CADENCE DESIGN SYSTEMS, INC. 
SAN JOSE, Calif., April 25, 2016 /PRNewswire/ -- Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the first quarter 2016.
http://photos.prnewswire.com/prnvar/20140102/SF39436LOGO
Cadence reported first quarter 2016 revenue of $448 million, compared to revenue of $411 million reported for the same period in 2015. On a GAAP basis, Cadence recognized net income of $51 million, or $0.17 per share on a diluted basis, in the first quarter of 2016, compared to net income of $36 million, or $0.12 per share on a diluted basis, for the same period in 2015.
Using the non-GAAP measure defined below, net income in the first quarter of 2016 was $86 million, or $0.28 per share on a diluted basis, as compared to net income of $72 million, or $0.23 per share on a diluted basis, for the same period in 2015.
"In the first quarter of 2016, we continued to innovate and execute to drive growth and deliver results for our customers. With customers enthusiastically embracing our Palladium(® )Z1 Enterprise Emulation Platform, Cadence achieved its best quarter ever for hardware revenue. Additionally, the release of the next-generation Virtuoso(® )platform sets a new standard for analog and mixed-signal design for broad applications including automotive and IoT," said Lip-Bu Tan, president and chief executive officer. "Our recently announced pending acquisition of Rocketick Technologies will further strengthen our System Design Enablement strategy by delivering ultra-high-performance simulation to accelerate the development of complete end-product systems."
"Strong execution at all levels of the company enabled Cadence to produce solid financial results in an environment that remains challenging," said Geoff Ribar, senior vice president and chief financial officer. "During Q1, we repurchased 11.6 million shares for $240 million, reducing shares outstanding to 301 million at quarter-end."
CFO Commentary
Commentary on the first quarter 2016 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 2016, the company expects total revenue in the range of $445 million to $455 million. Second quarter GAAP net income per diluted share is expected to be in the range of $0.17 to $0.19. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.27 to $0.29.
For 2016, the company expects total revenue in the range of $1.790 billion to $1.840 billion. On a GAAP basis, net income per diluted share for 2016 is expected to be in the range of $0.71 to $0.81. Using the non-GAAP measure defined below, net income per diluted share for 2016 is expected to be in the range of $1.15 to $1.25.
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 2016 financial results audio webcast today, April 25, 2016, 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 25, 2016 at 5 p.m. (Pacific) and ending June 17, 2016 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, Palladium and Virtuoso 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 2016 financial results, as well as the information in the Business Outlook section and the statements by Lip-Bu Tan and Geoff Ribar, 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 the reserves or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes, 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 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 generally accepted accounting principles, or 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 and debt discount related to convertible notes, stock-based compensation expense, acquisition and integration-related costs including retention expenses, special charges, 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 2, 2016 April 4, 2015
------------- -------------
(unaudited)
(in thousands)
Net income on a
GAAP basis $50,562 $36,259
Amortization of
acquired
intangibles 16,443 16,404
Stock-based
compensation
expense 24,632 21,861
Non-qualified
deferred
compensation
expenses
(credits) (83) 527
Restructuring
and other
charges 14,586 4,359
Acquisition and
integration-
related costs 804 3,750
Amortization of
debt discount
on convertible
notes - 5,026
Other income or
expense related
to investments
and non-
qualified
deferred
compensation
plan assets* (2,617) (1,263)
Income tax
effect of non-
GAAP
adjustments (18,698) (15,331)
------- -------
Net income on a
non-GAAP basis $85,629 $71,592
======= =======
* 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 2,
2016
April 4,
2015
---------
(unaudited)
(in thousands, except per share
data)
Diluted net income per share on
a GAAP basis $0.17 $0.12
Amortization of acquired
intangibles 0.05 0.05
Stock-based compensation expense 0.08 0.07
Non-qualified deferred
compensation expenses (credits) - -
Restructuring and other charges 0.05 0.01
Acquisition and integration-
related costs - 0.01
Amortization of debt discount on
convertible notes - 0.02
Other income or expense related
to investments and non-
qualified deferred compensation
plan assets* (0.01) -
Income tax effect of non-GAAP
adjustments (0.06) (0.05)
----- -----
Diluted net income per share on
a non-GAAP basis $0.28 $0.23
===== =====
Shares used in calculation of
diluted net income per share -
GAAP** 303,434 311,847
Shares used in calculation of
diluted net income per share -
non-GAAP** 303,434 311,847
* 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 17, 2016, 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 2016 earnings release is published, which is currently scheduled for July 25, 2016.
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 2, 2016 and January 2, 2016
(In thousands)
(Unaudited)
April 2, 2016 January 2, 2016
------------- ---------------
(As Adjusted)*
Current assets:
Cash and cash
equivalents $810,400 $616,686
Short-term
investments 96,317 94,498
Receivables,
net 147,533 164,848
Inventories 56,634 56,762
Prepaid
expenses and
other 41,360 31,441
-------------
Total current assets 1,152,244 964,235
Property, plant and
equipment, net of
accumulated
depreciation of
$592,978 and $581,345,
respectively 231,180 228,599
Goodwill 551,897 551,772
283,825 296,482
Acquired intangibles, net of
accumulated amortization of $224,474
and $216,589, respectively
Long-term receivables 11,365 4,498
Other assets 308,513 299,929
-------
Total assets $2,539,024 $2,345,515
========== ==========
Current liabilities:
Revolving
credit
facility $50,000 $ -
Accounts
payable and
accrued
liabilities 195,216 238,022
Current
portion of
deferred
revenue 322,684 298,285
-----------
Total current liabilities 567,900 536,307
------- -------
Long-term liabilities:
Long-term
portion of
deferred
revenue 38,447 30,209
Long-term
debt 642,862 343,288
Other long-
term
liabilities 55,763 59,596
Total long-term
liabilities 737,072 433,093
------- -------
Stockholders' equity 1,234,052 1,376,115
Total liabilities and
stockholders' equity $2,539,024 $2,345,515
========== ==========
* Adjusted for
the
retrospective
adoption of
ASU 2015-03,
"Simplifying
the
Presentation
of Debt
Issuance
Costs,"
during the
three months
ended April
2, 2016.
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months Ended April 2, 2016 and April 4, 2015
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
------------------
April 2, 2016 April 4, 2015
------------- -------------
Revenue:
Product and
maintenance $411,744 $383,637
Services 36,118 27,729
------
Total revenue 447,862 411,366
------- -------
Costs and expenses:
Cost of product
and maintenance 44,181 42,059
Cost of services 17,873 18,526
Marketing and
sales 99,200 100,268
Research and
development 179,906 162,996
General and
administrative 28,300 27,642
Amortization of
acquired
intangibles 5,780 6,231
Restructuring and
other charges 14,586 4,359
------
Total costs
and expenses 389,826 362,081
------- -------
Income from operations 58,036 49,285
Interest expense (5,357) (11,754)
Other income, net 4,763 4,781
-----
Income before provision for
income taxes 57,442 42,312
Provision for
income taxes 6,880 6,053
-----
Net income $50,562 $36,259
======= =======
Net income per share - basic $0.17 $0.13
===== =====
Net income per share - diluted $0.17 $0.12
===== =====
Weighted average common shares
outstanding -basic 296,615 284,523
======= =======
Weighted average common shares
outstanding -diluted 303,434 311,847
======= =======
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended April 2, 2016 and April 4, 2015
(In thousands)
(Unaudited)
Three Months Ended
------------------
April 2, April 4,
2016 2015
---- ----
Cash and cash equivalents
at beginning of period $616,686 $932,161
Cash flows from operating
activities:
Net income 50,562 36,259
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 31,231 29,433
Amortization of debt
discount and fees 255 5,945
Stock-based compensation 24,632 21,861
Gain on investments, net (2,617) (1,270)
Deferred income taxes 1,623 1,864
Other non-cash items 209 929
Changes in operating assets
and liabilities, net of
effect of acquired
businesses:
Receivables 11,618 (12,450)
Inventories (3,714) 1,682
Prepaid expenses and other (10,132) (10,004)
Other assets (3,595) 3,627
Accounts payable and
accrued liabilities (42,557) (44,754)
Deferred revenue 30,710 16,812
Other long-term
liabilities (5,034) (3,246)
Net cash provided by
operating activities 83,191 46,688
------ ------
Cash flows from investing
activities:
Purchases of available-
for-sale securities (20,525) (33,161)
Proceeds from the sale of
available-for-sale
securities 1,000 20,551
Proceeds from the maturity
of available-for-sale
securities 19,000 10,350
Proceeds from the sale of
long-term investments 2,583 1,364
Purchases of property,
plant and equipment (12,116) (7,520)
Cash paid in business
combinations and asset
acquisitions, net of cash
acquired (3,853) -
Net cash used for investing
activities (13,911) (8,416)
------- ------
Cash flows from financing
activities:
Proceeds from term loan 300,000 -
Proceeds from revolving
credit facility 50,000 -
Payment of convertible
notes - (53,862)
Payment of convertible
notes embedded conversion
derivative liability - (77,139)
Proceeds from convertible
notes hedges - 77,139
Payment of debt issuance
costs (542) -
Excess tax benefits from
stock-based compensation - 6,482
Proceeds from issuance of
common stock 24,200 24,609
Stock received for payment
of employee taxes on
vesting of restricted
stock (15,225) (14,114)
Payments for repurchases of
common stock (240,000) (36,797)
Net cash provided by (used
for) financing activities 118,433 (73,682)
------- -------
Effect of exchange rate
changes on cash and cash
equivalents 6,001 (9,015)
----- ------
Increase (decrease) in cash
and cash equivalents 193,714 (44,425)
------- -------
Cash and cash equivalents
at end of period $810,400 $887,736
======== ========
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by
Geography (% of
Total Revenue)
2015 2016
---- ----
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1
--------- --- --- --- --- ---- ---
Americas 47% 48% 48% 48% 47% 49%
Asia 24% 23% 25% 25% 24% 22%
Europe, Middle East
and Africa 19% 20% 18% 17% 19% 19%
Japan 10% 9% 9% 10% 10% 10%
Total 100% 100% 100% 100% 100% 100%
Revenue Mix by
Product Group (%
of Total Revenue)
2015 2016
---- ----
PRODUCT GROUP Q1 Q2 Q3 Q4 Year Q1
------------- --- --- --- --- ---- ---
Functional
Verification,
including
Emulation Hardware 23% 21% 23% 25% 23% 26%
Digital IC Design
and Signoff 28% 29% 28% 28% 28% 30%
Custom IC Design 27% 27% 26% 25% 26% 25%
System Interconnect
and Analysis 11% 11% 10% 10% 11% 9%
IP 11% 12% 13% 12% 12% 10%
Total 100% 100% 100% 100% 100% 100%
Cadence Design Systems, Inc.
As of April 25, 2016
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
(Unaudited)
Three Months Ending Year Ending
July 2, 2016 December 31, 2016
Forecast Forecast
-------- --------
Diluted net income per
share on a GAAP basis $0.17 to $0.19 $0.71 to $0.81
Amortization of acquired
intangibles 0.05 0.21
Stock-based compensation expense 0.09 0.37
Restructuring and other charges - 0.05
Acquisition and integration-
related costs - 0.02
Other income or expense related to
investments and non-qualified
deferred compensation plan
assets* - (0.01)
Income tax effect of non-GAAP
adjustments (0.04) (0.20)
Diluted net income per
share on a non-GAAP
basis** $0.27 to $0.29 $1.15 to $1.25
============== ==============
Cadence Design Systems, Inc.
As of April 25, 2016
Impact of Non-GAAP Adjustments on Forward Looking Net Income
(Unaudited)
Three Months Ending Year Ending
July 2, 2016 December 31, 2016
($ in millions) Forecast Forecast
-------- --------
Net income on a GAAP basis $49 to $55 $205 to $234
Amortization of acquired
intangibles 15 61
Stock-based compensation expense 25 109
Restructuring and other charges - 15
Acquisition and integration-
related costs 1 4
Other income or expense related to
investments and non-qualified
deferred compensation plan
assets* - (3)
Income tax effect of non-GAAP
adjustments (11) (57)
Net income on a non-GAAP
basis** $79 to $85 $334 to $363
========== ============
**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
Logo - http://photos.prnewswire.com/prnh/20140102/SF39436LOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cadence-reports-first-quarter-2016-financial-results-300256901.html
SOURCE Cadence Design Systems, Inc.
