10/25/2004 - Cadence announced total revenue for the third quarter of 2004 of $302 million compared to $269 million in the same period last year. On a GAAP basis, Cadence recognised net income of $20 million, or $0.07 per share in the third quarter of 2004, compared to a net loss of $14 million, or $0.05 per share in the same period last year.
In addition to using GAAP results in evaluating Cadence's business, management also believes it is useful to measure results using a non-GAAP measure of net income (loss), which excludes, as applicable, amortisation of intangible assets and deferred stock compensation, in-process research and development charges, integration and other acquisition-related expenses, restructuring charges and equity in losses (income) from investments. Non-GAAP net income (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 our non-GAAP measure. Using this non-GAAP measure, earnings in the third quarter were $52 million, or $0.19 per share, on a fully diluted basis as compared to $34 million, or $0.12 per share, on a fully diluted basis, in the same period last year.
"Cadence once again executed to plan, delivering consistent performance in an environment that remains challenging," said Michael J. Fister, Cadence President and CEO. "By partnering with our customers to help them tackle their biggest design challenges, we continue to gain traction with our world-class technology."
Business Highlights of Q3 2004
Cadence continued its advance in the digital IC design space. Cadence Encounter 4.1, introduced last quarter, has been adopted by more than half the company's digital customers. AMI Semiconductor chose Encounter over a competitor's offerings because of the ease of integrating digital and analog design through a common database. NEC Electronics agreed to adopt Encounter 4.1 and the Cadence Virtuoso custom design platform.
The Cadence Palladium accelerator/emulator, an integral component in the Incisive functional verification platform, has replaced competitors' offerings at a number of companies, including ATI and Broadcom.
"Our customers are increasingly receptive to the technology and customer-centric philosophy Cadence brings to the table," Fister said. "Our successes this past quarter have been driven by our broad product mix, deep partnerships and an outstanding global employee base passionate about customer success."
The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not include the impact of any mergers, acquisitions or other business combinations that may be completed after October 20, 2004.
In August 2003, Cadence issued $420 million of senior notes convertible into common stock. Subsequent to the issuance of the notes the Emerging Issues Task Force (or EITF) reached a consensus on Issue No. 04-08 "Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per Share". This consensus, which is expected to be effective during the fourth quarter of 2004, will require Cadence to include in the calculation of its fully diluted earnings per share an additional 26.8 million shares of its common stock. Therefore, earnings per share on a fully diluted basis as presented in this Outlook include the expected impact of EITF 04-08.
For the fourth quarter of 2004, the company expects total revenue in the range of $335 million to $345 million. Fourth quarter GAAP earnings per fully diluted share are expected to be in the range of $0.16 to $0.18, including a $0.02 reduction for the impact of EITF 04-08. Diluted earnings per share using our non-GAAP measure defined below are expected to be in the range of $0.24 to $0.26, including a $0.03 reduction for the impact of EITF 04-08.
For the full year 2004, the company expects total revenue in the range of $1.190 billion to $1.200 billion. On a GAAP basis, we expect net income per fully diluted share for fiscal 2004 in the range of $0.21 to $0.23, including a $0.02 reduction for the impact of EITF 04-08. Using our non-GAAP measure defined below, we expect fully diluted earnings per share for fiscal 2004 to be in the range of $0.63 to $0.65, including a $0.07 reduction for the impact of EITF 04-08.
A schedule showing a reconciliation of the business outlook from GAAP net income (loss) and diluted net income (loss) per share to our non-GAAP net income and diluted net income per share, as well as a reconciliation showing the effect of EITF 04-08, is included with this release.
Audio Webcast Scheduled
Cadence Design Systems, Inc.'s H. Raymond Bingham, Executive Chairman of the Board, Michael J. Fister, President and Chief Executive Officer, and William Porter, Chief Financial Officer, will host a third quarter Financial Results audio webcast today, October 20, 2004, at 2:00 p.m. (Pacific) / 5:00 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 October 20, 2004 at 5:00 p.m. Pacific time and ending at 5:00 p.m. Pacific time on October 27, 2004. Webcast access is available at www.cadence.com/company/investor_relations.
Cadence is the world's largest supplier of electronic design technologies and engineering services. Cadence products and services are used to accelerate and manage the design of semiconductors, computer systems, networking equipment, telecommunications equipment, consumer electronics, and other electronics-based products. With approximately 4,850 employees and 2003 revenues of approximately $1.1 billion, Cadence has sales offices, design centers, and research facilities around the world. The company is headquartered in San Jose, Calif., and trades on both the New York Stock Exchange and the NASDAQ National Market under the symbol CDN. More information is available at www.cadence.com.
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