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 October 31,						Nine Months Ended October 31,
				2015			2014			2015			2014
GAAP net income attributable to Mentor Graphics shareholders			$	14,679		$	21,030		$	36,006		$	32,651
Non-GAAP adjustments:
Equity plan-related compensation: (1)
Cost of revenues				665			608			1,981			1,687
Research and development				4,095			3,651			12,213			10,203
Marketing and selling				2,468			2,371			7,314			6,692
General and administration				2,797			2,472			9,381			7,809
Acquisition - related items:
Amortization of purchased assets
Cost of revenues (2)				1,844			2,050			5,496			5,252
Amortization of intangible assets (3)				2,364			2,233			6,817			6,125
Special charges (4)				4,831			8,375			43,994			19,409
Other income (expense), net (5)				72			78			33			146
Interest expense (6)				1,663			1,548			4,900			4,563
Non-GAAP income tax effects (7)				(756	)		(4,276	)		(16,056	)		(14,259	)
Noncontrolling interest (8)				(238	)		(218	)		(638	)		(622	)
Total of non-GAAP adjustments				19,805			18,892			75,435			47,005
Non-GAAP net income attributable to Mentor Graphics shareholders			$	34,484		$	39,922		$	111,441		$	79,656

GAAP weighted average shares (diluted)				120,141			116,715			121,963			116,928
Non-GAAP adjustment				2,695			-			-			-
Non-GAAP weighted average shares (diluted)				122,836			116,715			121,963			116,928

Net income per share attributable to Mentor Graphics shareholders:
GAAP (diluted)			$	0.12		$	0.18		$	0.30		$	0.29
Noncontrolling interest adjustment (9)				-			-			-			(0.01	)
Non-GAAP adjustments detailed above				0.16			0.16			0.62			0.40
Non-GAAP (diluted) (10)			$	0.28		$	0.34		$	0.92		$	0.68


(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 nine months ended October 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 October 31, 2015: Special charges consist of (i) $3,485 of costs incurred for employee rebalances which include severance benefits and notice pay, (ii) $1,122 for EVE litigation costs, (iii) $(203) for severance costs incurred for the voluntary early retirement program, and (iv) $427 in other adjustments.
		Three months ended October 31, 2014: Special charges consist of (i) $7,004 for EVE litigation costs, (ii) $1,377 of costs incurred for employee rebalances which include severance benefits and notice pay, and (iii) $(6) in other adjustments.
		Nine months ended October 31, 2015: Special charges consist of (i) $25,232 for severance costs incurred for the voluntary early retirement program, (ii) $14,188 of costs incurred for employee rebalances which include severance benefits and notice pay, (iii) $3,641 for EVE litigation costs, and (iv) $933 in other adjustments.
		Nine months ended October 31, 2014: Special charges consist of (i) $15,193 for EVE litigation costs, (ii) $3,077 of costs incurred for employee rebalances which include severance benefits and notice pay, and (iii) $1,139 in other adjustments.
(5	)	Amount represents 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 nine months ended October 31, 2015 and a 17% tax rate for the three and nine months ended October 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.
(10	)	We have increased the numerator of our diluted earnings per share calculation by $519 for the three and nine months ended October 31, 2015 for the dilutive effect of our convertible debt. Corresponding dilutive shares of 2,695 for the three months ended October 31, 2015 are presented in the reconciliation above. Corresponding dilutive shares of 2,565 for the nine months ended October 31, 2015 are already included in the GAAP diluted weighted average number of shares outstanding.

« Previous Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 Next Page »