CADENCE DESIGN SYSTEMS, INC. SAN JOSE, Calif., April 24, 2017 /PRNewswire/ -- Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the first quarter 2017.
Cadence reported first quarter 2017 revenue of $477 million, compared to revenue of $448 million reported for the same period in 2016. On a GAAP basis, Cadence recognized net income of $68 million, or $0.25 per share on a diluted basis, in the first quarter of 2017, compared to net income of $51 million, or $0.17 per share on a diluted basis, for the same period in 2016.
Using the non-GAAP measure defined below, net income in the first quarter of 2017 was $89 million, or $0.32 per share on a diluted basis, as compared to net income of $86 million, or $0.28 per share on a diluted basis, for the same period in 2016.
"Consistent execution enabled Cadence to deliver strong results. Innovation is at the heart of our success and we have introduced three significant new products so far in 2017: Xcelium(TM) for parallel logic simulation, Protium(TM) S1 for advanced FPGA-based prototyping and Pegasus(TM) Verification System, a next generation physical verification solution," said Lip-Bu Tan, president and chief executive officer. "Additionally, our digital and signoff solutions continue to proliferate with market-shaping customers for the most complex designs at the most advanced nodes."
"Cadence met or exceeded its key operating metrics in the first quarter, and we are maintaining our outlook for the fiscal year," said Geoff Ribar, senior vice president and chief financial officer.
CFO Commentary
Commentary on the first quarter 2017 financial results by Geoff Ribar, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
Business Outlook
For the second quarter of 2017, the company expects total revenue in the range of $470 million to $480 million. Second quarter GAAP net income per diluted share is expected to be in the range of $0.20 to $0.22. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.31 to $0.33.
For 2017, the company expects total revenue in the range of $1.900 billion to $1.950 billion. On a GAAP basis, net income per diluted share for 2017 is expected to be in the range of $0.93 to $1.03. Using the non-GAAP measure defined below, net income per diluted share for 2017 is expected to be in the range of $1.32 to $1.42.
A schedule showing a reconciliation of the business outlook from GAAP net income and diluted net income per share to non-GAAP net income and diluted net income per share is included in this release.
Audio Webcast Scheduled
Lip-Bu Tan, president and chief executive officer, and Geoff Ribar, senior vice president and chief financial officer, will host a first quarter 2017 financial results audio webcast today, April 24, 2017, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting April 24, 2017 at 5 p.m. (Pacific) and ending June 16, 2017 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.
About Cadence
Cadence enables global electronic design innovation and plays an essential role in the creation of today's integrated circuits and electronics. Customers use Cadence(®) software, hardware, IP, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. The company is headquartered in San Jose, California, with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about the company and its products and services is available at www.cadence.com.
Cadence, the Cadence logo, Xcelium, Protium and Pegasus are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
The statements contained above regarding Cadence's first quarter 2017 financial results, as well as the information in the Business Outlook section, are or include forward-looking statements based on current expectations or beliefs and 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. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence's control, including, among others: (i) Cadence's ability to compete successfully in the electronic design automation product and the commercial electronic design and methodology services industries; (ii) the success of Cadence's efforts to improve operational efficiency and growth; (iii) the mix of products and services sold and the timing of significant orders for Cadence's products; (iv) change in customer demands, including those resulting from consolidation among Cadence's customers and the possibility that the restructurings and other efforts to improve operational efficiency of Cadence's customers could result in delays in purchases of Cadence's products and services; (v) economic and industry conditions in regions in which Cadence does business; (vi) fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in which Cadence does business; (vii) capital expenditure requirements, legislative or regulatory requirements, interest rates and Cadence's ability to access capital and debt markets; (viii) the acquisition of other companies or technologies or the failure to successfully integrate and operate these companies or technologies Cadence acquires, including the potential inability to retain customers, key employees or vendors; (ix) the effects of Cadence's efforts to improve operational efficiency in its business, including strategic, customer and supplier relationships, and its ability to retain key employees; (x) events that affect cash flow, liquidity, reserves or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation or other matters; and (xi) the effects of any litigation or other proceedings to which Cadence is or may become a party.
For a detailed discussion of these and other cautionary statements related to Cadence's business, please refer to Cadence's filings with the U.S. Securities and Exchange Commission, which include Cadence's most recent reports on Form 10-K and Form 10-Q, including Cadence's future filings.
GAAP to Non-GAAP Reconciliation
Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.
To supplement Cadence's financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence's performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, investment gains or losses, income or expenses related to Cadence's non-qualified deferred compensation plan, restructuring and other significant items not directly related to Cadence's core business operations, and the income tax effect of non-GAAP pre-tax adjustments.
Cadence's management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company's core business operations and therefore provides supplemental information to Cadence's management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence's management, including forecasting and budgeting.
The following tables reconcile the specific items excluded from GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
Net Income Reconciliation Three Months Ended
April 1, 2017 April 2,
2016
------------- ---------
(unaudited)
(in thousands)
Net income on a GAAP
basis $68,259 $50,562
Amortization of acquired
intangibles 14,434 16,443
Stock-based compensation
expense 27,436 24,632
Non-qualified deferred
compensation expenses
(credits) 1,269 (83)
Restructuring and other
charges (credits) (1,788) 14,586
Acquisition and
integration-related
costs 1,357 804
Other income or expense
related to investments
and non-qualified
deferred compensation
plan assets* (1,228) (2,617)
Income tax effect of non-
GAAP adjustments (20,679) (18,698)
------- -------
Net income on a non-GAAP
basis $89,060 $85,629
======= =======
* Includes, as applicable, equity in
losses or income from
investments, write-down of
investments, gains or losses on
sale of investments and gains or
losses on non-qualified deferred
compensation plan assets recorded
in other income or expense.
Diluted Net Income per Share
Reconciliation Three Months Ended
April 1, 2017 April 2,
2016
------------- ---------
(unaudited)
(in thousands, except per
share data)
Diluted net income per share
on a GAAP basis $0.25 $0.17
Amortization of acquired
intangibles 0.05 0.05
Stock-based compensation
expense 0.10 0.08
Non-qualified deferred
compensation expenses
(credits) - -
Restructuring and other
charges (credits) (0.01) 0.05
Acquisition and integration-
related costs - -
Other income or expense
related to investments and
non-qualified deferred
compensation plan assets* - (0.01)
Income tax effect of non-
GAAP adjustments (0.07) (0.06)
----- -----
Diluted net income per share
on a non-GAAP basis $0.32 $0.28
===== =====
Shares used in calculation of
diluted net income per share
-GAAP** 277,736 303,434
Shares used in calculation of
diluted net income per share
- non-GAAP** 277,736 303,434
* Includes, as applicable, equity in
losses or income from
investments, write-down of
investments, gains or losses on
sale of investments and gains or
losses on non-qualified deferred
compensation plan assets recorded
in other income or expense.
** Shares used in the
calculation of GAAP net
income per share are
expected to be the same as
shares used in the
calculation of non-GAAP
net income per share,
except when the company
reports a GAAP net loss
and non-GAAP net income,
or GAAP net income and a
non-GAAP net loss.
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 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 website.
Prior to the start of the Quiet Period (described below), the public may continue to rely on the business outlook contained herein as still being Cadence's current expectations on matters covered unless Cadence publishes a notice stating otherwise.
Beginning June 16, 2017, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the most recent Annual Report on Form 10-K and 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 historical, speaking as of prior to the Quiet Period only and not subject to any update by the company. During the Quiet Period, Cadence's representatives will not comment on Cadence's business outlook, financial results or expectations. The Quiet Period will extend until the day when Cadence's second quarter 2017 earnings release is published, which is currently scheduled for July 24, 2017.
For more information, please contact:
Investors and Shareholders
Alan Lindstrom
Cadence Design Systems, Inc.
408-944-7100
investor_relations@cadence.com
Media and Industry Analysts
Craig Cochran
Cadence Design Systems, Inc.
408-944-7039
newsroom@cadence.com
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
April 1, 2017 and December 31, 2016
(In thousands)
(Unaudited)
April 1, 2017 December 31, 2016
------------- -----------------
Current assets:
Cash and cash equivalents $544,128 $465,232
Short-term investments 3,479 3,057
Receivables, net 180,571 157,171
Inventories 30,734 39,475
Prepaid expenses and other 41,092 37,099
--------------
Total current assets 800,004 702,034
Property, plant and equipment, net of accumulated
depreciation of $623,185 and $612,961,
respectively 243,949 238,607
Goodwill 574,545 572,764
Acquired intangibles, net of accumulated amortization of
$254,949 and $267,723, respectively 244,445 258,814
Long-term receivables 13,127 12,949
Other assets 315,128 311,740
-------
Total assets $2,191,198 $2,096,908
========== ==========
Current liabilities:
Revolving credit facility $50,000 $50,000
Accounts payable and accrued liabilities 193,978 239,496
Current portion of deferred revenue 331,848 296,066
--------------
Total current liabilities 575,826 585,562
------- -------
Long-term liabilities:
Long-term portion of deferred revenue 66,399 66,769
Long-term debt 643,709 643,493
Other long-term liabilities 64,672 59,314
Total long-term liabilities 774,780 769,576
------- -------
Stockholders' equity 840,592 741,770
Total liabilities and stockholders' equity $2,191,198 $2,096,908
========== ==========
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months Ended April 1, 2017 and April 2, 2016
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
------------------
April 1, 2017 April 2, 2016
------------- -------------
Revenue:
Product and
maintenance $451,407 $411,744
Services 25,504 36,118
Total
revenue 476,911 447,862
------- -------
Costs and expenses:
Cost of product and
maintenance 43,717 44,181
Cost of
services 18,075 17,873
Marketing and
sales 103,347 99,200
Research and
development 198,286 179,906
General and
administrative 31,816 28,300
Amortization of
acquired
intangibles 3,856 5,780
Restructuring and
other charges
(credits) (1,788) 14,586
-------
Total costs
and expenses 397,309 389,826
------- -------
Income from
operations 79,602 58,036
Interest
expense (6,479) (5,357)
Other income,
net 1,059 4,763
Income
before
provision
for income
taxes 74,182 57,442
Provision for
income taxes 5,923 6,880
Net
income $68,259 $50,562
======= =======
Net income per share - basic $0.25 $0.17
===== =====
Net income per share - diluted $0.25 $0.17
===== =====
Weighted average common shares outstanding -
basic 270,173 296,615
======= =======
Weighted average common shares outstanding -
diluted 277,736 303,434
======= =======
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended April 1, 2017 and April 2, 2016
(In thousands)
(Unaudited)
Three Months Ended
------------------
April 1, April 2,
2017 2016
---- ----
Cash and cash equivalents
at beginning of period $465,232 $616,686
Cash flows from operating
activities:
Net income 68,259 50,562
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 28,894 31,231
Amortization of debt
discount and fees 350 255
Stock-based compensation 27,436 24,632
Gain on investments, net (1,228) (2,617)
Deferred income taxes 1,990 1,623
Other non-cash items 1,359 209
Changes in operating assets
and liabilities, net of
effect of acquired
businesses:
Receivables (22,475) 11,618
Inventories 6,000 (3,714)
Prepaid expenses and other (3,777) (10,132)
Other assets (3,657) (3,595)
Accounts payable and
accrued liabilities (46,159) (42,557)
Deferred revenue 34,325 30,710
Other long-term
liabilities 1,113 (5,034)
Net cash provided by
operating activities 92,430 83,191
------ ------
Cash flows from investing
activities:
Purchases of available-
for-sale securities - (20,525)
Proceeds from the sale of
available-for-sale
securities 107 1,000
Proceeds from the maturity
of available-for-sale
securities - 19,000
Proceeds from the sale of
long-term investments - 2,583
Purchases of property,
plant and equipment (14,843) (12,116)
Cash paid in business
combinations and asset
acquisitions, net of cash
acquired - (3,853)
Net cash used for investing
activities (14,736) (13,911)
------- -------
Cash flows from financing
activities:
Proceeds from term loan - 300,000
Proceeds from revolving
credit facility 50,000 50,000
Payment on revolving credit
facility (50,000) -
Payment of debt issuance
costs (793) (542)
Proceeds from issuance of
common stock 22,715 24,200
Stock received for payment
of employee taxes on
vesting of restricted
stock (22,470) (15,225)
Payments for repurchases of
common stock - (240,000)
Net cash provided by (used
for) financing activities (548) 118,433
---- -------
Effect of exchange rate
changes on cash and cash
equivalents 1,750 6,001
----- -----
Increase in cash and cash
equivalents 78,896 193,714
------ -------
Cash and cash equivalents
at end of period $544,128 $810,400
======== ========
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by
Geography (% of
Total Revenue)
2016 2017
---- ----
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1
--------- --- --- --- --- ---- ---
Americas 49% 47% 46% 48% 48% 45%
Asia 22% 24% 27% 25% 24% 26%
Europe, Middle East
and Africa 19% 20% 19% 19% 19% 20%
Japan 10% 9% 8% 8% 9% 9%
Total 100% 100% 100% 100% 100% 100%
Revenue Mix by
Product Group (%
of Total Revenue)
2016 2017
---- ----
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1
------------- --- --- --- --- ---- ---
Functional
Verification,
including
Emulation and
Prototyping
Hardware 26% 27% 24% 25% 25% 23%
Digital IC Design
and Signoff 30% 27% 28% 30% 29% 29%
Custom IC Design 25% 26% 27% 25% 25% 26%
System Interconnect
and Analysis 9% 10% 10% 9% 10% 10%
IP 10% 10% 11% 11% 11% 12%
Total 100% 100% 100% 100% 100% 100%
Cadence Design Systems, Inc.
As of April 24, 2017
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
(Unaudited)
Three Months Ending Year Ending
July 1, 2017 December 30, 2017
Forecast Forecast
-------- --------
Diluted net income per share on a GAAP basis $0.20 to $0.22 $0.93 to $1.03
Amortization of acquired intangibles 0.05 0.20
Stock-based compensation expense 0.11 0.46
Non-qualified deferred compensation expenses - -
Restructuring and other charges (credits) - (0.01)
Acquisition and integration-related costs - 0.01
Other income or expense related to investments and non-qualified
deferred compensation plan assets* - -
Income tax effect of non-GAAP adjustments (0.05) (0.27)
Diluted net income per share on a non-GAAP basis** $0.31 to $0.33 $1.32 to $1.42
============== ==============
Cadence Design Systems, Inc.
As of April 24, 2017
Impact of Non-GAAP Adjustments on Forward Looking Net Income
(Unaudited)
Three Months Ending Year Ending
July 1, 2017 December 30, 2017
($ in millions) Forecast Forecast
-------- --------
Net income on a GAAP basis $56 to $62 $259 to $287
Amortization of acquired intangibles 14 56
Stock-based compensation expense 31 128
Non-qualified deferred compensation expenses - 1
Restructuring and other charges (credits) - (2)
Acquisition and integration-related costs 1 3
Other income or expense related to investments and non-qualified
deferred compensation plan assets* - (1)
Income tax effect of non-GAAP adjustments (15) (76)
Net income on a non-GAAP basis** $87 to $93 $368 to $396
========== ============
**The non-GAAP
measures
presented in
the table above
should not be
considered a
substitute for
financial
results and
measures
determined or
calculated in
accordance with
GAAP.
* Includes, as
applicable,
equity in
losses or
income from
investments,
write-down of
investments,
gains or losses
on sale of
investments and
gains or losses
on non-
qualified
deferred
compensation
plan assets
recorded in
other income or
expense.
SOURCE CDNS-IR
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cadence-reports-first-quarter-2017-financial-results-300444466.html
SOURCE Cadence Design Systems, Inc.
