Mentor Graphics Reports Fiscal First Quarter Results and Announces Dividend

WILSONVILLE, Ore. — (BUSINESS WIRE) — May 23, 2013 — Mentor Graphics Corporation (NASDAQ: MENT) today announced financial results for the company’s fiscal first quarter ended April 30, 2013. The company reported revenues of $226.5 million, non-GAAP earnings per share of $0.10, and GAAP earnings per share of $0.01.

“Sales force execution and strong customer demand produced an all-time bookings record for a first quarter. Strength was evident in the IC Design to Silicon, Scalable Verification—driven by emulation demand—and New and Emerging product categories. The year is off to a great start and Q2 is already showing continued bookings strength,” said Walden C. Rhines, chairman and CEO of Mentor Graphics. “During the quarter we initiated a $0.045 quarterly dividend. This has been well received by our shareholders.”

“Mentor’s business was exceptional in the first quarter, with bookings more than doubling year over year,” said Gregory K. Hinckley, president of Mentor Graphics. “First quarter non-GAAP earnings per share of $0.10 were double our guidance and represented the 17th consecutive quarter of exceeding non-GAAP guidance. Earnings benefited from continuous rigorous attention to operating expenses and a higher margin for our hardware business.”

During the first quarter the company announced the purchase of automotive assets of MontaVista, LLC, which establishes Mentor Graphics as the number one commercial provider of Linux-based, automotive in-vehicle infotainment solutions. Mentor also announced the FloTHERM® XT product, the industry’s first electronics cooling simulation solution that integrates both mechanical and electronic design automation from conceptual through detailed design.

The company introduced the Embedded Sourcery™ CodeBench Virtual Edition product. This allows software developers to remain in their native development environment while they optimize software on virtual prototypes and emulation platforms, before and after first silicon. Also in the quarter, Mentor Graphics and Mercedes-Benz Trucks announced that the Capital® electrical systems software suite was successfully deployed in the development of Daimler’s flagship heavy truck.


For the second quarter of fiscal 2014, the company expects revenues of about $245 million, non-GAAP earnings per share of about $0.17, and GAAP earnings per share that are approximately $0.14. For the full fiscal year 2014, the company expects revenues of about $1.155 billion. The company is forecasting non-GAAP earnings per share of about $1.55, and GAAP earnings per share of approximately $1.33.

Share Repurchase

In the first quarter of fiscal year 2014, the company used $20 million to repurchase 1.2 million shares at an average price of $17.37 per share. The company has repurchased $144 million of Mentor Graphics stock since March 2011 and has $56 million available under the current Board authorized share repurchase program.


The company announces a second quarter dividend of $0.045 per share on outstanding common stock. The dividend is payable on July 1, 2013 to shareholders of record as of the close of business on June 10, 2013.

Fiscal Year Definition

Mentor Graphics’ fiscal year runs from February 1 to January 31. The fiscal year is dated by the calendar year in which the fiscal year ends. As a result, the first three fiscal quarters of any fiscal year will be dated with the next calendar year, rather than the current calendar year.

Discussion of Non-GAAP Financial Measures

Mentor Graphics’ management evaluates and makes operating decisions using various performance measures. In addition to our GAAP results, we also consider adjusted gross profit, operating income, net income, and earnings per share which we refer to as non-GAAP gross profit, operating income, 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, sales and marketing, and general and administrative expenses, that management considers in evaluating our ongoing core operating performance. These non-GAAP measures exclude amortization of intangible assets, special charges, equity plan-related compensation expenses, interest expense 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:

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