CADENCE ANNUAL REPORT 2003 FROM BEGINNING TO END, MAKING IT POSSIBLE >> CORPORATE REGIONAL CADENCE DESIGN SYSTEMS, INC. HEADQUARTERS HEADQUARTERS >> CADENCE DESIGN SYSTEMS, INC. ASIA/PACIFIC EUROPE JAPAN 2655 Seely Avenue The Gateway, Tower II Bagshot Road 3-17-6 Shin-Yokohama, San Jose, California 95134 25 Canton Road Bracknell, Berkshire RG12 0PH Kouhoku-ku, Yokohama 408.943.1234 Suites 03–07, 23A United Kingdom Kanagawa 222-0033 www.cadence.com Tsimshatsui, Kowloon Phone: +44.1344.360333 Japan Hong Kong Fax: +44.1344.302837 Phone: +81.45.475.6330 Phone: +852.2377.7111 Fax: +81.45.475.6331 Fax: +852.2377.2802 2003 ANNUAL REPORT AND FORM 10 -K Cadence is the largest supplier of electronic design technologies, methodology services, and design services. Cadence solutions are used to accelerate and manage the design of semiconductors, computer systems, networking and telecommunications equipment, consumer electronics, and a variety of other electronics-based products. With approximately 4,800 employees and 2003 revenues of approximately $1.1 billion, Cadence has sales offices, design centers, and research facilities around the world. The company is headquartered in San Jose, Calif., and traded on the New York Stock Exchange under the symbol CDN. More information about the company, its products, and services is available at www.cadence.com. STOCKHOLDER INFORMATION INDEPENDENT PUBLIC ACCOUNTANTS FORM 10-K INVESTOR RELATIONS KPMG LLP Restated Restated A copy of the Company’s Form 10-K, as filed with For further information on our Company, please SELECTED FINANCIAL DATA 2003 2002 2001 500 East Middlefield Road the Securities and Exchange Commission for the contact Cadence Investor Relations in writing at: Mountain View, CA 94043 year ended January 3, 2004, is available without (In thousands except per share amounts) Cadence Design Systems, Inc. charge either by written request from: TRANSFER AGENT Investor Relations Revenue $1,119,484 $1,287,943 $1,430,440 For information regarding stock ownership, stock Cadence Design Systems, Inc. 2655 Seely Avenue Investor Relations San Jose, California 95134 Net income (loss) ($17,566) $60,339 $141,287 certificates, share transfers, change of address, stock splits, and tax basis questions, please contact 2655 Seely Avenue phone: 877.236.5972 Net income (loss) per share, assuming dilution ($0.07) $0.23 $0.55 San Jose, California 95134 our transfer agent in writing at: To download an EDA Primer and to provide Cash, cash equivalents, and short-term investments $418,423 $395,613 $274,794 Mellon Investor Services or by electronic request through the investor feedback on this annual report, log on to Total assets $2,817,902 $2,426,623 $1,730,030 P.O. Box 3315 relations area of the Company’s Web site at www.cadence.com/2003AR. Danielle Huthart South Hackensack, NJ 07606 www.cadence.com/company/investor_relations. Stockholders’ equity $1,572,281 $1,644,030 $1,121,347 phone: 800.356.2017 QUARTERLY EARNINGS ANNOUNCEMENTS e-mail: You will easily find our quarterly earnings [email protected] announcements, along with other financial reports and information, on the Internet in the investor relations area of our Web site at www.cadence.com. Copies of these reports can also be requested electronically from the Web site. BOARD OF DIRECTORS EXECUTIVE PORTRAIT Bart Nagel FUSE SEVEN FONT H. RAYMOND BINGHAM SEAN M. MALONEY JOHN B. SHOVEN, PHD President and Chief Executive Officer Executive Vice President, Intel Corporation The Charles R. Schwab Professor of Economics Don Mason Cadence Design Systems, Inc. and General Manager, Stanford University Intel Communications Group SUSAN L. BOSTROM ROGER S. SIBONI 5-year design chain alliance between Get2Chip acquisition empowers Cadence First Encounter used for virtual SoC Encounter voted “Innovation Senior Vice President ALBERTO SANGIOVANNI-VINCENTELLI, PHD Chairman PHOTOGRAPHY Cadence and ARM brings Incisive with the industry’s best nanometer-scale prototyping on 75% of all designs of the Year” in Electronic Design News’ Internet Business Solutions Group and Professor, The Edgar L. and Harold H. Buttner E.piphany, Inc. “Acceleration on Demand” to mutual synthesis technology over 5 million gates annual poll Worldwide Government Affairs Chair of Electrical Engineering customers LIP-BU TAN Cisco Systems, Inc. University of California, Berkeley Chairman DONALD L. LUCAS GEORGE M. SCALISE Walden International >> >> 04.10.03 >> >> 04.24.03 Chairman President Leonhardt:Fitch Seattle Leonhardt:Fitch Cadence Design Systems, Inc. Semiconductor Industry Association DESIGN Private Venture Capital Investor EXECUTIVE MANAGEMENT H. RAYMOND BINGHAM AKI FUJIMURA TIM BURCH President and Chief Executive Officer Chief Technology Officer, New Business Incubation Senior Vice President of Human Resources and Organizational Development KEVIN BUSHBY TED VUCUREVICH Executive Vice President, Worldwide Chief Technology Officer, Advanced Research R.L. SMITH MCKEITHEN Field Operations and Development Senior Vice President and General Counsel PING CHAO WILLIAM PORTER Executive Vice President and General Manager Senior Vice President and Chief Financial Officer LAVI LEV JAN WILLIS Executive Vice President and General Manager Senior Vice President, Industry Marketing © 2004 Cadence Design Systems, Inc. All rights reserved. Cadence, the Cadence logo, Allegro, First Encounter, and Virtuoso are registered trademarks, and Encounter, Incisive, Silicon Design Chain, and SoC Encounter are trademarks of Cadence Design Systems, Inc. Xbox is a registered trademark of Microsoft Corporation. All other company, product, or service names are the property of their respective owners. 5364 03/04/40K/BP >> Cadence Design Systems, Inc., is the world’s leading provider of software for electronics designers and services to support them. Our technologies are used in the design of almost every electronic system produced anywhere in the world today. SMALL MIRACLES ARE CHANGING THE WAY WE LIVE, WORK, AND PLAY. WE MAKE IT POSSIBLE FOR OUR CUSTOMERS TO PROFITABLY CREATE THESE ELECTRONIC INNOVATIONS BY OVERCOMING THE CHALLENGES OF NANOMETER DESIGN AND MANUFACTURING. TSMC employs Cadence Encounter Cadence listed in Business 2.0’s “100 Fastest Cadence Virtuoso custom design platform Cadence RTL Compiler synthesis technology digital IC design platform in the new Growing Tech Companies,” and named one streamlines design of analog and mixed-signal acquired in Get2Chip acquisition used by TSMC Reference Flow 4.0 of “America’s Most Admired Companies” by chips with integrated multi-mode simulation NVIDIA for production design Fortune Magazine and >10x faster layout on OpenAccess 05.02.03 >> >> 09.15.03 >> >> CADENCE PROVIDES THE SOFTWARE SMALLER SCALE FOR THE NEXT BIG THINGS By computer modeling how a chip will work, emails or make calls from a PC that fits in the Who shrunk the computer? If you play video and the actual route of the chip’s circuitry, design palm and goes anywhere. And your car can find games, you probably have more computing engineers can fit increasingly more transistors its own way home. onto the same sliver of silicon. More transistors power in your living room than NASA used to Today, a new breed of consumer is hooked on mean more speed and power. The graphics guide the Apollo moon missions. And, probably, having the coolest new features. Now, not later. chip in the latest Xbox packs more than 60 you don’t have NASA’s budget. Costing just And, of course, cheaper. This fervent demand million transistors (with miles of microscopic a few hundred dollars, game consoles like is driving electronics manufacturers to push the wire connecting them); and the next generation Microsoft’s Xbox® pack far more wallop than laws of physics. In fact, Cadence technology is will employ twice that number. And since the computers once weighing many tons. making it possible for semiconductor makers silicon wafer, design, and manufacturing account to squeeze so much logic onto so little silicon How did the electronics industry shrink room- for most of the price of a chip, the cost of real estate that components are measured not sized computers onto glass-like chips smaller individual transistors becomes negligible. than a postage stamp, while reducing the in millionths but in billionths of a meter. The cost an equally amazing degree? They did it The availability of all this inexpensive and wires that electrons travel across in MP3 players, using electronic design automation (EDA) miniaturized processing power has sparked smart phones, digital cameras, and other software from companies like Cadence®. an explosion in electronic innovation. Students electronic “in-things” are less than 1/1000 can access libraries full of information from the width of a human hair. a coffee shop. Business people can receive >> CADENCE ANNUAL REPORT 2003 PAGE 2 >> >> THAT MAKES IT POSSIBLE TO CREATE THE CHIP, Welcome to the “nanocosm.” As designers industry from 10–15 percent of revenue Only Cadence provides new generation solutions rush headlong into this unexplored territory, to 15–18 percent. In recent years, Cadence required to create all the various design domains they’re running up against a wall of complexity. has focused relentlessly on perfecting the of a complete system—from integrated circuits Transistor counts have mushroomed to the technologies essential for our customers to (ICs) to the packages that house them to the hundreds of millions. Wires interconnecting the profitably manufacture nanometer electronics. printed circuit