Mentor Graphics Corporation (NASDAQ:MENT) today announced
financial results for the company’s fiscal first quarter ended
April 30, 2016. The company reported revenues of $228 million,
non-GAAP earnings per share of $0.02, and a GAAP loss per share of
$0.12.
“Mentor modestly exceeded guidance for first quarter, although
weakness in semiconductor-related activity continued,” said Walden
C. Rhines, chairman and CEO of Mentor Graphics. “Bookings and
revenue from automotive customers set a first quarter all-time
record. Mentor’s customer breadth and our range of system design
products and services continue to be an advantage.”
Mentor announced three new software applications for the Veloce®
emulation platform to overcome critical challenges in complex
system-on-chip (SoC) and system designs. In other news, several
Mentor tools and flows have been certified and optimized for
Samsung’s 10 nm FinFET process, and for TSMC’s 7 nm design starts
and 10 nm production. Mentor also announced a design, layout and
verification solution, targeting mobile and consumer products, to
support TSMC’s Integrated Fan-Out (InFO) wafer-level packaging
technology.
During the quarter the company announced the Open Manufacturing
Language (OML) for printed circuit board assembly and the Valor®
Internet of Manufacturing solution, a hardware device with embedded
software for live data collection from shop-floor machines and
processes. The company also launched its newest HyperLynx® product
release, which integrates signal and power integrity analysis,
3D-electromagnetic solving, and fast rule checking into a single
unified environment.
“We have a strong portfolio of system companies renewing in
fiscal 2017,” said Gregory K. Hinckley, president of Mentor
Graphics. “We are increasing our second quarter revenue guidance
and continue our rigorous attention to expense control.”
Outlook
For the second quarter of fiscal 2017, the company expects
revenues of about $245 million, non-GAAP earnings per share of
about $0.09 and GAAP earnings per share of approximately
break-even. For the full year fiscal 2017, the company affirms
revenues of about $1.215 billion, non-GAAP earnings per share of
about $1.68, and GAAP earnings per share of approximately $1.19.
Cash flow from operations in fiscal 2017 is expected to be
approximately $200 million.
Dividend
The company announced a quarterly dividend of $0.055 per share.
The dividend is payable on June 30, 2016, to shareholders of record
at the close of business on June 10, 2016.
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 revenues, 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 amount 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 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 GAAP tax rate for the three months ended April 30,
2016 is 12% after consideration of period specific items. Without
period specific items of $0.9 million, our GAAP tax rate is 18%.
Our full fiscal year 2017 GAAP tax rate, inclusive of period
specific items recognized through April 30, 2016, is projected to
be 19%.
- Our agreement with the former owners of
noncontrolling interests in one of our subsidiaries gave 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. The amount for the three months
ended April 30, 2015 reflects our adjustment to redemption value
for this time period. In September 2015 we acquired the remaining
noncontrolling interest in the subsidiary. 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, employee stock purchase plan shares, and
convertible debt 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, advances, 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 of approximately $1.18 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, Valor, and HyperLynx 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) continued economic weakness in the European Union,
China, Japan or other countries, and the adverse impact of such
weakness on the company’s customers in those regions; (ii) the
company’s ability to successfully update existing hardware and
software products and offer new products and services that compete
in the highly competitive EDA industry, including the risk of
obsolescence for our hardware products; (iii) effects of customer
mergers, divestitures or shutdowns of business units or divisions,
customer seasonal purchasing patterns and the timing of significant
orders which may negatively or positively impact the company’s
quarterly results of operations; (iv) effects of the volatility of
foreign currency fluctuations on the company’s business and
operating results; (v) 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, or
result in loss of business; (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
CORPORATIONUNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands,
except earnings per share data)
Three Months Ended April
30, 2016 2015 Revenues: System and
software $ 106,704 $ 155,931 Service and support 120,935
116,212 Total revenues 227,639
272,143
Cost of revenues: (1) System and
software 8,332 13,624 Service and support 32,748 33,569
Amortization of purchased technology 1,785
1,858 Total cost of revenues 42,865
49,051 Gross profit 184,774 223,092
Operating expenses: Research and development (2)
91,136 89,515 Marketing and selling (3) 84,259 84,951 General and
administration (4) 17,535 17,963 Equity in earnings of Frontline
(636 ) (870 ) Amortization of intangible assets (5) 1,554 2,219
Special charges (6) 2,991 36,977 Total
operating expenses 196,839 230,755
Operating loss: (12,065 ) (7,663 ) Other income, net (7) 889
342 Interest expense (8) (4,138 ) (4,694 ) Loss
before income tax (15,314 ) (12,015 ) Income tax benefit (9)
(1,878 ) (1,512 ) Net loss (13,436 ) (10,503 ) Less: Loss
attributable to noncontrolling interest (10) -
(618 )
Net loss attributable to Mentor Graphics
shareholders
$ (13,436 ) $ (9,885 )
Net loss per share attributable to Mentor
Graphics shareholders:
Basica $ (0.12 ) $ (0.08 ) Diluteda $ (0.12 ) $ (0.08 ) Weighted
average number of shares outstanding: Basic 109,085
116,003 Diluted 109,085 116,003
a We increased the numerator of our basic
and diluted earnings per share calculation by $269 for the
adjustment of the noncontrolling interest with redemption feature
to its calculated redemption value, recorded directly to retained
earnings, for the quarter ended April 30, 2015.
Refer to following table for a description
of footnotes.
MENTOR GRAPHICS
CORPORATIONFOOTNOTES TO UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(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 April 30,
2016 2015 (1) Cost of revenues: Equity
plan-related compensation $ 711 $ 708 Amortization of purchased
technology 1,785 1,858 $ 2,496 $
2,566
(2) Research and development: Equity
plan-related compensation $ 4,323 $ 4,318
(3) Marketing and selling: Equity plan-related compensation
$ 2,855 $ 2,480
(4) General and
administration: Equity plan-related compensation $ 2,612
$ 2,772
(5) Amortization of intangible assets:
Amortization of other identified intangible assets $ 1,554 $
2,219
(6) Special charges: Rebalance,
restructuring, certain litigation, and other costs $ 2,991 $
36,977
(7) Other income, net: Net (income)
loss of unconsolidated entities $ 2 $ (25 )
(8)
Interest expense: Amortization of original issuance debt
discount $ 1,723 $ 1,604
(9) Income tax
benefit: Non-GAAP income tax effects $ (2,494 ) $ (9,282 )
(10) Loss attributable to noncontrolling interest:
Amortization of intangible assets,
equity-plan related compensation, and income tax effects
$ - $ (200 )
MENTOR GRAPHICS
CORPORATIONUNAUDITED RECONCILIATION OF NON-GAAP
ADJUSTMENTS(In thousands, except earnings per share
data)
Three Months Ended April
30, 2016 2015 GAAP net loss attributable
to Mentor Graphics shareholders $ (13,436 ) $ (9,885 ) Non-GAAP
adjustments: Equity plan-related compensation: (1) Cost of revenues
711 708 Research and development 4,323 4,318 Marketing and selling
2,855 2,480 General and administration 2,612 2,772 Acquisition -
related items: Amortization of purchased assets Cost of revenues
(2) 1,785 1,858 Amortization of intangible assets (3) 1,554 2,219
Special charges (4) 2,991 36,977 Other income, net (5) 2 (25 )
Interest expense (6) 1,723 1,604 Non-GAAP income tax effects (7)
(2,494 ) (9,282 ) Noncontrolling interest (8) -
(200 ) Total of non-GAAP adjustments 16,062
43,429 Non-GAAP net income attributable to Mentor
Graphics shareholders $ 2,626 $ 33,544 GAAP
weighted average shares (diluted) 109,085 116,003 Non-GAAP
adjustment 1,950 4,753 Non-GAAP
weighted average shares (diluted) 111,035
120,756 Net loss per share attributable to Mentor
Graphics shareholders: GAAP (diluted) $ (0.12 ) $ (0.08 ) Non-GAAP
adjustments detailed above 0.14 0.36
Non-GAAP (diluted) $ 0.02 $ 0.28
(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.
(4) Three months ended April 30,
2016: Special charges consist of (i) $2,088 of costs incurred for
employee rebalances which include severance benefits and notice
pay, (ii) $807 for EVE litigation costs, and (iii) $96 in other
adjustments.
Three months ended April 30, 2015: Special
charges consist of (i) $25,435 of severance costs incurred for the
voluntary early retirement program, (ii) $9,863 of costs incurred
for employee rebalances which include severance benefits and notice
pay, (iii) $1,575 for EVE litigation costs, and (iv) $104 in other
adjustments.
(5) Amount represents (income) loss
for 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.
(8) Adjustment for the impact of
amortization of intangible assets, equity plan-related
compensation, and income tax expense on noncontrolling
interest.
MENTOR GRAPHICS
CORPORATIONUNAUDITED RECONCILIATION OF GAAP FINANCIAL
MEASURES TO NON-GAAP FINANCIAL MEASURES(In thousands,
except percentages)
Three months ended April
30, 2016 2015 GAAP gross profit $ 184,774
$ 223,092 Reconciling items to non-GAAP gross profit: Equity
plan-related compensation 711 708 Amortization of purchased
technology 1,785 1,858 Non-GAAP gross
profit $ 187,270 $ 225,658
Three
months ended April 30, 2016 2015 GAAP gross
profit as a percent of total revenues 81.2 % 82.0 % Non-GAAP
adjustments detailed above 1.1 % 0.9 % Non-GAAP gross
profit as a percent of total revenues 82.3 % 82.9 %
Three months ended April 30, 2016
2015 GAAP operating expenses $ 196,839 $ 230,755 Reconciling
items to non-GAAP operating expenses: Equity plan-related
compensation (9,790 ) (9,570 ) Amortization of other identified
intangible assets (1,554 ) (2,219 ) Special charges (2,991 )
(36,977 ) Non-GAAP operating expenses $ 182,504 $
181,989
Three months ended April 30,
2016 2015 GAAP operating loss $ (12,065 ) $ (7,663 )
Reconciling items to non-GAAP operating income: Equity plan-related
compensation 10,501 10,278 Amortization of purchased technology
1,785 1,858 Amortization of other identified intangible assets
1,554 2,219 Special charges 2,991 36,977
Non-GAAP operating income $ 4,766 $ 43,669
Three months ended April 30, 2016
2015 GAAP operating loss as a percent of total revenues (5.3
%) (2.8 %) Non-GAAP adjustments detailed above 7.4 %
18.8 % Non-GAAP operating income as a percent of total revenues
2.1 % 16.0 %
Three months ended
April 30, 2016 2015 GAAP other income, net and
interest expense $ (3,249 ) $ (4,352 )
Reconciling items to non-GAAP other income
(expense), net and interest expense:
Equity in earnings of unconsolidated entities 2 (25 ) Amortization
of original issuance debt discount 1,723 1,604
Non-GAAP other income, net and interest expense $ (1,524 ) $
(2,773 )
MENTOR GRAPHICS
CORPORATIONUNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands)
April 30,2016
January 31,2016 Assets
Current assets: Cash and cash equivalents $ 216,325 $
334,826 Trade accounts receivable, net 87,423 176,021 Term
receivables, short-term 323,755 317,188 Prepaid expenses and other
81,143 70,432 Total current
assets 708,646 898,467
Property, plant, and equipment, net
184,045 182,092
Term receivables, long-term 253,636 268,657
Goodwill and intangible assets, net 642,313 644,288
Other
assets 72,827 70,860 Total
assets $ 1,861,467 $ 2,064,364
Liabilities
and Stockholders' Equity Current liabilities: Short-term
borrowings $ 30,686 $ 33,449 Accounts payable 8,117 16,740 Income
taxes payable 1,578 3,966 Accrued payroll and related liabilities
50,766 73,371 Accrued and other liabilities 34,413 37,059 Deferred
revenue 241,957 258,725 Total
current liabilities 367,517 423,310
Long-term notes payable
242,037 240,076
Deferred revenue, long-term 16,922 18,303
Other long-term liabilities 50,460
62,246 Total liabilities 676,936
743,935
Stockholders' equity: Common
stock 683,402 818,683 Retained earnings 513,710 522,846 Accumulated
other comprehensive loss (12,581 ) (21,100 ) Total
stockholders' equity 1,184,531 1,320,429
Total liabilities and stockholders' equity $
1,861,467 $ 2,064,364
MENTOR GRAPHICS
CORPORATIONUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS AND SUPPLEMENTAL INFORMATION(In thousands,
except days sales outstanding)
Three Months Ended April
30, 2016 2015 Operating activities
Net loss $ (13,436 ) $ (10,503 ) Depreciation and amortization
14,794 15,041 Other adjustments to reconcile: Operating cash 7,910
8,136 Changes in working capital 35,562 33,277
Net cash provided by operating activities 44,830
45,951
Investing activities Net cash used in
investing activities (10,202 ) (11,928 )
Financing
activities Net cash used in financing activities (155,980 )
(14,778 ) Effect of exchange rate changes on cash and cash
equivalents 2,851 247 Net change
in cash and cash equivalents (118,501 ) 19,492 Cash and cash
equivalents at beginning of period 334,826
230,281 Cash and cash equivalents at end of period $
216,325 $ 249,773
Other
data: Capital expenditures, net $ 10,202 $ 4,728
Days sales outstanding 163 145
MENTOR GRAPHICS
CORPORATIONUNAUDITED RECONCILIATION OF GAAP TO
NON-GAAPEARNINGS 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 Q2'17 and fiscal year 2017.
EstimatedQ2'17
EstimatedFY'17 Diluted GAAP net income (loss)
per share $ - $ 1.19 Non-GAAP adjustments: Amortization of
purchased technology (1) 0.02 0.06 Amortization of other identified
intangible assets (2) 0.01 0.05 Equity plan-related compensation
(3) 0.10 0.38 Special charges (4) - 0.03 Other income (expense),
net and interest expense (5) 0.02 0.06 Non-GAAP income tax effects
(6) (0.06 ) (0.09 ) Diluted non-GAAP net income per
share $ 0.09 $ 1.68
(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
primarily consisting of costs incurred for employee rebalances,
which includes severance benefits and notice pay, and certain
litigation costs. Full year adjustment represents the impact of
actual special charges for the three months ended April 30, 2016 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.
MENTOR GRAPHICS
CORPORATIONUNAUDITED SUPPLEMENTAL BOOKINGS AND REVENUE
INFORMATION(Rounded to nearest 5%)
2017 2016 2015 Product
Category Bookings (a) Q1 Q1 Q2
Q3 Q4 Year Q1
Q2 Q3 Q4
Year IC DESIGN TO SILICON 30% 30% 40% 40%
50% 45% 20% 25% 45% 55%
45% SCALABLE VERIFICATION 15% 25% 30% 15% 15% 20% 25% 25% 20% 20%
20% INTEGRATED SYSTEMS DESIGN 25% 15% 15% 20% 15% 15% 30% 25% 15%
10% 15% NEW & EMERGING MARKETS 5% 10% 5% 10% 10% 10% 10% 15%
10% 5% 10% SERVICES / OTHER 25% 20% 10% 15%
10% 10% 15% 10% 10% 10% 10%
Total 100% 100% 100% 100% 100%
100% 100% 100% 100% 100% 100%
2017 2016 2015 Product Category
Revenue (b) Q1 Q1 Q2
Q3 Q4 Year Q1
Q2 Q3 Q4 Year IC
DESIGN TO SILICON 30% 35% 40% 40% 50% 40% 25% 30% 35% 55% 40%
SCALABLE VERIFICATION 20% 30% 25% 25% 15% 25% 35% 25% 20% 20% 25%
INTEGRATED SYSTEMS DESIGN 25% 20% 20% 20% 20% 20% 25% 25% 25% 15%
20% NEW & EMERGING MARKETS 10% 5% 5% 5% 5% 5% 5% 10% 10% 5% 5%
SERVICES / OTHER 15% 10% 10% 10% 10%
10% 10% 10% 10% 5% 10%
Total
100% 100% 100% 100% 100% 100% 100%
100% 100% 100% 100%
2017 2016 2015 Bookings by Geography
Q1 Q1 Q2 Q3
Q4 Year Q1 Q2
Q3 Q4 Year North America 30% 35%
35% 45% 40% 40% 50% 40% 50% 40% 45% Europe 25% 25% 30% 20% 20% 25%
15% 25% 15% 15% 15% Japan 30% 15% 5% 10% 5% 5% 15% 5% 10% 5% 5% Pac
Rim 15% 25% 30% 25% 35% 30% 20%
30% 25% 40% 35%
Total 100% 100%
100% 100% 100% 100% 100% 100%
100% 100% 100%
2017 2016
2015 Revenue by Geography Q1 Q1
Q2 Q3 Q4 Year
Q1 Q2 Q3 Q4
Year North America 40% 50% 40% 40% 40% 45% 50% 45% 50% 40%
45% Europe 25% 15% 25% 25% 20% 20% 25% 20% 20% 15% 20% Japan 15%
10% 5% 10% 5% 5% 10% 10% 10% 5% 5% Pac Rim 20% 25% 30%
25% 35% 30% 15% 25% 20%
40% 30%
Total 100% 100% 100% 100%
100% 100% 100% 100% 100% 100%
100%
2017 2016 2015
Bookings by Business Model (c) Q1 Q1
Q2 Q3 Q4 Year
Q1 Q2 Q3 Q4
Year Perpetual 20% 20% 15% 15% 10% 15% 35% 20% 15% 10% 15%
Term Ratable 15% 10% 10% 10% 10% 10% 20% 10% 5% 5% 10% Term Up
Front 65% 70% 75% 75% 80% 75% 45%
70% 80% 85% 75%
Total 100% 100%
100% 100% 100% 100% 100% 100%
100% 100% 100%
2017
2016 2015 Revenue by Business Model (c)
Q1 Q1 Q2 Q3
Q4 Year Q1 Q2
Q3 Q4 Year Perpetual 20% 15% 15%
10% 15% 15% 35% 30% 15% 10% 20% Term Ratable 15% 10% 10% 10% 5% 10%
10% 10% 10% 5% 5% Term Up Front 65% 75% 75% 80%
80% 75% 55% 60% 75% 85%
75%
Total 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/20160519006529/en/
Mentor Graphics CorporationJoe Reinhart, 503-685-1462Vice
President, Investor Relations and Corporate
Developmentjoe_reinhart@mentor.com
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