-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
PhqcgobVbxB0E30lP7T9+P+DvaGf/J18jopzXpxxTdih0qlN47dWABRJSNX52bn0
t5vKNFOQHXSQwp6Fyir0YA==
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
99.1 Press Release of Mentor Graphics Corporation dated February 19, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
By: /s/ Dean Freed WILSONVILLE, OR -- 02/19/2008 -- In anticipation of the D.A. Davidson
Electronic System Design Conference, Mentor Graphics Corporation (NASDAQ: MENT) today announced preliminary fiscal 2008 annual revenue of about $860
million. On a GAAP basis, fiscal 2008 earnings are expected to be about
$0.30. On a non-GAAP basis, earnings for fiscal 2008 are expected to be
about $1.00.
For fiscal 2009, the company sees a softer electronics market creating a
more challenging EDA spending environment at least through the first half
of the year. Despite this, the company continues to believe that it is
better positioned than its competition, and expects to grow faster than the
industry on a revenue basis for fiscal 2009. Additionally, the company has
stepped up cost control actions. As a result of both revenue growth and
tightened expense control, the company expects fiscal 2009 to have modestly
higher revenues than fiscal 2008 and non-GAAP earnings growth of 5% to 10%
with commensurate growth in GAAP earnings.
The company emphasized that the foregoing results are preliminary and are
subject to adjustments upon final closing of financial results and
completion of the annual audit by independent accountants. In particular,
GAAP earnings are subject to further revision pending accounting close of
tax provisions. Mentor Graphics will release final fourth quarter and
fiscal year 2008 results, as well as detailed guidance for fiscal 2009,
after market on February 28, 2008.
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 margin, operating margin and net income (loss),
which we refer to as non-GAAP gross margin, operating margin and net income
(loss), 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 purchased and other identified intangible assets,
in-process research and development, special charges, equity plan-related
compensation expenses and charges and gains which management does not
consider reflective of our core operating business.
Purchased and other identified intangible assets consist primarily of
purchased technology, backlog, trade names, customer relationships and
employment agreements. In-process research and development charges
represent products in development that had not reached technological
feasibility at the time of acquisition. Special charges consist of
post-acquisition rebalance costs including severance and benefits, excess
facilities and asset-related charges, and also include strategic
reallocations or reductions of personnel resources. Equity plan-related
compensation expenses represent the fair value of all share-based payments
to employees, including grants of employee stock options, as required under
SFAS No. 123 (revised 2004), "Share-Based Payment" (SFAS 123R). For
purposes of comparability across other periods and against other companies
in our industry, non-GAAP net income (loss) is adjusted by the amount of
additional taxes or tax benefit that we would accrue using a normalized
effective tax rate applied to the non-GAAP results.
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 EPS is calculated may therefore
differ from the GAAP presentation due to the anti-dilutive effect of stock
options in a loss situation.
Non-GAAP gross margin, operating margin and net income (loss) are
supplemental measures of our performance that are not required by, or
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 margin, operating
margin and net income (loss) 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.
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:
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities Exchange Act of 1934.
Date of Report: February 19, 2008
(Date of earliest event reported)
Mentor Graphics Corporation
(Exact name of registrant as specified in its charter)
OR
(State or other jurisdiction
of incorporation)
(Commission File Number)
930786033
(IRS Employer
Identification Number)
8005 SW Boekman Rd
(Address of principal executive offices)
97070-7777
(Zip Code)
503-685-7000
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Item 9.01. Financial Statements and Exhibits
(a) Financial statements:
None
(b) Pro forma financial information:
None
(c) Shell company transactions:
None
(d) Exhibits
Pre-release and 8K
Dated: February 19, 2008
MENTOR GRAPHICS CORPORATION
Dean Freed
VP, General Council
Exhibit No.
Description
99.1
Press Release of Mentor Graphics Corporation dated February 19, 2008
- -- Amortization charges for our purchased and other identified intangible
assets are inconsistent in amount and frequency and are significantly
impacted by the timing and magnitude of our acquisition transactions. We
therefore consider our operating results without these charges when
evaluating our core performance. Generally, the most significant impact to
inter-period comparability of our net income (loss) is in the first twelve
months following an acquisition.
- -- Special charges are primarily severance related and are due to our
reallocation or reduction of personnel resources driven by modifications of
business strategy or business emphasis and by assimilation of acquired
businesses. These costs are originated based on the particular facts and
circumstances of business decisions and can vary in size. Special charges
also include excess facility and asset-related restructuring charges. These
charges are not specifically included in our annual operating plan and
related budget due to the rapidly changing technology and competitive
environment in our industry. We therefore exclude them when evaluating our
managers' performance internally.
- -- In-process research and development charges are largely disregarded as
acquisition decisions are made, since they often result in charges that
vary significantly in size and amount. Management excludes these charges
when evaluating the impact of an acquisition transaction and our ongoing
performance.
- -- Management supplementally considers performance without the impact of
equity plan-related compensation charges and believes this information is
useful to investors to compare our performance to the performance of other
companies in our industry who present non-GAAP results adjusted to exclude
stock compensation expense. We view equity plan-related compensation as a
key element of our employee retention and long-term incentives, not as an
expense that should be an element of evaluating core operations in any
given period. We therefore exclude these charges for purposes of
evaluating our core performance.
- -- Income tax expense (benefit) 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, taking
into consideration our long-term tax structure. We use a normalized
effective tax rate of 17%, which reflects the weighted average tax rate
applicable under the various tax jurisdictions in which we operate. This
non-GAAP weighted average tax rate is subject to change over time for
various reasons, including changes in the geographic business mix and
changes in statutory tax rates. The GAAP tax rate considers certain
mandatory and other non-scalable tax costs which may adversely or
beneficially affect our tax rate depending upon our level of profitability.
Non-GAAP net income (loss) also facilitates comparison with other companies in our industry, which use similar financial measures to supplement their GAAP results. However, non-GAAP net income (loss) has limitations as an analytical tool, and you should not consider this measure 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 (loss) are:
- -- Amortization of purchased intangibles, though not directly affecting our current cash position, 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 (loss) 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 engage in acquisition and assimilation activities as part of our ongoing business and therefore we will continue to experience special charges and merger and acquisition charges on a regular basis. These costs also directly impact our available funds. - -- Our stock option and stock purchase plans are important components of our incentive compensation arrangements and will be reflected as expenses in our GAAP results for the foreseeable future under SFAS 123R. - -- Our income tax expense (benefit) will be ultimately based on our GAAP taxable income and actual tax rates in effect, which often differ significantly from the 17% rate assumed in our non-GAAP presentation. - -- Other companies, including other companies in our industry, may calculate non-GAAP net income (loss) differently than we do, limiting its usefulness as a comparative measure.
MENTOR GRAPHICS CORPORATION UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EARNINGS PER SHARE PRELIMINARY RESULTS The following table reconciles management's estimates of the specific items excluded from preliminary GAAP results in the calculation of preliminary non-GAAP earnings per share for the period shown below: ---------- FY 2008 ---------- Diluted GAAP net earnings per share $ 0.30 Non-GAAP Adjustments: Amortization of purchased intangible assets (1) $ 0.10 Amortization of other identified intangible assets (2) $ 0.10 Equity plan-related compensation (3) $ 0.21 Special charges (4) $ 0.11 In-process research and development (5) $ 0.05 Expense associated with convertible debt (6) $ 0.01 Income tax effects (7) $ 0.12 ---------- Non-GAAP net income $ 1.00 ========== (1) Excludes estimated amortization of purchased intangible assets resulting from acquisition transactions. Purchased intangible assets are amortized over two to five years. (2) Excludes estimated amortization of other identified intangible assets including trade names, employment agreements and customer relationships resulting from acquisition transactions. Other identified intangible assets are amortized over two to five years. (3) Excludes estimated equity plan-related compensation expense recognized in accordance with SFAS 123R, Share-Based Payment. (4) Excludes estimated special charges incurred during FY2008 consisting primarily of costs incurred for employee rebalances, which included severance benefits, notice pay and outplacement services. (5) Excludes estimated write off of in-process research and development incurred during FY2008 related to the Sierra acquisition. (6) Excludes estimated amounts incurred during FY2008 for the write-off of previously capitalized convertible debt costs and net premium paid on the retirement of convertible debt. (7) 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.
About Mentor Graphics
Mentor Graphics Corporation (NASDAQ: MENT) 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 electronics and semiconductor companies. Established in 1981, the company reported revenues over the last 12 months of over $825 million and employs approximately 4,300 people worldwide. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777. World Wide Web site: http://www.mentor.com/.
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 section 21E of the Securities Exchange Act of 1934, as amended. These 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 the forward-looking statements. Such factors include, among others, the following: (i) the company's ability to successfully offer products and services in the highly competitive EDA industry; (ii) product bundling or discounting by competitors, which could force the company to lower its prices or offer other more favorable terms to customers; (iii) reductions in spending on the company's products by its customers due to cyclical downturns; (iv) weakness in the US or other economies; (v) foreign currency fluctuations; (vi) changes in accounting or reporting rules or interpretations; (vii) the impact of tax audits by taxing authorities, or changes in the tax laws, regulations or enforcement practices; (viii) effects of unanticipated shifts in product mix on gross margin; and (ix) effects of customer seasonal purchasing patterns and the timing of significant orders may negatively or positively impact the company's quarterly results of operations, 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.
Contact: Ryerson Schwark Public and Investor Relations Director Mentor Graphics 503.685.1462 ry_schwark@mentor.com Dennis Weldon Investor Relations and Business Development Director Mentor Graphics 503.685.1462 dennis_weldon@mentor.com-----END PRIVACY-ENHANCED MESSAGE-----