Mentor Graphics Acquires Sierra Design Automation; Answers Industry Need for Design-to-Fab Flow for 65 and 45 Nanometers
11 6월 2007 - 9:00PM
Business Wire
Mentor Graphics Corporation (Nasdaq:MENT) today announced it has
acquired Sierra Design Automation (Santa Clara, Calif.), a leading
provider of high-performance place and route solutions. The company
was purchased for $90 million, payable 50 percent in cash and 50
percent in Mentor Graphics common stock. �Combining Mentor�s
market-leading design-for-manufacturing (DFM) capabilities with
Sierra�s proven variability and lithography-driven place and route
solution gives our customers the edge they need to achieve rapid
design closure with high yield,� said Pravin Madhani, president and
CEO, Sierra Design Automation. �At 65 and 45 nanometers (nm),
discontinuities such as process variation, design size, low power
and DFM are creating a major disruption in physical design. The
merger with Mentor enables us to deliver a powerful design-to-fab
flow that addresses these discontinuities in a comprehensive
fashion.� �Mentor�s success with the Calibre product was built upon
recognizing a market discontinuity and capitalizing on it. We see
the same type of discontinuity happening in this market,� said
Walden C. Rhines, CEO and chairman, Mentor Graphics. �Our
leading-edge customers are telling us that they need a
design-to-fab flow capable of handling dozens of process corners
and multiple modes, all while addressing manufacturability
challenges to achieve manufacturing closure of their designs.
Mentor�s and Sierra�s leadership in these areas make us a natural
fit. The acquisition of Sierra expands Mentor�s leadership in DFM,
and provides the integration that customers need between physical
design, and back-end verification and yield-enhancement.�
"STMicroelectronics is designing some of the world's most complex
chips and is aggressively pursuing advanced process geometries with
65 and 45 nm designs in production and in progress today," said
Philippe Magarshack, Group Vice President, Central CAD General
Manager, STMicroelectronics. "We decided to partner with Mentor and
Sierra 18 months ago to address critical discontinuities that we
identified in the design flow including low-power, design for
variability and manufacturing. We are very impressed with the
quality of the results of this partnership, which allows us to
blend manufacturability know-how into the physical synthesis and
routing phase." Sierra�s flagship Olympus-SoC product delivers
innovative technologies for 65 and 45 nm processes. It provides the
next-generation place and route system that concurrently addresses
variations in lithography, process corners and design modes.
Integral to Olympus-SoC is Sierra�s detailed routing architecture
which embeds variation-aware timing, optimization and
litho-modeling to address optical proximity correction (OPC) and
resolution enhancement technology (RET) effects early in the design
cycle ensuring faster timing closure for complex process rules. It
is capable of simultaneously solving for dozens of different
process corners and design modes, ensuring an optimized chip
without unnecessary guard banding. Mentor Graphics will continue to
sell and support Sierra�s products through its global sales and
support organizations. Because of this acquisition, the company now
expects non-GAAP fiscal 2008 second quarter earnings to be in the
range of $.06 to $.08, down $.02 from previous guidance. For the
full fiscal year ending January 31, 2008, the company expects the
acquisition to be neutral to slightly accretive. The company cannot
yet assess GAAP earnings impact until the finalization of purchase
accounting, but expects GAAP non-cash charges arising from the
acquisition to cause larger decreases in GAAP earnings than in
non-GAAP earnings. The company will complete this assessment and
report its revised GAAP outlook during its second quarter fiscal
2008 earnings call. Consistent with the company�s previous
presentation of non-GAAP earnings, non-GAAP earnings exclude
amortization of purchased intangible assets which include purchased
technology, backlog, trade names, customer relationships and
employment agreements. Non-GAAP earnings further exclude in-process
research and development charges, special charges and stock-based
compensation expenses. 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 nonrecurring.
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 over the last 12 months of about $800 million and
employs approximately 4,200 people worldwide. Corporate
headquarters are located at 8005 S.W. Boeckman Road, Wilsonville,
Oregon 97070-7777. World Wide Web site: http://www.mentor.com/.
(Mentor Graphics and Calibre are registered trademarks of Mentor
Graphics Corporation. All other company or product names are the
registered trademarks or 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 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) the company�s ability to
successfully offer products and services that compete in the highly
competitive EDA industry; (ii) discounting of products and services
by competitors, which could force the company to lower its prices
or offer other more favorable terms to customers; (iii) reductions
in the spending on the company�s products by its customers due to
cyclical downturns; (iv) changes in accounting or reporting rules
or interpretations, limitations of reparation of earnings; (v) 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; (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.
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