News Release from: Cadence Design Systems
Edited by the Electronicstalk Editorial Team on 17 October 2002

Solid third quarter for Cadence

Cadence Design Systems has reported third quarter pro forma diluted earnings per share of $0.15, down 30% from the third quarter of 2001, on revenue of $327 million.

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Cadence Design Systems has reported third quarter pro forma diluted earnings per share of $0.15, down 30% from the third quarter of 2001, on revenue of $327 million. Cadence booked 60% of its product sales as subscription licenses during the quarter, compared with 49% for the comparable quarter in 2001. For the quarter, product revenue was $210 million, compared to $217 million in the third quarter of 2001.

For comparative purposes, except where noted, the results discussed throughout this release reflect earnings before special charges, unusual items, amortisation of acquired intangibles, and deferred stock compensation.

"We are pleased with our solid results, especially in this challenging economy", said Ray Bingham, president and CEO of Cadence Design Systems.

"Both the complexity of nanometer-scale design and the need for cost management are causing customers to revisit their approach to design-enabling Cadence to expand its role with existing and new customers.

We have the most complete technology and services portfolio in the world, which allows customers to consolidate on fewer vendors, minimise integration costs, and solve the most difficult technology problems".

In accordance with generally accepted accounting principles (GAAP), the company reported net income of $8 million and diluted net income per share of $0.03 for the third quarter.

Cadence's technology leadership position in both software and services across the full system-onto-chip-into-package-onto-board design spectrum is enabling it to expand its role as a preferred design partner for semiconductor and systems customers.

This was exemplified by a significant expansion of the company's relationship with IBM, announced last month.

Demand has been especially strong for the Cadence Encounter system, the company's single-architecture platform for nanometer-scale digital integrated circuit design.

Encounter wins in the quarter included AMD, NEC Computers Division, and Samsung.

Encounter bookings grew 70% sequentially.

"We continue to see evidence that the relationship we now have with customers like IBM is having an impact", said Bingham.

"Our momentum shows in our results, and in our alliances.

Our confidence in our business shows in the company's $100 million repurchase of shares in the quarter".

The company expects to see strength in software - 90% of its business - and continued weakness in services.

Growth in product bookings for 2002 is expected to be in the range from 7 to 10%.

Cadence expects its subscription bookings, which going forward include subscription licenses and maintenance combined, to grow from 60% of the mix of product bookings in Q3 to between 70 and 80% going forward.

The company expects this increased mix of subscriptions will not affect bookings but will reduce revenue in the short-term.

Cadence does not expect any meaningful recovery in the economy over the next year.

The company will continue to manage its cost structure aggressively.

In Q4, Cadence expects earnings per share to be in the range of $0.14 to $0.16.

For 2002, earnings per share are expected to be in the range of $0.75 to $0.77.

In 2003, Cadence expects earnings per share to be approximately $1.00.

The company expects that the change in mix of software licenses should enhance revenue visibility and, beginning in the second half of 2003, accelerate revenue and earnings growth.

All such expected earnings per share reflect earnings before unusual items, amortisation of acquired intangibles, and deferred stock compensation.

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