Exhibit 99.2
Mentor Graphics Announces 2005 and Preliminary 2006 Outlook
WILSONVILLE, Ore.--(BUSINESS WIRE)--July 29, 2005--Mentor Graphics
Corporation (Nasdaq:MENT) today released revised 2005 guidance, and
preliminary 2006 outlook.
"Weaker second quarter bookings will not support our previously
guided second half revenue targets. As a result, we are lowering our
second half numbers, but remain optimistic about potential fourth
quarter business," said Gregory K. Hinckley, president of Mentor
Graphics. "With a healthy number of contract renewals in the fourth
quarter, we expect a rebound that should produce good earnings and
allow us to grow our backlog."
For the third quarter, Mentor expects revenue of approximately
$160 million to $165 million, and pro forma earnings per share between
a loss of $.05 and break-even, with GAAP earnings per share expected
to be a loss of between $.07 and $.02. In the fourth quarter, the
company expects strength to return with revenue of $221 million and
pro forma earnings per share of approximately $.50 and GAAP earnings
per share of $.26.
For the full year 2005, the company expects revenue of about $700
million to $705 million. Pro forma earnings are anticipated to range
between $.37 and $.42 and GAAP earnings are expected to range between
$.05 and $.10.
For 2006, revenue is expected to be about $755 million, a growth
of approximately 7% to 8% from 2005, and pro forma earnings per share
are expected to grow about 25% to $.50. GAAP earnings per share for
2006 are expected to be about $.30.
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
$700 million and employs approximately 3,900 people worldwide.
Corporate headquarters are located at 8005 S.W. Boeckman Road,
Wilsonville, Oregon 97070-7777. World Wide Web site:
http://www.mentor.com/.
In the calculation of pro forma earnings, gross margin and
operating expenses, Mentor Graphics excludes amortization of acquired
intangibles and write-offs of in-process R&D from acquisitions. For
the three and six months ended June 30, 2005, a $4.75 million charge
to R&D related to the purchase of technology that had not reached
technological feasibility was also excluded from pro forma earnings.
Included in pro forma earnings for the six months ended June 30, 2005
was a $1 million gain related to the sale of a building in the first
quarter classified in other income, net. Also, excluded are
non-operating and non-recurring items classified as special charges
such as restructure expenses and asset impairments, as well as income
tax expense in excess of a normalized 17% effective tax rate. 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 based on
current expectations 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 successfully offer products
and services that compete in the highly competitive EDA industry
including the risk that the Company's technology, products or
inventory become obsolete; (ii) reductions in spending on EDA tools by
the Company's customers due to cyclical downturns or initiatives to
increase profitability, (iii) discounting of products and services by
competitors, which could force the company to lower its prices or
offer other more favorable terms to customers (iv) changes in
accounting or reporting rules or interpretations, limitations on
repatriation of earnings, licensing and intellectual property rights
protection; (v) changes in tax laws, regulations or enforcement
practices where the Company does business; (vi) effects of the
increasing volatility of foreign currency fluctuations on the
Company's business and operating results; (vii) effects of
unanticipated shifts in product mix on gross margin and unanticipated
shifts in geographic mix on the overall tax rate, (viii) effects of
customer seasonal purchasing patterns and the timing of significant
orders may negatively impact the Company's quarterly results of
operations, (ix) the Company's ability to successfully integrate and
manage its acquisitions, 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
As of July 29, 2005
Reconciliation of Forward Looking Diluted Net Income per Share Between
GAAP and Earnings Before Amortization of Acquired Intangibles and
Special Charges
(Unaudited)
$ in Millions except per
share data
Q3 2005 Q3 2005
GAAP Adjustments Pro Forma
-----------------------------------------
Revenue $160 - $165 - $160 - $165
Diluted earnings per share ($.07) - ($.02) $0.02 (a)($.05) - $0.00
Q4 2005 Q4 2005
GAAP Adjustments Pro Forma
-----------------------------------------
Revenue $221 - $221
Diluted earnings per share $0.26 $0.24 (a) $0.50
2005 2005
GAAP Adjustments Pro Forma
-----------------------------------------
Revenue $700 - $705 - $700 - $705
Diluted earnings per share $0.05 - $0.10 $0.32 (b) $0.37 - $0.42
2006 2006
GAAP Adjustments Pro Forma
-----------------------------------------
Revenue $755 - $755
Diluted earnings per share $0.30 $0.20 (a) $0.50
(a) GAAP to Pro Forma adjustments include amortization of intangibles,
the tax effect on these adjustments and differences between GAAP and
Pro Forma tax rates.
(b) GAAP to Pro Forma adjustments include amortization of intangibles,
special charges, R&D acquisition charges, the tax effect on these
adjustments and differences between GAAP and Pro Forma tax rates.
CONTACT: Mentor Graphics Corporation
Ryerson Schwark, 503-685-1462
ry_schwark@mentor.com
or
Dennis Weldon, 503-685-1462
dennis_weldon@mentor.com