Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 31, 2015 | Dec. 01, 2015 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Oct. 31, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | MENT | |
Entity Registrant Name | MENTOR GRAPHICS CORP | |
Entity Central Index Key | 701,811 | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Large Accelerated Filer | |
Common Stock, Shares, Outstanding | 117,479,862 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | |
Revenues: | ||||
System and software | $ 168,699 | $ 178,115 | $ 486,831 | $ 475,824 |
Service and support | 121,817 | 114,568 | 356,890 | 329,243 |
Total revenues | 290,516 | 292,683 | 843,721 | 805,067 |
Cost of revenues: | ||||
System and software | 9,759 | 11,821 | 36,432 | 54,977 |
Service and support | 35,286 | 33,670 | 100,275 | 93,684 |
Amortization of purchased technology | 1,844 | 2,050 | 5,496 | 5,252 |
Total cost of revenues | 46,889 | 47,541 | 142,203 | 153,913 |
Gross profit | 243,627 | 245,142 | 701,518 | 651,154 |
Operating expenses: | ||||
Research and development | 99,669 | 96,269 | 278,237 | 268,262 |
Marketing and selling | 93,165 | 89,875 | 262,857 | 256,814 |
General and administration | 19,665 | 19,851 | 56,298 | 57,006 |
Equity in earnings of Frontline | (1,755) | (1,184) | (3,976) | (4,625) |
Amortization of intangible assets | 2,364 | 2,233 | 6,817 | 6,009 |
Special charges | 4,831 | 8,375 | 43,994 | 19,409 |
Total operating expenses | 217,939 | 215,419 | 644,227 | 602,875 |
Operating income: | 25,688 | 29,723 | 57,291 | 48,279 |
Other income (expense), net | 320 | (381) | 849 | (743) |
Interest expense | (4,915) | (4,934) | (14,381) | (14,326) |
Income before income tax | 21,093 | 24,408 | 43,759 | 33,210 |
Income tax expense | 7,204 | 3,849 | 9,763 | 1,907 |
Net income | 13,889 | 20,559 | 33,996 | 31,303 |
Less: Loss attributable to noncontrolling interest | (790) | (471) | (2,010) | (1,348) |
Net income attributable to Mentor Graphics shareholders | $ 14,679 | $ 21,030 | $ 36,006 | $ 32,651 |
Net income per share: | ||||
Basic | $ 0.13 | $ 0.18 | $ 0.31 | $ 0.30 |
Diluted | $ 0.12 | $ 0.18 | $ 0.30 | $ 0.29 |
Weighted average number of shares outstanding: | ||||
Basic | 117,759 | 114,405 | 116,787 | 114,399 |
Diluted | 120,141 | 116,715 | 121,963 | 116,928 |
Cash dividends declared per common share | $ 0.055 | $ 0.050 | $ 0.165 | $ 0.150 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | |
Net income | $ 13,889 | $ 20,559 | $ 33,996 | $ 31,303 |
Other comprehensive income (loss), net of tax: | ||||
Change in unrealized gain (loss) on derivative instruments | 89 | (145) | 469 | (294) |
Less: Reclassification adjustment for net income (loss) included in net income | 497 | (165) | 518 | (248) |
Net change | (408) | 20 | (49) | (46) |
Change in accumulated translation adjustment | (1,698) | (11,790) | (5,858) | (12,493) |
Change in pension liability | (1) | (2) | (5) | (6) |
Other comprehensive loss | (2,107) | (11,772) | (5,912) | (12,545) |
Comprehensive income | 11,782 | 8,787 | 28,084 | 18,758 |
Net loss attributable to noncontrolling interest | (790) | (471) | (2,010) | (1,348) |
Change in accumulated translation adjustment attributable to the noncontrolling interest | (16) | 3 | 26 | 8 |
Comprehensive loss attributable to the noncontrolling interest | (806) | (468) | (1,984) | (1,340) |
Comprehensive income attributable to Mentor Graphics shareholders | $ 12,588 | $ 9,255 | $ 30,068 | $ 20,098 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 279,001 | $ 230,281 |
Trade accounts receivable, net of allowance for doubtful accounts of $3,653 as of October 31, 2015 and $4,217 as of January 31, 2015 | 447,760 | 546,622 |
Other receivables | 21,239 | 20,984 |
Inventory | 23,013 | 22,512 |
Prepaid expenses and other | 22,509 | 22,357 |
Deferred income taxes | 24,345 | 23,490 |
Total current assets | 817,867 | 866,246 |
Property, plant, and equipment, net of accumulated depreciation of $344,164 as of October 31, 2015 and $334,619 as of January 31, 2015 | 172,724 | 170,737 |
Term receivables | 283,756 | 301,862 |
Goodwill | 607,399 | 599,929 |
Intangible assets, net of accumulated amortization of $221,827 as of October 31, 2015 and $209,931 as of January 31, 2015 | 41,169 | 45,577 |
Other assets | 68,221 | 64,671 |
Total assets | 1,991,136 | 2,049,022 |
Current liabilities: | ||
Short-term borrowings | 1,386 | 7,228 |
Current portion of notes payable | 235,300 | 0 |
Accounts payable | 9,744 | 12,687 |
Income taxes payable | 6,041 | 5,994 |
Accrued payroll and related liabilities | 69,615 | 108,553 |
Accrued and other liabilities | 40,455 | 47,728 |
Deferred revenue | 212,021 | 259,340 |
Total current liabilities | 574,562 | 441,530 |
Notes payable | 5,188 | 230,400 |
Deferred revenue | 18,149 | 21,251 |
Income tax liability | 20,682 | 19,279 |
Deferred income taxes, long-term | 31,704 | 31,774 |
Other long-term liabilities | 17,132 | 18,562 |
Total liabilities | $ 667,417 | $ 762,796 |
Commitments and contingencies (Note 6) | ||
Convertible notes (Note 5) | $ 17,700 | $ 0 |
Noncontrolling interest with redemption feature | 0 | 13,372 |
Stockholders' equity: | ||
Common stock, no par value, 300,000 shares authorized as of October 31, 2015 and January 31, 2015; 118,298 shares issued and outstanding as of October 31, 2015 and 115,790 shares issued and outstanding as of January 31, 2015 | 854,665 | 832,612 |
Retained earnings | 468,902 | 451,901 |
Accumulated other comprehensive loss | (17,825) | (11,887) |
Noncontrolling interest | 277 | 228 |
Total stockholders’ equity | 1,306,019 | 1,272,854 |
Total liabilities and stockholders' equity | $ 1,991,136 | $ 2,049,022 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Allowance for doubtful accounts receivable, current | $ 3,653 | $ 4,217 |
Property, plant, and equipment, accumulated depreciation | 344,164 | 334,619 |
Intangible assets, accumulated amortization | $ 221,827 | $ 209,931 |
Common stock, no par value | $ 0 | $ 0 |
Common stock, shares authorized | 300,000 | 300,000 |
Common stock, shares issued | 118,298 | 115,790 |
Common stock, shares outstanding | 118,298 | 115,790 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Operating Cash Flows: | ||
Net income | $ 33,996 | $ 31,303 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation of property, plant, and equipment | 26,999 | 25,683 |
Amortization of intangible assets, debt costs and other | 18,926 | 17,581 |
Stock-based compensation | 30,889 | 26,391 |
Deferred income taxes | (1,352) | 1,208 |
Changes in other long-term liabilities | (1,016) | 973 |
Dividends received from unconsolidated entities, net of equity in income (loss) | 157 | (103) |
Other | (702) | 80 |
Changes in operating assets and liabilities, net of effect of acquired businesses: | ||
Trade accounts receivable, net | 97,037 | 44,977 |
Prepaid expenses and other | (10,722) | (10,533) |
Term receivables, long-term | 17,059 | 15,679 |
Accounts payable and accrued liabilities | (44,158) | (53,136) |
Income taxes receivable and payable | 2,746 | (4,428) |
Deferred revenue | (50,013) | (38,597) |
Net cash provided by operating activities | 119,846 | 57,078 |
Investing Cash Flows: | ||
Proceeds from sales and maturities of short-term investments | 0 | 4,124 |
Proceeds from sale of buildings | 2,068 | 0 |
Purchases of property, plant, and equipment | (28,337) | (21,872) |
Acquisitions of businesses, equity interests and other intangible assets, net of cash acquired | (11,700) | (78,600) |
Net cash used in investing activities | (37,969) | (96,348) |
Financing Cash Flows: | ||
Proceeds from issuance of common stock | 21,294 | 17,409 |
Repurchase of common stock | (10,000) | (70,053) |
Dividends paid | (19,263) | (17,168) |
Net decrease in short-term borrowing | (5,875) | (8,243) |
Repayments of other borrowings | (7,225) | (2,011) |
Payments to Noncontrolling Interests | (11,088) | 0 |
Proceeds (payments) from the sale of subsidiary shares to noncontrolling interest | 7 | (121) |
Net cash used in financing activities | (32,150) | (80,187) |
Effect of exchange rate changes on cash and cash equivalents | (1,007) | (1,257) |
Net change in cash and cash equivalents | 48,720 | (120,714) |
Cash and cash equivalents at the beginning of the period | 230,281 | 293,322 |
Cash and cash equivalents at the end of the period | $ 279,001 | $ 172,608 |
General
General | 9 Months Ended |
Oct. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) and reflect all material normal recurring adjustments. However, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the condensed consolidated financial statements include adjustments necessary for a fair presentation of the results of the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2015 . The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and contingencies as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Any changes in estimates will be reflected in the financial statements in future periods. The condensed consolidated financial statements include our financial statements and those of our wholly-owned and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Oct. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement The following table presents information about financial liabilities measured at fair value on a recurring basis as of October 31, 2015 : Fair Value Level 1 Level 2 Level 3 Contingent consideration $ 2,881 $ — $ — $ 2,881 The following table presents information about financial liabilities measured at fair value on a recurring basis as of January 31, 2015 : Fair Value Level 1 Level 2 Level 3 Contingent consideration $ 4,563 $ — $ — $ 4,563 The Financial Accounting Standards Board's authoritative guidance for the hierarchy of valuation techniques is based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources. Unobservable inputs reflect our market assumptions. The fair value hierarchy consists of the following three levels: • Level 1—Quoted prices for identical instruments in active markets; • Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose significant inputs are observable; and • Level 3—One or more significant inputs to the valuation model are unobservable. In connection with certain acquisitions, payment of a portion of the purchase price is contingent typically upon the acquired business’ achievement of certain revenue goals. As of October 31, 2015 , of the total recorded contingent consideration balance, $1,275 was included in accrued and other liabilities and $1,606 was included in other long-term liabilities on our condensed consolidated balance sheet. As of January 31, 2015 , of the total recorded contingent consideration balance, $1,515 was included in accrued and other liabilities and $3,048 was included in other long-term liabilities on our consolidated balance sheet. We have estimated the fair value of our contingent consideration as the present value of the expected payments over the term of the arrangements. The fair value measurement of our contingent consideration as of October 31, 2015 encompasses the following significant unobservable inputs (Level 3): Unobservable Inputs Range Total estimated contingent consideration $782 - $4,404 Discount rate 9.5% - 16.0% Timing of cash flows (in years) 1 - 3 Changes in the fair value of our contingent consideration are primarily driven by changes in the estimated amount and timing of payments, resulting from changes in the forecasted revenues of the acquired businesses. Significant changes in any of the inputs in isolation could result in a fluctuation in the fair value measurement of contingent consideration. Changes in fair value are recognized in special charges in our condensed consolidated statement of operations in the period in which the change is identified. The following table summarizes contingent consideration activity: Balance as of January 31, 2015 $ 4,563 Payments (1,525 ) Adjustments (254 ) Interest accretion 97 Balance as of October 31, 2015 $ 2,881 The following table summarizes the fair value and carrying value of notes payable: As of October 31, 2015 January 31, 2015 Fair value of notes payable $ 352,552 $ 310,173 Carrying value of notes payable $ 240,488 $ 230,400 We based the fair value of our 4.00% Convertible Subordinated Debentures on the quoted market price at the balance sheet date. Our notes are not actively traded and the quoted market price is derived from observable inputs including our stock price, stock volatility, and interest rate (Level 2). Of the total carrying value of notes payable, $235,300 was classified as current on our condensed consolidated balance sheet as of October 31, 2015 and none was classified as current on our condensed consolidated balance sheet as of January 31, 2015 . For further information on the current classification of notes payable, see Note 5 . “ Notes Payable .” The carrying amounts of cash equivalents, trade accounts receivable, net, term receivables, short-term borrowings, accounts payable, and accrued liabilities approximate fair value because of the short-term nature of these instruments or because amounts have been appropriately discounted. |
Term Receivables and Trade Acco
Term Receivables and Trade Accounts Receivable | 9 Months Ended |
Oct. 31, 2015 | |
Term Receivables and Trade Accounts Receivable [Abstract] | |
Term Receivables and Trade Accounts Receivable | Term Receivables and Trade Accounts Receivable We have long-term installment receivables that are attributable to multi-year, multi-element term license sales agreements. Balances for term agreements that are due within one year of the balance sheet date are included in trade accounts receivable, net and balances that are due more than one year from the balance sheet date are included in term receivables, long-term. We discount the total product portion of the agreements to reflect the interest component of the transaction. We amortize the interest component of the transaction, to system and software revenues over the period in which payments are made and balances are outstanding, using the effective interest method. We determine the discount rate at the outset of the arrangement based upon the current credit rating of the customer. We reset the discount rate periodically considering changes in prevailing interest rates but do not adjust previously discounted balances. Term receivable and trade accounts receivable balances were as follows: As of October 31, 2015 January 31, 2015 Trade accounts receivable $ 113,243 $ 208,996 Term receivables, short-term $ 334,517 $ 337,626 Term receivables, long-term $ 283,756 $ 301,862 Trade accounts receivable include billed amounts whereas term receivables, short-term are comprised of unbilled amounts. Term receivables, short-term represent the portion of long-term installment agreements that are due within one year of the balance sheet date. Billings for term agreements typically occur thirty days prior to the contractual due date, in accordance with individual contract installment terms. Term receivables, long-term represent unbilled amounts which are scheduled to be billed beyond one year from the balance sheet date. We perform a credit risk assessment of all customers using the Standard & Poor’s (S&P) credit rating as our primary credit-quality indicator. The S&P credit ratings are based on the most recent S&P score available at the time of assessment. For customers that do not have an S&P credit rating, we base our credit risk assessment on results provided in the customers’ most recent financial statements at the time of assessment. We determine whether or not to extend credit to these customers based on the results of our internal credit assessment, thus, mitigating our risk of loss. The credit risk assessment for our long-term receivables was as follows: As of October 31, 2015 January 31, 2015 S&P credit rating: AAA+ through BBB- $ 176,539 $ 192,430 BB+ and lower 39,963 31,939 216,502 224,369 Internal credit assessment 67,254 77,493 Total long-term term receivables $ 283,756 $ 301,862 We maintain allowances for doubtful accounts on trade accounts receivable and term receivables, long-term for estimated losses resulting from the inability of our customers to make required payments. We regularly evaluate the collectibility of our trade accounts receivable based on a combination of factors. When we become aware of a specific customer’s inability to meet its financial obligations, such as in the case of bankruptcy or deterioration in the customer’s operating results, financial position, or credit rating, we record a specific reserve for bad debt to reduce the related receivable to the amount believed to be collectible. We also record unspecified reserves for bad debt for all other customers based on a variety of factors including length of time the receivables are past due, the financial health of customers, the current business environment, and historical experience. If these factors change or circumstances related to specific customers change, we adjust the estimates of the recoverability of receivables resulting in either additional selling expense or a reduction in selling expense in the period the determination is made. We reduced our allowance for doubtful accounts during the nine months ended October 31, 2014 by $1,691 to reflect a change in estimate of our unspecified reserves resulting from sustained low write-off experience and strong collections. The adjustment was recorded in marketing and selling expense in our statement of income. The following shows the change in allowance for doubtful accounts: Allowance for doubtful accounts Beginning balance Expense adjustment Other deductions (1) Ending balance Nine months ended October 31, 2015 $ 4,217 $ (522 ) $ (42 ) $ 3,653 Nine months ended October 31, 2014 $ 5,469 $ (1,865 ) $ (252 ) $ 3,352 (1) Specific account write-offs and foreign exchange. We enter into agreements to sell qualifying accounts receivable from time to time to certain financing institutions on a non-recourse basis. We received net proceeds from the sale of receivables of $42,030 for the nine months ended October 31, 2015 compared to $21,956 for the nine months ended October 31, 2014 . Amounts collected from customers on accounts receivable previously sold on a non-recourse basis to financial institutions are included in short-term borrowings on the balance sheet. These amounts are remitted to the financial institutions in the month following quarter-end. |
Short-Term Borrowings
Short-Term Borrowings | 9 Months Ended |
Oct. 31, 2015 | |
Short-term Debt [Abstract] | |
Short-Term Borrowings | Short-Term Borrowings We have a syndicated, senior, unsecured, revolving credit facility which expires on January 9, 2020 . The revolving credit facility has a maximum borrowing capacity of $125,000 . As stated in the revolving credit facility, we have the option to pay interest based on: (i) London Interbank Offered Rate (LIBOR) with varying maturities commensurate with the borrowing period we select, plus a spread of between 2.00% and 2.50% based on a pricing grid tied to a financial covenant, or (ii) A base rate plus a spread of between 1.00% and 1.50% , based on a pricing grid tied to a financial covenant. As a result of these interest rate options, our interest expense associated with borrowings under this revolving credit facility will vary. We had no borrowings against the revolving credit facility during the nine months ended October 31, 2015 and 2014 . Commitment fees are payable on the unused portion of the revolving credit facility at rates between 0.30% and 0.40% based on a pricing grid tied to a financial covenant. This revolving credit facility contains certain financial and other covenants, including a limit on the aggregate amount we can pay for dividends and repurchases of our stock over the term of the facility of $50,000 plus 70% of our cumulative net income for the periods after January 31, 2011. We were in compliance with all financial covenants as of October 31, 2015 . If we fail to comply with the financial covenants and do not obtain a waiver from our lenders, we would be in default under the revolving credit facility and our lenders could terminate the facility and demand immediate repayment of all outstanding loans under the revolving credit facility. |
Notes Payable
Notes Payable | 9 Months Ended |
Oct. 31, 2015 | |
Notes Payable | Notes Payable Notes payable consist of the following: As of October 31, 2015 January 31, 2015 4.00% Debentures due 2031 $ 235,300 $ 230,400 Other 5,188 — Notes Payable 240,488 230,400 4.00% Debentures due 2031, current portion (235,300 ) — Notes payable, long-term $ 5,188 $ 230,400 Our 4.00% Convertible Subordinated Debentures (4.00% Debentures) are due in 2031 , but we may be required to repay them earlier under the conversion and redemption provisions described below. 4.00% Debentures due 2031 In April 2011 , we issued $253,000 of 4.00% Debentures in a private placement pursuant to the SEC Rule 144A under the Securities Act of 1933. Interest on the 4.00% Debentures is payable semi-annually in April and October. The 4.00% Debentures are unsecured obligations. Each one thousand dollars in principal amount of the 4.00% Debentures is currently convertible, under certain circumstances, into 49.8058 shares of our common stock (equivalent to a conversion price of $20.08 per share). The initial conversion rate for the 4.00% Debentures was 48.6902 shares of our common stock for each one thousand dollars in principal amount (equivalent to a conversion price of $20.54 per share). The conversion rate is adjusted because we declare and pay quarterly cash dividends, beginning in the first quarter of fiscal year 2014 . The 4.00% Debentures are convertible, under certain circumstances, into shares of our common stock at the conversion rate noted above. The circumstances for conversion include: • The market price of our common stock exceeding 120.0% of the conversion price, or $24.09 per share as of October 31, 2015 , for at least 20 of the last 30 trading days in the previous fiscal quarter; • A call for redemption of the 4.00% Debentures; • Specified distributions to holders of our common stock; • If a fundamental change, such as a change of control, occurs; • During the two months prior to, but not on, the maturity date; or • The market price of the 4.00% Debentures declining to less than 98% of the value of the common stock into which the 4.00% Debentures are convertible. Upon conversion of any 4.00% Debentures, a holder will receive: (i) Cash for the lesser of the principal amount of the 4.00% Debentures that are converted or the value of the converted shares; and (ii) Cash or shares of common stock, at our election, for the excess, if any, of the value of the converted shares over the principal amount. As of October 31, 2015 , the if-converted value of the 4.00% Debentures to the note holders exceeded the principal amount by $89,744 . During the fiscal quarter ended October 31, 2015 , the market price of our common stock exceeded 120% of the conversion price for at least 20 of the last 30 trading days of the period. Accordingly, the 4.00% Debentures are convertible at the option of the holders through January 31, 2016 . Therefore, the carrying value of the 4.00% Debentures is classified as a current liability. Additionally, the excess of the principal amount over the carrying value of the 4.00% Debentures is reclassified from permanent equity to temporary equity in our consolidated balance sheet as of October 31, 2015 . The determination of whether or not the 4.00% Debentures are convertible is performed at each balance sheet date and may change from quarter to quarter. If this threshold is not met next quarter, the 4.00% Debentures will be reclassified as a long-term liability and the temporary equity will be reclassified to permanent equity in our consolidated balance sheet. If a holder elects to convert their 4.00% Debentures through January 31, 2016 , we would be required to pay cash for at least the principal amount of converted 4.00% Debentures. At the end of the fiscal quarter ended October 31, 2015 a minimal number of holders requested conversion. As of October 31, 2015 , no cash or shares had been delivered related to the conversion requests. If a holder elects to convert their 4.00% Debentures in connection with a fundamental change in the company that occurs prior to April 5, 2016 , in some circumstances the holder will also be entitled to receive a make whole premium upon conversion. We may redeem some or all of the 4.00% Debentures for cash on or after April 5, 2016 at the following redemption prices, expressed as a percentage of principal plus any accrued and unpaid interest: Period Redemption Price Beginning on April 5, 2016 and ending on March 31, 2017 101.143 % Beginning on April 1, 2017 and ending on March 31, 2018 100.571 % On April 1, 2018 and thereafter 100.000 % The holders, at their option, may redeem the 4.00% Debentures for cash on April 1, 2018 , April 1, 2021 , and April 1, 2026 , and in the event of a fundamental change in the company. In each case, our repurchase price will be 100% of the principal amount of the 4.00% Debentures plus any accrued and unpaid interest. The 4.00% Debentures contain a conversion feature allowing for settlement of the debt in cash upon conversion, therefore we separately account for the implied liability and equity components of the 4.00% Debentures. The principal amount, unamortized debt discount, net carrying amount of the liability component, and carrying amount of the equity component of the 4.00% Debentures are as follows: As of October 31, 2015 January 31, 2015 Principal amount $ 253,000 $ 253,000 Unamortized debt discount (17,700 ) (22,600 ) Net carrying amount of the liability component $ 235,300 $ 230,400 Equity component, net of debt issuance costs $ 42,531 $ 42,531 The unamortized debt discount amortizes to interest expense using the effective interest method through March 2018. We recognized the following amounts in interest expense in the condensed consolidated statement of income related to the 4.00% Debentures: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Interest expense at the contractual interest rate $ 2,530 $ 2,530 $ 7,590 $ 7,590 Amortization of debt discount $ 1,663 $ 1,548 $ 4,900 $ 4,563 The effective interest rate on the 4.00% Debentures was 7.25% for the nine months ended October 31, 2015 and 2014 . Other Notes Payable In February 2015 , we issued a subordinated note payable as part of a business combination, and $3,188 of principal was outstanding on this note as of October 31, 2015 . The note bears interest at a rate of 4.0% and is due in full on February 25, 2019 . In September 2015 , we issued a $2,000 subordinated note payable as part of a business combination. The note bears interest at a rate of 4.0% and is due in full on September 8, 2018 . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Indemnifications Our license and services agreements generally include a limited indemnification provision for claims from third parties relating to our intellectual property (IP). The indemnification is generally limited to the amount paid by the customer, a multiple of the amount paid by the customer, or a set cap. As of October 31, 2015 , we were not aware of any material liabilities arising from these indemnification obligations. Legal Proceedings From time to time we are involved in various disputes and litigation matters that arise in the ordinary course of business. These include disputes and lawsuits relating to IP rights, contracts, distributorships, and employee relations matters. Periodically, we review the status of various disputes and litigation matters and assess our potential exposure. When we consider the potential loss from any dispute or legal matter probable and the amount or the range of loss can be estimated, we will accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, we base accruals on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation matters and may revise estimates. We believe that the outcome of current litigation, individually and in the aggregate, will not have a material effect on our results of operations. In some instances, we are unable to reasonably estimate any potential loss or range of loss. The nature and progression of litigation can make it difficult to predict the impact a particular lawsuit will have. There are many reasons why we cannot make these assessments, including, among others, one or more of the following: a proceeding being in its early stages; damages sought that are unspecific, unsupportable, unexplained or uncertain; discovery not having been started or being incomplete; the complexity of the facts that are in dispute; the difficulty of assessing novel claims; the parties not having engaged in any meaningful settlement discussions; the possibility that other parties may share in any ultimate liability; and/or the often slow pace of litigation. In December 2012, Synopsys, Inc. (Synopsys) filed a lawsuit claiming patent infringement against us in federal district court in the Northern District of California, alleging that our Veloce ® family of products infringed four Synopsys U.S. patents. In January 2015, the court issued a summary judgment order in our favor invalidating all asserted claims of three of the Synopsys patents. In June 2015, the U.S. Patent Trademark Office ruled that claims of the remaining patent asserted against us by Synopsys are unpatentable. This case is no longer on the court’s docket for trial. Synopsys has appealed the decision by the district court. In May 2013, Synopsys also filed a claim against us in federal district court in Oregon, similarly alleging that our Veloce family of products infringed on two additional Synopsys U.S. patents. These claims have been dismissed. We believe these lawsuits were filed in response to patent lawsuits we filed in 2010 and 2012 against Emulation and Verification Engineering S.A. and EVE-USA, Inc. (together EVE), which Synopsys acquired in October 2012. On October 10, 2014, the jury in our patent lawsuit filed in the federal district court for the District of Oregon found that one of our patents - U.S. Patent No. 6,240,376 - was directly and indirectly infringed by EVE and Synopsys. As part of the verdict, the jury awarded us damages of approximately $36,000 as well as certain royalties. As of October 31, 2015 , nothing has been included in our financial results for this award. Synopsys has filed an appeal. On March 12, 2015, the Oregon court granted our request for a permanent injunction against future sales of Synopsys emulators containing infringing technology. In December 2010, we filed a patent lawsuit against EVE in Tokyo district court, which seeks compensatory damages and an injunction against the sale of EVE emulation products. The technical trial for the Japanese litigation was held in October 2014. In May 2015, the court issued a preliminary verdict of non-infringement. We have appealed that verdict. We do not have sufficient information upon which to determine that a loss in connection with these matters is probable, reasonably possible, or estimable, and thus no liability has been established nor has a range of loss been disclosed. |
Stockholders Equity (Notes)
Stockholders Equity (Notes) | 9 Months Ended |
Oct. 31, 2015 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Stockholders' Equity Note Disclosure | Stockholders' Equity Dividends The following table summarizes dividends declared since the beginning of fiscal year 2015 : Declaration Date Record Date Payment Date Per Share Amount Total Amount Fiscal Year 2016 11/19/2015 12/15/2015 1/4/2016 $ 0.055 8/20/2015 9/10/2015 9/30/2015 $ 0.055 $ 6,491 5/22/2015 6/10/2015 6/30/2015 $ 0.055 $ 6,389 2/26/2015 3/10/2015 3/31/2015 $ 0.055 $ 6,383 Fiscal Year 2015 11/20/2014 12/10/2014 1/2/2015 $ 0.05 $ 5,743 8/21/2014 9/10/2014 9/30/2014 $ 0.05 $ 5,697 5/22/2014 6/10/2014 6/30/2014 $ 0.05 $ 5,693 2/27/2014 3/10/2014 3/31/2014 $ 0.05 $ 5,778 Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to the quarterly determination of our Board of Directors. |
Employee Stock and Savings Plan
Employee Stock and Savings Plans | 9 Months Ended |
Oct. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Employee Stock and Savings Plans | Stock-Based Compensation Stock Option and Stock Plans Our 2010 Omnibus Incentive Plan (Incentive Plan) is administered by the Compensation Committee of our Board of Directors and permits accelerated vesting of outstanding options, restricted stock units, restricted stock awards, and other equity incentives upon the occurrence of certain changes in control of our company. Stock options and time-based restricted stock units under the Incentive Plan are generally expected to vest over four years. Stock options have an expiration date of ten years from the date of grant and an exercise price no less than the fair market value of the shares on the date of grant. Performance-based restricted stock units vest after three years depending on attainment of goals for operating income margin. Employee Stock Purchase Plans We have an employee stock purchase plan (ESPP) for U.S. employees and an ESPP for certain foreign subsidiary employees. The ESPPs provide for six-month offerings commencing on January 1 and July 1 of each year with purchases on June 30 and December 31 of each year. Each eligible employee may purchase up to six thousand shares of stock on each purchase date (subject to a plan limit on the total fair market value) at prices no less than 85% of the lesser of the fair market value of the shares on the offering date or on the purchase date. Stock-Based Compensation Expense The following table summarizes stock-based compensation expense recognized: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Cost of revenues $ 665 $ 608 $ 1,981 $ 1,687 Operating expenses: 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 Equity plan-related compensation expense $ 10,025 $ 9,102 $ 30,889 $ 26,391 |
Incentive Stock Rights
Incentive Stock Rights | 9 Months Ended |
Oct. 31, 2015 | |
Incentive Stock Rights [Abstract] | |
Incentive Stock Rights | Incentive Stock Rights On June 24, 2010 , our Board of Directors adopted an Incentive Stock Purchase Rights Plan and declared a dividend distribution of one right for each outstanding share of common stock, payable to holders of record on July 6, 2010 . The rights would become exercisable if a person or group acquired or commenced a tender offer to acquire a set threshold of our outstanding common stock. The Plan was subsequently amended in 2011 and 2013 to extend its termination date and make certain other changes. On June 30, 2015 , the Plan expired in accordance with its terms. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Oct. 31, 2015 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share We compute basic net income (loss) per share using the weighted average number of common shares outstanding during the period. We compute diluted net income per share using the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of common shares issuable upon vesting of restricted stock units, exercise of stock options and ESPP purchase rights, and conversion of the 4.00% Debentures using the treasury stock method. The following provides the computation of basic and diluted net income per share: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Net income attributable to Mentor Graphics shareholders $ 14,679 $ 21,030 $ 36,006 $ 32,651 Adjustment to redemption value of noncontrolling interest with redemption feature 133 (267 ) 258 1,295 Adjusted net income attributable to Mentor Graphics shareholders, basic 14,812 20,763 36,264 33,946 Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures — — 519 — Adjusted net income attributable to Mentor Graphics shareholders, diluted $ 14,812 $ 20,763 $ 36,783 $ 33,946 Weighted average common shares used to calculate basic net income per share 117,759 114,405 116,787 114,399 Employee stock options, restricted stock units, employee stock purchase plan and convertible debt 2,382 2,310 5,176 2,529 Weighted average common and potential common shares used to calculate diluted net income per share 120,141 116,715 121,963 116,928 Net income per share attributable to Mentor Graphics shareholders: Basic net income per share $ 0.13 $ 0.18 $ 0.31 $ 0.30 Diluted net income per share $ 0.12 $ 0.18 $ 0.30 $ 0.29 We have adjusted the numerator of our basic and diluted earnings per share calculation for the adjustment of the noncontrolling interest with redemption feature to its calculated redemption value, recorded directly to retained earnings. The effect of the conversion of the 4.00% Debentures was dilutive for the nine months ended October 31, 2015 . We assume that the excess of the value of the converted shares over the principal amount of the 4.00% Debentures will be settled in common stock for purposes of calculating the dilutive effect on net income per share. We have adjusted the numerator of our diluted earnings per share calculation for the forfeited interest, net of tax, resulting from the assumed conversion. The effect of the conversion of the 4.00% Debentures was anti-dilutive for the three months ended October 31, 2015 and the three and nine months ended October 31, 2014 and therefore excluded from the computation of diluted net income per share. The conversion feature of the 4.00% Debentures, which allows for settlement in cash or a combination of cash and common stock, is further described in Note 5 . “ Notes Payable .” The following details adjustments to net income excluded from the computation of diluted net income : Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures $ 519 $ 519 $ — $ 519 The following details shares excluded from the computation of diluted net income : Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Shares of common stock for restricted stock units — 1,657 — 1,138 Shares of common stock for stock options — 20 — 51 Shares of common stock for convertible debt 2,695 354 — 476 Total anti-dilutive shares excluded 2,695 2,031 — 1,665 These stock options, restricted stock units, and convertible debt were determined to be anti-dilutive as a result of applying the treasury stock method. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Oct. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss, net of tax | Accumulated Other Comprehensive Loss The following table summarizes the components of accumulated other comprehensive loss, net of tax: As of October 31, 2015 January 31, 2015 Foreign currency translation adjustment $ (17,928 ) $ (12,044 ) Unrealized gain (loss) on derivatives (7 ) 42 Pension liability 110 115 Total accumulated other comprehensive loss $ (17,825 ) $ (11,887 ) |
Special Charges (Notes)
Special Charges (Notes) | 9 Months Ended |
Oct. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Special Charges | Special Charges The following is a summary of the components of special charges: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Voluntary early retirement program $ (203 ) $ — $ 25,232 $ — Employee severance and related costs 3,485 1,377 14,188 3,077 Litigation costs 1,122 7,004 3,641 15,193 Other costs, net 427 (6 ) 933 1,139 Total special charges $ 4,831 $ 8,375 $ 43,994 $ 19,409 Special charges generally include expenses incurred related to employee severance, certain litigation costs, acquisitions, excess facility costs, and asset related charges. We offered the voluntary early retirement program in North America during the three months ended April 30, 2015 and 110 employees elected to participate. The costs presented here are for severance benefits. Approximately 96% of these costs were paid during the nine months ended October 31, 2015 . We expect to pay the remainder during the fiscal year ending January 31, 2016. Employee severance and related costs include severance benefits and notice pay. These rebalance charges generally represent the aggregate of numerous unrelated rebalance plans which impact several employee groups, none of which is individually material to our financial position or results of operations. We determine termination benefit amounts based on employee status, years of service, and local statutory requirements. We record the charge for estimated severance benefits in the quarter that the rebalance plan is approved. Approximately 64% of the employee severance and related costs for the nine months ended October 31, 2015 were paid during the period. We expect to pay the remainder during the fiscal year ending January 31, 2016 . Substantially all of the employee severance and related costs for the nine months ended October 31, 2014 were paid during the fiscal year ending January 31, 2015 . There were no significant modifications to the amount of those charges. Litigation costs consist of professional service fees for services rendered, related to patent litigation involving us, EVE, and Synopsys regarding emulation technology. Accrued special charges are included in accrued and other liabilities and other long-term liabilities in the condensed consolidated balance sheets. The following table shows changes in accrued special charges during the nine months ended October 31, 2015 : Accrued special Charges during the nine months ended Payments during the nine months ended Accrued special charges as of January 31, 2015 October 31, 2015 October 31, 2015 October 31, 2015 (1 ) Voluntary early retirement program $ — $ 25,232 $ (24,344 ) $ 888 Employee severance and related costs 370 14,188 (9,326 ) 5,232 Litigation costs 3,406 3,641 (6,165 ) 882 Other costs, net 741 933 (600 ) 1,074 Total accrued special charges $ 4,517 $ 43,994 $ (40,435 ) $ 8,076 (1) Of the $8,076 total accrued special charges as of October 31, 2015 , $526 represents the long-term portion, which primarily includes accrued lease termination fees and other facility costs, net of sublease income. The remaining balance of $7,550 represents the short-term portion of accrued special charges. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Oct. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Certain members of our Board of Directors also serve as executive officers or directors for some of our customers. Management believes the transactions between these customers and us were carried out on an arm’s-length basis. We had amounts receivable from these customers of $14,870 as of October 31, 2015 and $46,661 as of January 31, 2015 . The following table shows revenue recognized from these customers: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Revenues from customers $ 6,902 $ 10,311 $ 14,054 $ 21,466 Percentage of total revenues 2.4 % 3.5 % 1.7 % 2.7 % |
Income Taxes
Income Taxes | 9 Months Ended |
Oct. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes was as follows: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Income tax expense $ 7,204 $ 3,849 $ 9,763 $ 1,907 Effective tax rate 34.2 % 15.8 % 22.3 % 5.7 % Generally, the provision for income taxes is the result of the mix of profits and losses earned in various tax jurisdictions with a broad range of income tax rates, withholding taxes (primarily in certain foreign jurisdictions), changes in tax reserves, and the application of valuation allowances on deferred tax assets. Accounting guidance for interim reporting requires that we evaluate our provision for income tax expense based on our projected results of operations for the full year and record adjustments in each quarter. Such adjustments consider period specific items and a separate determination of tax expense for entities in our consolidated group that are projected to have losses for which no tax benefit will be recognized. Our effective tax rate is 22.3% for the nine months ended October 31, 2015 , after the inclusion of $(301) in net favorable period specific items. For our full year forecast, we have projected a 23.0% effective tax rate. This rate is inclusive of period specific items recognized through October 31, 2015 . Our projected rate for the full year differs from tax computed at the U.S. federal statutory rate of 35.0% primarily due to: • The benefit of lower tax rates on earnings of foreign subsidiaries; and • Forecasted utilization of net operating loss carryforwards and tax credit carryforwards for which no previous benefit was recognized. These differences are partially offset by: • Provision of U.S. income tax on non-permanently reinvested foreign subsidiary earnings to permit future repatriation to the U.S; • Increase in liabilities for uncertain tax positions; and • Withholding taxes. Actual results may differ significantly from our current projections. Further, our effective tax rate could fluctuate considerably on a quarterly basis and could be significantly affected to the extent our actual mix of earnings among individual jurisdictions is different than our expectations. We determine deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities. In addition, we record deferred tax assets for net operating loss carryforwards and tax credit carryforwards. We calculate the deferred tax assets and liabilities using the enacted tax rates and laws that will be in effect when we expect the differences to reverse. A valuation allowance is recorded when it is more likely than not that all or some portion of the deferred tax asset will not be realized. Since 2004, we have determined that it is uncertain whether our U.S. entity will generate sufficient taxable income to offset reversing timing differences and to fully utilize net operating loss and tax credit carryforwards. Accordingly, we recorded a valuation allowance against those deferred tax assets for which realization does not meet the more likely than not standard. We have established valuation allowances related to certain foreign deferred tax assets based on historical losses as well as future expectations in certain jurisdictions. We will continue to evaluate the realizability of the deferred tax assets on a periodic basis. As of October 31, 2015 , we had a liability of $22,294 for income taxes associated with uncertain income tax positions. Of this liability, $1,612 was classified as short-term liabilities in income taxes payable in our condensed consolidated balance sheet as we generally anticipate the settlement of such liabilities will require payment of cash within the next twelve months. The remaining $20,682 of income tax associated with uncertain tax positions was classified as long-term liabilities. Certain liabilities may result in the reduction of deferred tax assets rather than settlement in cash. We are not able to reasonably estimate the timing of any cash payments required to settle the long-term liabilities and do not believe that the ultimate settlement of these liabilities will materially affect our liquidity. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Oct. 31, 2015 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following provides information concerning supplemental disclosures of cash flow activities: Nine months ended October 31, 2015 2014 Cash paid, net for: Interest $ 11,497 $ 11,322 Income taxes $ 10,426 $ 8,836 During the three months ended October 2015 we purchased the remaining noncontrolling interest in Calypto Design Systems, Inc. for $11,088 which is included in net cash used in financing activities in our condensed consolidated statement of cash flows. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Oct. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting Our Chief Operating Decision Makers (CODMs), which consist of the Chief Executive Officer and the President, review our consolidated results within one operating segment. In making operating decisions, our CODMs primarily consider consolidated financial information accompanied by disaggregated revenue information by geographic region. We eliminate all intercompany revenues in computing revenues by geographic regions. Revenues related to operations in the geographic regions were as follows: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Revenues: United States $ 115,984 $ 135,264 $ 360,773 $ 371,722 Europe 65,645 64,936 181,484 180,547 Japan 32,947 25,359 69,888 67,613 Pacific Rim 72,186 64,346 219,773 171,022 Other 3,754 2,778 11,803 14,163 Total revenues $ 290,516 $ 292,683 $ 843,721 $ 805,067 For the three months ended October 31, 2015 , no customer accounted for 10.0% or more of our total revenues. For the three months ended October 31, 2014 , one customer accounted for 10.0% or more of our total revenues. For the nine months ended October 31, 2015 and 2014 , one customer accounted for 10.0% or more of our total revenues. |
Fair Value Measurement (Policie
Fair Value Measurement (Policies) | 9 Months Ended |
Oct. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial instruments | The Financial Accounting Standards Board's authoritative guidance for the hierarchy of valuation techniques is based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources. Unobservable inputs reflect our market assumptions. The fair value hierarchy consists of the following three levels: • Level 1—Quoted prices for identical instruments in active markets; • Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose significant inputs are observable; and • Level 3—One or more significant inputs to the valuation model are unobservable. |
Contingent consideration | We have estimated the fair value of our contingent consideration as the present value of the expected payments over the term of the arrangements. |
Notes payable fair value determination | We based the fair value of our 4.00% Convertible Subordinated Debentures on the quoted market price at the balance sheet date. Our notes are not actively traded and the quoted market price is derived from observable inputs including our stock price, stock volatility, and interest rate (Level 2). |
Term Receivables and Trade Ac24
Term Receivables and Trade Accounts Receivable (Policies) | 9 Months Ended |
Oct. 31, 2015 | |
Term Receivables and Trade Accounts Receivable [Abstract] | |
Receivables policy | Balances for term agreements that are due within one year of the balance sheet date are included in trade accounts receivable, net and balances that are due more than one year from the balance sheet date are included in term receivables, long-term. We discount the total product portion of the agreements to reflect the interest component of the transaction. We amortize the interest component of the transaction, to system and software revenues over the period in which payments are made and balances are outstanding, using the effective interest method. We determine the discount rate at the outset of the arrangement based upon the current credit rating of the customer. We reset the discount rate periodically considering changes in prevailing interest rates but do not adjust previously discounted balances. |
Trade and unbilled receivables | Trade accounts receivable include billed amounts whereas term receivables, short-term are comprised of unbilled amounts. Term receivables, short-term represent the portion of long-term installment agreements that are due within one year of the balance sheet date. Billings for term agreements typically occur thirty days prior to the contractual due date, in accordance with individual contract installment terms. Term receivables, long-term represent unbilled amounts which are scheduled to be billed beyond one year from the balance sheet date. |
Financing receivable credit quality determination | We perform a credit risk assessment of all customers using the Standard & Poor’s (S&P) credit rating as our primary credit-quality indicator. The S&P credit ratings are based on the most recent S&P score available at the time of assessment. For customers that do not have an S&P credit rating, we base our credit risk assessment on results provided in the customers’ most recent financial statements at the time of assessment. We determine whether or not to extend credit to these customers based on the results of our internal credit assessment, thus, mitigating our risk of loss. |
Allowance for doubtful accounts | We maintain allowances for doubtful accounts on trade accounts receivable and term receivables, long-term for estimated losses resulting from the inability of our customers to make required payments. We regularly evaluate the collectibility of our trade accounts receivable based on a combination of factors. When we become aware of a specific customer’s inability to meet its financial obligations, such as in the case of bankruptcy or deterioration in the customer’s operating results, financial position, or credit rating, we record a specific reserve for bad debt to reduce the related receivable to the amount believed to be collectible. We also record unspecified reserves for bad debt for all other customers based on a variety of factors including length of time the receivables are past due, the financial health of customers, the current business environment, and historical experience. If these factors change or circumstances related to specific customers change, we adjust the estimates of the recoverability of receivables resulting in either additional selling expense or a reduction in selling expense in the period the determination is made. |
Commitments and Contingencies (
Commitments and Contingencies (Policies) | 9 Months Ended |
Oct. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies policy | When we consider the potential loss from any dispute or legal matter probable and the amount or the range of loss can be estimated, we will accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, we base accruals on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation matters and may revise estimates. |
Special Charges Costs Associate
Special Charges Costs Associated with Exit or Disposal Activities or Restructuring (Policies) | 9 Months Ended |
Oct. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Costs associated with employee severance and related costs | Employee severance and related costs include severance benefits and notice pay. These rebalance charges generally represent the aggregate of numerous unrelated rebalance plans which impact several employee groups, none of which is individually material to our financial position or results of operations. We determine termination benefit amounts based on employee status, years of service, and local statutory requirements. We record the charge for estimated severance benefits in the quarter that the rebalance plan is approved. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial liabilities measured at fair value on a recurring basis | The following table presents information about financial liabilities measured at fair value on a recurring basis as of October 31, 2015 : Fair Value Level 1 Level 2 Level 3 Contingent consideration $ 2,881 $ — $ — $ 2,881 The following table presents information about financial liabilities measured at fair value on a recurring basis as of January 31, 2015 : Fair Value Level 1 Level 2 Level 3 Contingent consideration $ 4,563 $ — $ — $ 4,563 |
Significant unobservable inputs | The fair value measurement of our contingent consideration as of October 31, 2015 encompasses the following significant unobservable inputs (Level 3): Unobservable Inputs Range Total estimated contingent consideration $782 - $4,404 Discount rate 9.5% - 16.0% Timing of cash flows (in years) 1 - 3 |
Summary of level 3 activity | The following table summarizes contingent consideration activity: Balance as of January 31, 2015 $ 4,563 Payments (1,525 ) Adjustments (254 ) Interest accretion 97 Balance as of October 31, 2015 $ 2,881 |
Schedule of notes payable | The following table summarizes the fair value and carrying value of notes payable: As of October 31, 2015 January 31, 2015 Fair value of notes payable $ 352,552 $ 310,173 Carrying value of notes payable $ 240,488 $ 230,400 |
Term Receivables and Trade Ac28
Term Receivables and Trade Accounts Receivable (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Term Receivables and Trade Accounts Receivable [Abstract] | |
Term receivable and trade accounts receivable balances | Term receivable and trade accounts receivable balances were as follows: As of October 31, 2015 January 31, 2015 Trade accounts receivable $ 113,243 $ 208,996 Term receivables, short-term $ 334,517 $ 337,626 Term receivables, long-term $ 283,756 $ 301,862 |
Credit risk assessment for long-term receivables | The credit risk assessment for our long-term receivables was as follows: As of October 31, 2015 January 31, 2015 S&P credit rating: AAA+ through BBB- $ 176,539 $ 192,430 BB+ and lower 39,963 31,939 216,502 224,369 Internal credit assessment 67,254 77,493 Total long-term term receivables $ 283,756 $ 301,862 |
Change in allowance for doubtful accounts | The following shows the change in allowance for doubtful accounts: Allowance for doubtful accounts Beginning balance Expense adjustment Other deductions (1) Ending balance Nine months ended October 31, 2015 $ 4,217 $ (522 ) $ (42 ) $ 3,653 Nine months ended October 31, 2014 $ 5,469 $ (1,865 ) $ (252 ) $ 3,352 (1) Specific account write-offs and foreign exchange. |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Debt Instrument | |
Schedule of Long-term Debt Instruments | Notes payable consist of the following: As of October 31, 2015 January 31, 2015 4.00% Debentures due 2031 $ 235,300 $ 230,400 Other 5,188 — Notes Payable 240,488 230,400 4.00% Debentures due 2031, current portion (235,300 ) — Notes payable, long-term $ 5,188 $ 230,400 |
4.00% Debentures due 2031 | |
Debt Instrument | |
Redemption prices | We may redeem some or all of the 4.00% Debentures for cash on or after April 5, 2016 at the following redemption prices, expressed as a percentage of principal plus any accrued and unpaid interest: Period Redemption Price Beginning on April 5, 2016 and ending on March 31, 2017 101.143 % Beginning on April 1, 2017 and ending on March 31, 2018 100.571 % On April 1, 2018 and thereafter 100.000 % |
Principal amount, unamortized debt premium (discount), net carrying amount of the liability component, and carrying amount of the equity component | The principal amount, unamortized debt discount, net carrying amount of the liability component, and carrying amount of the equity component of the 4.00% Debentures are as follows: As of October 31, 2015 January 31, 2015 Principal amount $ 253,000 $ 253,000 Unamortized debt discount (17,700 ) (22,600 ) Net carrying amount of the liability component $ 235,300 $ 230,400 Equity component, net of debt issuance costs $ 42,531 $ 42,531 |
Recognized amounts in interest expense in the condensed consolidated statement of income related to debentures | We recognized the following amounts in interest expense in the condensed consolidated statement of income related to the 4.00% Debentures: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Interest expense at the contractual interest rate $ 2,530 $ 2,530 $ 7,590 $ 7,590 Amortization of debt discount $ 1,663 $ 1,548 $ 4,900 $ 4,563 |
Stockholders Equity Dividends D
Stockholders Equity Dividends Declared (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Dividends declared | The following table summarizes dividends declared since the beginning of fiscal year 2015 : Declaration Date Record Date Payment Date Per Share Amount Total Amount Fiscal Year 2016 11/19/2015 12/15/2015 1/4/2016 $ 0.055 8/20/2015 9/10/2015 9/30/2015 $ 0.055 $ 6,491 5/22/2015 6/10/2015 6/30/2015 $ 0.055 $ 6,389 2/26/2015 3/10/2015 3/31/2015 $ 0.055 $ 6,383 Fiscal Year 2015 11/20/2014 12/10/2014 1/2/2015 $ 0.05 $ 5,743 8/21/2014 9/10/2014 9/30/2014 $ 0.05 $ 5,697 5/22/2014 6/10/2014 6/30/2014 $ 0.05 $ 5,693 2/27/2014 3/10/2014 3/31/2014 $ 0.05 $ 5,778 |
Employee Stock and Savings Pl31
Employee Stock and Savings Plans (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock compensation expense recognized | The following table summarizes stock-based compensation expense recognized: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Cost of revenues $ 665 $ 608 $ 1,981 $ 1,687 Operating expenses: 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 Equity plan-related compensation expense $ 10,025 $ 9,102 $ 30,889 $ 26,391 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted net income (loss) per share | The following provides the computation of basic and diluted net income per share: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Net income attributable to Mentor Graphics shareholders $ 14,679 $ 21,030 $ 36,006 $ 32,651 Adjustment to redemption value of noncontrolling interest with redemption feature 133 (267 ) 258 1,295 Adjusted net income attributable to Mentor Graphics shareholders, basic 14,812 20,763 36,264 33,946 Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures — — 519 — Adjusted net income attributable to Mentor Graphics shareholders, diluted $ 14,812 $ 20,763 $ 36,783 $ 33,946 Weighted average common shares used to calculate basic net income per share 117,759 114,405 116,787 114,399 Employee stock options, restricted stock units, employee stock purchase plan and convertible debt 2,382 2,310 5,176 2,529 Weighted average common and potential common shares used to calculate diluted net income per share 120,141 116,715 121,963 116,928 Net income per share attributable to Mentor Graphics shareholders: Basic net income per share $ 0.13 $ 0.18 $ 0.31 $ 0.30 Diluted net income per share $ 0.12 $ 0.18 $ 0.30 $ 0.29 We have adjusted the numerator of our basic and diluted earnings per share calculation for the adjustment of the noncontrolling interest with redemption feature to its calculated redemption value, recorded directly to retained earnings. The effect of the conversion of the 4.00% Debentures was dilutive for the nine months ended October 31, 2015 . We assume that the excess of the value of the converted shares over the principal amount of the 4.00% Debentures will be settled in common stock for purposes of calculating the dilutive effect on net income per share. We have adjusted the numerator of our diluted earnings per share calculation for the forfeited interest, net of tax, resulting from the assumed conversion. |
Adjustments to Net Income excluded from the computation of diluted EPS | The following details adjustments to net income excluded from the computation of diluted net income : Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures $ 519 $ 519 $ — $ 519 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | The following details shares excluded from the computation of diluted net income : Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Shares of common stock for restricted stock units — 1,657 — 1,138 Shares of common stock for stock options — 20 — 51 Shares of common stock for convertible debt 2,695 354 — 476 Total anti-dilutive shares excluded 2,695 2,031 — 1,665 These stock options, restricted stock units, and convertible debt were determined to be anti-dilutive as a result of applying the treasury stock method. |
Accumulated Other Comprehensi33
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of components of accumulated other comprehensive loss, net of tax | The following table summarizes the components of accumulated other comprehensive loss, net of tax: As of October 31, 2015 January 31, 2015 Foreign currency translation adjustment $ (17,928 ) $ (12,044 ) Unrealized gain (loss) on derivatives (7 ) 42 Pension liability 110 115 Total accumulated other comprehensive loss $ (17,825 ) $ (11,887 ) |
Special Charges Special Charges
Special Charges Special Charges (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Components of special charges | The following is a summary of the components of special charges: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Voluntary early retirement program $ (203 ) $ — $ 25,232 $ — Employee severance and related costs 3,485 1,377 14,188 3,077 Litigation costs 1,122 7,004 3,641 15,193 Other costs, net 427 (6 ) 933 1,139 Total special charges $ 4,831 $ 8,375 $ 43,994 $ 19,409 |
Schedule of accrued special charges | The following table shows changes in accrued special charges during the nine months ended October 31, 2015 : Accrued special Charges during the nine months ended Payments during the nine months ended Accrued special charges as of January 31, 2015 October 31, 2015 October 31, 2015 October 31, 2015 (1 ) Voluntary early retirement program $ — $ 25,232 $ (24,344 ) $ 888 Employee severance and related costs 370 14,188 (9,326 ) 5,232 Litigation costs 3,406 3,641 (6,165 ) 882 Other costs, net 741 933 (600 ) 1,074 Total accrued special charges $ 4,517 $ 43,994 $ (40,435 ) $ 8,076 (1) Of the $8,076 total accrued special charges as of October 31, 2015 , $526 represents the long-term portion, which primarily includes accrued lease termination fees and other facility costs, net of sublease income. The remaining balance of $7,550 represents the short-term portion of accrued special charges. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Related Party Transactions [Abstract] | |
Revenue recognized from related party | The following table shows revenue recognized from these customers: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Revenues from customers $ 6,902 $ 10,311 $ 14,054 $ 21,466 Percentage of total revenues 2.4 % 3.5 % 1.7 % 2.7 % |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | The provision for income taxes was as follows: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Income tax expense $ 7,204 $ 3,849 $ 9,763 $ 1,907 Effective tax rate 34.2 % 15.8 % 22.3 % 5.7 % |
Supplemental Cash Flow Inform37
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Supplemental Cash Flow Information [Abstract] | |
Information concerning supplemental disclosures of cash flow activities | The following provides information concerning supplemental disclosures of cash flow activities: Nine months ended October 31, 2015 2014 Cash paid, net for: Interest $ 11,497 $ 11,322 Income taxes $ 10,426 $ 8,836 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Oct. 31, 2015 | |
Segment Reporting [Abstract] | |
Revenues related to operations in geographic regions | Revenues related to operations in the geographic regions were as follows: Three months ended October 31, Nine months ended October 31, 2015 2014 2015 2014 Revenues: United States $ 115,984 $ 135,264 $ 360,773 $ 371,722 Europe 65,645 64,936 181,484 180,547 Japan 32,947 25,359 69,888 67,613 Pacific Rim 72,186 64,346 219,773 171,022 Other 3,754 2,778 11,803 14,163 Total revenues $ 290,516 $ 292,683 $ 843,721 $ 805,067 |
Financial Liabilities Measured
Financial Liabilities Measured at Fair Value on a Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Contingent consideration | $ 2,881 | $ 4,563 |
Level 1 | ||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Contingent consideration | 0 | 0 |
Level 2 | ||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Contingent consideration | 0 | 0 |
Level 3 | ||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Contingent consideration | $ 2,881 | $ 4,563 |
Fair Value Measurement Level 3
Fair Value Measurement Level 3 Unobservable Inputs (Details) $ in Thousands | 9 Months Ended |
Oct. 31, 2015USD ($)year | |
Unobservable Inputs [Abstract] | |
Total estimated contingent consideration, low | $ 782 |
Total estimated contingent consideration, high | $ 4,404 |
Discount rate, low | 9.50% |
Discount rate, high | 16.00% |
Timing of cash flows (in years), low | year | 1 |
Timing of cash flows (in years), high | year | 3 |
Summary of Level 3 Activity (De
Summary of Level 3 Activity (Detail) $ in Thousands | 9 Months Ended |
Oct. 31, 2015USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at beginning of period | $ 4,563 |
Payments | (1,525) |
Adjustment | (254) |
Interest accretion | 97 |
Balance at ending of period | $ 2,881 |
Fair Value Measurement - Additi
Fair Value Measurement - Additional Information (Detail) - USD ($) $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Fair Value Disclosures [Abstract] | ||
Business Combination, Contingent Consideration, Liability, Current | $ 1,275 | $ 1,515 |
Business Combination, Contingent Consideration, Liability, Noncurrent | 1,606 | 3,048 |
Fair value of notes payable | 352,552 | 310,173 |
Notes Payable | 240,488 | 230,400 |
Current portion of notes payable | 235,300 | 0 |
Notes and Loans, Noncurrent | $ 5,188 | $ 230,400 |
Term Receivable and Trade Accou
Term Receivable and Trade Accounts Receivable Balances (Detail) - USD ($) $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Accounts and Financing Receivable [Line Items] | ||
Trade accounts receivable, net | $ 447,760 | $ 546,622 |
Term receivables, long-term | 283,756 | 301,862 |
Trade accounts receivable | ||
Accounts and Financing Receivable [Line Items] | ||
Trade accounts receivable, net | 113,243 | 208,996 |
Term receivables, short-term | ||
Accounts and Financing Receivable [Line Items] | ||
Trade accounts receivable, net | $ 334,517 | $ 337,626 |
Credit Risk Assessment for Long
Credit Risk Assessment for Long-term Receivables (Detail) - USD ($) $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | $ 283,756 | $ 301,862 |
S&P credit rating, AAA+ through BBB- | ||
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | 176,539 | 192,430 |
S&P credit rating, BB+ and lower | ||
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | 39,963 | 31,939 |
S&P credit rating | ||
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | 216,502 | 224,369 |
Internal Credit Rating | ||
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | $ 67,254 | $ 77,493 |
Change in Allowance for Doubtfu
Change in Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Allowance for doubtful accounts receivable, beginning balance | $ 4,217 | |
Allowance for doubtful accounts receivable, ending balance | 3,653 | |
Allowance for Doubtful Accounts [Member] | ||
Allowance for doubtful accounts receivable, beginning balance | 4,217 | $ 5,469 |
Valuation Allowances and Reserves, Period Increase (Decrease) | (522) | (1,865) |
Valuation Allowances and Reserves, Adjustments | (42) | (252) |
Allowance for doubtful accounts receivable, ending balance | $ 3,653 | 3,352 |
Allowance for doubtful accounts adjustment | ||
Valuation Allowances and Reserves, Period Increase (Decrease) | $ (1,691) |
Term Receivables and Trade Ac46
Term Receivables and Trade Accounts Receivable - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Disclosure Term Receivables And Trade Accounts Receivable Additional Information [Abstract] | ||
Billing period | 30 days | |
Net proceeds from sale of receivables | $ 42,030 | $ 21,956 |
Short-Term Borrowings - Additio
Short-Term Borrowings - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Line of Credit Facility [Line Items] | ||
Amount outstanding | $ 0 | $ 0 |
Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Termination date for senior, unsecured revolving credit facility | Jan. 9, 2020 | |
Revolving credit facility, maximum borrowing capacity | $ 125,000 | |
Credit facility limits, aggregate amount available for dividend and repurchase of stock | $ 50,000 | |
Credit facility limits, aggregate amount available for dividend and repurchase of stock, percentage of cumulative net income | 70.00% | |
Minimum | Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Commitment fee percentage on unused line of credit | 0.30% | |
Minimum | LIBOR | Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Basis spread | 2.00% | |
Minimum | Base rate | Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Basis spread | 1.00% | |
Maximum | Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Commitment fee percentage on unused line of credit | 0.40% | |
Maximum | LIBOR | Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Basis spread | 2.50% | |
Maximum | Base rate | Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Basis spread | 1.50% |
Notes Payable (Details)
Notes Payable (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Debt Instrument | ||
Notes Payable | $ 240,488 | $ 230,400 |
Notes Payable, Noncurrent | 5,188 | 230,400 |
4.00% Debentures due 2031 | ||
Debt Instrument | ||
Notes Payable | 235,300 | 230,400 |
Notes Payable, Current | 235,300 | 0 |
Notes Payable, Other Payables | ||
Debt Instrument | ||
Notes Payable | $ 5,188 | $ 0 |
Notes Payable - Redemption Pric
Notes Payable - Redemption Prices Expressed as a Percentage of Principal, Plus any Accrued and Unpaid Interest (Detail) - 4.00% Debentures due 2031 - Convertible Subordinated Debt | 9 Months Ended |
Oct. 31, 2015 | |
Redemption period beginning on April 5, 2016 and ending on March 31, 2017 | |
Debt Instrument | |
Debentures redemption price | 101.143% |
Redemption period beginning on April 1, 2017 and ending on March 31, 2018 | |
Debt Instrument | |
Debentures redemption price | 100.571% |
Redemption period beginning on April 1, 2018 and thereafter | |
Debt Instrument | |
Debentures redemption price | 100.00% |
Notes Payable - Principal Amoun
Notes Payable - Principal Amount, Unamortized Debt Discount, Net Carrying Amount of the Liability Component, and Carrying Amount of the Equity Component of the 4.00% Debentures (Detail) - USD ($) $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Debt Instrument | ||
Net carrying amount of the liability component | $ 240,488 | $ 230,400 |
4.00% Debentures due 2031 | ||
Debt Instrument | ||
Principal amount | 253,000 | 253,000 |
Unamortized debt discount | (17,700) | (22,600) |
Net carrying amount of the liability component | 235,300 | 230,400 |
Equity component, net of debt issuance costs | $ 42,531 | $ 42,531 |
Notes Payable - Recognized Amou
Notes Payable - Recognized Amounts in Interest Expense in the Condensed Consolidated Statements of Income Related to the 4.00% Debentures (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | |
Debt Instrument | ||||
Interest expense at the contractual interest rate | $ 4,915 | $ 4,934 | $ 14,381 | $ 14,326 |
4.00% Debentures due 2031 | ||||
Debt Instrument | ||||
Interest expense at the contractual interest rate | 2,530 | 2,530 | 7,590 | 7,590 |
Amortization of debt discount | $ 1,663 | $ 1,548 | $ 4,900 | $ 4,563 |
Notes Payable - Additional Info
Notes Payable - Additional Information (Detail) $ / shares in Units, $ in Thousands | Sep. 09, 2015USD ($) | Feb. 25, 2015 | Apr. 30, 2011USD ($)$ / sharesshares | Oct. 31, 2015USD ($)day$ / sharesshares | Oct. 31, 2014 | Jan. 31, 2015USD ($) |
Debt Instrument | ||||||
Notes Payable | $ 240,488 | $ 230,400 | ||||
4.00% Debentures due 2031 | ||||||
Debt Instrument | ||||||
Notes Payable | 235,300 | $ 230,400 | ||||
4.00% Debentures due 2031 | Convertible Subordinated Debt | ||||||
Debt Instrument | ||||||
Debt Instrument, Maturity Date, Description | 2,031 | |||||
Issued debt | $ 253,000 | |||||
Interest rate | 4.00% | |||||
Principal amount multiple | $ 1 | $ 1 | ||||
Conversion rate | shares | 48.6902 | 49.8058 | ||||
Conversion price | $ / shares | $ 20.54 | $ 20.08 | ||||
Market price of common stock exceeding percent of the conversion price | 120.00% | |||||
Debt instrument conversion circumstance stock price | $ / shares | $ 24.09 | |||||
Debt instrument threshold trading days | day | 20 | |||||
Debt instrument threshold consecutive trading days | 30 days | |||||
Market price of debentures declining to maximum percent of the value of the common stock | 98.00% | |||||
If-converted value in excess of principal | $ 89,744 | |||||
Amortization end date | 2018-03 | |||||
Debt Instrument, Interest Rate During Period | 7.25% | 7.25% | ||||
February 2015, Other Notes Payable [Member] | ||||||
Debt Instrument | ||||||
Notes Payable | $ 3,188 | |||||
Interest rate | 4.00% | |||||
Debt Instrument, Maturity Date | Feb. 25, 2019 | |||||
September 2015, Other Notes Payable [Member] | ||||||
Debt Instrument | ||||||
Issued debt | $ 2,000 | |||||
Interest rate | 4.00% | |||||
Debt Instrument, Maturity Date | Sep. 8, 2018 | |||||
Holder optional redemption on April 1, 2018 | 4.00% Debentures due 2031 | Convertible Subordinated Debt | ||||||
Debt Instrument | ||||||
Debentures redemption price | 100.00% | |||||
Holder optional redemption on April 1, 2021 | 4.00% Debentures due 2031 | Convertible Subordinated Debt | ||||||
Debt Instrument | ||||||
Debentures redemption price | 100.00% | |||||
Holder optional redemption on April 1, 2026 | 4.00% Debentures due 2031 | Convertible Subordinated Debt | ||||||
Debt Instrument | ||||||
Debentures redemption price | 100.00% |
Stockholders Equity Dividend (D
Stockholders Equity Dividend (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 19, 2015 | Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jan. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Oct. 31, 2015 | Oct. 31, 2014 |
Dividends Payable [Line Items] | ||||||||||
Dividends payable, date declared | Aug. 20, 2015 | May 22, 2015 | Feb. 26, 2015 | Nov. 20, 2014 | Aug. 21, 2014 | May 22, 2014 | Feb. 27, 2014 | |||
Dividends payable, date of record | Sep. 10, 2015 | Jun. 10, 2015 | Mar. 10, 2015 | Dec. 10, 2014 | Sep. 10, 2014 | Jun. 10, 2014 | Mar. 10, 2014 | |||
Dividends payable, date to be paid | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jan. 2, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | |||
Cash dividends declared per common share | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.050 | $ 0.050 | $ 0.050 | $ 0.050 | $ 0.165 | $ 0.150 | |
Payments of dividends | $ 6,491 | $ 6,389 | $ 6,383 | $ 5,743 | $ 5,697 | $ 5,693 | $ 5,778 | $ 19,263 | $ 17,168 | |
Subsequent Event [Member] | ||||||||||
Dividends Payable [Line Items] | ||||||||||
Dividends payable, date declared | Nov. 19, 2015 | |||||||||
Dividends payable, date of record | Dec. 15, 2015 | |||||||||
Dividends payable, date to be paid | Jan. 4, 2016 | |||||||||
Cash dividends declared per common share | $ 0.055 |
Stock-Based Compensation Stock
Stock-Based Compensation Stock Based Compensation Details Textual (Details) shares in Thousands | 9 Months Ended |
Oct. 31, 2015shares | |
Omnibus Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period | 4 years |
Share Based Compensation Arrangement By Share Based Payment Award Expiry Period From Date Of Grant | 10 years |
Employee Stock Purchase Plans [Member] | |
Employee Stock Purchase Plan Maximum Number Of Shares Per Buy Date That May Be Purchased By Eligible Participants | 6 |
Share Based Compensation Arrangement By Share Based Payment Award Discounted Price From Market Price Offering | 85.00% |
Stock-Based Compensation Stoc55
Stock-Based Compensation Stock Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | $ 10,025 | $ 9,102 | $ 30,889 | $ 26,391 |
Cost of Sales [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | 665 | 608 | 1,981 | 1,687 |
Research and Development Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | 4,095 | 3,651 | 12,213 | 10,203 |
Selling and Marketing Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | 2,468 | 2,371 | 7,314 | 6,692 |
General and Administrative Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | $ 2,797 | $ 2,472 | $ 9,381 | $ 7,809 |
Incentive Stock Rights - Additi
Incentive Stock Rights - Additional Information (Detail) - shares | 3 Months Ended | ||
Jul. 31, 2015 | Jul. 31, 2010 | Jun. 24, 2010 | |
Disclosure Incentive Stock Rights Additional Information [Abstract] | |||
Incentive stock purchase right adoption date | Jun. 24, 2010 | ||
Common stock dividends right declared | 1 | ||
Incentive stock rights dividend date of record | Jul. 6, 2010 | ||
Incentive stock purchase rights expiration date | Jun. 30, 2015 |
Net Income Per Share - Computat
Net Income Per Share - Computation of Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | |
Disclosure Computation Of Basic And Diluted Net Income Per Share [Abstract] | ||||
Net income attributable to Mentor Graphics shareholders | $ 14,679 | $ 21,030 | $ 36,006 | $ 32,651 |
Adjustment to redemption value of noncontrolling interest with redemption feature | 133 | (267) | 258 | 1,295 |
Adjusted net income attributable to Mentor Graphics shareholders, basic | 14,812 | 20,763 | 36,264 | 33,946 |
Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures | 0 | 0 | 519 | 0 |
Adjusted net income attributable to Mentor Graphics shareholders, diluted | $ 14,812 | $ 20,763 | $ 36,783 | $ 33,946 |
Weighted average common shares used to calculate basic net income per share | 117,759 | 114,405 | 116,787 | 114,399 |
Employee stock options, restricted stock units, employee stock purchase plan and convertible debt | 2,382 | 2,310 | 5,176 | 2,529 |
Weighted average common and potential common shares used to calculate diluted net income per share | 120,141 | 116,715 | 121,963 | 116,928 |
Basic net income per share | $ 0.13 | $ 0.18 | $ 0.31 | $ 0.30 |
Diluted net income per share | $ 0.12 | $ 0.18 | $ 0.30 | $ 0.29 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Interest, Net Of Tax, To Be Forfeited Upon Conversion | $ 519 | $ 519 | $ 0 | $ 519 |
Antidilutive securities excluded from computation of earnings per share, amount | 2,695 | 2,031 | 0 | 1,665 |
Restricted Stock Units (RSUs) [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 0 | 1,657 | 0 | 1,138 |
Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 0 | 20 | 0 | 51 |
Convertible Debt [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 2,695 | 354 | 0 | 476 |
Accumulated Other Comprehensi58
Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Accumulated Other Comprehensive Loss [Line Items] | ||
Foreign currency translation adjustment | $ (17,928) | $ (12,044) |
Unrealized gain (loss) on derivatives | (7) | 42 |
Pension liability, net of tax | 110 | 115 |
Total accumulated other comprehensive loss | $ (17,825) | $ (11,887) |
Special Charges - Additional In
Special Charges - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | Jan. 31, 2015 | |
Accrued special charges | $ 8,076 | $ 8,076 | $ 4,517 | ||
Special charges cost (credit) | 4,831 | $ 8,375 | 43,994 | $ 19,409 | |
Accrued special charges settled | (40,435) | ||||
Accrued special charges noncurrent | 526 | 526 | |||
Accrued special charges current | 7,550 | 7,550 | |||
Early retirement benefits | |||||
Accrued special charges | 888 | 888 | 0 | ||
Special charges cost (credit) | (203) | 0 | 25,232 | 0 | |
Accrued special charges settled | $ (24,344) | ||||
Percentage of termination benefit paid during the period | 96.00% | ||||
Employee severance and related costs | |||||
Accrued special charges | 5,232 | $ 5,232 | 370 | ||
Special charges cost (credit) | 3,485 | 1,377 | 14,188 | 3,077 | |
Accrued special charges settled | $ (9,326) | ||||
Percentage of termination benefit paid during the period | 64.00% | ||||
Litigation costs | |||||
Accrued special charges | 882 | $ 882 | 3,406 | ||
Special charges cost (credit) | 1,122 | 7,004 | 3,641 | 15,193 | |
Accrued special charges settled | (6,165) | ||||
Other costs | |||||
Accrued special charges | 1,074 | 1,074 | $ 741 | ||
Special charges cost (credit) | $ 427 | $ (6) | 933 | $ 1,139 | |
Accrued special charges settled | $ (600) |
Revenue Recognized from Related
Revenue Recognized from Related Party (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | |
Related Party Transaction [Line Items] | ||||
Revenue from related party | $ 6,902 | $ 10,311 | $ 14,054 | $ 21,466 |
Percentage of related party revenue | 2.40% | 3.50% | 1.70% | 2.70% |
Related Party Transactions Rela
Related Party Transactions Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands | Oct. 31, 2015 | Jan. 31, 2015 |
Related Party Transaction [Line Items] | ||
Accounts receivable due from related party | $ 14,870 | $ 46,661 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | Jan. 31, 2016 | Jan. 31, 2015 | |
Income Taxes [Line Items] | ||||||
Income tax expense | $ 7,204 | $ 3,849 | $ 9,763 | $ 1,907 | ||
Effective tax rate | 34.20% | 15.80% | 22.30% | 5.70% | ||
Period specific items benefit | $ (301) | |||||
U.S. federal statutory rate | 35.00% | |||||
Income taxes associated with uncertain income tax positions | $ 22,294 | $ 22,294 | ||||
Liability for uncertain tax positions, current | 1,612 | 1,612 | ||||
Income tax liability | $ 20,682 | $ 20,682 | $ 19,279 | |||
Scenario, Forecast [Member] | ||||||
Income Taxes [Line Items] | ||||||
Effective income tax rate forecast | 23.00% |
Supplemental Cash Flow Inform63
Supplemental Cash Flow Information - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Disclosure Supplemental Cash Flow Information Additional Information [Abstract] | ||
Interest | $ 11,497 | $ 11,322 |
Income taxes | 10,426 | 8,836 |
Payments to Noncontrolling Interests | $ 11,088 | $ 0 |
Segment Reporting Operating Seg
Segment Reporting Operating Segment (Details) | 9 Months Ended |
Oct. 31, 2015segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Detail) - customer | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | |
Concentration Risk [Line Items] | ||||
Customers accounting for ten percent or more of net revenue | 0 | 1 | 1 | 1 |
Customer concentration risk | Sales Revenue, Net [Member] | ||||
Concentration Risk [Line Items] | ||||
Customer percent of total revenues | 10.00% | 10.00% | 10.00% | 10.00% |
Segment Reporting Revenues Rela
Segment Reporting Revenues Related to Operations in Geographic Regions (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | |
Revenues: | ||||
Total revenues | $ 290,516 | $ 292,683 | $ 843,721 | $ 805,067 |
UNITED STATES | ||||
Revenues: | ||||
Total revenues | 115,984 | 135,264 | 360,773 | 371,722 |
Europe | ||||
Revenues: | ||||
Total revenues | 65,645 | 64,936 | 181,484 | 180,547 |
Japan | ||||
Revenues: | ||||
Total revenues | 32,947 | 25,359 | 69,888 | 67,613 |
Asia | ||||
Revenues: | ||||
Total revenues | 72,186 | 64,346 | 219,773 | 171,022 |
Americas [Member] | ||||
Revenues: | ||||
Total revenues | $ 3,754 | $ 2,778 | $ 11,803 | $ 14,163 |