Cadence Reports Third Quarter 2016 Financial Results

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 generally accepted accounting principles, or 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 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



October 1, 2016


October 3, 2015



(unaudited)

(in thousands)





Net income on a GAAP basis


$

64,712


$

77,624

Amortization of acquired intangibles


14,482


15,794

Stock-based compensation expense


29,998


24,117

Non-qualified deferred compensation expenses (credits)


921


(1,508)

Restructuring and other charges


101


303

Acquisition and integration-related costs


1,841


948

Other income or expense related to investments and non-qualified deferred compensation plan assets*


(806)


174

Income tax effect of non-GAAP adjustments


(26,424)


(28,601)

Net income on a non-GAAP basis


$

84,825


$

88,851



*

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



October 1, 2016


October 3, 2015



(unaudited)

(in thousands, except per share data)





Diluted net income per share on a GAAP basis


$

0.23


$

0.25

Amortization of acquired intangibles


0.05


0.05

Stock-based compensation expense


0.10


0.08

Non-qualified deferred compensation expenses (credits)



(0.01)

Restructuring and other charges



Acquisition and integration-related costs


0.01


Other income or expense related to investments and non-qualified deferred compensation plan assets*



Income tax effect of non-GAAP adjustments


(0.09)


(0.09)

Diluted net income per share on a non-GAAP basis


$

0.30


$

0.28

Shares used in calculation of diluted net income per share — GAAP**


287,473


313,186

Shares used in calculation of diluted net income per share — non-GAAP**


287,473


313,186



*

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.


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