Cadence Design Systems, Inc. (NASDAQ: CDNS) reported fourth quarter 2006 revenue of $431 million, an increase of 14 percent over the $378 million reported for the same period in 2005. On a GAAP basis, Cadence recognized net income of $48 million, or $0.16 per share on a diluted basis, in the fourth quarter of 2006, compared to $27 million, or $0.08 per share on a diluted basis, in the same period in 2005. Revenues for the fiscal year 2006 totaled $1.48 billion, an increase of 12 percent over 2005 total revenues of $1.33 billion. Net income for the fiscal year 2006 was $143 million, or $0.46 per share, compared to net income of $49 million, or $0.16 per share for the year 2005.
In addition to using GAAP results in evaluating Cadence’s business, management believes it is useful to measure results using a non-GAAP measure of net income, which excludes, as applicable, amortization of intangible assets, stock-based compensation expense, in-process research and development charges, integration and acquisition-related costs, gains and expenses related to non-qualified deferred compensation plan assets, executive severance payments, restructuring charges, losses on extinguishment of debt, and equity in losses (income) from investments. Non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company’s tax liability. See “GAAP to non-GAAP Reconciliation” below for further information on the non-GAAP measure.
Using this non-GAAP measure, net income in the fourth quarter of 2006 was $116 million, or $0.38 per share on a diluted basis, as compared to $93 million, or $0.29 per share on a diluted basis, in the same period in 2005. For the fiscal year 2006, non-GAAP net income was $336 million, or $1.08 per share, compared to $258 million and $0.83 per share in 2005.
“We had outstanding execution across all elements of our business, especially fueled by technology innovation and significant customer engagements in all regions,” said Mike Fister, president and CEO of Cadence.
Bill Porter, executive vice president and chief financial officer, added, “We had a very good fourth quarter and year led by 20% or better year over year growth in our verification and custom businesses.”
The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not include the impact of any mergers, acquisitions or other business combinations completed after Dec. 30, 2006.
For the first quarter of 2007, the company expects total revenue in the range of $355 million to $365 million. First quarter GAAP earnings per diluted share are expected to be in the range of $0.10 to $0.12. Diluted earnings per share using the non-GAAP measure defined below are expected to be in the range of $0.23 to $0.25.
For the full year 2007, the company expects total revenue in the range of $1.575 billion to $1.625 billion. On a GAAP basis, net income per diluted share for fiscal 2007 is expected to be in the range of $0.69 to $0.77. Using the non-GAAP measure defined below, diluted earnings per share for fiscal 2007 are expected to be in the range of $1.26 to $1.34.
Audio Webcast Scheduled
An archive of the fourth quarter 2006 financial results audio webcast will be available starting Jan. 31, 2007, at 5 p.m. Pacific time and ending at 5 p.m. Pacific time on Feb. 7, 2007.
Cadence enables global electronic-design innovation and plays an essential role in the creation of today’s integrated circuits and electronics. Customers use Cadence(R) software and hardware, methodologies, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. Cadence reported 2006 revenues of approximately $1.5 billion, and has approximately 5,200 employees. The company is headquartered in San Jose, Calif., with sales offices, design centers, and research facilities around the world to serve the global electronics industry.
Cadence is a registered trademark and the Cadence logo is a trademark of Cadence Design Systems, Inc.