Mentor Graphics Corporation (NASDAQ: MENT) today announced
financial results for the company’s fiscal first quarter ended
April 30, 2012. The company reported revenues of $247.9 million,
non-GAAP earnings per share of $.30, and GAAP earnings per share of
$.25. The company raised guidance for fiscal year 2013 non-GAAP
earnings per share by $.05 to $1.37 and for GAAP earnings per share
by $.07 to $1.20.
“Strength in our business continued in the first quarter, with
record first quarter revenue and earnings,” said Walden C. Rhines,
chairman and CEO of Mentor Graphics. “The release of our
next-generation emulation platform during the quarter has attracted
broad customer interest, and we have a very full sales funnel. We
are also seeing increasing demand for our Calibre family of
products at advanced process nodes, as the explosion of capacity at
28nm is driving significant design activity. With 20nm processes
being certified now, and beginning production later in the year, we
expect that the ongoing move to the 28nm and 20nm generations of
technology will drive an exceptionally large increase in design
activity. This will benefit Mentor and the whole electronic design
automation industry through 2013.”
During the quarter, the company announced the availability of
the Veloce®2 platform, the next generation of emulation solutions
for the verification of electronic system and system-on-chip (SoC)
designs. This included the announcement of a new environment called
Veloce VirtuaLAB, giving verification engineers access to a full
environment for verifying complex electronics systems prior to
first silicon availability without requiring the building of
hardware test systems. The company also announced the latest
release of the PADS® desktop solution for PCB design, with new
features addressing design-for-manufacturing analysis, high-speed
and interactive routing. Additionally the quarter saw the latest
release of the Questa® functional verification platform for complex
SoC, ASIC and FPGA designs.
“Continued focus on cost controls, a favorable product mix, and
better than forecasted profitability in the business have allowed
us to raise earnings guidance for the year. We also reaffirm
revenue guidance at $1.1 billion for the year as we expect
increased Veloce2 emulation shipments beginning in the second
quarter as production capacity increases,” said Gregory K.
Hinckley, president of Mentor Graphics. “We are pleased that we
have achieved an operating margin in the first quarter that is
already near our fiscal year target of 18% non-GAAP. With a record
backlog at the start of the year and strong demand for our products
at advanced process nodes, we remain confident in our outlook for
the rest of the fiscal year.”
Outlook
For the full fiscal year 2013, the company reaffirms that it
expects revenues of about $1.1 billion, and raises outlook for
non-GAAP earnings per share by $.05 to $1.37, and GAAP earnings per
share by $.07 to $1.20. For the second fiscal quarter FY2013, the
company expects revenues of about $240 million, non-GAAP earnings
per share of $.17, and GAAP earnings per share of $.10.
Fiscal Year Definition
Mentor Graphics’ fiscal year runs from February 1 to January 31.
The fiscal year is dated by the calendar year in which the fiscal
year ends. As a result, the first three fiscal quarters of any
fiscal year will be dated with the next calendar year, rather than
the current calendar year.
Discussion of Non-GAAP Financial Measures
Mentor Graphics’ management evaluates and makes operating
decisions using various performance measures. In addition to our
GAAP results, we also consider adjusted gross margin, operating
margin, net income (loss), and earnings (loss) per share which we
refer to as non-GAAP gross margin, operating margin, net income
(loss), and earnings (loss) per share, respectively. These non-GAAP
measures are derived from the revenues of our product, maintenance,
and services business operations and the costs directly related to
the generation of those revenues, such as cost of revenue, research
and development, sales and marketing, and general and
administrative expenses, that management considers in evaluating
our ongoing core operating performance. These non-GAAP measures
exclude amortization of intangible assets, special charges, equity
plan-related compensation expenses, interest expense attributable
to net retirement premiums or discounts on the early retirement of
debt and associated debt issuance costs, interest expense
associated with the amortization of debt discount and premium on
convertible debt, and the equity in income (loss) of unconsolidated
entities (except Frontline PCB Solutions Limited Partnership
(Frontline)), which management does not consider reflective of our
core operating business.
Management excludes from our non-GAAP measures certain recurring
items to facilitate its review of the comparability of our core
operating performance on a period-to-period basis because such
items are not related to our ongoing core operating performance as
viewed by management. Management considers our core operating
performance to be that which can be affected by our managers in any
particular period through their management of the resources that
affect our underlying revenue and profit generating operations
during that period. Management uses this view of our operating
performance for purposes of comparison with our business plan and
individual operating budgets and allocation of resources.
Additionally, when evaluating potential acquisitions, management
excludes the items described above from its consideration of target
performance and valuation. More specifically, management adjusts
for the excluded items for the following reasons:
- Identified intangible assets consist
primarily of purchased technology, backlog, trade names, and
customer relationships. Amortization charges for our intangible
assets can vary in frequency and amount due to the timing and
magnitude of acquisition transactions. We consider our operating
results without these charges when evaluating our core performance
due to the variability. Generally, the most significant impact to
inter-period comparability of our net income (loss) is in the first
twelve months following an acquisition.
- Special charges primarily consist of
restructuring costs incurred for employee terminations, including
severance and benefits, driven by modifications of business
strategy or business emphasis. Special charges may also include
expenses incurred related to potential acquisitions, excess
facility costs, and asset-related charges. Special charges are
incurred based on the particular facts and circumstances of
acquisition and restructuring decisions and can vary in size and
frequency. These charges are excluded as they are not ordinarily
included in our annual operating plan and related budget due to the
unpredictability of economic trends and the rapidly changing
technology and competitive environment in our industry. We
therefore exclude them when evaluating our managers' performance
internally.
- Equity plan-related compensation
expenses represent the fair value of all share-based payments to
employees, including grants of employee stock options and
restricted stock units. We do not consider equity plan-related
compensation expense in evaluating our manager’s performance
internally or our core operations in any given period.
- Interest expense attributable to net
retirement premiums or discounts on the early retirement of debt,
the write-off of associated debt issuance costs and the
amortization of the debt discount and premium on convertible debt
are excluded. Management does not consider these charges as a part
of our core operating performance. The early retirement of debt and
the associated debt issuance costs are not included in our annual
operating plan and related budget due to unpredictability of market
conditions which could facilitate an early retirement of debt. We
do not consider the amortization of the debt discount and premium
on convertible debt to be a direct cost of operations.
- Equity in earnings or losses of
unconsolidated entities represents our equity in the net income
(loss) of a common stock investment accounted for under the equity
method. The carrying amount of our investment is adjusted for our
share of earnings or losses of the investee. The amounts are
excluded from our non-GAAP results (with the exception of our
investment in Frontline as discussed below) as we do not control
the results of operations for this investment and we do not
participate in regular and periodic operating activities;
therefore, management does not consider these businesses a part of
our core operating performance.
- In connection with the Company’s
acquisition of Valor on March 18, 2010, we also acquired Valor’s
50% interest in Frontline, a joint venture. We report our equity in
the earnings or losses of Frontline within operating income. We
actively participate in regular and periodic activities such as
budgeting, business planning, marketing and direction of research
and development projects. Accordingly, we do not exclude our share
of Frontline’s earnings or losses from our non-GAAP results as
management considers the joint venture to be core to our operating
performance.
- Income tax expense (benefit) is
adjusted by the amount of additional tax expense or benefit that we
would accrue if we used non-GAAP results instead of GAAP results in
the calculation of our tax liability, taking into consideration our
long-term tax structure. We use a normalized effective tax rate of
17%, which reflects the weighted average tax rate applicable under
the various jurisdictions in which we operate. This non-GAAP tax
rate eliminates the effects of non-recurring and period specific
items which are often attributable to acquisition decisions and can
vary in size and frequency and considers our U.S. loss
carryforwards that have not been previously benefited. This rate is
subject to change over time for various reasons, including changes
in the geographic business mix and changes in statutory tax rates.
Our GAAP tax rate for the three months ended April 30, 2012 is 3%,
after the consideration of period specific items. Without period
specific items of ($1.3) million, our GAAP tax rate is 7%. Our full
fiscal year 2013 GAAP tax rate, inclusive of period specific items,
is projected to be 7%. The GAAP tax rate considers certain
mandatory and other non-scalable tax costs which may adversely or
beneficially affect our tax rate depending upon our level of
profitability in various jurisdictions.
In certain instances our GAAP results of operations may not be
profitable when our corresponding non-GAAP results are profitable
or vice versa. The number of shares on which our non-GAAP earnings
per share is calculated may therefore differ from the GAAP
presentation due to the anti-dilutive effect of stock options and
restricted stock units in a loss situation.
Non-GAAP gross margin, operating margin, and net income are
supplemental measures of our performance that are not required by,
or presented in accordance with, GAAP. Moreover, they should not be
considered as an alternative to any performance measure derived in
accordance with GAAP, or as an alternative to cash flow from
operating activities as a measure of our liquidity. We present
non-GAAP gross margin, operating margin, and net income because we
consider them to be important supplemental measures of our
operating performance and profitability trends, and because we
believe they give investors useful information on period-to-period
performance as evaluated by management. Non-GAAP net income also
facilitates comparison with other companies in our industry, which
use similar financial measures to supplement their GAAP results.
Non-GAAP net income has limitations as an analytical tool, and
therefore should not be considered in isolation or as a substitute
for analysis of our results as reported under GAAP. In the future
we expect to continue to incur expenses similar to the non-GAAP
adjustments described above and exclusion of these items in our
non-GAAP presentation should not be construed as an inference that
these costs are unusual, infrequent or non-recurring. Some of the
limitations in relying on non-GAAP net income are:
- Amortization of intangibles represents
the loss in value as the technology in our industry evolves, is
advanced, or is replaced over time. The expense associated with
this loss in value is not included in the non-GAAP net income
presentation and therefore does not reflect the full economic
effect of the ongoing cost of maintaining our current technological
position in our competitive industry, which is addressed through
our research and development program.
- We regularly engage in acquisition and
assimilation activities as part of our ongoing business and
regularly evaluate our business to determine whether any operations
should be eliminated or curtailed. We therefore will continue to
experience special charges on a regular basis. These costs also
directly impact our available funds.
- Our stock incentive and stock purchase
plans are important components of our incentive compensation
arrangements and will be reflected as expenses in our GAAP
results.
- Our income tax expense will be
ultimately based on our GAAP taxable income and actual tax rates in
effect, which often differ significantly from the 17% rate assumed
in our non-GAAP presentation. In addition, if we have a GAAP loss
and non-GAAP net income, our non-GAAP results will not reflect any
projected GAAP tax benefits. Similarly, in the event we were to
have GAAP net income and a non-GAAP loss, our GAAP tax expense
would be replaced by a credit in our non-GAAP presentation.
- Other companies, including other
companies in our industry, calculate non-GAAP net income
differently than we do, limiting its usefulness as a comparative
measure.
About Mentor Graphics
Mentor Graphics Corporation is a world leader in electronic
hardware and software design solutions, providing products,
consulting services and award-winning support for the world’s most
successful electronic, semiconductor and systems companies.
Established in 1981, the company reported revenues in the last
fiscal year of about $1,015 million. Corporate headquarters are
located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777.
World Wide Web site: http://www.mentor.com/.
(Mentor Graphics, Veloce, Questa and PADS are registered
trademarks of Mentor Graphics Corporation. All other company and/or
product names are the trademarks and/or registered trademarks of
their respective owners.)
Statements in this press release regarding the company’s
guidance for future periods constitute “forward-looking” statements
based on current expectations within the meaning of the Securities
Exchange Act of 1934. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the company or
industry results to be materially different from any results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
following: (i) recession in the EU, US, Japan, China or other
economies, including the possibility of a “double-dip” recession or
weakness associated with the EU debt crisis; (ii) the
company’s ability to successfully offer products and services that
compete in the highly competitive EDA industry, including the risk
of production delays or obsolescence for our hardware products;
(iii) product bundling or discounting of products and services
by competitors, which could force the company to lower its prices
or offer other more favorable terms to customers; (iv) possible
delayed or canceled customer orders resulting from the business
disruption and uncertainty of actions of activist shareholders; (v)
effects of the volatility of foreign currency fluctuations on the
company’s business and operating results; (vi) changes in
accounting or reporting rules or interpretations; (vii) the
impact of tax audits by the IRS or other taxing authorities, or
changes in the tax laws, regulations or enforcement practices where
the company does business; (viii) effects of unanticipated
shifts in product mix on gross margin; and (ix) effects of
customer seasonal purchasing patterns and the timing of significant
orders which may negatively or positively impact the company’s
quarterly results of operations; all as may be discussed in more
detail under the heading “Risk Factors” in the company’s most
recent Form 10-K or Form 10-Q. Given these uncertainties,
prospective investors are cautioned not to place undue reliance on
such forward-looking statements. In addition, statements regarding
guidance do not reflect potential impacts of mergers or
acquisitions that have not been announced or closed as of the time
the statements are made. Mentor Graphics disclaims any obligation
to update any such factors or to publicly announce the results of
any revisions to any of the forward-looking statements to reflect
future events or developments.
MENTOR GRAPHICS
CORPORATION
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)
Three Months Ended April 30,
2012 2011 Revenues: System and software $
149,356 $ 139,645 Service and support 98,562
90,390
Total revenues
247,918 230,035
Cost of revenues:
(1) System and software 14,790 16,077 Service and support
28,414 25,211 Amortization of purchased technology 2,179
3,357 Total cost of revenues 45,383
44,645 Gross margin 202,535
185,390
Operating expenses: Research and
development (2) 71,046 69,368 Marketing and selling (3) 79,752
77,924 General and administration (4) 16,649 16,785 Equity in
earnings of Frontline (5) (587 ) (1,017 ) Amortization of
intangible assets (6) 1,706 1,610 Special charges (7) 1,147
4,547 Total operating expenses 169,713
169,217
Operating income 32,822 16,173
Other income (expense), net (8) 83 (475 ) Interest expense (9)
(4,594 ) (17,440 ) Income (loss) before income tax
28,311 (1,742 ) Income tax expense (10) 781
611 Net income (loss) 27,530 (2,353 ) Less: Loss
attributable to noncontrolling interest (11) (652 ) -
Net income (loss) attributable to Mentor
Graphics shareholders
$ 28,182 $ (2,353 )
Net income (loss) per share attributable
to Mentor Graphics shareholders:
Basic $ 0.26 $ (0.02 ) Diluted $ 0.25 $ (0.02 )
Weighted average number of shares outstanding: Basic 109,907
111,769 Diluted 113,243
111,769 Refer to following page for a description of
footnotes.
MENTOR GRAPHICS
CORPORATION
FOOTNOTES TO
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands)
Listed below are the items included in net income that
management excludes in computing the non-GAAP financial measures
referred to in the text of this press release. Items are further
described under "Discussion of Non-GAAP Financial Measures."
Three Months Ended April 30, 2012 2011
(1) Cost of revenues: Equity plan-related compensation $ 319
$ 267 Amortization of purchased technology 2,179
3,357 $ 2,498 $ 3,624
(2)
Research and development: Equity plan-related compensation $
2,117 $ 2,139
(3) Marketing and
selling: Equity plan-related compensation $ 1,549 $
1,615
(4) General and administration: Equity
plan-related compensation $ 1,162 $ 1,659
(5) Equity in earnings of
Frontline:
Amortization of purchased technology and
other identified intangible assets
$ 1,242 $ 1,242
(6) Amortization of
intangible assets: Amortization of other identified intangible
assets $ 1,706 $ 1,610
(7) Special
charges: Rebalance, restructuring, and other costs $ 1,147
$ 4,547
(8) Other income (expense),
net: Net (gain) loss of unconsolidated entities $ (13 ) $ -
(9) Interest expense: Amortization of debt
discount and premium, net $ 1,295 $ 1,175 Premium and costs related
to debt retirement - 11,504 $ 1,295
$ 12,679
(10) Income tax expense:
Non-GAAP income tax effects $ (6,191 ) $ (4,042 )
(11)
Loss attributable to noncontrolling interest: Amortization of
intangible assets and income tax effects $ (269 ) $ -
MENTOR GRAPHICS
CORPORATION
UNAUDITED
RECONCILIATION OF NON-GAAP ADJUSTMENTS
(In thousands, except earnings per share data)
Three Months Ended April 30,
2012 2011 GAAP net income (loss) attributable to
Mentor Graphics shareholders $ 28,182 $ (2,353 ) Non-GAAP
adjustments: Equity plan-related compensation: (1) Cost of revenues
319 267 Research and development 2,117 2,139 Marketing and selling
1,549 1,615 General and administration 1,162 1,659 Acquisition -
related items: Amortization of purchased assets Cost of revenues
(2) 2,179 3,357 Frontline purchased technology and intangible
assets (3) 1,242 1,242 Amortization of intangible assets (4) 1,706
1,610 Special charges (5) 1,147 4,547 Other income (expense), net
(6) (13 ) - Interest expense (7) 1,295 12,679 Non-GAAP income tax
effects (8) (6,191 ) (4,042 ) Noncontrolling interest (9)
(269 ) - Total of non-GAAP adjustments 6,243
25,073 Non-GAAP net income attributable to
Mentor Graphics shareholders $ 34,425 $ 22,720
GAAP weighted average shares (diluted) 113,243 111,769 Non-GAAP
adjustment - 3,649 Non-GAAP weighted
average shares (diluted) 113,243 115,418
Net income (loss) per share attributable to Mentor
Graphics shareholders: GAAP (diluted) $ 0.25 $ (0.02 ) Non-GAAP
adjustments detailed above 0.05 0.22
Non-GAAP (diluted) $ 0.30 $ 0.20
(1) Equity plan-related
compensation expense.
(2) Amount represents amortization of
purchased technology resulting from acquisitions. Purchased
intangible assets are amortized over three to five years.
(3) Amount represents amortization of purchased technology
and other identified intangible assets identified as part of the
fair value of the Frontline P.C.B. Solutions Limited Partnership
(Frontline) investment. Mentor Graphics acquired a 50% joint
venture in Frontline as a result of the Valor Computerized Systems,
Ltd. acquisition in the first quarter of fiscal 2011. The purchased
technology will be amortized over three years, other identified
intangible assets will be amortized over three to four years, and
are reflected in the income statement in the equity in earnings of
Frontline results. This expense is the same type as being adjusted
for in note (2) above and (4) below.
(4) Other identified
intangible assets are amortized to other operating expense over one
to five years. Other identified intangible assets include trade
names, customer relationships, and backlog resulting from
acquisition transactions.
(5) Three months ended April 30,
2012: Special charges consist of (i) $988 of costs incurred for
employee rebalances which includes severance benefits, notice pay,
and outplacement services and (ii) $159 in other adjustments.
Three months ended April 30, 2011: Special
charges consist of (i) $3,102 of costs related to consulting fees
associated with our proxy contest, (ii) $1,147 of costs incurred
for employee rebalances which includes severance benefits, notice
pay, and outplacement services, and (iii) $298 in other
adjustments.
(6) Three months ended April 30, 2012: Income of $13 on an
investment accounted for under the equity method of accounting.
(7) Three months ended April 30, 2012: $1,295 in
amortization of original issuance debt discount. Three months ended
April 30, 2011: $1,175 in amortization of original issuance debt
discount and bond premium, and $11,504 for the premium and other
costs related to the retirement of the 6.25% convertible debentures
and the term loan.
(8) Non-GAAP income tax expense
adjustment reflects the application of our assumed normalized
effective 17% tax rate, instead of our GAAP tax rate, to our
non-GAAP pre-tax income.
(9) Adjustment for the impact of
amortization of intangible assets, equity plan-related compensation
expense and income tax expense on noncontrolling interest.
MENTOR GRAPHICS
CORPORATION
UNAUDITED
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES
(In thousands, except percentages)
Three Months Ended April 30, 2012
2011 GAAP gross margin $ 202,535 $ 185,390 Reconciling items
to non-GAAP gross margin: Equity plan-related compensation 319 267
Amortization of purchased technology 2,179 3,357 Non-GAAP gross
margin $ 205,033 $ 189,014
Three Months Ended
April 30, 2012 2011 GAAP gross margin as a
percent of total revenues 81.7% 80.6% Non-GAAP adjustments detailed
above 1.0% 1.6% Non-GAAP gross margin as a percent of total
revenues 82.7% 82.2%
Three Months Ended April
30, 2012 2011 GAAP operating expenses $ 169,713 $
169,217 Reconciling items to non-GAAP operating expenses: Equity
plan-related compensation (4,828) (5,413)
Amortization of Frontline purchased
technology and other identified intangible assets
(1,242) (1,242) Amortization of other identified intangible assets
(1,706) (1,610) Special charges (1,147) (4,547) Non-GAAP operating
expenses $ 160,790 $ 156,405
Three Months Ended
April 30, 2012 2011 GAAP operating income $
32,822 $ 16,173 Reconciling items to non-GAAP operating income:
Equity plan-related compensation 5,147 5,680 Amortization of
purchased technology 2,179 3,357
Amortization of Frontline purchased
technology and other identified intangible assets
1,242 1,242 Amortization of other identified intangible assets
1,706 1,610 Special Charges 1,147 4,547 Non-GAAP operating income $
44,243 $ 32,609
Three Months Ended April 30,
2012 2011 GAAP operating income as a percent of total
revenues 13.2% 7.0% Non-GAAP adjustments detailed above 4.6% 7.2%
Non-GAAP operating income as a percent of total revenues 17.8%
14.2%
Three Months Ended April 30, 2012
2011 GAAP other expense, net and interest expense $ (4,511)
$ (17,915)
Reconciling items to non-GAAP other
expense, net and interest expense:
Net gain of unconsolidated entities (13) - Amortization of debt
discount and retirement costs 1,295 12,679 Non-GAAP other expense,
net and interest expense $ (3,229) $ (5,236)
MENTOR GRAPHICS
CORPORATION
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
April
30, January 31, 2012 2012
Assets Current assets: Cash, cash equivalents, and
short-term investments $ 134,811 $ 146,499 Restricted cash - 4,237
Trade accounts receivable, net 117,981 133,494 Term receivables,
short-term 236,938 221,430 Prepaid expenses and other 45,210 43,972
Deferred income taxes 13,590 17,803 Total
current assets 548,530 567,435
Property, plant, and equipment,
net 152,026 148,019
Term receivables, long-term 212,665
220,355
Goodwill and intangible assets, net 552,262 555,671
Other assets 63,670 59,195 Total assets
$ 1,529,153 $ 1,550,675
Liabilities and Stockholders'
Equity Current liabilities: Short-term borrowings $
8,339 $ 14,617 Current portion of notes payable 1,357 1,349
Accounts payable 16,746 17,261 Income taxes payable 2,365 2,538
Accrued payroll and related liabilities 57,751 112,349 Accrued and
other liabilities 30,000 34,284 Deferred revenue 207,974
191,540 Total current liabilities 324,532 373,938
Long-term notes payable 214,519 213,224
Deferred revenue,
long-term 12,649 14,883
Other long-term liabilities
66,065 73,290 Total liabilities 617,765
675,335
Noncontrolling interest with redemption
feature 9,291 9,266
Stockholders' equity: Common
stock 784,211 775,362 Retained earnings 89,516 62,032 Accumulated
other comprehensive income 28,370 28,680 Total
stockholders' equity 902,097 866,074 Total
liabilities and stockholders' equity $ 1,529,153 $ 1,550,675
MENTOR GRAPHICS
CORPORATION
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL
INFORMATION
(In thousands, except days sales outstanding)
Three Months Ended April 30,
2012 2011 Operating activities Net income
(loss) $ 27,530 $ (2,353 ) Depreciation and amortization (1) 13,813
22,411 Other adjustments to reconcile: Operating cash 6,700 7,155
Changes in working capital (41,898 ) (36,475 )
Net cash provided by (used in) operating activities 6,145 (9,262 )
Investing activities Net cash used in investing
activities (12,057 ) (8,381 )
Financing activities
Net cash provided by (used in) financing activities (4,234 ) 253
Effect of exchange rate changes on cash and cash equivalents
(1,542 ) 758 Net change in cash and
cash equivalents (11,688 ) (16,632 ) Cash and cash equivalents at
beginning of period 146,499 133,113
Cash and cash equivalents at end of period $ 134,811
$ 116,481
(1) Depreciation and
amortization includes a write-off of note issuance costs in the
amount of $8,010 for the three months ended April 30, 2011.
Other data: Capital expenditures $ (11,604 ) $ (6,345
) Days sales outstanding 129 126
MENTOR GRAPHICS
CORPORATION
UNAUDITED
SUPPLEMENTAL BOOKINGS AND REVENUE INFORMATION
(Rounded to nearest 5%)
FY 2013
Fiscal Year 2012 Fiscal Year 2011 Product Group
Bookings (a) Q1 Q1 Q2
Q3 Q4 Year
Q1 Q2 Q3
Q4 Year IC DESIGN TO SILICON 35%
20% 25% 60% 40% 40% 35% 40% 45% 30% 35% SCALABLE VERIFICATION 15%
35% 30% 15% 35% 30% 35% 25% 25% 30% 25% INTEGRATED SYSTEMS DESIGN
25% 25% 25% 15% 15% 15% 15% 25% 20% 25% 25% NEW & EMERGING
MARKETS 10% 10% 15% 5% 5% 10% 10% 5% 5% 10% 10% SERVICES / OTHER
15% 10% 5% 5% 5%
5% 5% 5% 5% 5%
5%
Total 100% 100% 100% 100%
100% 100% 100% 100%
100% 100% 100%
FY 2013 Fiscal Year 2012 Fiscal Year 2011
Product Group Revenue (b) Q1 Q1
Q2 Q3 Q4
Year Q1 Q2
Q3 Q4 Year IC
DESIGN TO SILICON 40% 40% 25% 40% 45% 40% 40% 40% 35% 30% 35%
SCALABLE VERIFICATION 25% 25% 30% 25% 25% 25% 20% 20% 30% 25% 25%
INTEGRATED SYSTEMS DESIGN 25% 20% 25% 25% 20% 25% 25% 25% 25% 30%
30% NEW & EMERGING MARKETS 5% 10% 10% 5% 5% 5% 5% 5% 5% 10% 5%
SERVICES / OTHER 5% 5% 10% 5% 5%
5% 10% 10% 5%
5% 5%
Total 100% 100%
100% 100% 100% 100% 100%
100% 100% 100%
100%
FY 2013 Fiscal Year 2012 Fiscal
Year 2011 Bookings by Geography Q1 Q1
Q2 Q3 Q4
Year Q1 Q2
Q3 Q4 Year
North America 35% 45% 45% 40% 50% 45% 45% 40% 45% 50% 45% Europe
20% 20% 30% 15% 25% 20% 20% 25% 20% 20% 20% Japan 10% 15% 5% 5% 10%
10% 15% 5% 15% 15% 15% Pac Rim 35% 20% 20% 40%
15% 25% 20% 30%
20% 15% 20%
Total 100%
100% 100% 100% 100%
100% 100% 100% 100%
100% 100%
FY 2013 Fiscal Year
2012 Fiscal Year 2011 Revenue by Geography
Q1 Q1 Q2 Q3
Q4 Year Q1
Q2 Q3 Q4
Year North America 50% 40% 50% 45% 35% 40% 35% 40%
50% 45% 40% Europe 20% 25% 20% 25% 25% 25% 25% 25% 25% 25% 25%
Japan 10% 15% 10% 10% 5% 10% 15% 10% 10% 15% 15% Pac Rim 20% 20%
20% 20% 35% 25%
25% 25% 15% 15%
20%
Total 100% 100% 100% 100%
100% 100% 100% 100%
100% 100% 100%
FY 2013 Fiscal Year 2012 Fiscal Year
2011 Bookings by Business Model (c) Q1 Q1
Q2 Q3 Q4
Year Q1 Q2
Q3 Q4 Year
Perpetual 25% 40% 15% 15% 25% 20% 40% 30% 10% 15% 20% Ratable 25%
20% 10% 5% 5% 10% 20% 15% 10% 5% 10% Up Front 50% 40%
75% 80% 70% 70% 40%
55% 80% 80% 70%
Total 100% 100% 100% 100%
100% 100% 100% 100% 100%
100% 100%
FY 2013
Fiscal Year 2012 Fiscal Year 2011 Revenue by
Business Model (c) Q1 Q1 Q2
Q3 Q4 Year
Q1 Q2 Q3
Q4 Year Perpetual 20% 30% 25%
15% 15% 20% 20% 25% 20% 15% 20% Ratable 10% 10% 10% 10% 5% 10% 25%
15% 10% 5% 10% Up Front 70% 60% 65% 75%
80% 70% 55% 60%
70% 80% 70%
Total 100% 100%
100% 100% 100%
100% 100% 100% 100% 100%
100% (a) Product Group Bookings
excludes support bookings for all sub-flow categories. (b) Product
Group Revenue includes support revenue for each sub-flow category
as appropriate. (c) Bookings and Revenue by Business Model are
System and Software only.
MENTOR GRAPHICS
CORPORATION
UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP
EARNINGS PER
SHARE
The following table reconciles
management's estimates of the specific items excluded from GAAP in
the calculation of estimated non-GAAP net income per share for Q2
FY13 and fiscal 2013.
Estimated
Estimated Q2 FY13 FY13 Diluted GAAP net income
per share $ 0.10 $ 1.20 Non-GAAP Adjustments: Amortization of
purchased intangible assets (1) 0.02 0.07 Amortization of other
identified intangible assets (2) 0.03 0.09 Equity plan-related
compensation (3) 0.06 0.18 Special charges (4) - 0.01 Other income
(expense), net and interest expense (5) 0.01 0.05 Non-GAAP income
tax effects (6) (0.05 ) (0.22 ) Noncontrolling Interest (7)
- (0.01 ) Non-GAAP net income per share $ 0.17
$ 1.37
(1) Excludes amortization of purchased
intangible assets resulting from acquisition transactions.
Purchased intangible assets are amortized over three to five years.
(2) Excludes amortization of other identified intangible
assets including trade names, customer relationships, and backlog
resulting from acquisition transactions. Other identified
intangible assets are amortized over one to five years. This line
item also excludes amortization of purchased intangible assets
identified as part of the fair value of the Frontline P.C.B.
Solutions Limited Partnership investment. The purchased technology
will be amortized over three years and other identified intangible
assets will be amortized over three to four years.
(3)
Excludes equity plan-related compensation expense.
(4)
Excludes special charges consisting primarily of costs incurred for
employee rebalances (which includes severance benefits, notice pay
and outplacement services), facility closures, and acquisition
costs.
(5) Adjustment for fiscal 2013 reflects the
amortization of original issuance debt discount for our 4.00%
Convertible Subordinated Debentures due 2031.
(6) Non-GAAP
income tax expense adjustment reflects the application of our
assumed normalized effective 17% tax rate, instead of our GAAP tax
rate, to our non-GAAP pre-tax income.
(7) Adjustment for the
impact of amortization of intangible assets, equity plan-related
compensation expense and income tax expense on noncontrolling
interest.
Mentor Graphics Corp. (NASDAQ:MENT)
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Mentor Graphics Corp. (NASDAQ:MENT)
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