10-KPeriod: FY2000

CADENCE DESIGN SYSTEMS INC Annual Report, Year Ended Dec 30, 2000

Filed March 29, 2001For Securities:CDNS

Summary

Cadence Design Systems, Inc. (CDNS) reported strong revenue growth in fiscal year 2000, reaching $1.28 billion, a 17% increase over the previous year, primarily driven by its product segment. Despite this revenue growth, the company experienced a net loss of $14.1 million in 1999, which improved to a net income of $49.9 million in 2000. This turnaround was supported by strategic acquisitions and a focus on intellectual property and system-on-chip (SOC) design solutions. The company is navigating a dynamic electronics industry, characterized by rapid technological advancements and increasing complexity in chip design, which it addresses through continuous investment in research and development and a comprehensive suite of EDA tools and services. However, the report also highlights potential risks, including the cyclical nature of the semiconductor industry, competition, and the successful integration of recent acquisitions, notably the separation and planned IPO of its design services group, Tality.

Key Highlights

  • 1Total revenue reached $1.28 billion in fiscal year 2000, a 17% increase year-over-year.
  • 2The company shifted from a net loss of $14.1 million in 1999 to a net income of $49.9 million in 2000, demonstrating improved profitability.
  • 3Product revenue saw a significant 24% increase in 2000, driven by renewals and sales of IP creation and implementation products.
  • 4Cadence made several strategic acquisitions in 1999 and 2000, including Diablo Research, OrCAD, DAI, Ambit, BLDA, EXD, and Symbionics, to expand its offerings in SOC design and other key areas.
  • 5The company is in the process of separating its electronics design services group into a new company named Tality Corporation, though its IPO has been postponed.
  • 6Research and development expenses increased to $292.4 million (before capitalization) in 2000, underscoring Cadence's commitment to technological innovation.
  • 7The company's international revenue, while decreasing slightly in 2000, still represented a significant portion (44%) of total revenue, with a strong focus on Europe.

Frequently Asked Questions

For the fiscal year ending December 30, 2000, Cadence reported total revenue of $1.28 billion, a 17% increase from the prior year. The company achieved a net income of $49.98 million, a significant improvement from a net loss of $14.08 million in 1999. This strong financial performance was driven by growth in product revenue, which increased by 24% year-over-year.

Cadence has been active in strategic growth through acquisitions, notably acquiring Diablo Research Company, OrCAD, Inc., Design Acceleration, Inc., Ambit Design Systems, Inc., Bell Labs' Integrated Circuit Design Automation Group, Excellent Design, Inc., and Symbionics Group Limited in the periods leading up to this filing. Additionally, Cadence announced plans to separate its electronics design services group into a new company named Tality Corporation, aiming for a future IPO, though the IPO was postponed due to market conditions.

The report identifies several risks, including the cyclical nature of the integrated circuit and electronics systems industries, potential downturns that could reduce revenue, and intense competition within the EDA market. Cadence also faces challenges related to the successful integration of recent acquisitions, the complexities of deep submicron and SOC design, reliance on key suppliers for hardware products, and potential intellectual property infringement claims. The company also notes the potential impact of foreign currency fluctuations on its international operations.

Cadence addresses these complexities by providing comprehensive software and technology solutions. Their offerings include system-level design tools like VCC and SPW, functional verification tools, and automated digital IC design tools such as PKS and SILICON ENSEMBLE PKS. They also offer custom and analog design tools, and PCB design tools, supported by extensive research and development to keep pace with industry demands for smaller feature sizes and more integrated systems.