CIMdata PLM Industry Summary Online Archive
21 October 2004
Financial News
Mentor Graphics Releases Guidance
Mentor Graphics Corporation 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.
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.
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