Cadence Reports Second Quarter Results; Product Revenue Grows 19 Percent and Earnings Per Share Increase 30 Percent.Business Editors & High-Tech high-tech also hi-tech adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. 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)--July 23, 2002 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. ), the world's leading supplier of electronic design products and services, today announced second quarter 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 of $0.24, up 30 percent over the second quarter of 2001, on revenue of $345 million. For the quarter, product revenue increased 19 percent to $226 million over the comparable quarter in 2001. 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. booked 40 percent of its software products as subscription licenses (48 percent including subscription licenses and maintenance) during the quarter. For comparative purposes, except where noted, the results discussed throughout this release reflect earnings before special charges, unusual items, amortization of acquired intangibles and deferred stock compensation. "We are pleased with our strong results," said Ray Bingham Bing·ham , George Caleb 1811-1879. American painter noted for his portraits and genre paintings of the American frontier. , president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Cadence Design Systems. "Given the very challenging economic environment we're we're Contraction of we are. we're we are in, customers continue to prioritize pri·or·i·tize v. pri·or·i·tized, pri·or·i·tiz·ing, pri·or·i·tiz·es Usage Problem v.tr. To arrange or deal with in order of importance. v.intr. investing in areas where they need new solutions in order to continue to innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. . Our nanometer One billionth of a meter. Nanometers are used to measure the wavelengths of light. See angstrom and metric system. design products -- digital and analog/mixed- signal -- continue to be the solutions of choice as customers move to nanometer design." The weakness in the systems and semiconductor markets continue to affect the Cadence services business. For the quarter, total services revenue declined 15 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen to $37 million. 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 a net loss of $46 million and a 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 $0.18 for the second quarter. Business Highlights As the semiconductor industry moves to advanced design processes of 130 nanometers and below, it drives the demand for new and different solutions to address increasingly difficult problems. Here, Cadence continued to see strong momentum for its digital integrated circuit integrated circuit (IC), electronic circuit built on a semiconductor substrate, usually one of single-crystal silicon. The circuit, often called a chip, is packaged in a hermetically sealed case or a nonhermetic plastic capsule, with leads extending from it for (IC) business, which grew more than 50 in the second quarter. The demand for the Cadence Encounter family -- the company's digital solution for nanometer design -- increased 30 percent sequentially over a strong first quarter. Additionally, Cadence received its first orders for NanoRoute Nanoroute is a powerful global routing tool built into Cadence Encounter, an Integrated Circuit design and layout tool. External links
Portable electric power tool used in carpentry and furniture making that consists of an electric motor, a base, two handle knobs, and bits (cutting tools). A router can cut fancy edges for shelving, grooves for storm windows and weather stripping, circles and ovals . Also, the leading technology from Simplex showed good momentum even though it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have been part of Cadence for just a short time. The rapid growth of chips with voice, data and multi-media computing computing - computer and communications capabilities triggered the demand for Cadence digital and custom IC design solutions. In the second quarter, 17 of the top 20 customers purchased the Cadence custom IC design flow, while 14 of those bought both Cadence custom and digital design flows. Cadence also had large contract renewals with Philips (company) Philips - A Dutch multinational electronics company. It produces washing machines, consumer electronics, integrated circuits and light bulbs. Together with Sony they set the Compact Disc standard, especially Green Book CD-ROM. Semiconductors, National Semiconductor and Teradyne Teradyne NYSE: TER, a US company, is a supplier of automatic test equipment (ATE). As of 2005, it has the largest marketshare in the SOC market. The company's divisions, Broadband Test, Assembly Test, Semiconductor Test, and Vehicle Diagnostic Solutions, are organized by the at contract values averaging more than 50 percent higher than previous contracts. In addition, Cadence added 33 new customers in the second quarter. "We're winning because we're the only company that can provide customers with solutions that solve the whole problem -- from system onto chip into package onto board," added Bingham. "Moreover, we've we've Contraction of we have. we've have implemented a highly focused strategy over the past 18 months that has added chip-design expertise, leadership, and technologies for the world's most advanced processes. As a result, we have leapfrogged the competition for next-generation nanometer design -- both digital and analog." Business Outlook The following statements are based on current expectations. These statements are 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. , 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 June June: see month. 30, 2002. The company expects to see strength in software -- 90 percent of its business -- and continued weakness in services. Product bookings expectations for the year remain the same, with growth in the mid-teens. Cadence expects its subscription bookings, which going forward include subscription licenses and maintenance combined, to grow from 48 percent of the mix of software bookings in Q2 to 65-70 percent for Q3 of 2002. For Q4, the company anticipates approximately 70-80 percent of software bookings to be under subscriptions. The company expects this increased mix of subscriptions will not affect bookings but will reduce revenue in the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. . Cadence does not expect any meaningful recovery in the economy during the second half of the year. The company will continue to aggressively manage its cost structure. In Q3, Cadence expects earnings per share to be approximately 15 cents. For the year, earnings per share are expected to be approximately 80 cents. In 2003, Cadence expects earnings per share to be approximately $1.00. The company expects that the change in mix of software licenses In computing, software that is copyrighted and licensed under a software license is done under a variety of licensing schemes. For end-users there are proprietary licenses and there are free software licenses, and there are proprietary Within these schemes are further classifications. should enhance revenue visibility and, beginning in the second half of 2003, accelerate revenue and earnings growth. All such expected earnings per share reflect earnings before unusual items, amortization of acquired intangibles and deferred stock compensation. The statements by Ray Bingham and the above statements contained in this Outlook are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on current expectations or beliefs, as well as a number of 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 and are subject to a number of uncertainties and other factors, many of which are outside the control of Cadence, 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; and the acquisition of other companies or the failure to successfully integrate them. 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 December: see month. 29, 2001, and Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ended March 30, 2002. In the calculation of the company's Earnings Before Goodwill (EBG EBG Electromagnetic Band Gap EBG Ernst-Barlach-Gymnasium (German high school name; several cities) EBG European Board of Gastroenterology EBG EuroBonus Gold EBG Electron Beam Gun EBG Electronic Book G EBG Extended Boolean Graphs ) or 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. , Cadence excludes certain non-cash items such as amortization of goodwill and other acquired intangibles, amortization of deferred stock compensation and write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of in-process R&D from acquisitions. Also excluded are non-operating and non-recurring items such as special charges, unusual items and restructure expenses. A reconciliation of EBG net income to GAAP net income is included in this press release and posted on the Cadence web site (www.cadence.com/company/investor_relations/index.html). 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 Outlook published in this press release. At the same time, Cadence will keep this press release, including the outlook, publicly available on its Web site (www.cadence.com/company/investor_relations/index.html). Prior to the start of the Quiet Period (described below), the public can continue to rely on the Outlook on the Web site as still being Cadence's current expectations on matters covered, unless Cadence publishes a notice stating otherwise. Beginning September September: see month. 13, 2002, Cadence will observe a "Quiet Period" during which the Outlook as provided in this press release and the company's quarterly report on Form 10-Q no longer constitute the company's current expectations. During the Quiet Period, the 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 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, presently scheduled for October October: see month. 15, 2002. 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. IEEE (Institute of Electrical and Electronics Engineers, New York, www.ieee.org) A membership organization that includes engineers, scientists and students in electronics and allied fields. , the world's largest technical professional society, honored hon·or n. 1. High respect, as that shown for special merit; esteem: the honor shown to a Nobel laureate. 2. a. Good name; reputation. b. Cadence with its 2002 Corporate Innovation Recognition Award. With approximately 5,600 employees and 2001 revenues of approximately $1.4 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 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. under the symbol CDN. More information about the company, its products and services are available at www.cadence.com. Note to Editors: Cadence and the Cadence logo are registered trademarks of Cadence Design Systems, Inc.
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
June 29, 2002 and December 29, 2001
(In $000's)
June 29, December 29,
2002 2001
------------ ------------
(Unaudited)
Cash and cash equivalents $ 239,186 $ 206,311
Short-term investments 39,869 68,483
Receivables, net 288,374 258,402
Inventories, net 7,214 18,151
Prepaid expenses and other 103,777 83,575
------------ ------------
Total current assets 678,420 634,922
Property, plant and equipment, net 438,587 417,189
Software development costs, net 13,099 11,938
Goodwill and acquired intangibles, net 730,454 413,641
Installment contract receivables 81,402 58,918
Other assets 193,213 193,422
------------ ------------
Total assets $ 2,135,175 $ 1,730,030
============ ============
Notes payable and current portion of
capital leases $ 1,232 $ 1,397
Accounts payable and accrued liabilities 261,613 259,029
Deferred revenue 232,368 211,965
------------ ------------
Total current liabilities 495,213 472,391
Long-term debt and capital leases 1,135 1,476
Other long-term liabilities 179,980 134,816
Stockholders' equity 1,458,847 1,121,347
------------ ------------
Total liabilities and
stockholders' equity $ 2,135,175 $ 1,730,030
============ ============
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Operations
For the Quarters and Six Months Ended June 29, 2002 and June 30, 2001
(In $000's, except per share amounts)
(Unaudited)
Quarters Ended Six Months Ended
--------------------- ---------------------
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
-------------------------------------------
Revenue
Product $ 226,064 $ 190,166 $ 445,113 $ 371,423
Services 37,026 73,798 80,292 153,818
Maintenance 81,730 83,611 164,129 166,991
---------- ---------- ---------- ----------
Total revenue 344,820 347,575 689,534 692,232
---------- ---------- ---------- ----------
Costs and Expenses
Cost of product 29,822 27,616 47,922 49,279
Cost of services 28,784 48,765 61,550 102,481
Cost of maintenance 17,340 15,918 33,768 32,876
Marketing and sales 96,170 96,163 192,951 189,650
Research and development 78,255 73,902 156,445 144,882
General and administrative 25,552 27,454 51,982 58,209
Amortization of acquired
intangibles 19,048 25,928 37,697 47,920
Amortization of deferred
stock compensation 7,454 7,175 10,947 13,115
Special charges 27,400 2,272 38,500 17,856
Restructure 55,523 33,802 73,231 35,302
Goodwill write-off - 25,834 - 25,834
---------- ---------- ---------- ----------
Total costs and
expenses 385,348 384,829 704,993 717,404
---------- ---------- ---------- ----------
Loss from operations (40,528) (37,254) (15,459) (25,172)
Other income (loss), net (9,822) 536 (4,819) 158
---------- ---------- ---------- ----------
Loss before provision
(benefit) for income
taxes (50,350) (36,718) (20,278) (25,014)
Provision (benefit) for
income taxes (4,029) (7,829) 4,698 53
---------- ---------- ---------- ----------
Net loss $ (46,321) $ (28,889) $ (24,976) $ (25,067)
========== ========== ========== ==========
Basic net loss per share $ (0.18) $ (0.12) $ (0.10) $ (0.10)
========== ========== ========== ==========
Diluted net loss per share $ (0.18) $ (0.12) $ (0.10) $ (0.10)
========== ========== ========== ==========
Weighted average common
shares outstanding 251,131 248,020 250,394 244,609
========== ========== ========== ==========
Weighted average common and
potential common shares
outstanding - assuming
dilution 251,131 248,020 250,394 244,609
========== ========== ========== ==========
----------------------------------------------------------------------
Supplemental diluted
earnings per share before
amortization of acquired
intangibles, amortization of
deferred stock compensation,
special charges, goodwill
write-off, and restructure $ 0.24 $ 0.18 $ 0.47 $ 0.34
========== ========== ========== ==========
Cadence Design Systems, Inc.
Supplemental Condensed Consolidated Statements of Operations
Excluding Amortization of Acquired Intangibles, Amortization of
Deferred Stock Compensation, Special Charges, Goodwill Write-Off,
and Restructure
For the Quarters and Six Months Ended
June 29, 2002 and June 30, 2001
(In $000's, except per share amounts)
(Unaudited)
Supplemental
------------------------------------------------------
Quarters Ended Six Months Ended
-------------------- --------------------
June 29, June 30, % June 29, June 30, %
2002 2001 Change 2002 2001 Change
------------------------------------------------------
Revenue
Product $ 226,064 $ 190,166 19% $ 445,113 $ 371,423 20%
Services 37,026 73,798 -50% 80,292 153,818 -48%
Maintenance 81,730 83,611 -2% 164,129 166,991 -2%
-------------------- --------------------
Total revenue 344,820 347,575 -1% 689,534 692,232 0%
-------------------- --------------------
Costs and Expenses
Cost of product 16,017 21,820 -27% 34,117 43,483 -22%
Cost of services 28,784 48,765 -41% 61,550 102,481 -40%
Cost of
maintenance 17,340 15,918 9% 33,768 32,876 3%
Marketing
and sales 96,170 96,163 0% 192,951 189,650 2%
Research and
development 78,255 73,902 6% 156,445 144,882 8%
General and
administrative 25,552 27,454 -7% 51,982 58,209 -11%
-------------------- --------------------
Total costs and
expenses 262,118 284,022 -8% 530,813 571,581 -7%
-------------------- --------------------
Income from
operations 82,702 63,553 158,721 120,651
Other
income, net 178 536 5,181 158
-------------------- --------------------
Income before
provision
for income taxes 82,880 64,089 163,902 120,809
Provision for
income taxes 21,549 16,984 42,615 32,015
-------------------- --------------------
Net income $ 61,331 $ 47,105 $ 121,287 $ 88,794
==================== ====================
Diluted net
income per
share $ 0.24 $ 0.18 $ 0.47 $ 0.34
==================== ====================
Weighted average
common and
potential
common shares
outstanding -
assuming
dilution 258,660 259,564 0% 259,734 257,623 1%
==================== ====================
Cadence Design Systems, Inc.
Reconciliation of Pro Forma and GAAP Net Income
For the Quarters and Six Months
Ended June 29, 2002 and June 30, 2001
(In $000's)
The following pro forma supplemental information provides a
reconciliation between pro forma operating income and net income
according to generally accepted accounting principles (GAAP). This pro
forma information is not prepared in accordance with GAAP.
Quarters Ended Six Months Ended
-------------------- --------------------
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
-----------------------------------------
Pro forma operating income $ 61,331 $ 47,105 $121,287 $ 88,794
Reconciling items to GAAP Net loss
Restructure expense (69,328) (39,598) (87,036) (41,098)
Write-off of in-process R&D (27,400) (1,000) (27,400) (13,100)
Amortization of acquired
intangibles (19,048) (25,928) (37,697) (47,920)
Write-down of equity
investments to fair value (10,000) - (10,000) -
Amortization of deferred
stock compensation (7,454) (7,175) (10,947) (13,115)
Legal costs - - (11,100) -
Diablo goodwill write-off - (25,834) - (25,834)
Tality IPO fees and
separation costs - (1,272) - (4,756)
Income tax effect of
reconciling items 25,578 24,813 37,917 31,962
-------------------- --------------------
GAAP Net loss $ (46,321) $(28,889) $(24,976) $(25,067)
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