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 Cadence Reports Fourth Quarter and Fiscal Year 2017 Financial Results
   Wednesday, January 31, 2018 4:05:01 PM ET

Cadence Design Systems, Inc. (CDNS ) today announced results for the fourth quarter and fiscal year 2017.

Cadence reported 2017 revenue of $1.943 billion, compared to revenue of $1.816 billion for 2016. On a GAAP basis, Cadence recognized net income of $204 million, or $0.73 per share on a diluted basis, in 2017, compared to net income of $203 million, or $0.70 per share on a diluted basis for 2016. Revenue for the fourth quarter of 2017 totaled $502 million, compared to revenue of $469 million reported for the same period in 2016. Net loss for the fourth quarter of 2017 was $14 million, or $(0.05) per share on a diluted basis, compared to net income of $38 million, or $0.14 per share on a diluted basis, for the same period in 2016.

Due to the U.S. Tax Cuts and Jobs Act enacted in December 2017, GAAP net loss for the fourth quarter of 2017 included a $67 million income tax expense on a provisional basis for a one time transition tax on previously untaxed foreign earnings and a $25 million income tax expense on a provisional basis for the reduction in the value of Cadence’s U.S. deferred tax assets caused by the U.S. corporate tax rate reduction. These provisional amounts may change as Cadence continues to evaluate the impact of the Tax Act.

Using the non-GAAP measure defined below, net income for 2017 was $393 million, or $1.40 per share on a diluted basis, as compared to non-GAAP net income of $351 million, or $1.21 per share on a diluted basis for 2016. For the fourth quarter of 2017, non-GAAP net income was $111 million, or $0.39 per share on a diluted basis, as compared to net income of $95 million, or $0.34 per share on a diluted basis, for the same period in 2016.

"Through the execution of our System Design Enablement Strategy and our innovative solutions, Cadence delivered strong performance for our shareholders," said Lip-Bu Tan, chief executive officer. "The Data-Driven Economy is emerging as the new paradigm and has key underlying technology waves including mobile, cloud/datacenter, edge computing and automotive. We are confident that we are well positioned to provide enablement solutions to fuel and ride with these technology waves."

"Cadence continues to capitalize on the growth opportunities presented by the new trends. As a result, during the fourth quarter, we met or exceeded our key operating metrics and delivered strong financial results for the fiscal year," said John Wall, senior vice president and chief financial officer. "We are excited about the opportunities we see to drive top line growth in 2018. We also expect to continue to deliver shareholder value by repurchasing approximately $50 million of Cadence common stock per quarter through 2018."

CFO Commentary

Commentary on the fourth quarter and fiscal year 2017 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.

Business Outlook

The outlook provided below is on an ASC Topic 606 basis, which Cadence is adopting for its fiscal year 2018 using the modified retrospective transition method. As required by the new standard, the company will report revenue under both methods for the 2018 transition year. We expect the difference between revenue under the new and old standard to gradually decline over time and be de minimis within two years.

For the first quarter of 2018, the company expects total revenue in the range of $500 million to $510 million. First quarter GAAP net income per diluted share is expected to be in the range of $0.20 to $0.22. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.36 to $0.38.

For 2018, the company expects total revenue in the range of $2.015 billion to $2.055 billion. On a GAAP basis, net income per diluted share for 2018 is expected to be in the range of $0.80 to $0.90. Using the non-GAAP measure defined below, net income per diluted share for 2018 is expected to be in the range of $1.50 to $1.60.

For 2018, the company is forecasting a non-GAAP income tax rate of 16 percent, down from 23 percent used in fiscal 2017, primarily resulting from the tax rate reduction.

For comparison purposes, the company expects the outlook for 2018 on the prior ASC Topic 605 basis to be as follows: revenue in the range of $2.055 billion to $2.095 billion, GAAP net income per diluted share in the range of $0.93 to $1.03 and non-GAAP net income per diluted share in the range of $1.62 to $1.72.

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, chief executive officer, and John Wall, senior vice president and chief financial officer, will host the fourth quarter and fiscal year 2017 financial results audio webcast today, January 31, 2018, 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 January 31, 2018 at 5 p.m. (Pacific) and ending March 16, 2018 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.

About Cadence

Cadence enables electronic systems and semiconductor companies to create the innovative end products that are transforming the way people live, work and play. Cadence(R) software, hardware and semiconductor IP are used by customers to deliver products to market faster. The company’s System Design Enablement strategy helps customers develop differentiated products-from chips to boards to systems-in mobile, consumer, cloud datacenter, automotive, aerospace, IoT, industrial and other market segments. Cadence is listed as one of Fortune Magazine’s 100 Best Companies to Work For. Learn more at cadence.com.

Cadence and the Cadence logo are trademarks or 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 2017 financial results, as well as the information in the Business Outlook section, 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, changes in tax laws, 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 cash flow, liquidity, reserves or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation or other matters; and (xi) the effects of any litigation or other proceedings to which Cadence is or may become a party. In addition, the actual timing and amount of Cadence’s repurchase of its common stock under the existing authorization will be subject to business and market conditions, corporate and regulatory requirements, acquisition opportunities and other factors.

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, stock-based compensation expense, acquisition and integration-related costs including retention expenses, 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 management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence 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 management, including forecasting and budgeting.

Cadence’s non-GAAP net income for the fourth quarter of 2017 excludes the effect of the transition tax expense and income tax expense related to the reduction in value of the deferred tax assets caused by the U.S. corporate tax rate reduction. Cadence management believes it is useful to exclude these tax expenses since it does not expect these tax expenses to be recorded frequently.

The following tables reconcile the specific items excluded from GAAP net income (loss) and GAAP net income (loss) 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 (Loss) Reconciliation                                                                                               Three Months Ended
                                                                                          ---------------------------------------------------------------------------------------------
                                                                                                   December 30, 2017                     December 31, 2016
                                                                                          -----------------------------------                     -------------------------------------
                                                                                                                                   (unaudited)
(in thousands)
Net income (loss) on a GAAP basis                                                             $ (14,442 )                                               $  38,477
    Amortization of acquired intangibles                                                         13,741                                                    14,474
    Stock-based compensation expense                                                             36,015                                                    29,231
    Non-qualified deferred compensation expenses                                                  1,295                                                       544
    Restructuring and other charges                                                              12,178                                                    26,342
    Acquisition and integration-related costs                                                     5,712                                                     1,433
    Other income or expense related to investments and non-qualified                             (1,368 )                                                    (655 )
    deferred compensation plan assets*
    Income tax related to transition tax                                                         67,188                                            --
    Income tax related to tax rate change                                                        25,292                                            --
    Income tax effect of non-GAAP adjustments                                                   (34,328 )                                                 (14,672 )
                                                                                          ----------------------------------                      ------------------------------------
Net income on a non-GAAP basis                                                                $ 111,283                              $  95,174  
                                                                                          ===== ======= ====================                      ======= ======= ====================
                                                                                                                                                                   
* 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.
                                                                     
Net Income Reconciliation                                                                                                         Years Ended
                                                                                         ---------------------------------------------------------------------------------------------
                                                                                                  December 30, 2017                     December 31, 2016
                                                                                         -----------------------------------                     -------------------------------------
                                                                                                                                  (unaudited)
(in thousands)
Net income on a GAAP basis                                                                   $ 204,101                                                 $ 203,086
   Amortization of acquired intangibles                                                         56,497                                                    60,482
   Stock-based compensation expense                                                            130,023                                                   109,217
   Non-qualified deferred compensation expenses                                                  6,145                                                     1,741
   Restructuring and other charges                                                               9,406                                                    40,955
   Acquisition and integration-related costs                                                     8,468                                                    11,268
   Other income or expense related to investments and non-qualified                            (15,693 )                                                  (4,672 )
   deferred compensation plan assets*
   Income tax related to transition tax                                                         67,188                                            --
   Income tax related to tax rate change                                                        25,292                                            --
   Income tax effect of non-GAAP adjustments                                                   (98,810 )                                                 (70,847 )
                                                                                         ----------------------------------                      ------------------------------------
Net income on a non-GAAP basis                                                               $ 392,617                              $ 351,230  
                                                                                         ===== ======= ====================                      ======= ======= ====================
                                                                                                                                                                  
* 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 (Loss) per Share Reconciliation                                                                                   Three Months Ended
                                                                                               -----------------------------------------------------------------------------------------------
                                                                                                         December 30, 2017                      December 31, 2016
                                                                                               -------------------------------------                     -------------------------------------
                                                                                                                                         (unaudited)
(in thousands, except per share data)
Diluted net income (loss) per share on a GAAP basis                                                  $   (0.05 )                                               $    0.14
   Amortization of acquired intangibles                                                                   0.05                                                      0.05
   Stock-based compensation expense                                                                       0.13                                                      0.10
   Non-qualified deferred compensation expenses                                                 --                                            --
   Restructuring and other charges                                                                        0.04                                                      0.09
   Acquisition and integration-related costs                                                              0.02                                                      0.01
   Other income or expense related to investments and non-qualified                                      (0.01 )                                          --
   deferred compensation plan assets*
   Income tax related to transition tax                                                                   0.24                                            --
   Income tax related to tax rate change                                                                  0.09                                            --
   Income tax effect of non-GAAP adjustments                                                             (0.12 )                                                   (0.05 )
                                                                                               ------------------------------------                      ------------------------------------
Diluted net income per share on a non-GAAP basis                                                     $    0.39                              $    0.34  
                                                                                               ======= ======= ====================                      ======= ======= ====================
Shares used in calculation of diluted net income (loss) per share                                      273,157                                                   278,917
-- GAAP**
Shares used in calculation of diluted net income per share --                              282,206                                                   278,917
non-GAAP**
                                                                                                                                                                          
* 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 (loss) 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.
                                                                                  
Diluted Net Income per Share Reconciliation                                                                                                   Years Ended
                                                                                                      -------------------------------------------------------------------------------------------
                                                                                                              December 30, 2017                    December 31, 2016
                                                                                                      ---------------------------------                     -------------------------------------
                                                                                                                                              (unaudited)
(in thousands, except per share data)
Diluted net income per share on a GAAP basis                                                              $  0.73                                                 $    0.70
   Amortization of acquired intangibles                                                                      0.20                                                      0.21
   Stock-based compensation expense                                                                          0.46                                                      0.37
   Non-qualified deferred compensation expenses                                                              0.02                                                      0.01
   Restructuring and other charges                                                                           0.03                                                      0.14
   Acquisition and integration-related costs                                                                 0.03                                                      0.04
   Other income or expense related to investments and non-qualified                                         (0.05 )                                                   (0.02 )
   deferred compensation plan assets*
   Income tax related to transition tax                                                                      0.24                                            --
   Income tax related to tax rate change                                                                     0.09                                            --
   Income tax effect of non-GAAP adjustments                                                                (0.35 )                                                   (0.24 )
                                                                                                      --------------------------------                      ------------------------------------
Diluted net income per share on a non-GAAP basis                                                          $  1.40                              $    1.21  
                                                                                                      ===== ===== ====================                      ======= ======= ====================
Shares used in calculation of diluted net income per share -- GAAP**                          280,221                                                   291,256
Shares used in calculation of diluted net income per share --                                 280,221                                                   291,256
non-GAAP**
                                                                                                                                                                             
* 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.
    

Cadence expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings, Cadence may reiterate the business outlook published in this press release. At the same time, Cadence will keep this press release, including the business outlook, publicly available on its website.

Prior to the start of the Quiet Period (described below), the public may continue to rely on the business outlook contained herein as still being Cadence’s current expectations on matters covered unless Cadence publishes a notice stating otherwise.

Beginning March 16, 2018, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute Cadence’s current expectations. During the Quiet Period, the business outlook in these documents should be considered historical, speaking as of prior to the Quiet Period only and not subject to any update by Cadence. During the Quiet Period, Cadence’s representatives will not comment on Cadence’s business outlook, financial results or expectations. The Quiet Period will extend until Cadence’s first quarter 2018 earnings release is published, which is currently scheduled for April 23, 2018.

For more information, please contact: Cadence Investor Relations 408-944-7100 investor_relations@cadence.com Cadence Newsroom 408-944-7039 newsroom@cadence.com

 
                                                                            Cadence Design Systems, Inc.
                                                                        Condensed Consolidated Balance Sheets
                                                                       December 30, 2017 and December 31, 2016
                                                                                   (In thousands)
                                                                                     (Unaudited)
                                                                                                    
                                                                                              December 30, 2017                      December 31, 2016
                                                                                       --------------------------------------------------- ------------------------------------------
                                                                                                                                            
Current assets:
  Cash and cash equivalents                                                                               $   688,087                                         $              465,232
  Short-term investments                                                                                        4,455                                                          3,057
  Receivables, net                                                                                            190,426                                                        157,171
  Inventories                                                                                                  33,209                                                         39,475
  Prepaid expenses and other                                                                63,811                                      37,099
                                                                                       -------------------- ---------                      -------------------- --------------------
    Total current assets                                                                                      979,988                                                        702,034
                                                                                                                                            
Property, plant and equipment, net of accumulated depreciation of                                             251,342                                                        238,607
$658,377 and $612,961, respectively
Goodwill                                                                                                      666,009                                                        572,764
Acquired intangibles, net of accumulated amortization of $297,456                                             278,835                                                        258,814
and $267,723, respectively
Long-term receivables                                                                                          12,239                                                         12,949
Other assets                                                                               230,301                                     311,740
                                                                                       -------------------- ---------                      -------------------- --------------------
Total assets                                                                                              $ 2,418,714                                         $            2,096,908
                                                                                       ==================== =========                      ==================== ====================
                                                                                                                                            
Current liabilities:
  Revolving credit facility                                                                               $    85,000                                         $               50,000
  Accounts payable and accrued liabilities                                                                    221,101                                                        239,496
  Current portion of deferred revenue                                                      336,297                                     296,066
                                                                                       -------------------- ---------                      -------------------- --------------------
    Total current liabilities                                                              642,398                                     585,562
                                                                                       -------------------- ---------                      -------------------- --------------------
                                                                                                                                            
Long-term liabilities:
  Long-term portion of deferred revenue                                                                        61,513                                                         66,769
  Long-term debt                                                                                              644,369                                                        643,493
  Other long-term liabilities                                                               81,232                                      59,314
                                                                                       -------------------- ---------                      -------------------- --------------------
    Total long-term liabilities                                                            787,114                                     769,576
                                                                                       -------------------- ---------                      -------------------- --------------------
                                                                                                                                            
Stockholders’ equity                                                                       989,202                                     741,770
                                                                                       -------------------- ---------                      -------------------- --------------------
Total liabilities and stockholders’ equity                                                                $ 2,418,714                                         $            2,096,908
                                                                                       ==================== =========                      ==================== ====================
                                                                                                                                                                 
                                                                                                                                                            Cadence Design Systems, Inc.
                                                                                                                                                   Condensed Consolidated Statements of Operations
                                                                                                                                             For the Three Months and Years Ended December 30, 2017 and
                                                                                                                                                                  December 31, 2016
                                                                                                                                                      (In thousands, except per share amounts)
                                                                                                                                                                     (Unaudited)
                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                  
                                                                                                                             Three Months Ended                                                                                                                                  Years Ended
                                                                          -------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------
                                                                                             December 30,                                        December 31,                                         December 30,                                          December 31,
                                                                                                 2017                                                                   2016                                                                    2017                                                                     2016
                                                                          -----------------------------------------------   -------------------- -----------------------------------------------   -------------------- -------------------------------------------------   -------------------- -------------------------------------------------
                                                                                                                                                                                                                                                                                                  
Revenue:
  Product and maintenance                                                                    $ 467,504                                                              $ 436,694                                                              $ 1,813,987                                                              $ 1,683,771
  Services                                                                   34,218                           32,286                            129,045                            132,312  
                                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                  
    Total revenue                                                           501,722                          468,980                          1,943,032                          1,816,083  
                                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                  
Costs and expenses:
  Cost of product and maintenance                                                               39,305                                                                 57,410                                                                  156,676                                                                  183,291
  Cost of services                                                                              20,979                                                                 18,638                                                                   80,714                                                                   73,201
  Marketing and sales                                                                          107,654                                                                 98,091                                                                  419,161                                                                  395,194
  Research and development                                                                     203,468                                                                181,516                                                                  804,223                                                                  735,340
  General and administrative                                                                    33,289                                                                 29,977                                                                  134,181                                                                  125,106
  Amortization of acquired intangibles                                                           3,571                                                                  3,889                                                                   14,716                                                                   18,095
  Restructuring and other charges                                            12,178                           26,342                              9,406                             40,955  
                                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                  
    Total costs and expenses                                                420,444                          415,863                          1,619,077                          1,571,182  
                                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                  
      Income from operations                                                                    81,278                                                                 53,117                                                                  323,955                                                                  244,901
                                                                                                                                                                                                                                                                                                  
  Interest expense                                                                              (6,712 )                                                               (6,364 )                                                                (25,664 )                                                                (23,670 )
  Other income, net                                                           2,385                            5,481                             16,755                             15,922  
                                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                  
    Income before provision for income taxes                                                    76,951                                                                 52,234                                                                  315,046                                                                  237,153
                                                                                                                                                                                                                                                                                                  
  Provision for income taxes                                                 91,393                           13,757                            110,945                             34,067  
                                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                  
    Net income (loss)                                                                        $ (14,442 )                                                            $  38,477                                           $   204,101                                           $   203,086  
                                                                          ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                  
Net income (loss) per share - basic                                                          $   (0.05 )                                                            $    0.14                                           $      0.75                                           $      0.71  
                                                                          ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                  
Net income (loss) per share - diluted                                                        $   (0.05 )                                                            $    0.14                                           $      0.73                                           $      0.70  
                                                                          ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                  
Weighted average common shares outstanding - basic                          273,157                          272,578                            272,097                            284,502  
                                                                          ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                  
Weighted average common shares outstanding - diluted                        273,157                          278,917                            280,221                            291,256  
                                                                          ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                 
                                                                                            Cadence Design Systems, Inc.
                                                                                   Condensed Consolidated Statements of Cash Flows
                                                                             For the Years Ended December 30, 2017 and December 31, 2016
                                                                                                   (In thousands)
                                                                                                     (Unaudited)
                                                                                                                          
                                                                                                                                                                  
                                                                                                                                                 Years Ended
                                                                                         ---------------------------------------------------------------------------------------------------------------------------
                                                                                                            December 30,                                                            December 31,
                                                                                             2017                              2016    
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                  
Cash and cash equivalents at beginning of year                                                              $  465,232                                           $  616,686  
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
Cash flows from operating activities:
   Net income                                                                                                  204,101                                                                 203,086
   Adjustments to reconcile net income to net cash provided by
   operating activities:
      Depreciation and amortization                                                                            115,524                                                                 119,588
      Amortization of debt discount and fees                                                                     1,211                                                                   1,069
      Stock-based compensation                                                                                 130,023                                                                 109,217
      Gain on investments, net                                                                                 (13,869 )                                                                (4,725 )
      Gain on sale of property, plant and equipment                                                                  -                                                                    (923 )
      Deferred income taxes                                                                                     79,934                                                                  (4,869 )
      Other non-cash items                                                                                       5,068                                                                   4,027
      Changes in operating assets and liabilities, net of effect of
      acquired businesses:
         Receivables                                                                                           (28,409 )                                                                (3,299 )
         Inventories                                                                                             5,034                                                                   4,934
         Prepaid expenses and other                                                                            (25,793 )                                                                (6,903 )
         Other assets                                                                                          (22,336 )                                                                (6,566 )
         Accounts payable and accrued liabilities                                                              (25,987 )                                                                 2,655
         Deferred revenue                                                                                       33,614                                                                  30,742
         Other long-term liabilities                                                         12,625                            (3,154 )
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
            Net cash provided by operating activities                                       470,740                           444,879  
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                  
Cash flows from investing activities:
  Purchases of available-for-sale securities                                                                         -                                                                 (20,525 )
  Proceeds from the sale of available-for-sale securities                                                          833                                                                  55,619
  Proceeds from the maturity of available-for-sale securities                                                        -                                                                  57,762
  Proceeds from the sale of long-term investments                                                                9,108                                                                   2,917
  Proceeds from the sale of property, plant and equipment                                                            -                                                                     923
  Purchases of property, plant and equipment                                                                   (57,901 )                                                               (53,712 )
  Cash paid in business combinations and asset acquisitions, net of                        (143,249 )                                            (41,627 )
  cash acquired
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
           Net cash provided by (used for) investing activities                            (191,209 )                                              1,357  
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                  
Cash flows from financing activities:
  Proceeds from term loan                                                                                            -                                                                 300,000
  Proceeds from revolving credit facility                                                                      135,000                                                                 115,000
  Payment on revolving credit facility                                                                        (100,000 )                                                               (65,000 )
  Payment of debt issuance costs                                                                                  (793 )                                                                  (622 )
  Proceeds from issuance of common stock                                                                        48,965                                                                  55,440
  Stock received for payment of employee taxes on vesting of                                                   (57,161 )                                                               (37,226 )
  restricted stock
  Payments for repurchases of common stock                                                                    (100,025 )                                                              (960,289 )
  Change in book overdraft                                                                    3,867                                 -  
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
           Net cash used for financing activities                                           (70,147 )                                           (592,697 )
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                  
Effect of exchange rate changes on cash and cash equivalents                                 13,471                            (4,993 )
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                  
Increase (decrease) in cash and cash equivalents                                            222,855                          (151,454 )
                                                                                         -------------------- -------- --------------------                      -------------------- -------- --------------------
                                                                                                                                                                  
Cash and cash equivalents at end of year                                                                    $  688,087                                           $  465,232  
                                                                                         ==================== ======== ====================                      ==================== ======== ====================
                                                                                                                                                                                                
                                                                                                                                                               Cadence Design Systems, Inc.
                                                                                                                                                                        (Unaudited)
                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                       
Revenue Mix by Geography (% of Total Revenue)
                                                                                                                                                2016                                                                                                                                      2017
                                                                                            -------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------
GEOGRAPHY                                                                                    Q1     Q2     Q3     Q4    Year                       Q1     Q2     Q3     Q4            Year
----------------------------------------------------------------------                      ---- -------------------- ---- -------------------- ---- -------------------- ---- -------------------- ----                      ---- -------------------- ---- -------------------- ---- -------------------- ---- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                       
 Americas                                                                                    49%                       47%                       46%                       48%                       48%                       45%                       45%                       45%                       44%                                       44%
 Asia                                                                                        22%                       24%                       27%                       25%                       24%                       26%                       28%                       27%                       28%                                       27%
 Europe, Middle East and Africa                                                              19%                       20%                       19%                       19%                       19%                       20%                       19%                       19%                       20%                                       20%
 Japan                                                                                       10%                        9%                        8%                        8%                        9%                        9%                        8%                        9%                        8%                                        9%
Total                                                                                       100%                      100%                      100%                      100%                      100%                      100%                      100%                      100%                      100%                                      100%
                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                       
Revenue Mix by Product Group (% of Total Revenue)
                                                                                                                                                2016                                                                                                                                      2017
                                                                                            -------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------
PRODUCT GROUP                                                                                Q1     Q2     Q3     Q4    Year                       Q1     Q2     Q3     Q4            Year
----------------------------------------------------------------------                      ---- -------------------- ---- -------------------- ---- -------------------- ---- -------------------- ----                      ---- -------------------- ---- -------------------- ---- -------------------- ---- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                       
 Functional Verification, including Emulation and Prototyping Hardware                       26%                       27%                       24%                       25%                       25%                       23%                       23%                       21%                       23%                                       22%
 Digital IC Design and Signoff                                                               30%                       27%                       28%                       30%                       29%                       29%                       30%                       30%                       29%                                       29%
 Custom IC Design                                                                            25%                       26%                       27%                       25%                       25%                       26%                       26%                       28%                       26%                                       27%
 System Interconnect and Analysis                                                             9%                       10%                       10%                        9%                       10%                       10%                       10%                       10%                       10%                                       10%
 IP                                                                                          10%                       10%                       11%                       11%                       11%                       12%                       11%                       11%                       12%                                       12%
Total                                                                                       100%                      100%                      100%                      100%                      100%                      100%                      100%                      100%                      100%                                      100%
                                                                                                                                                                                                                                                                                                                                       
                                          Cadence Design Systems, Inc.
                                             As of January 31, 2018
                          Impact of Non-GAAP Adjustments on Forward Looking Diluted Net
                                                Income Per Share
                                                   (Unaudited)
                                                                        
                                                                                             
                                                   Three Months Ending                           Year Ending
                                                     March 31, 2018                           December 29, 2018
                                                  --------------------                      --------------------
                                                        Forecast                                  Forecast
                                                  --------------------                      --------------------
                                                                                             
Diluted net income per share on a GAAP basis         $0.20 to $0.22                            $0.80 to $0.90
                                                                                             
  Amortization of acquired intangibles                    0.05                                      0.19
  Stock-based compensation expense                        0.14                                      0.59
  Restructuring and other charges                           -                                         -
  Acquisition and integration-related costs               0.03                                      0.09
  Income tax effect of non-GAAP adjustments              (0.06)                                    (0.17)
                                                                          
                                                  --------------------                      --------------------
Diluted net income per share on a non-GAAP basis+    $0.36 to $0.38                            $1.50 to $1.60
                                                  ====================                      ====================
                                                                                             
                                                                                             
                                          Cadence Design Systems, Inc.
                                             As of January 31, 2018
                          Impact of Non-GAAP Adjustments on Forward Looking Net Income
                                                   (Unaudited)
                                                                                             
                                                                                             
                                                   Three Months Ending                           Year Ending
                                                     March 31, 2018                           December 29, 2018
                                                  --------------------                      --------------------
($ in millions)                                         Forecast                                  Forecast
                                                  --------------------                      --------------------
                                                                                             
Net income on a GAAP basis                             $58 to $64                               $226 to $254
                                                                                             
  Amortization of acquired intangibles                     14                                        54
  Stock-based compensation expense                         39                                        167
  Restructuring and other charges                           1                                         1
  Acquisition and integration-related costs                 7                                        26
  Income tax effect of non-GAAP adjustments               (16)                                      (48)
                                                                          
                                                  --------------------                      --------------------
Net income on a non-GAAP basis+                       $103 to $109                              $426 to $454
                                                  ====================                      ====================
                                                                                             
                                                                                             
+The non-GAAP measures presented in the table above should not
be considered a substitute for financial results and measures
determined or calculated in accordance with GAAP.
  

CDNS_IR

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180131006186r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180131006186/en/

SOURCE: Cadence Design Systems, Inc.

Cadence Investor Relations 
408-944-7100 
investor_relations@cadence.com 
or 
Cadence Newsroom 
408-944-7039 
newsroom@cadence.com


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