UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
______________
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
|
|
November
19, 2015
|
MENTOR
GRAPHICS CORPORATION
|
(Exact
name of registrant as specified in charter)
|
OREGON
|
1-34795
|
93-0786033
|
(State or other jurisdiction
of incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
8005 S.W. BOECKMAN ROAD
WILSONVILLE, OR
|
|
97070-7777
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Registrant’s
telephone number, including area code:
|
(503)
685-7000
|
|
NO
CHANGE
|
(Former
name or former address, if changed since last report.)
|
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
Attached as Exhibit 99.1 is a copy of a press release of Mentor Graphics
Corporation dated November 19, 2015, announcing the Company’s financial
results for the third quarter and the Company’s outlook for the fourth
quarter, which is being furnished to the Securities and Exchange
Commission.
SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
MENTOR GRAPHICS CORPORATION
|
|
|
(Registrant)
|
|
|
|
|
|
|
Date:
|
November 19, 2015
|
By:
|
/s/ Dean M. Freed
|
|
|
|
Dean M. Freed
|
|
|
|
Vice President and General Counsel
|
3
Exhibit 99.1
Mentor
Graphics Reports Fiscal Third Quarter Results
WILSONVILLE, Ore.--(BUSINESS WIRE)--November 19, 2015--Mentor Graphics
Corporation (NASDAQ: MENT) today announced financial results for the
company’s fiscal third quarter ended October 31, 2015. The company
reported revenues of $291 million, non-GAAP earnings per share of $0.28,
and GAAP earnings per share of $0.12.
“Mentor achieved third-quarter guided results,” said Walden C. Rhines,
chairman and CEO of Mentor Graphics. “Active evaluations of Mentor’s
Veloce emulator increased in the third quarter, but the time required
for completion of evaluations also increased. This, along with
semiconductor industry consolidations, is having a negative impact on
our business. However, demand for EDA software for system design,
particularly in the transportation industry, remains robust. Embedded
electronics in automotive and aerospace applications continues to show
rapid growth.”
During the quarter Mentor Graphics acquired all remaining outstanding
shares of its majority-owned subsidiary, Calypto Design Systems, Inc.
Mentor also announced its new Tessent® ScanPro product, which achieves
significant compression of test data volume and thereby reduces the cost
and time required to test an integrated circuit. The company also
introduced support for 25G, 50G and 100G Ethernet in the Veloce®
VirtuaLAB environment, for emulation of leading-edge networking and
other massive Ethernet-based designs.
Mentor announced two automotive offerings during the quarter. The Mentor
Automotive Safety-Certifiable Digital Instrument Cluster solution
displays safety-critical driver information simultaneously with rich 3D
graphics on a single instrument cluster display. This enables compliance
with safety standards without pushing up hardware or safety
certification costs. The Mentor Automotive Connected OS™ software
platform provides faster integration and connectivity with car network
communication frameworks and consumer electronic devices.
“Semiconductor consolidation and delays in emulator decisions are now
having an adverse impact on our ability to close business,” said Gregory
K. Hinckley, president of Mentor Graphics. “Because we recognize revenue
upfront on product sales, changes in market outlook and demand are
reflected in real time in Mentor’s results. Nevertheless, with
appropriate scaling of the business and continued attention to expenses,
we expect to deliver FY16 non-GAAP operating margins consistent with our
strategic objective.”
Outlook
For the fourth quarter of fiscal 2016, the company expects revenues of
about $336 million, non-GAAP earnings per share of about $0.47 and GAAP
earnings per share of approximately $0.32. For the full year fiscal
2016, the company expects revenues of about $1.18 billion, non-GAAP
earnings per share of about $1.40, and GAAP earnings per share of
approximately $0.63.
Dividend
The company announced a quarterly dividend of $0.055 per share. The
dividend is payable on January 4, 2016 to shareholders of record at the
close of business on December 15, 2015.
Fiscal Year Definition
Mentor Graphics Corporation’s 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 profit, operating income, operating margin,
net income, and earnings per share which we refer to as non-GAAP gross
profit, operating income, 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, marketing and sales, 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 associated
with the amortization of original issuance debt discount on convertible
debt, the equity in earnings or losses of unconsolidated entities
(except Frontline PCB Solutions Limited Partnership (Frontline)), and
the impact on basic and diluted earnings per share of changes in the
calculated redemption value of noncontrolling interests, 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 is in the first twelve months following an
acquisition.
-
Special charges may include expenses related to employee severance,
certain litigation costs, acquisitions, excess facility costs, and
other asset related charges. Special charges are incurred based on
particular facts and circumstances and can vary in size and frequency.
Restructuring costs included in special charges include costs incurred
for employee terminations, including severance and benefits, driven by
modification of business strategy or business emphasis. Litigation
costs classified as special charges consist of professional service
fees related to patent litigation involving us, EVE S.A., and
Synopsys, Inc. These costs are included in special charges because of
their unusual nature due to the significance in variability of timing
and amount. Special charges are not ordinarily included in our annual
operating plan and related budget due to unpredictability, driven in
part by rapidly changing technology and the 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, and purchases made as a
result of our employee stock purchase plans. We do not consider equity
plan-related compensation expense in evaluating our managers’
performance internally or our core operations in any given period.
-
Interest expense attributable to amortization of the original issuance
debt discount on convertible debt is excluded. Management does not
consider this charge as a part of our core operating performance. We
do not consider the amortization of the original issuance debt
discount 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 common stock investments accounted
for under the equity method. The carrying amounts of our investments
are adjusted for our share of earnings or losses of the investee. We
report our equity in the earnings or losses of investments in other
income (expense), net (with the exception of our investment in
Frontline as discussed below). The amounts are excluded from our
non-GAAP results as we do not control the results of operations for
the investments and we do not participate in regular and periodic
operating activities; therefore, management does not consider these
investments as a part of our core operating performance.
-
The Company maintains a 50% interest in Frontline, a joint venture. We
report our equity in the earnings or losses of Frontline within
operating income. Although we do not exert control, 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 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, utilizing a
normalized effective tax rate. The normalized non-GAAP effective tax
rate of 19% considers our global tax posture, including the weighted
average tax rates applicable in the various jurisdictions in which we
operate; 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. tax loss
carryforwards and tax credits that were not previously recorded as a
benefit in our financial statements. Our non-GAAP effective tax rate
is subject to change over time for various reasons, including changes
in geographic business mix, statutory tax rates, foreign re-investment
expectations, and availability of U.S. tax loss carryforwards and tax
credits that were not previously recorded as a benefit. Our normalized
effective non-GAAP tax rate increased from 17% for the year ended
January 31, 2015 to 19% for the year ended January 31, 2016. The
increase in the normalized non-GAAP effective tax rate reflects the
reduced availability of U.S. tax loss carryforwards that were not
previously recorded as a benefit in our financial statements. Our GAAP
tax rate for the nine months ended October 31, 2015 is 22% after
consideration of period specific items. Without period specific items
of $(0.3) million, our GAAP tax rate is 23%. Our full fiscal year 2016
GAAP tax rate, inclusive of period specific items recognized through
October 31, 2015, is projected to be 23%.
-
Our agreement with the former owners of noncontrolling interests in
one of our subsidiaries gave them a right to require us to purchase
their interests for a price based on a formula defined in the
agreement. Under GAAP, increases (or decreases to the extent they
offset previous increases) in the calculated redemption value of the
noncontrolling interests are recorded directly to retained earnings
and therefore do not affect net income. However, as required by GAAP,
these amounts are applied to increase or decrease the numerator in the
calculation of basic and diluted earnings per share. In September 2015
we acquired the remaining noncontrolling interest in the subsidiary.
The amount for the three and nine months ended October 31, 2015
reflects the final adjustment of redemption value to the actual price
we paid. Management does not consider fluctuations in the calculated
redemption value of noncontrolling interests to be relevant to our
core operating performance.
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, restricted stock units,
employee stock purchase plan shares, and convertible debt in a loss
situation.
Non-GAAP gross profit, operating income, operating margin, net income,
and earnings per share are supplemental measures of our performance that
are not 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
profit, operating income, operating margin, net income, and earnings per
share 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 intangible assets 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 evaluate our business to determine whether any operations
should be eliminated or curtailed. Additionally, as part of our
ongoing business, we engage in acquisition and assimilation activities
and patent litigation. 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 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.
-
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 in excess of $1.24 billion. Corporate
headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon
97070-7777. World Wide Web site: http://www.mentor.com/.
(Mentor Graphics, Mentor, Veloce and Tessent are registered trademarks
and Connected OS is a trademark 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) continued economic weakness in
the European Union, China, Japan or other countries, and the potential
adverse impact of such weakness on the semiconductor and electronics
industries; (ii) the company’s ability to successfully update existing
products and offer new products and services that compete in the highly
competitive EDA industry, including the risk of 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
the volatility of foreign currency fluctuations on the company’s
business and operating results; (v) effects of customer mergers or
divestitures, customer seasonal purchasing patterns and the timing of
significant orders which may negatively or positively impact the
company’s quarterly results of operations; (vi) changes in accounting or
reporting rules or interpretations, including new rules affecting
revenue recognition; (vii) the impact of audits by taxing authorities,
or changes in applicable tax laws, regulations or enforcement practices;
(viii) effects of unanticipated shifts in product mix on gross margin;
and (ix) litigation; 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,
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System and software
|
|
$
|
168,699
|
|
|
|
$
|
178,115
|
|
|
|
$
|
486,831
|
|
|
|
$
|
475,824
|
|
|
Service and support
|
|
|
121,817
|
|
|
|
|
114,568
|
|
|
|
|
356,890
|
|
|
|
|
329,243
|
|
|
|
Total revenues
|
|
|
290,516
|
|
|
|
|
292,683
|
|
|
|
|
843,721
|
|
|
|
|
805,067
|
|
Cost of revenues: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System and software
|
|
|
9,759
|
|
|
|
|
11,821
|
|
|
|
|
36,432
|
|
|
|
|
54,977
|
|
|
Service and support
|
|
|
35,286
|
|
|
|
|
33,670
|
|
|
|
|
100,275
|
|
|
|
|
93,684
|
|
|
Amortization of purchased technology
|
|
|
1,844
|
|
|
|
|
2,050
|
|
|
|
|
5,496
|
|
|
|
|
5,252
|
|
|
|
Total cost of revenues
|
|
|
46,889
|
|
|
|
|
47,541
|
|
|
|
|
142,203
|
|
|
|
|
153,913
|
|
|
|
Gross profit
|
|
|
243,627
|
|
|
|
|
245,142
|
|
|
|
|
701,518
|
|
|
|
|
651,154
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development (2)
|
|
|
99,669
|
|
|
|
|
96,269
|
|
|
|
|
278,237
|
|
|
|
|
268,262
|
|
|
Marketing and selling (3)
|
|
|
93,165
|
|
|
|
|
89,875
|
|
|
|
|
262,857
|
|
|
|
|
256,814
|
|
|
General and administration (4)
|
|
|
19,665
|
|
|
|
|
19,851
|
|
|
|
|
56,298
|
|
|
|
|
57,006
|
|
|
Equity in earnings of Frontline (5)
|
|
|
(1,755
|
)
|
|
|
|
(1,184
|
)
|
|
|
|
(3,976
|
)
|
|
|
|
(4,625
|
)
|
|
Amortization of intangible assets (6)
|
|
|
2,364
|
|
|
|
|
2,233
|
|
|
|
|
6,817
|
|
|
|
|
6,009
|
|
|
Special charges (7)
|
|
|
4,831
|
|
|
|
|
8,375
|
|
|
|
|
43,994
|
|
|
|
|
19,409
|
|
|
|
Total operating expenses
|
|
|
217,939
|
|
|
|
|
215,419
|
|
|
|
|
644,227
|
|
|
|
|
602,875
|
|
Operating income:
|
|
|
25,688
|
|
|
|
|
29,723
|
|
|
|
|
57,291
|
|
|
|
|
48,279
|
|
|
Other income (expense), net (8)
|
|
|
320
|
|
|
|
|
(381
|
)
|
|
|
|
849
|
|
|
|
|
(743
|
)
|
|
Interest expense (9)
|
|
|
(4,915
|
)
|
|
|
|
(4,934
|
)
|
|
|
|
(14,381
|
)
|
|
|
|
(14,326
|
)
|
|
Income before income tax
|
|
|
21,093
|
|
|
|
|
24,408
|
|
|
|
|
43,759
|
|
|
|
|
33,210
|
|
|
Income tax expense (10)
|
|
|
7,204
|
|
|
|
|
3,849
|
|
|
|
|
9,763
|
|
|
|
|
1,907
|
|
|
|
Net income
|
|
|
13,889
|
|
|
|
|
20,559
|
|
|
|
|
33,996
|
|
|
|
|
31,303
|
|
|
|
Less: Loss attributable to noncontrolling interest (11)
|
|
|
(790
|
)
|
|
|
|
(471
|
)
|
|
|
|
(2,010
|
)
|
|
|
|
(1,348
|
)
|
|
|
Net income attributable to Mentor Graphics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders
|
|
$
|
14,679
|
|
|
|
$
|
21,030
|
|
|
|
$
|
36,006
|
|
|
|
$
|
32,651
|
|
|
Net income per share attributable to Mentor Graphics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basica
|
|
$
|
0.13
|
|
|
|
$
|
0.18
|
|
|
|
$
|
0.31
|
|
|
|
$
|
0.30
|
|
|
|
Diluteda, b
|
|
$
|
0.12
|
|
|
|
$
|
0.18
|
|
|
|
$
|
0.30
|
|
|
|
$
|
0.29
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
117,759
|
|
|
|
|
114,405
|
|
|
|
|
116,787
|
|
|
|
|
114,399
|
|
|
|
Diluted
|
|
|
120,141
|
|
|
|
|
116,715
|
|
|
|
|
121,963
|
|
|
|
|
116,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
aWe have increased (decreased) the numerator of our basic
and diluted earnings per share calculation for the adjustment of the
noncontrolling interest with redemption feature to its calculated
redemption value, recorded directly to retained earnings, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
133
|
|
|
|
$
|
(267
|
)
|
|
|
$
|
258
|
|
|
|
$
|
1,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bWe have increased the numerator of our diluted earnings
per share calculation by $519 for the nine months ended October 31,
2015 for the dilutive effect of our convertible debt. Corresponding
dilutive shares of 2,565 are included in the diluted weighted
average number of shares outstanding for the same period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
(1) Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
$
|
665
|
|
|
|
$
|
608
|
|
|
|
$
|
1,981
|
|
|
|
$
|
1,687
|
|
|
Amortization of purchased technology
|
|
|
1,844
|
|
|
|
|
2,050
|
|
|
|
|
5,496
|
|
|
|
|
5,252
|
|
|
|
|
|
$
|
2,509
|
|
|
|
$
|
2,658
|
|
|
|
$
|
7,477
|
|
|
|
$
|
6,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Research and development:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
$
|
4,095
|
|
|
|
$
|
3,651
|
|
|
|
$
|
12,213
|
|
|
|
$
|
10,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Marketing and selling:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
$
|
2,468
|
|
|
|
$
|
2,371
|
|
|
|
$
|
7,314
|
|
|
|
$
|
6,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) General and administration:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
$
|
2,797
|
|
|
|
$
|
2,472
|
|
|
|
$
|
9,381
|
|
|
|
$
|
7,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Equity in earnings of Frontline:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of other identified intangible assets
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) Amortization of intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of other identified intangible assets
|
|
$
|
2,364
|
|
|
|
$
|
2,233
|
|
|
|
$
|
6,817
|
|
|
|
$
|
6,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7) Special charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebalance, restructuring, certain litigation, and other costs
|
|
$
|
4,831
|
|
|
|
$
|
8,375
|
|
|
|
$
|
43,994
|
|
|
|
$
|
19,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss of unconsolidated entities
|
|
$
|
72
|
|
|
|
$
|
78
|
|
|
|
$
|
33
|
|
|
|
$
|
146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) Interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of original issuance debt discount
|
|
$
|
1,663
|
|
|
|
$
|
1,548
|
|
|
|
$
|
4,900
|
|
|
|
$
|
4,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) Income tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income tax effects
|
|
$
|
(756
|
)
|
|
|
$
|
(4,276
|
)
|
|
|
$
|
(16,056
|
)
|
|
|
$
|
(14,259
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) Loss attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets, equity-plan related
compensation, and income tax effects
|
|
$
|
(238
|
)
|
|
|
$
|
(218
|
)
|
|
|
$
|
(638
|
)
|
|
|
$
|
(622
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
GAAP net income attributable to Mentor Graphics shareholders
|
|
$
|
14,679
|
|
|
|
$
|
21,030
|
|
|
|
$
|
36,006
|
|
|
|
$
|
32,651
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation: (1)
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
665
|
|
|
|
|
608
|
|
|
|
|
1,981
|
|
|
|
|
1,687
|
|
Research and development
|
|
|
4,095
|
|
|
|
|
3,651
|
|
|
|
|
12,213
|
|
|
|
|
10,203
|
|
Marketing and selling
|
|
|
2,468
|
|
|
|
|
2,371
|
|
|
|
|
7,314
|
|
|
|
|
6,692
|
|
General and administration
|
|
|
2,797
|
|
|
|
|
2,472
|
|
|
|
|
9,381
|
|
|
|
|
7,809
|
|
Acquisition - related items:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of purchased assets
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (2)
|
|
|
1,844
|
|
|
|
|
2,050
|
|
|
|
|
5,496
|
|
|
|
|
5,252
|
|
Amortization of intangible assets (3)
|
|
|
2,364
|
|
|
|
|
2,233
|
|
|
|
|
6,817
|
|
|
|
|
6,125
|
|
Special charges (4)
|
|
|
4,831
|
|
|
|
|
8,375
|
|
|
|
|
43,994
|
|
|
|
|
19,409
|
|
Other income (expense), net (5)
|
|
|
72
|
|
|
|
|
78
|
|
|
|
|
33
|
|
|
|
|
146
|
|
Interest expense (6)
|
|
|
1,663
|
|
|
|
|
1,548
|
|
|
|
|
4,900
|
|
|
|
|
4,563
|
|
Non-GAAP income tax effects (7)
|
|
|
(756
|
)
|
|
|
|
(4,276
|
)
|
|
|
|
(16,056
|
)
|
|
|
|
(14,259
|
)
|
Noncontrolling interest (8)
|
|
|
(238
|
)
|
|
|
|
(218
|
)
|
|
|
|
(638
|
)
|
|
|
|
(622
|
)
|
Total of non-GAAP adjustments
|
|
|
19,805
|
|
|
|
|
18,892
|
|
|
|
|
75,435
|
|
|
|
|
47,005
|
|
Non-GAAP net income attributable to Mentor Graphics shareholders
|
|
$
|
34,484
|
|
|
|
$
|
39,922
|
|
|
|
$
|
111,441
|
|
|
|
$
|
79,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted average shares (diluted)
|
|
|
120,141
|
|
|
|
|
116,715
|
|
|
|
|
121,963
|
|
|
|
|
116,928
|
|
Non-GAAP adjustment
|
|
|
2,695
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Non-GAAP weighted average shares (diluted)
|
|
|
122,836
|
|
|
|
|
116,715
|
|
|
|
|
121,963
|
|
|
|
|
116,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to Mentor Graphics shareholders:
|
|
|
|
|
|
|
|
|
|
|
GAAP (diluted)
|
|
$
|
0.12
|
|
|
|
$
|
0.18
|
|
|
|
$
|
0.30
|
|
|
|
$
|
0.29
|
|
Noncontrolling interest adjustment (9)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.01
|
)
|
Non-GAAP adjustments detailed above
|
|
|
0.16
|
|
|
|
|
0.16
|
|
|
|
|
0.62
|
|
|
|
|
0.40
|
|
Non-GAAP (diluted) (10)
|
|
$
|
0.28
|
|
|
|
$
|
0.34
|
|
|
|
$
|
0.92
|
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 technology is generally amortized over
two to five years.
|
(3
|
)
|
Other identified intangible assets are generally amortized to
operating expense over two to five years. Other identified
intangible assets include trade names, customer relationships, and
backlog resulting from acquisition transactions. The amount
presented for the nine months ended October 31, 2014 also includes
$116 of amortization of other identified intangible assets for
Frontline, which were fully amortized in the first quarter of fiscal
2015.
|
(4
|
)
|
Three months ended October 31, 2015: Special charges consist
of (i) $3,485 of costs incurred for employee rebalances which
include severance benefits and notice pay, (ii) $1,122 for EVE
litigation costs, (iii) $(203) for severance costs incurred for the
voluntary early retirement program, and (iv) $427 in other
adjustments.
|
|
Three months ended October 31, 2014: Special charges consist
of (i) $7,004 for EVE litigation costs, (ii) $1,377 of costs
incurred for employee rebalances which include severance benefits
and notice pay, and (iii) $(6) in other adjustments.
|
|
Nine months ended October 31, 2015: Special charges consist
of (i) $25,232 for severance costs incurred for the voluntary early
retirement program, (ii) $14,188 of costs incurred for employee
rebalances which include severance benefits and notice pay, (iii)
$3,641 for EVE litigation costs, and (iv) $933 in other adjustments.
|
|
Nine months ended October 31, 2014: Special charges consist
of (i) $15,193 for EVE litigation costs, (ii) $3,077 of costs
incurred for employee rebalances which include severance benefits
and notice pay, and (iii) $1,139 in other adjustments.
|
(5
|
)
|
Amount represents loss on an investment accounted for under the
equity method of accounting.
|
(6
|
)
|
Amount represents the amortization of original issuance debt
discount.
|
(7
|
)
|
Non-GAAP income tax expense adjustment reflects the application of
our assumed normalized effective 19% tax rate, instead of our GAAP
tax rate, to our non-GAAP pre-tax income for the three and nine
months ended October 31, 2015 and a 17% tax rate for the three and
nine months ended October 31, 2014.
|
(8
|
)
|
Adjustment for the impact of amortization of intangible assets,
equity plan-related compensation, and income tax expense on
noncontrolling interest.
|
(9
|
)
|
Non-GAAP EPS excludes from the numerator of our earnings per share
calculation the adjustment of the noncontrolling interest to the
calculated redemption value, recorded directly to retained earnings.
|
(10
|
)
|
We have increased the numerator of our diluted earnings per share
calculation by $519 for the three and nine months ended October 31,
2015 for the dilutive effect of our convertible debt. Corresponding
dilutive shares of 2,695 for the three months ended October 31, 2015
are presented in the reconciliation above. Corresponding dilutive
shares of 2,565 for the nine months ended October 31, 2015 are
already included in the GAAP diluted weighted average number of
shares outstanding.
|
|
|
|
|
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,
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
GAAP gross profit
|
|
$
|
243,627
|
|
|
$
|
245,142
|
|
|
$
|
701,518
|
|
|
$
|
651,154
|
|
Reconciling items to non-GAAP gross profit:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
665
|
|
|
|
608
|
|
|
|
1,981
|
|
|
|
1,687
|
|
Amortization of purchased technology
|
|
|
1,844
|
|
|
|
2,050
|
|
|
|
5,496
|
|
|
|
5,252
|
|
Non-GAAP gross profit
|
|
$
|
246,136
|
|
|
$
|
247,800
|
|
|
$
|
708,995
|
|
|
$
|
658,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
GAAP gross profit as a percent of total revenues
|
|
|
83.9
|
%
|
|
|
83.8
|
%
|
|
|
83.1
|
%
|
|
|
80.9
|
%
|
Non-GAAP adjustments detailed above
|
|
|
0.8
|
%
|
|
|
0.9
|
%
|
|
|
0.9
|
%
|
|
|
0.8
|
%
|
Non-GAAP gross profit as a percent of total revenues
|
|
|
84.7
|
%
|
|
|
84.7
|
%
|
|
|
84.0
|
%
|
|
|
81.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
GAAP operating expenses
|
|
$
|
217,939
|
|
|
$
|
215,419
|
|
|
$
|
644,227
|
|
|
$
|
602,875
|
|
Reconciling items to non-GAAP operating expenses:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
(9,360
|
)
|
|
|
(8,494
|
)
|
|
|
(28,908
|
)
|
|
|
(24,704
|
)
|
Amortization of other identified intangible assets
|
|
|
(2,364
|
)
|
|
|
(2,233
|
)
|
|
|
(6,817
|
)
|
|
|
(6,125
|
)
|
Special charges
|
|
|
(4,831
|
)
|
|
|
(8,375
|
)
|
|
|
(43,994
|
)
|
|
|
(19,409
|
)
|
Non-GAAP operating expenses
|
|
$
|
201,384
|
|
|
$
|
196,317
|
|
|
$
|
564,508
|
|
|
$
|
552,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
GAAP operating income
|
|
$
|
25,688
|
|
|
$
|
29,723
|
|
|
$
|
57,291
|
|
|
$
|
48,279
|
|
Reconciling items to non-GAAP operating income:
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
10,025
|
|
|
|
9,102
|
|
|
|
30,889
|
|
|
|
26,391
|
|
Amortization of purchased technology
|
|
|
1,844
|
|
|
|
2,050
|
|
|
|
5,496
|
|
|
|
5,252
|
|
Amortization of other identified intangible assets
|
|
|
2,364
|
|
|
|
2,233
|
|
|
|
6,817
|
|
|
|
6,125
|
|
Special charges
|
|
|
4,831
|
|
|
|
8,375
|
|
|
|
43,994
|
|
|
|
19,409
|
|
Non-GAAP operating income
|
|
$
|
44,752
|
|
|
$
|
51,483
|
|
|
$
|
144,487
|
|
|
$
|
105,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
GAAP operating income as a percent of total revenues
|
|
|
8.8
|
%
|
|
|
10.2
|
%
|
|
|
6.8
|
%
|
|
|
6.0
|
%
|
Non-GAAP adjustments detailed above
|
|
|
6.6
|
%
|
|
|
7.4
|
%
|
|
|
10.3
|
%
|
|
|
7.1
|
%
|
Non-GAAP operating income as a percent of total revenues
|
|
|
15.4
|
%
|
|
|
17.6
|
%
|
|
|
17.1
|
%
|
|
|
13.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
GAAP other income (expense), net and interest expense
|
|
$
|
(4,595
|
)
|
|
$
|
(5,315
|
)
|
|
$
|
(13,532
|
)
|
|
$
|
(15,069
|
)
|
Reconciling items to non-GAAP other income (expense), net and
interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in losses of unconsolidated entities
|
|
|
72
|
|
|
|
78
|
|
|
|
33
|
|
|
|
146
|
|
Amortization of original issuance debt discount
|
|
|
1,663
|
|
|
|
1,548
|
|
|
|
4,900
|
|
|
|
4,563
|
|
Non-GAAP other income (expense), net and interest expense
|
|
$
|
(2,860
|
)
|
|
$
|
(3,689
|
)
|
|
$
|
(8,599
|
)
|
|
$
|
(10,360
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
January 31,
|
|
|
|
|
2015
|
|
|
|
2015
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
279,001
|
|
|
$
|
230,281
|
|
Trade accounts receivable, net
|
|
|
113,243
|
|
|
|
208,996
|
|
Term receivables, short-term
|
|
|
334,517
|
|
|
|
337,626
|
|
Prepaid expenses and other
|
|
|
66,761
|
|
|
|
65,853
|
|
Deferred income taxes
|
|
|
24,345
|
|
|
|
23,490
|
|
|
|
|
|
|
|
Total current assets
|
|
|
817,867
|
|
|
|
866,246
|
|
Property, plant, and equipment, net
|
|
|
172,724
|
|
|
|
170,737
|
|
Term receivables, long-term
|
|
|
283,756
|
|
|
|
301,862
|
|
Goodwill and intangible assets, net
|
|
|
648,568
|
|
|
|
645,506
|
|
Other assets
|
|
|
68,221
|
|
|
|
64,671
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,991,136
|
|
|
$
|
2,049,022
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Short-term borrowings
|
|
$
|
1,386
|
|
|
$
|
7,228
|
|
Notes payable, current portion
|
|
|
235,300
|
|
|
|
-
|
|
Accounts payable
|
|
|
9,744
|
|
|
|
12,687
|
|
Income taxes payable
|
|
|
6,041
|
|
|
|
5,994
|
|
Accrued payroll and related liabilities
|
|
|
69,615
|
|
|
|
108,553
|
|
Accrued and other liabilities
|
|
|
40,455
|
|
|
|
47,728
|
|
Deferred revenue
|
|
|
212,021
|
|
|
|
259,340
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
574,562
|
|
|
|
441,530
|
|
Long-term notes payable
|
|
|
5,188
|
|
|
|
230,400
|
|
Deferred revenue, long-term
|
|
|
18,149
|
|
|
|
21,251
|
|
Other long-term liabilities
|
|
|
69,518
|
|
|
|
69,615
|
|
Total liabilities
|
|
|
667,417
|
|
|
|
762,796
|
|
|
|
|
|
|
|
Convertible notes
|
|
|
17,700
|
|
|
|
-
|
|
Noncontrolling interest with redemption feature
|
|
|
-
|
|
|
|
13,372
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Common stock
|
|
|
854,665
|
|
|
|
832,612
|
|
Retained earnings
|
|
|
468,902
|
|
|
|
451,901
|
|
Accumulated other comprehensive loss
|
|
|
(17,825
|
)
|
|
|
(11,887
|
)
|
Noncontrolling interest
|
|
|
277
|
|
|
|
228
|
|
Total stockholders' equity
|
|
|
1,306,019
|
|
|
|
1,272,854
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,991,136
|
|
|
$
|
2,049,022
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
13,889
|
|
|
$
|
20,559
|
|
|
$
|
33,996
|
|
|
$
|
31,303
|
|
Depreciation and amortization
|
|
|
15,765
|
|
|
|
15,015
|
|
|
|
45,925
|
|
|
|
43,264
|
|
Other adjustments to reconcile:
|
|
|
|
|
|
|
|
|
Operating cash
|
|
|
6,609
|
|
|
|
10,729
|
|
|
|
27,976
|
|
|
|
28,549
|
|
Changes in working capital
|
|
|
(11,224
|
)
|
|
|
(27,787
|
)
|
|
|
11,949
|
|
|
|
(46,038
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
25,039
|
|
|
|
18,516
|
|
|
|
119,846
|
|
|
|
57,078
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(15,801
|
)
|
|
|
(11,257
|
)
|
|
|
(37,969
|
)
|
|
|
(96,348
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(25,568
|
)
|
|
|
(7,451
|
)
|
|
|
(32,150
|
)
|
|
|
(80,187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(116
|
)
|
|
|
(1,561
|
)
|
|
|
(1,007
|
)
|
|
|
(1,257
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
(16,446
|
)
|
|
|
(1,753
|
)
|
|
|
48,720
|
|
|
|
(120,714
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
295,447
|
|
|
|
174,361
|
|
|
|
230,281
|
|
|
|
293,322
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
279,001
|
|
|
$
|
172,608
|
|
|
$
|
279,001
|
|
|
$
|
172,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other data:
|
|
|
|
|
|
|
|
|
Capital expenditures, net
|
|
$
|
11,301
|
|
|
$
|
8,557
|
|
|
$
|
26,269
|
|
|
$
|
21,872
|
|
Days sales outstanding
|
|
|
139
|
|
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Q4'16 and fiscal year 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
Estimated
|
|
|
|
|
|
Q4'16
|
|
FY'16
|
Diluted GAAP net income per share
|
|
|
$
|
0.32
|
|
$
|
0.63
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
Amortization of purchased technology (1)
|
|
|
|
0.01
|
|
|
0.06
|
|
Amortization of other identified intangible assets (2)
|
|
|
|
0.01
|
|
|
0.07
|
|
Equity plan-related compensation (3)
|
|
|
|
0.11
|
|
|
0.36
|
|
Special charges (4)
|
|
|
|
-
|
|
|
0.37
|
|
Other income (expense), net and interest expense (5)
|
|
|
|
0.01
|
|
|
0.06
|
|
Non-GAAP income tax effects (6)
|
|
|
|
0.01
|
|
|
(0.14
|
)
|
Noncontrolling interest (7)
|
|
|
|
-
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
Diluted non-GAAP net income per share
|
|
|
$
|
0.47
|
|
$
|
1.40
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
Excludes amortization of purchased technology resulting from
acquisitions. Purchased technology is generally amortized over two
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 generally amortized over two to five years.
|
(3
|
)
|
Excludes equity plan-related compensation expense for 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
the voluntary early retirement program, employee rebalances, which
includes severance benefits and notice pay, and certain litigation
costs. Full year adjustment represents the impact of actual special
charges for the nine months ended October 31, 2015 as we do not
provide guidance for special charges.
|
(5
|
)
|
Excludes amortization of original issuance debt discount, and income
(loss) from an investment accounted for under the equity method of
accounting.
|
(6
|
)
|
Non-GAAP income tax expense adjustment reflects the application of
our assumed normalized effective 19% 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, and income tax expense on
noncontrolling interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED SUPPLEMENTAL BOOKINGS AND REVENUE INFORMATION
|
(Rounded to nearest 5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Product Category Bookings (a)
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
IC DESIGN TO SILICON
|
|
30%
|
|
40%
|
|
40%
|
|
40%
|
|
|
20%
|
|
25%
|
|
45%
|
|
55%
|
|
45%
|
|
|
60%
|
|
35%
|
|
40%
|
|
30%
|
|
40%
|
SCALABLE VERIFICATION
|
|
25%
|
|
30%
|
|
15%
|
|
25%
|
|
|
25%
|
|
25%
|
|
20%
|
|
20%
|
|
20%
|
|
|
15%
|
|
45%
|
|
25%
|
|
30%
|
|
30%
|
INTEGRATED SYSTEMS DESIGN
|
|
15%
|
|
15%
|
|
20%
|
|
15%
|
|
|
30%
|
|
25%
|
|
15%
|
|
10%
|
|
15%
|
|
|
10%
|
|
10%
|
|
20%
|
|
30%
|
|
20%
|
NEW & EMERGING MARKETS
|
|
10%
|
|
5%
|
|
10%
|
|
5%
|
|
|
10%
|
|
15%
|
|
10%
|
|
5%
|
|
10%
|
|
|
5%
|
|
5%
|
|
5%
|
|
5%
|
|
5%
|
SERVICES / OTHER
|
|
20%
|
|
10%
|
|
15%
|
|
15%
|
|
|
15%
|
|
10%
|
|
10%
|
|
10%
|
|
10%
|
|
|
10%
|
|
5%
|
|
10%
|
|
5%
|
|
5%
|
Total
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Product Category Revenue (b)
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
IC DESIGN TO SILICON
|
|
35%
|
|
40%
|
|
40%
|
|
40%
|
|
|
25%
|
|
30%
|
|
35%
|
|
55%
|
|
40%
|
|
|
35%
|
|
50%
|
|
35%
|
|
35%
|
|
40%
|
SCALABLE VERIFICATION
|
|
30%
|
|
25%
|
|
25%
|
|
25%
|
|
|
35%
|
|
25%
|
|
20%
|
|
20%
|
|
25%
|
|
|
20%
|
|
20%
|
|
25%
|
|
30%
|
|
25%
|
INTEGRATED SYSTEMS DESIGN
|
|
20%
|
|
20%
|
|
20%
|
|
20%
|
|
|
25%
|
|
25%
|
|
25%
|
|
15%
|
|
20%
|
|
|
30%
|
|
20%
|
|
25%
|
|
25%
|
|
20%
|
NEW & EMERGING MARKETS
|
|
5%
|
|
5%
|
|
5%
|
|
5%
|
|
|
5%
|
|
10%
|
|
10%
|
|
5%
|
|
5%
|
|
|
5%
|
|
5%
|
|
5%
|
|
5%
|
|
5%
|
SERVICES / OTHER
|
|
10%
|
|
10%
|
|
10%
|
|
10%
|
|
|
10%
|
|
10%
|
|
10%
|
|
5%
|
|
10%
|
|
|
10%
|
|
5%
|
|
10%
|
|
5%
|
|
10%
|
Total
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Bookings by Geography
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
North America
|
|
35%
|
|
35%
|
|
45%
|
|
40%
|
|
|
50%
|
|
40%
|
|
50%
|
|
40%
|
|
45%
|
|
|
35%
|
|
55%
|
|
60%
|
|
40%
|
|
50%
|
Europe
|
|
25%
|
|
30%
|
|
20%
|
|
25%
|
|
|
15%
|
|
25%
|
|
15%
|
|
15%
|
|
15%
|
|
|
10%
|
|
15%
|
|
15%
|
|
30%
|
|
20%
|
Japan
|
|
15%
|
|
5%
|
|
10%
|
|
10%
|
|
|
15%
|
|
5%
|
|
10%
|
|
5%
|
|
5%
|
|
|
10%
|
|
5%
|
|
5%
|
|
10%
|
|
5%
|
Pac Rim
|
|
25%
|
|
30%
|
|
25%
|
|
25%
|
|
|
20%
|
|
30%
|
|
25%
|
|
40%
|
|
35%
|
|
|
45%
|
|
25%
|
|
20%
|
|
20%
|
|
25%
|
Total
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Revenue by Geography
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
North America
|
|
50%
|
|
40%
|
|
40%
|
|
45%
|
|
|
50%
|
|
45%
|
|
50%
|
|
40%
|
|
45%
|
|
|
45%
|
|
40%
|
|
50%
|
|
45%
|
|
45%
|
Europe
|
|
15%
|
|
25%
|
|
25%
|
|
20%
|
|
|
25%
|
|
20%
|
|
20%
|
|
15%
|
|
20%
|
|
|
20%
|
|
20%
|
|
20%
|
|
20%
|
|
20%
|
Japan
|
|
10%
|
|
5%
|
|
10%
|
|
10%
|
|
|
10%
|
|
10%
|
|
10%
|
|
5%
|
|
5%
|
|
|
10%
|
|
5%
|
|
10%
|
|
15%
|
|
10%
|
Pac Rim
|
|
25%
|
|
30%
|
|
25%
|
|
25%
|
|
|
15%
|
|
25%
|
|
20%
|
|
40%
|
|
30%
|
|
|
25%
|
|
35%
|
|
20%
|
|
20%
|
|
25%
|
Total
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Bookings by Business Model (c)
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
Perpetual
|
|
20%
|
|
15%
|
|
15%
|
|
15%
|
|
|
35%
|
|
20%
|
|
15%
|
|
10%
|
|
15%
|
|
|
15%
|
|
50%
|
|
20%
|
|
10%
|
|
25%
|
Term Ratable
|
|
10%
|
|
10%
|
|
10%
|
|
10%
|
|
|
20%
|
|
10%
|
|
5%
|
|
5%
|
|
10%
|
|
|
10%
|
|
5%
|
|
5%
|
|
5%
|
|
5%
|
Term Up Front
|
|
70%
|
|
75%
|
|
75%
|
|
75%
|
|
|
45%
|
|
70%
|
|
80%
|
|
85%
|
|
75%
|
|
|
75%
|
|
45%
|
|
75%
|
|
85%
|
|
70%
|
Total
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Revenue by Business Model (c)
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year
|
Perpetual
|
|
15%
|
|
15%
|
|
10%
|
|
15%
|
|
|
35%
|
|
30%
|
|
15%
|
|
10%
|
|
20%
|
|
|
20%
|
|
25%
|
|
20%
|
|
20%
|
|
20%
|
Term Ratable
|
|
10%
|
|
10%
|
|
10%
|
|
10%
|
|
|
10%
|
|
10%
|
|
10%
|
|
5%
|
|
5%
|
|
|
10%
|
|
10%
|
|
5%
|
|
5%
|
|
10%
|
Term Up Front
|
|
75%
|
|
75%
|
|
80%
|
|
75%
|
|
|
55%
|
|
60%
|
|
75%
|
|
85%
|
|
75%
|
|
|
70%
|
|
65%
|
|
75%
|
|
75%
|
|
70%
|
Total
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Product Category Bookings excludes support bookings for all
sub-flow categories.
|
(b) Product Category Revenue includes support revenue for each
sub-flow category as appropriate.
|
(c) Bookings and Revenue by Business Model are System and Software
only (excludes finance fee).
|
CONTACT:
Mentor Graphics Corporation
Joe Reinhart, 503-685-1462
joe_reinhart@mentor.com
Mentor Graphics Corp. (NASDAQ:MENT)
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Mentor Graphics Corp. (NASDAQ:MENT)
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