[November 29, 2012] |
|
Mentor Graphics Reports Fiscal Third Quarter Results
WILSONVILLE, Ore. --(Business Wire)--
Mentor Graphics Corporation (NASDAQ:MENT) today announced financial
results for the company's fiscal third quarter ended October 31, 2012.
The company reported revenue of $268.8 million, non-GAAP earnings per
share of $0.32, and GAAP earnings per share of $0.27.
"Revenue and earnings were records for a Q3. Mentor and the Electronic
Design Automation industry continue to benefit from the semiconductor
industry's transition to the next generations of technology," said
Walden C. Rhines, chairman and CEO of Mentor Graphics. "For Mentor,
exceptional strength in bookings for system design, including mechanical
analysis, and new applications of EDA to automotive design and embedded
software development provided unique growth opportunities."
During the quarter, the company announced a major new design rule
checking product in the HyperLynx® suite, the market-leading, high-speed
analysis product line. Mentor also introduced new formal-based
technologies in the Questa® Verification Platform that provide
mainstream users with the ability to more easily perform exhaustive
formal verification analysis. The next generation of high-performance,
multi-core Linux-based embedded systems development software was also
announced this quarter, along with new design, verification and test
solutions for 20 nm process nodes.
"Our continued focus on controlling costs, and a favorable currency
environment, resulted in a 70% drop-through of incremental
year-over-year revenue to operating income," said Gregory K. Hinckley,
president of Mentor Graphics. "Mentor delivered record third quarter
emulation revenue. Even with record hardware shipments and associated
costs of goods sold, we exceeded our full-year non-GAAP operating margin
target of 18% in the quarter, and achieved a GAAP operating margin of
14.1%. We reaffirm our full year revenue guidance of $1.1 billion and
raise the full-year non-GAAP earnings estimate modestly."
Outlook
For the full fiscal year 2013, the company continues to expect revenue
of about $1.1 billion, approximately $1.39 in non-GAAP earnings per
share and about $1.22 in GAAP earnings per share. For the fourth fiscal
quarter 2013, the company expects revenues of about $343 million,
non-GAAP earnings per share of about $0.55, and GAAP earnings per share
of approximately $0.54.
Fiscal Year Definition
Mentor Graphics' fiscal year runs from February 1 to January 31. The
fiscal year is dated by the calendar year in which the fiscal year ends.
As a result, the first three fiscal quarters of any fiscal year will be
dated with the next calendar year, rather than the current calendar year.
Discussion of Non-GAAP Financial Measures
Mentor Graphics' management evaluates and makes operating decisions
using various performance measures. In addition to our GAAP results, we
also consider adjusted gross margin, operating margin, net income, and
earnings per share which we refer to as non-GAAP gross margin, operating
margin, net income, and earnings per share, respectively. These non-GAAP
measures are derived from the revenues of our product, maintenance, and
services business operations and the costs directly related to the
generation of those revenues, such as cost of revenue, research and
development, sales and marketing, and general and administrative
expenses, that management considers in evaluating our ongoing core
operating performance. These non-GAAP measures exclude amortization of
intangible assets, special charges, equity plan-related compensation
expenses, interest expense attributable to net retirement premiums or
discounts on the early retirement of debt and associated debt issuance
costs, interest expense associated with the amortization of debt
discount and premium on convertible debt, and the equity in income
(loss) of unconsolidated entities (except Frontline PCB Solutions
Limited Partnership (Frontline)), which management does not consider
reflective of our core operating business.
Management excludes from our non-GAAP measures certain recurring items
to facilitate its review of the comparability of our core operating
performance on a period-to-period basis because such items are not
related to our ongoing core operating performance as viewed by
management. Management considers our core operating performance to be
that which can be affected by our managers in any particular period
through their management of the resources that affect our underlying
revenue and profit generating operations during that period. Management
uses this view of our operating performance for purposes of comparison
with our business plan and individual operating budgets and allocation
of resources. Additionally, when evaluating potential acquisitions,
management excludes the items described above from its consideration of
target performance and valuation. More specifically, management adjusts
for the excluded items for the following reasons:
-
Identified intangible assets consist primarily of purchased
technology, backlog, trade names, and customer relationships.
Amortization charges for our intangible assets can vary in frequency
and amount due to the timing and magnitude of acquisition
transactions. We consider our operating results without these charges
when evaluating our core performance due to the variability.
Generally, the most significant impact to inter-period comparability
of our net income (loss) is in the first twelve months following an
acquisition.
-
Special charges primarily consist of restructuring costs incurred for
employee terminations, including severance and benefits, driven by
modifications of business strategy or business emphasis. Special
charges may also include expenses incurred related to potential
acquisitions, excess facility costs, and asset-related charges.
Special charges are incurred based on the particular facts and
circumstances of acquisition and restructuring decisions and can vary
in size and frequency. These charges are excluded as they are not
ordinarily included in our annual operating plan and related budget
due to the unpredictability of economic trends and the rapidly
changing technology and competitive environment in our industry. We
therefore exclude them when evaluating our managers' performance
internally.
-
Equity plan-related compensation expenses represent the fair value of
all share-based payments to employees, including grants of employee
stock options and restricted stock units. We do not consider equity
plan-related compensation expense in evaluating our manager's
performance internally or our core operations in any given period.
-
Interest expense attributable to net retirement premiums or discounts
on the early retirement of debt, the write-off of associated debt
issuance costs and the amortization of the debt discount and premium
on convertible debt are excluded. Management does not consider these
charges as a part of our core operating performance. The early
retirement of debt and the associated debt issuance costs are not
included in our annual operating plan and related budget due to
unpredictability of market conditions which could facilitate an early
retirement of debt. We do not consider the amortization of the debt
discount and premium on convertible debt to be a direct cost of
operations.
-
Equity in earnings or losses of unconsolidated entities represents our
equity in the net income (loss) of a common stock investment accounted
for under the equity method. The carrying amount of our investment is
adjusted for our share of earnings or losses of the investee. The
amounts are excluded from our non-GAAP results (with the exception of
our investment in Frontline as discussed below) as we do not control
the results of operations for this investment and we do not
participate in regular and periodic operating activities; therefore,
management does not consider this investment as a part of our core
operating performance.
-
In connection with the Company's acquisition of Valor on March 18,
2010, we also acquired Valor's 50% interest in Frontline, a joint
venture. We report our equity in the earnings or losses of Frontline
within operating income. We actively participate in regular and
periodic activities such as budgeting, business planning, marketing
and direction of research and development projects. Accordingly, we do
not exclude our share of Frontline's earnings or losses from our
non-GAAP results as management considers the joint venture to be core
to our operating performance.
-
Income tax expense (benefit) is adjusted by the amount of additional
tax expense or benefit that we would accrue if we used non-GAAP
results instead of GAAP results in the calculation of our tax
liability, taking into consideration our long-term tax structure. We
use a normalized effective tax rate of 17%, which reflects the
weighted average tax rate applicable under the various jurisdictions
in which we operate. This non-GAAP tax rate eliminates the effects of
non-recurring and period specific items which are often attributable
to acquisition decisions and can vary in size and frequency and
considers our U.S. loss carryforwards that have not been previously
benefited. This rate is subject to change over time for various
reasons, including changes in the geographic business mix and changes
in statutory tax rates. Our GAAP tax rate for the nine months ended
October 31, 2012 is (1%), after the consideration of period specific
items. Without period specific items of ($6.2) million, our GAAP tax
rate is 7%. Our full fiscal year 2013 GAAP tax rate, inclusive of
period specific items, is projected to be 3%. The GAAP tax rate
considers certain mandatory and other non-scalable tax costs which may
adversely or beneficially affect our tax rate depending upon our level
of profitability in various jurisdictions.
In certain instances our GAAP results of operations may not be
profitable when our corresponding non-GAAP results are profitable or
vice versa. The number of shares on which our non-GAAP earnings per
share is calculated may therefore differ from the GAAP presentation due
to the anti-dilutive effect of stock options and restricted stock units
in a loss situation.
Non-GAAP gross margin, operating margin, and net income are supplemental
measures of our performance that are not required by, or presented in
accordance with, GAAP. Moreover, they should not be considered as an
alternative to any performance measure derived in accordance with GAAP,
or as an alternative to cash flow from operating activities as a measure
of our liquidity. We present non-GAAP gross margin, operating margin,
and net income because we consider them to be important supplemental
measures of our operating performance and profitability trends, and
because we believe they give investors useful information on
period-to-period performance as evaluated by management. Non-GAAP net
income also facilitates comparison with other companies in our industry,
which use similar financial measures to supplement their GAAP results.
Non-GAAP net income has limitations as an analytical tool, and therefore
should not be considered in isolation or as a substitute for analysis of
our results as reported under GAAP. In the future we expect to continue
to incur expenses similar to the non-GAAP adjustments described above
and exclusion of these items in our non-GAAP presentation should not be
construed as an inference that these costs are unusual, infrequent or
non-recurring. Some of the limitations in relying on non-GAAP net income
are:
-
Amortization of intangibles represents the loss in value as the
technology in our industry evolves, is advanced, or is replaced over
time. The expense associated with this loss in value is not included
in the non-GAAP net income presentation and therefore does not reflect
the full economic effect of the ongoing cost of maintaining our
current technological position in our competitive industry, which is
addressed through our research and development program.
-
We regularly engage in acquisition and assimilation activities as part
of our ongoing business and regularly evaluate our business to
determine whether any operations should be eliminated or curtailed. We
therefore will continue to experience special charges on a regular
basis. These costs also directly impact our available funds.
-
Our stock incentive and stock purchase plans are important components
of our incentive compensation arrangements and will be reflected as
expenses in our GAAP results.
-
Our income tax expense (benefit) will be ultimately based on our GAAP
taxable income and actual tax rates in effect, which often differ
significantly from the 17% rate assumed in our non-GAAP presentation.
In addition, if we have a GAAP loss and non-GAAP net income, our
non-GAAP results will not reflect any projected GAAP tax benefits.
Similarly, in the event we were to have GAAP net income and a non-GAAP
loss, our GAAP tax expense would be replaced by a credit in our
non-GAAP presentation.
-
Other companies, including other companies in our industry, calculate
non-GAAP net income differently than we do, limiting its usefulness as
a comparative measure.
About Mentor Graphics
Mentor Graphics Corporation is a world leader in electronic hardware and
software design solutions, providing products, consulting services and
award-winning support for the world's most successful electronic,
semiconductor and systems companies. Established in 1981, the company
reported revenues in the last fiscal year of about $1,015 million.
Corporate headquarters are located at 8005 S.W. Boeckman Road,
Wilsonville, Oregon 97070-7777. World Wide Web site: http://www.mentor.com/.
(Mentor Graphics, HyperLynx and Questa are registered trademarks of
Mentor Graphics Corporation. All other company and/or product names are
the trademarks and/or registered trademarks of their respective owners.)
Statements in this press release regarding the company's guidance for
future periods constitute "forward-looking" statements based on current
expectations within the meaning of the Securities Exchange Act of 1934.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of the company or industry results to be
materially different from any results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, among others, the following: (i) recession or weakness in the
EU, US, Japan, China or other economies, including recession or weakness
associated with the ongoing EU debt crisis; (ii) the company's ability
to successfully offer products and services that compete in the highly
competitive EDA industry, including the risk of production delays or
obsolescence for our hardware products; (iii) product bundling or
discounting of products and services by competitors, which could force
the company to lower its prices or offer other more favorable terms to
customers; (iv) effects of unanticipated shifts in hardware and software
product mix on gross margin; (v) effects of the volatility of foreign
currency fluctuations on the company's business and operating results;
(vi) changes in accounting or reporting rules or interpretations;
(vii) the impact of tax audits by the IRS or other taxing authorities,
or changes in the tax laws, regulations or enforcement practices where
the company does business; (viii) possible delayed or canceled customer
orders resulting from the uncertainty created by actions of activist
shareholders; and (ix) effects of customer seasonal purchasing patterns
and the timing of significant orders which may negatively or positively
impact the company's quarterly results of operations; all as may be
discussed in more detail under the heading "Risk Factors" in the
company's most recent Form 10-K or Form 10-Q. Given these uncertainties,
prospective investors are cautioned not to place undue reliance on such
forward-looking statements. In addition, statements regarding guidance
do not reflect potential impacts of mergers or acquisitions that have
not been announced or closed as of the time the statements are made.
Mentor Graphics disclaims any obligation to update any such factors or
to publicly announce the results of any revisions to any of the
forward-looking statements to reflect future events or developments.
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
|
(In thousands, except earnings per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Revenues:
|
|
|
|
|
|
|
|
|
System and software
|
|
$
|
166,301
|
|
|
$
|
154,363
|
|
|
$
|
455,614
|
|
|
$
|
411,503
|
|
Service and support
|
|
|
102,459
|
|
|
|
96,145
|
|
|
|
301,875
|
|
|
|
282,780
|
|
Total revenues
|
|
|
268,760
|
|
|
|
250,508
|
|
|
|
757,489
|
|
|
|
694,283
|
|
Cost of revenues: (1)
|
|
|
|
|
|
|
|
|
System and software
|
|
|
19,214
|
|
|
|
10,864
|
|
|
|
49,296
|
|
|
|
41,235
|
|
Service and support
|
|
|
29,290
|
|
|
|
27,621
|
|
|
|
86,834
|
|
|
|
79,676
|
|
Amortization of purchased technology
|
|
|
1,759
|
|
|
|
1,761
|
|
|
|
6,092
|
|
|
|
7,872
|
|
Total cost of revenues
|
|
|
50,263
|
|
|
|
40,246
|
|
|
|
142,222
|
|
|
|
128,783
|
|
Gross margin
|
|
|
218,497
|
|
|
|
210,262
|
|
|
|
615,267
|
|
|
|
565,500
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development (2)
|
|
|
76,214
|
|
|
|
81,305
|
|
|
|
220,211
|
|
|
|
220,578
|
|
Marketing and selling (3)
|
|
|
84,673
|
|
|
|
83,036
|
|
|
|
243,493
|
|
|
|
236,718
|
|
General and administration (4)
|
|
|
17,794
|
|
|
|
17,922
|
|
|
|
54,308
|
|
|
|
52,055
|
|
Equity in (earnings) loss of Frontline (5)
|
|
|
(381
|
)
|
|
|
134
|
|
|
|
(1,630
|
)
|
|
|
(2,022
|
)
|
Amortization of intangible assets (6)
|
|
|
1,242
|
|
|
|
1,296
|
|
|
|
4,547
|
|
|
|
4,361
|
|
Special charges (7)
|
|
|
1,146
|
|
|
|
1,164
|
|
|
|
3,800
|
|
|
|
7,388
|
|
Total operating expenses
|
|
|
180,688
|
|
|
|
184,857
|
|
|
|
524,729
|
|
|
|
519,078
|
|
Operating income
|
|
|
37,809
|
|
|
|
25,405
|
|
|
|
90,538
|
|
|
|
46,422
|
|
Other income (expense), net (8)
|
|
|
57
|
|
|
|
1,836
|
|
|
|
(239
|
)
|
|
|
1,890
|
|
Interest expense (9)
|
|
|
(4,652
|
)
|
|
|
(4,615
|
)
|
|
|
(13,983
|
)
|
|
|
(26,689
|
)
|
Income before income tax
|
|
|
33,214
|
|
|
|
22,626
|
|
|
|
76,316
|
|
|
|
21,623
|
|
Income tax expense (benefit) (10)
|
|
|
1,148
|
|
|
|
(1,445
|
)
|
|
|
(835
|
)
|
|
|
(4,429
|
)
|
Net income
|
|
|
32,066
|
|
|
|
24,071
|
|
|
|
77,151
|
|
|
|
26,052
|
|
Less: Income attributable to noncontrolling interest (11)
|
|
|
1,425
|
|
|
|
-
|
|
|
|
161
|
|
|
|
-
|
|
Net income attributable to Mentor Graphics
|
|
|
|
|
|
|
|
|
shareholders
|
|
$
|
30,641
|
|
|
$
|
24,071
|
|
|
$
|
76,990
|
|
|
$
|
26,052
|
|
Net income per share attributable to Mentor Graphics
|
|
|
|
|
|
|
|
|
shareholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.27
|
|
|
$
|
0.22
|
|
|
$
|
0.70
|
|
|
$
|
0.24
|
|
Diluted
|
|
$
|
0.27
|
|
|
$
|
0.22
|
|
|
$
|
0.68
|
|
|
$
|
0.23
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
111,575
|
|
|
|
109,501
|
|
|
|
110,454
|
|
|
|
110,423
|
|
Diluted
|
|
|
114,721
|
|
|
|
111,563
|
|
|
|
113,584
|
|
|
|
113,181
|
|
|
|
|
|
|
|
|
|
|
Refer to following page for a description of footnotes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MENTOR GRAPHICS CORPORATION
|
FOOTNOTES TO UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Listed below are the items included in net income that management
excludes in computing the non-GAAP financial measures referred to in
the text of this press release. Items are further described under
"Discussion of Non-GAAP Financial Measures."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
(1) Cost of revenues:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
$
|
393
|
|
|
$
|
249
|
|
|
$
|
1,080
|
|
|
$
|
753
|
|
Amortization of purchased technology
|
|
|
1,759
|
|
|
|
1,761
|
|
|
|
6,092
|
|
|
|
7,872
|
|
|
|
$
|
2,152
|
|
|
$
|
2,010
|
|
|
$
|
7,172
|
|
|
$
|
8,625
|
|
|
|
|
|
|
|
|
|
|
(2) Research and development:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
$
|
2,272
|
|
|
$
|
2,005
|
|
|
$
|
6,604
|
|
|
$
|
6,119
|
|
|
|
|
|
|
|
|
|
|
(3) Marketing and selling:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
$
|
1,644
|
|
|
$
|
1,365
|
|
|
$
|
4,818
|
|
|
$
|
4,393
|
|
|
|
|
|
|
|
|
|
|
(4) General and administration:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
$
|
1,400
|
|
|
$
|
1,495
|
|
|
$
|
4,660
|
|
|
$
|
5,358
|
|
|
|
|
|
|
|
|
|
|
(5) Equity in (earnings) loss of Frontline:
|
|
|
|
|
|
|
|
|
Amortization of purchased technology and other identified
intangible assets
|
|
$
|
1,242
|
|
|
$
|
1,242
|
|
|
$
|
3,726
|
|
|
$
|
3,726
|
|
|
|
|
|
|
|
|
|
|
(6) Amortization of intangible assets:
|
|
|
|
|
|
|
|
|
Amortization of other identified intangible assets
|
|
$
|
1,242
|
|
|
$
|
1,296
|
|
|
$
|
4,547
|
|
|
$
|
4,361
|
|
|
|
|
|
|
|
|
|
|
(7) Special charges:
|
|
|
|
|
|
|
|
|
Rebalance, restructuring, and other costs
|
|
$
|
1,146
|
|
|
$
|
1,164
|
|
|
$
|
3,800
|
|
|
$
|
7,388
|
|
|
|
|
|
|
|
|
|
|
(8) Other income (expense), net:
|
|
|
|
|
|
|
|
|
Net (gain) loss of unconsolidated entities
|
|
$
|
(38
|
)
|
|
$
|
(1,484
|
)
|
|
$
|
(110
|
)
|
|
$
|
(1,432
|
)
|
|
|
|
|
|
|
|
|
|
(9) Interest expense:
|
|
|
|
|
|
|
|
|
Amortization of debt discount and premium, net
|
|
$
|
1,342
|
|
|
$
|
1,250
|
|
|
$
|
3,955
|
|
|
$
|
3,653
|
|
Premium and costs related to debt retirement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,504
|
|
|
|
$
|
1,342
|
|
|
$
|
1,250
|
|
|
$
|
3,955
|
|
|
$
|
15,157
|
|
|
|
|
|
|
|
|
|
|
(10) Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
Non-GAAP income tax effects
|
|
$
|
(6,607
|
)
|
|
$
|
(7,050
|
)
|
|
$
|
(20,468
|
)
|
|
$
|
(17,233
|
)
|
|
|
|
|
|
|
|
|
|
(11) Income attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
|
Amortization of intangible assets and income tax effects
|
|
$
|
96
|
|
|
$
|
-
|
|
|
$
|
(506
|
)
|
|
$
|
-
|
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED RECONCILIATION OF NON-GAAP
ADJUSTMENTS
|
(In thousands, except earnings per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
GAAP net income attributable to Mentor Graphics shareholders
|
|
$
|
30,641
|
|
|
$
|
24,071
|
|
|
$
|
76,990
|
|
|
$
|
26,052
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation: (1)
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
393
|
|
|
|
249
|
|
|
|
1,080
|
|
|
|
753
|
|
Research and development
|
|
|
2,272
|
|
|
|
2,005
|
|
|
|
6,604
|
|
|
|
6,119
|
|
Marketing and selling
|
|
|
1,644
|
|
|
|
1,365
|
|
|
|
4,818
|
|
|
|
4,393
|
|
General and administration
|
|
|
1,400
|
|
|
|
1,495
|
|
|
|
4,660
|
|
|
|
5,358
|
|
Acquisition - related items:
|
|
|
|
|
|
|
|
|
Amortization of purchased assets
|
|
|
|
|
|
|
|
|
Cost of revenues (2)
|
|
|
1,759
|
|
|
|
1,761
|
|
|
|
6,092
|
|
|
|
7,872
|
|
Frontline purchased technology and intangible assets (3)
|
|
|
1,242
|
|
|
|
1,242
|
|
|
|
3,726
|
|
|
|
3,726
|
|
Amortization of intangible assets (4)
|
|
|
1,242
|
|
|
|
1,296
|
|
|
|
4,547
|
|
|
|
4,361
|
|
Special charges (5)
|
|
|
1,146
|
|
|
|
1,164
|
|
|
|
3,800
|
|
|
|
7,388
|
|
Other income (expense), net (6)
|
|
|
(38
|
)
|
|
|
(1,484
|
)
|
|
|
(110
|
)
|
|
|
(1,432
|
)
|
Interest expense (7)
|
|
|
1,342
|
|
|
|
1,250
|
|
|
|
3,955
|
|
|
|
15,157
|
|
Non-GAAP income tax effects (8)
|
|
|
(6,607
|
)
|
|
|
(7,050
|
)
|
|
|
(20,468
|
)
|
|
|
(17,233
|
)
|
Noncontrolling interest (9)
|
|
|
96
|
|
|
|
-
|
|
|
|
(506
|
)
|
|
|
-
|
|
Total of non-GAAP adjustments
|
|
|
5,891
|
|
|
|
3,293
|
|
|
|
18,198
|
|
|
|
36,462
|
|
Non-GAAP net income attributable to Mentor Graphics shareholders
|
|
$
|
36,532
|
|
|
$
|
27,364
|
|
|
$
|
95,188
|
|
|
$
|
62,514
|
|
|
|
|
|
|
|
|
|
|
|
GAAP and Non-GAAP weighted average shares (diluted)
|
|
|
114,721
|
|
|
|
111,563
|
|
|
|
113,584
|
|
|
|
113,181
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to Mentor Graphics shareholders:
|
|
|
|
|
|
|
|
|
GAAP (diluted)
|
|
$
|
0.27
|
|
|
$
|
0.22
|
|
|
$
|
0.68
|
|
|
$
|
0.23
|
|
Non-GAAP adjustments detailed above
|
|
|
0.05
|
|
|
|
0.03
|
|
|
|
0.16
|
|
|
|
0.32
|
|
Non-GAAP (diluted)
|
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
$
|
0.84
|
|
|
$
|
0.55
|
|
|
(1)
|
Equity plan-related compensation expense is the fair value of all
share-based payments to employees for stock options and restricted
stock units, and purchases made as a result of the employee stock
purchase plans.
|
(2)
|
Amount represents amortization of purchased technology resulting
from acquisitions. Purchased intangible assets are amortized over
two to five years.
|
(3)
|
Amount represents amortization of purchased technology and other
identified intangible assets identified as part of the fair value of
the Frontline P.C.B. Solutions Limited Partnership (Frontline)
investment. Mentor Graphics acquired a 50% joint venture in
Frontline as a result of the Valor Computerized Systems, Ltd.
acquisition in the first quarter of fiscal 2011. The purchased
technology will be amortized over three years, other identified
intangible assets will be amortized over three to four years, and
are reflected in the income statement in the equity in earnings of
Frontline. This expense is the same type as being adjusted for in
note (2) above and (4) below.
|
(4)
|
Other identified intangible assets are amortized to other operating
expense over two to five years. Other identified intangible assets
include trade names, customer relationships, and backlog which are
the result of acquisition transactions.
|
(5)
|
Three months ended October 31, 2012: Special charges consist
of (i) $612 of costs incurred for employee rebalances which includes
severance benefits, notice pay, and outplacement services and (ii)
$534 in other adjustments.
|
|
Three months ended October 31, 2011: Special charges consist
of (i) $1,227 of costs incurred for employee rebalances which
includes severance benefits, notice pay, and outplacement services,
(ii) $129 of costs related to consulting fees associated with our
proxy contest, and (iii) $(192) in other adjustments.
|
|
Nine months ended October 31, 2012: Special charges consist
of (i) $2,629 of costs incurred for employee rebalances which
includes severance benefits, notice pay, and outplacement services
and (ii) $1,171 in other adjustments.
|
|
Nine months ended October 31, 2011: Special charges consist
of (i) $3,967 of costs related to consulting fees associated with
our proxy contest , (ii) $3,581 of costs incurred for employee
rebalances which includes severance benefits, notice pay, and
outplacement services, and (iii) $(160) in other adjustments.
|
(6)
|
Three months ended October 31, 2012: Income of $38 on
investment accounted for under the equity method of accounting.
|
|
Three months ended October 31, 2011: Gain of $1,519 resulting
from a change from an equity method investment to a controlling
interest and loss of $(35) on investments accounted for under the
equity method of accounting.
|
|
Nine months ended October 31, 2012: Income of $110 on
investment accounted for under the equity method of accounting.
|
|
Nine months ended October 31, 2011: Gain of $1,519 resulting
from a change from an equity method investment to a controlling
interest and loss of $(87) on investments accounted for under the
equity method of accounting.
|
(7)
|
Three months ended October 31, 2012: $1,342 in amortization
of original issuance debt discount.
|
|
|
|
Three months ended October 31, 2011: $1,250 in amortization
of original issuance debt discount.
|
|
|
|
Nine months ended October 31, 2012: $3,955 in amortization of
original issuance debt discount.
|
|
|
|
Nine months ended October 31, 2011: $3,653 in amortization of
original issuance debt discount and bond premium, and $11,504 for
the premium and other costs related to the retirement of the 6.25%
convertible debentures and the term loan.
|
(8)
|
Non-GAAP income tax expense adjustment reflects the application of
our assumed normalized effective 17% tax rate, instead of our GAAP
tax rate, to our non-GAAP pre-tax income.
|
(9)
|
Adjustment for the impact of amortization of intangible assets,
equity plan-related compensation, and income tax expense on
noncontrolling interest.
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED RECONCILIATION OF GAAP
FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
|
(In thousands, except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
GAAP gross margin
|
|
$
|
218,497
|
|
|
$
|
210,262
|
|
|
$
|
615,267
|
|
|
$
|
565,500
|
|
Reconciling items to non-GAAP gross margin:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
393
|
|
|
|
249
|
|
|
|
1,080
|
|
|
|
753
|
|
Amortization of purchased technology
|
|
|
1,759
|
|
|
|
1,761
|
|
|
|
6,092
|
|
|
|
7,872
|
|
Non-GAAP gross margin
|
|
$
|
220,649
|
|
|
$
|
212,272
|
|
|
$
|
622,439
|
|
|
$
|
574,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
GAAP gross margin as a percent of total revenues
|
|
|
81.3
|
%
|
|
|
83.9
|
%
|
|
|
81.2
|
%
|
|
|
81.5
|
%
|
Non-GAAP adjustments detailed above
|
|
|
0.8
|
%
|
|
|
0.8
|
%
|
|
|
1.0
|
%
|
|
|
1.2
|
%
|
Non-GAAP gross margin as a percent of total revenues
|
|
|
82.1
|
%
|
|
|
84.7
|
%
|
|
|
82.2
|
%
|
|
|
82.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
GAAP operating expenses
|
|
$
|
180,688
|
|
|
$
|
184,857
|
|
|
$
|
524,729
|
|
|
$
|
519,078
|
|
Reconciling items to non-GAAP operating expenses:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
(5,316
|
)
|
|
|
(4,865
|
)
|
|
|
(16,082
|
)
|
|
|
(15,870
|
)
|
Amortization of Frontline purchased technology and other
identified intangible assets
|
|
|
(1,242
|
)
|
|
|
(1,242
|
)
|
|
|
(3,726
|
)
|
|
|
(3,726
|
)
|
Amortization of other identified intangible assets
|
|
|
(1,242
|
)
|
|
|
(1,296
|
)
|
|
|
(4,547
|
)
|
|
|
(4,361
|
)
|
Special charges
|
|
|
(1,146
|
)
|
|
|
(1,164
|
)
|
|
|
(3,800
|
)
|
|
|
(7,388
|
)
|
Non-GAAP operating expenses
|
|
$
|
171,742
|
|
|
$
|
176,290
|
|
|
$
|
496,574
|
|
|
$
|
487,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
GAAP operating income
|
|
$
|
37,809
|
|
|
$
|
25,405
|
|
|
$
|
90,538
|
|
|
$
|
46,422
|
|
Reconciling items to non-GAAP operating income:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
5,709
|
|
|
|
5,114
|
|
|
|
17,162
|
|
|
|
16,623
|
|
Amortization of purchased technology
|
|
|
1,759
|
|
|
|
1,761
|
|
|
|
6,092
|
|
|
|
7,872
|
|
Amortization of Frontline purchased technology and other
identified intangible assets
|
|
|
1,242
|
|
|
|
1,242
|
|
|
|
3,726
|
|
|
|
3,726
|
|
Amortization of other identified intangible assets
|
|
|
1,242
|
|
|
|
1,296
|
|
|
|
4,547
|
|
|
|
4,361
|
|
Special Charges
|
|
|
1,146
|
|
|
|
1,164
|
|
|
|
3,800
|
|
|
|
7,388
|
|
Non-GAAP operating income
|
|
$
|
48,907
|
|
|
$
|
35,982
|
|
|
$
|
125,865
|
|
|
$
|
86,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
GAAP operating income as a percent of total revenues
|
|
|
14.1
|
%
|
|
|
10.1
|
%
|
|
|
12.0
|
%
|
|
|
6.7
|
%
|
Non-GAAP adjustments detailed above
|
|
|
4.1
|
%
|
|
|
4.3
|
%
|
|
|
4.6
|
%
|
|
|
5.7
|
%
|
Non-GAAP operating income as a percent of total revenues
|
|
|
18.2
|
%
|
|
|
14.4
|
%
|
|
|
16.6
|
%
|
|
|
12.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
GAAP other expense, net and interest expense
|
|
$
|
(4,595
|
)
|
|
$
|
(2,779
|
)
|
|
$
|
(14,222
|
)
|
|
$
|
(24,799
|
)
|
Reconciling items to non-GAAP other expense, net and interest
expense:
|
|
|
|
|
|
|
|
|
Net gain of unconsolidated entities
|
|
|
(38
|
)
|
|
|
(1,484
|
)
|
|
|
(110
|
)
|
|
|
(1,432
|
)
|
Amortization of debt discount and retirement costs
|
|
|
1,342
|
|
|
|
1,250
|
|
|
|
3,955
|
|
|
|
15,157
|
|
Non-GAAP other expense, net and interest expense
|
|
$
|
(3,291
|
)
|
|
$
|
(3,013
|
)
|
|
$
|
(10,377
|
)
|
|
$
|
(11,074
|
)
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
January 31,
|
|
|
2012
|
|
2012
|
|
|
|
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
159,730
|
|
$
|
146,499
|
Restricted cash
|
|
|
-
|
|
|
4,237
|
Trade accounts receivable, net
|
|
|
171,916
|
|
|
133,494
|
Term receivables, short-term
|
|
|
232,867
|
|
|
221,430
|
Prepaid expenses and other
|
|
|
44,165
|
|
|
43,972
|
Deferred income taxes
|
|
|
16,249
|
|
|
17,803
|
|
|
|
|
|
Total current assets
|
|
|
624,927
|
|
|
567,435
|
Property, plant, and equipment, net
|
|
|
161,260
|
|
|
148,019
|
Term receivables, long-term
|
|
|
207,639
|
|
|
220,355
|
Goodwill and intangible assets, net
|
|
|
547,156
|
|
|
555,671
|
Other assets
|
|
|
65,827
|
|
|
59,195
|
|
|
|
|
|
Total assets
|
|
$
|
1,606,809
|
|
$
|
1,550,675
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Short-term borrowings
|
|
$
|
2,836
|
|
$
|
14,617
|
Current portion of notes payable
|
|
|
1,381
|
|
|
1,349
|
Accounts payable
|
|
|
16,686
|
|
|
17,261
|
Income taxes payable
|
|
|
9,723
|
|
|
2,538
|
Accrued payroll and related liabilities
|
|
|
68,328
|
|
|
112,349
|
Accrued and other liabilities
|
|
|
36,812
|
|
|
34,284
|
Deferred revenue
|
|
|
202,292
|
|
|
191,540
|
|
|
|
|
|
Total current liabilities
|
|
|
338,058
|
|
|
373,938
|
Long-term notes payable
|
|
|
217,179
|
|
|
213,224
|
Deferred revenue, long-term
|
|
|
18,331
|
|
|
14,883
|
Other long-term liabilities
|
|
|
53,628
|
|
|
73,290
|
Total liabilities
|
|
|
627,196
|
|
|
675,335
|
|
|
|
|
|
Noncontrolling interest with redemption feature
|
|
|
8,685
|
|
|
9,266
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Common stock
|
|
|
804,793
|
|
|
775,362
|
Retained earnings
|
|
|
139,706
|
|
|
62,032
|
Accumulated other comprehensive income
|
|
|
26,429
|
|
|
28,680
|
Total stockholders' equity
|
|
|
970,928
|
|
|
866,074
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,606,809
|
|
$
|
1,550,675
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL INFORMATION
|
(In thousands, except days sales outstanding)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
Nine Months Ended October 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
32,066
|
|
|
$
|
24,071
|
|
|
$
|
77,151
|
|
|
$
|
26,052
|
|
Depreciation and amortization (1)
|
|
|
13,189
|
|
|
|
13,157
|
|
|
|
40,201
|
|
|
|
49,347
|
|
Other adjustments to reconcile:
|
|
|
|
|
|
|
|
|
Operating cash
|
|
|
4,117
|
|
|
|
5,770
|
|
|
|
14,310
|
|
|
|
18,686
|
|
Changes in working capital
|
|
|
(30,887
|
)
|
|
|
(32,660
|
)
|
|
|
(78,790
|
)
|
|
|
(58,893
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
18,485
|
|
|
|
10,338
|
|
|
|
52,872
|
|
|
|
35,192
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(13,534
|
)
|
|
|
(7,571
|
)
|
|
|
(37,520
|
)
|
|
|
(26,231
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
7,936
|
|
|
|
(13,380
|
)
|
|
|
(136
|
)
|
|
|
(30,789
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
482
|
|
|
|
(867
|
)
|
|
|
(1,985
|
)
|
|
|
704
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
13,369
|
|
|
|
(11,480
|
)
|
|
|
13,231
|
|
|
|
(21,124
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
146,361
|
|
|
|
123,469
|
|
|
|
146,499
|
|
|
|
133,113
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
159,730
|
|
|
$
|
111,989
|
|
|
$
|
159,730
|
|
|
$
|
111,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Depreciation and amortization includes a write-off of
note issuance costs in the amount of $8,010 for the nine months
ended October 31, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other data:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
13,392
|
|
|
$
|
8,438
|
|
|
$
|
35,575
|
|
|
$
|
25,062
|
|
Days sales outstanding
|
|
|
136
|
|
|
|
105
|
|
|
|
|
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED SUPPLEMENTAL BOOKINGS AND
REVENUE INFORMATION
|
(Rounded to nearest 5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
Product Group Bookings (a)
|
|
Q1
|
Q2
|
Q3
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
IC DESIGN TO SILICON
|
|
35%
|
25%
|
30%
|
30%
|
|
20%
|
25%
|
60%
|
40%
|
40%
|
|
35%
|
40%
|
45%
|
30%
|
35%
|
SCALABLE VERIFICATION
|
|
15%
|
30%
|
25%
|
25%
|
|
35%
|
30%
|
15%
|
35%
|
30%
|
|
35%
|
25%
|
25%
|
30%
|
25%
|
INTEGRATED SYSTEMS DESIGN
|
|
25%
|
25%
|
25%
|
25%
|
|
25%
|
25%
|
15%
|
15%
|
15%
|
|
15%
|
25%
|
20%
|
25%
|
25%
|
NEW & EMERGING MARKETS
|
|
10%
|
10%
|
15%
|
15%
|
|
10%
|
15%
|
5%
|
5%
|
10%
|
|
10%
|
5%
|
5%
|
10%
|
10%
|
SERVICES / OTHER
|
|
15%
|
10%
|
5%
|
5%
|
|
10%
|
5%
|
5%
|
5%
|
5%
|
|
5%
|
5%
|
5%
|
5%
|
5%
|
Total
|
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
Product Group Revenue (b)
|
|
Q1
|
Q2
|
Q3
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
IC DESIGN TO SILICON
|
|
40%
|
35%
|
25%
|
35%
|
|
40%
|
25%
|
40%
|
45%
|
40%
|
|
40%
|
40%
|
35%
|
30%
|
35%
|
SCALABLE VERIFICATION
|
|
25%
|
25%
|
30%
|
25%
|
|
25%
|
30%
|
25%
|
25%
|
25%
|
|
20%
|
20%
|
30%
|
25%
|
25%
|
INTEGRATED SYSTEMS DESIGN
|
|
25%
|
25%
|
30%
|
25%
|
|
20%
|
25%
|
25%
|
20%
|
25%
|
|
25%
|
25%
|
25%
|
30%
|
30%
|
NEW & EMERGING MARKETS
|
|
5%
|
10%
|
10%
|
10%
|
|
10%
|
10%
|
5%
|
5%
|
5%
|
|
5%
|
5%
|
5%
|
10%
|
5%
|
SERVICES / OTHER
|
|
5%
|
5%
|
5%
|
5%
|
|
5%
|
10%
|
5%
|
5%
|
5%
|
|
10%
|
10%
|
5%
|
5%
|
5%
|
Total
|
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
Bookings by Geography
|
|
Q1
|
Q2
|
Q3
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
North America
|
|
35%
|
40%
|
50%
|
45%
|
|
45%
|
45%
|
40%
|
50%
|
45%
|
|
45%
|
40%
|
45%
|
50%
|
45%
|
Europe
|
|
20%
|
35%
|
20%
|
25%
|
|
20%
|
30%
|
15%
|
25%
|
20%
|
|
20%
|
25%
|
20%
|
20%
|
20%
|
Japan
|
|
10%
|
5%
|
5%
|
5%
|
|
15%
|
5%
|
5%
|
10%
|
10%
|
|
15%
|
5%
|
15%
|
15%
|
15%
|
Pac Rim
|
|
35%
|
20%
|
25%
|
25%
|
|
20%
|
20%
|
40%
|
15%
|
25%
|
|
20%
|
30%
|
20%
|
15%
|
20%
|
Total
|
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
Revenue by Geography
|
|
Q1
|
Q2
|
Q3
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
North America
|
|
50%
|
45%
|
50%
|
50%
|
|
40%
|
50%
|
45%
|
35%
|
40%
|
|
35%
|
40%
|
50%
|
45%
|
40%
|
Europe
|
|
20%
|
20%
|
20%
|
20%
|
|
25%
|
20%
|
25%
|
25%
|
25%
|
|
25%
|
25%
|
25%
|
25%
|
25%
|
Japan
|
|
10%
|
15%
|
10%
|
10%
|
|
15%
|
10%
|
10%
|
5%
|
10%
|
|
15%
|
10%
|
10%
|
15%
|
15%
|
Pac Rim
|
|
20%
|
20%
|
20%
|
20%
|
|
20%
|
20%
|
20%
|
35%
|
25%
|
|
25%
|
25%
|
15%
|
15%
|
20%
|
Total
|
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
Bookings by Business Model (c)
|
|
Q1
|
Q2
|
Q3
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
Perpetual
|
|
25%
|
20%
|
20%
|
20%
|
|
40%
|
20%
|
15%
|
25%
|
20%
|
|
40%
|
30%
|
10%
|
15%
|
20%
|
Ratable
|
|
25%
|
15%
|
10%
|
15%
|
|
20%
|
10%
|
5%
|
5%
|
10%
|
|
20%
|
15%
|
10%
|
5%
|
10%
|
Up Front
|
|
50%
|
65%
|
70%
|
65%
|
|
40%
|
70%
|
80%
|
70%
|
70%
|
|
40%
|
55%
|
80%
|
80%
|
70%
|
Total
|
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
Revenue by Business Model (c)
|
|
Q1
|
Q2
|
Q3
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Year
|
Perpetual
|
|
20%
|
25%
|
25%
|
25%
|
|
30%
|
25%
|
15%
|
15%
|
20%
|
|
20%
|
25%
|
20%
|
15%
|
20%
|
Ratable
|
|
10%
|
10%
|
10%
|
10%
|
|
10%
|
10%
|
10%
|
5%
|
10%
|
|
25%
|
15%
|
10%
|
5%
|
10%
|
Up Front
|
|
70%
|
65%
|
65%
|
65%
|
|
60%
|
65%
|
75%
|
80%
|
70%
|
|
55%
|
60%
|
70%
|
80%
|
70%
|
Total
|
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Product Group Bookings excludes support bookings for all
sub-flow categories.
|
(b) Product Group Revenue includes support revenue for each sub-flow
category as appropriate.
|
(c) Bookings and Revenue by Business Model are System and Software
only, excluding finance fee revenue.
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED RECONCILIATION OF GAAP TO
NON-GAAP
|
EARNINGS PER SHARE
|
|
|
|
|
|
|
The following table reconciles management's estimates of the
specific items excluded from GAAP in the calculation of estimated
non-GAAP net income per share for Q4'13 and fiscal 2013.
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
Estimated
|
|
|
|
Q4'13
|
|
FY'13
|
Diluted GAAP net income per share
|
|
$
|
0.54
|
|
|
$
|
1.22
|
|
Non-GAAP Adjustments:
|
|
|
|
|
Amortization of purchased intangible assets (1)
|
|
|
0.01
|
|
|
|
0.07
|
|
Amortization of other identified intangible assets (2)
|
|
|
0.02
|
|
|
|
0.10
|
|
Equity plan-related compensation (3)
|
|
|
0.06
|
|
|
|
0.21
|
|
Special charges (4)
|
|
|
-
|
|
|
|
0.03
|
|
Other expense, net and interest expense (5)
|
|
|
0.01
|
|
|
|
0.05
|
|
Non-GAAP income tax effects (6)
|
|
|
(0.09
|
)
|
|
|
(0.29
|
)
|
Non-GAAP net income per share
|
|
$
|
0.55
|
|
|
$
|
1.39
|
|
|
|
|
|
|
|
|
(1)
|
Excludes amortization of purchased intangible assets resulting from
acquisitions. Purchased intangible assets are amortized over two to
five years.
|
(2)
|
Amount represents amortization of purchased technology and other
identified intangible assets identified as part of the fair value of
the Frontline P.C.B. Solutions Limited Partnership (Frontline)
investment. Mentor Graphics acquired a 50% joint venture in
Frontline as a result of the Valor Computerized Systems, Ltd.
acquisition in the first quarter of fiscal 2011. The purchased
technology will be amortized over three years, other identified
intangible assets will be amortized over three to four years, and
are reflected in the income statement in the equity in earnings of
Frontline.
|
(3)
|
Equity plan-related compensation expense is the fair value of all
share-based payments to employees for stock options and restricted
stock units, and purchases made as a result of the employee stock
purchase plans.
|
(4)
|
Excludes special charges consisting primarily of costs incurred for
employee rebalances (which includes severance benefits, notice pay
and outplacement services), facility closures, and acquisition costs.
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(5)
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Adjustment for fiscal 2013 reflects the amortization of original
issuance debt discount for our 4.00% Convertible Subordinated
Debentures due 2031.
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(6)
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Non-GAAP income tax expense adjustment reflects the application of
our assumed normalized effective 17% tax rate, instead of our GAAP
tax rate, to our non-GAAP pre-tax income.
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