Cadence Reports Fourth Quarter and Fiscal Year 2014 Financial Results

SAN JOSE, Calif., Feb. 4, 2015 /PRNewswire/ -- Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the fourth quarter and fiscal year 2014.

Cadence reported fourth quarter 2014 revenue of $423 million, compared to revenue of $377 million reported for the same period in 2013.  On a GAAP basis, Cadence recognized net income of $65 million, or $0.21 per share on a diluted basis, in the fourth quarter of 2014, compared to net income of $38 million, or $0.13 per share on a diluted basis, for the same period in 2013.  Revenue for 2014 totaled $1.581 billion, compared to revenue of $1.460 billion for 2013.  Net income for 2014 was $159 million, or $0.52 per share on a diluted basis, compared to net income of $164 million, or $0.56 per share on a diluted basis, for 2013.

Using the non-GAAP measure defined below, net income in the fourth quarter of 2014 was $84 million, or $0.27 per share on a diluted basis, as compared to net income of $67 million, or $0.23 per share on a diluted basis, for the same period in 2013.  For 2014, non-GAAP net income was $287 million, or $0.94 per share on a diluted basis, compared to non-GAAP net income of $252 million, or $0.86 per share on a diluted basis, in 2013.

"Fiscal 2014 was a year of excellent progress for our system design enablement strategy for end-product design, as we delivered a growing set of innovative solutions to our expanding systems and SoC customer base," said Lip-Bu Tan, president and chief executive officer.  "Our digital and signoff solutions gained momentum with market-shaping customers, and our IP business had a breakout year with revenue growth of nearly 40 percent.  As we look ahead, we are confident that our strategy and commitment to innovation will continue to drive meaningful customer wins."

"Our focus on execution drove solid financial results in Q4 and throughout 2014," added Geoff Ribar, senior vice president and chief financial officer.  "We are committed to driving efficiency, productivity and sustainable profitability over the long-term as we work to meet the needs of our ongoing business, invest in future growth opportunities and return cash to shareholders under our recently expanded stock repurchase program."

Business Outlook

For the first quarter of 2015, the company expects total revenue in the range of $405 million to $415 million.  First quarter GAAP net income per diluted share is expected to be in the range of $0.08 to $0.10.  Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.20 to $0.22.

For 2015, the company expects total revenue in the range of $1.680 billion to $1.720 billion.  On a GAAP basis, net income per diluted share for 2015 is expected to be in the range of $0.49 to $0.61.  Using the non-GAAP measure defined below, net income per diluted share for 2015 is expected to be in the range of $0.94 to $1.06.

For 2015, the company is forecasting a non-GAAP income tax rate of 23 percent, down from 26 percent used in fiscal 2014, based on forecasted increases in foreign earnings that are expected to lower Cadence's long-term non-GAAP effective income tax rate.

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 fourth quarter and fiscal year 2014 financial results audio webcast today, February 4, 2015, 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 February 4, 2015 at 5 p.m. (Pacific) and ending March 20, 2015 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.

Cadence and the Cadence logo are registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.

The statements contained above regarding Cadence's fourth quarter and fiscal year 2014 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 Securities and Exchange Commission.  These include Cadence's most recent reports on Form 10-K and Form 10-Q, including Cadence's future filings.

GAAP to Non-GAAP Reconciliation

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, and is calculated by taking GAAP net income and excluding, as applicable, amortization and sale of intangible assets and debt discount related to our convertible notes, stock-based compensation expense, acquisition and integration-related costs including changes in fair value of contingent consideration and retention expenses for employees added from our 2013 and 2014 acquisitions, special charges (comprised of costs related to a voluntary retirement program and executive severance costs), 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.

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