Exhibit 99.1
Mentor Graphics Announces Record Bookings For First Quarter
WILSONVILLE, Ore.--(BUSINESS WIRE)--April 22, 2004--Mentor Graphics
Corporation (Nasdaq:MENT) today announced first quarter pro forma diluted
earnings per share of $.07 on revenue of $164.4 million. Earnings on a GAAP
basis were $.03 per share. Revenue grew 3% over the year ago quarter, while
bookings, climbing 17%, were a first quarter record.
"Mentor saw strength within all product areas, but particularly in our
Scalable Verification Environment, driven in part by the second largest order in
the company's history, for ModelSim," said Walden C. Rhines, chairman and CEO of
Mentor Graphics. "But the strength in Scalable was broad-based, with
analog-mixed signal bookings up 40% year-on-year and with 18 new customers in
the quarter. VStation emulation also made excellent progress and was also up
strongly year-on-year."
By geography, Asia was particularly robust. Bookings in Japan climbed 65%
and Pacific Rim bookings grew 35%. Japanese revenue was 25% of total, a level
which Mentor has not achieved since the early 1990s. Revenue by region was 40%
Americas, 25% Europe, 25% Japan, and 10% Pacific Rim.
Other areas of strength included the Expedition and PADS PCB design tools,
Precision FPGA synthesis and TestKompress. The rollout of TestKompress continued
to accelerate as five more logos were added in the first quarter, including two
major IC companies. Calibre again enjoyed healthy results, paced by activity in
Japan. Embedded software and cabling both showed double-digit bookings growth.
Book-to-bill was near one and a record for a first quarter. Pro forma gross
margin was 85%. Gross margin on a GAAP basis was 83.5%. Foreign exchange effects
increased both revenues and expenses, resulting in a net gain of half a million
dollars.
"With record bookings for the first quarter, and a 20% marketshare
according to EDAC numbers for the fourth quarter of 2003, Mentor believes that
we continue to outgrow the overall EDA market," said Gregory K. Hinckley,
president of Mentor Graphics. "And, still being early in the deployment cycle of
Calibre products, as well with a number of strong emerging businesses like
TestKompress, cabling, and embedded software, we believe Mentor is positioned to
outgrow the market for some time to come."
Excluding its entry-level PCB product, PADS, Mentor won 146 new customers
in the quarter, up over 20% from the first quarter of 2003.
About Mentor Graphics
Mentor Graphics Corporation (Nasdaq: MENT) is a world leader in electronic
hardware and software design solutions, providing products, consulting services
and award-winning support for the world's most successful electronics and
semiconductor companies. Established in 1981, the company reported revenues over
the last 12 months of about $675 million and employs approximately 3,700 people
worldwide. Corporate headquarters are located at 8005 S.W. Boeckman Road,
Wilsonville, Oregon 97070-7777; Silicon Valley headquarters are located at 1001
Ridder Park Drive, San Jose, California 95131-2314. World Wide Web site:
http://www.mentor.com/.
Mentor Graphics, Calibre, ModelSim, TestKompress, Precision and PADS are
registered trademarks and Expedition, Scalable Verification, VStation, FPGA
Synthesis are trademarks of Mentor Graphics Corporation.
In the calculation of earnings, gross margin and operating expenses before
amortization of acquired intangibles and special charges, Mentor Graphics
excludes amortization of acquired intangibles and write-offs of in-process R&D
from acquisitions. Also excluded are non-operating and non-recurring items
classified as special charges such as restructure expenses and asset
impairments. These excluded items are generally infrequent, less predictable and
are often non-cash in nature. Mentor Graphics believes that excluding these
items provides investors with a representation of its core performance, and a
pro forma base line for assessing the future earnings potential of Mentor
Graphics.
These pro forma measures should be assessed in conjunction with GAAP
earnings measures for a more complete understanding of the Company's results.
Since pro forma measures exclude certain items, differences in earnings from
GAAP can be significant; Mentor Graphics management evaluates its performance
under both measures for a complete understanding of its results. Investors are
encouraged to review both measures for their evaluations and consider the GAAP
earnings measures as the most complete measure of Mentor Graphics' overall
performance.
Statements in this press release regarding the Company's outlook for future
periods constitute "forward-looking" statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the Company or
industry results to be materially different from any results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: (i) the Company's ability to
continue selling products and services, and to manage expenses, during the
current slowdown in the electronics industry; (ii) changes in tax laws,
regulations or enforcement practices in the jurisdictions where the Company does
business; (iii) changes in accounting or reporting rules or interpretations,
limitations on repatriation of earnings, licensing and intellectual property
rights protection; (iv) effects of the increasing volatility of foreign currency
fluctuations on the Company's business and operating results; (v) the Company's
ability to successfully offer products and services that compete in the highly
competitive and dynamic EDA industry including the risk that the Company's
technology, products or inventory become obsolete; (vi) the overall instability
of diverse economies, including changes in regional or worldwide economic or
political conditions, government trade restrictions, or war in the Middle East
or elsewhere (vii) the Company's ability to successfully integrate and manage
its recent and future acquisitions, and (viii) effects of unanticipated shifts
in product mix on gross margin and unanticipated shifts in geographic mix on the
overall tax rate, all as may be discussed in more detail under the heading
"Factors That May Affect Future Results and Financial Condition" in the
Company's most recent Form 10-K or Form 10-Q. Given these uncertainties,
prospective investors are cautioned not to place undue reliance on such
forward-looking statements. In addition, statements regarding outlook do not
reflect potential impacts of mergers or acquisitions that have not been
announced or closed as of the time the statements are made. Mentor Graphics
disclaims any obligation to update any such factors or to publicly announce the
results of any revisions to any of the forward-looking statements to reflect
future events or developments.
MENTOR GRAPHICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data-Unaudited)
Three Months Ended
March 31,
----------------------
2004 2003
---------- ----------
Revenues:
System and software $ 94,521 $ 91,812
Service and support 69,884 67,528
---------- ----------
Total revenues 164,405 159,340
---------- ----------
Cost of revenues:
System and software 4,562 4,815
Service and support 20,095 20,703
Amortization of purchased technology 2,466 2,209
---------- ----------
Total cost of revenues 27,123 27,727
---------- ----------
Gross margin 137,282 131,613
---------- ----------
Operating expenses:
Research and development 48,383 42,876
Marketing and selling 63,706 59,189
General and administration 18,562 18,983
Amortization of intangible assets 782 1,145
Special charges - 1,363
---------- ----------
Total operating expenses 131,433 123,556
---------- ----------
Operating income 5,849 8,057
Other income, net 1,230 487
Interest expense (4,455) (4,045)
---------- ----------
Income before income taxes 2,624 4,499
Income tax expense 446 900
---------- ----------
Net income $ 2,178 $ 3,599
========== ==========
Net income per share:
Basic $ .03 $ .05
========== ==========
Diluted $ .03 $ .05
========== ==========
Weighted average number of
shares outstanding:
Basic 69,803 67,335
========== ==========
Diluted 72,763 68,255
========== ==========
MENTOR GRAPHICS CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except percentages and earnings
per share data-Unaudited)
Three Months Ended March 31, 2004
GAAP Adjustments Pro Forma
------------------------------------
Revenues:
System and software $ 94,521 $ - $ 94,521
Service and support 69,884 - 69,884
---------- --------- ----------
Total revenues 164,405 - 164,405
---------- --------- ----------
Cost of revenues:
System and software 4,562 - 4,562
Service and support 20,095 - 20,095
Amortization of purchased
technology 2,466 (2,466)(1) -
---------- --------- ----------
Total cost of
revenues 27,123 (2,466) 24,657
---------- --------- ----------
Gross margin 137,282 2,466 139,748
---------- --------- ----------
Gross margin
percentage 83.5% 85.0%
---------- ----------
Operating expenses:
Research and development 48,383 - 48,383
Marketing and selling 63,706 - 63,706
General and administration 18,562 - 18,562
Amortization of intangible
assets 782 (782)(1) -
Special charges - - -
---------- --------- ----------
Total operating
expenses 131,433 (782) 130,651
---------- --------- ----------
Operating income 5,849 3,248 9,097
Other income, net 1,230 - 1,230
Interest expense (4,455) - (4,455)
---------- --------- ----------
Income before income taxes 2,624 3,248 5,872
Income tax expense 446 552 998
---------- --------- ----------
Net income $ 2,178 $ 2,696 $ 4,874
========== ========= ==========
Net income per share:
Basic $ .03 $ .07
========== ==========
Diluted $ .03 $ .07
========== ==========
Weighted average number of
shares outstanding:
Basic 69,803 69,803
========== ==========
Diluted 72,763 72,763
========== ==========
(1) Non-cash amortization of intangible assets.
MENTOR GRAPHICS CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except percentages and earnings
per share data-Unaudited)
Three Months Ended March 31, 2003
GAAP Adjustments Pro Forma
------------------------------------
Revenues:
System and software $ 91,812 $ - $ 91,812
Service and support 67,528 - 67,528
---------- --------- ----------
Total revenues 159,340 - 159,340
---------- --------- ----------
Cost of revenues:
System and software 4,815 - 4,815
Service and support 20,703 - 20,703
Amortization of purchased
technology 2,209 (2,209)(1) -
---------- --------- ----------
Total cost of
revenues 27,727 (2,209) 25,518
---------- --------- ----------
Gross margin 131,613 2,209 133,822
---------- --------- ----------
Gross margin
percentage 82.6% 84.0%
---------- ----------
Operating expenses:
Research and development 42,876 - 42,876
Marketing and selling 59,189 - 59,189
General and administration 18,983 - 18,983
Amortization of intangible
assets 1,145 (1,145)(1) -
Special charges 1,363 (1,363)(2) -
---------- --------- ----------
Total operating
expenses 123,556 (2,508) 121,048
---------- --------- ----------
Operating income 8,057 4,717 12,774
Other income, net 487 - 487
Interest expense (4,045) - (4,045)
---------- --------- ----------
Income before income taxes 4,499 4,717 9,216
Income tax expense 900 943 1,843
---------- --------- ----------
Net income $ 3,599 $ 3,774 $ 7,373
========== ========= ==========
Net income per share:
Basic $ .05 $ .11
========== ==========
Diluted $ .05 $ .11
========== ==========
Weighted average number of
shares outstanding:
Basic 67,335 67,335
========== ==========
Diluted 68,255 68,255
========== ==========
(1) Non-cash amortization of intangible assets.
(2) Merger, acquisition, restructuring and other charges.
MENTOR GRAPHICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands - Unaudited)
As of As of
March December
31, 31,
2004 2003
- ----------------------------------------------------------------------
Assets
Current assets:
Cash and short-term investments $ 80,183 $ 71,324
Trade accounts receivable, net 99,726 104,043
Term receivables, short-term 110,163 119,627
Prepaid expenses and other 29,755 27,164
Deferred income taxes 18,792 18,787
-------- --------
Total current assets 338,619 340,945
Property, plant and equipment, net 90,296 91,350
Term receivables, long-term 110,264 98,207
Intangibles, net 324,619 326,281
Other assets 87,188 83,905
-------- --------
Total assets $950,986 $940,688
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings $ 9,662 $ 6,910
Accounts payable 16,207 18,105
Income taxes payable 35,407 35,122
Accrued payroll and related liabilities 52,630 80,484
Accrued liabilities 37,198 37,719
Deferred revenue 104,226 74,662
-------- --------
Total current liabilities 255,330 253,002
Long-term notes payable 286,390 286,768
Other long-term liabilities 21,844 23,161
-------- --------
Total liabilities 563,564 562,931
-------- --------
Minority Interest 3,383 3,391
Stockholders' equity:
Common stock 301,300 294,180
Deferred compensation (1,561) (2,601)
Retained earnings 60,470 57,800
Accumulated other comprehensive income 23,830 24,987
-------- --------
Total stockholders' equity 384,039 374,366
-------- --------
Total liabilities and stockholders' equity $950,986 $940,688
======== ========
MENTOR GRAPHICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands - Unaudited)
Three Months Ended
March 31,
-------------------
2004 2003
--------- ---------
Operating Cash Flows:
Net income $ 2,178 $ 3,599
Depreciation and amortization 10,327 12,124
Other adjustments to reconcile operating
Cash (1,557) (1,488)
Changes in working capital (2,435) (575)
--------- ---------
Net cash provided by operating activities 8,513 13,660
Net cash provided by (used in) investing
activities (13,902) 218
Net cash provided by financing activities 10,354 1,899
Effect of exchange rate changes on cash
And cash equivalents (79) (61)
--------- ---------
Net change in cash and cash equivalents 4,886 15,716
Cash and cash equivalents at beginning of
period 68,333 34,969
--------- ---------
Cash and cash equivalents at end of period $ 73,219 $ 50,685
========= =========
MENTOR GRAPHICS CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In thousands, except for percentages and days sales
outstanding-Unaudited)
Three Months Ended
March 31,
---------------------------
2004 2003
----------- -----------
Geographic Revenue:
Americas $ 65,030 $ 79,526
39.5% 49.9%
Europe $ 43,821 $ 42,420
26.7% 26.6%
Japan $ 38,795 $ 24,024
23.6% 15.1%
Pac Rim $ 16,759 $ 13,370
10.2% 8.4%
Other Data:
Capital expenditures $ 4,820 $ 3,278
Days sales outstanding 115 89
CONTACT: Mentor Graphics
Ryerson Schwark, 503-685-1462
ry_schwark@mentor.com
or
Dennis Weldon, 503-685-1462
dennis_weldon@mentor.com