Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 31, 2016 | Dec. 01, 2016 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Oct. 31, 2016 | |
Document Fiscal Year Focus | 2,017 | |
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 | 109,521,738 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Revenues: | ||||
System and software | $ 198,605 | $ 168,699 | $ 439,064 | $ 486,831 |
Service and support | 123,911 | 121,817 | 365,435 | 356,890 |
Total revenues | 322,516 | 290,516 | 804,499 | 843,721 |
Cost of revenues: | ||||
System and software | 13,713 | 9,759 | 37,375 | 36,432 |
Service and support | 35,649 | 35,286 | 100,910 | 100,275 |
Amortization of purchased technology | 1,828 | 1,844 | 5,400 | 5,496 |
Total cost of revenues | 51,190 | 46,889 | 143,685 | 142,203 |
Gross profit | 271,326 | 243,627 | 660,814 | 701,518 |
Operating expenses: | ||||
Research and development | 101,023 | 99,669 | 285,561 | 278,237 |
Marketing and selling | 91,646 | 93,165 | 259,816 | 262,857 |
General and administration | 20,015 | 19,665 | 56,777 | 56,298 |
Equity in earnings of Frontline | (634) | (1,755) | (2,311) | (3,976) |
Amortization of intangible assets | 1,462 | 2,364 | 4,536 | 6,817 |
Special charges | 1,500 | 4,831 | 5,936 | 43,994 |
Total operating expenses | 215,012 | 217,939 | 610,315 | 644,227 |
Operating income: | 56,314 | 25,688 | 50,499 | 57,291 |
Other income | 268 | 320 | 1,795 | 849 |
Interest expense | (5,143) | (4,915) | (14,971) | (14,381) |
Income before income tax | 51,439 | 21,093 | 37,323 | 43,759 |
Income tax expense | 9,677 | 7,204 | 5,560 | 9,763 |
Net income | 41,762 | 13,889 | 31,763 | 33,996 |
Less: Loss attributable to noncontrolling interest | 0 | (790) | 0 | (2,010) |
Net income attributable to Mentor Graphics shareholders | $ 41,762 | $ 14,679 | $ 31,763 | $ 36,006 |
Net income per share: | ||||
Basic | $ 0.38 | $ 0.13 | $ 0.29 | $ 0.31 |
Diluted | $ 0.37 | $ 0.12 | $ 0.29 | $ 0.30 |
Weighted average number of shares outstanding: | ||||
Basic | 108,887 | 117,759 | 108,442 | 116,787 |
Diluted | 114,112 | 120,141 | 110,931 | 121,963 |
Cash dividends declared per common share | $ 0.055 | $ 0.055 | $ 0.165 | $ 0.165 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Net income | $ 41,762 | $ 13,889 | $ 31,763 | $ 33,996 |
Other comprehensive income (loss), net of tax: | ||||
Change in accumulated translation adjustment | (3,245) | (1,698) | 1,076 | (5,858) |
Change in unrealized gain (loss) on derivative instruments | (4) | (408) | 19 | (49) |
Change in pension liability | (29) | (1) | (54) | (5) |
Other comprehensive income (loss) | (3,278) | (2,107) | 1,041 | (5,912) |
Comprehensive income | 38,484 | 11,782 | 32,804 | 28,084 |
Net loss attributable to noncontrolling interest | 0 | (790) | 0 | (2,010) |
Change in accumulated translation adjustment attributable to the noncontrolling interest | 0 | (16) | 0 | 26 |
Comprehensive loss attributable to the noncontrolling interest | 0 | (806) | 0 | (1,984) |
Comprehensive income attributable to Mentor Graphics shareholders | $ 38,484 | $ 12,588 | $ 32,804 | $ 30,068 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 31, 2016 | Jan. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 262,762 | $ 334,826 |
Trade accounts receivable, net of allowance for doubtful accounts of $3,548 as of October 31, 2016 and $3,826 as of January 31, 2016 | 429,534 | 493,209 |
Other receivables | 18,361 | 23,120 |
Inventory | 14,276 | 24,762 |
Prepaid expenses and other | 31,979 | 22,550 |
Total current assets | 756,912 | 898,467 |
Property, plant, and equipment, net of accumulated depreciation of $368,149 as of October 31, 2016 and $348,597 as of January 31, 2016 | 200,781 | 182,092 |
Term receivables | 251,416 | 268,657 |
Goodwill | 610,006 | 606,842 |
Intangible assets, net of accumulated amortization of $235,768 as of October 31, 2016 and $225,818 as of January 31, 2016 | 35,455 | 37,446 |
Other assets | 79,005 | 70,860 |
Total assets | 1,933,575 | 2,064,364 |
Current liabilities: | ||
Short-term borrowings | 21,475 | 33,449 |
Current portion of notes payable (Note 6) | 240,865 | 0 |
Accounts payable | 13,431 | 16,740 |
Income taxes payable | 5,339 | 3,966 |
Accrued payroll and related liabilities | 68,189 | 73,371 |
Accrued and other liabilities | 32,114 | 37,059 |
Deferred revenue | 213,630 | 258,725 |
Total current liabilities | 595,043 | 423,310 |
Notes payable (Note 6) | 5,188 | 240,076 |
Deferred revenue | 34,242 | 18,303 |
Income tax liability | 19,957 | 25,116 |
Other long-term liabilities | 31,977 | 37,130 |
Total liabilities | 686,407 | 743,935 |
Commitments and contingencies (Note 7) | ||
Convertible notes (Note 6) | 12,092 | 0 |
Stockholders' equity: | ||
Common stock, no par value, 300,000 shares authorized as of October 31, 2016 and January 31, 2016; 109,491 shares issued and outstanding as of October 31, 2016 and 114,934 shares issued and outstanding as of January 31, 2016 | 708,128 | 818,683 |
Retained earnings | 547,007 | 522,846 |
Accumulated other comprehensive loss | (20,059) | (21,100) |
Total stockholders’ equity | 1,235,076 | 1,320,429 |
Total liabilities and stockholders' equity | $ 1,933,575 | $ 2,064,364 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Oct. 31, 2016 | Jan. 31, 2016 |
Allowance for doubtful accounts receivable, current | $ 3,548 | $ 3,826 |
Property, plant, and equipment, accumulated depreciation | 368,149 | 348,597 |
Intangible assets, accumulated amortization | $ 235,768 | $ 225,818 |
Common stock, no par value | $ 0 | $ 0 |
Common stock, shares authorized | 300,000 | 300,000 |
Common stock, shares issued | 109,491 | 114,934 |
Common stock, shares outstanding | 109,491 | 114,934 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Operating Cash Flows: | ||
Net income | $ 31,763 | $ 33,996 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation of property, plant, and equipment | 29,107 | 26,999 |
Amortization of intangible assets, debt costs and other | 16,362 | 18,926 |
Stock-based compensation | 33,518 | 30,889 |
Deferred income taxes | 3,977 | (1,352) |
Changes in other long-term liabilities | 556 | (1,016) |
Equity in income of unconsolidated entities, net of dividends received | 1,370 | 157 |
Other | 106 | (702) |
Changes in operating assets and liabilities, net of effect of acquired businesses: | ||
Trade accounts receivable, net | 63,228 | 97,037 |
Prepaid expenses and other | (1,349) | (10,722) |
Term receivables, long-term | 17,049 | 17,059 |
Accounts payable and accrued liabilities | (19,101) | (41,728) |
Income taxes receivable and payable | (3,526) | 2,746 |
Deferred revenue | (29,354) | (50,013) |
Net cash provided by operating activities | 143,706 | 122,276 |
Investing Cash Flows: | ||
Proceeds from sale of building | 0 | 2,068 |
Purchases of property, plant, and equipment | (43,585) | (28,337) |
Acquisitions of businesses and equity interests, net | (11,759) | (11,700) |
Net cash used in investing activities | (55,344) | (37,969) |
Financing Cash Flows: | ||
Proceeds from issuance of common stock | 18,186 | 21,294 |
Repurchase of common stock | (146,050) | (10,000) |
Payments related to tax withholding on vesting of share based awards | (4,117) | (2,430) |
Dividends paid | (17,782) | (19,263) |
Net decrease in short-term borrowing, excluding revolving credit facility | (7,079) | (5,875) |
Repayments of revolving credit facility | (5,000) | 0 |
Repayments of other borrowings | (1,475) | (7,225) |
Purchase of remaining noncontrolling interest in majority owned subsidiaries | 0 | (11,088) |
Proceeds for the sale of subsidiary shares to noncontrolling interest | 0 | 7 |
Net cash used in financing activities | (163,317) | (34,580) |
Effect of exchange rate changes on cash and cash equivalents | 2,891 | (1,007) |
Net change in cash and cash equivalents | (72,064) | 48,720 |
Cash and cash equivalents at the beginning of the period | 334,826 | 230,281 |
Cash and cash equivalents at the end of the period | $ 262,762 | $ 279,001 |
General
General | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 . 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. |
Recent accounting pronouncement
Recent accounting pronouncements (Notes) | 9 Months Ended |
Oct. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent accounting pronouncements | Recent Accounting Pronouncements Recently Adopted Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, as part of their simplification initiative to improve the accounting for share-based payments to employees. The new standard affects several aspects of the accounting for share-based payments. It requires excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement when awards vest or are exercised. Cash flows associated with excess tax benefits are no longer classified as cash flows from financing activities but will be classified as operating activities, consistent with other income tax cash flows. The standard also allows for additional employee tax withholding on the exercise or release of awards, without triggering liability classification of the award. Additionally, when we withhold shares for tax-withholding purposes and in-turn pay cash for taxes on behalf of an employee, the cash payment is classified as a financing activity in our statement of cash flows. Finally, the standard allows an accounting policy election for the treatment of forfeitures of stock based awards. Companies can elect to continue to estimate forfeitures expected to occur, or account for forfeitures as they occur. This standard is effective for us in the first quarter of fiscal year 2018, with early adoption permitted. We early adopted the new standard effective February 1, 2016. The primary impact to our financial statements was the recognition of $48,605 in deferred tax assets associated with excess tax benefits offset by a valuation allowance of $38,425 and a cumulative-effect adjustment of $10,180 to retained earnings as of January 31, 2016. We elected to continue to estimate forfeitures expected to occur when estimating the amount of compensation expense recorded in each accounting period. We retrospectively applied to all periods presented in our statements of cash flows, the presentation of excess tax benefits and cash paid for employee taxes where shares were withheld. As a result of this election excess tax benefits were reclassified from financing activities to operating activities and cash paid for shares withheld were reclassified from operating activities to financing activities. The net impact on previously reported results is as follows: Nine months ended October 31, 2015 As originally reported As Adjusted Net cash provided by operations $ 119,846 $ 122,276 Net cash used in financing activities $ (32,150 ) $ (34,580 ) In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805), Simplifying the Accounting for Measurement-Period Adjustments. This standard eliminates the requirement for an acquirer to retrospectively account for adjustments made to provisional amounts recognized in a business combination. The standard requires that an acquirer recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustments are identified. Changes in depreciation, amortization, and any other income effects resulting from adjustments to provisional amounts, should be computed as of the acquisition date. The standard requires that an entity present separately, by line item, the amounts included in current-period earnings that would have been recorded in previous reporting periods, if the adjustments to provisional amounts had been recognized on the acquisition date. We adopted this standard beginning February 1, 2016. Adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement includes a software license, the customer accounts for fees related to the software license element consistent with accounting for the acquisition of other acquired software licenses. If the arrangement does not contain a software license, the customer accounts for the arrangement as a service contract. An arrangement would contain a software license element if both: (i) the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty; and (ii) it is feasible for the customer to either run the software on its own hardware or contract with another party unrelated to the vendor to host the software. We adopted this standard beginning February 1, 2016 on a prospective basis. Adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Issued Pronouncements not yet Adopted Revenue Recognition In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients. This ASU amends narrow aspects of Topic 606 in ASU 2014-09, Revenue from Contracts with Customers , related to the assessment of collectibility, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. Practical expedients are provided in the ASU to simplify the transition to the new standard. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. This ASU clarifies guidance in ASU 2014-09, Revenue from Contracts with Customers related to identifying performance obligations and licensing implementation . This ASU is expected to: (i) reduce the cost and complexity of applying the guidance on identifying promised goods or services; (ii) improve guidance on criteria in assessing whether promises to transfer goods and services are separately identifiable; and (iii) improve the operability and understandability of the licensing implementation guidance. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations. This ASU amends the principal versus agent guidance in ASU 2014-09, Revenue from Contracts with Customers , and clarifies that the analysis must determine whether an entity controls the specified goods or services before they are transferred to the customer. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . This ASU is based on the principle that the amount of revenue recognized should reflect the consideration an entity expects to be entitled to in exchange for the transfer of goods and services to customers. This ASU requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This ASU also requires qualitative and quantitative disclosure about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The standard permits one of two methods for adoption: (i) retrospectively to each prior reporting period presented, with the ability to utilize certain practical expedients; or (ii) retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application, including additional disclosures. We have not yet selected a transition method. We are evaluating the effect that each of these ASUs will have on our condensed consolidated financial statements and related disclosures. We will be required to implement this guidance in the first quarter of fiscal year 2019. Early adoption is permitted beginning in the first quarter of fiscal year 2018. Other In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory . This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory by requiring an entity to recognize the income tax consequences when a transfer occurs, instead of when an asset is sold to an outside party. Examples of assets included in the scope of this ASU are intellectual property (IP) and property, plant, and equipment. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We will be required to implement this guidance in the first quarter of fiscal year 2019. Early adoption is permitted as of the beginning of an annual reporting period for which interim or annual financial statements have not been issued. We are evaluating the effect that ASU 2016-16 will have on our condensed consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Clarification of Certain Cash Receipts and Cash Payments . This ASU adds and clarifies guidance on the presentation and classification of eight specific cash flow items related to cash receipts and cash payments in the Statement of Cash Flows, with the intent of reducing diversity in practice. The amendments in this ASU should be applied retrospectively for each period presented. For those issues where it is impractical to apply these amendments retrospectively, the amendments should be applied prospectively as of the earliest date practicable. We will be required to implement this guidance in the first quarter of fiscal year 2019. Early adoption is permitted. This ASU is not expected to have a material impact on our condensed consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This ASU changes how companies measure and recognize credit losses for various financial assets. This ASU will require companies to use an expected credit loss model to recognize estimated credit losses expected to occur over the remaining life of the financial assets rather than the current incurred credit loss model methodology. This revised guidance is applicable to our trade and term receivables. We will be required to implement this guidance in the first quarter of fiscal year 2021. Early adoption is permitted beginning in the first quarter of fiscal year 2020. We are evaluating the effect that ASU 2016-13 will have on our condensed consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires a lessee to recognize in the statement of financial position a liability to make lease payments, and a right-of-use asset representing its right to use the underlying asset for the lease term. We will be required to implement this guidance in the first quarter of fiscal year 2020. Early adoption is permitted. We are evaluating the effect that ASU 2016-02 will have on our condensed consolidated financial statements and related disclosures. In September 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. This ASU provides guidance on management's responsibility in evaluating whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern and to provide related disclosures if required. Evaluation is required every reporting period, including interim periods. We will be required to implement this guidance in the fourth quarter of fiscal year 2017. Early adoption is permitted. This ASU is not expected to have a material impact on our condensed consolidated financial statements and related disclosures. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Oct. 31, 2016 | |
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: Fair Value Level 1 Level 2 Level 3 Contingent consideration at October 31, 2016 $ 2,457 $ — $ — $ 2,457 Contingent consideration at January 31, 2016 $ 3,749 $ — $ — $ 3,749 The FASB'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 typically contingent upon the acquired business’ achievement of certain revenue goals. The short-term portion of the total recorded contingent consideration is included in accrued and other liabilities and the long-term portion of the total recorded contingent consideration is included in other long-term liabilities on our condensed consolidated balance sheet. The following table summarizes the total recorded contingent consideration: As of October 31, 2016 January 31, 2016 Contingent consideration, short-term $ 965 $ 1,460 Contingent consideration, long-term 1,492 2,289 Total contingent consideration $ 2,457 $ 3,749 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, 2016 encompasses the following significant unobservable inputs (Level 3): Unobservable Inputs Range Total estimated contingent consideration $125 - $2,932 Discount rate 9.5% - 15.0% Timing of cash flows (in years) 0 - 2 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, 2016 $ 3,749 Payments (1,475 ) Changes in fair value 99 Interest accretion 84 Balance as of October 31, 2016 $ 2,457 The following table summarizes the fair value and carrying value of our 4.00% Convertible Subordinated Debentures (4.00% Debentures): As of October 31, 2016 January 31, 2016 Fair value of notes payable $ 363,292 $ 255,487 Carrying value of notes payable $ 240,865 $ 234,888 We based the fair value of our 4.00% 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). We believe the carrying value of other notes payable of $5,188 at October 31, 2016 and January 31, 2016 approximated fair value. Of the total carrying value of notes payable, $240,865 was classified as current on our condensed consolidated balance sheet as of October 31, 2016 and none was classified as current on our consolidated balance sheet as of January 31, 2016 . See additional discussion of notes payable in Note 6 . “ 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. During the quarter ended July 31, 2016, we acquired a non-marketable equity security which was accounted for using the cost method of accounting. Our cost method investments are reported at cost net of impairment losses. The carrying amount of the non-marketable equity security was $3,000 at October 31, 2016 . Investments accounted for under the cost method of accounting are remeasured and recorded at fair value when identified events or changes in circumstances have a significant adverse effect on the fair value of the investments. When these events or changes in circumstances occur, these investments are classified as Level 3 because they are valued using significant unobservable inputs. We periodically review our cost method investments for these types of events or changes in circumstances. |
Term Receivables and Trade Acco
Term Receivables and Trade Accounts Receivable | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 January 31, 2016 Trade accounts receivable $ 125,453 $ 176,021 Term receivables, short-term $ 304,081 $ 317,188 Term receivables, long-term $ 251,416 $ 268,657 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, 2016 January 31, 2016 S&P credit rating: AAA+ through BBB- $ 176,338 $ 195,764 BB+ and lower 35,286 22,520 211,624 218,284 Internal credit assessment 39,792 50,373 Total long-term term receivables $ 251,416 $ 268,657 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. 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, 2016 $ 3,826 $ (611 ) $ 333 $ 3,548 Nine months ended October 31, 2015 $ 4,217 $ (522 ) $ (42 ) $ 3,653 (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 $45,104 for the nine months ended October 31, 2016 compared to $42,030 for the nine months ended October 31, 2015 . 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, 2016 | |
Short-term Debt [Abstract] | |
Short-Term Borrowings | Short-Term Borrowings Short-term borrowings consisted of the following: As of October 31, 2016 January 31, 2016 Senior revolving credit facility $ 20,000 $ 25,000 Collections of previously sold accounts receivable 489 7,568 Other borrowings 986 881 Short-term borrowings $ 21,475 $ 33,449 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 with market interest rates. 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 common stock over the term of the facility to $200,000 plus 70% of our cumulative consolidated net income (loss) for periods ending after February 1, 2016. We were in compliance with all financial covenants as of October 31, 2016 . 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, 2016 | |
Notes Payable [Abstract] | |
Notes Payable | Notes Payable Notes payable consist of the following: As of October 31, 2016 January 31, 2016 4.00% Debentures $ 240,865 $ 234,888 Other 5,188 5,188 Notes payable 246,053 240,076 4.00% Debentures, current portion (240,865 ) — Notes payable, long-term $ 5,188 $ 240,076 Our 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 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 50.4551 shares of our common stock (equivalent to a conversion price of $19.82 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% of the conversion price, or $23.78 per share as of October 31, 2016 , 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, 2016 , the if-converted value of the 4.00% Debentures to the note holders exceeded the principal amount by $115,893 . During the fiscal quarter ended October 31, 2016 , 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, 2017 . 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 amount of the 4.00% Debentures is reclassified from permanent equity to temporary equity in our condensed consolidated balance sheet. 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, 2017 , we would be required to pay cash for at least the principal amount of the converted 4.00% Debentures. If the proposed acquisition of the Company by Siemens Industry, Inc. is completed at a price of $37.25 per share and the 4.00% Debentures are converted, an estimated cash payment of $475,000 to the debenture holders would be required, including the impact of the dividend declared on November 22, 2016 . Effective April 5, 2016 , we may redeem some or all of the 4.00% Debentures for cash 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, unamortized debt issuance costs, 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, 2016 January 31, 2016 Principal amount $ 252,957 $ 252,957 Unamortized debt discount (10,744 ) (16,007 ) Unamortized debt issuance costs (1,348 ) (2,062 ) Net carrying amount of the liability component $ 240,865 $ 234,888 Equity component, net of debt issuance costs $ 42,518 $ 42,518 The unamortized debt discount and debt issuance costs amortize 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, 2016 2015 2016 2015 Interest expense at the contractual interest rate $ 2,530 $ 2,530 $ 7,589 $ 7,590 Amortization of debt discount $ 1,786 $ 1,663 $ 5,263 $ 4,900 Amortization of debt issuance costs $ 238 $ 238 $ 714 $ 714 The effective interest rate on the 4.00% Debentures was 7.25% for the nine months ended October 31, 2016 and 2015 . Other Notes Payable In February 2015 , we issued a subordinated note payable as part of a business combination. The principal amount of $3,188 was outstanding as of October 31, 2016 . 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 subordinated note payable as part of a business combination. The principal amount of $2,000 was outstanding as of October 31, 2016 . 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, 2016 | |
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 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, 2016 , 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 the U.S. District Court for 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 and 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 appealed the decisions by both the district court and the U.S. Patent and Trademark Office. The Court of Appeals for the Federal Circuit has unanimously confirmed the invalidity of all four Synopsys patents. In June 2013, Synopsys also filed a claim against us in the U.S District Court for the District of Oregon, similarly alleging that our Veloce family of products infringed on two additional Synopsys U.S. patents. These claims have been dismissed, and have been appealed. 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 U.S. District Court for the District of Oregon found that one of our patents - U.S. Patent No. 6,240,376 - was 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, 2016 , nothing has been included in our financial results for this award. Synopsys has filed an appeal, and is currently seeking to have the infringed claims invalidated by the U.S. Patent and Trademark Office. 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 sought 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. A Japanese appeals court has ratified 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, 2016 | |
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 2016 : Declaration Date Record Date Payment Date Per Share Amount Total Amount Fiscal Year 2017 11/22/2016 12/8/2016 1/3/2017 $0.055 8/18/2016 9/19/2016 9/30/2016 $0.055 $6,016 5/19/2016 6/10/2016 6/30/2016 $0.055 $5,886 3/3/2016 3/10/2016 3/31/2016 $0.055 $5,880 Fiscal Year 2016 11/19/2015 12/15/2015 1/4/2016 $0.055 $6,326 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 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, 2016 | |
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 and include goals for operating income margin. We estimate forfeitures based on our historical forfeiture rates. The source of shares issued under the Incentive Plan is new shares. We have not issued any options since fiscal year 2013. Our current equity strategy is to grant restricted stock units rather than options to ensure that we deliver value to our employees when there is volatility in the market. 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, 2016 2015 2016 2015 Cost of revenues $ 785 $ 665 $ 2,277 $ 1,981 Operating expenses: Research and development 4,708 4,095 13,598 12,213 Marketing and selling 2,911 2,468 8,612 7,314 General and administration 2,687 2,797 9,031 9,381 Equity plan-related compensation expense $ 11,091 $ 10,025 $ 33,518 $ 30,889 |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Oct. 31, 2016 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share We compute basic net income 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, 2016 2015 2016 2015 Net income attributable to Mentor Graphics shareholders $ 41,762 $ 14,679 $ 31,763 $ 36,006 Adjustment to redemption value of noncontrolling interest with redemption feature — 133 — 258 Adjusted net income attributable to Mentor Graphics shareholders, basic 41,762 14,812 31,763 36,264 Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures 519 — — 519 Adjusted net income attributable to Mentor Graphics shareholders $ 42,281 $ 14,812 $ 31,763 $ 36,783 Weighted average common shares used to calculate basic net income per share 108,887 117,759 108,442 116,787 Potentially dilutive common shares 5,225 2,382 2,489 5,176 Weighted average common and potentially dilutive common shares used to calculate diluted net income per share 114,112 120,141 110,931 121,963 Net income per share attributable to Mentor Graphics shareholders: Basic net income per share $ 0.38 $ 0.13 $ 0.29 $ 0.31 Diluted net income per share $ 0.37 $ 0.12 $ 0.29 $ 0.30 We have adjusted the numerator of our basic and diluted net income per share calculation for the three and nine months ended October 31, 2015 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 three months ended October 31, 2016 and 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 the purposes of calculating the dilutive effect of 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 nine months ended October 31, 2016 and the three months ended October 31, 2015 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 6 . “ Notes Payable .” The following details the adjustments to net income excluded from the computation of diluted net income per share: Three months ended October 31, Nine months ended October 31, 2016 2015 2016 2015 Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures $ — $ 519 $ 519 $ — The following details shares excluded from the computation of diluted net income per share: Three months ended October 31, Nine months ended October 31, 2016 2015 2016 2015 Shares of common stock for restricted stock units — — 1,278 — Shares of common stock for convertible debt — 2,695 1,071 — Total anti-dilutive shares excluded — 2,695 2,349 — The stock options and the 4.00% Debentures 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, 2016 | |
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 effects: As of October 31, 2016 January 31, 2016 Foreign currency translation adjustment $ (19,937 ) $ (21,013 ) Unrealized loss on derivatives (17 ) (36 ) Pension liability (105 ) (51 ) Total accumulated other comprehensive loss $ (20,059 ) $ (21,100 ) During the first nine months of fiscal years 2017 and 2016, there were no significant amounts reclassified to net income from accumulated other comprehensive loss related to foreign currency translation adjustment, cash flow hedges or pension plans. |
Special Charges (Notes)
Special Charges (Notes) | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 2015 2016 2015 Employee severance and related costs $ 354 $ 3,485 $ 2,884 $ 14,188 Litigation costs (19 ) 1,122 1,344 3,641 Voluntary early retirement program — (203 ) — 25,232 Other costs, net 1,165 427 1,708 933 Total special charges $ 1,500 $ 4,831 $ 5,936 $ 43,994 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 in which 110 employees elected to participate. The costs presented here are for severance benefits. 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 87% of the employee severance and related costs for the nine months ended October 31, 2016 were paid during the period. We expect to pay the remainder during the fiscal year ending January 31, 2017 . Substantially all of the employee severance and related costs for the nine months ended October 31, 2015 were paid during the fiscal year ending January 31, 2016 . 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 in the condensed consolidated balance sheets. The following table shows changes in accrued special charges during the nine months ended October 31, 2016 : Accrued special Charges during the nine months ended Payments during the nine months ended Accrued special charges as of January 31, 2016 October 31, 2016 October 31, 2016 October 31, 2016 Employee severance and related costs $ 1,935 $ 2,884 $ (4,232 ) $ 587 Litigation costs 311 1,344 (1,152 ) 503 Other costs, net 760 1,708 (2,069 ) 399 Total accrued special charges $ 3,006 $ 5,936 $ (7,453 ) $ 1,489 |
Income Taxes
Income Taxes | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 2015 2016 2015 Income tax expense $ 9,677 $ 7,204 $ 5,560 $ 9,763 Effective tax rate 18.8 % 34.2 % 14.9 % 22.3 % 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 fiscal year and record adjustments in each quarter. Such adjustments consider period specific items and, when applicable, 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 14.9% for the nine months ended October 31, 2016 , after the inclusion of $(1,532) in net favorable period specific items. For our full fiscal year forecast, we project an 18.0% effective tax rate. This rate is inclusive of period specific items recognized through October 31, 2016 . Our projected rate for the full fiscal 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, foreign tax credit carryforwards, and research and experimentation credit carryforwards for which no tax benefit has been recognized. These differences are partially offset by: • Provision of U.S. income tax on non-permanently reinvested foreign subsidiary earnings to account for the impact of future repatriations; • Net 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. We have determined that it is uncertain whether our U.S. entity will generate sufficient taxable income to fully utilize tax credit carryforwards and certain net operating losses. 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 limitations on the utilization of such deferred tax assets in certain jurisdictions. We will continue to evaluate the realizability of the deferred tax assets on a periodic basis. As of October 31, 2016 , we had a liability of $25,296 for income taxes associated with uncertain income tax positions. Of this liability, $5,339 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 $19,957 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, 2016 | |
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, 2016 2015 Cash paid, net for: Interest $ 12,535 $ 11,497 Income taxes $ 10,170 $ 10,426 |
Segment Reporting
Segment Reporting | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 2015 2016 2015 Revenues: United States $ 139,251 $ 115,984 $ 328,931 $ 360,773 Europe 63,065 65,645 165,529 181,484 Japan 21,651 32,947 83,163 69,888 Pacific Rim 94,183 72,186 217,292 219,773 Other 4,366 3,754 9,584 11,803 Total revenues $ 322,516 $ 290,516 $ 804,499 $ 843,721 For the three months ended October 31, 2016 , one customer accounted for approximately 10.0% of our total revenues. For the three months ended October 31, 2015 , no customer accounted for 10.0% or more of our total revenues. For the nine months ended October 31, 2016 , no customer accounted for 10.0% or more of our total revenues. For the nine months ended October 31, 2015 , one customer accounted for approximately 10.0% of our total revenues. |
Subsequent Events (Notes)
Subsequent Events (Notes) | 9 Months Ended |
Oct. 31, 2016 | |
Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | On November 12, 2016 , we entered into a definitive agreement to be acquired by Siemens Industry, Inc. (Siemens) and Meadowlark Subsidiary Corporation, a wholly-owned subsidiary of Siemens. The transaction is valued at $37.25 per share in cash, or approximately $4.5 billion , and has been approved by our Board of Directors. The closing of the transaction is subject to approval by the affirmative vote of the holders of at least a majority of the outstanding shares of Mentor Graphics common stock. The closing of the transaction is also subject to various customary conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; receipt of clearance from the Committee on Foreign Investment in the U.S. and other specified regulatory approvals; the accuracy of representations and warranties contained in the agreement. We are also subject to compliance with covenants and agreements contained in the agreement, including a restriction on the amount we can borrow of no more than $10,000 in each fiscal quarter and a prohibition on the repurchase of common stock. The closing of the transaction is not subject to a financing condition and is expected to occur in 2017. |
Recent accounting pronounceme23
Recent accounting pronouncements (Policies) | 9 Months Ended |
Oct. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent accounting pronouncements, Policy | Recently Adopted Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, as part of their simplification initiative to improve the accounting for share-based payments to employees. The new standard affects several aspects of the accounting for share-based payments. It requires excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement when awards vest or are exercised. Cash flows associated with excess tax benefits are no longer classified as cash flows from financing activities but will be classified as operating activities, consistent with other income tax cash flows. The standard also allows for additional employee tax withholding on the exercise or release of awards, without triggering liability classification of the award. Additionally, when we withhold shares for tax-withholding purposes and in-turn pay cash for taxes on behalf of an employee, the cash payment is classified as a financing activity in our statement of cash flows. Finally, the standard allows an accounting policy election for the treatment of forfeitures of stock based awards. Companies can elect to continue to estimate forfeitures expected to occur, or account for forfeitures as they occur. This standard is effective for us in the first quarter of fiscal year 2018, with early adoption permitted. We early adopted the new standard effective February 1, 2016. The primary impact to our financial statements was the recognition of $48,605 in deferred tax assets associated with excess tax benefits offset by a valuation allowance of $38,425 and a cumulative-effect adjustment of $10,180 to retained earnings as of January 31, 2016. We elected to continue to estimate forfeitures expected to occur when estimating the amount of compensation expense recorded in each accounting period. We retrospectively applied to all periods presented in our statements of cash flows, the presentation of excess tax benefits and cash paid for employee taxes where shares were withheld. As a result of this election excess tax benefits were reclassified from financing activities to operating activities and cash paid for shares withheld were reclassified from operating activities to financing activities. The net impact on previously reported results is as follows: Nine months ended October 31, 2015 As originally reported As Adjusted Net cash provided by operations $ 119,846 $ 122,276 Net cash used in financing activities $ (32,150 ) $ (34,580 ) In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805), Simplifying the Accounting for Measurement-Period Adjustments. This standard eliminates the requirement for an acquirer to retrospectively account for adjustments made to provisional amounts recognized in a business combination. The standard requires that an acquirer recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustments are identified. Changes in depreciation, amortization, and any other income effects resulting from adjustments to provisional amounts, should be computed as of the acquisition date. The standard requires that an entity present separately, by line item, the amounts included in current-period earnings that would have been recorded in previous reporting periods, if the adjustments to provisional amounts had been recognized on the acquisition date. We adopted this standard beginning February 1, 2016. Adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement includes a software license, the customer accounts for fees related to the software license element consistent with accounting for the acquisition of other acquired software licenses. If the arrangement does not contain a software license, the customer accounts for the arrangement as a service contract. An arrangement would contain a software license element if both: (i) the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty; and (ii) it is feasible for the customer to either run the software on its own hardware or contract with another party unrelated to the vendor to host the software. We adopted this standard beginning February 1, 2016 on a prospective basis. Adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Issued Pronouncements not yet Adopted Revenue Recognition In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients. This ASU amends narrow aspects of Topic 606 in ASU 2014-09, Revenue from Contracts with Customers , related to the assessment of collectibility, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. Practical expedients are provided in the ASU to simplify the transition to the new standard. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. This ASU clarifies guidance in ASU 2014-09, Revenue from Contracts with Customers related to identifying performance obligations and licensing implementation . This ASU is expected to: (i) reduce the cost and complexity of applying the guidance on identifying promised goods or services; (ii) improve guidance on criteria in assessing whether promises to transfer goods and services are separately identifiable; and (iii) improve the operability and understandability of the licensing implementation guidance. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations. This ASU amends the principal versus agent guidance in ASU 2014-09, Revenue from Contracts with Customers , and clarifies that the analysis must determine whether an entity controls the specified goods or services before they are transferred to the customer. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . This ASU is based on the principle that the amount of revenue recognized should reflect the consideration an entity expects to be entitled to in exchange for the transfer of goods and services to customers. This ASU requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This ASU also requires qualitative and quantitative disclosure about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The standard permits one of two methods for adoption: (i) retrospectively to each prior reporting period presented, with the ability to utilize certain practical expedients; or (ii) retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application, including additional disclosures. We have not yet selected a transition method. We are evaluating the effect that each of these ASUs will have on our condensed consolidated financial statements and related disclosures. We will be required to implement this guidance in the first quarter of fiscal year 2019. Early adoption is permitted beginning in the first quarter of fiscal year 2018. Other In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory . This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory by requiring an entity to recognize the income tax consequences when a transfer occurs, instead of when an asset is sold to an outside party. Examples of assets included in the scope of this ASU are intellectual property (IP) and property, plant, and equipment. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We will be required to implement this guidance in the first quarter of fiscal year 2019. Early adoption is permitted as of the beginning of an annual reporting period for which interim or annual financial statements have not been issued. We are evaluating the effect that ASU 2016-16 will have on our condensed consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Clarification of Certain Cash Receipts and Cash Payments . This ASU adds and clarifies guidance on the presentation and classification of eight specific cash flow items related to cash receipts and cash payments in the Statement of Cash Flows, with the intent of reducing diversity in practice. The amendments in this ASU should be applied retrospectively for each period presented. For those issues where it is impractical to apply these amendments retrospectively, the amendments should be applied prospectively as of the earliest date practicable. We will be required to implement this guidance in the first quarter of fiscal year 2019. Early adoption is permitted. This ASU is not expected to have a material impact on our condensed consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This ASU changes how companies measure and recognize credit losses for various financial assets. This ASU will require companies to use an expected credit loss model to recognize estimated credit losses expected to occur over the remaining life of the financial assets rather than the current incurred credit loss model methodology. This revised guidance is applicable to our trade and term receivables. We will be required to implement this guidance in the first quarter of fiscal year 2021. Early adoption is permitted beginning in the first quarter of fiscal year 2020. We are evaluating the effect that ASU 2016-13 will have on our condensed consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires a lessee to recognize in the statement of financial position a liability to make lease payments, and a right-of-use asset representing its right to use the underlying asset for the lease term. We will be required to implement this guidance in the first quarter of fiscal year 2020. Early adoption is permitted. We are evaluating the effect that ASU 2016-02 will have on our condensed consolidated financial statements and related disclosures. In September 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. This ASU provides guidance on management's responsibility in evaluating whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern and to provide related disclosures if required. Evaluation is required every reporting period, including interim periods. We will be required to implement this guidance in the fourth quarter of fiscal year 2017. Early adoption is permitted. This ASU is not expected to have a material impact on our condensed consolidated financial statements and related disclosures. |
Fair Value Measurement (Policie
Fair Value Measurement (Policies) | 9 Months Ended |
Oct. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial instruments | The FASB'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% 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 Ac25
Term Receivables and Trade Accounts Receivable (Policies) | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 | |
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, 2016 | |
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. |
Recent accounting pronounceme28
Recent accounting pronouncements (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New accounting pronouncement, early adoption | The net impact on previously reported results is as follows: Nine months ended October 31, 2015 As originally reported As Adjusted Net cash provided by operations $ 119,846 $ 122,276 Net cash used in financing activities $ (32,150 ) $ (34,580 ) |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
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: Fair Value Level 1 Level 2 Level 3 Contingent consideration at October 31, 2016 $ 2,457 $ — $ — $ 2,457 Contingent consideration at January 31, 2016 $ 3,749 $ — $ — $ 3,749 |
Schedule of contingent consideration | The following table summarizes the total recorded contingent consideration: As of October 31, 2016 January 31, 2016 Contingent consideration, short-term $ 965 $ 1,460 Contingent consideration, long-term 1,492 2,289 Total contingent consideration $ 2,457 $ 3,749 |
Significant unobservable inputs | The fair value measurement of our contingent consideration as of October 31, 2016 encompasses the following significant unobservable inputs (Level 3): Unobservable Inputs Range Total estimated contingent consideration $125 - $2,932 Discount rate 9.5% - 15.0% Timing of cash flows (in years) 0 - 2 |
Summary of level 3 activity | The following table summarizes contingent consideration activity: Balance as of January 31, 2016 $ 3,749 Payments (1,475 ) Changes in fair value 99 Interest accretion 84 Balance as of October 31, 2016 $ 2,457 |
Schedule of notes payable | The following table summarizes the fair value and carrying value of our 4.00% Convertible Subordinated Debentures (4.00% Debentures): As of October 31, 2016 January 31, 2016 Fair value of notes payable $ 363,292 $ 255,487 Carrying value of notes payable $ 240,865 $ 234,888 |
Term Receivables and Trade Ac30
Term Receivables and Trade Accounts Receivable (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 January 31, 2016 Trade accounts receivable $ 125,453 $ 176,021 Term receivables, short-term $ 304,081 $ 317,188 Term receivables, long-term $ 251,416 $ 268,657 |
Credit risk assessment for long-term receivables | The credit risk assessment for our long-term receivables was as follows: As of October 31, 2016 January 31, 2016 S&P credit rating: AAA+ through BBB- $ 176,338 $ 195,764 BB+ and lower 35,286 22,520 211,624 218,284 Internal credit assessment 39,792 50,373 Total long-term term receivables $ 251,416 $ 268,657 |
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, 2016 $ 3,826 $ (611 ) $ 333 $ 3,548 Nine months ended October 31, 2015 $ 4,217 $ (522 ) $ (42 ) $ 3,653 (1) Specific account write-offs and foreign exchange. |
Short-Term Borrowings Short-ter
Short-Term Borrowings Short-term Borrowings (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
Short-term Debt [Abstract] | |
Schedule of Short-term Borrowings | Short-term borrowings consisted of the following: As of October 31, 2016 January 31, 2016 Senior revolving credit facility $ 20,000 $ 25,000 Collections of previously sold accounts receivable 489 7,568 Other borrowings 986 881 Short-term borrowings $ 21,475 $ 33,449 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
Debt Instrument | |
Schedule of Long-term Debt Instruments | Notes payable consist of the following: As of October 31, 2016 January 31, 2016 4.00% Debentures $ 240,865 $ 234,888 Other 5,188 5,188 Notes payable 246,053 240,076 4.00% Debentures, current portion (240,865 ) — Notes payable, long-term $ 5,188 $ 240,076 |
4.00% Debentures due 2031 | |
Debt Instrument | |
Redemption prices | we may redeem some or all of the 4.00% Debentures for cash 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), unamortized debt issuance costs, net carrying amount of the liability component, and carrying amount of the equity component | The principal amount, unamortized debt discount, unamortized debt issuance costs, 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, 2016 January 31, 2016 Principal amount $ 252,957 $ 252,957 Unamortized debt discount (10,744 ) (16,007 ) Unamortized debt issuance costs (1,348 ) (2,062 ) Net carrying amount of the liability component $ 240,865 $ 234,888 Equity component, net of debt issuance costs $ 42,518 $ 42,518 |
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, 2016 2015 2016 2015 Interest expense at the contractual interest rate $ 2,530 $ 2,530 $ 7,589 $ 7,590 Amortization of debt discount $ 1,786 $ 1,663 $ 5,263 $ 4,900 Amortization of debt issuance costs $ 238 $ 238 $ 714 $ 714 |
Stockholders Equity Dividends D
Stockholders Equity Dividends Declared (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Dividends declared | The following table summarizes dividends declared since the beginning of fiscal year 2016 : Declaration Date Record Date Payment Date Per Share Amount Total Amount Fiscal Year 2017 11/22/2016 12/8/2016 1/3/2017 $0.055 8/18/2016 9/19/2016 9/30/2016 $0.055 $6,016 5/19/2016 6/10/2016 6/30/2016 $0.055 $5,886 3/3/2016 3/10/2016 3/31/2016 $0.055 $5,880 Fiscal Year 2016 11/19/2015 12/15/2015 1/4/2016 $0.055 $6,326 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 |
Employee Stock and Savings Pl34
Employee Stock and Savings Plans (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 2015 2016 2015 Cost of revenues $ 785 $ 665 $ 2,277 $ 1,981 Operating expenses: Research and development 4,708 4,095 13,598 12,213 Marketing and selling 2,911 2,468 8,612 7,314 General and administration 2,687 2,797 9,031 9,381 Equity plan-related compensation expense $ 11,091 $ 10,025 $ 33,518 $ 30,889 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted net income 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, 2016 2015 2016 2015 Net income attributable to Mentor Graphics shareholders $ 41,762 $ 14,679 $ 31,763 $ 36,006 Adjustment to redemption value of noncontrolling interest with redemption feature — 133 — 258 Adjusted net income attributable to Mentor Graphics shareholders, basic 41,762 14,812 31,763 36,264 Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures 519 — — 519 Adjusted net income attributable to Mentor Graphics shareholders $ 42,281 $ 14,812 $ 31,763 $ 36,783 Weighted average common shares used to calculate basic net income per share 108,887 117,759 108,442 116,787 Potentially dilutive common shares 5,225 2,382 2,489 5,176 Weighted average common and potentially dilutive common shares used to calculate diluted net income per share 114,112 120,141 110,931 121,963 Net income per share attributable to Mentor Graphics shareholders: Basic net income per share $ 0.38 $ 0.13 $ 0.29 $ 0.31 Diluted net income per share $ 0.37 $ 0.12 $ 0.29 $ 0.30 We have adjusted the numerator of our basic and diluted net income per share calculation for the three and nine months ended October 31, 2015 for the adjustment of the noncontrolling interest with redemption feature to its calculated redemption value, recorded directly to retained earnings. |
Adjustments to Net Income excluded from the computation of diluted EPS | The following details the adjustments to net income excluded from the computation of diluted net income per share: Three months ended October 31, Nine months ended October 31, 2016 2015 2016 2015 Adjustment for convertible debt interest, net of tax to be forfeited upon conversion of 4.00% Debentures $ — $ 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 per share: Three months ended October 31, Nine months ended October 31, 2016 2015 2016 2015 Shares of common stock for restricted stock units — — 1,278 — Shares of common stock for convertible debt — 2,695 1,071 — Total anti-dilutive shares excluded — 2,695 2,349 — The stock options and the 4.00% Debentures were determined to be anti-dilutive as a result of applying the treasury stock method. |
Accumulated Other Comprehensi36
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
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 effects: As of October 31, 2016 January 31, 2016 Foreign currency translation adjustment $ (19,937 ) $ (21,013 ) Unrealized loss on derivatives (17 ) (36 ) Pension liability (105 ) (51 ) Total accumulated other comprehensive loss $ (20,059 ) $ (21,100 ) During the first nine months of fiscal years 2017 and 2016, there were no significant amounts reclassified to net income from accumulated other comprehensive loss related to foreign currency translation adjustment, cash flow hedges or pension plans. |
Special Charges Special Charges
Special Charges Special Charges (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 2015 2016 2015 Employee severance and related costs $ 354 $ 3,485 $ 2,884 $ 14,188 Litigation costs (19 ) 1,122 1,344 3,641 Voluntary early retirement program — (203 ) — 25,232 Other costs, net 1,165 427 1,708 933 Total special charges $ 1,500 $ 4,831 $ 5,936 $ 43,994 |
Schedule of accrued special charges | The following table shows changes in accrued special charges during the nine months ended October 31, 2016 : Accrued special Charges during the nine months ended Payments during the nine months ended Accrued special charges as of January 31, 2016 October 31, 2016 October 31, 2016 October 31, 2016 Employee severance and related costs $ 1,935 $ 2,884 $ (4,232 ) $ 587 Litigation costs 311 1,344 (1,152 ) 503 Other costs, net 760 1,708 (2,069 ) 399 Total accrued special charges $ 3,006 $ 5,936 $ (7,453 ) $ 1,489 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 2015 2016 2015 Income tax expense $ 9,677 $ 7,204 $ 5,560 $ 9,763 Effective tax rate 18.8 % 34.2 % 14.9 % 22.3 % |
Supplemental Cash Flow Inform39
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 2015 Cash paid, net for: Interest $ 12,535 $ 11,497 Income taxes $ 10,170 $ 10,426 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
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, 2016 2015 2016 2015 Revenues: United States $ 139,251 $ 115,984 $ 328,931 $ 360,773 Europe 63,065 65,645 165,529 181,484 Japan 21,651 32,947 83,163 69,888 Pacific Rim 94,183 72,186 217,292 219,773 Other 4,366 3,754 9,584 11,803 Total revenues $ 322,516 $ 290,516 $ 804,499 $ 843,721 |
Recent accounting pronounceme41
Recent accounting pronouncements (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Jan. 31, 2016 | |
New Accounting Pronouncement, Early Adoption [Line Items] | |||
Net Cash Provided by (Used in) Operating Activities | $ 143,706 | $ 122,276 | |
Net Cash Provided by (Used in) Financing Activities | $ (163,317) | (34,580) | |
Adjustments for New Accounting Pronouncement [Member] | |||
New Accounting Pronouncement, Early Adoption [Line Items] | |||
Deferred Tax Assets, Gross | $ 48,605 | ||
Deferred tax assets valuation allowance | 38,425 | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 10,180 | ||
Scenario, Previously Reported [Member] | |||
New Accounting Pronouncement, Early Adoption [Line Items] | |||
Net Cash Provided by (Used in) Operating Activities | 119,846 | ||
Net Cash Provided by (Used in) Financing Activities | $ (32,150) |
Financial Liabilities Measured
Financial Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands | Oct. 31, 2016 | Jan. 31, 2016 |
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Business Combination, Contingent Consideration, Liability, Current | $ 965 | $ 1,460 |
Business Combination, Contingent Consideration, Liability, Noncurrent | 1,492 | 2,289 |
Contingent consideration | 2,457 | 3,749 |
Level 1 | Fair Value, Measurements, Recurring | ||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Contingent consideration | 0 | 0 |
Level 2 | Fair Value, Measurements, Recurring | ||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Contingent consideration | 0 | 0 |
Level 3 | Fair Value, Measurements, Recurring | ||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Contingent consideration | $ 2,457 | $ 3,749 |
Fair Value Measurement Level 3
Fair Value Measurement Level 3 Unobservable Inputs (Details) $ in Thousands | 9 Months Ended |
Oct. 31, 2016USD ($)year | |
Unobservable Inputs [Abstract] | |
Total estimated contingent consideration, low | $ | $ 125 |
Total estimated contingent consideration, high | $ | $ 2,932 |
Discount rate, low | 9.50% |
Discount rate, high | 15.00% |
Timing of cash flows (in years), low | year | 0 |
Timing of cash flows (in years), high | year | 2 |
Summary of Level 3 Activity (De
Summary of Level 3 Activity (Detail) $ in Thousands | 9 Months Ended |
Oct. 31, 2016USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at beginning of period | $ 3,749 |
Payments | (1,475) |
Adjustment | 99 |
Interest accretion | 84 |
Balance at ending of period | $ 2,457 |
Fair Value Measurement - Additi
Fair Value Measurement - Additional Information (Detail) - USD ($) $ in Thousands | Oct. 31, 2016 | Jan. 31, 2016 |
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Notes payable | $ 246,053 | $ 240,076 |
Current portion of notes payable (Note 6) | 240,865 | 0 |
Non-marketable equity securities | 3,000 | |
4.00% Debentures due 2031 | ||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair value of notes payable | 363,292 | 255,487 |
Notes payable | 240,865 | 234,888 |
Current portion of notes payable (Note 6) | 240,865 | 0 |
Notes Payable, Other Payables | ||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | ||
Notes payable | $ 5,188 | $ 5,188 |
Term Receivable and Trade Accou
Term Receivable and Trade Accounts Receivable Balances (Detail) - USD ($) $ in Thousands | Oct. 31, 2016 | Jan. 31, 2016 |
Accounts and Financing Receivable [Line Items] | ||
Trade accounts receivable, net | $ 429,534 | $ 493,209 |
Term receivables, long-term | 251,416 | 268,657 |
Trade accounts receivable | ||
Accounts and Financing Receivable [Line Items] | ||
Trade accounts receivable, net | 125,453 | 176,021 |
Term receivables, short-term | ||
Accounts and Financing Receivable [Line Items] | ||
Trade accounts receivable, net | $ 304,081 | $ 317,188 |
Credit Risk Assessment for Long
Credit Risk Assessment for Long-term Receivables (Detail) - USD ($) $ in Thousands | Oct. 31, 2016 | Jan. 31, 2016 |
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | $ 251,416 | $ 268,657 |
S&P credit rating, AAA+ through BBB- | ||
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | 176,338 | 195,764 |
S&P credit rating, BB+ and lower | ||
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | 35,286 | 22,520 |
S&P credit rating | ||
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | 211,624 | 218,284 |
Internal Credit Rating | ||
Accounts and Financing Receivable [Line Items] | ||
Term receivables, long-term | $ 39,792 | $ 50,373 |
Change in Allowance for Doubtfu
Change in Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Disclosure Change In Allowance For Doubtful Accounts [Abstract] | ||
Allowance for doubtful accounts receivable, beginning balance | $ 3,826 | $ 4,217 |
Valuation Allowances and Reserves, Period Increase (Decrease) | (611) | (522) |
Valuation Allowances and Reserves, Adjustments | 333 | (42) |
Allowance for doubtful accounts receivable, ending balance | $ 3,548 | $ 3,653 |
Term Receivables and Trade Ac49
Term Receivables and Trade Accounts Receivable - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Disclosure Term Receivables And Trade Accounts Receivable Additional Information [Abstract] | ||
Billing period | 30 days | |
Net proceeds from sale of receivables | $ 45,104 | $ 42,030 |
Short-Term Borrowings Short-T50
Short-Term Borrowings Short-Term Borrowings (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Jan. 31, 2016 |
Short-term Debt [Line Items] | ||
Senior revolving credit facility | $ 20,000 | $ 25,000 |
Collections Of Previously Sold Accounts Receivable | 489 | 7,568 |
Other Short-term Borrowings | 986 | 881 |
Short-term borrowings | $ 21,475 | $ 33,449 |
Short-Term Borrowings - Additio
Short-Term Borrowings - Additional Information (Detail) - Revolving credit facility $ in Thousands | 9 Months Ended |
Oct. 31, 2016USD ($) | |
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 | $ 200,000 |
Credit facility limits, aggregate amount available for dividend and repurchase of stock, percentage of cumulative consolidated net income (loss) | 70.00% |
Minimum | |
Line of Credit Facility [Line Items] | |
Commitment fee percentage on unused line of credit | 0.30% |
Minimum | LIBOR | |
Line of Credit Facility [Line Items] | |
Basis spread | 2.00% |
Minimum | Base rate | |
Line of Credit Facility [Line Items] | |
Basis spread | 1.00% |
Maximum | |
Line of Credit Facility [Line Items] | |
Commitment fee percentage on unused line of credit | 0.40% |
Maximum | LIBOR | |
Line of Credit Facility [Line Items] | |
Basis spread | 2.50% |
Maximum | Base rate | |
Line of Credit Facility [Line Items] | |
Basis spread | 1.50% |
Notes Payable (Details)
Notes Payable (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Jan. 31, 2016 |
Debt Instrument | ||
Notes payable | $ 246,053 | $ 240,076 |
Notes Payable, Current | 240,865 | 0 |
Notes payable, Noncurrent | 5,188 | 240,076 |
4.00% Debentures due 2031 | ||
Debt Instrument | ||
Notes payable | 240,865 | 234,888 |
Notes Payable, Current | 240,865 | 0 |
Notes Payable, Other Payables | ||
Debt Instrument | ||
Notes payable | $ 5,188 | $ 5,188 |
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, 2016 | |
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, Unamortized Debt Issuance Costs, 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, 2016 | Jan. 31, 2016 |
Debt Instrument | ||
Net carrying amount of liability component | $ 246,053 | $ 240,076 |
4.00% Debentures due 2031 | ||
Debt Instrument | ||
Principal amount | 252,957 | 252,957 |
Unamortized debt discount | (10,744) | (16,007) |
Unamortized debt issuance costs | (1,348) | (2,062) |
Net carrying amount of liability component | 240,865 | 234,888 |
Equity component, net of debt issuance costs | $ 42,518 | $ 42,518 |
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, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Debt Instrument | ||||
Interest expense at the contractual interest rate | $ 5,143 | $ 4,915 | $ 14,971 | $ 14,381 |
4.00% Debentures due 2031 | ||||
Debt Instrument | ||||
Interest expense at the contractual interest rate | 2,530 | 2,530 | 7,589 | 7,590 |
Amortization of debt discount | 1,786 | 1,663 | 5,263 | 4,900 |
Amortization of debt issuance costs | $ 238 | $ 238 | $ 714 | $ 714 |
Notes Payable - Additional Info
Notes Payable - Additional Information (Detail) $ / shares in Units, $ in Thousands | Sep. 09, 2015 | Feb. 25, 2015 | Apr. 30, 2011USD ($)$ / sharesshares | Oct. 31, 2016USD ($)day$ / sharesshares | Oct. 31, 2015 | Jan. 31, 2016USD ($) |
Debt Instrument | ||||||
Notes payable (Note 6) | $ 5,188 | $ 240,076 | ||||
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 | 50.4551 | ||||
Conversion price | $ / shares | $ 20.54 | $ 19.82 | ||||
Market price of common stock exceeding percent of the conversion price | 120.00% | |||||
Debt instrument conversion circumstance stock price | $ / shares | $ 23.78 | |||||
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 | $ 115,893 | |||||
Assumed average stock price used for conversion upon change in control | $ / shares | $ 37.25 | |||||
Estimated payment upon conversion for change in control | $ 475,000 | |||||
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 (Note 6) | $ 3,188 | |||||
Interest rate | 4.00% | |||||
Debt Instrument, Maturity Date | Feb. 25, 2019 | |||||
September 2015, Other Notes Payable [Member] | ||||||
Debt Instrument | ||||||
Notes payable (Note 6) | $ 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% |
Commitments and Contingencies G
Commitments and Contingencies Gain Contingency, Unrecorded Amount (Details) $ in Thousands | Oct. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Gain Contingency, Unrecorded Amount | $ 36,000 |
Commitments and Contingencies L
Commitments and Contingencies Loss Contingency, Inestimable Loss (Details) | 9 Months Ended |
Oct. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Loss Contingency, Inestimable Loss | 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 Dividend (D
Stockholders Equity Dividend (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||
Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Dividends Payable [Line Items] | ||||||||||
Dividends payable, date declared | Aug. 18, 2016 | May 19, 2016 | Mar. 3, 2016 | Nov. 19, 2015 | Aug. 20, 2015 | May 22, 2015 | Feb. 26, 2015 | |||
Dividends payable, date of record | Sep. 19, 2016 | Jun. 10, 2016 | Mar. 10, 2016 | Dec. 15, 2015 | Sep. 10, 2015 | Jun. 10, 2015 | Mar. 10, 2015 | |||
Dividends payable, date to be paid | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jan. 4, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||
Cash dividends declared per common share | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.165 | $ 0.165 | |
Payments of dividends | $ 6,016 | $ 5,886 | $ 5,880 | $ 6,326 | $ 6,491 | $ 6,389 | $ 6,383 | $ 17,782 | $ 19,263 | |
Subsequent Event [Member] | ||||||||||
Dividends Payable [Line Items] | ||||||||||
Dividends payable, date declared | Nov. 22, 2016 | |||||||||
Dividends payable, date of record | Dec. 8, 2016 | |||||||||
Dividends payable, date to be paid | Jan. 3, 2017 | |||||||||
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, 2016shares | |
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 Stoc61
Stock-Based Compensation Stock Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | $ 11,091 | $ 10,025 | $ 33,518 | $ 30,889 |
Cost of Sales [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | 785 | 665 | 2,277 | 1,981 |
Research and Development Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | 4,708 | 4,095 | 13,598 | 12,213 |
Selling and Marketing Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | 2,911 | 2,468 | 8,612 | 7,314 |
General and Administrative Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based Compensation | $ 2,687 | $ 2,797 | $ 9,031 | $ 9,381 |
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, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Disclosure Computation Of Basic And Diluted Net Income Per Share [Abstract] | ||||
Net income attributable to Mentor Graphics shareholders | $ 41,762 | $ 14,679 | $ 31,763 | $ 36,006 |
Adjustment to redemption value of noncontrolling interest with redemption feature | 0 | 133 | 0 | 258 |
Adjusted net income attributable to Mentor Graphics shareholders, basic | 41,762 | 14,812 | 31,763 | 36,264 |
Dilutive Securities, Effect on Basic Earnings Per Share, Dilutive Convertible Securities | 519 | 0 | 0 | 519 |
Adjusted net income attributable to Mentor Graphics shareholders | $ 42,281 | $ 14,812 | $ 31,763 | $ 36,783 |
Weighted average common shares used to calculate basic net income per share | 108,887 | 117,759 | 108,442 | 116,787 |
Potentially dilutive common shares | 5,225 | 2,382 | 2,489 | 5,176 |
Weighted average common and potentially dilutive common shares used to calculate diluted net income per share | 114,112 | 120,141 | 110,931 | 121,963 |
Basic net income per share | $ 0.38 | $ 0.13 | $ 0.29 | $ 0.31 |
Diluted net income per share | $ 0.37 | $ 0.12 | $ 0.29 | $ 0.30 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Interest, net of tax, to be forfeited upon conversion | $ 0 | $ 519 | $ 519 | $ 0 |
Antidilutive securities excluded from computation of earnings per share, amount | 0 | 2,695 | 2,349 | 0 |
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 | 0 | 1,278 | 0 |
Convertible Debt [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 0 | 2,695 | 1,071 | 0 |
Accumulated Other Comprehensi63
Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Jan. 31, 2016 | |
Accumulated Other Comprehensive Loss [Line Items] | |||
Foreign currency translation adjustment | $ (19,937) | $ (21,013) | |
Unrealized loss on derivatives | (17) | (36) | |
Pension liability, net of tax | (105) | (51) | |
Total accumulated other comprehensive loss | (20,059) | $ (21,100) | |
Reclassification from Accumulated Other Comprehensive Loss, Current Period, Net of Tax | $ 0 | $ 0 |
Special Charges - Additional In
Special Charges - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Accrued special charges, period start | $ 3,006 | |||
Special charges | $ 1,500 | $ 4,831 | 5,936 | $ 43,994 |
Special charges, payments | (7,453) | |||
Accrued special charges, period end | 1,489 | 1,489 | ||
Employee severance and related costs | ||||
Accrued special charges, period start | 1,935 | |||
Special charges | 354 | 3,485 | 2,884 | 14,188 |
Special charges, payments | (4,232) | |||
Accrued special charges, period end | 587 | $ 587 | ||
Percentage of termination benefit paid during the period | 87.00% | |||
Litigation costs | ||||
Accrued special charges, period start | $ 311 | |||
Special charges | (19) | 1,122 | 1,344 | 3,641 |
Special charges, payments | (1,152) | |||
Accrued special charges, period end | 503 | 503 | ||
Early retirement benefits | ||||
Special charges | 0 | (203) | 0 | 25,232 |
Other costs | ||||
Accrued special charges, period start | 760 | |||
Special charges | 1,165 | $ 427 | 1,708 | $ 933 |
Special charges, payments | (2,069) | |||
Accrued special charges, period end | $ 399 | $ 399 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Jan. 31, 2017 | Jan. 31, 2016 | |
Income Taxes [Line Items] | ||||||
Income tax expense | $ 9,677 | $ 7,204 | $ 5,560 | $ 9,763 | ||
Effective tax rate | 18.80% | 34.20% | 14.90% | 22.30% | ||
Period specific items expense | $ (1,532) | |||||
U.S. federal statutory rate | 35.00% | |||||
Income taxes associated with uncertain income tax positions | $ 25,296 | $ 25,296 | ||||
Liability for uncertain tax positions, current | 5,339 | 5,339 | ||||
Liability for uncertain tax positions, non current | $ 19,957 | $ 19,957 | $ 25,116 | |||
Scenario, Forecast [Member] | ||||||
Income Taxes [Line Items] | ||||||
Effective income tax rate forecast | 18.00% |
Supplemental Cash Flow Inform66
Supplemental Cash Flow Information - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Supplemental Cash Flow Information [Abstract] | ||
Interest | $ 12,535 | $ 11,497 |
Income taxes | $ 10,170 | $ 10,426 |
Segment Reporting Operating Seg
Segment Reporting Operating Segment (Details) | 9 Months Ended |
Oct. 31, 2016segment | |
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, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Concentration Risk [Line Items] | ||||
Customers accounting for ten percent or more of net revenue | 1 | 0 | 0 | 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, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Revenues: | ||||
Total revenues | $ 322,516 | $ 290,516 | $ 804,499 | $ 843,721 |
UNITED STATES | ||||
Revenues: | ||||
Total revenues | 139,251 | 115,984 | 328,931 | 360,773 |
Europe | ||||
Revenues: | ||||
Total revenues | 63,065 | 65,645 | 165,529 | 181,484 |
Japan | ||||
Revenues: | ||||
Total revenues | 21,651 | 32,947 | 83,163 | 69,888 |
Asia | ||||
Revenues: | ||||
Total revenues | 94,183 | 72,186 | 217,292 | 219,773 |
Americas | ||||
Revenues: | ||||
Total revenues | $ 4,366 | $ 3,754 | $ 9,584 | $ 11,803 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] $ / shares in Units, $ in Thousands | Nov. 12, 2016USD ($)$ / shares |
Subsequent Event [Line Items] | |
Subsequent Event, Date | Nov. 12, 2016 |
Business Acquisition, Share Price | $ / shares | $ 37.25 |
Business Combination, Consideration Transferred | $ 4,500,000 |
Maximum Quarterly Borrowing | $ 10,000 |