Mentor Graphics Reports Fiscal Third Quarter Results
|
MENTOR GRAPHICS CORPORATION
|
|
UNAUDITED RECONCILIATION OF
NON-GAAP ADJUSTMENTS
|
|
(In thousands, except earnings per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
October 31, 2008
|
|
October 31, 2007
|
|
October 31, 2008
|
|
October 31, 2007
|
|
GAAP net loss
|
|
$
|
(78,244
|
)
|
|
$
|
(8,796
|
)
|
|
$
|
(120,339
|
)
|
|
$
|
(6,123
|
)
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Equity plan-related compensation: (1)
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
351
|
|
|
|
281
|
|
|
|
1,102
|
|
|
|
642
|
|
|
Research and development
|
|
|
2,979
|
|
|
|
2,240
|
|
|
|
8,830
|
|
|
|
5,179
|
|
|
Marketing and selling
|
|
|
2,150
|
|
|
|
1,557
|
|
|
|
6,371
|
|
|
|
3,678
|
|
|
General and administration, and other
|
|
|
1,518
|
|
|
|
892
|
|
|
|
4,830
|
|
|
|
2,987
|
|
|
System and software cost of revenues (2)
|
|
|
-
|
|
|
|
-
|
|
|
|
103
|
|
|
|
-
|
|
|
Acquisition - related items:
|
|
|
|
|
|
|
|
|
|
Amortization of purchased and other identified intangible assets
|
|
|
|
|
|
|
|
|
|
Cost of revenues (3)
|
|
|
3,810
|
|
|
|
2,139
|
|
|
|
9,040
|
|
|
|
7,513
|
|
|
Amortization of intangible assets (4)
|
|
|
3,129
|
|
|
|
2,704
|
|
|
|
8,099
|
|
|
|
6,361
|
|
|
In-process R&D (5)
|
|
|
6,790
|
|
|
|
-
|
|
|
|
22,075
|
|
|
|
4,100
|
|
|
Special charges (6)
|
|
|
2,214
|
|
|
|
1,115
|
|
|
|
15,099
|
|
|
|
5,160
|
|
|
Other income, net (7)
|
|
|
445
|
|
|
|
-
|
|
|
|
1,088
|
|
|
|
-
|
|
|
Interest expense (8)
|
|
|
-
|
|
|
|
288
|
|
|
|
-
|
|
|
|
452
|
|
|
Income tax effects (9)
|
|
|
51,140
|
|
|
|
(2,491
|
)
|
|
|
29,882
|
|
|
|
(5,464
|
)
|
|
Total of non-GAAP adjustments
|
|
|
74,526
|
|
|
|
8,725
|
|
|
|
106,519
|
|
|
|
30,608
|
|
|
Non-GAAP net income (loss)
|
|
$
|
(3,718
|
)
|
|
$
|
(71
|
)
|
|
$
|
(13,820
|
)
|
|
$
|
24,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted average shares (diluted)
|
|
|
92,354
|
|
|
|
89,609
|
|
|
|
91,484
|
|
|
|
87,456
|
|
|
Non-GAAP adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,293
|
|
|
Non-GAAP weighted average shares (diluted)
|
|
|
92,354
|
|
|
|
89,609
|
|
|
|
91,484
|
|
|
|
89,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share (diluted)
|
|
$
|
(0.85
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(1.32
|
)
|
|
$
|
(0.07
|
)
|
|
Non-GAAP adjustments detailed above
|
|
|
0.81
|
|
|
|
0.10
|
|
|
|
1.17
|
|
|
|
0.34
|
|
|
Non-GAAP net income (loss) per share (diluted)
|
|
$
|
(0.04
|
)
|
|
$
|
-
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Equity plan-related compensation expense recognized in accordance
with SFAS 123R.
|
|
(2)
|
|
Amount represents the write-off of prepaid royalty amounts
associated with the closure of our Intellectual Property division.
|
|
(3)
|
|
Amount represents amortization of purchased intangible assets
resulting from acquisitions. Purchased intangible assets are
amortized over two to five years.
|
|
(4)
|
|
Other identified intangible assets are amortized to other operating
expense over two to five years. Other identified intangible assets
include tradenames, employment agreements, customer relationships
and deferred compensation which are the result of acquisition
transactions.
|
|
(5)
|
|
Three months ended October 31, 2008 : Write off of $6,790 for
in-process research and development related to the Flomerics
acquisition.
|
|
|
|
Nine months ended October 31, 2008: Write off of $8,090 for
in-process research and development related to the Ponte and
Flomerics acquisitions and $13,985 related to the acquisition of
technology from IBM which has not yet reached technological
feasibility and provided no alternative future uses. The technology
is expected to be the basis for a new offering in the Calibre
product family once development is completed.
|
|
|
|
Nine months ended October 31, 2007 : A write off of $4,100 for
in-process research and development related to the Sierra
acquisition.
|
|
(6)
|
|
Three months ended October 31, 2008: Special charges consist
of (i) $2,273 in fees incurred in response to the unsolicited bid by
Cadence Design Systems, (ii) $350 of costs incurred for employee
rebalances consisting of severance benefits, notice pay and
outplacement services, and (iii) $(409) related to leased facilities.
|
|
|
|
Three months ended October 31, 2007: Special charges consist
of $1,115 of costs incurred for employee rebalances consisting of
severance benefits, notice pay and outplacement services.
|
|
|
|
Nine months ended October 31, 2008: Special charges consist
of (i) $9,194 of costs incurred for employee rebalances consisting
of severance benefits, notice pay and outplacement services, (ii)
$3,345 in fees incurred in response to the unsolicited bid by
Cadence Design Systems, (iii) $2,547 related to the abandonment of
excess leased facility space, and (iv) $13 in fixed asset write-offs
related to the closure of our Intellectual Property division.
|
|
|
|
Nine months ended October 31, 2007: Special charges consist
of (i) $5,798 of costs incurred for employee rebalances consisting
of severance benefits, notice pay and outplacement services, (ii)
$100 for a wind-up services agreement related to the liquidation of
a subsidiary, (iii) ($721) related to reoccupation of a previously
abandoned facility, and (iv) ($17) in other costs and adjustments,
net.
|
|
(7)
|
|
Amount represent our equity in the loss of an investment accounted
for under the equity method.
|
|
(8)
|
|
Discounts, premiums, and unamortized debt costs related to the
redemption of convertible debt.
|
|
(9)
|
|
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 GAAP pre-tax income and the application of the 17%
tax rate to our non-GAAP adjustments.
|
|
