Mentor Graphics Reports Fiscal Fourth Quarter Results and Announces 11% Dividend Increase
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Mentor Graphics Reports Fiscal Fourth Quarter Results and Announces 11% Dividend Increase

WILSONVILLE, Ore. — (BUSINESS WIRE) — February 27, 2014 — Mentor Graphics Corporation (NASDAQ: MENT) today announced financial results for the company’s fiscal fourth quarter ended January 31, 2014. The company reported revenues of $401.0 million, non-GAAP earnings per share of $0.92, and GAAP earnings per share of $0.89. For the full fiscal year, revenues were $1.156 billion and non-GAAP earnings per share were $1.62, and GAAP earnings per share were $1.29.

“The fourth quarter and full year achieved multiple all-time records for Mentor Graphics,” said Walden C. Rhines, chairman and CEO of Mentor Graphics. “Record annual bookings, record fourth quarter and annual revenues, record fourth quarter and annual levels of profitability and earnings per share, all evidence the value of Mentor’s technology, products and the merits of our strategy. Mentor’s board is raising the quarterly dividend to $0.05 per share. Aside from weakness within the Japanese semiconductor industry, core EDA demand remains solid for Mentor and we are very pleased with the traction our investments in emulation and new markets including transportation are achieving.”

During the quarter the company announced the acquisition of assets of Oasys Design Systems, which brings the Oasys RealTime™ RTL physical synthesis platform to the Mentor® digital implementation flow. This enables faster turnaround time for complex systems-on-chip, ASICs and IP blocks. The company also purchased the AUTOSAR assets of Mecel AB, complementing existing Mentor automotive software solutions which enable a wide range of automotive sub-systems. Mentor also announced the latest release of its Capital® software, which addresses vehicle electrical system design, manufacture and service. The Capital and Volcano™ tool suites were recently deployed in both passenger and commercial vehicle projects at Chinese automaker Jianghuai Automobile Co. Ltd. (JAC).

During the fourth quarter the company also announced a new version of the Mentor® Embedded Sourcery™ CodeBench embedded software development platform, and the latest release of the Mentor® Embedded automotive technology platform for Linux-based in-vehicle infotainment system development. Mentor also released the next-generation FloTHERM® product, its flagship offering for computational fluid dynamics, targeting today’s most advanced electronics designs. FloTHERM XT was named as one of EDN Magazine’s Hot 100 Electronics Products for 2013; the product also received an EDN China Innovation Award for Best Product, development tool and software category.

“The fourth quarter and fiscal 2014 were periods of solid execution for our company,” said Gregory K. Hinckley, president of Mentor Graphics. “Fourth quarter revenue was up over 20% and non-GAAP earnings per share were up 59% year on year. Continued attention to expenses enabled the company to comfortably achieve our multi-year commitment to reach 20% non-GAAP operating margins in fiscal 2014. I am also pleased to note that on a GAAP operating margin basis Mentor is the most profitable company among the big three EDA vendors.”

Outlook

For the full year fiscal 2015, the company expects revenues of about $1.237 billion, non-GAAP earnings per share of about $1.75, and GAAP earnings per share of approximately $1.50. For the first quarter of fiscal 2015, the company expects revenues of about $245 million, non-GAAP earnings per share of about $0.06 and GAAP earnings per share of approximately break-even.

Dividend Increase

The company announced an 11% increase in the quarterly dividend to $0.05 per share on outstanding common stock. The dividend is payable on March 31, 2014 to shareholders of record as of the close of business on March 10, 2014.

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, 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 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:

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, and employee stock purchase plan shares 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:

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 $1.15 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, Capital and FloTHERM are registered trademarks and RealTime, Volcano and Sourcery are 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) weakness in the United States, the European Union, China or other international economies, and the potential adverse impact on the semiconductor and electronics industries; (ii) the company’s ability to successfully offer 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) litigation; (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 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; 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 January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
Revenues:
System and software $ 293,468 $ 226,267 $ 737,790 $ 681,881
Service and support   107,532     104,971     418,583     406,846  
Total revenues   401,000     331,238     1,156,373     1,088,727  
Cost of revenues: (1)
System and software 25,206 14,984 65,288 64,280
Service and support 29,841 30,775 118,221 117,609
Amortization of purchased technology   950     1,709     3,598     7,801  
Total cost of revenues   55,997     47,468     187,107     189,690  
Gross profit   345,003     283,770     969,266     899,037  
Operating expenses:
Research and development (2) 101,994 93,751 348,817 313,962
Marketing and selling (3) 98,135 95,160 342,799 338,653
General and administrationa (4) 23,091 18,990 75,543 70,692
Equity in earnings of Frontline (5) (1,353 ) (134 ) (4,092 ) (1,764 )
Amortization of intangible assets (6) 1,580 1,368 6,230 5,915
Special chargesa (7)   4,359     3,540     16,929     9,946  
Total operating expenses   227,806     212,675     786,226     737,404  
Operating income 117,197 71,095 183,040 161,633
Other income (expense), net (8) 359 (1,193 ) (520 ) (1,432 )
Interest expense (9)   (4,803 )   (4,883 )   (19,452 )   (18,866 )
Income before income tax 112,753 65,019 163,068 141,335
Income tax expense (10)   7,646     3,536     9,510     2,701  
Net income 105,107 61,483 153,558 138,634
Less: Loss attributable to noncontrolling interest (11)   (429 )   (263 )   (1,700 )   (102 )
Net income attributable to Mentor Graphics
shareholders $ 105,536   $ 61,746   $ 155,258   $ 138,736  
Net income per share attributable to Mentor Graphics
shareholders:
Basicb $ 0.91   $ 0.50   $ 1.33   $ 1.20  
Dilutedb $ 0.89   $ 0.49   $ 1.29   $ 1.17  
Weighted average number of shares outstanding:
Basic   114,978     112,623     113,671     110,998  
Diluted   117,484     115,167     116,702     114,017  
 
aCertain litigation costs have been reclassified from general and administration to special charges within operating expenses for the three and twelve months ended January 31, 2013. These reclassifications were made to conform to the current period presentation. These reclassifications had no impact on GAAP operating expense, operating income or net income for the three and twelve months ended January 31, 2013. Additional discussion regarding the reclassification will be provided in our Annual Report on Form 10-K for the year ended January 31, 2014.
 
bWe have decreased the numerator of our basic and diluted earnings per share calculation by $573 and $4,486 for the three and twelve months ended January 31, 2014, respectively, and by $5,272 for the three and twelve months ended January 31, 2013 for the adjustment to increase the noncontrolling interest with redemption feature to its calculated redemption value, recorded directly to retained earnings.
 

       

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 January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
(1) Cost of revenues:
Equity plan-related compensation $ 554 $ 449 $ 1,992 $ 1,529
Amortization of purchased technology   950     1,709     3,598     7,801  
$ 1,504   $ 2,158   $ 5,590   $ 9,330  
 
(2) Research and development:
Equity plan-related compensation $ 3,164   $ 2,602   $ 11,182   $ 9,206  
 
(3) Marketing and selling:
Equity plan-related compensation $ 2,126   $ 1,836   $ 7,777   $ 6,654  
 
(4) General and administration:
Equity plan-related compensation $ 2,237   $ 1,648   $ 8,399   $ 6,308  
 
(5) Equity in earnings of Frontline:
Amortization of purchased technology and other identified intangible assets
$ 231   $ 1,242   $ 1,430   $ 4,968  
 
(6) Amortization of intangible assets:
Amortization of other identified intangible assets $ 1,580   $ 1,368   $ 6,230   $ 5,915  
 
(7) Special charges:
Certain litigation, rebalance, and other costs $ 4,359   $ 3,540   $ 16,929   $ 9,946  
 
(8) Other income (expense), net:
Net income of unconsolidated entities $ 7   $ (18 ) $ (119 ) $ (128 )
 
(9) Interest expense:
Amortization of original issuance debt discount $ 1,467   $ 1,367   $ 5,715   $ 5,322  
 
(10) Income tax expense:
Non-GAAP income tax effects $ (14,357 ) $ (10,194 ) $ (28,944 ) $ (31,105 )
 
(11) Loss attributable to noncontrolling interest:
Amortization of intangible assets, equity-plan related compensation, and income tax effects $ (203 ) $ (193 ) $ (971 ) $ (699 )
 

       

MENTOR GRAPHICS CORPORATION

UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS

(In thousands, except earnings per share data)
 
 
Three Months Ended January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
GAAP net income attributable to Mentor Graphics shareholders $ 105,536 $ 61,746 $ 155,258 $ 138,736
Non-GAAP adjustments:
Equity plan-related compensation: (1)
Cost of revenues 554 449 1,992 1,529
Research and development 3,164 2,602 11,182 9,206
Marketing and selling 2,126 1,836 7,777 6,654
General and administration 2,237 1,648 8,399 6,308
Acquisition - related items:
Amortization of purchased assets
Cost of revenues (2) 950 1,709 3,598 7,801
Frontline purchased technology and intangible assets (3) 231 1,242 1,430 4,968
Amortization of intangible assets (4) 1,580 1,368 6,230 5,915
Special chargesa (5) 4,359 3,540 16,929 9,946
Other income (expense), net (6) 7 (18 ) (119 ) (128 )
Interest expense (7) 1,467 1,367 5,715 5,322
Non-GAAP income tax effects (8) (14,357 ) (10,194 ) (28,944 ) (31,105 )
Noncontrolling interest (9)   (203 )   (193 )   (971 )   (699 )
Total of non-GAAP adjustments   2,115     5,356     33,218     25,717  
Non-GAAP net income attributable to Mentor Graphics shareholders $ 107,651   $ 67,102   $ 188,476   $ 164,453  
 
GAAP and Non-GAAP weighted average shares (diluted)   117,484     115,167     116,702     114,017  
 
Net income per share attributable to Mentor Graphics shareholders:
GAAP (diluted) $ 0.89 $ 0.49 $ 1.29 $ 1.17
Noncontrolling interest adjustment (10) 0.01 0.05 0.04 0.05
Non-GAAP adjustments detailed above   0.02     0.04     0.29     0.22  
Non-GAAP (diluted) $ 0.92   $ 0.58   $ 1.62   $ 1.44  
 

aSee footnote a for a discussion of the reclassification of certain litigation costs to special charges.

                     
(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) joint venture investment. Mentor Graphics has a 50% interest in Frontline. The purchased technology was amortized over three years from the March 2010 acquisition date, 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 January 31, 2014: Special charges consist of (i) $3,380 for EVE litigation costs, (ii) $549 of costs incurred for employee rebalances which includes severance benefits, notice pay, and outplacement services, and (iii) $430 in other adjustments.
Three months ended January 31, 2013: Special charges consist of (i) $1,026 for EVE litigation costs, (ii) $1,387 of costs incurred for employee rebalances which includes severance benefits, notice pay, and outplacement services, and (iii) $1,127 in other adjustments.
Twelve months ended January 31, 2014: Special charges consist of (i) $11,597 for EVE litigation costs, (ii) $4,392 of costs incurred for employee rebalances which includes severance benefits, notice pay, and outplacement services, and (iii) $940 in other adjustments.
Twelve months ended January 31, 2013: Special charges consist of (i) $3,632 for EVE litigation costs, (ii) $4,016 of costs incurred for employee rebalances which includes severance benefits, notice pay, and outplacement services, and (iii) $2,298 in other adjustments.
(6 ) Income from investment accounted for under the equity method of accounting.
(7 ) Amortization of original issuance debt discount.
(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.
(10 ) 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.
 

 

MENTOR GRAPHICS CORPORATION

UNAUDITED RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

(In thousands, except percentages)
           
 
Three Months Ended January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
GAAP gross profit $ 345,003 $ 283,770 $ 969,266 $ 899,037
Reconciling items to non-GAAP gross profit:
Equity plan-related compensation 554 449 1,992 1,529
Amortization of purchased technology   950     1,709     3,598     7,801  
Non-GAAP gross profit $ 346,507   $ 285,928   $ 974,856   $ 908,367  
 
 
Three Months Ended January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
GAAP gross profit as a percent of total revenues 86.0 % 85.7 % 83.8 % 82.6 %
Non-GAAP adjustments detailed above   0.4 %   0.6 %   0.5 %   0.8 %
Non-GAAP gross profit as a percent of total revenues   86.4 %   86.3 %   84.3 %   83.4 %
 
 
Three Months Ended January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
GAAP operating expenses $ 227,806 $ 212,675 $ 786,226 $ 737,404
Reconciling items to non-GAAP operating expenses:
Equity plan-related compensation (7,527 ) (6,086 ) (27,358 ) (22,168 )
Amortization of Frontline purchased technology and other identified intangible assets
(231 ) (1,242 ) (1,430 ) (4,968 )
Amortization of other identified intangible assets (1,580 ) (1,368 ) (6,230 ) (5,915 )
Special chargesa   (4,359 )   (3,540 )   (16,929 )   (9,946 )
Non-GAAP operating expenses $ 214,109   $ 200,439   $ 734,279   $ 694,407  
 
 
Three Months Ended January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
GAAP operating income $ 117,197 $ 71,095 $ 183,040 $ 161,633
Reconciling items to non-GAAP operating income:
Equity plan-related compensation 8,081 6,535 29,350 23,697
Amortization of purchased technology 950 1,709 3,598 7,801
Amortization of Frontline purchased technology and other identified intangible assets
231 1,242 1,430 4,968
Amortization of other identified intangible assets 1,580 1,368 6,230 5,915
Special Chargesa   4,359     3,540     16,929     9,946  
Non-GAAP operating income $ 132,398   $ 85,489   $ 240,577   $ 213,960  
 
 
Three Months Ended January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
GAAP operating margin 29.2 % 21.5 % 15.8 % 14.8 %
Non-GAAP adjustments detailed above   3.8 %   4.3 %   5.0 %   4.9 %
Non-GAAP operating margin   33.0 %   25.8 %   20.8 %   19.7 %
 
 
Three Months Ended January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
GAAP other expense, net and interest expense $ (4,444 ) $ (6,076 ) $ (19,972 ) $ (20,298 )
Reconciling items to non-GAAP other expense, net and interest expense:
 
Equity in earnings of unconsolidated entities 7 (18 ) (119 ) (128 )
Amortization of original issuance debt discount   1,467     1,367     5,715     5,322  
Non-GAAP other expense, net and interest expense $ (2,970 ) $ (4,727 ) $ (14,376 ) $ (15,104 )
 

aSee footnote a for a discussion of the reclassification of certain litigation costs to special charges.

 

 

MENTOR GRAPHICS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)
     
 
January 31, January 31,
2014 2013
 
Assets
Current assets:
Cash, cash equivalents and short-term investments $ 297,312 $ 223,783
Trade accounts receivable, net 179,830 178,351
Term receivables, short-term 274,653 233,894
Prepaid expenses and other 64,658 53,951
Deferred income taxes   15,520   14,973
 
Total current assets 831,973 704,952
Property, plant, and equipment, net 160,165 162,402
Term receivables, long-term 270,365 250,497
Goodwill and intangible assets, net 571,843 557,770
Other assets   71,627   69,663
 
Total assets $ 1,905,973 $ 1,745,284
 
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings $ 9,590 $ 5,964
Accounts payable 21,548 20,906
Income taxes payable 3,365 9,180
Accrued payroll and related liabilities 102,848 101,354
Accrued and other liabilities 42,457 40,662
Deferred revenue   231,179   233,759
 
Total current liabilities 410,987 411,825
Long-term notes payable 224,261 218,546
Deferred revenue, long-term 17,398 17,755
Other long-term liabilities   52,554   50,981
Total liabilities   705,200   699,107
 
Noncontrolling interest with redemption feature 15,479 12,698
 
Stockholders' equity:
Common stock 838,939 810,902
Retained earnings 327,552 197,178
Accumulated other comprehensive income   18,803   25,399
Total stockholders' equity   1,185,294   1,033,479
 
Total liabilities and stockholders' equity $ 1,905,973 $ 1,745,284
 

 

MENTOR GRAPHICS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL INFORMATION

(In thousands, except days sales outstanding)
         
 
Three Months Ended January 31, Twelve Months Ended January 31,
  2014       2013     2014       2013  
Operating activities
Net income $ 105,107 $ 61,483 $ 153,558 $ 138,634
Depreciation and amortization 13,047 13,350 52,454 53,551
Other adjustments to reconcile:
Operating cash 12,365 6,042 35,471 20,352
Changes in working capital   (44,843 )   5,540     (91,781 )   (73,250 )
 
Net cash provided by operating activities 85,676 86,415 149,702 139,287
 
Investing activities
Net cash used in investing activities (23,893 ) (23,262 ) (56,375 ) (60,782 )
 
Financing activities
Net cash provided by (used in) financing activities 13,128 2,079 (21,007 ) 1,943
 
Effect of exchange rate changes on cash and cash equivalents   (1,496 )   (1,179 )   (2,781 )   (3,164 )
 
Net change in cash and cash equivalents 73,415 64,053 69,539 77,284
Cash and cash equivalents at beginning of period   219,907     159,730     223,783     146,499  
 
Cash and cash equivalents at end of period (a) $ 293,322   $ 223,783   $ 293,322   $ 223,783  
 
 
 
Other data:
Capital expenditures $ 9,395   $ 9,555   $ 30,761   $ 45,130  
Days sales outstanding   102     112  
 
 
(a) The condensed consolidated balance sheet at January 31, 2014 includes $3,990 of short-term investments in the "Cash, cash equivalents, and short-term investments" line item. $3,990 should be deducted from that line item to reconcile to the amount of "Cash and cash equivalents at end of period" presented in this statement for the three and twelve months ended January 31, 2014.
 

 

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 Q1'15 and fiscal year 2015.
 
 
 
Estimated Estimated
Q1'15 FY'15
Diluted GAAP net income per share $ - $ 1.50
Non-GAAP Adjustments:
Amortization of purchased intangible assets (1) 0.01 0.04
Amortization of other identified intangible assets (2) 0.01 0.04
Equity plan-related compensation (3) 0.07 0.31
Other income (expense), net and interest expense (4) 0.01 0.05
Non-GAAP income tax effects (5)   (0.04 )   (0.19 )
Diluted non-GAAP net income per share $ 0.06   $ 1.75  
               
 
(1 ) Excludes amortization of purchased intangible assets resulting from acquisitions. Purchased intangible assets are 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 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 income from an investment accounted for under the equity method of accounting, and amortization of original issuance debt discount.
(5 ) 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.
 

 

MENTOR GRAPHICS CORPORATION

UNAUDITED SUPPLEMENTAL BOOKINGS AND REVENUE INFORMATION

(Rounded to nearest 5%)
     
2014 2013 2012
Product Category Bookings (a) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
IC DESIGN TO SILICON 60% 35% 40% 30% 40% 35% 25% 30% 35% 30% 20% 25% 60% 40% 40%
SCALABLE VERIFICATION 15% 45% 25% 30% 30% 15% 30% 20% 25% 25% 35% 30% 15% 35% 30%
INTEGRATED SYSTEMS DESIGN 10% 10% 20% 30% 20% 25% 25% 25% 25% 25% 25% 25% 15% 15% 15%
NEW & EMERGING MARKETS 5% 5% 5% 5% 5% 5% 10% 15% 5% 10% 5% 10% 5% 5% 5%
SERVICES / OTHER 10% 5% 10% 5% 5% 20% 10% 10% 10% 10% 15% 10% 5% 5% 10%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
 
2014 2013 2012
Product Category Revenue (b) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
IC DESIGN TO SILICON 35% 50% 35% 35% 40% 40% 35% 25% 35% 35% 40% 25% 40% 45% 40%
SCALABLE VERIFICATION 20% 20% 25% 30% 25% 25% 25% 30% 30% 25% 25% 30% 25% 25% 25%
INTEGRATED SYSTEMS DESIGN 30% 20% 25% 25% 20% 20% 25% 25% 20% 25% 20% 25% 25% 20% 20%
NEW & EMERGING MARKETS 5% 5% 5% 5% 5% 5% 5% 10% 5% 5% 5% 10% 5% 5% 5%
SERVICES / OTHER 10% 5% 10% 5% 10% 10% 10% 10% 10% 10% 10% 10% 5% 5% 10%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
 
 
 
2014 2013 2012
Bookings by Geography Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
North America 35% 55% 60% 40% 50% 35% 40% 50% 35% 40% 45% 45% 40% 50% 45%
Europe 10% 15% 15% 30% 20% 20% 35% 20% 30% 25% 20% 30% 15% 25% 20%
Japan 10% 5% 5% 10% 5% 10% 5% 5% 10% 10% 15% 5% 5% 10% 10%
Pac Rim 45% 25% 20% 20% 25% 35% 20% 25% 25% 25% 20% 20% 40% 15% 25%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
 
2014 2013 2012
Revenue by Geography Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
North America 45% 40% 50% 45% 45% 50% 45% 50% 40% 45% 40% 50% 45% 35% 40%
Europe 20% 20% 20% 20% 20% 20% 20% 20% 30% 25% 25% 20% 25% 25% 25%
Japan 10% 5% 10% 15% 10% 10% 15% 10% 10% 10% 15% 10% 10% 5% 10%
Pac Rim 25% 35% 20% 20% 25% 20% 20% 20% 20% 20% 20% 20% 20% 35% 25%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
 
 
2014 2013 2012
Bookings by Business Model (c) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
Perpetual 15% 50% 20% 10% 25% 25% 20% 20% 15% 20% 40% 20% 15% 25% 20%
Term Ratable 10% 5% 5% 5% 5% 25% 15% 10% 5% 10% 20% 10% 5% 5% 10%
Term Up Front 75% 45% 75% 85% 70% 50% 65% 70% 80% 70% 40% 70% 80% 70% 70%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
 
 
2014 2013 2012
Revenue by Business Model (c) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
Perpetual 20% 25% 20% 20% 20% 20% 25% 25% 15% 20% 30% 25% 15% 15% 20%
Term Ratable 10% 10% 5% 5% 10% 10% 10% 10% 5% 10% 10% 10% 10% 5% 10%
Term Up Front 70% 65% 75% 75% 70% 70% 65% 65% 80% 70% 60% 65% 75% 80% 70%
Total 100% 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
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