CIMdata PLM Industry Summary Online Archive
21 October 2004
Financial News
Mentor Graphics Announces Third Quarter Results
Mentor Graphics Corporation announced third quarter pro forma diluted earnings per share were $.05, on revenue of $162 million. On a GAAP basis, the company reported a loss of $.08 per share, driven lower primarily by special charges for in-process R&D associated with the acquisition of 0-In Design Automation. Revenue grew 3% over the year ago quarter, while bookings grew 2%.
"Although growth in the third quarter was slow, it was primarily due to the timing of major orders," said Walden C. Rhines, chairman and CEO of Mentor Graphics. "Year to date bookings have grown over 8% and we expect an all-time record level in fourth quarter and full year bookings growth of 10%."
On Oct. 19, the company announced design-for-manufacturing (DFM) enhancements to its flagship Calibre® product line, as well as announced plans for more DFM products to be delivered in 2005. The company believes that DFM is a significant opportunity for the industry as customers struggle with achieving acceptable yield on advanced processes.
By geography, PacRim was particularly robust. Bookings in PacRim climbed 20%, North America was up 5%, and Europe was down 10%. Japan was flat, but continued at bookings levels nearly double the historical rate of the late 1990s. Revenue by region was 40% Americas, 30% Europe, 20% Japan, and 10% Pacific Rim.
By product line, Scalable VerificationTM bookings rose 40% over the year ago quarter, driven by strength in the ModelSim® product line. During the quarter, the company launched ModelSim® 6.0 with enhancements to support standards and assertion-based methodologies. Systems bookings rose 10% with particular strength in high speed design, up over 100% and in the ExpeditionTM product line. Design to Silicon bookings were down 20% and new and emerging products fell 25%. During the quarter, Mentor won 4 new customers for TestKompress® as well as a major order for Platform ExpressTM.
Book-to-bill was below 1.0. Pro forma gross margin was 86%. Gross margin on a GAAP basis was 84%.
"Customer interest in the 0-In acquisition is as strong as I've ever seen interest in a newly acquired product line," said Gregory K. Hinckley, president of Mentor Graphics. "We expect as we fully integrate 0-In into our Scalable Verification Platform that we'll see continued market share gains in the verification space."
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.
For full financials, please visit http://www.mentor.com/press_releases/oct04/1084902132247.html
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