Cover Page
Cover Page | 9 Months Ended |
Oct. 02, 2021shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Oct. 2, 2021 |
Document Transition Report | false |
Entity File Number | 000-15867 |
Entity Registrant Name | CADENCE DESIGN SYSTEMS, INC. |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 00-0000000 |
Entity Address, Address Line One | 2655 Seely Avenue, Building 5, |
Entity Address, City or Town | San Jose, |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 95134 |
City Area Code | (408) |
Local Phone Number | 943-1234 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Title of 12(b) Security | Common Stock, $0.01 par value per share |
Trading Symbol | CDNS |
Security Exchange Name | NASDAQ |
Entity Common Stock, Shares Outstanding | 277,141,000 |
Entity Central Index Key | 0000813672 |
Amendment Flag | false |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | Q3 |
Current Fiscal Year End Date | --01-01 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,013,819 | $ 928,432 |
Receivables, net | 327,191 | 338,487 |
Inventories | 101,575 | 75,956 |
Prepaid expenses and other | 100,428 | 135,712 |
Total current assets | 1,543,013 | 1,478,587 |
Property, plant and equipment, net | 303,313 | 311,125 |
Goodwill | 925,949 | 782,087 |
Acquired intangibles, net | 247,628 | 210,590 |
Deferred taxes | 766,036 | 732,290 |
Other assets | 427,936 | 436,106 |
Total assets | 4,213,875 | 3,950,785 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 363,835 | 349,951 |
Current portion of deferred revenue | 543,361 | 446,857 |
Total current liabilities | 907,196 | 796,808 |
Long-term liabilities: | ||
Long-term portion of deferred revenue | 95,991 | 107,064 |
Long-term debt | 347,385 | 346,793 |
Other long-term liabilities | 232,041 | 207,102 |
Total long-term liabilities | 675,417 | 660,959 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock and capital in excess of par value | 2,411,791 | 2,217,939 |
Treasury stock, at cost | (2,622,675) | (2,057,829) |
Retained earnings | 2,869,709 | 2,350,333 |
Accumulated other comprehensive loss | (27,563) | (17,425) |
Total stockholders’ equity | 2,631,262 | 2,493,018 |
Total liabilities and stockholders’ equity | $ 4,213,875 | $ 3,950,785 |
Condensed Consolidated Income S
Condensed Consolidated Income Statements - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Revenues [Abstract] | ||||
Revenues | $ 750,895 | $ 666,607 | $ 2,215,208 | $ 1,922,982 |
Costs and Expenses: | ||||
Marketing and sales | 143,401 | 123,738 | 412,194 | 369,958 |
Research and development | 289,105 | 250,934 | 845,324 | 743,423 |
General and administrative | 42,990 | 35,928 | 123,275 | 105,161 |
Amortization of acquired intangibles | 5,000 | 4,438 | 14,661 | 13,234 |
Restructuring and other charges (credits) | (222) | 13 | (968) | (1,329) |
Total costs and expenses | 556,861 | 497,335 | 1,631,799 | 1,462,409 |
Income from operations | 194,034 | 169,272 | 583,409 | 460,573 |
Interest expense | (4,196) | (5,325) | (12,729) | (15,876) |
Other income (expenses), net | (1,143) | 1,766 | 3,701 | 1,862 |
Income before provision for income taxes | 188,695 | 165,713 | 574,381 | 446,559 |
Provision for income taxes | 12,388 | 4,083 | 55,005 | 29,653 |
Net income | $ 176,307 | $ 161,630 | $ 519,376 | $ 416,906 |
Net income per share - basic (usd per share) | $ 0.65 | $ 0.59 | $ 1.90 | $ 1.52 |
Net Income per share - diluted (usd per share) | $ 0.63 | $ 0.58 | $ 1.86 | $ 1.49 |
Weighted average common shares outstanding - basic (in shares) | 273,194 | 273,996 | 273,636 | 273,633 |
Weighted average common shares outstanding - diluted (in shares) | 278,311 | 280,024 | 279,046 | 279,455 |
Product and maintenance [Member] | ||||
Revenues [Abstract] | ||||
Revenues | $ 706,160 | $ 630,329 | $ 2,093,098 | $ 1,813,384 |
Costs and Expenses: | ||||
Cost of sales | 54,185 | 64,800 | 174,933 | 175,915 |
Service [Member] | ||||
Revenues [Abstract] | ||||
Revenues | 44,735 | 36,278 | 122,110 | 109,598 |
Costs and Expenses: | ||||
Cost of sales | $ 22,402 | $ 17,484 | $ 62,380 | $ 56,047 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 176,307 | $ 161,630 | $ 519,376 | $ 416,906 |
Other comprehensive income (loss), net of tax effects: | ||||
Foreign currency translation adjustments | (5,483) | 11,539 | (9,618) | 3,029 |
Changes in defined benefit plan liabilities | (288) | (142) | (520) | 277 |
Total other comprehensive income (loss), net of tax effects | (5,771) | 11,397 | (10,138) | 3,306 |
Comprehensive income | $ 170,536 | $ 173,027 | $ 509,238 | $ 420,212 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Common Stock, Par Value and Capital in Excess of Par | Treasury Stock | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment [Member] | Accumulated Other Comprehensive Loss |
Beginning balance at Dec. 28, 2019 | $ 2,102,894 | $ 2,046,237 | $ (1,668,105) | $ 1,761,688 | $ (1,999) | $ (36,926) | |
Beginning balance, shares at Dec. 28, 2019 | 279,855 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 416,906 | 416,906 | |||||
Other comprehensive loss, net of taxes | $ 3,306 | 3,306 | |||||
Purchase of treasury stock, shares | (3,124) | (3,124) | |||||
Purchase of treasury stock | $ (250,047) | (250,047) | |||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures, shares | 3,049 | ||||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures | 71,450 | 15,086 | 56,364 | ||||
Stock received for payment of employee taxes on vesting of restricted stock, shares | (849) | ||||||
Stock received for payment of employee taxes on vesting of restricted stock | (85,515) | (13,196) | (72,319) | ||||
Stock-based compensation expense | 138,723 | 138,723 | |||||
Ending balance at Sep. 26, 2020 | 2,395,718 | 2,186,850 | (1,934,107) | 2,176,595 | (33,620) | ||
Ending balance, shares at Sep. 26, 2020 | 278,931 | ||||||
Beginning balance at Jun. 27, 2020 | 2,256,631 | 2,143,016 | (1,856,333) | 2,014,965 | (45,017) | ||
Beginning balance, shares at Jun. 27, 2020 | 278,794 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 161,630 | 161,630 | |||||
Other comprehensive loss, net of taxes | $ 11,397 | 11,397 | |||||
Purchase of treasury stock, shares | (717) | (717) | |||||
Purchase of treasury stock | $ (75,011) | (75,011) | |||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures, shares | 1,093 | ||||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures | 27,595 | 4,328 | 23,267 | ||||
Stock received for payment of employee taxes on vesting of restricted stock, shares | (239) | ||||||
Stock received for payment of employee taxes on vesting of restricted stock | (31,858) | (5,828) | (26,030) | ||||
Stock-based compensation expense | 45,334 | 45,334 | |||||
Ending balance at Sep. 26, 2020 | 2,395,718 | 2,186,850 | (1,934,107) | 2,176,595 | (33,620) | ||
Ending balance, shares at Sep. 26, 2020 | 278,931 | ||||||
Beginning balance at Jan. 02, 2021 | 2,493,018 | 2,217,939 | (2,057,829) | 2,350,333 | (17,425) | ||
Beginning balance, shares at Jan. 02, 2021 | 278,941 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 519,376 | 519,376 | |||||
Other comprehensive loss, net of taxes | $ (10,138) | (10,138) | |||||
Purchase of treasury stock, shares | (3,766) | (3,766) | |||||
Purchase of treasury stock | $ (502,301) | (502,301) | |||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures, shares | 2,640 | ||||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures | 83,632 | 52,236 | 31,396 | ||||
Stock received for payment of employee taxes on vesting of restricted stock, shares | (674) | ||||||
Stock received for payment of employee taxes on vesting of restricted stock | (108,185) | (14,244) | (93,941) | ||||
Stock-based compensation expense | 155,860 | 155,860 | |||||
Ending balance at Oct. 02, 2021 | 2,631,262 | 2,411,791 | (2,622,675) | 2,869,709 | (27,563) | ||
Ending balance, shares at Oct. 02, 2021 | 277,141 | ||||||
Beginning balance at Jul. 03, 2021 | 2,516,743 | 2,354,801 | (2,509,668) | 2,693,402 | (21,792) | ||
Beginning balance, shares at Jul. 03, 2021 | 276,780 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 176,307 | 176,307 | |||||
Other comprehensive loss, net of taxes | $ (5,771) | (5,771) | |||||
Purchase of treasury stock, shares | (723) | (723) | |||||
Purchase of treasury stock | $ (110,011) | (110,011) | |||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures, shares | 1,249 | ||||||
Issuance of common stock and reissuance of treasury stock under equity incentive plans, net of forfeitures | 31,380 | 9,319 | 22,061 | ||||
Stock received for payment of employee taxes on vesting of restricted stock, shares | (165) | ||||||
Stock received for payment of employee taxes on vesting of restricted stock | (30,132) | (5,075) | (25,057) | ||||
Stock-based compensation expense | 52,746 | 52,746 | |||||
Ending balance at Oct. 02, 2021 | $ 2,631,262 | $ 2,411,791 | $ (2,622,675) | $ 2,869,709 | $ (27,563) | ||
Ending balance, shares at Oct. 02, 2021 | 277,141 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 02, 2021 | Sep. 26, 2020 | |
Statement of Cash Flows [Abstract] | ||
Cash and Cash Equivalents, at Carrying Value | $ 1,013,819 | $ 1,306,564 |
Cash flows from operating activities: | ||
Net income | 519,376 | 416,906 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 106,962 | 107,019 |
Amortization of debt discount and fees | 952 | 770 |
Stock-based compensation | 155,860 | 138,723 |
(Gain) loss on investments, net | (330) | 5,118 |
Deferred income taxes | (34,566) | (18,966) |
Provisions for losses on receivables | 234 | 1,087 |
ROU asset amortization and change in operating lease liabilities | (2,917) | 2,064 |
Other non-cash items | 146 | 410 |
Changes in operating assets and liabilities, net of effect of acquired businesses: | ||
Receivables | 15,132 | 9,945 |
Inventories | (25,608) | 6,376 |
Prepaid expenses and other | 36,632 | 22,769 |
Other assets | 8,127 | (21,287) |
Accounts payable and accrued liabilities | 10,501 | (30,455) |
Deferred revenue | 84,183 | 124,491 |
Other long-term liabilities | 10,417 | 4,430 |
Net cash provided by operating activities | 885,101 | 769,400 |
Cash flows from investing activities: | ||
Proceeds from the sale of non-marketable investments | 128 | 0 |
Purchases of property, plant and equipment | (49,977) | (63,745) |
Cash paid in business combinations, net of cash acquired | (220,026) | (197,562) |
Net cash used for investing activities | (269,875) | (261,307) |
Cash flows from financing activities: | ||
Proceeds from revolving credit facility | 0 | 350,000 |
Payment of debt issuance costs | (1,285) | 0 |
Proceeds from issuance of common stock | 83,632 | 71,451 |
Stock received for payment of employee taxes on vesting of restricted stock | (108,185) | (85,515) |
Payments for repurchases of common stock | (502,301) | (250,047) |
Net cash provided by (used for) financing activities | (528,139) | 85,889 |
Effect of exchange rate changes on cash and cash equivalents | (1,700) | 7,372 |
Increase in cash and cash equivalents | 85,387 | 601,354 |
Supplemental cash flow information: | ||
Cash paid for interest | 8,117 | 10,982 |
Cash paid for taxes, net | $ 47,687 | $ 44,679 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 02, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by Cadence Design Systems, Inc. (“Cadence”) without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, Cadence believes that the disclosures contained in this Quarterly Report on Form 10-Q comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These condensed consolidated financial statements are meant to be, and should be, read in conjunction with the consolidated financial statements and the Notes thereto included in Cadence’s Annual Report on Form 10-K for the fiscal year ended January 2, 2021. The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q reflect all adjustments (which include only normal, recurring adjustments and those items discussed in these Notes) that are, in the opinion of management, necessary to state fairly the results of operations, cash flows and financial position for the periods and dates presented. The results for such periods are not necessarily indicative of the results to be expected for the full fiscal year. Certain prior period balances have been reclassified to conform to the current period presentation. Management has evaluated subsequent events through the issuance date of the unaudited condensed consolidated financial statements. Use of Estimates Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Due to the ongoing COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. Cadence is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of October 25, 2021, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. Recently Adopted Accounting Standards Accounting for Income Taxes In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within Accounting Standards Codification 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. Cadence adopted the standard on January 3, 2021, the first day of fiscal 2021. The adoption of this standard did not impact Cadence’s condensed consolidated financial statements for the period ended October 2, 2021. |
Debt
Debt | 9 Months Ended |
Oct. 02, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Cadence’s outstanding debt as of October 2, 2021 and January 2, 2021 was as follows: October 2, 2021 January 2, 2021 (In thousands) Principal Unamortized Discount Carrying Value Principal Unamortized Discount Carrying Value Revolving Credit Facility $ — $ — $ — $ — $ — $ — 2024 Notes 350,000 (2,615) 347,385 350,000 (3,207) 346,793 Total outstanding debt $ 350,000 $ (2,615) $ 347,385 $ 350,000 $ (3,207) $ 346,793 Revolving Credit Facility In June 2021, Cadence terminated its existing revolving credit facility, dated January 30, 2017, and entered into a five-year senior unsecured revolving credit facility with a group of lenders led by Bank of America, N.A., as administrative agent (the “2021 Credit Facility”). The 2021 Credit Facility provides for borrowings up to $700.0 million, with the right to request increased capacity up to an additional $350.0 million upon the receipt of lender commitments, for total maximum borrowings of $1.05 billion. The 2021 Credit Facility expires on June 30, 2026. Any outstanding loans drawn under such credit facility are due at maturity on June 30, 2026, subject to an option to extend the maturity date. Outstanding borrowings may be repaid at any time prior to maturity. Debt issuance costs of $1.3 million were recorded to other assets in Cadence’s condensed consolidated balance sheet at the inception of the agreement and are being amortized to interest expense over the term of the 2021 Credit Facility. Interest accrues on borrowings under the 2021 Credit Facility at a rate equal to, at Cadence’s option, either (1) LIBOR plus a margin between 0.750% and 1.250% per annum, determined by reference to the credit rating of Cadence’s unsecured debt, or (2) the base rate plus a margin between 0.000% and 0.250% per annum, determined by reference to the credit rating of Cadence’s unsecured debt. Interest is payable quarterly. A commitment fee ranging from 0.070% to 0.175% is assessed on the daily average undrawn portion of revolving commitments. The 2021 Credit Facility also includes provisions addressing the potential transition from LIBOR to a new replacement benchmark. The 2021 Credit Facility contains customary negative covenants that, among other things, restrict Cadence’s ability to incur additional indebtedness and grant liens. In addition, the 2021 Credit Facility contains financial covenants that require Cadence to maintain a funded debt to EBITDA ratio not greater than 3.25 to 1, with a step up to 3.75 to 1 for one year following an acquisition by Cadence of at least $250.0 million that results in a pro forma leverage ratio between 3.00 to 1 and 3.50 to 1. As of October 2, 2021, Cadence was in compliance with all financial covenants associated with the 2021 Credit Facility. 2024 Notes In October 2014, Cadence issued $350.0 million aggregate principal amount of 4.375% Senior Notes due October 15, 2024 (the “2024 Notes”). Cadence received net proceeds of $342.4 million from the issuance of the 2024 Notes, net of a discount of $1.4 million and issuance costs of $6.2 million. Both the discount and issuance costs are being amortized to interest expense over the term of the 2024 Notes using the effective interest method. Interest is payable in cash semi-annually in April and October. The 2024 Notes are unsecured and rank equal in right of payment to all of Cadence’s existing and future senior indebtedness. The fair value of the 2024 Notes was approximately $382.7 million as of October 2, 2021. Cadence may redeem the 2024 Notes, in whole or in part, at a redemption price equal to the greater of (a) 100% of the principal amount of the notes to be redeemed, and (b) the sum of the present values of the remaining scheduled payments of principal and interest, plus any accrued and unpaid interest, as more particularly described in the indenture governing the 2024 Notes. The indenture governing the 2024 Notes includes customary representations, warranties and restrictive covenants, including, but not limited to, restrictions on Cadence’s ability to grant liens on assets, enter into sale and lease-back transactions, or merge, consolidate or sell assets, and also includes customary events of default. |
Receivables, net
Receivables, net | 9 Months Ended |
Oct. 02, 2021 | |
Receivables [Abstract] | |
RECEIVABLES, NET | RECEIVABLES, NET Cadence’s current and long-term receivables balances as of October 2, 2021 and January 2, 2021 were as follows: As of October 2, January 2, (In thousands) Accounts receivable $ 184,298 $ 196,990 Unbilled accounts receivable 146,550 144,364 Long-term receivables 3,832 3,655 Total receivables 334,680 345,009 Less allowance for doubtful accounts (3,657) (2,867) Total receivables, net $ 331,023 $ 342,142 |
Revenue
Revenue | 9 Months Ended |
Oct. 02, 2021 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Cadence groups its products into five categories related to major design activities. The following table shows the percentage of product and related maintenance revenue contributed by each of Cadence’s five product categories and services for the three and nine months ended October 2, 2021 and September 26, 2020: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, Custom Integrated Circuit (“IC”) Design and Simulation 23 % 24 % 23 % 25 % Digital IC Design and Signoff 29 % 27 % 28 % 28 % Functional Verification, including Emulation and Prototyping Hardware* 23 % 23 % 25 % 23 % Intellectual Property (“IP”) 14 % 15 % 13 % 14 % System Design and Analysis 11 % 11 % 11 % 10 % Total 100 % 100 % 100 % 100 % _____________ * Includes immaterial amount of revenue accounted for under leasing arrangements. Cadence generates revenue from contracts with customers and applies judgment in identifying and evaluating any terms and conditions in contracts which may impact revenue recognition. Certain of Cadence’s licensing arrangements allow customers the ability to remix among software products. Cadence also has arrangements with customers that include a combination of products, with the actual product selection and number of licensed users to be determined at a later date. For these arrangements, Cadence estimates the allocation of the revenue to product categories based upon the expected usage of products. Revenue by product category fluctuates from period to period based on demand for products and services, and Cadence’s available resources to deliver them. Significant Judgments Cadence’s contracts with customers often include promises to transfer to a customer multiple software and/or IP licenses and services, including professional services, technical support services, and rights to unspecified updates. Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or not distinct and thus accounted for together, requires significant judgment. In some arrangements, such as most of Cadence’s IP license arrangements, Cadence has concluded that the licenses and associated services are distinct from each other. In others, like Cadence’s time-based software arrangements, the licenses and certain services are not distinct from each other. Cadence’s time-based software arrangements include multiple software licenses and updates to the licensed software products, as well as technical support, and Cadence has concluded that these promised goods and services are a single, combined performance obligation. The accounting for contracts with multiple performance obligations requires the contract’s transaction price to be allocated to each distinct performance obligation based on relative standalone selling price (“SSP”). Judgment is required to determine the SSP for each distinct performance obligation because Cadence rarely licenses or sells products on a standalone basis. In instances where the SSP is not directly observable because Cadence does not sell the license, product or service separately, Cadence determines the SSP using information that maximizes the use of observable inputs and may include market conditions. Cadence typically has more than one SSP for individual performance obligations due to the stratification of those items by classes of customers and circumstances. In these instances, Cadence may use information such as the size of the customer and geographic region of the customer in determining the SSP. Revenue is recognized over time for Cadence’s combined performance obligations that include software licenses, updates, technical support and maintenance that are separate performance obligations with the same term. For Cadence’s professional services, revenue is recognized over time, generally using costs incurred or hours expended to measure progress. Judgment is required in estimating project status and the costs necessary to complete projects. A number of internal and external factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes. For Cadence’s other performance obligations recognized over time, revenue is generally recognized using a time-based measure of progress reflecting generally consistent efforts to satisfy those performance obligations throughout the arrangement term. If a group of agreements are so closely related that they are, in effect, part of a single arrangement, such agreements are deemed to be one arrangement for revenue recognition purposes. Cadence exercises significant judgment to evaluate the relevant facts and circumstances in determining whether the separate agreements should be accounted for separately or as, in substance, a single arrangement. Cadence’s judgments about whether a group of contracts comprise a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved. Cadence is required to estimate the total consideration expected to be received from contracts with customers. In limited circumstances, the consideration expected to be received is variable based on the specific terms of the contract or based on Cadence’s expectations of the term of the contract. Generally, Cadence has not experienced significant returns or refunds to customers. These estimates require significant judgment and the change in these estimates could have an effect on its results of operations during the periods involved. Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on Cadence’s condensed consolidated balance sheets. For certain software, hardware and IP agreements with payment plans, Cadence records an unbilled receivable related to revenue recognized upon transfer of control because it has an unconditional right to invoice and receive payment in the future related to those transferred products or services. Cadence records a contract asset when revenue is recognized prior to invoicing and Cadence does not have the unconditional right to invoice or retains performance risk with respect to that performance obligation. Cadence records deferred revenue when revenue is recognized subsequent to invoicing. For Cadence’s time-based software agreements, customers are generally invoiced in equal, quarterly amounts, although some customers prefer to be invoiced in single or annual amounts. The contract assets indicated below are included in prepaid expenses and other in the condensed consolidated balance sheet and primarily relate to Cadence’s rights to consideration for work completed but not billed as of the balance sheet date on services and customized IP contracts. The contract assets are transferred to receivables when the rights become unconditional, usually upon completion of a milestone. Cadence’s contract balances as of October 2, 2021 and January 2, 2021 were as follows: As of October 2, January 2, (In thousands) Contract assets $ 7,834 $ 9,709 Deferred revenue 639,352 553,921 Cadence recognized revenue of $59.8 million and $389.8 million during the three and nine months ended October 2, 2021, and $50.5 million and $292.1 million during the three and nine months ended September 26, 2020, respectively, that was included in the deferred revenue balance at the beginning of each fiscal year. All other activity in deferred revenue is due to the timing of invoices in relation to the timing of revenue as described above. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, Cadence has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing Cadence’s products and services, and not to facilitate financing arrangements. Some customers enter into a non-cancellable IP Access Agreement (“IPAA”) whereby the customer commits to a fixed dollar amount over a specified period of time that can be used to purchase from a list of IP products or services. These arrangements do not meet the definition of a revenue contract until the customer executes a separate selection form to identify the products and services that they are purchasing. Each separate selection form under the IPAA is treated as an individual contract and accounted for based on the respective performance obligations. Remaining Performance Obligations Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Cadence has elected to exclude the potential future royalty receipts from the remaining performance obligations. Contracted but unsatisfied performance obligations were approximately $3.7 billion as of October 2, 2021, which included $89.1 million of non-cancellable IPAA commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date. As of October 2, 2021, Cadence expected to recognize approximately 55% of the contracted but unsatisfied performance obligations, excluding non-cancellable IPAA commitments, as revenue over the next 12 months and the remainder thereafter. Cadence recognized revenue of $13.3 million and $35.0 million during the three and nine months ended October 2, 2021, and $18.1 million and $38.9 million during the three and nine months ended September 26, 2020, respectively, from performance obligations satisfied in previous periods. These amounts represent royalties earned during the period and exclude contracts with nonrefundable prepaid royalties. Nonrefundable prepaid royalties are recognized upon delivery of the IP because Cadence’s right to the consideration is not contingent upon customers’ future shipments. |
Acquisitions
Acquisitions | 9 Months Ended |
Oct. 02, 2021 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS On February 23, 2021, Cadence acquired all of the outstanding equity of Belgium-based Numerical Mechanics Applications International SA (“NUMECA”). The addition of NUMECA’s technologies and talent supports Cadence’s Intelligent System Design™ strategy, servicing the computational fluid dynamics (“CFD”) market segment as part of System Design and Analysis. The aggregate cash consideration for Cadence’s acquisition of NUMECA, net of cash acquired of $9.6 million, was $188.6 million. Cadence expects to recognize expense for consideration paid to certain former NUMECA shareholders that is subject to service and other conditions, through the first quarter of fiscal 2023. The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition dates as follows: Acquisition Date Fair Value (In thousands) Current assets $ 16,423 Goodwill 132,693 Acquired intangibles 72,200 Other long-term assets 6,928 Total assets acquired 228,244 Current liabilities 9,951 Long-term liabilities 20,091 Total liabilities assumed 30,042 Total purchase consideration $ 198,202 During the three months ended October 2, 2021, Cadence finalized certain estimates impacting total purchase consideration for NUMECA and recorded the resulting measurement period adjustment which decreased goodwill by $0.6 million. Cadence will continue to evaluate certain estimates and assumptions related to tax liabilities assumed from NUMECA during the remainder of the measurement period (up to one year from the acquisition date). The recorded goodwill is attributed to intangible assets that do not qualify for separate recognition, including the acquired assembled workforce and expected synergies from combining operations of NUMECA with Cadence. Cadence expects all of the goodwill related to the acquisition of NUMECA to be deductible for tax purposes. On April 14, 2021, Cadence acquired all of the outstanding equity of Pointwise, Inc. (“Pointwise”), a leader in mesh generation for CFD for cash consideration of approximately $31.4 million, net of cash acquired. The addition of Pointwise’s technologies and experienced team supports Cadence’s Intelligent System Design™ strategy and further broadens its System Design and Analysis portfolio, complementing its acquisition of NUMECA. The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition dates. Cadence recorded $16.7 million of definite-lived intangible assets and $16.7 million of goodwill with its acquisition of Pointwise. All of the goodwill related to Cadence’s acquisition of Pointwise will be deductible for tax purposes. Definite-lived intangible assets acquired with Cadence’s fiscal 2021 acquisitions were as follows: Acquisition Date Fair Value Weighted Average Amortization Period (In thousands) (in years) Existing technology $ 55,400 14.2 years Agreements and relationships 28,900 13.7 years Tradenames, trademarks and patents 4,600 14.3 years Total acquired intangibles with definite lives $ 88,900 14.1 years Cadence has not presented pro forma financial information for its fiscal 2021 acquisitions because the results of operations for the acquired businesses are not material to Cadence’s condensed consolidated financial statements. During the three and nine months ended October 2, 2021, and the three and nine months ended September 26, 2020, transaction costs associated with acquisitions were not material and were expensed as incurred. |
Goodwill and Acquired Intangibl
Goodwill and Acquired Intangibles | 9 Months Ended |
Oct. 02, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND ACQUIRED INTANGIBLES | GOODWILL AND ACQUIRED INTANGIBLES Goodwill The changes in the carrying amount of goodwill during the nine months ended October 2, 2021 were as follows: Gross Carrying (In thousands) Balance as of January 2, 2021 $ 782,087 Goodwill resulting from acquisitions 150,021 Measurement period adjustments (633) Effect of foreign currency translation (5,526) Balance as of October 2, 2021 $ 925,949 Measurement period adjustments are the result of new information obtained about assets or liabilities that existed as of the acquisition date and, if known, would have resulted in changes to the initial recognition of those assets or liabilities as of that date. During the three months ended October 2, 2021, Cadence finalized certain estimates impacting total purchase consideration for its acquisition of NUMECA and recorded the resulting measurement period adjustment which decreased goodwill. Acquired Intangibles, Net Acquired intangibles as of October 2, 2021 were as follows, excluding intangibles that were fully amortized as of January 2, 2021: Gross Carrying Accumulated Acquired (In thousands) Existing technology $ 402,640 $ (242,829) $ 159,811 Agreements and relationships 205,454 (125,436) 80,018 Tradenames, trademarks and patents 10,741 (2,942) 7,799 Total acquired intangibles with definite lives $ 618,835 $ (371,207) $ 247,628 Acquired intangibles as of January 2, 2021 were as follows, excluding intangibles that were fully amortized as of December 28, 2019: Gross Carrying Accumulated Acquired (In thousands) Existing technology $ 370,838 $ (230,654) $ 140,184 Agreements and relationships 180,023 (113,629) 66,394 Tradenames, trademarks and patents 10,590 (6,578) 4,012 Total acquired intangibles with definite lives $ 561,451 $ (350,861) $ 210,590 Amortization expense from existing technology and maintenance agreements is included in cost of product and maintenance. Amortization expense for the three and nine months ended October 2, 2021 and September 26, 2020 by condensed consolidated income statement caption was as follows: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Cost of product and maintenance $ 11,774 $ 11,447 $ 35,774 $ 33,791 Amortization of acquired intangibles 5,000 4,438 14,661 13,234 Total amortization of acquired intangibles $ 16,774 $ 15,885 $ 50,435 $ 47,025 As of October 2, 2021, the estimated amortization expense for acquired intangible assets with definite lives was as follows for the following five fiscal years and thereafter: (In thousands) 2021 - remaining period $ 16,724 2022 50,022 2023 34,492 2024 32,732 2025 22,092 2026 17,087 Thereafter 74,479 Total estimated amortization expense $ 247,628 |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Oct. 02, 2021 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation expense is reflected in Cadence’s condensed consolidated income statements for the three and nine months ended October 2, 2021 and September 26, 2020 as follows: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Cost of product and maintenance $ 885 $ 668 $ 2,601 $ 2,042 Cost of services 1,158 850 3,177 2,599 Marketing and sales 10,784 9,699 32,284 29,826 Research and development 32,957 28,652 97,101 87,688 General and administrative 6,962 5,465 20,697 16,568 Total stock-based compensation expense $ 52,746 $ 45,334 $ 155,860 $ 138,723 |
Stock Repurchase Program
Stock Repurchase Program | 9 Months Ended |
Oct. 02, 2021 | |
Class of Stock Disclosures [Abstract] | |
STOCK REPURCHASE PROGRAM | STOCK REPURCHASE PROGRAM As of the end of the second quarter of fiscal 2021, approximately $346 million remained available under Cadence’s previously announced authorization to repurchase shares of Cadence common stock. In August 2021, Cadence’s Board of Directors increased the prior authorization to repurchase shares of Cadence common stock by authorizing an additional $1 billion. The actual timing and amount of repurchases are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. As of October 2, 2021, approximately $1.2 billion of the share repurchase authorization remained available to repurchase shares of Cadence common stock. The shares repurchased under Cadence’s repurchase authorizations and the total cost of repurchased shares, including commissions, during the three and nine months ended October 2, 2021 and September 26, 2020 were as follows: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Shares repurchased 723 717 3,766 3,124 Total cost of repurchased shares $ 110,011 $ 75,011 $ 502,301 $ 250,047 |
Restructuring and Other Termina
Restructuring and Other Termination Benefits | 9 Months Ended |
Oct. 02, 2021 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING AND OTHER CHARGES | RESTRUCTURING AND OTHER TERMINATION BENEFITS Restructuring Cadence has initiated restructuring plans in an effort to better align its resources with its business strategy. The charges associated with these restructuring plans have primarily been comprised of severance payments and termination benefits related to headcount reductions and charges related to impacted facilities and are included in restructuring and other charges on Cadence’s condensed consolidated income statements. The following table presents activity for Cadence’s restructuring plans during the nine months ended October 2, 2021: Severance and Benefits Facilities Total (In thousands) Balance, January 2, 2021 $ 7,321 $ 1,372 $ 8,693 Restructuring and other credits (1,379) 411 (968) Cash payments (5,715) (1,596) (7,311) Effect of foreign currency translation (67) — (67) Balance, October 2, 2021 $ 160 $ 187 $ 347 The remaining liability for Cadence’s restructuring plans is recorded in the condensed consolidated balance sheet as follows: As of October 2, 2021 (In thousands) Accounts payable and accrued liabilities $ 340 Other long-term liabilities 7 Total restructuring liabilities $ 347 All liabilities for severance and related benefits under Cadence’s restructuring plans are included in accounts payable and accrued liabilities on Cadence’s condensed consolidated balance sheets as of October 2, 2021. Restructuring liabilities included in other long-term liabilities represent liabilities from impacted facilities, and Cadence expects to make cash payments to settle these liabilities through fiscal 2022. Other Termination Benefits During the second quarter of fiscal 2021, Cadence offered a voluntary retirement program to eligible employees in the United States. This program resulted in a one-time charge of $26.8 million for voluntary termination and post-employment benefits. These charges are included in each category of costs and expenses on Cadence’s condensed consolidated income statements. As of October 2, 2021, liabilities related to the voluntary retirement program were $21.5 million and were included in accounts payable and accrued liabilities and other long-term liabilities on Cadence’s condensed consolidated balance sheet. Cadence expects to make cash payments to settle these liabilities through fiscal 2023, including $20.5 million that is expected to be paid within the next twelve months. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Oct. 02, 2021 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE Basic net income per share is computed by dividing net income during the period by the weighted average number of shares of common stock outstanding during that period, less unvested restricted stock awards. Diluted net income per share is impacted by equity instruments considered to be potential common shares, if dilutive, computed using the treasury stock method of accounting. The calculations for basic and diluted net income per share for the three and nine months ended October 2, 2021 and September 26, 2020 are as follows: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands, except per share amounts) Net income $ 176,307 $ 161,630 $ 519,376 $ 416,906 Weighted average common shares used to calculate basic net income per share 273,194 273,996 273,636 273,633 Stock-based awards 5,117 6,028 5,410 5,822 Weighted average common shares used to calculate diluted net income per share 278,311 280,024 279,046 279,455 Net income per share - basic $ 0.65 $ 0.59 $ 1.90 $ 1.52 Net income per share - diluted $ 0.63 $ 0.58 $ 1.86 $ 1.49 The following table presents shares of Cadence’s common stock outstanding for the three and nine months ended October 2, 2021 and September 26, 2020 that were excluded from the computation of diluted net income per share because the effect of including these shares in the computation of diluted net income per share would have been anti-dilutive: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Long-term market-based awards — 105 — 510 Options to purchase shares of common stock 331 23 267 258 Non-vested shares of restricted stock 5 21 46 75 Total potential common shares excluded 336 149 313 843 |
Fair Value
Fair Value | 9 Months Ended |
Oct. 02, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | FAIR VALUE Inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Cadence’s market assumptions. These two types of inputs have created the following fair value hierarchy: • Level 1 – Quoted prices for identical instruments in active markets; • Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and • Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires Cadence to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Cadence recognizes transfers between levels of the hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the nine months ended October 2, 2021. On a quarterly basis, Cadence measures at fair value certain financial assets and liabilities. The fair value of financial assets and liabilities was determined using the following levels of inputs as of October 2, 2021 and January 2, 2021: Fair Value Measurements as of October 2, 2021 Total Level 1 Level 2 Level 3 (In thousands) Assets Cash equivalents: Money market funds $ 384,958 $ 384,958 $ — $ — Marketable equity securities 5,568 5,568 — — Securities held in Non-Qualified Deferred Compensation (“NQDC”) trust 51,653 51,653 — — Total Assets $ 442,179 $ 442,179 $ — $ — Total Level 1 Level 2 Level 3 (In thousands) Liabilities Foreign currency exchange contracts $ 2,831 $ — $ 2,831 $ — Total Liabilities $ 2,831 $ — $ 2,831 $ — Fair Value Measurements as of January 2, 2021 Total Level 1 Level 2 Level 3 (In thousands) Assets Cash equivalents: Money market funds $ 541,386 $ 541,386 $ — $ — Marketable equity securities 4,452 4,452 — — Securities held in NQDC trust 42,769 42,769 — — Foreign currency exchange contracts 8,868 — 8,868 — Total Assets $ 597,475 $ 588,607 $ 8,868 $ — As of January 2, 2021, Cadence did not have any financial liabilities requiring a recurring fair value measurement. Level 1 Measurements Cadence’s cash equivalents held in money market funds, marketable equity securities and the trading securities held in Cadence’s NQDC trust are measured at fair value using level 1 inputs. Level 2 Measurements The valuation techniques used to determine the fair value of Cadence’s foreign currency forward exchange contracts and 2024 Notes are classified within Level 2 of the fair value hierarchy. For additional information relating to Cadence’s debt arrangements, see Note 2 in the notes to condensed consolidated financial statements. Level 3 Measurements Cadence acquired intangible assets of $88.9 million with its acquisition of NUMECA and Pointwise during fiscal 2021. The fair value of the definite-lived intangible assets acquired with these acquisitions was determined using variations of the income approach and level 3 inputs. For acquired existing technology, the fair value was determined by applying the relief-from-royalty method. This method is based on the application of a royalty rate to forecasted revenue to quantify the benefit of owning the intangible asset rather than paying a royalty for use of the asset. To estimate royalty savings over time, Cadence projected revenue from the acquired existing technology over the estimated remaining life of the technology, including the effect of assumed technological obsolescence, before applying an assumed royalty rate. For NUMECA, Cadence assumed technological obsolescence at a rate of 6.7% annually, before applying an assumed royalty rate of 22%. For Pointwise, Cadence assumed technological obsolescence at a rate of 10.0% annually, before applying an assumed royalty rate of 25%. The fair value for acquired agreements and relationships was determined by using the multi-period excess earnings method. This method reflects the present value of the projected cash flows that are expected to be generated from existing customers, less charges representing the contribution of other assets to those cash flows. Projected income from existing customer relationships considered a customer retention rate of 95% for both NUMECA and Pointwise. The present value of operating cash flows from existing customers was determined using discount rates ranging from 10.5% to 12.0%. Cadence believes that its estimates and assumptions related to the fair value of its acquired intangible assets are reasonable, but significant judgment is involved. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 02, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, Cadence is involved in various disputes and litigation that arise in the ordinary course of business. These include disputes and lawsuits related to intellectual property, indemnification obligations, mergers and acquisitions, licensing, contracts, distribution arrangements and employee relations matters. At least quarterly, Cadence reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on Cadence’s judgments using the best information available at the time. As additional information becomes available, Cadence reassesses the potential liability related to pending claims and litigation matters and may revise estimates. Other Contingencies Cadence provides its customers with a warranty on sales of hardware products, generally for a 90-day period. Cadence did not incur any significant costs related to warranty obligations during the three and nine months ended October 2, 2021 and September 26, 2020. Cadence’s product license and services agreements typically include a limited indemnification provision for claims from third parties relating to Cadence’s intellectual property. If the potential loss from any indemnification claim is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. The indemnification is generally limited to the amount paid by the customer. Cadence did not incur any significant losses from indemnification claims during the three and nine months ended October 2, 2021 and September 26, 2020. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Oct. 02, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS Cadence’s accumulated other comprehensive loss is comprised of the aggregate impact of foreign currency translation gains and losses and changes in defined benefit plan liabilities and is presented in Cadence’s condensed consolidated statements of comprehensive income. Accumulated other comprehensive loss was comprised of the following as of October 2, 2021 and January 2, 2021: As of October 2, January 2, (In thousands) Foreign currency translation loss $ (20,748) $ (11,130) Changes in defined benefit plan liabilities (6,815) (6,295) Total accumulated other comprehensive loss $ (27,563) $ (17,425) For the three and nine months ended October 2, 2021 and September 26, 2020 there were no significant amounts related to foreign currency translation loss or changes in defined benefit plan liabilities reclassified from accumulated other comprehensive loss to net income. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Oct. 02, 2021 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING Segment reporting is based on the “management approach,” following the method that management organizes the company’s reportable segments for which separate financial information is made available to, and evaluated regularly by, the chief operating decision maker in allocating resources and in assessing performance. Cadence’s chief operating decision maker is its CEO, who reviews Cadence’s consolidated results as one operating segment. In making operating decisions, the CEO primarily considers consolidated financial information, accompanied by disaggregated information about revenues by geographic region. Outside the United States, Cadence markets and supports its products and services primarily through its subsidiaries. Revenue is attributed to geography based upon the country in which the product is used, or services are delivered. Long-lived assets are attributed to geography based on the country where the assets are located. The following table presents a summary of revenue by geography for the three and nine months ended October 2, 2021 and September 26, 2020: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Americas: United States $ 331,463 $ 269,057 $ 970,925 $ 794,545 Other Americas 11,487 10,956 31,353 29,913 Total Americas 342,950 280,013 1,002,278 824,458 Asia: China 98,325 114,160 287,357 275,191 Other Asia 136,272 123,188 404,509 354,063 Total Asia 234,597 237,348 691,866 629,254 Europe, Middle East and Africa 129,606 107,913 384,341 340,173 Japan 43,742 41,333 136,723 129,097 Total $ 750,895 $ 666,607 $ 2,215,208 $ 1,922,982 The following table presents a summary of long-lived assets by geography as of October 2, 2021 and January 2, 2021: As of October 2, January 2, (In thousands) Americas: United States $ 239,200 $ 248,292 Other Americas 616 753 Total Americas 239,816 249,045 Asia: China 15,601 16,416 Other Asia 31,159 28,668 Total Asia 46,760 45,084 Europe, Middle East and Africa 16,245 16,304 Japan 492 692 Total $ 303,313 $ 311,125 |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 02, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by Cadence Design Systems, Inc. (“Cadence”) without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. |
Use of estimates | Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. |
Recently adopted accounting standards | In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within Accounting Standards Codification 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. Cadence adopted the standard on January 3, 2021, the first day of fiscal 2021. The adoption of this standard did not impact Cadence’s condensed consolidated financial statements for the period ended October 2, 2021. |
Fair value of financial instruments | Inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Cadence’s market assumptions. These two types of inputs have created the following fair value hierarchy: • Level 1 – Quoted prices for identical instruments in active markets; • Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and • Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires Cadence to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Cadence recognizes transfers between levels of the hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the nine months ended October 2, 2021. |
Contingencies | At least quarterly, Cadence reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on Cadence’s judgments using the best information available at the time. As additional information becomes available, Cadence reassesses the potential liability related to pending claims and litigation matters and may revise estimates. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Debt Disclosure [Abstract] | |
Summary of debt outstanding | Cadence’s outstanding debt as of October 2, 2021 and January 2, 2021 was as follows: October 2, 2021 January 2, 2021 (In thousands) Principal Unamortized Discount Carrying Value Principal Unamortized Discount Carrying Value Revolving Credit Facility $ — $ — $ — $ — $ — $ — 2024 Notes 350,000 (2,615) 347,385 350,000 (3,207) 346,793 Total outstanding debt $ 350,000 $ (2,615) $ 347,385 $ 350,000 $ (3,207) $ 346,793 |
Receivables, net (Tables)
Receivables, net (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Receivables [Abstract] | |
Current and long-term accounts receivable balances | Cadence’s current and long-term receivables balances as of October 2, 2021 and January 2, 2021 were as follows: As of October 2, January 2, (In thousands) Accounts receivable $ 184,298 $ 196,990 Unbilled accounts receivable 146,550 144,364 Long-term receivables 3,832 3,655 Total receivables 334,680 345,009 Less allowance for doubtful accounts (3,657) (2,867) Total receivables, net $ 331,023 $ 342,142 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from external customers by product group | The following table shows the percentage of product and related maintenance revenue contributed by each of Cadence’s five product categories and services for the three and nine months ended October 2, 2021 and September 26, 2020: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, Custom Integrated Circuit (“IC”) Design and Simulation 23 % 24 % 23 % 25 % Digital IC Design and Signoff 29 % 27 % 28 % 28 % Functional Verification, including Emulation and Prototyping Hardware* 23 % 23 % 25 % 23 % Intellectual Property (“IP”) 14 % 15 % 13 % 14 % System Design and Analysis 11 % 11 % 11 % 10 % Total 100 % 100 % 100 % 100 % _____________ * Includes immaterial amount of revenue accounted for under leasing arrangements. |
Contract balances | Cadence’s contract balances as of October 2, 2021 and January 2, 2021 were as follows: As of October 2, January 2, (In thousands) Contract assets $ 7,834 $ 9,709 Deferred revenue 639,352 553,921 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition dates as follows: Acquisition Date Fair Value (In thousands) Current assets $ 16,423 Goodwill 132,693 Acquired intangibles 72,200 Other long-term assets 6,928 Total assets acquired 228,244 Current liabilities 9,951 Long-term liabilities 20,091 Total liabilities assumed 30,042 Total purchase consideration $ 198,202 |
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | Acquisition Date Fair Value Weighted Average Amortization Period (In thousands) (in years) Existing technology $ 55,400 14.2 years Agreements and relationships 28,900 13.7 years Tradenames, trademarks and patents 4,600 14.3 years Total acquired intangibles with definite lives $ 88,900 14.1 years |
Goodwill and Acquired Intangi_2
Goodwill and Acquired Intangibles (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill during the nine months ended October 2, 2021 were as follows: Gross Carrying (In thousands) Balance as of January 2, 2021 $ 782,087 Goodwill resulting from acquisitions 150,021 Measurement period adjustments (633) Effect of foreign currency translation (5,526) Balance as of October 2, 2021 $ 925,949 |
Schedule of acquired intangibles with finite and indefinite lives (excluding goodwill) | Acquired intangibles as of October 2, 2021 were as follows, excluding intangibles that were fully amortized as of January 2, 2021: Gross Carrying Accumulated Acquired (In thousands) Existing technology $ 402,640 $ (242,829) $ 159,811 Agreements and relationships 205,454 (125,436) 80,018 Tradenames, trademarks and patents 10,741 (2,942) 7,799 Total acquired intangibles with definite lives $ 618,835 $ (371,207) $ 247,628 Acquired intangibles as of January 2, 2021 were as follows, excluding intangibles that were fully amortized as of December 28, 2019: Gross Carrying Accumulated Acquired (In thousands) Existing technology $ 370,838 $ (230,654) $ 140,184 Agreements and relationships 180,023 (113,629) 66,394 Tradenames, trademarks and patents 10,590 (6,578) 4,012 Total acquired intangibles with definite lives $ 561,451 $ (350,861) $ 210,590 |
Amortization of acquired intangibles | Amortization expense for the three and nine months ended October 2, 2021 and September 26, 2020 by condensed consolidated income statement caption was as follows: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Cost of product and maintenance $ 11,774 $ 11,447 $ 35,774 $ 33,791 Amortization of acquired intangibles 5,000 4,438 14,661 13,234 Total amortization of acquired intangibles $ 16,774 $ 15,885 $ 50,435 $ 47,025 |
Estimated amortization expense | As of October 2, 2021, the estimated amortization expense for acquired intangible assets with definite lives was as follows for the following five fiscal years and thereafter: (In thousands) 2021 - remaining period $ 16,724 2022 50,022 2023 34,492 2024 32,732 2025 22,092 2026 17,087 Thereafter 74,479 Total estimated amortization expense $ 247,628 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based compensation expense and allocation by cost | Stock-based compensation expense is reflected in Cadence’s condensed consolidated income statements for the three and nine months ended October 2, 2021 and September 26, 2020 as follows: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Cost of product and maintenance $ 885 $ 668 $ 2,601 $ 2,042 Cost of services 1,158 850 3,177 2,599 Marketing and sales 10,784 9,699 32,284 29,826 Research and development 32,957 28,652 97,101 87,688 General and administrative 6,962 5,465 20,697 16,568 Total stock-based compensation expense $ 52,746 $ 45,334 $ 155,860 $ 138,723 |
Stock Repurchase Program (Table
Stock Repurchase Program (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Class of Stock Disclosures [Abstract] | |
Shares repurchased and the total cost of shares repurchased | The shares repurchased under Cadence’s repurchase authorizations and the total cost of repurchased shares, including commissions, during the three and nine months ended October 2, 2021 and September 26, 2020 were as follows: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Shares repurchased 723 717 3,766 3,124 Total cost of repurchased shares $ 110,011 $ 75,011 $ 502,301 $ 250,047 |
Restructuring and Other Termi_2
Restructuring and Other Termination Benefits (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring reserve rollforward by major type of cost | The following table presents activity for Cadence’s restructuring plans during the nine months ended October 2, 2021: Severance and Benefits Facilities Total (In thousands) Balance, January 2, 2021 $ 7,321 $ 1,372 $ 8,693 Restructuring and other credits (1,379) 411 (968) Cash payments (5,715) (1,596) (7,311) Effect of foreign currency translation (67) — (67) Balance, October 2, 2021 $ 160 $ 187 $ 347 |
Schedule of restructuring reserve by balance sheet classification | The remaining liability for Cadence’s restructuring plans is recorded in the condensed consolidated balance sheet as follows: As of October 2, 2021 (In thousands) Accounts payable and accrued liabilities $ 340 Other long-term liabilities 7 Total restructuring liabilities $ 347 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Earnings Per Share [Abstract] | |
Basic and diluted net income per share | The calculations for basic and diluted net income per share for the three and nine months ended October 2, 2021 and September 26, 2020 are as follows: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands, except per share amounts) Net income $ 176,307 $ 161,630 $ 519,376 $ 416,906 Weighted average common shares used to calculate basic net income per share 273,194 273,996 273,636 273,633 Stock-based awards 5,117 6,028 5,410 5,822 Weighted average common shares used to calculate diluted net income per share 278,311 280,024 279,046 279,455 Net income per share - basic $ 0.65 $ 0.59 $ 1.90 $ 1.52 Net income per share - diluted $ 0.63 $ 0.58 $ 1.86 $ 1.49 |
Potential shares of Cadence's common stock excluded | The following table presents shares of Cadence’s common stock outstanding for the three and nine months ended October 2, 2021 and September 26, 2020 that were excluded from the computation of diluted net income per share because the effect of including these shares in the computation of diluted net income per share would have been anti-dilutive: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Long-term market-based awards — 105 — 510 Options to purchase shares of common stock 331 23 267 258 Non-vested shares of restricted stock 5 21 46 75 Total potential common shares excluded 336 149 313 843 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial assets and liabilities | The fair value of financial assets and liabilities was determined using the following levels of inputs as of October 2, 2021 and January 2, 2021: Fair Value Measurements as of October 2, 2021 Total Level 1 Level 2 Level 3 (In thousands) Assets Cash equivalents: Money market funds $ 384,958 $ 384,958 $ — $ — Marketable equity securities 5,568 5,568 — — Securities held in Non-Qualified Deferred Compensation (“NQDC”) trust 51,653 51,653 — — Total Assets $ 442,179 $ 442,179 $ — $ — Total Level 1 Level 2 Level 3 (In thousands) Liabilities Foreign currency exchange contracts $ 2,831 $ — $ 2,831 $ — Total Liabilities $ 2,831 $ — $ 2,831 $ — Fair Value Measurements as of January 2, 2021 Total Level 1 Level 2 Level 3 (In thousands) Assets Cash equivalents: Money market funds $ 541,386 $ 541,386 $ — $ — Marketable equity securities 4,452 4,452 — — Securities held in NQDC trust 42,769 42,769 — — Foreign currency exchange contracts 8,868 — 8,868 — Total Assets $ 597,475 $ 588,607 $ 8,868 $ — As of January 2, 2021, Cadence did not have any financial liabilities requiring a recurring fair value measurement. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated other comprehensive loss, net of tax | Accumulated other comprehensive loss was comprised of the following as of October 2, 2021 and January 2, 2021: As of October 2, January 2, (In thousands) Foreign currency translation loss $ (20,748) $ (11,130) Changes in defined benefit plan liabilities (6,815) (6,295) Total accumulated other comprehensive loss $ (27,563) $ (17,425) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Segment Reporting [Abstract] | |
Summary of revenue by geography | The following table presents a summary of revenue by geography for the three and nine months ended October 2, 2021 and September 26, 2020: Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, (In thousands) Americas: United States $ 331,463 $ 269,057 $ 970,925 $ 794,545 Other Americas 11,487 10,956 31,353 29,913 Total Americas 342,950 280,013 1,002,278 824,458 Asia: China 98,325 114,160 287,357 275,191 Other Asia 136,272 123,188 404,509 354,063 Total Asia 234,597 237,348 691,866 629,254 Europe, Middle East and Africa 129,606 107,913 384,341 340,173 Japan 43,742 41,333 136,723 129,097 Total $ 750,895 $ 666,607 $ 2,215,208 $ 1,922,982 |
Summary of long-lived assets by geography | The following table presents a summary of long-lived assets by geography as of October 2, 2021 and January 2, 2021: As of October 2, January 2, (In thousands) Americas: United States $ 239,200 $ 248,292 Other Americas 616 753 Total Americas 239,816 249,045 Asia: China 15,601 16,416 Other Asia 31,159 28,668 Total Asia 46,760 45,084 Europe, Middle East and Africa 16,245 16,304 Japan 492 692 Total $ 303,313 $ 311,125 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 | Oct. 09, 2014 |
Debt Instrument [Line Items] | |||
Principal | $ 350,000 | $ 350,000 | |
Unamortized Discount | (2,615) | (3,207) | |
Carrying Value | 347,385 | 346,793 | |
Carrying Value | 347,385 | 346,793 | |
Senior Notes [Member] | Senior Notes Due 2024 [Member] | |||
Debt Instrument [Line Items] | |||
Principal | 350,000 | 350,000 | $ 350,000 |
Unamortized Discount | (2,615) | (3,207) | $ (1,400) |
Carrying Value | 347,385 | 346,793 | |
Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Principal | 0 | 0 | |
Carrying Value | $ 0 | $ 0 |
Debt Credit Facility (Details T
Debt Credit Facility (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Oct. 02, 2021 | Oct. 02, 2021 | Sep. 26, 2020 | |
Line of Credit Facility [Line Items] | |||
Payments of Debt Issuance Costs | $ 1,285 | $ 0 | |
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, current borrowing capacity | $ 700,000 | 700,000 | |
Credit facility additional borrowing capacity available | 350,000 | 350,000 | |
Credit facility, maximum borrowing capacity | 1,050,000 | $ 1,050,000 | |
Credit facility, maturity date | Jun. 30, 2026 | ||
Payments of Debt Issuance Costs | 1,300 | ||
Minimum [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, commitment fee percentage | 0.07% | ||
Credit facility, covenant, pro forma leverage ratio | 3 | ||
Maximum [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, commitment fee percentage | 0.175% | ||
Credit facility, covenant, pro forma leverage ratio | 3.50 | ||
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, interest rate spread | 0.75% | ||
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, interest rate spread | 1.25% | ||
Base Rate [Member] | Minimum [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, interest rate spread | 0.00% | ||
Base Rate [Member] | Maximum [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, interest rate spread | 0.25% | ||
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, covenant, debt to EBITDA ratio | 3.25 | ||
Credit facility, covenant, debt to EBITDA ratio after step up triggered by acquisition | 3.75 | ||
Credit facility, covenant, required business acquisition consideration, minimum | $ 250,000 | $ 250,000 |
Debt (Details Textual)
Debt (Details Textual) - USD ($) $ in Thousands | Oct. 09, 2014 | Oct. 02, 2021 | Jan. 02, 2021 |
Debt Instrument [Line Items] | |||
Unamortized discount | $ 2,615 | $ 3,207 | |
Senior Notes [Member] | Senior Notes Due 2024 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount, issued | $ 350,000 | 350,000 | 350,000 |
Stated interest rate of Senior Notes | 4.375% | ||
Proceeds from Senior Notes, net | $ 342,400 | ||
Unamortized discount | 1,400 | 2,615 | $ 3,207 |
Debt issuance costs | $ 6,200 | ||
Fair value, notes payable | $ 382,700 |
Receivables, net (Details Textu
Receivables, net (Details Textual) - Customer | Oct. 02, 2021 | Jan. 02, 2021 |
Receivables [Abstract] | ||
Number of customers with receivables balance greater than ten percent of total balance | 1 | 0 |
Percentage of receivables, net attributable to single customer | 13.00% | 10.00% |
Receivables, net (Details)
Receivables, net (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Current and long-term receivables balances | ||
Accounts receivable | $ 184,298 | $ 196,990 |
Unbilled accounts receivable | 146,550 | 144,364 |
Long-term receivables | 3,832 | 3,655 |
Total receivables | 334,680 | 345,009 |
Less allowance for doubtful accounts | (3,657) | (2,867) |
Total receivables, net | $ 331,023 | $ 342,142 |
Revenue (Details)
Revenue (Details) | 3 Months Ended | 9 Months Ended | |||||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | ||||
Revenue from External Customer [Line Items] | |||||||
Percentage of product and maintenance revenue by product group | 100.00% | 100.00% | 100.00% | 100.00% | |||
Custom Integrated Circuit (“IC”) Design and Simulation | |||||||
Revenue from External Customer [Line Items] | |||||||
Percentage of product and maintenance revenue by product group | 23.00% | 24.00% | 23.00% | 25.00% | |||
Digital IC Design and Signoff | |||||||
Revenue from External Customer [Line Items] | |||||||
Percentage of product and maintenance revenue by product group | 29.00% | 27.00% | 28.00% | 28.00% | |||
Functional Verification, including Emulation and Prototyping Hardware* | |||||||
Revenue from External Customer [Line Items] | |||||||
Percentage of product and maintenance revenue by product group | 23.00% | 23.00% | [1] | 25.00% | [1] | 23.00% | [1] |
Intellectual Property (“IP”) | |||||||
Revenue from External Customer [Line Items] | |||||||
Percentage of product and maintenance revenue by product group | 14.00% | 15.00% | 13.00% | 14.00% | |||
System Design and Analysis | |||||||
Revenue from External Customer [Line Items] | |||||||
Percentage of product and maintenance revenue by product group | 11.00% | 11.00% | 11.00% | 10.00% | |||
[1] | Includes immaterial amount of revenue accounted for under leasing arrangements. |
Revenue (Details 1)
Revenue (Details 1) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 7,834 | $ 9,709 |
Deferred revenue | $ 639,352 | $ 553,921 |
Revenue (Details Textual)
Revenue (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Revenue from Contract with Customer [Abstract] | ||||
Revenue recognized from deferred revenue during the period | $ 59.8 | $ 50.5 | $ 389.8 | $ 292.1 |
Remaining performance obligations | 3,700 | 3,700 | ||
Non-cancellable IP access agreements included in remaining performance obligations | $ 89.1 | $ 89.1 | ||
Percent of remaining performance obligations, current | 55.00% | 55.00% | ||
Revenue recognized from satisfaction of performance obligations | $ 13.3 | $ 18.1 | $ 35 | $ 38.9 |
Acquisitions (Details Textual)
Acquisitions (Details Textual) - USD ($) $ in Thousands | 9 Months Ended | ||||
Oct. 02, 2021 | Sep. 26, 2020 | Apr. 14, 2021 | Feb. 23, 2021 | Jan. 02, 2021 | |
Business Acquisition [Line Items] | |||||
Cash consideration to acquire businesses, net of cash acquired | $ 220,026 | $ 197,562 | |||
Goodwill | 925,949 | $ 782,087 | |||
Goodwill, measurement period adjustment | (633) | ||||
NUMECA | |||||
Business Acquisition [Line Items] | |||||
Cash acquired | $ 9,600 | ||||
Cash consideration to acquire businesses, net of cash acquired | 188,600 | ||||
Acquired intangibles | 72,200 | ||||
Goodwill | $ 132,693 | ||||
Pointwise | |||||
Business Acquisition [Line Items] | |||||
Cash consideration to acquire businesses, net of cash acquired | $ 31,400 | ||||
Acquired intangibles | $ 16,700 | ||||
Goodwill | $ 16,700 |
Acquisitions (Details 1)
Acquisitions (Details 1) - USD ($) $ in Thousands | Oct. 02, 2021 | Feb. 23, 2021 | Jan. 02, 2021 |
Business Acquisition [Line Items] | |||
Goodwill | $ 925,949 | $ 782,087 | |
NUMECA | |||
Business Acquisition [Line Items] | |||
Current assets | $ 16,423 | ||
Goodwill | 132,693 | ||
Acquired intangibles | 72,200 | ||
Other long-term assets | 6,928 | ||
Total assets acquired | 228,244 | ||
Current liabilities | 9,951 | ||
Long-term liabilities | 20,091 | ||
Total liabilities assumed | 30,042 | ||
Total purchase consideration | $ 198,202 |
Acquisitions (Details 2)
Acquisitions (Details 2) - Fiscal 2021 Acquisitions $ in Thousands | 9 Months Ended |
Oct. 02, 2021USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 88,900 |
Weighted-average useful life of definite-lived intangible assets acquired | 14 years 1 month 6 days |
Existing Technology [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 55,400 |
Weighted-average useful life of definite-lived intangible assets acquired | 14 years 2 months 12 days |
Agreements and Relationship [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 28,900 |
Weighted-average useful life of definite-lived intangible assets acquired | 13 years 8 months 12 days |
Tradename Trademark and Patents [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 4,600 |
Weighted-average useful life of definite-lived intangible assets acquired | 14 years 3 months 18 days |
Goodwill and Acquired Intangi_3
Goodwill and Acquired Intangibles (Details) $ in Thousands | 9 Months Ended |
Oct. 02, 2021USD ($) | |
Changes in the carrying amount of goodwill | |
Balance at beginning of period | $ 782,087 |
Goodwill resulting from acquisitions | 150,021 |
Goodwill, measurement period adjustment | (633) |
Effect of foreign currency translation | (5,526) |
Balance at end of period | $ 925,949 |
Goodwill and Acquired Intangi_4
Goodwill and Acquired Intangibles (Details 1) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Acquired intangibles with finite lives, excluding intangibles fully amortized at end of prior fiscal year | ||
Gross carrying amount | $ 618,835 | $ 561,451 |
Accumulated amortization | (371,207) | (350,861) |
Total estimated amortization expense | 247,628 | 210,590 |
Existing Technology [Member] | ||
Acquired intangibles with finite lives, excluding intangibles fully amortized at end of prior fiscal year | ||
Gross carrying amount | 402,640 | 370,838 |
Accumulated amortization | (242,829) | (230,654) |
Total estimated amortization expense | 159,811 | 140,184 |
Agreements and Relationships [Member] | ||
Acquired intangibles with finite lives, excluding intangibles fully amortized at end of prior fiscal year | ||
Gross carrying amount | 205,454 | 180,023 |
Accumulated amortization | (125,436) | (113,629) |
Total estimated amortization expense | 80,018 | 66,394 |
Tradenames Trademarks And Patents [Member] | ||
Acquired intangibles with finite lives, excluding intangibles fully amortized at end of prior fiscal year | ||
Gross carrying amount | 10,741 | 10,590 |
Accumulated amortization | (2,942) | (6,578) |
Total estimated amortization expense | $ 7,799 | $ 4,012 |
Goodwill and Acquired Intangi_5
Goodwill and Acquired Intangibles (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Amortization of acquired intangibles | ||||
Cost of product and maintenance | $ 11,774 | $ 11,447 | $ 35,774 | $ 33,791 |
Amortization of acquired intangibles | 5,000 | 4,438 | 14,661 | 13,234 |
Total amortization of acquired intangibles | $ 16,774 | $ 15,885 | $ 50,435 | $ 47,025 |
Goodwill and Acquired Intangi_6
Goodwill and Acquired Intangibles (Details 3) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Estimated amortization expense | ||
2021 - remaining period | $ 16,724 | |
2022 | 50,022 | |
2023 | 34,492 | |
2024 | 32,732 | |
2025 | 22,092 | |
2026 | 17,087 | |
Thereafter | 74,479 | |
Total estimated amortization expense | $ 247,628 | $ 210,590 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Textual) - Stock option and restricted stock grants [Member] $ in Millions | 9 Months Ended |
Oct. 02, 2021USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized compensation expense | $ 375 |
Weighted-average vesting period over which unrecognized compensation expense will be recognized | 2 years 1 month 6 days |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Share-based compensation expense and allocation by cost [Line Items] | ||||
Stock-based compensation expense | $ 52,746 | $ 45,334 | $ 155,860 | $ 138,723 |
Cost of product and maintenance | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Stock-based compensation expense | 885 | 668 | 2,601 | 2,042 |
Cost of services | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Stock-based compensation expense | 1,158 | 850 | 3,177 | 2,599 |
Marketing and sales | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Stock-based compensation expense | 10,784 | 9,699 | 32,284 | 29,826 |
Research and development | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Stock-based compensation expense | 32,957 | 28,652 | 97,101 | 87,688 |
General and administrative | ||||
Share-based compensation expense and allocation by cost [Line Items] | ||||
Stock-based compensation expense | $ 6,962 | $ 5,465 | $ 20,697 | $ 16,568 |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Aug. 04, 2021 | Jul. 03, 2021 | |
Class of Stock Disclosures [Abstract] | ||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 1,200,000 | $ 1,200,000 | $ 346,000 | |||
Additional authorized repurchase amount | $ 1,000,000 | |||||
Shares repurchased | 723 | 717 | 3,766 | 3,124 | ||
Total cost of repurchased shares | $ 110,011 | $ 75,011 | $ 502,301 | $ 250,047 |
Restructuring and Other Termi_3
Restructuring and Other Termination Benefits (Details Textual) $ in Millions | 9 Months Ended |
Oct. 02, 2021USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Voluntary retirement program, period expense | $ 26.8 |
Voluntary retirement program, liability | 21.5 |
Voluntary retirement program liability, current | $ 20.5 |
Restructuring and Other Termi_4
Restructuring and Other Termination Benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | $ 8,693 | |||
Restructuring and other credits | $ (222) | $ 13 | (968) | $ (1,329) |
Cash payments | (7,311) | |||
Effect of foreign currency translation | (67) | |||
Ending balance | 347 | 347 | ||
Employee Severance and Benefits [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | 7,321 | |||
Restructuring and other credits | (1,379) | |||
Cash payments | (5,715) | |||
Effect of foreign currency translation | (67) | |||
Ending balance | 160 | 160 | ||
Excess Facilities [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | 1,372 | |||
Restructuring and other credits | 411 | |||
Cash payments | (1,596) | |||
Effect of foreign currency translation | 0 | |||
Ending balance | $ 187 | $ 187 |
Restructuring and Other Termi_5
Restructuring and Other Termination Benefits (Details 1) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring reserve | $ 347 | $ 8,693 |
Accounts Payable and Accrued Liabilities [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring reserve | 340 | |
Other Long Term Liabilities [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring reserve | $ 7 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Net income | $ 176,307 | $ 161,630 | $ 519,376 | $ 416,906 |
Weighted average common shares used to calculate basic net income per share | 273,194 | 273,996 | 273,636 | 273,633 |
Stock-based awards | 5,117 | 6,028 | 5,410 | 5,822 |
Weighted average common shares used to calculate diluted net income per share (in shares) | 278,311 | 280,024 | 279,046 | 279,455 |
Net income per share - basic (usd per share) | $ 0.65 | $ 0.59 | $ 1.90 | $ 1.52 |
Net income per share - diluted (usd per share) | $ 0.63 | $ 0.58 | $ 1.86 | $ 1.49 |
Net Income Per Share (Details 1
Net Income Per Share (Details 1) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Potential shares of Cadence's common stock excluded | ||||
Potential common shares excluded from the computation of diluted earnings per share | 336 | 149 | 313 | 843 |
Long-term market-based awards | ||||
Potential shares of Cadence's common stock excluded | ||||
Potential common shares excluded from the computation of diluted earnings per share | 0 | 105 | 0 | 510 |
Options to purchase shares of common stock | ||||
Potential shares of Cadence's common stock excluded | ||||
Potential common shares excluded from the computation of diluted earnings per share | 331 | 23 | 267 | 258 |
Non-vested shares of restricted stock | ||||
Potential shares of Cadence's common stock excluded | ||||
Potential common shares excluded from the computation of diluted earnings per share | 5 | 21 | 46 | 75 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Assets | ||
Marketable equity securities | $ 5,568 | $ 4,452 |
Securities held in Non-Qualified Deferred Compensation trust, or NQDC | 51,653 | 42,769 |
Foreign currency exchange contracts | 8,868 | |
Total Assets | 442,179 | 597,475 |
Foreign currency exchange contracts | 2,831 | |
Total Liabilities | 2,831 | |
Money Market Funds | ||
Assets | ||
Money market funds | 384,958 | 541,386 |
Fair Value Measurements, Level 1 [Member] | ||
Assets | ||
Marketable equity securities | 5,568 | 4,452 |
Securities held in Non-Qualified Deferred Compensation trust, or NQDC | 51,653 | 42,769 |
Foreign currency exchange contracts | 0 | |
Total Assets | 442,179 | 588,607 |
Foreign currency exchange contracts | 0 | |
Total Liabilities | 0 | |
Fair Value Measurements, Level 1 [Member] | Money Market Funds | ||
Assets | ||
Money market funds | 384,958 | 541,386 |
Fair Value Measurements, Level 2 [Member] | ||
Assets | ||
Marketable equity securities | 0 | 0 |
Securities held in Non-Qualified Deferred Compensation trust, or NQDC | 0 | 0 |
Foreign currency exchange contracts | 8,868 | |
Total Assets | 0 | 8,868 |
Foreign currency exchange contracts | 2,831 | |
Total Liabilities | 2,831 | |
Fair Value Measurements, Level 2 [Member] | Money Market Funds | ||
Assets | ||
Money market funds | 0 | 0 |
Fair Value Measurements, Level 3 [Member] | ||
Assets | ||
Marketable equity securities | 0 | 0 |
Securities held in Non-Qualified Deferred Compensation trust, or NQDC | 0 | 0 |
Foreign currency exchange contracts | 0 | |
Total Assets | 0 | 0 |
Foreign currency exchange contracts | 0 | |
Total Liabilities | 0 | |
Fair Value Measurements, Level 3 [Member] | Money Market Funds | ||
Assets | ||
Money market funds | $ 0 | $ 0 |
Fair Value Fair Value (Details
Fair Value Fair Value (Details Textual) - Fair Value, Inputs, Level 3 [Member] $ in Millions | 9 Months Ended |
Oct. 02, 2021USD ($) | |
2021 Acquisitions [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Finite-lived intangible assets acquired during period | $ 88.9 |
Measurement Input, Discount Rate [Member] | NUMECA | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Estimated Technological Obsolescence Rate | 6.70% |
Estimated Royalty Rate | 22.00% |
Measurement Input, Discount Rate [Member] | NUMECA | Customer Relationships | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Estimated Customer Retention Rate | 95.00% |
Measurement Input, Discount Rate [Member] | NUMECA | Minimum [Member] | Customer Relationships | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Valuation significant input, discount rate | 10.50% |
Measurement Input, Discount Rate [Member] | NUMECA | Maximum [Member] | Customer Relationships | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Valuation significant input, discount rate | 12.00% |
Measurement Input, Discount Rate [Member] | Pointwise | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Estimated Technological Obsolescence Rate | 10.00% |
Estimated Royalty Rate | 25.00% |
Measurement Input, Discount Rate [Member] | Pointwise | Customer Relationships | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Estimated Customer Retention Rate | 95.00% |
Measurement Input, Discount Rate [Member] | Pointwise | Minimum [Member] | Customer Relationships | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Valuation significant input, discount rate | 10.50% |
Measurement Input, Discount Rate [Member] | Pointwise | Maximum [Member] | Customer Relationships | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Valuation significant input, discount rate | 12.00% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (27,563) | $ (17,425) |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (27,563) | (17,425) |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (20,748) | (11,130) |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (20,748) | (11,130) |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (6,815) | (6,295) |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (6,815) | $ (6,295) |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | $ 750,895 | $ 666,607 | $ 2,215,208 | $ 1,922,982 |
United States [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 331,463 | 269,057 | 970,925 | 794,545 |
Other Americas [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 11,487 | 10,956 | 31,353 | 29,913 |
Americas [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 342,950 | 280,013 | 1,002,278 | 824,458 |
China [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 98,325 | 114,160 | 287,357 | 275,191 |
Other Asia [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 136,272 | 123,188 | 404,509 | 354,063 |
Asia [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 234,597 | 237,348 | 691,866 | 629,254 |
EMEA [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 129,606 | 107,913 | 384,341 | 340,173 |
Japan [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | $ 43,742 | $ 41,333 | $ 136,723 | $ 129,097 |
Segment Reporting (Details 1)
Segment Reporting (Details 1) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Summary of long-lived assets by geography | ||
Total long-lived assets | $ 303,313 | $ 311,125 |
United States [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 239,200 | 248,292 |
Other Americas [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 616 | 753 |
Americas [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 239,816 | 249,045 |
China [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 15,601 | 16,416 |
Other Asia [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 31,159 | 28,668 |
Asia [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 46,760 | 45,084 |
EMEA [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | 16,245 | 16,304 |
Japan [Member] | ||
Summary of long-lived assets by geography | ||
Long-lived assets in individual foreign countries | $ 492 | $ 692 |