10-QPeriod: Q3 FY2000

CADENCE DESIGN SYSTEMS INC Quarterly Report for Q3 Ended Sep 30, 2000

Filed November 14, 2000For Securities:CDNS

Summary

Cadence Design Systems, Inc. (CDNS) reported its third-quarter and nine-month results for the period ending September 30, 2000. Total revenue for the nine months increased by 8% to $888.6 million, driven by strong performance in product and maintenance revenue, although services revenue saw a decline. The company reported a net income of $7.5 million for the nine-month period, a decrease from $8.4 million in the prior year. Diluted EPS was $0.03 for both periods. A significant event during the quarter was the plan to separate the electronics design services group into a new entity, Tality Corporation. While Tality's separation was effective October 4, 2000, its initial public offering (IPO) was postponed due to unfavorable market conditions. The financial statements reflect Tality's operations, and Cadence expects to retain approximately 80% ownership post-IPO. The company also secured new senior unsecured credit facilities totaling $350 million, replacing a previous facility, with no borrowings outstanding as of quarter-end.

Key Highlights

  • 1Total revenue for the nine months ended September 30, 2000, increased by 8% to $888.6 million, compared to $825.3 million in the prior year.
  • 2Product revenue saw a substantial increase of 105% in the third quarter to $165.3 million, indicating strong demand for software products, particularly integrated circuit implementation and intellectual property creation products.
  • 3The company reported a net income of $7.5 million for the nine months ended September 30, 2000, down from $8.4 million in the same period last year.
  • 4Diluted earnings per share (EPS) remained steady at $0.03 for both the nine-month periods ended September 30, 2000, and October 2, 1999.
  • 5Cadence established new senior unsecured credit facilities totaling $350 million, replacing a previous $355 million facility, with no outstanding borrowings as of September 30, 2000.
  • 6The company announced plans to separate its electronics design services group into Tality Corporation, effective October 4, 2000, though Tality's IPO was subsequently postponed.
  • 7Cash provided by operating activities increased significantly to $145.3 million for the nine months ended September 30, 2000, up from $103.1 million in the prior year.

Frequently Asked Questions

For the nine months ended September 30, 2000, Cadence reported total revenue of $888.6 million, an increase of 8% from $825.3 million in the prior year. The company's net income was $7.5 million, resulting in diluted earnings per share of $0.03. Cash flow from operations improved significantly, reaching $145.3 million.

Cadence is separating its electronics design services group into Tality Corporation, which became effective October 4, 2000. This strategic move aims to create a more focused entity for its services business. However, Tality's planned Initial Public Offering (IPO) has been postponed due to unfavorable market conditions. Cadence expects to retain a significant ownership stake in Tality post-IPO.

The revenue mix has shifted, with Product revenue showing significant growth, increasing by 105% in the third quarter and contributing 50% of total revenue for the quarter, up from 36% in the prior year. Maintenance revenue also increased. However, Services revenue experienced a decline of 10% for the quarter and 22% for the nine months, attributed to reduced staffing and fewer engagements.

As of September 30, 2000, Cadence had $128 million in cash and short-term investments. The company also secured new syndicated senior unsecured credit facilities totaling $350 million, replacing its prior credit facility. Importantly, there were no outstanding borrowings under these new credit facilities at the end of the quarter, indicating a strong liquidity position.