WILSONVILLE, Ore. — (BUSINESS WIRE) — February 26, 2015 — Mentor Graphics Corporation (NASDAQ: MENT) today announced financial results for the company’s fiscal fourth quarter ended January 31, 2015. The company reported revenues of $439.1 million, non-GAAP earnings per share of $1.09, and GAAP earnings per share of $0.96. For the full fiscal year, revenues were $1.244 billion, non-GAAP earnings per share were $1.77, and GAAP earnings per share were $1.26.

“Mentor Graphics set all-time records for the fourth quarter and full-year fiscal 2015,” said Walden C. Rhines, chairman and CEO of Mentor Graphics. “Fourth quarter results were driven primarily by Asian foundries and their customers adopting Design-to-Silicon solutions for 14nm and 10nm nodes and by the automotive sector’s continued demand for embedded software and electrical design products. Mentor’s board of directors is raising the quarterly dividend by 10% to $0.055 per share.”

During the quarter, the company announced new releases of its award-winning computational fluid dynamics product, FloEFD™, and of its Flowmaster® simulation software for modeling thermo-fluid systems. Both products provide advanced capabilities to support the automotive industry. The company also announced Mentor® Embedded virtual prototype kits for the company’s Vista™ and Sourcery™ CodeBench products. The kits enable embedded developers to integrate and optimize software on various platforms, especially for automotive in-vehicle infotainment and electronic control unit networks. Mentor also made available automotive Ethernet support in the Volcano™ VSA™ product for network design of electronic control units. This addresses timing analysis challenges where a mixture of network busses co-exist, for example in advanced driver assistance systems.

“In the fourth quarter we posted numerous all-time records including bookings, revenue, and both GAAP and non-GAAP earnings per share,” said Gregory K. Hinckley, president of Mentor Graphics. “Similarly, we had record revenue and non-GAAP earnings per share for the full year. Strength in the Design-to-Silicon products category reinforces our leadership position in traditional EDA markets and our transportation offerings continue to benefit from expanding opportunities for advanced electrical design. Continued attention to expenses drove record non-GAAP operating margins for the quarter and year.”

Outlook

For the first quarter of fiscal 2016, the company expects revenues of about $260 million, non-GAAP earnings per share of about $0.18 and GAAP earnings per share of approximately $0.08. For the full year fiscal 2016, the company expects revenues of about $1.282 billion, non-GAAP earnings per share of about $1.85, and GAAP earnings per share of approximately $1.45. The fiscal 2016 non-GAAP guidance, first quarter and full year, anticipates a normalized non-GAAP tax rate of 19% which is an increase from the fiscal 2015 rate of 17%.

Dividend

The company announced a 10% increase in the quarterly dividend to $0.055 per share on outstanding common stock. The dividend is payable on March 31, 2015 to shareholders of record at the close of business on March 10, 2015.

Fiscal Year Definition

Mentor Graphics Corporation’s fiscal year runs from February 1 to January 31. The fiscal year is dated by the calendar year in which the fiscal year ends. As a result, the first three fiscal quarters of any fiscal year will be dated with the next calendar year, rather than the current calendar year.

Discussion of Non-GAAP Financial Measures

Mentor Graphics’ management evaluates and makes operating decisions using various performance measures. In addition to our GAAP results, we also consider adjusted gross profit, operating income, operating margin, net income, and earnings per share which we refer to as non-GAAP gross profit, operating income, operating margin, net income, and earnings per share, respectively. These non-GAAP measures are derived from the revenues of our product, maintenance, and services business operations and the costs directly related to the generation of those revenues, such as cost of revenue, research and development, marketing and sales, and general and administrative expenses, that management considers in evaluating our ongoing core operating performance. These non-GAAP measures exclude amortization of intangible assets, special charges, equity plan-related compensation expenses, interest expense associated with the amortization of original issuance debt discount on convertible debt, the equity in earnings or losses of unconsolidated entities (except Frontline PCB Solutions Limited Partnership (Frontline)), and the impact on basic and diluted earnings per share of changes in the calculated redemption value of noncontrolling interests, which management does not consider reflective of our core operating business.

Management excludes from our non-GAAP measures certain recurring items to facilitate its review of the comparability of our core operating performance on a period-to-period basis because such items are not related to our ongoing core operating performance as viewed by management. Management considers our core operating performance to be that which can be affected by our managers in any particular period through their management of the resources that affect our underlying revenue and profit generating operations during that period. Management uses this view of our operating performance for purposes of comparison with our business plan and individual operating budgets and allocation of resources. Additionally, when evaluating potential acquisitions, management excludes the items described above from its consideration of target performance and valuation. More specifically, management adjusts for the excluded items for the following reasons: