SEC Comment Letter for CADENCE DESIGN SYSTEMS (CDNS) — May 22, 2014
CADENCE DESIGN SYSTEMS INC
Date: May 22, 2014 · CIK: 0000813672 · Accession: 0000000000-14-026396
AI Filing Summary & Sentiment
Reasoning
Letter
May 22, 2014 Via E -mail Mr. Geoffrey G. Ribar Senior Vice President and Chief Financial Officer Cadence Design Systems, Inc. 2655 Seely Avenue, Building 5 San Jose, California 95134
Re: Cadence Design Systems, Inc. Form 10-K for the Fiscal Year Ended December 28, 2013 Filed February 20, 2014 File No. 000 -15867
Dear Mr. Ribar :
We have reviewed your filing an d have the following comment s. Please note that we have limited our review to only your financial statements and related disclosures . In some of our comment s, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to this letter within ten business days by amending y our filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comment s apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your filing and the information you provide in response to these comment s, we may have additional comme nts.
Form 10 -K for the Fiscal Year Ended December 28, 2013
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Income Taxes, page 39
1. We note that your effective tax rate is impacted by the relative mix of earnings and losses within the taxing jurisdictions in which you operate. We also note your disclosure on page 75 that your foreign subsidiaries are generally subject to lower statutory tax rates. Please tell us what consideration you gave to providing disclosures that explain, in greater detail, the relationship between the foreign and domestic effective tax rates. T o the extent that specific countries have had a more significant impact on your effective tax
Mr. Geoffrey G. Ribar Cadence Design Systems, Inc. May 22, 2014 Page 2
rate, tell us how you considered disclosing this information and including a discussion regarding how potential changes in such countries’ operations may impact their results of operations. We refer you to Item 303(a)(3)(i) of Regulation S -K and Section III.B of SEC Release 33 -8350.
Consolidated Financial Statements
Consolidated Income Statements, page 55
2. Your disclosure on page 59 indicates that in 2013 you combined product and maintenance revenue into a single caption because these agreements require customers to purchase both the product and maintenance in a bundled offering. We note that in your Form 10 -K for the fiscal year ended December 29, 2012 you presented segregated revenue and cost of sales for product, service and maintenance. Please explain to us how you class ified the bundled arrangements in the 2012 Form 10 -K. Tell us why you were able to segr egate these revenue s and expenses in the 2012 Form 10 -K and not the 2013 Form 10 -K. As part of your response, please tell us how your current presentation complies wit h Rule 5 -03(b)(1) and (2) of Regulation S -X.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applica ble Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
In responding to our comment s, please provide a written statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Mr. Geoffrey G. Ribar Cadence Design Systems, Inc. May 22, 2014 Page 3
You may contac t Megan Akst, Senior Staff Accountant at (202) 551 -3407, or Christine Davis, Assistant Chief Accountant at (202) 551 -3408 if you have questions regarding comments on the financial statements and related matters. If you require further assistance, do not hesitate to contact me at (202) 551 -3406 .
Sincerely,
/s/ Patrick Gilmore
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May 22, 2014 Via E -mail Mr. Geoffrey G. Ribar Senior Vice President and Chief Financial Officer Cadence Design Systems, Inc. 2655 Seely Avenue, Building 5 San Jose, California 95134 Re: Cadence Design Systems, Inc. Form 10-K for the Fiscal Year Ended December 28, 2013 Filed February 20, 2014 File No. 000 -15867 Dear Mr. Ribar : We have reviewed your filing an d have the following comment s. Please note that we have limited our review to only your financial statements and related disclosures . In some of our comment s, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within ten business days by amending y our filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comment s apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response. After reviewing any amendment to your filing and the information you provide in response to these comment s, we may have additional comme nts. Form 10 -K for the Fiscal Year Ended December 28, 2013 Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Income Taxes, page 39 1. We note that your effective tax rate is impacted by the relative mix of earnings and losses within the taxing jurisdictions in which you operate. We also note your disclosure on page 75 that your foreign subsidiaries are generally subject to lower statutory tax rates. Please tell us what consideration you gave to providing disclosures that explain, in greater detail, the relationship between the foreign and domestic effective tax rates. T o the extent that specific countries have had a more significant impact on your effective tax Mr. Geoffrey G. Ribar Cadence Design Systems, Inc. May 22, 2014 Page 2 rate, tell us how you considered disclosing this information and including a discussion regarding how potential changes in such countries’ operations may impact their results of operations. We refer you to Item 303(a)(3)(i) of Regulation S -K and Section III.B of SEC Release 33 -8350. Consolidated Financial Statements Consolidated Income Statements, page 55 2. Your disclosure on page 59 indicates that in 2013 you combined product and maintenance revenue into a single caption because these agreements require customers to purchase both the product and maintenance in a bundled offering. We note that in your Form 10 -K for the fiscal year ended December 29, 2012 you presented segregated revenue and cost of sales for product, service and maintenance. Please explain to us how you class ified the bundled arrangements in the 2012 Form 10 -K. Tell us why you were able to segr egate these revenue s and expenses in the 2012 Form 10 -K and not the 2013 Form 10 -K. As part of your response, please tell us how your current presentation complies wit h Rule 5 -03(b)(1) and (2) of Regulation S -X. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applica ble Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In responding to our comment s, please provide a written statement from the company acknowledging that: the company is responsible for the adequacy and accuracy of the disclosure in the filing; staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. Mr. Geoffrey G. Ribar Cadence Design Systems, Inc. May 22, 2014 Page 3 You may contac t Megan Akst, Senior Staff Accountant at (202) 551 -3407, or Christine Davis, Assistant Chief Accountant at (202) 551 -3408 if you have questions regarding comments on the financial statements and related matters. If you require further assistance, do not hesitate to contact me at (202) 551 -3406 . Sincerely, /s/ Patrick Gilmore Patrick Gilmore Accounting Branch Chief