Cadence reported fourth quarter 2016 revenue of $469 million, compared to revenue of $441 million reported for the same period in 2015. On a GAAP basis, Cadence recognized net income of $38 million, or $0.14 per share on a diluted basis, in the fourth quarter of 2016, compared to net income of $80 million, or $0.26 per share on a diluted basis, for the same period in 2015. Revenue for 2016 totaled $1.816 billion, compared to revenue of $1.702 billion for 2015. Net income for 2016 was $203 million, or $0.70 per share on a diluted basis, compared to net income of $252 million, or $0.81 per share on a diluted basis for 2015.
Using the non-GAAP measure defined below, net income in the fourth quarter of 2016 was $95 million, or $0.34 per share on a diluted basis, as compared to net income of $95 million, or $0.31 per share on a diluted basis, for the same period in 2015. For 2016, non-GAAP net income was $351 million, or $1.21 per share on a diluted basis, compared to non-GAAP net income of $341 million, or $1.09 per share on a diluted basis, in 2015.
"Through focus on innovation and execution, Cadence again delivered strong results for both the fourth quarter and fiscal 2016. Core EDA is foundational to our System Design Enablement (SDE) strategy, and digital and signoff revenue grew 9 percent for the year on strong customer adoption, while in System Integration, Palladium® Z1 had a phenomenal year with hardware revenue surging to a record high," said Lip-Bu Tan, president and chief executive officer. "SDE is expanding our reach with systems companies and into segments like automotive, aerospace and defense, where we had key wins with important customers in 2016."
"Cadence continued to deliver consistent, predictable financial results in 2016 with operating cash flow generation a standout at $445 million, up 18 percent over 2015," said Geoff Ribar, senior vice president and chief financial officer. "I am especially proud of the quality of our balance sheet. In the fourth quarter we completed our $1.2 billion stock repurchase program, cumulatively repurchasing 52 million shares representing approximately 18 percent of shares outstanding as of July 4, 2015. This week, we replaced our December 2012 senior credit facility, increasing our borrowing capacity and extending the term; and we maintain an investment grade rating for our outstanding public debt."
On January 30, 2017, Cadence entered into a new $350 million five year senior unsecured revolving credit facility with a group of lenders, which replaces the December 2012 senior credit facility.
On January 30, 2017, the Board of Directors of Cadence authorized the repurchase of $525 million of Cadence common stock. The actual timing and amount of repurchases will be subject to business and market conditions, corporate and regulatory requirements, acquisition opportunities and other factors.
CFO Commentary
Commentary on the fourth quarter and fiscal year 2016 financial results by Geoff Ribar, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
Business Outlook
For the first quarter of 2017, the company expects total revenue in the range of $470 million to $480 million. First quarter GAAP net income per diluted share is expected to be in the range of $0.19 to $0.21. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.30 to $0.32.
For 2017, the company expects total revenue in the range of $1.900 billion to $1.950 billion. On a GAAP basis, net income per diluted share for 2017 is expected to be in the range of $0.89 to $0.99. Using the non-GAAP measure defined below, net income per diluted share for 2017 is expected to be in the range of $1.32 to $1.42.
A schedule showing a reconciliation of the business outlook from GAAP net income and diluted net income per share to non-GAAP net income and diluted net income per share is included in this release.
Audio Webcast Scheduled
Lip-Bu Tan, president and chief executive officer, and Geoff Ribar, senior vice president and chief financial officer, will host a fourth quarter and fiscal year 2016 financial results audio webcast today, February 1, 2017, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting February 1, 2017 at 5 p.m. (Pacific) and ending March 17, 2017 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.
About Cadence
Cadence enables global electronic design innovation and plays an essential role in the creation of today's integrated circuits and electronics. Customers use Cadence® software, hardware, IP, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. The company is headquartered in San Jose, California, with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about the company and its products and services is available at www.cadence.com.
Cadence, the Cadence logo and Palladium are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
The statements contained above regarding Cadence's fourth quarter and fiscal year 2016 financial results and authorization to repurchase shares of its common stock, as well as the information in the Business Outlook section, are or include forward-looking statements based on current expectations or beliefs and preliminary assumptions about future events that are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence's control, including, among others: (i) Cadence's ability to compete successfully in the electronic design automation product and the commercial electronic design and methodology services industries; (ii) the success of Cadence's efforts to improve operational efficiency and growth; (iii) the mix of products and services sold and the timing of significant orders for Cadence's products; (iv) change in customer demands, including those resulting from consolidation among Cadence's customers and the possibility that the restructurings and other efforts to improve operational efficiency of Cadence's customers could result in delays in purchases of Cadence's products and services; (v) economic and industry conditions in regions in which Cadence does business; (vi) fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in which Cadence does business; (vii) capital expenditure requirements, legislative or regulatory requirements, interest rates and Cadence's ability to access capital and debt markets; (viii) the acquisition of other companies or technologies or the failure to successfully integrate and operate these companies or technologies Cadence acquires, including the potential inability to retain customers, key employees or vendors; (ix) the effects of Cadence's efforts to improve operational efficiency in its business, including strategic, customer and supplier relationships, and its ability to retain key employees; (x) events that affect the reserves or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes, litigation or other matters; and (xi) the effects of any litigation or other proceedings to which Cadence is or may become a party.
