Mentor Graphics Issues First Quarter Fiscal Year 2008 Guidance: Raises Annual Guidance
14 4월 2007 - 7:51AM
Business Wire
Mentor Graphics Corporation (NASDAQ:MENT) today announced guidance
for fiscal quarter ending April 30, 2007, the first quarter of
Fiscal 2008. At the beginning of calendar 2007, the company changed
its fiscal year to the twelve months ending January 31 and,
accordingly, had a one-month 2007 transition period. At that time,
the company stated that until completion of the accounting close
for that period, the company would not provide quarterly guidance.
The company has now substantially completed its accounting close
for the one-month period ended January 31, 2007 and is in a
position to provide guidance for first quarter and full fiscal year
2008. The company expects revenue of about $187 million, GAAP
earnings per share of approximately $.01 to $.03 and non-GAAP
earnings per share of approximately $.08 to $.10 for the fiscal
quarter ending April 30, 2008. Based on the strong bookings growth
through the first quarter, the company is also raising its full
fiscal year 2008 revenue guidance to approximately $844 million,
with GAAP earnings per share of approximately $.75 and non-GAAP
earnings per share of approximately $1.01. 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 and net income (loss), which we refer to as
non-GAAP gross margin, operating margin and net income (loss),
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 purchased
intangible assets, merger and acquisition charges, special charges,
equity plan-related compensation expenses and charges and gains
which management does not consider reflective of our core operating
business. Purchased intangible assets consist primarily of
purchased technology, backlog, trade names, customer relationships
and employment agreements. Merger and acquisition charges represent
in-process research and development charges related to products in
development that had not reached technological feasibility at the
time of acquisition. Special charges consist of post-acquisition
rebalance costs including severance and benefits, excess facilities
and asset-related charges, and also include strategic reallocations
or reductions of personnel resources. Equity plan-related
compensation expenses represent the fair value of all share-based
payments to employees, including grants of employee stock options,
as required under SFAS No. 123 (revised 2004), �Share-Based
Payment� (SFAS 123R). For purposes of comparability across other
periods and against other companies in our industry, non-GAAP net
income (loss) is adjusted by the amount of additional taxes or tax
benefit that the company would accrue using a normalized effective
tax rate applied to the non-GAAP results. 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 EPS is calculated may
therefore differ from the GAAP presentation due to the
anti-dilutive effect of stock options in a loss situation. Non-GAAP
gross margin, operating margin and net income (loss) 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 or as a measure of our liquidity. We present
non-GAAP gross margin, operating margin and net income (loss)
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. Management excludes from
its non-GAAP measures certain recurring items to facilitate its
review of the comparability of the company's core operating
performance on a period-to-period basis because such items are not
related to the company's 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 its operating
performance for purposes of comparison with its 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: Amortization charges
for our purchased intangible assets are inconsistent in amount and
frequency and are significantly impacted by the timing and
magnitude of the company's acquisition transactions. We therefore
consider our operating results without these charges when
evaluating our core performance. Generally, the most significant
impact to inter-period comparability of the company's net income
(loss) is in the first twelve months following the acquisition.
Special charges are primarily severance related and are due to the
company's reallocation or reduction of personnel resources driven
by modifications of business strategy or business emphasis and by
assimilation of acquired businesses. These costs are originated
based on the particular facts and circumstances of business
decisions and can vary in size. Special charges also include excess
facility and asset-related restructuring charges. These charges are
not specifically included in the company's annual operating plan
and related budget due to the rapidly changing technology and
competitive environment in our industry. We therefore exclude them
when evaluating our managers' performance internally. Merger and
acquisition charges are in-process R&D charges, which are
largely disregarded as acquisition decisions are made and which
often result in charges that vary significantly in size and amount.
Management excludes these charges when evaluating the impact of an
acquisition transaction and our ongoing performance. Management
supplementally considers performance without the impact of
stock-based compensation charges and believes this information is
useful to investors to compare our performance to prior periods
before SFAS 123R and to the performance of other companies in our
industry who present non-GAAP results adjusted to exclude stock
compensation expense. We view stock-based compensation as a key
element of our employee retention and long-term incentives, not as
an expense that should be an element of evaluating core operations
in any given period. We therefore exclude these charges for
purposes of evaluating our core 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 the company's long-term tax structure. We use a
normalized effective tax rate of 17%, which reflects the weighted
average tax rate applicable under the various tax jurisdictions in
which the company operates. This non-GAAP weighted average tax rate
is subject to change over time for various reasons, including
changes in the geographic business mix and changes in statutory tax
rates. Non-GAAP net income (loss) also facilitates comparison with
other companies in our industry, which use similar financial
measures to supplement their GAAP results. However, non-GAAP net
income (loss) has limitations as an analytical tool, and you should
not consider this measure in isolation or as a substitute for
analysis of our results as reported under GAAP. In the future the
company expects 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 (loss) are: Amortization of purchased intangibles, though
not directly affecting our current cash position, 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 (loss)
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. The company regularly engages
in acquisition and assimilation activities as part of its ongoing
business and therefore we will continue to experience special
charges and merger and acquisition charges on a regular basis.
These costs also directly impact available funds of the company.
The company�s stock option and stock purchase plans are important
components of our incentive compensation arrangements and will be
reflected as expenses in our GAAP results for the foreseeable
future under SFAS 123R. The company's income tax expense (benefit)
will be ultimately based on its GAAP taxable income and actual tax
rates in effect, which often differ significantly from the 17% rate
assumed in our non-GAAP presentation. Other companies, including
other companies in our industry, may calculate non-GAAP net income
(loss) differently than we do, limiting its usefulness as a
comparative measure. About Mentor Graphics Mentor Graphics
Corporation (Nasdaq:MENT) 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
electronics and semiconductor companies. Established in 1981, the
company reported revenues for fiscal year 2006 of over $800 million
and employs approximately 4,250 people worldwide. Corporate
headquarters are located at 8005 S.W. Boeckman Road, Wilsonville,
Oregon 97070-7777. World Wide Web site: http://www.mentor.com/.
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 Section 21E of the
Securities Exchange Act of 1934, as amended. 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) reductions in spending on
the company's products by its customers due to cyclical downturns;
(ii) the company's ability to successfully offer products and
services that compete in the highly competitive EDA industry; (iii)
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) changes in accounting or reporting rules
or interpretations, limitations on repatriation of earnings; (v)
the impact of tax audits by the IRS or other taxing authorities, or
changes in tax laws, regulations or enforcement practices where the
company does business; (vi) effects of the increasing volatility of
foreign currency fluctuations on the company's business and
operating results; (vii) effects of unanticipated shifts in product
mix on gross margin; (viii) effects of customer seasonal purchasing
patterns and the timing of significant orders may negatively or
positively impact the company's quarterly results of operations;
and (ix) weakness in the US or other economies, 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
CORPORATIONUNAUDITED RECONCILIATION OF GAAP TO NON-GAAPEARNINGS PER
SHARE GUIDANCE The types of non-GAAP adjustments reflected below
are consistent with those applied by the Company in reporting its
performance on a non-GAAP basis for historical periods. For
discussion of the reasons the Company presents such adjustments and
considers non-GAAP net income to be a useful supplemental
performance measure, and of the limitations on non-GAAP performance
measures, see Discussion of Non-GAAP Financial Measures above. �
The following table reconciles the estimates of specific items
excluded from GAAP earnings per share in the calculation of
expected non-GAAP earnings per share for the periods shown below: �
� � Q1 2008 FY 2008 Diluted GAAP net earnings per share $ .01 to
.03 $ 0.75� Non-GAAP Adjustments: Amortization of purchased
intangible assets (1) 0.04� 0.10� Amortization of other identified
intangible assets (2) 0.02� 0.06� Stock-based compensation (3)
0.03� 0.16� Income tax effects (4) (0.02) (0.06) Non-GAAP net
income $ .08 to .10 � $ 1.01� � � � � � � � � � (1) Excludes
amortization of purchased intangible assets acquired in 20 separate
acquisition transactions. Purchased intangible assets are amortized
over two to five years. The guidance for 2008 does not assume any
new acquisition transactions. � (2) Excludes amortization of other
identified intangible assets including trade names, employment
agreements and customer relationships acquired in 14 separate
acquisition transactions. Other identified intangible assets are
amortized over two to five years. � (3) Excludes equity
plan-related compensation expense recognized in accordance with
SFAS 123R, Share-Based Payment. � (4) Non-GAAP income tax expense
adjustment is based upon the assumption of a normalized effective
rate of 17% on non-GAAP income (loss) before income taxes and tax
effect on non-GAAP adjustments.
Mentor Graphics Corp. (NASDAQ:MENT)
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