Cadence's management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company's core business operations and therefore provides useful supplemental information to Cadence's management and investors regarding the performance of the company's business operations, facilitates comparisons to the company's historical operating results and enhances investors' ability to review Cadence's business from the same perspective as Cadence's management. Cadence's management also uses non-GAAP net income internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results. Investors are encouraged to look at the GAAP results as the best measure of financial performance.
The following tables reconcile the specific items excluded from GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
|
Net Income Reconciliation |
Three Months Ended |
|||||||
|
January 3, 2015 |
December 28, 2013 |
|||||||
|
(unaudited) |
||||||||
|
(in thousands) |
||||||||
|
Net income on a GAAP basis |
$ |
65,030 |
$ |
37,705 |
||||
|
Amortization of acquired intangibles |
17,559 |
12,422 |
||||||
|
Stock-based compensation expense |
22,974 |
18,798 |
||||||
|
Non-qualified deferred compensation expenses |
409 |
1,256 |
||||||
|
Restructuring and other charges (credits) |
(1,145) |
15,405 |
||||||
|
Acquisition and integration-related costs |
4,280 |
8,903 |
||||||
|
Special charges* |
— |
216 |
||||||
|
Amortization of debt discount |
4,782 |
5,515 |
||||||
|
Other income or expense related to investments and non-qualified deferred compensation plan assets** |
(1,484) |
(1,553) |
||||||
|
Income tax effect of non-GAAP adjustments |
(27,987) |
(31,775) |
||||||
|
Net income on a non-GAAP basis |
$ |
84,418 |
$ |
66,892 |
||||
|
* |
Comprised of costs related to executive severance costs |
|
** |
Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
|
Net Income Reconciliation |
Years Ended |
|||||||
|
January 3, 2015 |
December 28, 2013 |
|||||||
|
(unaudited) |
||||||||
|
(in thousands) |
||||||||
|
Net income on a GAAP basis |
$ |
158,898 |
$ |
164,243 |
||||
|
Amortization and sale of acquired intangibles |
60,924 |
44,134 |
||||||
|
Stock-based compensation expense |
83,792 |
66,285 |
||||||
|
Non-qualified deferred compensation expenses |
3,415 |
3,293 |
||||||
|
Restructuring and other charges |
10,252 |
17,999 |
||||||
|
Acquisition and integration-related costs |
24,620 |
31,972 |
||||||
|
Special charges* |
10,816 |
961 |
||||||
|
Amortization of debt discount |
17,602 |
22,315 |
||||||
|
Other income or expense related to investments and non-qualified deferred compensation plan assets** |
(4,629) |
(5,280) |
||||||
|
Income tax benefit due to a release of an uncertain tax position |
— |
(33,719) |
||||||
|
Income tax effect of non-GAAP adjustments |
(78,723) |
(60,104) |
||||||
|
Net income on a non-GAAP basis |
$ |
286,967 |
$ |
252,099 |
||||
|
* |
Comprised of costs related to a voluntary retirement program and executive severance costs |
|
** |
Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on sale of investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
