Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced that its Board of Directors has formed an Interim Office of the Chief Executive to oversee the day-to-day running of the company’s operations, effective immediately. The Interim Office of the Chief Executive includes: John B. Shoven, Ph.D., Chairman of the Board of Directors of Cadence, who has been appointed to the position of Interim Executive Chairman, Lip-Bu Tan, a director of Cadence since 2004, who has been appointed Interim Vice Chairman of Cadence’s Board, and Kevin S. Palatnik, Senior Vice President and Chief Financial Officer. Charlie Huang, Senior Vice President – Business Development, has been named Chief of Staff of the Interim Office of the Chief Executive.
The formation of the Interim Office of the Chief Executive followed Michael Fister’s resignation as President, Chief Executive Officer and a director of the company, by mutual agreement between Mr. Fister and the Board.
The Board has formed a search committee, co-chaired by Dr. Shoven and Mr. Tan, to identify qualified candidates to lead the company on a permanent basis.
“Our Board of Directors believes that the formation of the Interim Office of the Chief Executive is the best structure to lead Cadence during this time of transition,” said Dr. John Shoven, Chairman of the Board. “Each of us is looking forward to working closely, together with the entire Cadence organization, to better position the company for future success. We remain focused on leveraging the company’s many strengths while continuing to fulfill the needs of our customers with compelling products and solutions. We believe strongly that Cadence has a solid foundation in place that positions the company for strong performance as economic and business trends improve.”
Dr. Shoven continued, “On behalf of the Board, I would like to thank Mike Fister for his leadership, hard work and dedication to Cadence. Since he joined the company in 2004, he has made a number of important contributions to the company and we wish him the best in his future endeavors.”
The company also announced that Kevin Bushby has resigned as Executive Vice President – Worldwide Field Operations, effective immediately. Thomas Cooley, Corporate Vice President – Field Marketing, will succeed Mr. Bushby, leading Worldwide Field Operations. Mr. Cooley’s proven leadership in the field, combined with his deep knowledge of Cadence’s products and customers acquired over 13 years in the Cadence sales organization, makes him an ideal leader for the company’s field operations.
The company also announced the resignations of James S. Miller, Jr., Executive Vice President – Products and Technologies Organization, William Porter, Executive Vice President and Chief Administrative Officer, and R.L. Smith McKeithen, Executive Vice President – Corporate Affairs, effective immediately. The company does not intend to fill the positions held by Mr. Miller, Mr. Porter or Mr. McKeithen.
“The Board of Directors would like to express its sincere appreciation to Kevin Bushby, Smith McKeithen, Jim Miller and Bill Porter for their years of service, numerous contributions and deep commitment to Cadence. Cadence has benefited from their collective experience and leadership. We wish them all continued success in the years ahead,” continued Dr. Shoven. Update on Expected Third Quarter Results
For the third quarter of 2008, the company expects results to be in line with the business outlook previously announced on July 23, 2008. Total revenue is estimated to be in the range of $235 to $245 million. Third quarter GAAP net loss per share is estimated to be in the range of $(0.27) to $(0.25). Net loss per share using the non-GAAP measure defined below is estimated to be in the range of $(0.11) to $(0.09). These results are preliminary and subject to the company's management completing its customary quarterly close. In addition to using GAAP results in evaluating Cadence’s business, management believes it is useful to measure results using a non-GAAP measure of net income, which excludes, as applicable, amortization of intangible assets, stock-based compensation expense, in-process research and development charges, certain termination and legal costs, integration and acquisition-related costs, gains or losses and expenses or credits related to non-qualified deferred compensation plan assets, executive severance payments, restructuring charges and credits, losses on extinguishment of debt and equity in losses (income) from investments. Non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company’s tax liability. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial results with their most direct comparable GAAP financial results, including the reconciliation of non-GAAP financial results with GAAP financial results for the quarter ended June 28, 2008 set forth in our press release of July 23, 2008, which can be found in the investor relations portion of our website at www.cadence.com/cadence/investor_relations
Cadence will announce its third quarter financial results and conduct an audio webcast on October 22, 2008, at 2 p.m. (Pacific)/5 p.m. (Eastern). Participating on the Webcast will be Lip-Bu Tan, Interim Vice Chairman, and Kevin Palatnik, Senior Vice President and Chief Financial Officer. About John Shoven
Dr. John B. Shoven, 61, has served as Cadence’s Chairman of the Board of Directors since July 2005, and has been a member of the Board since 1992. He is currently the Charles R. Schwab Professor of Economics at Stanford University, where he has taught since 1973. Dr. Shoven has served as director of the Stanford Institute for Economics Policy Research since November 1999 and served in that capacity from 1989 to 1993. Dr. Shoven served as Chairman of the Economics Department at Stanford University from 1986 to 1989 and as Dean of the School of Humanities and Sciences from 1993 to 1998. Dr. Shoven also serves as a director of Exponent, Inc., and a member of the Mountain View Board of American Century Funds. Dr. Shoven is also a member of the American Academy of Arts and Sciences. About Lip-Bu Tan
Lip-Bu Tan, 48, has been a member of Cadence’s Board of Directors since 2004, and serves as a member of the Finance and Technology Committees of the Board. He is the founder and Chairman of Walden International, an international venture capital firm founded in 1987. Mr. Tan also serves as a director of Flextronics International Ltd., Semiconductor Manufacturing International Corporation and SINA Corporation. Mr. Tan received an M.S. in nuclear engineering from the Massachusetts Institute of Technology, an MBA from the University of San Francisco, and a B.S. from Nanyang University in Singapore. About Kevin Palatnik
Kevin S. Palatnik, 50, serves as Cadence Senior Vice President and Chief Financial Office. Prior to his appointment as CFO, Palatnik served as Senior Vice President and Corporate Controller. Before joining Cadence in 1994, Palatnik spent 13 years with IBM Corporation, where he held engineering and senior financial positions including Controller of one of IBM’s largest manufacturing sites. Palatnik received his Bachelor of Science degree in Industrial Engineering and Operations Research as well as an M.B.A. from Syracuse University.
The statements contained above regarding the company's third quarter outlook in the Update on Expected Third Quarter Results section and the statements by Dr. Shoven include forward-looking statements based on current expectations or beliefs, as well as a number of 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. Readers are cautioned not to put undue reliance on these forward-looking statements, which are not a guarantee of future performance and 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 design automation product and the commercial electronic design and methodology services industries; (ii) the mix of products and services sold and the timing of significant orders for its products, including the possibility that our shift to a ratable license structure may result in changes in the mix of license types; (iii) change in customer demands; (iv) economic and industry conditions in regions in which Cadence does business; (v) fluctuations in rates of exchange between the U.S. dollar and the currencies of other countries in which Cadence does business; (vi) capital expenditure requirements; legislative or regulatory requirements; interest rates and Cadence’s ability to access capital and debt markets; and (vii) the acquisition of other companies or technologies or the failure to successfully integrate and operate these companies or technologies Cadence acquires. For a detailed discussion of these and other cautionary statements, please refer to the company's filings with the Securities and Exchange Commission. These include the company's Annual Report on Form 10-K for the year ended December 29, 2007 and the company’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008.