Cadence Reports Q2 2010 Financial Results

SAN JOSE, Calif. , 28 Jul 2010

Click here for the Q2 2010 Financial Schedules.

Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the second quarter of fiscal year 2010.

Cadence reported second quarter 2010 revenue of $227 million, compared to revenue of $210 million reported for the same period in 2009. On a GAAP basis, Cadence recognized net income of $49 million, or $0.19 per share on a diluted basis, including $67 million in acquisition-related income tax benefit, in the second quarter of 2010, compared to a net loss of $74 million, or $(0.29) per share on a diluted basis, in the same period in 2009.

Using Cadence’s non-GAAP measure, net income in the second quarter of 2010 was $18 million, or $0.07 per share on a diluted basis, including the reversal of $10 million in bad debt reserves, as compared to a net loss of $13 million, or $(0.05) per share on a diluted basis, in the same period in 2009.

“The Cadence team executed and delivered solid results in the second quarter,” said Lip-Bu Tan, president and chief executive officer. “The combination of our strong technology portfolio with the closer collaboration of our sales and R&D teams is yielding results.”

“Business improved for us in all geographies, and the combination of stronger business performance and a lower expense base helped improve our top and bottom lines,” said Kevin S. Palatnik, senior vice president and chief financial officer.

In addition to using GAAP results to evaluate Cadence's business, management believes it is useful to measure results using a non-GAAP measure of net income or net loss, which excludes, as applicable, amortization of intangible assets, stock-based compensation expense, integration and acquisition-related costs, acquisition-related income tax benefits, shareholder litigation costs, gains or losses and expenses or credits related to non-qualified deferred compensation plan assets, restructuring charges and credits, amortization of discount on convertible notes, losses on extinguishment of debt, equity in losses or income from investments, write-down of investments, and gains or losses on the sale of investments. Non-GAAP net income or net loss is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company's tax liability. See "GAAP to non-GAAP Reconciliation" below for further information on the non-GAAP measure.

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Business Outlook

For the third quarter of 2010, the company expects total revenue in the range of $225 million to $235 million. Third quarter GAAP net loss per diluted share is expected to be in the range of $(0.08) to $(0.06). Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.01 to $0.03.

For the full year 2010, the company expects total revenue in the range of $900 million to $925 million. On a GAAP basis, net loss / net income per diluted share for fiscal 2010 is expected to be in the range of $(0.01) to $0.03. Using the non-GAAP measure defined below, net income per diluted share for fiscal 2010 is expected to be in the range of $0.12 to $0.16.

A schedule showing a reconciliation of the business outlook from GAAP net loss / net income and diluted net loss / net income per share to non-GAAP net income and diluted net income per share is included with this release.

Audio Webcast Scheduled

Lip-Bu Tan, Cadence’s president and chief executive officer, and Kevin S. Palatnik, Cadence’s senior vice president and chief financial officer, will host a second quarter of fiscal year 2010 financial results audio webcast today, July 28, 2010, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the Web site at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting July 28, 2010 at 5 p.m. (Pacific) and ending August 11, 2010 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 and hardware, methodologies, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. Cadence is headquartered in San Jose, Calif., with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about Cadence and its products and services is available at www.cadence.com.