|
Mentor Graphics Corporation (MENT) today announced financial
results for the company’s fiscal first quarter ended April 30, 2012. The
company reported revenues of $247.9 million, non-GAAP earnings per share
of $.30, and GAAP earnings per share of $.25. The company raised
guidance for fiscal year 2013 non-GAAP earnings per share by $.05 to
$1.37 and for GAAP earnings per share by $.07 to $1.20.
"Strength in our business continued in the first quarter, with record
first quarter revenue and earnings," said Walden C. Rhines, chairman and
CEO of Mentor Graphics. "The release of our next-generation emulation
platform during the quarter has attracted broad customer interest, and
we have a very full sales funnel. We are also seeing increasing demand
for our Calibre family of products at advanced process nodes, as the
explosion of capacity at 28nm is driving significant design activity.
With 20nm processes being certified now, and beginning production later
in the year, we expect that the ongoing move to the 28nm and 20nm
generations of technology will drive an exceptionally large increase in
design activity. This will benefit Mentor and the whole electronic
design automation industry through 2013."
During the quarter, the company announced the availability of the
Veloce(R)2 platform, the next generation of emulation solutions for the
verification of electronic system and system-on-chip (SoC) designs. This
included the announcement of a new environment called Veloce VirtuaLAB,
giving verification engineers access to a full environment for verifying
complex electronics systems prior to first silicon availability without
requiring the building of hardware test systems. The company also
announced the latest release of the PADS(R) desktop solution for PCB
design, with new features addressing design-for-manufacturing analysis,
high-speed and interactive routing. Additionally the quarter saw the
latest release of the Questa(R) functional verification platform for
complex SoC, ASIC and FPGA designs.
"Continued focus on cost controls, a favorable product mix, and better
than forecasted profitability in the business have allowed us to raise
earnings guidance for the year. We also reaffirm revenue guidance at
$1.1 billion for the year as we expect increased Veloce2 emulation
shipments beginning in the second quarter as production capacity
increases," said Gregory K. Hinckley, president of Mentor Graphics. "We
are pleased that we have achieved an operating margin in the first
quarter that is already near our fiscal year target of 18% non-GAAP.
With a record backlog at the start of the year and strong demand for our
products at advanced process nodes, we remain confident in our outlook
for the rest of the fiscal year."
Outlook
For the full fiscal year 2013, the company reaffirms that it expects
revenues of about $1.1 billion, and raises outlook for non-GAAP earnings
per share by $.05 to $1.37, and GAAP earnings per share by $.07 to
$1.20. For the second fiscal quarter FY2013, the company expects
revenues of about $240 million, non-GAAP earnings per share of $.17, and
GAAP earnings per share of $.10.
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
(loss), and earnings (loss) per share which we refer to as non-GAAP
gross margin, operating margin, net income (loss), and earnings (loss)
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 these businesses 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 three months ended
April 30, 2012 is 3%, after the consideration of period specific
items. Without period specific items of ($1.3) million, our GAAP tax
rate is 7%. Our full fiscal year 2013 GAAP tax rate, inclusive of
period specific items, is projected to be 7%. 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 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, Veloce, Questa and PADS 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 in the EU, US,
Japan, China or other economies, including the possibility of a
"double-dip" recession or weakness associated with the 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) possible delayed or
canceled customer orders resulting from the business disruption and
uncertainty of actions of activist shareholders; (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) effects of
unanticipated shifts in product mix on gross margin; 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 OPERATIONS
----------------------------------------------------------------------------------------------------
(In thousands, except earnings per share data)
Three Months Ended April 30,
--------------------------------------
2012 2011
------------------ ------------------
Revenues:
System and software $ 149,356 $ 139,645
Service and support 98,562 90,390
------- -------
247,918 230,035
Total revenues
------- -------
Cost of revenues: (1)
System and software 14,790 16,077
Service and support 28,414 25,211
Amortization of purchased technology 2,179 3,357
------- -------
Total cost of revenues 45,383 44,645
------- -------
Gross margin 202,535 185,390
------- -------
Operating expenses:
Research and development (2) 71,046 69,368
Marketing and selling (3) 79,752 77,924
General and administration (4) 16,649 16,785
Equity in earnings of Frontline (5) (587 ) (1,017 )
Amortization of intangible assets (6) 1,706 1,610
Special charges (7) 1,147 4,547
------- -------
Total operating expenses 169,713 169,217
------- -------
Operating income 32,822 16,173
Other income (expense), net (8) 83 (475 )
Interest expense (9) (4,594 ) (17,440 )
------- ---- ------- ----
Income (loss) before income tax 28,311 (1,742 )
Income tax expense (10) 781 611
------- -------
Net income (loss) 27,530 (2,353 )
Less: Loss attributable to noncontrolling interest (11) (652 ) -
------- ---- -------
$ 28,182 $ (2,353 )
Net income (loss) attributable to Mentor Graphics shareholders
==== ======= ==== ==== ======= ====
Net income (loss) per share attributable to Mentor Graphics
shareholders:
Basic $ 0.26 $ (0.02 )
==== ======= ==== ======= ====
Diluted $ 0.25 $ (0.02 )
==== ======= ==== ======= ====
Weighted average number of shares outstanding:
Basic 109,907 111,769
======= =======
Diluted 113,243 111,769
======= =======
Refer to following page for a description of footnotes.
MENTOR GRAPHICS CORPORATION
----------------------------------------------------------------------------------------------------
FOOTNOTES TO UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------------------------------------
(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 April 30,
------------------------------------
2012 2011
----------------- -----------------
(1) Cost of revenues:
Equity plan-related compensation $ 319 $ 267
Amortization of purchased technology 2,179 3,357
------ ------
$ 2,498 $ 3,624
==== ====== ==== ======
(2) Research and development:
Equity plan-related compensation $ 2,117 $ 2,139
==== ====== ==== ======
(3) Marketing and selling:
Equity plan-related compensation $ 1,549 $ 1,615
==== ====== ==== ======
(4) General and administration:
Equity plan-related compensation $ 1,162 $ 1,659
==== ====== ==== ======
(5) Equity in earnings of Frontline:
Amortization of purchased technology and other identified $ 1,242 $ 1,242
intangible assets
==== ====== ==== ==== ====== ====
(6) Amortization of intangible assets:
Amortization of other identified intangible assets $ 1,706 $ 1,610
==== ====== ==== ======
(7) Special charges:
Rebalance, restructuring, and other costs $ 1,147 $ 4,547
==== ====== ==== ======
(8) Other income (expense), net:
Net (gain) loss of unconsolidated entities $ (13 ) $ -
==== ====== ==== ==== ======
(9) Interest expense:
Amortization of debt discount and premium, net $ 1,295 $ 1,175
Premium and costs related to debt retirement - 11,504
------ ------
$ 1,295 $ 12,679
==== ====== ==== ======
(10) Income tax expense:
Non-GAAP income tax effects $ (6,191 ) $ (4,042 )
==== ====== ==== ==== ====== ====
(11) Loss attributable to noncontrolling interest:
Amortization of intangible assets and income tax effects $ (269 ) $ -
==== ====== ==== ==== ======
MENTOR GRAPHICS CORPORATION
----------------------------------------------------------------------------------------------
UNAUDITED RECONCILIATION OF NON-GAAP
ADJUSTMENTS
----------------------------------------------------------------------------------------------
(In thousands, except earnings per share data)
Three Months Ended April 30,
----------------------------------
2012 2011
---------------- ----------------
GAAP net income (loss) attributable to Mentor Graphics shareholders $ 28,182 $ (2,353 )
Non-GAAP adjustments:
Equity plan-related compensation: (1)
Cost of revenues 319 267
Research and development 2,117 2,139
Marketing and selling 1,549 1,615
General and administration 1,162 1,659
Acquisition - related items:
Amortization of purchased assets
Cost of revenues (2) 2,179 3,357
Frontline purchased technology and intangible assets (3) 1,242 1,242
Amortization of intangible assets (4) 1,706 1,610
Special charges (5) 1,147 4,547
Other income (expense), net (6) (13 ) -
Interest expense (7) 1,295 12,679
Non-GAAP income tax effects (8) (6,191 ) (4,042 )
Noncontrolling interest (9) (269 ) -
------- - -------
Total of non-GAAP adjustments 6,243 25,073
------- -------
Non-GAAP net income attributable to Mentor Graphics shareholders $ 34,425 $ 22,720
===== ======= ===== =======
GAAP weighted average shares (diluted) 113,243 111,769
Non-GAAP adjustment - 3,649
------- -------
Non-GAAP weighted average shares (diluted) 113,243 115,418
======= =======
Net income (loss) per share attributable to Mentor Graphics
shareholders:
GAAP (diluted) $ 0.25 $ (0.02 )
Non-GAAP adjustments detailed above 0.05 0.22
------- -------
Non-GAAP (diluted) $ 0.30 $ 0.20
===== ======= ===== =======
(1) Equity plan-related compensation expense.
(2) Amount represents amortization of purchased technology
resulting from acquisitions. Purchased intangible assets are
amortized over three 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 results. 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 one to five years. Other identified
intangible assets include trade names, customer relationships, and
backlog resulting from acquisition transactions.
(5) Three months ended April 30, 2012: Special charges
consist of (i) $988 of costs incurred for employee rebalances which
includes severance benefits, notice pay, and outplacement services
and (ii) $159 in other adjustments.
Three months ended April 30, 2011: Special charges consist
of (i) $3,102 of costs related to consulting fees associated with
our proxy contest, (ii) $1,147 of costs incurred for employee
rebalances which includes severance benefits, notice pay, and
outplacement services, and (iii) $298 in other adjustments.
(6) Three months ended April 30, 2012: Income of $13
on an investment accounted for under the equity method of accounting.
(7) Three months ended April 30, 2012: $1,295 in
amortization of original issuance debt discount.
Three months ended April 30, 2011: $1,175 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 expense 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 April 30,
-----------------------------
2012 2011
--------- ----------------
GAAP gross margin $ 202,535 $ 185,390
Reconciling items to non-GAAP gross margin:
Equity plan-related compensation 319 267
Amortization of purchased technology 2,179 3,357
--------- ----------------
Non-GAAP gross margin $ 205,033 $ 189,014
========= ================
Three Months Ended April 30,
-----------------------------
2012 2011
--------- ----------------
GAAP gross margin as a percent of total revenues 81.7% 80.6%
Non-GAAP adjustments detailed above 1.0% 1.6%
--------- ----------------
Non-GAAP gross margin as a percent of total revenues 82.7% 82.2%
========= ================
Three Months Ended April 30,
-----------------------------
2012 2011
--------- ----------------
GAAP operating expenses $ 169,713 $ 169,217
Reconciling items to non-GAAP operating expenses:
Equity plan-related compensation (4,828) (5,413)
(1,242) (1,242)
Amortization of Frontline purchased technology and other
identified intangible assets
Amortization of other identified intangible assets (1,706) (1,610)
Special charges (1,147) (4,547)
--------- ----------------
Non-GAAP operating expenses $ 160,790 $ 156,405
========= ================
Three Months Ended April 30,
-----------------------------
2012 2011
--------- ----------------
GAAP operating income $ 32,822 $ 16,173
Reconciling items to non-GAAP operating income:
Equity plan-related compensation 5,147 5,680
Amortization of purchased technology 2,179 3,357
1,242 1,242
Amortization of Frontline purchased technology and other
identified intangible assets
Amortization of other identified intangible assets 1,706 1,610
Special Charges 1,147 4,547
--------- ----------------
Non-GAAP operating income $ 44,243 $ 32,609
========= ================
Three Months Ended April 30,
-----------------------------
2012 2011
--------- ----------------
GAAP operating income as a percent of total revenues 13.2% 7.0%
Non-GAAP adjustments detailed above 4.6% 7.2%
--------- ----------------
Non-GAAP operating income as a percent of total revenues 17.8% 14.2%
========= ================
Three Months Ended April 30,
-----------------------------
2012 2011
--------- ----------------
GAAP other expense, net and interest expense $ (4,511) $ (17,915)
Reconciling items to non-GAAP other expense, net and interest
expense:
Net gain of unconsolidated entities (13) -
Amortization of debt discount and retirement costs 1,295 12,679
--------- ----------------
Non-GAAP other expense, net and interest expense $ (3,229) $ (5,236)
========= ================
MENTOR GRAPHICS CORPORATION
---------------------------------------------------------------------------------
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
---------------------------------------------------------------------------------
(In thousands)
April 30, January 31,
2012 2012
--------------- ----------------
Assets
Current assets:
Cash, cash equivalents, and short-term investments $ 134,811 $ 146,499
Restricted cash - 4,237
Trade accounts receivable, net 117,981 133,494
Term receivables, short-term 236,938 221,430
Prepaid expenses and other 45,210 43,972
Deferred income taxes 13,590 17,803
--------- ---------
Total current assets 548,530 567,435
Property, plant, and equipment, net 152,026 148,019
Term receivables, long-term 212,665 220,355
Goodwill and intangible assets, net 552,262 555,671
Other assets 63,670 59,195
--------- ---------
Total assets $ 1,529,153 $ 1,550,675
==== ========= ===== =========
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings $ 8,339 $ 14,617
Current portion of notes payable 1,357 1,349
Accounts payable 16,746 17,261
Income taxes payable 2,365 2,538
Accrued payroll and related liabilities 57,751 112,349
Accrued and other liabilities 30,000 34,284
Deferred revenue 207,974 191,540
--------- ---------
Total current liabilities 324,532 373,938
Long-term notes payable 214,519 213,224
Deferred revenue, long-term 12,649 14,883
Other long-term liabilities 66,065 73,290
--------- ---------
Total liabilities 617,765 675,335
--------- ---------
Noncontrolling interest with redemption feature 9,291 9,266
Stockholders’ equity:
Common stock 784,211 775,362
Retained earnings 89,516 62,032
Accumulated other comprehensive income 28,370 28,680
--------- ---------
Total stockholders’ equity 902,097 866,074
--------- ---------
Total liabilities and stockholders’ equity $ 1,529,153 $ 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 April 30,
----------------------------------
2012 2011
---------------- ----------------
Operating activities
Net income (loss) $ 27,530 $ (2,353 )
Depreciation and amortization (1) 13,813 22,411
Other adjustments to reconcile:
Operating cash 6,700 7,155
Changes in working capital (41,898 ) (36,475 )
------- - ------- -
Net cash provided by (used in) operating activities 6,145 (9,262 )
Investing activities
Net cash used in investing activities (12,057 ) (8,381 )
Financing activities
Net cash provided by (used in) financing activities (4,234 ) 253
Effect of exchange rate changes on cash and cash equivalents (1,542 ) 758
------- - -------
Net change in cash and cash equivalents (11,688 ) (16,632 )
Cash and cash equivalents at beginning of period 146,499 133,113
------- -------
Cash and cash equivalents at end of period $ 134,811 $ 116,481
===== ======= ===== =======
(1) Depreciation and amortization includes a write-off of
note issuance costs in the amount of $8,010 for the three months
ended April 30, 2011.
Other data:
Capital expenditures $ (11,604 ) $ (6,345 )
===== ======= = ===== ======= =
Days sales outstanding 129 126
MENTOR GRAPHICS CORPORATION
-----------------------------------------------------------------------------
UNAUDITED SUPPLEMENTAL BOOKINGS AND
REVENUE INFORMATION
-----------------------------------------------------------------------------
(Rounded to nearest 5%)
FY 2013 Fiscal Year 2012 Fiscal Year 2011
------- -------------------------------- ---------------------------------
Product Group Bookings (a) Q1 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
IC DESIGN TO SILICON 35% 20% 25% 60% 40% 40% 35% 40% 45% 30% 35%
SCALABLE VERIFICATION 15% 35% 30% 15% 35% 30% 35% 25% 25% 30% 25%
INTEGRATED SYSTEMS DESIGN 25% 25% 25% 15% 15% 15% 15% 25% 20% 25% 25%
NEW & EMERGING MARKETS 10% 10% 15% 5% 5% 10% 10% 5% 5% 10% 10%
SERVICES / OTHER 15% 10% 5% 5% 5% 5% 5% 5% 5% 5% 5%
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
======= ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
FY 2013 Fiscal Year 2012 Fiscal Year 2011
------- -------------------------------- ---------------------------------
Product Group Revenue (b) Q1 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
IC DESIGN TO SILICON 40% 40% 25% 40% 45% 40% 40% 40% 35% 30% 35%
SCALABLE VERIFICATION 25% 25% 30% 25% 25% 25% 20% 20% 30% 25% 25%
INTEGRATED SYSTEMS DESIGN 25% 20% 25% 25% 20% 25% 25% 25% 25% 30% 30%
NEW & EMERGING MARKETS 5% 10% 10% 5% 5% 5% 5% 5% 5% 10% 5%
SERVICES / OTHER 5% 5% 10% 5% 5% 5% 10% 10% 5% 5% 5%
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
======= ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
FY 2013 Fiscal Year 2012 Fiscal Year 2011
------- -------------------------------- ---------------------------------
Bookings by Geography Q1 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
North America 35% 45% 45% 40% 50% 45% 45% 40% 45% 50% 45%
Europe 20% 20% 30% 15% 25% 20% 20% 25% 20% 20% 20%
Japan 10% 15% 5% 5% 10% 10% 15% 5% 15% 15% 15%
Pac Rim 35% 20% 20% 40% 15% 25% 20% 30% 20% 15% 20%
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
======= ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
FY 2013 Fiscal Year 2012 Fiscal Year 2011
------- -------------------------------- ---------------------------------
Revenue by Geography Q1 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
North America 50% 40% 50% 45% 35% 40% 35% 40% 50% 45% 40%
Europe 20% 25% 20% 25% 25% 25% 25% 25% 25% 25% 25%
Japan 10% 15% 10% 10% 5% 10% 15% 10% 10% 15% 15%
Pac Rim 20% 20% 20% 20% 35% 25% 25% 25% 15% 15% 20%
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
======= ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
FY 2013 Fiscal Year 2012 Fiscal Year 2011
------- -------------------------------- ---------------------------------
Bookings by Business Model (c) Q1 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Perpetual 25% 40% 15% 15% 25% 20% 40% 30% 10% 15% 20%
Ratable 25% 20% 10% 5% 5% 10% 20% 15% 10% 5% 10%
Up Front 50% 40% 75% 80% 70% 70% 40% 55% 80% 80% 70%
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
======= ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
FY 2013 Fiscal Year 2012 Fiscal Year 2011
------- -------------------------------- ---------------------------------
Revenue by Business Model (c) Q1 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Perpetual 20% 30% 25% 15% 15% 20% 20% 25% 20% 15% 20%
Ratable 10% 10% 10% 10% 5% 10% 25% 15% 10% 5% 10%
Up Front 70% 60% 65% 75% 80% 70% 55% 60% 70% 80% 70%
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total 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.
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 Q2 FY13 and fiscal 2013.
Estimated Estimated
Q2 FY13 FY13
-------------- --------------
Diluted GAAP net income per share $ 0.10 $ 1.20
Non-GAAP Adjustments:
Amortization of purchased intangible assets (1) 0.02 0.07
Amortization of other identified intangible assets (2) 0.03 0.09
Equity plan-related compensation (3) 0.06 0.18
Special charges (4) - 0.01
Other income (expense), net and interest expense (5) 0.01 0.05
Non-GAAP income tax effects (6) (0.05 ) (0.22 )
Noncontrolling Interest (7) - (0.01 )
----- ----- -
Non-GAAP net income per share $ 0.17 $ 1.37
===== ===== ===== =====
(1) Excludes amortization of purchased intangible assets
resulting from acquisition transactions. Purchased intangible assets
are amortized over three to five years.
(2) Excludes amortization of other identified intangible
assets including trade names, customer relationships, and backlog
resulting from acquisition transactions. Other identified intangible
assets are amortized over one to five years. This line item also
excludes amortization of purchased intangible assets identified as
part of the fair value of the Frontline P.C.B. Solutions Limited
Partnership investment. The purchased technology will be amortized
over three years and other identified intangible assets will be
amortized over three to four years.
(3) Excludes equity plan-related compensation expense.
(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.
(5) Adjustment for fiscal 2013 reflects the amortization of
original issuance debt discount for our 4.00% Convertible
Subordinated Debentures due 2031.
(6) 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.
(7) Adjustment for the impact of amortization of intangible
assets, equity plan-related compensation expense and income tax
expense on noncontrolling interest.
SOURCE: Mentor Graphics Corporation
Mentor Graphics Corporation
Media:
Ry Schwark, 503-685-1660
ry_schwark@mentor.com
or
Investors:
Joe Reinhart, 503-685-1462
joe_reinhart@mentor.com
|
