01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
Cadence Design Systems, Inc. (CDNS) reported its annual results for the fiscal year ending January 2, 2010.
The company experienced a significant revenue decline of approximately 17% year-over-year, from $1,038.6 million in 2008 to $852.6 milliona in 2009. This downturn was attributed to the challenging macroeconomic environment impacting the semiconductor industry, leading to reduced customer spending on EDA products and services. Despite the revenue decrease, Cadence managed to reduce its operating expenses significantly through restructuring efforts, including workforce reductions, which helped mitigate the impact on its overall financial performance.
Financially, the company reported a net loss for the fiscal year, a continuation from the previous year, impacted by a substantial goodwill impairment charge in 2008. Cadence maintained a solid liquidity position with $571.3 millionb in cash, cash equivalents, and short-term investments at the end of the fiscal year.
The company's strategy continued to focus on its core EDA platforms and investing in research and development to address complex design challenges in the evolving electronics industry. Key risks highlighted include the cyclical nature of the semiconductor industry, technological developments, and competitive pressures.
02—Key points
Key Highlights
- Revenue decreased by 17% to $852.6 million in fiscal year 2009, down from $1,038.6 million in fiscal year 2008, primarily due to macroeconomic pressures on customer R&D budgets.
- The company reported a net loss of $149.9 million for fiscal year 2009, compared to a net loss of $1,856.7 million in fiscal year 2008 (which included significant impairment charges).
- Operating expenses were reduced by 21% to $764.2 million in fiscal year 2009, a decrease from $968.3 million in fiscal year 2008, driven by restructuring plans and cost-saving initiatives.
- Cadence maintained a strong liquidity position, ending the fiscal year with $571.3 million in cash, cash equivalents, and short-term investments.
- Backlog at January 2, 2010, was $1.6 billion, a decrease from $1.8 billion at the start of the fiscal year.
- Product revenue, the largest segment, decreased by 26% year-over-year, while Maintenance revenue decreased by 11% and Services revenue decreased by 20%.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2010, Cadence Design Systems Inc lost $0.18.
- Revenue$852.6M100.0%
- Cost of revenue−$32.1M3.8%
- Gross profit$820.5M96.2%
- Operating costs−$944.1M110.7%
- Operating income−$123.6M14.5%
- Interest, other & tax−$26.3M3.1%
- Net income−$149.9M17.6%
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 26, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $852.63M$1.04B | −17.9% |
| Cost of Revenue | $32.11M$50.30M | −36.2% |
| Gross Profit | $820.52M$988.31M | −17.0% |
| Operating Expenses | $976.22M$2.61B | −62.6% |
| Operating Income | -$123.59M-$1.57B | +92.1% |
| Interest Expense | $28.87M$27.40M | +5.4% |
| Net Income | -$149.87M-$1.86B | +91.9% |
| EPS (Basic) | $-0.58$-7.30 | +92.1% |
| EPS (Diluted) | $-0.58$-7.30 | +92.1% |
| Shares Outstanding (Basic) | 257.78M254.32M | +1.4% |
| Shares Outstanding (Diluted) | 257.78M254.32M | +1.4% |
05—Questions
Frequently Asked Questions
What was the primary driver of Cadence's revenue decline in fiscal year 2009?
The primary driver of the revenue decline was the challenging macroeconomic environment that impacted the semiconductor and electronics industries. This led to reduced customer spending on Electronic Design Automation (EDA) products and services due to pressures on their research and development budgets.
How did Cadence manage its expenses in response to lower revenues?
Cadence implemented significant cost-saving initiatives, including workforce reductions through restructuring plans. These efforts resulted in a substantial decrease in operating expenses, helping to mitigate the impact of the revenue shortfall on its financial performance.
What is the company's financial health and outlook based on this filing?
While the company reported a net loss, its liquidity remains strong with over half a billion dollars in cash and short-term investments. The company is focused on its R&D efforts and adapting its product offerings to industry trends like System-on-Chip (SoC) integration and low-power design. The outlook anticipates modest growth in the semiconductor industry for 2010, though Cadence expects EDA spending to grow more slowly.
What were the significant accounting charges or adjustments made in fiscal year 2008 and 2009?
In fiscal year 2008, Cadence recorded a significant goodwill impairment charge of $1,317.2 million and an impairment of intangible and tangible assets of $47.1 million. It also recorded a valuation allowance against its deferred tax assets of $326.0 million. For fiscal year 2009, the company reported $35.1 million in restructuring charges.
06—Continue