Cadence Reports Q2 2011 Financial Results

SAN JOSE, Calif., 28 Jul 2011

Click here for the Q2 2011 Financial Schedules.

Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the second quarter of fiscal year 2011.

Cadence reported second quarter 2011 revenue of $283 million, compared to revenue of $227 million reported for the same period in 2010. On a GAAP basis, Cadence recognized net income of $27 million, or $0.10 per share on a diluted basis in the second quarter of 2011, compared to net income of $49 million, or $0.18 per share on a diluted basis in the same period in 2010. GAAP net income for the second quarter of 2010 included $67 million in acquisition-related tax benefits.

Using Cadence’s non-GAAP measure, net income in the second quarter of 2011 was $32 million, or $0.12 per share on a diluted basis, as compared to net income of $18 million, or $0.07 per share on a diluted basis in the same period in 2010.

“Demand for our products and services in the second quarter continued to be strong with run rates on renewals increasing,” said Lip-Bu Tan, president and chief executive officer. “We saw acceleration in adoption of our end-to-end digital solution at advanced nodes and very positive response to our new Cadence System Development Suite.”

“The Cadence team produced excellent operating results in Q2 as we met or exceeded expectations for our key operating metrics,” added Geoff Ribar, senior vice president and chief financial officer. “With the ongoing strength in our business we are adjusting upward our outlook for fiscal 2011.”

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, which excludes, as applicable, amortization of intangible assets, stock-based compensation expense, integration and acquisition-related costs, acquisition-related income tax benefits, income tax benefits related to the settlement of IRS examinations, shareholder litigation costs and charges, gains or losses and expenses or credits related to non-qualified deferred compensation plan assets, executive and other employee severance costs, 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 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 2011, the company expects total revenue in the range of $280 million to $290 million. Third quarter GAAP net income per diluted share is expected to be in the range of $0.04 to $0.06. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.11 to $0.13.

For the full year 2011, the company expects total revenue in the range of $1,115 million to $1,135 million. On a GAAP basis, net income per diluted share for fiscal year 2011 is expected to be in the range of $0.20 to $0.26. Using the non-GAAP measure defined below, net income per diluted share for fiscal year 2011 is expected to be in the range of $0.41 to $0.47.

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 with this release.

Audio Webcast Scheduled

Lip-Bu Tan, Cadence’s president and chief executive officer, and Geoff Ribar, Cadence’s senior vice president and chief financial officer, will host a second quarter of fiscal year 2011 financial results audio webcast today, July 28, 2011, 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 July 28, 2011 at 5 p.m. (Pacific) and ending August 11, 2011 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/company/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.