[August 20, 2015] |
|
Mentor Graphics Reports Fiscal Second Quarter Results and Announces Quarterly Dividend
Mentor Graphics Corporation (NASDAQ:MENT) today announced financial
results for the company's fiscal second quarter ended July 31, 2015. The
company reported revenues of $281.1 million, non-GAAP earnings per share
of $0.36, and GAAP earnings per share of $0.26.
"Revenue was an all-time second quarter record and Mentor exceeded
non-GAAP earnings per share guidance for the 26th consecutive
quarter," said Walden C. Rhines, chairman and CEO. "Customer need for
increased amounts of software drove early renewal activity and the
upside in the quarter. Demand was strongest in both Design to Silicon
and Scalable Verification. During the quarter we added five new
emulation customers, including both a Top Ten chip company and a
start-up."
During the quarter, the company announced Veloce® Power Application
software, which captures real power consumption during emulation and
passes the information efficiently to power analysis tools. Mentor also
announced its next-generation MicReD® Industrial Power Tester, which now
provides 1500 amp electronic component power cycling and thermal testing
for up to 12 devices simultaneously, to benefit automotive, railway,
power generation and renewable energy industries. The quarter also had a
major new release of the Mentor® Enterprise Verification Platform, with
new levels of Questa® performance and productivity in areas including
simulation, debug, and low-power verification.
In the second quarter the company also announced the newest version of
the FloTHERM® XT product, with EDA connectivity for advanced thermal
management of electronic systems, printed circuit boards and packages of
any geometric complexity. In addition Mentor introduced the latest
release of the Flowmaster® computational fluid dynamics software
targeting network systems in automotive, aerospace and power generation.
The company also announced a new release of the Mentor® Embedded
Nucleus® Real-Time Operating System targeting connected embedded devices
for high-performance Internet of Things applications.
"Second quarter results highlight both our continued rigorous attention
to cost control and the operating leverage in our business," said
Gregory K. Hinckley, president of Mentor Graphics. "On an 8% increase in
revenue, GAAP and non-GAAP operating expenses grew less than 1.5% year
on year. Second quarter revenue exceeded guidance by 12% while non-GAAP
EPS was up over 150% versus guidance. Cash flow, another important
metric, was strong with cash flow from operations of $49 million in the
second quarter and $95 million in the first half of fiscal 2016."
Outlook
For the third quarter of fiscal 2016, the company expects revenue of
about $290 million, non-GAAP earnings per share of about $0.27 and GAAP
earnings per share of approximately $0.17. For the full year fiscal
2016, the company is raising revenue guidance to about $1.285 billion;
is increasing non-GAAP earnings per share guidance from $1.88 to about
$1.90; and currently expects GAAP earnings per share of approximately
$1.25.
Dividend
The company announced a quarterly dividend of $0.055 per share on
outstanding common stock. The dividend is payable on September 30, 2015
to shareholders of record at the close of business on September 10, 2015.
Fiscal Year Definition
Mentor Graphics Corporation's fiscal year runs from February 1 to
January 31. The fiscal year is dated by the calendar year in which the
fiscal year ends. As a result, the first three fiscal quarters of any
fiscal year will be dated with the next calendar year, rather than the
current calendar year.
Discussion of Non-GAAP Financial Measures
Mentor Graphics' management evaluates and makes operating decisions
using various performance measures. In addition to our GAAP results, we
also consider adjusted gross profit, operating income, operating margin,
net income, and earnings per share which we refer to as non-GAAP gross
profit, operating income, operating margin, net income, and earnings per
share, respectively. These non-GAAP measures are derived from the
revenues of our product, maintenance, and services business operations
and the costs directly related to the generation of those revenues, such
as cost of revenue, research and development, marketing and sales, and
general and administrative expenses, that management considers in
evaluating our ongoing core operating performance. These non-GAAP
measures exclude amortization of intangible assets, special charges,
equity plan-related compensation expenses, interest expense associated
with the amortization of original issuance debt discount on convertible
debt, the equity in earnings or losses of unconsolidated entities
(except Frontline PCB Solutions Limited Partnership (Frontline)), and
the impact on basic and diluted earnings per share of changes in the
calculated redemption value of noncontrolling interests, which
management does not consider reflective of our core operating business.
Management excludes from our non-GAAP measures certain recurring items
to facilitate its review of the comparability of our core operating
performance on a period-to-period basis because such items are not
related to our ongoing core operating performance as viewed by
management. Management considers our core operating performance to be
that which can be affected by our managers in any particular period
through their management of the resources that affect our underlying
revenue and profit generating operations during that period. Management
uses this view of our operating performance for purposes of comparison
with our business plan and individual operating budgets and allocation
of resources. Additionally, when evaluating potential acquisitions,
management excludes the items described above from its consideration of
target performance and valuation. More specifically, management adjusts
for the excluded items for the following reasons:
-
Identified intangible assets consist primarily of purchased
technology, backlog, trade names, and customer relationships.
Amortization charges for our intangible assets can vary in frequency
and amount due to the timing and magnitude of acquisition
transactions. We consider our operating results without these charges
when evaluating our core performance due to the variability.
Generally, the most significant impact to inter-period comparability
of our net income is in the first twelve months following an
acquisition.
-
Special charges may include expenses related to employee severance,
certain litigation costs, acquisitions, excess facility costs, and
other asset related charges. Special charges are incurred based on
particular facts and circumstances and can vary in size and frequency.
Restructuring costs included in special charges include costs incurred
for employee terminations, including severance and benefits, driven by
modification of business strategy or business emphasis. Litigation
costs classified as special charges consist of professional service
fees related to patent litigation involving us, EVE S.A., and
Synopsys, Inc. These costs are included in special charges because of
their unusual nature due to the significance in variability of timing
and amount. Special charges are not ordinarily included in our annual
operating plan and related budget due to unpredictability, driven in
part by rapidly changing technology and the competitive environment in
our industry. We therefore exclude them when evaluating our managers'
performance internally.
-
Equity plan-related compensation expenses represent the fair value of
all share-based payments to employees, including grants of employee
stock options and restricted stock units, and purchases made as a
result of our employee stock purchase plans. We do not consider equity
plan-related compensation expense in evaluating our managers'
performance internally or our core operations in any given period.
-
Interest expense attributable to amortization of the original issuance
debt discount on convertible debt is excluded. Management does not
consider this charge as a part of our core operating performance. We
do not consider the amortization of the original issuance debt
discount on convertible debt to be a direct cost of operations.
-
Equity in earnings or losses of unconsolidated entities represents our
equity in the net income (loss) of common stock investments accounted
for under the equity method. The carrying amounts of our investments
are adjusted for our share of earnings or losses of the investee. We
report our equity in the earnings or losses of investments in other
income (expense), net (with the exception of our investment in
Frontline as discussed below). The amounts are excluded from our
non-GAAP results as we do not control the results of operations for
the investments and we do not participate in regular and periodic
operating activities; therefore, management does not consider these
investments as a part of our core operating performance.
-
The Company maintains a 50% interest in Frontline, a joint venture. We
report our equity in the earnings or losses of Frontline within
operating income. Although we do not exert control, we actively
participate in regular and periodic activities such as budgeting,
business planning, marketing and direction of research and development
projects. Accordingly, we do not exclude our share of Frontline's
earnings or losses from our non-GAAP results as management considers
the joint venture to be core to our operating performance.
-
Income tax expense is adjusted by the amount of additional tax expense
or benefit that we would accrue if we used non-GAAP results instead of
GAAP results in the calculation of our tax liability, utilizing a
normalized effective tax rate. The normalized non-GAAP effective tax
rate of 19% considers our global tax posture, including the weighted
average tax rates applicable in the various jurisdictions in which we
operate; eliminates the effects of non-recurring and period specific
items which are often attributable to acquisition decisions and can
vary in size and frequency; and considers our U.S. tax loss
carryforwards and tax credits that were not previously recorded as a
benefit in our financial statements. Our non-GAAP effective tax rate
is subject to change over time for various reasons, including changes
in geographic business mix, statutory tax rates, foreign re-investment
expectations, and availability of U.S. tax loss carryforwards and tax
credits that were not previously recorded as a benefit. Our normalized
effective non-GAAP tax rate increased from 17% for the year ended
January 31, 2015 to 19% for the year ended January 31, 2016. The
increase in the normalized non-GAAP effective tax rate reflects the
reduced availability of U.S. tax loss carryforwards that were not
previously recorded as a benefit in our financial statements. Our GAAP
tax rate for the six months ended July 31, 2015 is 11% after
consideration of period specific items. Without period specific items
of $(1.6) million, our GAAP tax rate is 18%. Our full fiscal year 2016
GAAP tax rate, inclusive of period specific items recognized through
July 31, 2015, is projected to be 16%.
-
Our agreement with the owners of noncontrolling interests in one of
our subsidiaries gives them a right to require us to purchase their
interests for a price based on a formula defined in the agreement.
Under GAAP, increases (or decreases to the extent they offset previous
increases) in the calculated redemption value of the noncontrolling
interests are recorded directly to retained earnings and therefore do
not affect net income. However, as required by GAAP, these amounts are
applied to increase or decrease the numerator in the calculation of
basic and diluted earnings per share. Management does not consider
fluctuations in the calculated redemption value of noncontrolling
interests to be relevant to our core operating performance.
In certain instances our GAAP results of operations may not be
profitable when our corresponding non-GAAP results are profitable or
vice versa. The number of shares on which our non-GAAP earnings per
share is calculated may therefore differ from the GAAP presentation due
to the anti-dilutive effect of stock options, restricted stock units,
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:
-
Amortization of intangible assets represents the loss in value as the
technology in our industry evolves, is advanced, or is replaced over
time. The expense associated with this loss in value is not included
in the non-GAAP net income presentation and therefore does not reflect
the full economic effect of the ongoing cost of maintaining our
current technological position in our competitive industry, which is
addressed through our research and development program.
-
We regularly evaluate our business to determine whether any operations
should be eliminated or curtailed. Additionally, as part of our
ongoing business, we engage in acquisition and assimilation activities
and patent litigation. We therefore will continue to experience
special charges on a regular basis. These costs also directly impact
our available funds.
-
Our stock incentive and stock purchase plans are important components
of our incentive compensation arrangements and will be reflected as
expenses in our GAAP results.
-
Our income tax expense will be ultimately based on our GAAP taxable
income and actual tax rates in effect, which often differ
significantly from the rate assumed in our non-GAAP presentation. In
addition, if we have a GAAP loss and non-GAAP net income, our non-GAAP
results will not reflect any projected GAAP tax benefits.
-
Other companies, including other companies in our industry, calculate
non-GAAP net income differently than we do, limiting its usefulness as
a comparative measure.
About Mentor Graphics
Mentor Graphics Corporation is a world leader in electronic hardware and
software design solutions, providing products, consulting services and
award-winning support for the world's most successful electronic,
semiconductor and systems companies. Established in 1981, the company
reported revenues in the last fiscal year in excess of $1.24 billion. Corporate
headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon
97070-7777. World Wide Web site: http://www.mentor.com/.
(Mentor Graphics, Mentor, Veloce, MicReD,Questa, FloTHERM, Flowmaster
and Nucleus 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) economic weakness in the
European Union, China, Japan or other countries, and the potential
adverse impact of such weakness on the semiconductor and electronics
industries; (ii) the company's ability to successfully 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) effects of customer mergers or divestitures, customer seasonal
purchasing patterns and the timing of significant orders which may
negatively or positively impact the company's quarterly results of
operations; (vi) changes in accounting or reporting rules or
interpretations, including new rules affecting revenue recognition;
(vii) the impact of audits by taxing authorities, or changes in
applicable tax laws, regulations or enforcement practices; (viii)
effects of unanticipated shifts in product mix on gross margin; and (ix)
litigation; all as may be discussed in more detail under the heading
"Risk Factors" in the company's most recent Form 10-K or Form 10-Q.
Given these uncertainties, prospective investors are cautioned not to
place undue reliance on such forward-looking statements. In addition,
statements regarding guidance do not reflect potential impacts of
mergers or acquisitions that have not been announced or closed as of the
time the statements are made. Mentor Graphics disclaims any obligation
to update any such factors or to publicly announce the results of any
revisions to any of the forward-looking statements to reflect future
events or developments.
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
|
(In thousands, except earnings per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
System and software
|
|
|
$
|
162,201
|
|
|
|
$
|
149,480
|
|
|
|
$
|
318,132
|
|
|
|
$
|
297,709
|
|
Service and support
|
|
|
|
118,861
|
|
|
|
|
110,753
|
|
|
|
|
235,073
|
|
|
|
|
214,675
|
|
Total revenues
|
|
|
|
281,062
|
|
|
|
|
260,233
|
|
|
|
|
553,205
|
|
|
|
|
512,384
|
|
Cost of revenues: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
System and software
|
|
|
|
13,049
|
|
|
|
|
16,185
|
|
|
|
|
26,673
|
|
|
|
|
43,156
|
|
Service and support
|
|
|
|
31,420
|
|
|
|
|
30,903
|
|
|
|
|
64,989
|
|
|
|
|
60,014
|
|
Amortization of purchased technology
|
|
|
|
1,794
|
|
|
|
|
1,841
|
|
|
|
|
3,652
|
|
|
|
|
3,202
|
|
Total cost of revenues
|
|
|
|
46,263
|
|
|
|
|
48,929
|
|
|
|
|
95,314
|
|
|
|
|
106,372
|
|
Gross profit
|
|
|
|
234,799
|
|
|
|
|
211,304
|
|
|
|
|
457,891
|
|
|
|
|
406,012
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development (2)
|
|
|
|
89,053
|
|
|
|
|
87,542
|
|
|
|
|
178,568
|
|
|
|
|
171,993
|
|
Marketing and selling (3)
|
|
|
|
84,741
|
|
|
|
|
82,305
|
|
|
|
|
169,692
|
|
|
|
|
166,939
|
|
General and administration (4)
|
|
|
|
18,670
|
|
|
|
|
19,473
|
|
|
|
|
36,633
|
|
|
|
|
37,155
|
|
Equity in earnings of Frontline (5)
|
|
|
|
(1,351
|
)
|
|
|
|
(2,062
|
)
|
|
|
|
(2,221
|
)
|
|
|
|
(3,441
|
)
|
Amortization of intangible assets (6)
|
|
|
|
2,234
|
|
|
|
|
2,026
|
|
|
|
|
4,453
|
|
|
|
|
3,776
|
|
Special charges (7)
|
|
|
|
2,186
|
|
|
|
|
5,108
|
|
|
|
|
39,163
|
|
|
|
|
11,034
|
|
Total operating expenses
|
|
|
|
195,533
|
|
|
|
|
194,392
|
|
|
|
|
426,288
|
|
|
|
|
387,456
|
|
Operating income:
|
|
|
|
39,266
|
|
|
|
|
16,912
|
|
|
|
|
31,603
|
|
|
|
|
18,556
|
|
Other income (expense), net (8)
|
|
|
|
187
|
|
|
|
|
(104
|
)
|
|
|
|
529
|
|
|
|
|
(362
|
)
|
Interest expense (9)
|
|
|
|
(4,772
|
)
|
|
|
|
(4,807
|
)
|
|
|
|
(9,466
|
)
|
|
|
|
(9,392
|
)
|
Income before income tax
|
|
|
|
34,681
|
|
|
|
|
12,001
|
|
|
|
|
22,666
|
|
|
|
|
8,802
|
|
Income tax expense (benefit) (10)
|
|
|
|
4,071
|
|
|
|
|
(1,768
|
)
|
|
|
|
2,559
|
|
|
|
|
(1,942
|
)
|
Net income
|
|
|
|
30,610
|
|
|
|
|
13,769
|
|
|
|
|
20,107
|
|
|
|
|
10,744
|
|
Less: Loss attributable to noncontrolling interest (11)
|
|
|
|
(602
|
)
|
|
|
|
(403
|
)
|
|
|
|
(1,220
|
)
|
|
|
|
(877
|
)
|
Net income attributable to Mentor Graphics shareholders
|
|
|
$
|
31,212
|
|
|
|
$
|
14,172
|
|
|
|
$
|
21,327
|
|
|
|
$
|
11,621
|
|
Net income per share attributable to Mentor Graphics shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basica
|
|
|
$
|
0.27
|
|
|
|
$
|
0.13
|
|
|
|
$
|
0.18
|
|
|
|
$
|
0.12
|
|
Diluteda
|
|
|
$
|
0.26
|
|
|
|
$
|
0.13
|
|
|
|
$
|
0.18
|
|
|
|
$
|
0.11
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
116,584
|
|
|
|
|
113,868
|
|
|
|
|
116,296
|
|
|
|
|
114,396
|
|
Diluted
|
|
|
|
119,368
|
|
|
|
|
116,551
|
|
|
|
|
118,986
|
|
|
|
|
116,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
aWe have (decreased) increased the numerator of our basic
and diluted earnings per share calculation for the adjustment of the
noncontrolling interest with redemption feature to its calculated
redemption value, recorded directly to retained earnings, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(144
|
)
|
|
|
$
|
895
|
|
|
|
$
|
125
|
|
|
|
$
|
1,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refer to description of footnotes below.
|
|
|
MENTOR GRAPHICS CORPORATION
|
FOOTNOTES TO UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Listed below are the items included in net loss 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 July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
(1) Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
$
|
608
|
|
|
|
$
|
544
|
|
|
|
$
|
1,316
|
|
|
|
$
|
1,079
|
|
Amortization of purchased technology
|
|
|
|
1,794
|
|
|
|
|
1,841
|
|
|
|
|
3,652
|
|
|
|
|
3,202
|
|
|
|
|
$
|
2,402
|
|
|
|
$
|
2,385
|
|
|
|
$
|
4,968
|
|
|
|
$
|
4,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Research and development:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
$
|
3,800
|
|
|
|
$
|
3,311
|
|
|
|
$
|
8,118
|
|
|
|
$
|
6,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Marketing and selling:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
$
|
2,366
|
|
|
|
$
|
2,143
|
|
|
|
$
|
4,846
|
|
|
|
$
|
4,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) General and administration:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
$
|
3,812
|
|
|
|
$
|
3,162
|
|
|
|
$
|
6,584
|
|
|
|
$
|
5,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Equity in earnings of Frontline:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of other identified intangible assets
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) Amortization of intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of other identified intangible assets
|
|
|
$
|
2,234
|
|
|
|
$
|
2,026
|
|
|
|
$
|
4,453
|
|
|
|
$
|
3,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7) Special charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebalance, restructuring, certain litigation, and other costs
|
|
|
$
|
2,186
|
|
|
|
$
|
5,108
|
|
|
|
$
|
39,163
|
|
|
|
$
|
11,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (income) loss of unconsolidated entities
|
|
|
$
|
(14
|
)
|
|
|
$
|
55
|
|
|
|
$
|
(39
|
)
|
|
|
$
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) Interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of original issuance debt discount
|
|
|
$
|
1,633
|
|
|
|
$
|
1,521
|
|
|
|
$
|
3,237
|
|
|
|
$
|
3,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income tax effects
|
|
|
$
|
(6,018
|
)
|
|
|
$
|
(7,158
|
)
|
|
|
$
|
(15,300
|
)
|
|
|
$
|
(9,983
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) Loss attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets, equity-plan related
compensation, and income tax effects
|
|
|
$
|
(200
|
)
|
|
|
$
|
(204
|
)
|
|
|
$
|
(400
|
)
|
|
|
$
|
(404
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED RECONCILIATION OF NON-GAAP
ADJUSTMENTS
|
(In thousands, except earnings per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
GAAP net income attributable to Mentor Graphics shareholders
|
|
|
$
|
31,212
|
|
|
|
$
|
14,172
|
|
|
|
$
|
21,327
|
|
|
|
$
|
11,621
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
|
608
|
|
|
|
|
544
|
|
|
|
|
1,316
|
|
|
|
|
1,079
|
|
Research and development
|
|
|
|
3,800
|
|
|
|
|
3,311
|
|
|
|
|
8,118
|
|
|
|
|
6,552
|
|
Marketing and selling
|
|
|
|
2,366
|
|
|
|
|
2,143
|
|
|
|
|
4,846
|
|
|
|
|
4,321
|
|
General and administration
|
|
|
|
3,812
|
|
|
|
|
3,162
|
|
|
|
|
6,584
|
|
|
|
|
5,337
|
|
Acquisition - related items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of purchased assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (2)
|
|
|
|
1,794
|
|
|
|
|
1,841
|
|
|
|
|
3,652
|
|
|
|
|
3,202
|
|
Amortization of intangible assets (3)
|
|
|
|
2,234
|
|
|
|
|
2,026
|
|
|
|
|
4,453
|
|
|
|
|
3,892
|
|
Special charges (4)
|
|
|
|
2,186
|
|
|
|
|
5,108
|
|
|
|
|
39,163
|
|
|
|
|
11,034
|
|
Other income (expense), net (5)
|
|
|
|
(14
|
)
|
|
|
|
55
|
|
|
|
|
(39
|
)
|
|
|
|
68
|
|
Interest expense (6)
|
|
|
|
1,633
|
|
|
|
|
1,521
|
|
|
|
|
3,237
|
|
|
|
|
3,015
|
|
Non-GAAP income tax effects (7)
|
|
|
|
(6,018
|
)
|
|
|
|
(7,158
|
)
|
|
|
|
(15,300
|
)
|
|
|
|
(9,983
|
)
|
Noncontrolling interest (8)
|
|
|
|
(200
|
)
|
|
|
|
(204
|
)
|
|
|
|
(400
|
)
|
|
|
|
(404
|
)
|
Total of non-GAAP adjustments
|
|
|
|
12,201
|
|
|
|
|
12,349
|
|
|
|
|
55,630
|
|
|
|
|
28,113
|
|
Non-GAAP net income attributable to Mentor Graphics shareholders
|
|
|
$
|
43,413
|
|
|
|
$
|
26,521
|
|
|
|
$
|
76,957
|
|
|
|
$
|
39,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP and Non-GAAP weighted average shares (diluted)
|
|
|
|
119,368
|
|
|
|
|
116,551
|
|
|
|
|
118,986
|
|
|
|
|
116,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to Mentor Graphics shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP (diluted)
|
|
|
$
|
0.26
|
|
|
|
$
|
0.13
|
|
|
|
$
|
0.18
|
|
|
|
$
|
0.11
|
|
Noncontrolling interest adjustment (9)
|
|
|
|
-
|
|
|
|
|
(0.01
|
)
|
|
|
|
-
|
|
|
|
|
(0.01
|
)
|
Non-GAAP adjustments detailed above
|
|
|
|
0.10
|
|
|
|
|
0.11
|
|
|
|
|
0.47
|
|
|
|
|
0.24
|
|
Non-GAAP (diluted)
|
|
|
$
|
0.36
|
|
|
|
$
|
0.23
|
|
|
|
$
|
0.65
|
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
Equity plan-related compensation expense is the fair value of all
share-based payments to employees for stock options and restricted
stock units, and purchases made as a result of the employee stock
purchase plans.
|
(2)
|
|
|
Amount represents amortization of purchased technology resulting
from acquisitions. Purchased technology is generally amortized over
two to five years.
|
(3)
|
|
|
Other identified intangible assets are generally amortized to
operating expense over two to five years. Other identified
intangible assets include trade names, customer relationships, and
backlog resulting from acquisition transactions. The amount
presented for the six months ended July 31, 2014 also includes $116
of amortization of other identified intangible assets for Frontline,
which were fully amortized in the first quarter of fiscal 2015.
|
(4)
|
|
|
Three months ended July 31, 2015: Special charges consist of
(i) $944 for EVE litigation costs, (ii) $840 of costs incurred for
employee rebalances which include severance benefits, notice pay,
and outplacement services, and (iii) $402 in other adjustments.
|
|
|
|
Three months ended July 31, 2014: Special charges consist of
(i) $4,231 for EVE litigation costs, (ii) $575 of costs incurred for
employee rebalances which include severance benefits, notice pay,
and outplacement services, and (iii) $302 in other adjustments.
|
|
|
|
Six months ended July 31, 2015: Special charges consist of
(i) $25,435 for severance costs incurred for the voluntary early
retirement program, (ii) $10,703 of costs incurred for employee
rebalances which include severance benefits, notice pay, and
outplacement services, (iii) $2,519 for EVE litigation costs, and
(iv) $506 in other adjustments.
|
|
|
|
Six months ended July 31, 2014: Special charges consist of
(i) $8,189 for EVE litigation costs, (ii) $1,700 of costs incurred
for employee rebalances which include severance benefits, notice
pay, and outplacement services, and (iii) $1,145 in other
adjustments.
|
(5)
|
|
|
Amount represents (income) loss on an investment accounted for under
the equity method of accounting.
|
(6)
|
|
|
Amount represents the amortization of original issuance debt
discount.
|
(7)
|
|
|
Non-GAAP income tax expense adjustment reflects the application of
our assumed normalized effective 19% tax rate, instead of our GAAP
tax rate, to our non-GAAP pre-tax income for the three and six
months ended July 31, 2015 and a 17% tax rate for the three and six
months ended July 31, 2014.
|
(8)
|
|
|
Adjustment for the impact of amortization of intangible assets,
equity plan-related compensation, and income tax expense on
noncontrolling interest.
|
(9)
|
|
|
Non-GAAP EPS excludes from the numerator of our earnings per share
calculation the adjustment of the noncontrolling interest to the
calculated redemption value, recorded directly to retained earnings.
|
|
|
|
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED RECONCILIATION OF GAAP
FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
|
(In thousands, except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
GAAP gross profit
|
|
|
$
|
234,799
|
|
|
|
$
|
211,304
|
|
|
|
$
|
457,891
|
|
|
|
$
|
406,012
|
|
Reconciling items to non-GAAP gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
|
608
|
|
|
|
|
544
|
|
|
|
|
1,316
|
|
|
|
|
1,079
|
|
Amortization of purchased technology
|
|
|
|
1,794
|
|
|
|
|
1,841
|
|
|
|
|
3,652
|
|
|
|
|
3,202
|
|
Non-GAAP gross profit
|
|
|
$
|
237,201
|
|
|
|
$
|
213,689
|
|
|
|
$
|
462,859
|
|
|
|
$
|
410,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
GAAP gross profit as a percent of total revenues
|
|
|
|
83.5
|
%
|
|
|
|
81.2
|
%
|
|
|
|
82.8
|
%
|
|
|
|
79.2
|
%
|
Non-GAAP adjustments detailed above
|
|
|
|
0.9
|
%
|
|
|
|
0.9
|
%
|
|
|
|
0.9
|
%
|
|
|
|
0.9
|
%
|
Non-GAAP gross profit as a percent of total revenues
|
|
|
|
84.4
|
%
|
|
|
|
82.1
|
%
|
|
|
|
83.7
|
%
|
|
|
|
80.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
GAAP operating expenses
|
|
|
$
|
195,533
|
|
|
|
$
|
194,392
|
|
|
|
$
|
426,288
|
|
|
|
$
|
387,456
|
|
Reconciling items to non-GAAP operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
|
(9,978
|
)
|
|
|
|
(8,616
|
)
|
|
|
|
(19,548
|
)
|
|
|
|
(16,210
|
)
|
Amortization of other identified intangible assets
|
|
|
|
(2,234
|
)
|
|
|
|
(2,026
|
)
|
|
|
|
(4,453
|
)
|
|
|
|
(3,892
|
)
|
Special charges
|
|
|
|
(2,186
|
)
|
|
|
|
(5,108
|
)
|
|
|
|
(39,163
|
)
|
|
|
|
(11,034
|
)
|
Non-GAAP operating expenses
|
|
|
$
|
181,135
|
|
|
|
$
|
178,642
|
|
|
|
$
|
363,124
|
|
|
|
$
|
356,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
GAAP operating income
|
|
|
$
|
39,266
|
|
|
|
$
|
16,912
|
|
|
|
$
|
31,603
|
|
|
|
$
|
18,556
|
|
Reconciling items to non-GAAP operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation
|
|
|
|
10,586
|
|
|
|
|
9,160
|
|
|
|
|
20,864
|
|
|
|
|
17,289
|
|
Amortization of purchased technology
|
|
|
|
1,794
|
|
|
|
|
1,841
|
|
|
|
|
3,652
|
|
|
|
|
3,202
|
|
Amortization of other identified intangible assets
|
|
|
|
2,234
|
|
|
|
|
2,026
|
|
|
|
|
4,453
|
|
|
|
|
3,892
|
|
Special charges
|
|
|
|
2,186
|
|
|
|
|
5,108
|
|
|
|
|
39,163
|
|
|
|
|
11,034
|
|
Non-GAAP operating income
|
|
|
$
|
56,066
|
|
|
|
$
|
35,047
|
|
|
|
$
|
99,735
|
|
|
|
$
|
53,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
GAAP operating income as a percent of total revenues
|
|
|
|
14.0
|
%
|
|
|
|
6.5
|
%
|
|
|
|
5.7
|
%
|
|
|
|
3.6
|
%
|
Non-GAAP adjustments detailed above
|
|
|
|
5.9
|
%
|
|
|
|
7.0
|
%
|
|
|
|
12.3
|
%
|
|
|
|
6.9
|
%
|
Non-GAAP operating income as a percent of total revenues
|
|
|
|
19.9
|
%
|
|
|
|
13.5
|
%
|
|
|
|
18.0
|
%
|
|
|
|
10.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
GAAP other income (expense), net and interest expense
|
|
|
$
|
(4,585
|
)
|
|
|
$
|
(4,911
|
)
|
|
|
$
|
(8,937
|
)
|
|
|
$
|
(9,754
|
)
|
Reconciling items to non-GAAP other income (expense), net and
interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in (income) loss of unconsolidated entities
|
|
|
|
(14
|
)
|
|
|
|
55
|
|
|
|
|
(39
|
)
|
|
|
|
68
|
|
Amortization of original issuance debt discount
|
|
|
|
1,633
|
|
|
|
|
1,521
|
|
|
|
|
3,237
|
|
|
|
|
3,015
|
|
Non-GAAP other income (expense), net and interest expense
|
|
|
$
|
(2,966
|
)
|
|
|
$
|
(3,335
|
)
|
|
|
$
|
(5,739
|
)
|
|
|
$
|
(6,671
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
July 31,
|
|
|
January 31,
|
|
|
|
2015
|
|
|
2015
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
295,447
|
|
|
|
$
|
230,281
|
|
Trade accounts receivable, net
|
|
|
|
97,839
|
|
|
|
|
208,996
|
|
Term receivables, short-term
|
|
|
|
345,958
|
|
|
|
|
337,626
|
|
Prepaid expenses and other
|
|
|
|
67,726
|
|
|
|
|
65,853
|
|
Deferred income taxes
|
|
|
|
24,390
|
|
|
|
|
23,490
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
831,360
|
|
|
|
|
866,246
|
|
Property, plant, and equipment, net
|
|
|
|
170,898
|
|
|
|
|
170,737
|
|
Term receivables, long-term
|
|
|
|
266,092
|
|
|
|
|
301,862
|
|
Goodwill and intangible assets, net
|
|
|
|
646,064
|
|
|
|
|
645,506
|
|
Other assets
|
|
|
|
64,516
|
|
|
|
|
64,671
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
$
|
1,978,930
|
|
|
|
$
|
2,049,022
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
$
|
1,844
|
|
|
|
$
|
7,228
|
|
Notes payable, current portion
|
|
|
|
233,637
|
|
|
|
|
-
|
|
Accounts payable
|
|
|
|
10,682
|
|
|
|
|
12,687
|
|
Income taxes payable
|
|
|
|
223
|
|
|
|
|
5,994
|
|
Accrued payroll and related liabilities
|
|
|
|
48,738
|
|
|
|
|
108,553
|
|
Accrued and other liabilities
|
|
|
|
35,678
|
|
|
|
|
47,728
|
|
Deferred revenue
|
|
|
|
226,098
|
|
|
|
|
259,340
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
556,900
|
|
|
|
|
441,530
|
|
Long-term notes payable
|
|
|
|
3,188
|
|
|
|
|
230,400
|
|
Deferred revenue, long-term
|
|
|
|
18,674
|
|
|
|
|
21,251
|
|
Other long-term liabilities
|
|
|
|
70,206
|
|
|
|
|
69,615
|
|
Total liabilities
|
|
|
|
648,968
|
|
|
|
|
762,796
|
|
|
|
|
|
|
|
|
Convertible notes
|
|
|
|
19,363
|
|
|
|
|
-
|
|
Noncontrolling interest with redemption feature
|
|
|
|
12,020
|
|
|
|
|
13,372
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
|
|
853,455
|
|
|
|
|
832,612
|
|
Retained earnings
|
|
|
|
460,581
|
|
|
|
|
451,901
|
|
Accumulated other comprehensive loss
|
|
|
|
(15,734
|
)
|
|
|
|
(11,887
|
)
|
Noncontrolling interest
|
|
|
|
277
|
|
|
|
|
228
|
|
Total stockholders' equity
|
|
|
|
1,298,579
|
|
|
|
|
1,272,854
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
1,978,930
|
|
|
|
$
|
2,049,022
|
|
|
|
|
|
|
|
|
|
MENTOR GRAPHICS CORPORATION
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL INFORMATION
|
(In thousands, except days sales outstanding)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Six Months Ended July 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
30,610
|
|
|
|
$
|
13,769
|
|
|
|
$
|
20,107
|
|
|
|
$
|
10,744
|
|
Depreciation and amortization
|
|
|
|
15,119
|
|
|
|
|
14,512
|
|
|
|
|
30,160
|
|
|
|
|
28,249
|
|
Other adjustments to reconcile:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
|
|
|
|
13,231
|
|
|
|
|
11,298
|
|
|
|
|
21,367
|
|
|
|
|
17,820
|
|
Changes in working capital
|
|
|
|
(10,104
|
)
|
|
|
|
9,944
|
|
|
|
|
23,173
|
|
|
|
|
(18,251
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
48,856
|
|
|
|
|
49,523
|
|
|
|
|
94,807
|
|
|
|
|
38,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
(10,240
|
)
|
|
|
|
(37,511
|
)
|
|
|
|
(22,168
|
)
|
|
|
|
(85,091
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
8,196
|
|
|
|
|
(13,443
|
)
|
|
|
|
(6,582
|
)
|
|
|
|
(72,736
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(1,138
|
)
|
|
|
|
(33
|
)
|
|
|
|
(891
|
)
|
|
|
|
304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
|
45,674
|
|
|
|
|
(1,464
|
)
|
|
|
|
65,166
|
|
|
|
|
(118,961
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
249,773
|
|
|
|
|
175,825
|
|
|
|
|
230,281
|
|
|
|
|
293,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
295,447
|
|
|
|
$
|
174,361
|
|
|
|
$
|
295,447
|
|
|
|
$
|
174,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net
|
|
|
$
|
10,240
|
|
|
|
$
|
7,145
|
|
|
|
$
|
14,968
|
|
|
|
$
|
13,315
|
|
Days sales outstanding
|
|
|
|
142
|
|
|
|
|
147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Q3'16 and fiscal year 2016.
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
Estimated
|
|
|
|
Q3'16
|
|
|
FY'16
|
Diluted GAAP net income per share
|
|
|
$
|
0.17
|
|
|
|
$
|
1.25
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
Amortization of purchased technology (1)
|
|
|
|
0.01
|
|
|
|
|
0.06
|
|
Amortization of other identified intangible assets (2)
|
|
|
|
0.02
|
|
|
|
|
0.07
|
|
Equity plan-related compensation (3)
|
|
|
|
0.08
|
|
|
|
|
0.34
|
|
Special charges (4)
|
|
|
|
-
|
|
|
|
|
0.33
|
|
Other income (expense), net and interest expense (5)
|
|
|
|
0.01
|
|
|
|
|
0.05
|
|
Non-GAAP income tax effects (6)
|
|
|
|
(0.02
|
)
|
|
|
|
(0.19
|
)
|
Noncontrolling interest (7)
|
|
|
|
-
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
Diluted non-GAAP net income per share
|
|
|
$
|
0.27
|
|
|
|
$
|
1.90
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
Excludes amortization of purchased technology resulting from
acquisitions. Purchased technology is generally amortized over two
to five years.
|
(2)
|
|
|
Excludes amortization of other identified intangible assets
including trade names, customer relationships, and backlog resulting
from acquisition transactions. Other identified intangible assets
are generally amortized over two to five years.
|
(3)
|
|
|
Excludes equity plan-related compensation expense for the fair value
of all share-based payments to employees for stock options and
restricted stock units, and purchases made as a result of the
employee stock purchase plans.
|
(4)
|
|
|
Excludes special charges consisting primarily of costs incurred for
the voluntary early retirement program, employee rebalances, which
includes severance benefits, notice pay, and outplacement services,
and certain litigation costs. Full year adjustment represents the
impact of actual special charges for the six months ended July 31,
2015 as we do not provide guidance for special charges.
|
(5)
|
|
|
Excludes amortization of original issuance debt discount, and income
(loss) from an investment accounted for under the equity method of
accounting.
|
(6)
|
|
|
Non-GAAP income tax expense adjustment reflects the application of
our assumed normalized effective 19% tax rate, instead of our GAAP
tax rate, to our non-GAAP pre-tax income.
|
(7)
|
|
|
Adjustment for the impact of amortization of intangible assets,
equity plan-related compensation, and income tax expense on
noncontrolling interest.
|
|
|
|
|
|
|
|
|
|
|
|
MENTOR GRAPHICS CORPORATION
|
|
|
|
UNAUDITED SUPPLEMENTAL BOOKINGS AND
REVENUE INFORMATION
|
|
|
|
(Rounded to nearest 5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Product Category Bookings (a)
|
|
|
Q1
|
|
|
Q2
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
IC DESIGN TO SILICON
|
|
|
30%
|
|
|
40%
|
|
|
35%
|
|
|
20%
|
|
|
25%
|
|
|
45%
|
|
|
55%
|
|
|
45%
|
|
|
60%
|
|
|
35%
|
|
|
40%
|
|
|
30%
|
|
|
40%
|
SCALABLE VERIFICATION
|
|
|
25%
|
|
|
30%
|
|
|
30%
|
|
|
25%
|
|
|
25%
|
|
|
20%
|
|
|
20%
|
|
|
20%
|
|
|
15%
|
|
|
45%
|
|
|
25%
|
|
|
30%
|
|
|
30%
|
INTEGRATED SYSTEMS DESIGN
|
|
|
15%
|
|
|
15%
|
|
|
15%
|
|
|
30%
|
|
|
25%
|
|
|
15%
|
|
|
10%
|
|
|
15%
|
|
|
10%
|
|
|
10%
|
|
|
20%
|
|
|
30%
|
|
|
20%
|
NEW & EMERGING MARKETS
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
10%
|
|
|
15%
|
|
|
10%
|
|
|
5%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
SERVICES / OTHER
|
|
|
20%
|
|
|
10%
|
|
|
15%
|
|
|
15%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
5%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
Total
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Product Category Revenue (b)
|
|
|
Q1
|
|
|
Q2
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
IC DESIGN TO SILICON
|
|
|
35%
|
|
|
40%
|
|
|
40%
|
|
|
25%
|
|
|
30%
|
|
|
35%
|
|
|
55%
|
|
|
40%
|
|
|
35%
|
|
|
50%
|
|
|
35%
|
|
|
35%
|
|
|
40%
|
SCALABLE VERIFICATION
|
|
|
30%
|
|
|
25%
|
|
|
25%
|
|
|
35%
|
|
|
25%
|
|
|
20%
|
|
|
20%
|
|
|
25%
|
|
|
20%
|
|
|
20%
|
|
|
25%
|
|
|
30%
|
|
|
25%
|
INTEGRATED SYSTEMS DESIGN
|
|
|
20%
|
|
|
20%
|
|
|
20%
|
|
|
25%
|
|
|
25%
|
|
|
25%
|
|
|
15%
|
|
|
20%
|
|
|
30%
|
|
|
20%
|
|
|
25%
|
|
|
25%
|
|
|
20%
|
NEW & EMERGING MARKETS
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
|
|
10%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
SERVICES / OTHER
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
5%
|
|
|
10%
|
|
|
10%
|
|
|
5%
|
|
|
10%
|
|
|
5%
|
|
|
10%
|
Total
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Bookings by Geography
|
|
|
Q1
|
|
|
Q2
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
North America
|
|
|
35%
|
|
|
35%
|
|
|
35%
|
|
|
50%
|
|
|
40%
|
|
|
50%
|
|
|
40%
|
|
|
45%
|
|
|
35%
|
|
|
55%
|
|
|
60%
|
|
|
40%
|
|
|
50%
|
Europe
|
|
|
25%
|
|
|
30%
|
|
|
30%
|
|
|
15%
|
|
|
25%
|
|
|
15%
|
|
|
15%
|
|
|
15%
|
|
|
10%
|
|
|
15%
|
|
|
15%
|
|
|
30%
|
|
|
20%
|
Japan
|
|
|
15%
|
|
|
5%
|
|
|
5%
|
|
|
15%
|
|
|
5%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
10%
|
|
|
5%
|
Pac Rim
|
|
|
25%
|
|
|
30%
|
|
|
30%
|
|
|
20%
|
|
|
30%
|
|
|
25%
|
|
|
40%
|
|
|
35%
|
|
|
45%
|
|
|
25%
|
|
|
20%
|
|
|
20%
|
|
|
25%
|
Total
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Revenue by Geography
|
|
|
Q1
|
|
|
Q2
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
North America
|
|
|
50%
|
|
|
40%
|
|
|
45%
|
|
|
50%
|
|
|
45%
|
|
|
50%
|
|
|
40%
|
|
|
45%
|
|
|
45%
|
|
|
40%
|
|
|
50%
|
|
|
45%
|
|
|
45%
|
Europe
|
|
|
15%
|
|
|
25%
|
|
|
20%
|
|
|
25%
|
|
|
20%
|
|
|
20%
|
|
|
15%
|
|
|
20%
|
|
|
20%
|
|
|
20%
|
|
|
20%
|
|
|
20%
|
|
|
20%
|
Japan
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
10%
|
|
|
5%
|
|
|
10%
|
|
|
15%
|
|
|
10%
|
Pac Rim
|
|
|
25%
|
|
|
30%
|
|
|
30%
|
|
|
15%
|
|
|
25%
|
|
|
20%
|
|
|
40%
|
|
|
30%
|
|
|
25%
|
|
|
35%
|
|
|
20%
|
|
|
20%
|
|
|
25%
|
Total
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Bookings by Business Model (c)
|
|
|
Q1
|
|
|
Q2
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
Perpetual
|
|
|
20%
|
|
|
15%
|
|
|
15%
|
|
|
35%
|
|
|
20%
|
|
|
15%
|
|
|
10%
|
|
|
15%
|
|
|
15%
|
|
|
50%
|
|
|
20%
|
|
|
10%
|
|
|
25%
|
Term Ratable
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
20%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
10%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
|
|
5%
|
Term Up Front
|
|
|
70%
|
|
|
75%
|
|
|
75%
|
|
|
45%
|
|
|
70%
|
|
|
80%
|
|
|
85%
|
|
|
75%
|
|
|
75%
|
|
|
45%
|
|
|
75%
|
|
|
85%
|
|
|
70%
|
Total
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Revenue by Business Model (c)
|
|
|
Q1
|
|
|
Q2
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Year
|
Perpetual
|
|
|
15%
|
|
|
15%
|
|
|
15%
|
|
|
35%
|
|
|
30%
|
|
|
15%
|
|
|
10%
|
|
|
20%
|
|
|
20%
|
|
|
25%
|
|
|
20%
|
|
|
20%
|
|
|
20%
|
Term Ratable
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
10%
|
|
|
10%
|
|
|
5%
|
|
|
5%
|
|
|
10%
|
Term Up Front
|
|
|
75%
|
|
|
75%
|
|
|
75%
|
|
|
55%
|
|
|
60%
|
|
|
75%
|
|
|
85%
|
|
|
75%
|
|
|
70%
|
|
|
65%
|
|
|
75%
|
|
|
75%
|
|
|
70%
|
Total
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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).
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150820006124/en/
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|