-----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, O96Uz1feR6p5Kae9O8r0By+0XzqKlGbxZ3jhE/dAg+DEInbaOvuvspRokblxiakc 9uNaMWF3+6kTzk6e0rsT3w== 0001157523-03-001345.txt : 20030424 0001157523-03-001345.hdr.sgml : 20030424 20030424170428 ACCESSION NUMBER: 0001157523-03-001345 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030424 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MENTOR GRAPHICS CORP CENTRAL INDEX KEY: 0000701811 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 930786033 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13442 FILM NUMBER: 03662840 BUSINESS ADDRESS: STREET 1: 8005 SW BOECKMAN RD CITY: WILSONVILLE STATE: OR ZIP: 97070-7777 BUSINESS PHONE: 5036857000 8-K 1 a4383162.txt MENTOR GRAPHICS 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 24, 2003 --------------- MENTOR GRAPHICS CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) OREGON 0-13442 93-0786033 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 8005 S.W. BOECKMAN ROAD, 97070-7777 WILSONVILLE, OR - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (503) 685-7000 ---------------------------- NO CHANGE - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Item 7. Financial Statements and Exhibits. - ------------------------------------------ (c) Exhibits. 99.1 Press release issued by Mentor Graphics Corporation dated April 24, 2003, announcing first quarter 2003 earnings. 99.2 Press release issued by Mentor Graphics Corporation dated April 24, 2003, providing outlook for the second quarter and balance of 2003. Item 9. Regulation FD Disclosure. - --------------------------------- Attached as Exhibit 99.1 is a copy of a press release of Mentor Graphics Corporation dated April 24, 2003 announcing the Company's earnings for the first quarter of 2003, which is being furnished to the Securities and Exchange Commission as required by Item 12 of Form 8-K. Attached as Exhibit 99.2 is a copy of a press release of Mentor Graphics Corporation dated April 24, 2003 providing the Company's outlook for the second quarter and balance of 2003, which is being furnished to the Securities and Exchange Commission. 2 SIGNATURES 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. MENTOR GRAPHICS CORPORATION (Registrant) Date: April 24, 2003 By: /s/ Gregory K. Hinckley ----------------------- Gregory K. Hinckley President, Chief Operating and Financial Officer 3 EXHIBIT INDEX Exhibit Description 99.1 Press release issued by Mentor Graphics Corporation dated April 24, 2003, announcing first quarter 2003 earnings. 99.2 Press release issued by Mentor Graphics Corporation dated April 24, 2003, providing outlook for the second quarter and balance of 2003. 4 EX-99 3 a4383162ex99.txt EXHIBIT 99.1 PRESS RELEASE FIRST QUARTER EARNINGS Exhibit 99.1 Mentor Graphics Reports First Quarter Earnings WILSONVILLE, Ore.--(BUSINESS WIRE)--April 24, 2003--Mentor Graphics Corporation (Nasdaq:MENT) today reported first quarter 2003 earnings-per-share of $.11, before amortization of acquired intangibles and special charges, on revenues of $159.3 million. GAAP earnings-per-share were $.05. Total bookings rose 33 percent over the first quarter of 2002, to a new record for first quarter bookings. Revenues were also at record levels for a first quarter, up 25 percent from the year ago quarter. "Our systems and deep submicron businesses were very strong in the quarter," said Walden C. Rhines, chairman and CEO of Mentor Graphics. "Based on the performance of the business, we believe Mentor continued to grow market share in the first quarter, on top of strong growth last year. Mentor's most recently reported market share reached new heights as it crossed 20 percent, according to recently released fourth quarter 2002 Electronic Design Automation Consortium reports." Strength in the quarter was broad-based, led by the systems design business. Systems design bookings were nearly triple the first quarter of 2002, while revenue climbed 80 percent. Systems design strength was across all geographic regions. High-speed printed circuit board design tool bookings more than tripled. The cabling and wire harness business reported bookings up 20 percent. Deep submicron products also performed well in the quarter, led by strength in the Calibre product family. Calibre bookings were up 50 percent. The increasing complexity of analog/mixed-signal designs continues to drive customers to retool into Mentor's new analog/mixed signal design flow, announced last year. The strength in analog/mixed-signal has continued into the second quarter, as several key orders have already been booked. "As we predicted in our fourth quarter 2002 conference call, the first quarter exhibited strong year over year growth," said Gregory K. Hinckley, president of Mentor Graphics. "The systems business and the deep submicron businesses were particularly strong, but growth was broad-based and seen in all geographic regions. While we are obviously pleased with the outcome of this quarter, we remain cautious given the state of the global electronics market." Mentor continued its strategy of using its broad distribution network to seed its products, gaining 116 new customers in the quarter, excluding telesales products in embedded systems and systems design. Revenue by region was 50 percent North America, 25 percent Europe, 15 percent Japan and 10 percent Pacific Rim. By region, bookings growth in Japan and Europe were the strongest year over year, at about 65 percent and 45 percent, respectively. North American bookings grew about 15 percent over the year ago quarter, with the Pacific Rim up about 5 percent on top of its strong growth reported in the first quarter of 2002. The move from distributor to direct sales in China, which Mentor undertook last year, began to pay off with significant IC and systems orders from top Chinese companies in the quarter and more expected in the second quarter. Special charges were primarily restructuring related. 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 about $600 million and employs approximately 3,500 people worldwide. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777; Silicon Valley headquarters are located at 1001 Ridder Park Drive, San Jose, California 95131-2314. World Wide Web site: www.mentor.com. In the calculation of earnings, gross margin and operating expenses before amortization of acquired intangibles and special charges, Mentor Graphics excludes amortization of acquired intangibles and write-offs of in-process R&D from acquisitions. Also excluded are non-operating and non-recurring items classified as special charges such as restructure expenses and asset impairments. Mentor Graphics believes that excluding these items provides investors with a representation of its core performance, and a pro forma base line for assessing the future earnings potential of Mentor Graphics. Mentor Graphics is a registered trademark of Mentor Graphics Corporation. All other company or product names are the registered trademarks or trademarks of their respective owners. Statements in this press release regarding the Company's outlook for future periods constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. 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) the Company's ability to continue selling products and services during the continuing severe slowdown in the electronics industry, particularly in the telecommunications, semiconductor and personal computer segments; (ii) the Company's ability to manage expenses during the current very severe slowdown in the electronics industry; (iii) the overall instability of diverse economies, including changes in regional or worldwide economic or political conditions, government trade restrictions, or war in the Middle East or elsewhere (iv) changes in accounting or reporting rules or interpretations, changes in the tax environment worldwide, limitations on repatriation of earnings, licensing and intellectual property rights protection; (v) the Company's ability to successfully integrate and manage its recent and future acquisitions; (vi) the completion of customer contracts and the terms of delivery of software, hardware and other services; (vii) the Company's ability to successfully offer products and services that compete in the highly competitive and dynamic EDA industry including the risk that the Company's technology, products or inventory become obsolete; (viii) effects of the increasing volatility of foreign currency fluctuations on the Company's business and operating results, and (ix) effects of unanticipated shifts in product mix on gross margin and unanticipated shifts in geographic mix on the overall tax rate, all as may be discussed in more detail under the heading "Factors That May Affect Future Results and Financial Condition" 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 outlook 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 CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except earnings per share data - Unaudited) Three Months Ended March 31, -------------------------- 2003 2002 -------------------------- Revenues: System and software $91,812 $67,901 Service and support 67,528 60,103 -------------------------- Total revenues 159,340 128,004 -------------------------- Cost of revenues: System and software 4,815 4,587 Service and support 20,703 19,812 Amortization of purchased technology 2,209 472 -------------------------- Total cost of revenues 27,727 24,871 -------------------------- Gross margin 131,613 103,133 -------------------------- Operating expenses: Research and development 42,876 35,608 Marketing and selling 59,189 47,671 General and administration 18,983 16,579 Amortization of intangible assets 1,145 - Special charges 1,363 4,789 -------------------------- Total operating expenses 123,556 104,647 -------------------------- Operating income (loss) 8,057 (1,514) Other income, net 487 4,002 Interest expense (4,045) (291) -------------------------- Income before income taxes 4,499 2,197 Income tax expense 900 439 -------------------------- Net income $3,599 $1,758 ========================== Net income per share: Basic $.05 $.03 ========================== Diluted $.05 $.03 ========================== Weighted average number of shares outstanding: Basic 67,335 65,224 ========================== Diluted 68,255 68,826 ========================== MENTOR GRAPHICS CORPORATION PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except earnings per share data - Unaudited) Three Months Ended March 31, 2003 GAAP Adjustments Pro Forma ----------------------------------- Revenues: System and software $91,812 $- $91,812 Service and support 67,528 - 67,528 ----------------------------------- Total revenues 159,340 - 159,340 ----------------------------------- Cost of revenues: System and software 4,815 - 4,815 Service and support 20,703 - 20,703 Amortization of purchased technology 2,209 (2,209)(1) - ----------------------------------- Total cost of revenues 27,727 (2,209) 25,518 ----------------------------------- Gross margin 131,613 2,209 133,822 ----------------------------------- Gross margin percentage 82.6% 84.0% ----------- ---------- Operating expenses: Research and development 42,876 - 42,876 Marketing and selling 59,189 - 59,189 General and administration 18,983 - 18,983 Amortization of intangible assets 1,145 (1,145)(1) - Special charges 1,363 (1,363)(2) - ----------------------------------- Total operating expenses 123,556 (2,508) 121,048 ----------------------------------- Operating income (loss) 8,057 4,717 12,774 Other income, net 487 - 487 Interest expense (4,045) - (4,045) ----------------------------------- Income before income taxes 4,499 4,717 9,216 Income tax expense 900 943 (3) 1,843 ----------------------------------- Net income $3,599 $3,774 $7,373 =================================== Net income per share: Basic $.05 $.11 =========== ========== Diluted $.05 $.11 =========== ========== Weighted average number of shares outstanding: Basic 67,335 67,335 =========== ========== Diluted 68,255 68,255 =========== ========== (1) Non-cash amortization of acquired intangibles. (2) Restructuring and other charges. (3) Income tax expense calculation assumes an effective tax rate of 20%. MENTOR GRAPHICS CORPORATION PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except earnings per share data - Unaudited) Three Months Ended March 31, 2002 GAAP Adjustments Pro Forma ----------------------------------- Revenues: System and software $67,901 $- $67,901 Service and support 60,103 - 60,103 ----------------------------------- Total revenues 128,004 - 128,004 ----------------------------------- Cost of revenues: System and software 4,587 - 4,587 Service and support 19,812 - 19,812 Amortization of purchased technology 472 (472)(1) - ----------------------------------- Total cost of revenues 24,871 (472) 24,399 ----------------------------------- Gross margin 103,133 472 103,605 ----------------------------------- Gross margin percentage 80.6% 80.9% ----------- ---------- Operating expenses: Research and development 35,608 - 35,608 Marketing and selling 47,671 - 47,671 General and administration 16,579 - 16,579 Amortization of intangible assets - - - Special charges 4,789 (4,789)(2) - ----------------------------------- Total operating expenses 104,647 (4,789) 99,858 ----------------------------------- Operating income (loss) (1,514) 5,261 3,747 Other income, net 4,002 - 4,002 Interest expense (291) - (291) ----------------------------------- Income before income taxes 2,197 5,261 7,458 Income tax expense 439 1,053 (3) 1,492 ----------------------------------- Net income $1,758 $4,208 $5,966 =================================== Net income per share: Basic $.03 $.09 =========== ========== Diluted $.03 $.09 =========== ========== Weighted average number of shares outstanding: Basic 65,224 65,224 =========== ========== Diluted 68,826 68,826 =========== ========== (1) Non-cash amortization of acquired intangibles. (2) Restructuring, merger and acquisition and other charges. (3) Income tax expense calculation assumes an effective tax rate of 20%. MENTOR GRAPHICS CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands - Unaudited) As of As of March 31, 2003 Dec. 31, 2002 - ---------------------------------------------------------------------- Assets Current assets: Cash and short-term investments $50,699 $38,826 Trade accounts receivable, net 72,581 77,960 Term receivables, short-term 85,120 81,697 Prepaid expenses and other 27,406 24,884 Deferred income taxes 16,997 16,827 ----------------------------- Total current assets 252,803 240,194 Property, plant and equipment, net 87,498 90,259 Term receivables, long-term 82,053 78,431 Intangibles, net 337,983 342,171 Other assets 49,604 53,793 ----------------------------- Total assets $809,941 $804,848 ============================= Liabilities and Stockholders' Equity Current liabilities: Short-term borrowings $16,677 $17,670 Accounts payable 15,148 17,110 Income taxes payable 36,778 40,784 Accrued payroll and related liabilities 46,231 51,250 Accrued liabilities 42,039 45,233 Deferred revenue 86,375 72,902 ----------------------------- Total current liabilities 243,248 244,949 Long-term notes payable 177,456 177,685 Other long-term liabilities 18,102 19,275 ----------------------------- Total liabilities 438,806 441,909 ----------------------------- Minority interest 3,262 3,219 Stockholders' equity: Common stock 301,168 297,995 Deferred compensation (4,249) (4,761) Retained earnings 53,466 49,867 Accumulated other comprehensive income 17,488 16,619 ----------------------------- Total stockholders' equity 367,873 359,720 ----------------------------- Total liabilities and stockholders' equity $809,941 $804,848 ============================= MENTOR GRAPHICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands - Unaudited) Three Months Ended March 31, ----------------------------- 2003 2002 ----------------------------- Net income $3,599 $1,758 Depreciation and amortization 12,124 5,094 Other adjustments to reconcile operating cash (1,488) 1,866 Changes in working capital (575) (5,017) ----------------------------- Net cash provided by operating activities 13,660 3,701 Net cash provided by (used in) investing activities 218 (86,166) Net cash provided by financing activities 1,899 28,113 Effect of exchange rate changes on cash and cash equivalents (61) (150) ----------------------------- Net change in cash and cash equivalents 15,716 (54,502) Cash and cash equivalents at beginning of period 34,969 124,029 ----------------------------- Cash and cash equivalents at end of period $50,685 $69,527 ============================= MENTOR GRAPHICS CORPORATION SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION (In thousands, except for days sales outstanding - Unaudited) Three Months Ended March 31, --------------------------------- 2003 2002 --------------------------------- Geographic Revenue: Americas $79,526 $60,077 49.9% 46.9% Europe $42,420 $33,235 26.6% 26.0% Japan $24,024 $23,494 15.1% 18.4% Pacific Rim $13,370 $11,198 8.4% 8.7% Other Data: Capital expenditures $3,278 $4,291 Days sales outstanding 89 105 CONTACT: Mentor Graphics Corporation Dennis Weldon, 503/685-1462 dennis_weldon@mentor.com Ryerson Schwark, 503/685-1462 ry_schwark@mentor.com EX-99 4 a4383162ex992.txt EXHIBIT 99.2 PRESS RELEASE PROVIDING OUTLOOK Exhibit 99.2 Mentor Graphics Provides Outlook WILSONVILLE, Ore.--(BUSINESS WIRE)--April 24, 2003--Mentor Graphics Corporation (Nasdaq:MENT) today provided the outlook for the second quarter and balance of 2003. For second quarter 2003, Mentor expects revenues between $156 and $162 million and earnings of between $0.06 and $0.11 per share, before amortization of acquired intangibles and special charges. GAAP earnings are expected to be $0.02 to $0.07 per share. Gross margin excluding amortization of acquired intangibles is expected to be approximately 84 percent, while gross margin on a GAAP basis is expected to be in the range of 82 to 83 percent. Operating expense excluding amortization of acquired intangibles should be approximately $123 million, up 2 percent sequentially. Operating expense on a GAAP basis is expected to be about $124 million. OI&E will be about a $3 million expense. The tax rate should remain at 20 percent and diluted shares outstanding are expected to be 69 million. For 2003, full-year guidance remains unchanged, with revenues of $665 million, earnings before amortization of acquired intangibles and special charges of $.55 per share and GAAP earnings of $.39 per share. 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 about $600 million and employs approximately 3,500 people worldwide. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777; Silicon Valley headquarters are located at 1001 Ridder Park Drive, San Jose, California 95131-2314. World Wide Web site: www.mentor.com. In the calculation of earnings, gross margin and operating expenses before amortization of acquired intangibles and special charges, Mentor Graphics excludes amortization of acquired intangibles and write-offs of in-process R&D from acquisitions. Also excluded are non-operating and non-recurring items classified as special charges such as restructure expenses and asset impairments. Mentor Graphics believes that excluding these items provides investors with a representation of its core performance, and a pro forma base line for assessing the future earnings potential of Mentor Graphics. Mentor Graphics is a registered trademark of Mentor Graphics Corporation. All other company or product names are the registered trademarks or trademarks of their respective owners. Statements in this press release regarding the Company's outlook for future periods constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. 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) the Company's ability to continue selling products and services during the continuing severe slowdown in the electronics industry, particularly in the telecommunications, semiconductor and personal computer segments; (ii) the Company's ability to manage expenses during the current very severe slowdown in the electronics industry; (iii) the overall instability of diverse economies, including changes in regional or worldwide economic or political conditions, government trade restrictions, or war in the Middle East or elsewhere (iv) changes in accounting or reporting rules or interpretations, changes in the tax environment worldwide, limitations on repatriation of earnings, licensing and intellectual property rights protection; (v) the Company's ability to successfully integrate and manage its recent and future acquisitions; (vi) the completion of customer contracts and the terms of delivery of software, hardware and other services; (vii) the Company's ability to successfully offer products and services that compete in the highly competitive and dynamic EDA industry including the risk that the Company's technology, products or inventory become obsolete; (viii) effects of the increasing volatility of foreign currency fluctuations on the Company's business and operating results, and (ix) effects of unanticipated shifts in product mix on gross margin and unanticipated shifts in geographic mix on the overall tax rate, all as may be discussed in more detail under the heading "Factors That May Affect Future Results and Financial Condition" 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 outlook 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. - -0- *T Mentor Graphics Corporation As of April 24, 2003 Reconciliation of Forward Looking Diluted Net Income per Share Between GAAP and Earnings Before Amortization of Acquired Intangibles and Special Charges (Unaudited) $ in Millions except per share data Q2 2003 Q2 2003 GAAP Adjustments Pro Forma -------------------------------------------- Revenue $156 to $162 - $156 to $162 Gross margin 82% to 83% $2 (a) 84% Operating expense $124 $1 (b) $123 Other income & expense ($3) - ($3) Per share impact of adjustments $0.05 Per share tax effect of reconciling items ($0.01) ------- Diluted earnings per share $0.02 to $0.07 $0.04 $0.06 to $0.11 2003 2003 GAAP Adjustments Pro Forma -------------------------------------------- Revenue $665 - $665 Gross margin 83% $9 (a) 84% Operating expense $504 $4 (b) $499 Special charges $1 $1 (c) - Other income & expense ($11) - ($11) Per share impact of adjustments $0.20 Per share tax effect of reconciling items ($0.04) ------- Diluted earnings per share $0.39 $0.16 $0.55 (a) Amortization of purchased technology (in cost of revenues) (b) Amortization of intangible assets (in operating expense) (c) Special charges may occur in future periods but amounts and timing are unknown and therefore are not forecasted. CONTACT: Mentor Graphics Corporation Ry Schwark, 503/685-1462 (Investor Relations) ry_schwark@mentor.com Dennis Weldon, 503/685-1462 (Treasurer) dennis_weldon@mentor.com -----END PRIVACY-ENHANCED MESSAGE-----