Cadence Reports Fourth Quarter and 2003 Results and Intention to Restate Accounting for Certain Minority Equity Investments and other Financial Information.Business Editors/High-Tech Writers SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--Jan. 28, 2004 Cadence Design Systems (company) Cadence Design Systems - A company that sells electronic design automation software and services. http://cadence.com/. See also Verilog. , Inc. (NYSE NYSE See: New York Stock Exchange : CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. ) today announced its fourth quarter and fiscal 2003 results. Cadence cadence, in music, the ending of a phrase or composition. In singing the voice may be raised or lowered, or the singer may execute elaborate variations within the key. (R) announced total fourth quarter revenue of $308 million, compared to $274 million in the same period last year. Ratable That which can be appraised, assessed, or adjusted through the application of a formula or percentage. Ratable property is that which is taxable or capable of being appraised or assessed. ratable adj. licenses accounted for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 75 percent of product bookings. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the fourth quarter were $0.24 compared to $0.02 in the same period last year. Total revenue for 2003 was $1.11 billion compared to $1.29 billion in 2002, and pro forma diluted earnings per share for the year were $0.51 compared to $0.61 in 2002. For comparison purposes, except where noted, the results discussed in this release reflect earnings before amortization of acquired intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. and special items. Including amortization of acquired intangibles and special items, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), the company reported net income of $24 million and diluted earnings per share of $0.09 for the fourth quarter of 2003, compared to $87 million and $0.32 per share in the same period last year. On a GAAP basis, the company reported a net loss of $17 million and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net loss per share of $(0.06) for the year, compared to $67 million net income and net income per share of $0.25 in the same period last year. Schedules showing the impact of pro forma adjustments on net income on a quarterly and annual basis are included with this release. "The fourth quarter was a turning point for Cadence in digital design. Our Encounter(TM) platform earned 25 new logos and displaced displaced see displacement. competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. at several global IC companies," said Ray Bingham Bing·ham , George Caleb 1811-1879. American painter noted for his portraits and genre paintings of the American frontier. , president and chief executive officer of Cadence Design Systems. "We also saw good momentum in our Incisive incisive /in·ci·sive/ (-si´siv) 1. having the power or quality of cutting. 2. pertaining to the incisor teeth. in·ci·sive adj. 1. Having the power to cut. (TM) functional verification Functional verification, in electronic design automation, is the task of verifying that the logic design conforms to specification. In everyday terms, functional verification attempts to answer the question "Does this proposed design do what is intended?" This is a complex task, platform and in our new Virtuoso custom design platform on OpenAccess OpenAccess is a community effort to provide interoperability, including unified data exchange among integrated circuit design tools through an open standard data API and reference database supporting that API for IC design. ." Cadence also announced that it will restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state certain information in its financial statements for its fiscal year 2002, and the first, second and third quarters of fiscal 2003. These restatements will correct the accounting treatment for certain minority equity investments made by Cadence and its affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: venture capital partnerships in prior periods. In addition, these restatements will include certain other adjustments that are immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. both individually and in the aggregate. The adjustments are expected to affect primarily "other income" in Cadence's Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Operations, and "other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. " and "retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. " in its Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. for the periods affected. For the nine months ended September September: see month. 27, 2003, GAAP net loss is expected to be decreased by approximately $1.8 million, or $0.01 per share. For the year ended December December: see month. 28, 2002, Cadence's GAAP net income is expected to be reduced by approximately $4.9 million, or $0.02 per share. Business Highlights of Q4 2003 Cadence delivered -- ahead of schedule -- the fourth major release of the Encounter digital IC design platform in 13 months. It included the integration of NanoRoute Nanoroute is a powerful global routing tool built into Cadence Encounter, an Integrated Circuit design and layout tool. External links
Computer software that translates (compiles) source code written in a high-level language (e.g., C++) into a set of machine-language instructions that can be understood by a digital computer's CPU. , the leading new generation synthesis A combination, derivation or compilation. See logic synthesis. (programming, specification) synthesis - The process of deriving (efficient) programs from (clear) specifications. See also program transformation. technology. The customer benefits of this integration are ease of use, higher performance and productivity. Verification See verify. verification - The process of determining whether or not the products of a given phase in the life-cycle fulfil a set of established requirements. continues to be a key area of customer investment. Cadence enjoyed a record quarter for the Incisive functional verification platform, which was launched less than a year ago. Thirty-six new customers adopted the Incisive platform in the fourth quarter. Cadence also enjoyed a record quarter for Incisive XLD XLD eXperimental Laser Device XLD Excel Dialog . Incisive XLD provides the industry's only "acceleration-on-demand" capability, which allows customers to choose either simulation The mathematical representation of the interaction of real-world objects. See scientific application and simulator. Simulation A broad collection of methods used to study and analyze the behavior and performance of actual or theoretical systems. or hardware-based acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. at runtime Refers to the actual execution of a program. "At runtime" means while the program is running. See runtime library, runtime engine, runtime environment and runtime error. . Cadence is investing to sustain its leadership position in the custom design market. In the fourth quarter, Cadence launched the Virtuoso(R) custom design platform, integrated on the industry standard OpenAccess database. The acquisition of Q Design Automation added process migration and layout
Layout may refer to:
Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. technologies to the Virtuoso platform. "The decisive actions we took to strengthen our technology are beginning to bear fruit as our customers' operations improve and they gain greater visibility on their product development plans," said Bingham. "We are poised to strengthen our position in digital at the leading edge; to exploit the market sweet spot for fast, complicated SoCs; and to develop indispensable business partnerships with our customers through platforms, services and open collaboration Working together on a project. See collaborative software. . This in turn will enable enterprises to create nanometer One billionth of a meter. Nanometers are used to measure the wavelengths of light. See angstrom and metric system. electronics profitably." Restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of Financial Information During the fourth quarter of 2003, Cadence commenced a review of equity investments made directly by it or through its affiliated Telos venture capital investment partnerships. Most of these investments are treated by Cadence as "passive" investments and have been accounted for using the cost method. However, with respect to certain investments, it was determined that Cadence had the "ability to exercise" significant influence over the investee companies because Cadence held more than 20% of an entity's voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. . In cases in which Cadence held less than 20% of the shares, Cadence was also deemed to have the "ability to exercise" significant influence because of its board representation, or commercial or technology relationships material to the investee company. Based on these facts, the equity method of accounting should have been applied to the investments. If Cadence had used the equity method rather than the cost method of accounting during the affected periods, Cadence would have recorded its pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. share of the income or losses from the investment in the "other income" line item of its consolidated statement of operations See Income statement. . Cadence is working with its independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. to finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... the necessary adjustments and complete the restatements as promptly prompt adj. prompt·er, prompt·est 1. Being on time; punctual. 2. Carried out or performed without delay: a prompt reply. tr.v. as possible. In addition, Cadence will reflect in its restated 2002 and 2003 financial statements other adjustments that are immaterial both individually and in the aggregate. The changes noted above will have no effect on Cadence's cash flow. Summary financial information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc these adjustments is provided in attachments to this press release. Detailed schedules relating to the adjustments are available at www.cadence.com/company/investor_relations. The Securities and Exchange Commission (SEC) has been notified of these issues and is evaluating them in connection with its current review of Cadence's Registration Statement on Form S-3. Pending completion of this review, Cadence can give no assurances that the SEC will agree with Cadence's proposed restatements, that the SEC will not require additional items to be restated, or that such additional restatements will not require a reaudit of certain prior periods affected by those adjustments. Cadence is working to resolve these matters with the SEC as soon as possible. Cadence's application for quotation QUOTATION, practice. The allegation of some authority or case, or passage of some law, in support of a position which it is desired to establish. 2. Quotations when properly made, assist the reader, but when misplaced, they are inconvenient. of its common stock on NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on as a dual listing with the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. will be postponed pending filing of the restated financial statements for the relevant periods. Business Outlook The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not include the potential impact of any mergers, acquisitions or other business combinations that may be completed after January January: see month. 3, 2004. In the first quarter of 2004, total revenue is expected to be in the range of $260 million to $270 million. Ratable licenses are expected to make up 75 percent to 85 percent of total software bookings, and about 70 percent of product revenue is expected to come from backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. . Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share for the first quarter of 2004 are expected to be in the range of $0.08 to $0.10. On a GAAP basis, including amortization of acquired intangibles, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other charges that are required to be included, first quarter earnings are expected to be in the range of $(0.01) to $0.01 per share. For 2004, total bookings growth is expected to be in the range of 7 percent to 10 percent. Because of the timing of contract renewals and normal seasonality, bookings and revenue will be weighted toward the second half of 2004. Total revenue is expected to be in the range of $1.175 to $1.225 billion. Pro forma earnings per share for the year are expected to be in the range of $0.70 to $0.77. On a GAAP basis the earnings per share for 2004 are expected to be in the range of $0.43 to $0.50. A schedule showing the impact of pro forma adjustments on forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. diluted net income per share is included with this release. Audio Webcast Scheduled Cadence Design Systems, Inc.'s Ray Bingham, chief executive officer, and Bill Porter Bill Porter may refer to:
About Cadence Cadence is the largest supplier of electronic design technologies, methodology services, and design services. Cadence solutions are used to accelerate and manage the design of semiconductors, computer systems, networking and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment, consumer electronics, and a variety of other electronics-based products. With approximately 4,800 employees and 2003 revenues of approximately $1.1 billion, Cadence has sales offices, design centers, and research facilities around the world. The company is headquartered in San Jose, Calif., and traded on the New York Stock Exchange under the symbol CDN. More information about the company, its products and services is available at www.cadence.com. Cadence, the Cadence logo and Virtuoso are registered trademarks, and Encounter, Incisive and NanoRoute are trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners. The statements contained above regarding the company's fourth quarter and full year 2003 results, the discussion relating to the restatement of certain financial information in Cadence's prior financial statements, those contained in the Business Outlook section above and all statements by Ray Bingham are forward looking statements based on current expectations or beliefs, as well as a number of preliminary assumptions about future events that are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. Readers are cautioned not to put undue reliance on these forward looking statements, which are not a guarantee of future performance or outcomes and are subject to a number of uncertainties and other factors, many of which are outside Cadence's control, including, among others: Cadence's ability to compete successfully in the design automation product and the commercial electronic design and methodology services industries; the mix of products and services sold and the timing of significant orders for its products; recent economic uncertainty; fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries; its ability to acquire other companies or technology or the failure to successfully integrate those that are acquired; and its independent auditors' and the SEC's review of certain financial information in prior period financial statements. For a detailed discussion of these and other cautionary statements, please refer to the company's filings with the Securities and Exchange Commission. These include the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 28, 2002 and Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ended September 27, 2003. Cadence expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings Cadence may reiterate re·it·er·ate tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it the Business Outlook published in this press release. At the same time, Cadence will keep this press release, including the Business Outlook, publicly available on its Web site (www.cadence.com/company/investor_relations/index.aspx). Prior to the start of the Quiet Period (described below), the public can continue to rely on the Business Outlook herein as still being Cadence's current expectations on matters covered, unless Cadence issues a press release stating otherwise. Beginning March 20, 2004, Cadence will observe TO OBSERVE, civil law. To perform that which has been prescribed by some law or usage. Dig., 1, 3, 32. a "Quiet Period" during which the Business Outlook as provided in this press release and the company's most recent quarterly report on Form 10-Q no longer constitute the company's current expectations. During the Quiet Period, the Business Outlook in these documents should be considered to be historical, speaking as of prior to the Quiet Period only and not subject to update by the company. During the Quiet Period, Cadence representatives will not comment concerning the outlook or Cadence's financial results or expectations. The Quiet Period will extend until the day when Cadence's next quarterly Earnings Release is published, currently scheduled for April 21, 2004.
Cadence Design Systems, Inc.
Consolidated Balance Sheets
January 3, 2004 and December 28, 2002
(In $000's)
Restated
Jan. 3, Dec. 28,
2004 2002
---------- ----------
Current Assets:
Cash and cash equivalents $ 384,525 $ 371,327
Short-term investments 33,898 24,286
Receivables, net 348,680 313,968
Inventories 16,926 9,614
Prepaid expenses and other 53,139 39,448
---------- ----------
Total current assets 837,168 758,643
Property, plant and equipment, net 403,847 431,846
Goodwill, net 916,227 663,197
Acquired intangibles, net 270,273 220,142
Installment contract receivables, net 121,627 113,185
Other assets 254,917 228,732
---------- ----------
Total Assets $2,804,059 $2,415,745
========== ==========
Current Liabilities:
Current portion of capital lease obligations $ 388 $ 1,609
Accounts payable and accrued liabilities 246,862 294,973
Deferred revenue 254,765 218,945
---------- ----------
Total current liabilities 502,015 515,527
---------- ----------
Long-term Liabilities:
Long-term portion of capital lease
obligations 61 659
Long-term debt 420,000 52,000
Other long-term liabilities 318,666 214,407
---------- ----------
Total long-term liabilities 738,727 267,066
---------- ----------
Stockholders' equity 1,563,317 1,633,152
---------- ----------
Total Liabilities and Stockholders' Equity $2,804,059 $2,415,745
========== ==========
Cadence Design Systems, Inc.
Consolidated Statements of Operations
For the Quarters and Years Ended January 3, 2004 and December 28, 2002
(In $000's, except per share amounts)
Quarters Ended Years Ended
Restated Restated Restated
-------------------- --------------------
Jan. 3, Dec. 28, Jan. 3, Dec. 28,
2004 2002 2004 2002
--------- --------- --------- ---------
Revenue:
Product $ 198,836 $ 153,905 $ 658,490 $ 806,786
Services 30,187 35,526 131,149 149,810
Maintenance 78,585 84,260 324,822 331,347
--------- --------- --------- ---------
Total revenue 307,608 273,691 1,114,461 1,287,943
--------- --------- --------- ---------
Costs and Expenses:
Cost of product 17,373 17,764 67,036 98,291
Cost of services 21,624 23,844 93,153 114,688
Cost of maintenance 13,061 14,816 56,460 65,089
Marketing and sales 79,586 104,068 326,579 402,148
Research and development 82,444 85,322 340,121 326,414
General and
administrative 16,968 26,418 82,566 115,767
Amortization of acquired
intangibles 16,310 13,710 62,573 53,752
Amortization of deferred
stock compensation 18,229 10,868 51,183 35,904
Avant! restitution and
settlement - (261,090) - (261,090)
Mentor settlement - - (14,500) -
Restructuring and other
charges 2,610 61,065 66,836 134,296
Write-off of acquired in-
process technology - - 7,500 34,000
--------- --------- --------- ---------
Total costs and
expenses 268,205 96,785 1,139,507 1,119,259
--------- --------- --------- ---------
Income (loss) from
operations 39,403 176,906 (25,046) 168,684
Interest expense (1,296) (1,240) (5,002) (2,803)
Other loss, net (1,917) (11,028) (10,576) (13,756)
--------- --------- --------- ---------
Income (loss) before
provision (benefit)
for income taxes 36,190 164,638 (40,624) 152,125
Provision (benefit) for
income taxes 12,667 77,350 (23,953) 85,111
--------- --------- --------- ---------
Net income (loss) $ 23,523 $ 87,288 $ (16,671) $ 67,014
========= ========= ========= =========
Basic net income (loss)
per share $ 0.09 $ 0.32 $ (0.06) $ 0.26
========= ========= ========= =========
Diluted net income (loss)
per share $ 0.09 $ 0.32 $ (0.06) $ 0.25
========= ========= ========= =========
Weighted average common
shares outstanding 264,178 268,702 266,794 259,870
========= ========= ========= =========
Weighted average common
and potential common
shares outstanding -
assuming dilution 274,366 272,475 266,794 267,500
========= ========= ========= =========
Supplemental diluted
earnings per share before
amortization of acquired
intangibles, amortization
of deferred stock
compensation, Mentor
settlement, net of related
costs, restructuring and
other charges, Avant!
civil settlement, net of
related costs, write-off
of acquired in-process
technology, write-down of
long-term investment
securities, reserve
against inventory, imputed
interest related to an
acquisition, non-recurring
legal costs, and income
tax effect of pro forma
adjustments $ 0.24 $ 0.02 $ 0.51 $ 0.61
========= ========= ========= =========
Cadence Design Systems, Inc.
Pro Forma Consolidated Income Statements
Impact of Pro Forma Adjustments on Reported and Restated Net Income
For the Quarters Ended January 3, 2004 and December 28, 2002
(In $000's, except per share amounts)
Quarter Ended
January 3, 2004
-----------------------------------
As Reported Adjustments Pro Forma
Revenue:
Product $ 198,836 $ - $ 198,836
Services 30,187 - 30,187
Maintenance 78,585 - 78,585
---------- ---------- ---------
Total revenue 307,608 - 307,608
---------- ---------- ---------
Costs and Expenses:
Cost of product 17,373 (9,641)(A) 7,732
Cost of services 21,624 (474)(A) 21,150
Cost of maintenance 13,061 (604)(A) 12,457
Marketing and sales 79,586 - 79,586
Research and development 82,444 - 82,444
General and administrative 16,968 - 16,968
Amortization of acquired
intangibles 16,310 (16,310)(A) -
Amortization of deferred stock
compensation 18,229 (18,229)(B) -
Avant! restitution and settlement - - -
Restructuring and other charges 2,610 (2,610)(C) -
---------- ---------- ---------
Total costs and expenses 268,205 (47,868) 220,337
---------- ---------- ---------
Income from operations 39,403 47,868 87,271
Interest expense (1,296) 825 (E) (471)
Other income (loss), net (1,917) 3,299 (F) 1,382
---------- ---------- ---------
Income before provision for
income taxes 36,190 51,992 88,182
Provision for income taxes 12,667 10,260 (G) 22,927
---------- ---------- ---------
Net Income $ 23,523 $ 41,732 $ 65,255
========== ========== =========
Basic net income per share $ 0.09 $ 0.25
========== =========
Diluted net income per share $ 0.09 $ 0.24
========== =========
Weighted average common shares
outstanding 264,178 264,178
========== =========
Weighted average common and
potential common shares
outstanding - assuming dilution 274,366 274,366
========== =========
Quarter Ended
December 28, 2002
-----------------------------------
As Restated Adjustments Pro Forma
Revenue:
Product $ 153,905 $ - $ 153,905
Services 35,526 - 35,526
Maintenance 84,260 - 84,260
---------- ---------- ---------
Total revenue 273,691 - 273,691
---------- ---------- ---------
Costs and Expenses:
Cost of product 17,764 (7,179)(A) 10,585
Cost of services 23,844 (785)(A) 23,059
Cost of maintenance 14,816 (370)(A) 14,446
Marketing and sales 104,068 - 104,068
Research and development 85,322 - 85,322
General and administrative 26,418 - 26,418
Amortization of acquired
intangibles 13,710 (13,710)(A) -
Amortization of deferred stock
compensation 10,868 (10,868)(B) -
Avant! restitution and settlement (261,090) 261,090 (D) -
Restructuring and other charges 61,065 (61,065)(C) -
---------- ---------- ---------
Total costs and expenses 96,785 167,113 263,898
---------- ---------- ---------
Income from operations 176,906 (167,113) 9,793
Interest expense (1,240) - (1,240)
Other income (loss), net (11,028) 9,350 (F) (1,678)
---------- ---------- ---------
Income before provision for
income taxes 164,638 (157,763) 6,875
Provision for income taxes 77,350 (75,562)(G) 1,788
---------- ---------- ---------
Net Income $ 87,288 $ (82,201) $ 5,087
========== ========== =========
Basic net income per share $ 0.32 $ 0.02
========== =========
Diluted net income per share $ 0.32 $ 0.02
========== =========
Weighted average common shares
outstanding 268,702 268,702
========== =========
Weighted average common and
potential common shares
outstanding - assuming dilution 272,475 272,475
========== =========
Notes:
(A) Non-cash amortization of acquired intangibles
(B) Non-cash amortization of deferred stock compensation
(C) Restructuring and other charges
(D) Avant! civil settlement, net of related costs
(E) Imputed interest related to an acquisition
(F) Write-down of long-term investment securities
(G) Income tax effect of pro forma adjustments
Cadence Design Systems, Inc.
Pro Forma Consolidated Statements of Operations
Impact of Pro Forma Adjustments on Restated Net Income (Loss)
For the Years Ended January 3, 2004 and December 28, 2002
(In $000's, except per share amounts)
Year Ended
January 3, 2004
------------------------------------
As Restated Adjustments Pro Forma
Revenue:
Product $ 658,490 $ - $ 658,490
Services 131,149 - 131,149
Maintenance 324,822 - 324,822
---------- ---------- ----------
Total revenue 1,114,461 - 1,114,461
---------- ---------- ----------
Costs and Expenses:
Cost of product 67,036 (38,999)(A) 28,037
Cost of services 93,153 (2,213)(A) 90,940
Cost of maintenance 56,460 (2,337)(A) 54,123
Marketing and sales 326,579 - 326,579
Research and development 340,121 - 340,121
General and administrative 82,566 - 82,566
Amortization of acquired
intangibles 62,573 (62,573)(A) -
Amortization of deferred stock
compensation 51,183 (51,183)(B) -
Avant! restitution and
settlement - - -
Mentor settlement (14,500) 14,500 (C) -
Restructuring and other charges 66,836 (66,836)(D) -
Write-off of acquired in-process
technology 7,500 (7,500)(E) -
---------- ---------- ----------
Total costs and expenses 1,139,507 (217,141) 922,366
---------- ---------- ----------
Income (loss) from
operations (25,046) 217,141 192,095
Interest expense (5,002) 825 (I) (4,177)
Other income (loss), net (10,576) 11,595 (J) 1,019
---------- ---------- ----------
Income (loss) before
provision (benefit) for
income taxes (40,624) 229,561 188,937
Provision (benefit) for income
taxes (23,953) 73,076 (K) 49,123
---------- ---------- ----------
Net Income (loss) $ (16,671) $ 156,485 $ 139,814
========== ========== ==========
Basic net income (loss) per
share $ (0.06) $ 0.52
========== ==========
Diluted net income (loss) per
share $ (0.06) $ 0.51
========== ==========
Weighted average common shares
outstanding 266,794 266,794
========== ==========
Weighted average common and
potential common shares
outstanding - assuming dilution 266,794 272,639
========== ==========
Year Ended
December 28, 2002
--------------------------------------
As Restated Adjustments Pro Forma
Revenue:
Product $ 806,786 $ - $ 806,786
Services 149,810 - 149,810
Maintenance 331,347 - 331,347
---------- ------------- ----------
Total revenue 1,287,943 - 1,287,943
---------- ------------- ----------
Costs and Expenses:
Cost of product 98,291 (38,959)(A)(F) 59,332
Cost of services 114,688 (2,001)(A) 112,687
Cost of maintenance 65,089 (868)(A) 64,221
Marketing and sales 402,148 - 402,148
Research and development 326,414 - 326,414
General and administrative 115,767 (11,100)(G) 104,667
Amortization of acquired
intangibles 53,752 (53,752)(A) -
Amortization of deferred
stock compensation 35,904 (35,904)(B) -
Avant! restitution and
settlement (261,090) 261,090 (H) -
Mentor settlement - - -
Restructuring and other
charges 134,296 (134,296)(D) -
Write-off of acquired in-
process technology 34,000 (34,000)(E) -
---------- ------------- ----------
Total costs and expenses 1,119,259 (49,790) 1,069,469
---------- ------------- ----------
Income (loss) from
operations 168,684 49,790 218,474
Interest expense (2,803) - (2,803)
Other income (loss), net (13,756) 19,350 (J) 5,594
---------- ------------- ----------
Income (loss) before
provision (benefit) for
income taxes 152,125 69,140 221,265
Provision (benefit) for
income taxes 85,111 (27,581)(K) 57,530
---------- ------------- ----------
Net Income (loss) $ 67,014 $ 96,721 $ 163,735
========== ============= ==========
Basic net income (loss) per
share $ 0.26 $ 0.63
========== ==========
Diluted net income (loss) per
share $ 0.25 $ 0.61
========== ==========
Weighted average common shares
outstanding 259,870 259,870
========== ==========
Weighted average common and
potential common shares
outstanding - assuming
dilution 267,500 267,500
========== ==========
Notes:
(A) Non-cash amortization of acquired intangibles
(B) Non-cash amortization of deferred stock compensation
(C) Mentor settlement, net of related costs
(D) Restructuring and other charges
(E) Write-off of acquired in-process technology
(F) Reserve against inventory
(G) Non-recurring legal costs
(H) Avant! civil settlement, net of related costs
(I) Imputed interest related to an acquisition
(J) Write-down of long-term investment securities
(K) Income tax effect of pro forma adjustments
Cadence Design Systems, Inc.
As of January 28, 2004
Impact of Pro Forma Adjustments
on Forward Looking Diluted Net Income per Share
(Unaudited)
Quarter Ended Year Ended
April 3, 2004 January 1, 2005
---------------- ----------------
GAAP net income (loss) per share $(0.01) to $0.01 $0.43 to $0.50
Amortization of acquired
intangibles 0.08 0.31
Amortization of deferred stock
compensation 0.03 0.09
Restructuring and other charges 0.01 0.01
Income tax effect of reconciling
items (0.03) (0.14)
---------------- ----------------
Pro Forma diluted net income per $0.08 to $0.10 $0.70 to $0.77
share
================ ================
Cadence Design Systems, Inc.
2001-2003 Revenue Detail by Product Group ($ Millions)
2001
-----------------------------------
Q1 Q2 Q3 Q4 Year
------ ------ ------ ------ -------
Product Revenue:
IC Implementation 96.2 96.3 135.6 117.3 445.4
IP Creation 64.9 71.0 63.7 93.3 292.9
PSD 20.1 22.9 18.1 31.1 92.2
----- ----- ----- ----- -------
Total Product Revenue 181.2 190.2 217.4 241.7 830.5
Services 80.0 73.8 58.0 51.5 263.3
Maintenance 83.4 83.6 84.6 85.0 336.6
TOTAL REVENUE 344.6 347.6 360.0 378.2 1,430.4
2002
-----------------------------------
Q1 Q2 Q3 Q4 Year
------ ------ ------ ------ -------
Product Revenue:
IC Implementation 124.6 142.5 123.9 91.7 482.7
IP Creation 71.3 65.5 65.3 45.1 247.2
PSD 22.7 17.2 19.9 17.1 76.9
----- ----- ----- ----- -------
Total Product Revenue 218.6 225.2 209.1 153.9 806.8
Services 43.3 37.0 34.0 35.5 149.8
Maintenance 82.4 81.7 82.9 84.3 331.3
TOTAL REVENUE 344.3 343.9 326.0 273.7 1,287.9
2003
-----------------------------------
Q1 Q2 Q3 Q4 Year
------ ------ ------ ------ -------
Product Revenue:
IC Implementation 77.3 94.1 89.3 106.7 367.4
IP Creation 59.2 53.5 52.2 73.5 238.4
PSD 10.9 13.0 10.2 18.6 52.7
----- ----- ----- ----- -------
Total Product Revenue 147.4 160.6 151.7 198.8 658.5
Services 32.4 34.8 33.8 30.2 131.2
Maintenance 82.2 81.0 83.0 78.6 324.8
TOTAL REVENUE 262.0 276.4 268.5 307.6 1,114.5
2001-2003 Revenue Detail by Geography ($ Millions)
2001
-----------------------------------
Q1 Q2 Q3 Q4 Year
------ ------ ------ ------ -------
North America 217.0 201.1 178.7 224.1 820.9
Europe 59.6 85.6 118.3 70.1 333.6
Japan 48.9 43.5 30.1 58.8 181.3
Asia 19.1 17.4 32.9 25.2 94.6
TOTAL REVENUE 344.6 347.6 360.0 378.2 1,430.4
2002
-----------------------------------
Q1 Q2 Q3 Q4 Year
------ ------ ------ ------ -------
North America 204.1 184.8 192.7 158.1 739.7
Europe 56.6 95.9 61.1 44.3 257.9
Japan 61.6 36.5 46.7 43.5 188.3
Asia 22.0 26.7 25.5 27.8 102.0
TOTAL REVENUE 344.3 343.9 326.0 273.7 1,287.9
2003
-----------------------------------
Q1 Q2 Q3 Q4 Year
------ ------ ------ ------ -------
North America 141.7 151.1 155.9 196.6 645.3
Europe 44.7 41.6 52.1 49.4 187.8
Japan 53.4 59.6 35.3 39.5 187.8
Asia 22.2 24.1 25.2 22.1 93.6
TOTAL REVENUE 262.0 276.4 268.5 307.6 1,114.5
Cadence Design Systems, Inc.
Impact of Restatement Adjustments on Previously Reported Consolidated
Balance Sheets as of December 28, 2002
(In $000's)
December 28, 2002
-----------------------------------------------
As Restate- Reclas- As Restated
Previously ment sification and
Reported Adjust- Adjust- Reclas-
ments ments sified
Current Assets:
Cash and cash
equivalents $ 371,327 $ - $ - $ 371,327
Short-term
investments 24,286 - - 24,286
Receivables, net 313,968 - - 313,968
Inventories 9,614 - - 9,614
Prepaid expenses
and other 39,448 - - 39,448
---------- ---------- ----------- ----------
Total current
assets 758,643 - - 758,643
Property, plant,
and equipment,
net 434,491 (2,645)(A) - 431,846
Goodwill, net - - 663,197 (G) 663,197
Acquired
intangibles, net 883,339 - (663,197)(G) 220,142
Installment
contract
receivables 113,185 - - 113,185
Other assets 248,603 (19,871)(B) - 228,732
---------- ---------- ----------- ----------
Total assets $2,438,261 $ (22,516) $ - $2,415,745
========== ========== =========== ==========
Current Liabilities:
Current portion of
capital lease
obligations $ 1,609 $ - $ - $ 1,609
Accounts payable
and accrued
liabilities 297,399 (2,426)(C) - 294,973
Deferred revenue 212,882 6,063 (D) - 218,945
---------- ---------- ----------- ----------
Total current
liabilities 511,890 3,637 - 515,527
---------- ---------- ----------- ----------
Long-term
Liabilities:
Long-term portion
of capital lease
obligations 659 - - 659
Long-term debt 52,000 - - 52,000
Other long-term
liabilities 214,407 - - 214,407
---------- ---------- ----------- ----------
Total long-term
liabilities 267,066 - - 267,066
---------- ---------- ----------- ----------
Stockholders' Equity:
Preferred stock - - - -
Common stock and
capital in excess
of par value 1,100,380 - - 1,100,380
Deferred stock
compensation (44,426) (159)(E) - (44,585)
Retained earnings 607,460 (25,994)(F) - 581,466
Accumulated other
comprehensive
loss (4,109) - - (4,109)
---------- ---------- ----------- ----------
Total
stockholders'
equity 1,659,305 (26,153) - 1,633,152
---------- ---------- ----------- ----------
Total
liabilities
and
stock-
holders'
equity $2,438,261 $ (22,516) $ - $2,415,745
========== ========== =========== ==========
Notes:
(A) Capitalized software adjustment
(B) Effect of investment entries
(C) Tax effect of restatement adjustments
(D) Effect of revenue entries
(E) Net effect of earnout and deferred compensation adjustments
(F) Net effect of restatement adjustments on retained earnings
(G) Separate goodwill from intangible assets
Cadence Design Systems, Inc.
Impact of Restatement Adjustments on Previously Reported Consolidated
Statements of Operations For the Nine Months Ended September 27, 2003
and the Year Ended
December 28, 2002
(In $000's, except per share amounts)
Nine months ended Year ended Dec.
Sept, 27, 2003 28, 2002
----------------- -----------------
Total revenue, as previously
reported $ 800,789 $ 1,293,067
Restatement adjustments (A) 6,064 (5,124)
----------------- -----------------
Total revenue, as restated $ 806,853 $ 1,287,943
----------------- -----------------
Total costs and expenses, as
previously reported $ 872,678 $ 1,118,312
Restatement adjustments (B) (1,376) 947
----------------- -----------------
Total costs and expenses, as
restated $ 871,302 $ 1,119,259
----------------- -----------------
Other loss as previously
reported $ (2,989) $ (13,986)
Restatement adjustments (C) (5,670) 230
----------------- -----------------
Other loss as restated $ (8,659) $ (13,756)
----------------- -----------------
Provision (benefit) for income
taxes as previously reported $ (36,620) $ 86,017
Restatement adjustments (D) - (906)
----------------- -----------------
Provision (benefit) for income
taxes as restated $ (36,620) $ 85,111
----------------- -----------------
Net income (loss) as previously
reported $ (41,964) $ 71,949
Restatement adjustments 1,770 (4,935)
----------------- -----------------
Net income (loss) as restated $ (40,194) $ 67,014
----------------- -----------------
Basic net income (loss) per
share as previously reported $ (0.16) $ 0.28
Restatement adjustments 0.01 (0.02)
----------------- -----------------
Basic net income (loss) per
share as restated $ (0.15) $ 0.26
----------------- -----------------
Diluted net income (loss) per
share as previously reported $ (0.16) $ 0.27
Restatement adjustments 0.01 (0.02)
----------------- -----------------
Diluted net income (loss) per
share as restated $ (0.15) $ 0.25
----------------- -----------------
(A) - Revenue adjustments
(B) - Capitalized software and deferred compensation adjustments
(C) - Investment and foreign currency adjustments
(D) - Tax effect of restatement adjustments
Cadence Design Systems, Inc.
Impact of Restatement Adjustments on Previously Reported Consolidated
Statements of Operations
For the Nine Months Ended September 27, 2003 and the Year Ended
December 28, 2002
(In $000's, except per share amounts)
Nine months
ended
September
27, 2003 Q3 2003 Q2 2003 Q1 2003
-------- -------- -------- --------
Total revenue, as previously
reported $800,789 $268,476 $276,437 $255,876
Restatement adjustments 6,064 - - 6,064
-------- -------- -------- --------
Total revenue, as restated $806,853 $268,476 $276,437 $261,940
-------- -------- -------- --------
Total costs and expenses, as
previously reported $872,678 $314,392 $279,353 $278,933
Restatement adjustments (1,376) (181) (2,596) 1,401
-------- -------- -------- --------
Total costs and expenses, as
restated $871,302 $314,211 $276,757 $280,334
-------- -------- -------- --------
Other income (loss) as
previously reported $ (2,989) $ 2,295 $ (6,192) $ 908
Restatement adjustments (5,670) (803) (1,562) (3,305)
-------- -------- -------- --------
Other income (loss) as
restated $ (8,659) $ 1,492 $ (7,754) $ (2,397)
-------- -------- -------- --------
Provision (benefit) for
income taxes as previously
reported $(36,620) $(31,018) $ (1,895) $ (3,707)
Restatement adjustments - (420) 200 220
-------- -------- -------- --------
Provision (benefit) for
income taxes as restated $(36,620) $(31,438) $ (1,695) $ (3,487)
-------- -------- -------- --------
Net income (loss) as
previously reported $(41,964) $(14,995) $ (7,853) $(19,116)
Restatement adjustments 1,770 (202) 834 1,138
-------- -------- -------- --------
Net income (loss) as
restated $(40,194) $(15,197) $ (7,019) $(17,978)
-------- -------- -------- --------
Basic net income (loss) per
share as previously
reported $ (0.16) $ (0.06) $ (0.03) $ (0.07)
Restatement adjustments 0.01 0.00 0.00 0.00
-------- -------- -------- --------
Basic net income (loss) per
share as restated $ (0.15) $ (0.06) $ (0.03) $ (0.07)
-------- -------- -------- --------
Diluted net income (loss)
per share as previously
reported $ (0.16) $ (0.06) $ (0.03) $ (0.07)
Restatement adjustments 0.01 0.00 0.00 0.00
-------- -------- -------- --------
Diluted net income (loss)
per share as restated $ (0.15) $ (0.06) $ (0.03) $ (0.07)
-------- -------- -------- --------
Year ended
December
28, 2002 Q4 2002 Q3 2002 Q2 2002 Q1 2002
---------- -------- -------- -------- --------
Total revenue, as
previously
reported $1,293,067 $276,297 $327,236 $344,820 $344,714
Restatement
adjustments (5,124) (2,606) (1,211) (869) (438)
---------- -------- -------- -------- --------
Total revenue, as
restated $1,287,943 $273,691 $326,025 $343,951 $344,276
---------- -------- -------- -------- --------
Total costs and
expenses, as
previously
reported $1,118,312 $101,375 $311,944 $385,348 $319,645
Restatement
adjustments 947 (4,590) 319 2,500 2,718
---------- -------- -------- -------- --------
Total costs and
expenses, as
restated $1,119,259 $ 96,785 $312,263 $387,848 $322,363
---------- -------- -------- -------- --------
Other income (loss)
as previously
reported $ (13,986) $(10,238) $ 171 $ (9,401) $ 5,482
Restatement
adjustments 230 (790) 1,579 (2,434) 1,875
---------- -------- -------- -------- --------
Other income (loss)
as restated $ (13,756) $(11,028) $ 1,750 $(11,835) $ 7,357
---------- -------- -------- -------- --------
Provision (benefit)
for income taxes
as previously
reported $ 86,017 $ 74,750 $ 6,569 $ (4,029) $ 8,727
Restatement
adjustments (906) 2,600 (1,458) (1,317) (731)
---------- -------- -------- -------- --------
Provision (benefit)
for income taxes
as restated $ 85,111 $ 77,350 $ 5,111 $ (5,346) $ 7,996
---------- -------- -------- -------- --------
Net income (loss)
as previously
reported $ 71,949 $ 88,694 $ 8,231 $(46,321) $ 21,345
Restatement
adjustments (4,935) (1,406) 1,507 (4,486) (550)
---------- -------- -------- -------- --------
Net income (loss)
as restated $ 67,014 $ 87,288 $ 9,738 $(50,807) $ 20,795
---------- -------- -------- -------- --------
Basic net income
(loss) per share
as previously
reported $ 0.28 $ 0.33 $ 0.03 $ (0.18) $ 0.09
Restatement
adjustments (0.02) (0.01) 0.01 (0.02) (0.01)
---------- -------- -------- -------- --------
Basic net income
(loss) per share
as restated $ 0.26 $ 0.32 $ 0.04 $ (0.20) $ 0.08
---------- -------- -------- -------- --------
Diluted net income
(loss) per share
as previously
reported $ 0.27 $ 0.33 $ 0.03 $ (0.18) $ 0.08
Restatement
adjustments (0.02) (0.01) 0.01 (0.02) 0.00
---------- -------- -------- -------- --------
Diluted net income
(loss) per share
as restated $ 0.25 $ 0.32 $ 0.04 $ (0.20) $ 0.08
---------- -------- -------- -------- --------
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