Mentor Graphics Releases Guidance
WILSONVILLE, Ore.—(BUSINESS WIRE)—Oct. 21, 2004—
Mentor Graphics Corporation (Nasdaq:MENT) expects
revenue in the fourth quarter of approximately $205 million. Pro forma
earnings per share are expected to be approximately $.38, while GAAP
earnings per share are expected to be about $.33.
For the full year 2004, Mentor expects bookings growth of about
10%, revenue of about $700 million and pro forma earnings per share of
about $.65. On a GAAP basis, the company expects to report a loss of
approximately $.15 for the entire year. Diluted shares outstanding are
expected to be about 78 million for the fourth quarter. For the full
year 2004, average diluted shares outstanding are expected to be about
75 million and weighted average basic shares outstanding are expected
to be about 72 million. The growth in shares outstanding is caused by
the addition of 4.5 million shares associated with the 0-In Design
Automation acquisition.
For 2005, Mentor expects bookings to again increase by about 10%
and revenue growth in the range of 6% to 8%. 2005 pro forma earnings
per share are now expected to range between $.75 and $.80, while GAAP
earnings per share are expected to range between $.60 and $.65.
The Emerging Issues Task Force (EITF) reached consensus on Issue
No. 04-08 "Accounting Issues Related to Certain Features of
Contingently Convertible Debt and the Effect on Diluted Earnings Per
Share." This consensus should be effective during the fourth quarter
of 2004 and is expected to have an immaterial impact on Mentor
Graphics for the fourth quarter of 2004 and all of 2005, and is not
considered in the above guidance.
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 3,800 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/.
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. 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) the Company's ability to successfully
integrate and manage its acquisitions, (iii) changes in accounting or
reporting rules or interpretations, limitations on repatriation of
earnings, licensing and intellectual property rights protection; (iv)
changes in tax laws, regulations or enforcement practices where the
Company does business; (v) effects of the increasing volatility of
foreign currency fluctuations on the Company's business and operating
results; (vi) economic uncertainty and (vii) 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
As of October 21, 2004
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
Q4 2004 Q4 2004
GAAP Adjustments Pro Forma
---------------------------------------
Revenue $ 205 - $ 205
Diluted earnings per share $ 0.33 $ 0.05 (a) $ 0.38
(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.
2004 2004
GAAP Adjustments Pro Forma
---------------------------------------
Revenue $ 700 - $ 700
Diluted earnings per share ($ 0.15) $ 0.80 (b) $ 0.65
(b) GAAP to Pro Forma adjustments include amortization of
intangibles, special charges, the tax effect on these adjustments, and
differences between GAAP and Pro Forma tax rates.
2005 2005
GAAP Adjustments Pro Forma
---------------------------------------
Revenue $742-$756 - $742-$756
Diluted earnings per share $0.60-$0.65 $0.15 (c) $0.75-$0.80
(c) GAAP to Pro Forma adjustments include amortization of
intangibles and the tax effect on these adjustments
Contact:
Mentor Graphics Corporation
Ryerson Schwark, Public and Investor Relations
503-685-1462
ry_schwark@mentor.com
OR
Dennis Weldon, Treasurer
503-685-1462
dennis_weldon@mentor.com
