Cover Page
Cover Page | 3 Months Ended |
Apr. 02, 2022shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Apr. 2, 2022 |
Document Transition Report | false |
Entity File Number | 000-15867 |
Entity Registrant Name | CADENCE DESIGN SYSTEMS, INC. |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 00-0000000 |
Entity Address, Address Line One | 2655 Seely Avenue, Building 5, |
Entity Address, City or Town | San Jose, |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 95134 |
City Area Code | (408) |
Local Phone Number | 943-1234 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Title of 12(b) Security | Common Stock, $0.01 par value per share |
Trading Symbol | CDNS |
Security Exchange Name | NASDAQ |
Entity Common Stock, Shares Outstanding | 275,759,000 |
Entity Central Index Key | 0000813672 |
Amendment Flag | false |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | Q1 |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 1,134,752 | $ 1,088,940 |
Receivables, net | 361,789 | 337,596 |
Inventories | 110,213 | 115,721 |
Prepaid expenses and other | 128,143 | 173,512 |
Total current assets | 1,734,897 | 1,715,769 |
Property, plant and equipment, net | 310,690 | 305,911 |
Goodwill | 923,719 | 928,358 |
Acquired intangibles, net | 219,110 | 233,265 |
Deferred taxes | 787,111 | 763,770 |
Other assets | 419,540 | 439,226 |
Total assets | 4,395,067 | 4,386,299 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 360,547 | 417,283 |
Current portion of deferred revenue | 600,279 | 553,942 |
Total current liabilities | 960,826 | 971,225 |
Long-term liabilities: | ||
Long-term portion of deferred revenue | 106,838 | 101,148 |
Long-term debt | 347,792 | 347,588 |
Other long-term liabilities | 219,428 | 225,663 |
Total long-term liabilities | 674,058 | 674,399 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock and capital in excess of par value | 2,552,207 | 2,467,701 |
Treasury stock, at cost | (3,025,728) | (2,740,003) |
Retained earnings | 3,281,623 | 3,046,288 |
Accumulated other comprehensive loss | (47,919) | (33,311) |
Total stockholders’ equity | 2,760,183 | 2,740,675 |
Total liabilities and stockholders’ equity | $ 4,395,067 | $ 4,386,299 |
Condensed Consolidated Income S
Condensed Consolidated Income Statements - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Revenues [Abstract] | ||
Revenues | $ 901,766 | $ 736,028 |
Costs and Expenses: | ||
Marketing and sales | 140,186 | 132,826 |
Research and development | 290,895 | 270,992 |
General and administrative | 48,937 | 39,952 |
Amortization of acquired intangibles | 4,964 | 4,631 |
Restructuring | 12 | (277) |
Total costs and expenses | 582,837 | 532,091 |
Income from operations | 318,929 | 203,937 |
Interest expense | (4,108) | (4,217) |
Other income (expenses), net | (4,900) | 2,701 |
Income before provision for income taxes | 309,921 | 202,421 |
Provision for income taxes | 74,586 | 15,252 |
Net income | $ 235,335 | $ 187,169 |
Net income per share - basic (usd per share) | $ 0.86 | $ 0.68 |
Net Income per share - diluted (usd per share) | $ 0.85 | $ 0.67 |
Weighted average common shares outstanding - basic (in shares) | 272,431 | 274,021 |
Weighted average common shares outstanding - diluted (in shares) | 276,918 | 280,140 |
Product and maintenance [Member] | ||
Revenues [Abstract] | ||
Revenues | $ 846,244 | $ 699,054 |
Costs and Expenses: | ||
Cost of sales | 72,795 | 64,906 |
Service [Member] | ||
Revenues [Abstract] | ||
Revenues | 55,522 | 36,974 |
Costs and Expenses: | ||
Cost of sales | $ 25,048 | $ 19,061 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 235,335 | $ 187,169 |
Other comprehensive loss, net of tax effects: | ||
Foreign currency translation adjustments | (14,774) | (9,923) |
Changes in defined benefit plan liabilities | 166 | 311 |
Total other comprehensive loss, net of tax effects | (14,608) | (9,612) |
Comprehensive income | $ 220,727 | $ 177,557 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Common Stock, Par Value and Capital in Excess of Par | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss |
Beginning balance at Jan. 02, 2021 | $ 2,493,018 | $ 2,217,939 | $ (2,057,829) | $ 2,350,333 | $ (17,425) | |
Beginning balance, shares at Jan. 02, 2021 | 278,941 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 187,169 | 187,169 | ||||
Other comprehensive loss, net of taxes | $ (9,612) | (9,612) | ||||
Purchase of treasury stock, shares | (1,323) | (1,323) | ||||
Purchase of treasury stock | $ (172,267) | (172,267) | ||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures, shares | 1,024 | |||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures | 47,913 | 42,125 | 5,788 | |||
Stock received for payment of employee taxes on vesting of restricted stock, shares | (377) | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (56,385) | (4,695) | (51,690) | |||
Stock-based compensation expense | 52,596 | 52,596 | ||||
Ending balance at Apr. 03, 2021 | 2,542,432 | 2,307,965 | (2,275,998) | 2,537,502 | (27,037) | |
Ending balance, shares at Apr. 03, 2021 | 278,265 | |||||
Beginning balance at Jan. 01, 2022 | 2,740,675 | 2,467,701 | (2,740,003) | 3,046,288 | (33,311) | |
Beginning balance, shares at Jan. 01, 2022 | 276,796 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 235,335 | 235,335 | ||||
Other comprehensive loss, net of taxes | $ (14,608) | (14,608) | ||||
Purchase of treasury stock, shares | (1,566) | (1,566) | ||||
Purchase of treasury stock | $ (250,016) | (250,016) | ||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures, shares | 874 | |||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures | 45,671 | 31,402 | 14,269 | |||
Stock received for payment of employee taxes on vesting of restricted stock, shares | (345) | |||||
Stock received for payment of employee taxes on vesting of restricted stock | (56,343) | (6,365) | (49,978) | |||
Stock-based compensation expense | 59,469 | 59,469 | ||||
Ending balance at Apr. 02, 2022 | $ 2,760,183 | $ 2,552,207 | $ (3,025,728) | $ 3,281,623 | $ (47,919) | |
Ending balance, shares at Apr. 02, 2022 | 275,759 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Statement of Cash Flows [Abstract] | ||
Cash and cash equivalents at beginning of period | $ 1,088,940 | $ 928,432 |
Cash flows from operating activities: | ||
Net income | 235,335 | 187,169 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 34,825 | 36,218 |
Amortization of debt discount and fees | 268 | 264 |
Stock-based compensation | 59,469 | 52,596 |
(Gain) loss on investments, net | 2,038 | (1,433) |
Deferred income taxes | (24,920) | 2,710 |
Provisions for losses (recoveries) on receivables | (344) | 77 |
ROU asset amortization and change in operating lease liabilities | 926 | (2,136) |
Other non-cash items | 88 | 302 |
Changes in operating assets and liabilities, net of effect of acquired businesses: | ||
Receivables | (28,426) | (45,927) |
Inventories | 4,580 | (669) |
Prepaid expenses and other | 44,419 | (3,014) |
Other assets | 11,588 | 6,260 |
Accounts payable and accrued liabilities | (58,203) | (80,769) |
Deferred revenue | 56,225 | 59,166 |
Other long-term liabilities | (1,260) | (2,372) |
Net cash provided by operating activities | 336,608 | 208,442 |
Cash flows from investing activities: | ||
Purchases of non-marketable investments | (1,000) | 0 |
Purchases of property, plant and equipment | (18,130) | (16,968) |
Purchases of intangible assets | 750 | 0 |
Cash paid in business combinations, net of cash acquired | 0 | (189,262) |
Net cash used for investing activities | (19,880) | (206,230) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 45,673 | 46,384 |
Stock received for payment of employee taxes on vesting of restricted stock | (56,343) | (56,385) |
Payments for repurchases of common stock | (250,016) | (172,267) |
Net cash used for financing activities | (260,686) | (182,268) |
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | (10,230) | (5,395) |
Effect of exchange rate changes on cash and cash equivalents | 1,134,752 | 742,981 |
Increase (decrease) in cash and cash equivalents | 45,812 | (185,451) |
Cash and cash equivalents at end of period | 1,134,752 | |
Supplemental cash flow information: | ||
Cash paid for interest | 158 | 131 |
Cash paid for taxes, net | $ 10,018 | $ 10,127 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by Cadence Design Systems, Inc. (“Cadence”) without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, Cadence believes that the disclosures contained in this Quarterly Report on Form 10-Q comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These condensed consolidated financial statements are meant to be, and should be, read in conjunction with the consolidated financial statements and the Notes thereto included in Cadence’s Annual Report on Form 10-K for the fiscal year ended January 1, 2022. The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q reflect all adjustments (which include only normal, recurring adjustments and those items discussed in these Notes) that are, in the opinion of management, necessary to state fairly the results of operations, cash flows and financial position for the periods and dates presented. The results for such periods are not necessarily indicative of the results to be expected for the full fiscal year. Certain prior period balances have been reclassified to conform to the current period presentation. Management has evaluated subsequent events through the issuance date of the unaudited condensed consolidated financial statements. Use of Estimates Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Due to the ongoing COVID-19 pandemic and rising tensions in the geopolitical climate, there continues to be uncertainty and disruption in the global economy and financial markets. Cadence is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of April 25, 2022, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. Recently Adopted Accounting Standards Lessors - Certain Leases with Variable Lease Payments In July 2021, the Financial Accounting Standards Board (“FASB”), issued ASU 2021-05, “Lessors - Certain Leases with Variable Lease Payments,” which allows lessors to classify and account for a lease with variable payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: (1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria as defined in ASC Topic 842 and (2) the lessor would have otherwise recognized a day-one loss on the lease arrangement. This standard better aligns the accounting with the underlying economics of these arrangements as lessors are not permitted to include most variable payments which do not depend on a reference index or a rate in the lease receivable while assets are derecognized at lease commencement. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Cadence adopted this standard on January 2, 2022, the first day of fiscal 2022, on a prospective basis. The adoption of this standard did not have a material impact on Cadence’s condensed consolidated financial statements and related disclosures. Business Combinations In October 2021, the FASB issued ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with “Revenue from Contracts with Customers (Topic 606)” as if the acquiring entity had originated the contracts. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is permitted. Cadence adopted this standard on January 2, 2022, the first day of fiscal 2022. The impact of the standard on Cadence’s condensed consolidated financial statements is dependent on the size and frequency of future acquisitions and does not affect contract assets or contract liabilities related to acquisitions completed prior to the adoption date. |
Revenue
Revenue | 3 Months Ended |
Apr. 02, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Cadence groups its products and services into five categories related to major design activities. The following table shows the percentage of revenue contributed by each of Cadence’s five product categories for the three months ended April 2, 2022 and April 3, 2021: Three Months Ended April 2, April 3, Custom Integrated Circuit (“IC”) Design and Simulation 22 % 23 % Digital IC Design and Signoff 27 % 27 % Functional Verification, including Emulation and Prototyping Hardware* 28 % 26 % Intellectual Property (“IP”) 13 % 14 % System Design and Analysis 10 % 10 % Total 100 % 100 % _____________ * Includes immaterial amount of revenue accounted for under leasing arrangements. Cadence generates revenue from contracts with customers and applies judgment in identifying and evaluating any terms and conditions in contracts which may impact revenue recognition. Certain of Cadence’s licensing arrangements allow customers the ability to remix among software products. Cadence also has arrangements with customers that include a combination of products, with the actual product selection and number of licensed users to be determined at a later date. For these arrangements, Cadence estimates the allocation of the revenue to product categories based upon the expected usage of products. Revenue by product category fluctuates from period to period based on demand for products and services, and Cadence’s available resources to deliver them. No one customer accounted for 10% or more of total revenue during the three months ended April 2, 2022 or the three months ended April 3, 2021. Generally, between 85% and 90% of Cadence’s annual revenue is characterized as recurring revenue. Recurring revenue includes revenue recognized over time from our software arrangements, services, royalties, maintenance on IP licenses and hardware, and operating leases of hardware. Recurring revenue also includes revenue recognized at varying points in time over the term of other arrangements with non-cancelable commitments, whereby the customer commits to a fixed dollar amount over a specified period of time that can be used to purchase from a list of products or services. These arrangements do not meet the definition of a revenue contract until the customer executes a separate selection form to identify the products and services that they are purchasing. Each separate selection form under the arrangement is treated as an individual contract and accounted for based on the respective performance obligations. The remainder of Cadence’s revenue is recognized at a point in time and is characterized as up-front revenue. Up-front revenue is primarily generated by sales of emulation and prototyping hardware and individual IP licenses. The percentage of Cadence’s recurring and up-front revenue may be impacted by delivery of hardware and IP products to its customers in any single fiscal period. The following table shows the percentage of Cadence’s revenue that is classified as recurring or up-front for the three months ended April 2, 2022 and April 3, 2021: Three Months Ended April 2, April 3, Revenue recognized over time 81 % 82 % Revenue from arrangements with non-cancelable commitments 2 % 4 % Recurring revenue 83 % 86 % Up-front revenue 17 % 14 % Total 100 % 100 % Significant Judgments Cadence’s contracts with customers often include promises to transfer to a customer multiple software and/or IP licenses and services, including professional services, technical support services, and rights to unspecified updates. Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or not distinct and thus accounted for together, requires significant judgment. In some arrangements, such as most of Cadence’s IP license arrangements, Cadence has concluded that the licenses and associated services are distinct from each other. In others, like Cadence’s time-based software arrangements, the licenses and certain services are not distinct from each other. Cadence’s time-based software arrangements include multiple software licenses and updates to the licensed software products, as well as technical support, and Cadence has concluded that these promised goods and services are a single, combined performance obligation. The accounting for contracts with multiple performance obligations requires the contract’s transaction price to be allocated to each distinct performance obligation based on relative standalone selling price (“SSP”). Judgment is required to determine the SSP for each distinct performance obligation because Cadence rarely licenses or sells products on a standalone basis. In instances where the SSP is not directly observable because Cadence does not sell the license, product or service separately, Cadence determines the SSP using information that maximizes the use of observable inputs and may include market conditions. Cadence typically has more than one SSP for individual performance obligations due to the stratification of those items by classes of customers and circumstances. In these instances, Cadence may use information such as the size of the customer and geographic region of the customer in determining the SSP. Revenue is recognized over time for Cadence’s combined performance obligations that include software licenses, updates, technical support and maintenance that are separate performance obligations with the same term. For Cadence’s professional services, revenue is recognized over time, generally using costs incurred or hours expended to measure progress. Judgment is required in estimating project status and the costs necessary to complete projects. A number of internal and external factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes. For Cadence’s other performance obligations recognized over time, revenue is generally recognized using a time-based measure of progress reflecting generally consistent efforts to satisfy those performance obligations throughout the arrangement term. If a group of agreements are so closely related that they are, in effect, part of a single arrangement, such agreements are deemed to be one arrangement for revenue recognition purposes. Cadence exercises significant judgment to evaluate the relevant facts and circumstances in determining whether the separate agreements should be accounted for separately or as, in substance, a single arrangement. Cadence’s judgments about whether a group of contracts comprise a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved. Cadence is required to estimate the total consideration expected to be received from contracts with customers. In limited circumstances, the consideration expected to be received is variable based on the specific terms of the contract or based on Cadence’s expectations of the term of the contract. Generally, Cadence has not experienced significant returns or refunds to customers. These estimates require significant judgment and a change in these estimates could have an effect on its results of operations during the periods involved. Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on Cadence’s condensed consolidated balance sheets. For certain software, hardware and IP agreements with payment plans, Cadence records an unbilled receivable related to revenue recognized upon transfer of control because it has an unconditional right to invoice and receive payment in the future related to those transferred products or services. Cadence records a contract asset when revenue is recognized prior to invoicing and Cadence does not have the unconditional right to invoice or retains performance risk with respect to that performance obligation. Cadence records deferred revenue when revenue is recognized subsequent to invoicing. For Cadence’s time-based software agreements, customers are generally invoiced in equal, quarterly amounts, although some customers prefer to be invoiced in single or annual amounts. The contract assets indicated below are included in prepaid expenses and other in the condensed consolidated balance sheet and primarily relate to Cadence’s rights to consideration for work completed but not billed as of the balance sheet date on services and customized IP contracts. The contract assets are transferred to receivables when the rights become unconditional, usually upon completion of a milestone. Cadence’s contract balances as of April 2, 2022 and January 1, 2022 were as follows: As of April 2, January 1, (In thousands) Contract assets $ 19,066 $ 6,811 Deferred revenue 707,117 655,090 Cadence recognized revenue of $281.6 million during the three months ended April 2, 2022, and $226.6 million during the three months ended April 3, 2021, that was included in the deferred revenue balance at the beginning of each respective fiscal year. All other activity in deferred revenue is due to the timing of invoices in relation to the timing of revenue as described above. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, Cadence has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing Cadence’s products and services, and not to facilitate financing arrangements. Remaining Performance Obligations Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Cadence has elected to exclude the potential future royalty receipts from the remaining performance obligations. Contracted but unsatisfied performance obligations were approximately $5.1 billion as of April 2, 2022, which included $196.9 million of non-cancelable commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date. As of April 2, 2022, Cadence expected to recognize approximately 50% of the contracted but unsatisfied performance obligations, excluding non-cancelable commitments, as revenue over the next 12 months and the remainder thereafter. Cadence recognized revenue of $12.2 million during the three months ended April 2, 2022, and $10.2 million during the three months ended April 3, 2021, from performance obligations satisfied in previous periods. These amounts represent royalties earned during the period and exclude contracts with nonrefundable prepaid royalties. Nonrefundable prepaid royalties are recognized upon delivery of the IP because Cadence’s right to the consideration is not contingent upon customers’ future shipments. |
Receivables, net
Receivables, net | 3 Months Ended |
Apr. 02, 2022 | |
Receivables [Abstract] | |
RECEIVABLES, NET | RECEIVABLES, NET Cadence’s current and long-term receivables balances as of April 2, 2022 and January 1, 2022 were as follows: As of April 2, January 1, (In thousands) Accounts receivable $ 227,181 $ 185,599 Unbilled accounts receivable 137,244 155,689 Long-term receivables 6,781 5,098 Total receivables 371,206 346,386 Less allowance for doubtful accounts (2,636) (3,692) Total receivables, net $ 368,570 $ 342,694 |
Debt
Debt | 3 Months Ended |
Apr. 02, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Revolving Credit Facility In June 2021, Cadence entered into a five-year senior unsecured revolving credit facility with a group of lenders led by Bank of America, N.A., as administrative agent (the “2021 Credit Facility”). The 2021 Credit Facility provides for borrowings up to $700 million, with the right to request increased capacity up to an additional $350 million upon the receipt of lender commitments, for total maximum borrowings of $1.05 billion. The 2021 Credit Facility expires on June 30, 2026. Any outstanding loans drawn under such credit facility are due at maturity on June 30, 2026, subject to an option to extend the maturity date. Outstanding borrowings may be repaid at any time prior to maturity. Debt issuance costs of $1.3 million were recorded to other assets in Cadence’s condensed consolidated balance sheet at the inception of the agreement and are being amortized to interest expense over the term of the 2021 Credit Facility. Interest accrues on borrowings under the 2021 Credit Facility at a rate equal to, at Cadence’s option, either (1) LIBOR plus a margin between 0.750% and 1.250% per annum, determined by reference to the credit rating of Cadence’s unsecured debt, or (2) the base rate plus a margin between 0.000% and 0.250% per annum, determined by reference to the credit rating of Cadence’s unsecured debt. Interest is payable quarterly. A commitment fee ranging from 0.070% to 0.175% is assessed on the daily average undrawn portion of revolving commitments. The 2021 Credit Facility also includes provisions addressing the potential transition from LIBOR to a new replacement benchmark. The 2021 Credit Facility contains customary negative covenants that, among other things, restrict Cadence’s ability to incur additional indebtedness and grant liens. In addition, the 2021 Credit Facility contains financial covenants that require Cadence to maintain a funded debt to EBITDA ratio not greater than 3.25 to 1, with a step up to 3.75 to 1 for one year following an acquisition by Cadence of at least $250.0 million that results in a pro forma leverage ratio between 3.00 to 1 and 3.50 to 1. As of April 2, 2022, Cadence was in compliance with all financial covenants associated with the 2021 Credit Facility. 2024 Notes In October 2014, Cadence issued $350.0 million aggregate principal amount of 4.375% Senior Notes due October 15, 2024 (the “2024 Notes”). Cadence received net proceeds of $342.4 million from the issuance of the 2024 Notes, net of a discount of $1.4 million and issuance costs of $6.2 million. Both the discount and issuance costs are being amortized to interest expense over the term of the 2024 Notes using the effective interest method. Interest is payable in cash semi-annually in April and October. The 2024 Notes are unsecured and rank equal in right of payment to all of Cadence’s existing and future senior indebtedness. The carrying value of the 2024 Notes was $347.8 million and $347.6 million as of April 2, 2022 and January 1, 2022, respectively. The fair value of the 2024 Notes was approximately $358.6 million as of April 2, 2022. Cadence may redeem the 2024 Notes, in whole or in part, at a redemption price equal to the greater of (a) 100% of the principal amount of the notes to be redeemed, and (b) the sum of the present values of the remaining scheduled payments of principal and interest, plus any accrued and unpaid interest, as more particularly described in the indenture governing the 2024 Notes. The indenture governing the 2024 Notes includes customary representations, warranties and restrictive covenants, including, but not limited to, restrictions on Cadence’s ability to grant liens on assets, enter into sale and lease-back transactions, or merge, consolidate or sell assets, and also includes customary events of default. |
Goodwill and Acquired Intangibl
Goodwill and Acquired Intangibles | 3 Months Ended |
Apr. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND ACQUIRED INTANGIBLES | GOODWILL AND ACQUIRED INTANGIBLES Goodwill The changes in the carrying amount of goodwill during the three months ended April 2, 2022 were as follows: Gross Carrying (In thousands) Balance as of January 1, 2022 $ 928,358 Effect of foreign currency translation (4,639) Balance as of April 2, 2022 $ 923,719 Acquired Intangibles, Net Acquired intangibles as of April 2, 2022 were as follows, excluding intangibles that were fully amortized as of January 1, 2022: Gross Carrying Accumulated Acquired (In thousands) Existing technology $ 391,889 $ (249,550) $ 142,339 Agreements and relationships 194,781 (125,208) 69,573 Tradenames, trademarks and patents 9,257 (2,059) 7,198 Total acquired intangibles $ 595,927 $ (376,817) $ 219,110 Acquired intangibles as of January 1, 2022 were as follows, excluding intangibles that were fully amortized as of January 2, 2021: Gross Carrying Accumulated Acquired (In thousands) Existing technology $ 405,481 $ (254,599) $ 150,882 Agreements and relationships 205,057 (130,187) 74,870 Tradenames, trademarks and patents 10,666 (3,153) 7,513 Total acquired intangibles $ 621,204 $ (387,939) $ 233,265 Amortization expense from existing technology and maintenance agreements is included in cost of product and maintenance. Amortization expense for the three months ended April 2, 2022 and April 3, 2021 by condensed consolidated income statement caption was as follows: Three Months Ended April 2, April 3, (In thousands) Cost of product and maintenance $ 11,971 $ 11,768 Amortization of acquired intangibles 4,964 4,631 Total amortization of acquired intangibles $ 16,935 $ 16,399 As of April 2, 2022, the estimated amortization expense for intangible assets with definite lives was as follows for the following five fiscal years and thereafter: (In thousands) 2022 - remaining period $ 34,854 2023 36,566 2024 34,807 2025 22,887 2026 17,508 2027 15,950 Thereafter 56,538 Total estimated amortization expense $ 219,110 |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Apr. 02, 2022 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation expense is reflected in Cadence’s condensed consolidated income statements for the three months ended April 2, 2022 and April 3, 2021 as follows: Three Months Ended April 2, April 3, (In thousands) Cost of product and maintenance $ 830 $ 807 Cost of services 1,050 1,027 Marketing and sales 11,757 11,206 Research and development 35,122 32,858 General and administrative 10,710 6,698 Total stock-based compensation expense $ 59,469 $ 52,596 |
Stock Repurchase Program
Stock Repurchase Program | 3 Months Ended |
Apr. 02, 2022 | |
Class of Stock Disclosures [Abstract] | |
STOCK REPURCHASE PROGRAM | STOCK REPURCHASE PROGRAM In August 2021, Cadence’s Board of Directors increased the prior authorization to repurchase shares of Cadence common stock by authorizing an additional $1 billion. The actual timing and amount of repurchases are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. As of April 2, 2022, approximately $877 million of the share repurchase authorization remained available to repurchase shares of Cadence common stock. The shares repurchased under Cadence’s repurchase authorizations and the total cost of repurchased shares, including commissions, during the three months ended April 2, 2022 and April 3, 2021 were as follows: Three Months Ended April 2, April 3, (In thousands) Shares repurchased 1,566 1,323 Total cost of repurchased shares $ 250,016 $ 172,267 |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Apr. 02, 2022 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE Basic net income per share is computed by dividing net income during the period by the weighted average number of shares of common stock outstanding during that period, less unvested restricted stock awards. Diluted net income per share is impacted by equity instruments considered to be potential common shares, if dilutive, computed using the treasury stock method of accounting. The calculations for basic and diluted net income per share for the three months ended April 2, 2022 and April 3, 2021 are as follows: Three Months Ended April 2, April 3, (In thousands, except per share amounts) Net income $ 235,335 $ 187,169 Weighted average common shares used to calculate basic net income per share 272,431 274,021 Stock-based awards 4,487 6,119 Weighted average common shares used to calculate diluted net income per share 276,918 280,140 Net income per share - basic $ 0.86 $ 0.68 Net income per share - diluted $ 0.85 $ 0.67 The following table presents shares of Cadence’s common stock outstanding for the three months ended April 2, 2022 and April 3, 2021 that were excluded from the computation of diluted net income per share because the effect of including these shares in the computation of diluted net income per share would have been anti-dilutive: Three Months Ended April 2, April 3, (In thousands) Long-term market-based awards 1,035 — Options to purchase shares of common stock 663 138 Non-vested shares of restricted stock 82 58 Total potential common shares excluded 1,780 196 |
Fair Value
Fair Value | 3 Months Ended |
Apr. 02, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | FAIR VALUE Inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Cadence’s market assumptions. These two types of inputs have created the following fair value hierarchy: • Level 1 – Quoted prices for identical instruments in active markets; • Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and • Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The valuation techniques used to determine the fair value of Cadence’s foreign currency forward exchange contracts and 2024 Notes are classified within Level 2 of the fair value hierarchy. For additional information relating to Cadence’s debt arrangements, see Note 4 in the notes to condensed consolidated financial statements. This hierarchy requires Cadence to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Cadence recognizes transfers between levels of the hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the three months ended April 2, 2022. On a quarterly basis, Cadence measures at fair value certain financial assets and liabilities. The fair value of financial assets and liabilities was determined using the following levels of inputs as of April 2, 2022 and January 1, 2022: Fair Value Measurements as of April 2, 2022 Total Level 1 Level 2 Level 3 (In thousands) Assets Cash equivalents: Money market funds $ 658,547 $ 658,547 $ — $ — Marketable equity securities 5,080 5,080 — — Securities held in Non-Qualified Deferred Compensation (“NQDC”) trust 53,893 53,893 — — Total Assets $ 717,520 $ 717,520 $ — $ — Total Level 1 Level 2 Level 3 (In thousands) Liabilities Foreign currency exchange contracts $ 7,606 $ — $ 7,606 $ — Total Liabilities $ 7,606 $ — $ 7,606 $ — Fair Value Measurements as of January 1, 2022 Total Level 1 Level 2 Level 3 (In thousands) Assets Cash equivalents: Money market funds $ 658,474 $ 658,474 $ — $ — Marketable equity securities 5,956 5,956 — — Securities held in NQDC trust 56,165 56,165 — — Total Assets $ 720,595 $ 720,595 $ — $ — Total Level 1 Level 2 Level 3 (In thousands) Liabilities Foreign currency exchange contracts $ 306 $ — $ 306 $ — Total Liabilities $ 306 $ — $ 306 $ — |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 02, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, Cadence is involved in various disputes and legal proceedings that arise in the ordinary course of business. These include disputes and legal proceedings related to intellectual property, indemnification obligations, mergers and acquisitions, licensing, contracts, customers, products, distribution and other commercial arrangements and employee relations matters. At least quarterly, Cadence reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on Cadence’s judgments using the best information available at the time. As additional information becomes available, Cadence reassesses the potential liability related to pending claims and legal proceedings and may revise estimates. Other Contingencies Cadence provides its customers with a warranty on sales of hardware products, generally for a 90-day period. Cadence did not incur any significant costs related to warranty obligations during the three months ended April 2, 2022 and April 3, 2021. Cadence’s product license and services agreements typically include a limited indemnification provision for claims from third parties relating to Cadence’s intellectual property. If the potential loss from any indemnification claim is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. The indemnification is generally limited to the amount paid by the customer. Cadence did not incur any significant losses from indemnification claims during the three months ended April 2, 2022 and April 3, 2021. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Apr. 02, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS Cadence’s accumulated other comprehensive loss is comprised of the aggregate impact of foreign currency translation gains and losses and changes in defined benefit plan liabilities and is presented in Cadence’s condensed consolidated statements of comprehensive income. Accumulated other comprehensive loss was comprised of the following as of April 2, 2022 and January 1, 2022: As of April 2, January 1, (In thousands) Foreign currency translation loss $ (41,327) $ (26,553) Changes in defined benefit plan liabilities (6,592) (6,758) Total accumulated other comprehensive loss $ (47,919) $ (33,311) |
Segment Reporting
Segment Reporting | 3 Months Ended |
Apr. 02, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING Segment reporting is based on the “management approach,” following the method that management organizes the company’s reportable segments for which separate financial information is made available to, and evaluated regularly by, the chief operating decision maker in allocating resources and in assessing performance. Cadence’s chief operating decision maker is its CEO, who reviews Cadence’s consolidated results as one operating segment. In making operating decisions, the CEO primarily considers consolidated financial information, accompanied by disaggregated information about revenues by geographic region. Outside the United States, Cadence markets and supports its products and services primarily through its subsidiaries. Revenue is attributed to geography based upon the country in which the product is used, or services are delivered. Long-lived assets are attributed to geography based on the country where the assets are located. The following table presents a summary of revenue by geography for the three months ended April 2, 2022 and April 3, 2021: Three Months Ended April 2, April 3, (In thousands) Americas: United States $ 413,538 $ 326,324 Other Americas 11,802 9,676 Total Americas 425,340 336,000 Asia: China 139,966 89,441 Other Asia 158,674 133,848 Total Asia 298,640 223,289 Europe, Middle East and Africa 130,634 130,233 Japan 47,152 46,506 Total $ 901,766 $ 736,028 The following table presents a summary of long-lived assets by geography as of April 2, 2022 and January 1, 2022: As of April 2, January 1, (In thousands) Americas: United States $ 270,486 $ 267,202 Other Americas 1,096 975 Total Americas 271,582 268,177 Asia: China 53,184 56,403 Other Asia 58,742 54,677 Total Asia 111,926 111,080 Europe, Middle East and Africa 51,464 53,748 Japan 2,449 3,030 Total $ 437,421 $ 436,035 |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by Cadence Design Systems, Inc. (“Cadence”) without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. |
Use of estimates | Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Due to the ongoing COVID-19 pandemic and rising tensions in the geopolitical climate, there continues to be uncertainty and disruption in the global economy and financial markets. Cadence is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of April 25, 2022, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. |
Fair value of financial instruments | Inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Cadence’s market assumptions. These two types of inputs have created the following fair value hierarchy: • Level 1 – Quoted prices for identical instruments in active markets; • Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and • Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The valuation techniques used to determine the fair value of Cadence’s foreign currency forward exchange contracts and 2024 Notes are classified within Level 2 of the fair value hierarchy. For additional information relating to Cadence’s debt arrangements, see Note 4 in the notes to condensed consolidated financial statements. This hierarchy requires Cadence to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Cadence recognizes transfers between levels of the hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the three months ended April 2, 2022. |
Contingencies | From time to time, Cadence is involved in various disputes and legal proceedings that arise in the ordinary course of business. These include disputes and legal proceedings related to intellectual property, indemnification obligations, mergers and acquisitions, licensing, contracts, customers, products, distribution and other commercial arrangements and employee relations matters. At least quarterly, Cadence reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on Cadence’s judgments using the best information available at the time. As additional information becomes available, Cadence reassesses the potential liability related to pending claims and legal proceedings and may revise estimates. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table shows the percentage of revenue contributed by each of Cadence’s five product categories for the three months ended April 2, 2022 and April 3, 2021: Three Months Ended April 2, April 3, Custom Integrated Circuit (“IC”) Design and Simulation 22 % 23 % Digital IC Design and Signoff 27 % 27 % Functional Verification, including Emulation and Prototyping Hardware* 28 % 26 % Intellectual Property (“IP”) 13 % 14 % System Design and Analysis 10 % 10 % Total 100 % 100 % _____________ * Includes immaterial amount of revenue accounted for under leasing arrangements. Three Months Ended April 2, April 3, Revenue recognized over time 81 % 82 % Revenue from arrangements with non-cancelable commitments 2 % 4 % Recurring revenue 83 % 86 % Up-front revenue 17 % 14 % Total 100 % 100 % |
Contract balances | Cadence’s contract balances as of April 2, 2022 and January 1, 2022 were as follows: As of April 2, January 1, (In thousands) Contract assets $ 19,066 $ 6,811 Deferred revenue 707,117 655,090 |
Receivables, net (Tables)
Receivables, net (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
Receivables [Abstract] | |
Current and long-term accounts receivable balances | Cadence’s current and long-term receivables balances as of April 2, 2022 and January 1, 2022 were as follows: As of April 2, January 1, (In thousands) Accounts receivable $ 227,181 $ 185,599 Unbilled accounts receivable 137,244 155,689 Long-term receivables 6,781 5,098 Total receivables 371,206 346,386 Less allowance for doubtful accounts (2,636) (3,692) Total receivables, net $ 368,570 $ 342,694 |
Goodwill and Acquired Intangi_2
Goodwill and Acquired Intangibles (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill during the three months ended April 2, 2022 were as follows: Gross Carrying (In thousands) Balance as of January 1, 2022 $ 928,358 Effect of foreign currency translation (4,639) Balance as of April 2, 2022 $ 923,719 |
Schedule of acquired intangibles with finite and indefinite lives (excluding goodwill) | Acquired intangibles as of April 2, 2022 were as follows, excluding intangibles that were fully amortized as of January 1, 2022: Gross Carrying Accumulated Acquired (In thousands) Existing technology $ 391,889 $ (249,550) $ 142,339 Agreements and relationships 194,781 (125,208) 69,573 Tradenames, trademarks and patents 9,257 (2,059) 7,198 Total acquired intangibles $ 595,927 $ (376,817) $ 219,110 Acquired intangibles as of January 1, 2022 were as follows, excluding intangibles that were fully amortized as of January 2, 2021: Gross Carrying Accumulated Acquired (In thousands) Existing technology $ 405,481 $ (254,599) $ 150,882 Agreements and relationships 205,057 (130,187) 74,870 Tradenames, trademarks and patents 10,666 (3,153) 7,513 Total acquired intangibles $ 621,204 $ (387,939) $ 233,265 |
Amortization of acquired intangibles | Amortization expense for the three months ended April 2, 2022 and April 3, 2021 by condensed consolidated income statement caption was as follows: Three Months Ended April 2, April 3, (In thousands) Cost of product and maintenance $ 11,971 $ 11,768 Amortization of acquired intangibles 4,964 4,631 Total amortization of acquired intangibles $ 16,935 $ 16,399 |
Estimated amortization expense | As of April 2, 2022, the estimated amortization expense for intangible assets with definite lives was as follows for the following five fiscal years and thereafter: (In thousands) 2022 - remaining period $ 34,854 2023 36,566 2024 34,807 2025 22,887 2026 17,508 2027 15,950 Thereafter 56,538 Total estimated amortization expense $ 219,110 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based compensation expense and allocation by cost | Stock-based compensation expense is reflected in Cadence’s condensed consolidated income statements for the three months ended April 2, 2022 and April 3, 2021 as follows: Three Months Ended April 2, April 3, (In thousands) Cost of product and maintenance $ 830 $ 807 Cost of services 1,050 1,027 Marketing and sales 11,757 11,206 Research and development 35,122 32,858 General and administrative 10,710 6,698 Total stock-based compensation expense $ 59,469 $ 52,596 |
Stock Repurchase Program (Table
Stock Repurchase Program (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
Class of Stock Disclosures [Abstract] | |
Shares repurchased and the total cost of shares repurchased | The shares repurchased under Cadence’s repurchase authorizations and the total cost of repurchased shares, including commissions, during the three months ended April 2, 2022 and April 3, 2021 were as follows: Three Months Ended April 2, April 3, (In thousands) Shares repurchased 1,566 1,323 Total cost of repurchased shares $ 250,016 $ 172,267 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
Earnings Per Share [Abstract] | |
Basic and diluted net income per share | The calculations for basic and diluted net income per share for the three months ended April 2, 2022 and April 3, 2021 are as follows: Three Months Ended April 2, April 3, (In thousands, except per share amounts) Net income $ 235,335 $ 187,169 Weighted average common shares used to calculate basic net income per share 272,431 274,021 Stock-based awards 4,487 6,119 Weighted average common shares used to calculate diluted net income per share 276,918 280,140 Net income per share - basic $ 0.86 $ 0.68 Net income per share - diluted $ 0.85 $ 0.67 |
Potential shares of Cadence's common stock excluded | The following table presents shares of Cadence’s common stock outstanding for the three months ended April 2, 2022 and April 3, 2021 that were excluded from the computation of diluted net income per share because the effect of including these shares in the computation of diluted net income per share would have been anti-dilutive: Three Months Ended April 2, April 3, (In thousands) Long-term market-based awards 1,035 — Options to purchase shares of common stock 663 138 Non-vested shares of restricted stock 82 58 Total potential common shares excluded 1,780 196 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial assets and liabilities | The fair value of financial assets and liabilities was determined using the following levels of inputs as of April 2, 2022 and January 1, 2022: Fair Value Measurements as of April 2, 2022 Total Level 1 Level 2 Level 3 (In thousands) Assets Cash equivalents: Money market funds $ 658,547 $ 658,547 $ — $ — Marketable equity securities 5,080 5,080 — — Securities held in Non-Qualified Deferred Compensation (“NQDC”) trust 53,893 53,893 — — Total Assets $ 717,520 $ 717,520 $ — $ — Total Level 1 Level 2 Level 3 (In thousands) Liabilities Foreign currency exchange contracts $ 7,606 $ — $ 7,606 $ — Total Liabilities $ 7,606 $ — $ 7,606 $ — Fair Value Measurements as of January 1, 2022 Total Level 1 Level 2 Level 3 (In thousands) Assets Cash equivalents: Money market funds $ 658,474 $ 658,474 $ — $ — Marketable equity securities 5,956 5,956 — — Securities held in NQDC trust 56,165 56,165 — — Total Assets $ 720,595 $ 720,595 $ — $ — Total Level 1 Level 2 Level 3 (In thousands) Liabilities Foreign currency exchange contracts $ 306 $ — $ 306 $ — Total Liabilities $ 306 $ — $ 306 $ — |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated other comprehensive loss, net of tax | Accumulated other comprehensive loss was comprised of the following as of April 2, 2022 and January 1, 2022: As of April 2, January 1, (In thousands) Foreign currency translation loss $ (41,327) $ (26,553) Changes in defined benefit plan liabilities (6,592) (6,758) Total accumulated other comprehensive loss $ (47,919) $ (33,311) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Apr. 02, 2022 | |
Segment Reporting [Abstract] | |
Summary of revenue by geography | The following table presents a summary of revenue by geography for the three months ended April 2, 2022 and April 3, 2021: Three Months Ended April 2, April 3, (In thousands) Americas: United States $ 413,538 $ 326,324 Other Americas 11,802 9,676 Total Americas 425,340 336,000 Asia: China 139,966 89,441 Other Asia 158,674 133,848 Total Asia 298,640 223,289 Europe, Middle East and Africa 130,634 130,233 Japan 47,152 46,506 Total $ 901,766 $ 736,028 |
Summary of long-lived assets by geography | The following table presents a summary of long-lived assets by geography as of April 2, 2022 and January 1, 2022: As of April 2, January 1, (In thousands) Americas: United States $ 270,486 $ 267,202 Other Americas 1,096 975 Total Americas 271,582 268,177 Asia: China 53,184 56,403 Other Asia 58,742 54,677 Total Asia 111,926 111,080 Europe, Middle East and Africa 51,464 53,748 Japan 2,449 3,030 Total $ 437,421 $ 436,035 |
Revenue (Details)
Revenue (Details) | 3 Months Ended | ||
Apr. 02, 2022 | Apr. 03, 2021 | ||
Revenue from External Customer [Line Items] | |||
Percentage of product and maintenance revenue by product group | 100.00% | 100.00% | |
Custom Integrated Circuit (“IC”) Design and Simulation | |||
Revenue from External Customer [Line Items] | |||
Percentage of product and maintenance revenue by product group | 22.00% | 23.00% | |
Digital IC Design and Signoff | |||
Revenue from External Customer [Line Items] | |||
Percentage of product and maintenance revenue by product group | 27.00% | 27.00% | |
Functional Verification, including Emulation and Prototyping Hardware* | |||
Revenue from External Customer [Line Items] | |||
Percentage of product and maintenance revenue by product group | [1] | 28.00% | 26.00% |
Intellectual Property (“IP”) | |||
Revenue from External Customer [Line Items] | |||
Percentage of product and maintenance revenue by product group | 13.00% | 14.00% | |
System Design and Analysis | |||
Revenue from External Customer [Line Items] | |||
Percentage of product and maintenance revenue by product group | 10.00% | 10.00% | |
[1] | Includes immaterial amount of revenue accounted for under leasing arrangements. |
Revenue (Details 1)
Revenue (Details 1) | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer, timing of goods or service | 100.00% | 100.00% |
Transferred over Time | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer, timing of goods or service | 83.00% | 86.00% |
Transferred over Time | Single performance obligation | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer, timing of goods or service | 81.00% | 82.00% |
Transferred over Time | Multiple performance obligations | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer, timing of goods or service | 2.00% | 4.00% |
Transferred at Point in Time | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer, timing of goods or service | 17.00% | 14.00% |
Revenue (Details 2)
Revenue (Details 2) - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 19,066 | $ 6,811 |
Deferred revenue | $ 707,117 | $ 655,090 |
Revenue (Details Textual)
Revenue (Details Textual) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized from deferred revenue during the period | $ 281.6 | $ 226.6 |
Remaining performance obligations | 5,100 | |
Non-cancellable commitments from customers included in remaining performance obligations | $ 196.9 | |
Percent of remaining performance obligations, current | 50.00% | |
Revenue recognized from satisfaction of performance obligations | $ 12.2 | $ 10.2 |
Receivables, net (Details)
Receivables, net (Details) - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
Current and long-term receivables balances | ||
Accounts receivable | $ 227,181 | $ 185,599 |
Unbilled accounts receivable | 137,244 | 155,689 |
Long-term receivables | 6,781 | 5,098 |
Total receivables | 371,206 | 346,386 |
Less allowance for doubtful accounts | (2,636) | (3,692) |
Total receivables, net | $ 368,570 | $ 342,694 |
Debt Credit Facility (Details T
Debt Credit Facility (Details Textual) $ in Millions | 3 Months Ended |
Apr. 02, 2022USD ($) | |
Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit facility, current borrowing capacity | $ 700 |
Credit facility additional borrowing capacity available | 350 |
Credit facility, maximum borrowing capacity | $ 1,050 |
Credit facility, maturity date | Jun. 30, 2026 |
Payments of Debt Issuance Costs | $ 1.3 |
Minimum [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit facility, commitment fee percentage | 0.07% |
Credit facility, covenant, pro forma leverage ratio | 3 |
Maximum [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit facility, commitment fee percentage | 0.175% |
Credit facility, covenant, pro forma leverage ratio | 3.50 |
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit facility, interest rate spread | 0.75% |
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit facility, interest rate spread | 1.25% |
Base Rate [Member] | Minimum [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit facility, interest rate spread | 0.00% |
Base Rate [Member] | Maximum [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit facility, interest rate spread | 0.25% |
Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit facility, covenant, debt to EBITDA ratio | 3.25 |
Credit facility, covenant, debt to EBITDA ratio after step up triggered by acquisition | 3.75 |
Credit facility, covenant, required business acquisition consideration, minimum | $ 250 |
Debt (Details Textual)
Debt (Details Textual) - USD ($) $ in Thousands | Oct. 09, 2014 | Apr. 02, 2022 | Jan. 01, 2022 |
Debt Instrument [Line Items] | |||
Carrying value of the 2024 Notes | $ 347,792 | $ 347,588 | |
Senior Notes [Member] | Senior Notes Due 2024 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount, issued | $ 350,000 | ||
Stated interest rate of Senior Notes | 4.375% | ||
Proceeds from Senior Notes, net | $ 342,400 | ||
Unamortized discount | 1,400 | ||
Debt issuance costs | $ 6,200 | ||
Carrying value of the 2024 Notes | 347,800 | $ 347,600 | |
Fair value of the 2024 Notes | $ 358,600 |
Goodwill and Acquired Intangi_3
Goodwill and Acquired Intangibles (Details) $ in Thousands | 3 Months Ended |
Apr. 02, 2022USD ($) | |
Changes in the carrying amount of goodwill | |
Balance at beginning of period | $ 928,358 |
Effect of foreign currency translation | (4,639) |
Balance at end of period | $ 923,719 |
Goodwill and Acquired Intangi_4
Goodwill and Acquired Intangibles (Details 1) - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
Acquired intangibles with finite lives, excluding intangibles fully amortized at end of prior fiscal year | ||
Gross carrying amount | $ 595,927 | $ 621,204 |
Accumulated amortization | (376,817) | (387,939) |
Total estimated amortization expense | 219,110 | 233,265 |
Existing Technology [Member] | ||
Acquired intangibles with finite lives, excluding intangibles fully amortized at end of prior fiscal year | ||
Gross carrying amount | 391,889 | 405,481 |
Accumulated amortization | (249,550) | (254,599) |
Total estimated amortization expense | 142,339 | 150,882 |
Agreements and Relationships [Member] | ||
Acquired intangibles with finite lives, excluding intangibles fully amortized at end of prior fiscal year | ||
Gross carrying amount | 194,781 | 205,057 |
Accumulated amortization | (125,208) | (130,187) |
Total estimated amortization expense | 69,573 | 74,870 |
Tradenames Trademarks And Patents [Member] | ||
Acquired intangibles with finite lives, excluding intangibles fully amortized at end of prior fiscal year | ||
Gross carrying amount | 9,257 | 10,666 |
Accumulated amortization | (2,059) | (3,153) |
Total estimated amortization expense | $ 7,198 | $ 7,513 |
Goodwill and Acquired Intangi_5
Goodwill and Acquired Intangibles (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Amortization of acquired intangibles | ||
Cost of product and maintenance | $ 11,971 | $ 11,768 |
Amortization of acquired intangibles | 4,964 | 4,631 |
Total amortization of acquired intangibles | $ 16,935 | $ 16,399 |
Goodwill and Acquired Intangi_6
Goodwill and Acquired Intangibles (Details 3) - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
Estimated amortization expense | ||
2022 - remaining period | $ 34,854 | |
2023 | 36,566 | |
2024 | 34,807 | |
2025 | 22,887 | |
2026 | 17,508 | |
2027 | 15,950 | |
Thereafter | 56,538 | |
Total estimated amortization expense | $ 219,110 | $ 233,265 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Textual) - Stock option and restricted stock grants [Member] $ in Millions | 3 Months Ended |
Apr. 02, 2022USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized compensation expense | $ 420.2 |
Weighted-average vesting period over which unrecognized compensation expense will be recognized | 2 years 3 months 18 days |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Share-based compensation expense and allocation by cost [Line Items] | ||
Stock-based compensation expense | $ 59,469 | $ 52,596 |
Cost of product and maintenance | ||
Share-based compensation expense and allocation by cost [Line Items] | ||
Stock-based compensation expense | 830 | 807 |
Cost of services | ||
Share-based compensation expense and allocation by cost [Line Items] | ||
Stock-based compensation expense | 1,050 | 1,027 |
Marketing and sales | ||
Share-based compensation expense and allocation by cost [Line Items] | ||
Stock-based compensation expense | 11,757 | 11,206 |
Research and development | ||
Share-based compensation expense and allocation by cost [Line Items] | ||
Stock-based compensation expense | 35,122 | 32,858 |
General and administrative | ||
Share-based compensation expense and allocation by cost [Line Items] | ||
Stock-based compensation expense | $ 10,710 | $ 6,698 |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Apr. 02, 2022 | Apr. 03, 2021 | Aug. 04, 2021 | |
Class of Stock Disclosures [Abstract] | |||
Additional authorized repurchase amount | $ 1,000,000 | ||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 877,000 | ||
Shares repurchased | 1,566 | 1,323 | |
Total cost of repurchased shares | $ 250,016 | $ 172,267 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||
Net income | $ 235,335 | $ 187,169 |
Weighted average common shares used to calculate basic net income per share | 272,431 | 274,021 |
Stock-based awards | 4,487 | 6,119 |
Weighted average common shares used to calculate diluted net income per share (in shares) | 276,918 | 280,140 |
Net income per share - basic (usd per share) | $ 0.86 | $ 0.68 |
Net income per share - diluted (usd per share) | $ 0.85 | $ 0.67 |
Net Income Per Share (Details 1
Net Income Per Share (Details 1) - shares shares in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Potential shares of Cadence's common stock excluded | ||
Potential common shares excluded from the computation of diluted earnings per share | 1,780 | 196 |
Long-term market-based awards | ||
Potential shares of Cadence's common stock excluded | ||
Potential common shares excluded from the computation of diluted earnings per share | 1,035 | 0 |
Options to purchase shares of common stock | ||
Potential shares of Cadence's common stock excluded | ||
Potential common shares excluded from the computation of diluted earnings per share | 663 | 138 |
Non-vested shares of restricted stock | ||
Potential shares of Cadence's common stock excluded | ||
Potential common shares excluded from the computation of diluted earnings per share | 82 | 58 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
Assets | ||
Marketable equity securities | $ 5,080 | $ 5,956 |
Securities held in Non-Qualified Deferred Compensation trust, or NQDC | 53,893 | 56,165 |
Total Assets | 717,520 | 720,595 |
Liabilities | ||
Foreign currency exchange contracts | 7,606 | 306 |
Total Liabilities | 7,606 | 306 |
Money Market Funds | ||
Assets | ||
Money market funds | 658,547 | 658,474 |
Fair Value Measurements, Level 1 [Member] | ||
Assets | ||
Marketable equity securities | 5,080 | 5,956 |
Securities held in Non-Qualified Deferred Compensation trust, or NQDC | 53,893 | 56,165 |
Total Assets | 717,520 | 720,595 |
Liabilities | ||
Foreign currency exchange contracts | 0 | 0 |
Total Liabilities | 0 | 0 |
Fair Value Measurements, Level 1 [Member] | Money Market Funds | ||
Assets | ||
Money market funds | 658,547 | 658,474 |
Fair Value Measurements, Level 2 [Member] | ||
Assets | ||
Marketable equity securities | 0 | 0 |
Securities held in Non-Qualified Deferred Compensation trust, or NQDC | 0 | 0 |
Total Assets | 0 | 0 |
Liabilities | ||
Foreign currency exchange contracts | 7,606 | 306 |
Total Liabilities | 7,606 | 306 |
Fair Value Measurements, Level 2 [Member] | Money Market Funds | ||
Assets | ||
Money market funds | 0 | 0 |
Fair Value Measurements, Level 3 [Member] | ||
Assets | ||
Marketable equity securities | 0 | 0 |
Securities held in Non-Qualified Deferred Compensation trust, or NQDC | 0 | 0 |
Total Assets | 0 | 0 |
Liabilities | ||
Foreign currency exchange contracts | 0 | 0 |
Total Liabilities | 0 | 0 |
Fair Value Measurements, Level 3 [Member] | Money Market Funds | ||
Assets | ||
Money market funds | $ 0 | $ 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Accumulated Other Comprehensive Loss, Net of Tax | $ (47,919) | $ (33,311) |
Accumulated Other Comprehensive Loss [Line Items] | ||
Accumulated Other Comprehensive Loss, Net of Tax | (47,919) | (33,311) |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Accumulated Other Comprehensive Loss, Net of Tax | (41,327) | (26,553) |
Accumulated Other Comprehensive Loss [Line Items] | ||
Accumulated Other Comprehensive Loss, Net of Tax | (41,327) | (26,553) |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Accumulated Other Comprehensive Loss, Net of Tax | (6,592) | (6,758) |
Accumulated Other Comprehensive Loss [Line Items] | ||
Accumulated Other Comprehensive Loss, Net of Tax | $ (6,592) | $ (6,758) |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2022 | Apr. 03, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 901,766 | $ 736,028 |
United States [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 413,538 | 326,324 |
Other Americas [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 11,802 | 9,676 |
Americas [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 425,340 | 336,000 |
China [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 139,966 | 89,441 |
Other Asia [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 158,674 | 133,848 |
Asia [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 298,640 | 223,289 |
EMEA [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 130,634 | 130,233 |
Japan [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 47,152 | $ 46,506 |
Segment Reporting (Details 1)
Segment Reporting (Details 1) - USD ($) $ in Thousands | Apr. 02, 2022 | Jan. 01, 2022 |
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | $ 437,421 | $ 436,035 |
United States [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 270,486 | 267,202 |
Other Americas [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 1,096 | 975 |
Americas [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 271,582 | 268,177 |
China [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 53,184 | 56,403 |
Other Asia [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 58,742 | 54,677 |
Asia [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 111,926 | 111,080 |
EMEA [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 51,464 | 53,748 |
Japan [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | $ 2,449 | $ 3,030 |