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MENTOR GRAPHICS CORPORATION |
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UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS |
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| (In thousands, except earnings per share data) | ||||||||||
| Three Months Ended April 30, | ||||||||||
| 2015 | 2014 | |||||||||
| GAAP net loss attributable to Mentor Graphics shareholders | $ | (9,885 | ) | $ | (2,551 | ) | ||||
| Non-GAAP adjustments: | ||||||||||
| Equity plan-related compensation: (1) | ||||||||||
| Cost of revenues | 708 | 535 | ||||||||
| Research and development | 4,318 | 3,241 | ||||||||
| Marketing and selling | 2,480 | 2,178 | ||||||||
| General and administration | 2,772 | 2,175 | ||||||||
| Acquisition - related items: | ||||||||||
| Amortization of purchased assets | ||||||||||
| Cost of revenues (2) | 1,858 | 1,361 | ||||||||
| Amortization of intangible assets (3) | 2,219 | 1,866 | ||||||||
| Special charges (4) | 36,977 | 5,926 | ||||||||
| Other income (expense), net (5) | (25 | ) | 13 | |||||||
| Interest expense (6) | 1,604 | 1,494 | ||||||||
| Non-GAAP income tax effects (7) | (9,282 | ) | (2,825 | ) | ||||||
| Noncontrolling interest (8) | (200 | ) | (200 | ) | ||||||
| Total of non-GAAP adjustments | 43,429 | 15,764 | ||||||||
| Non-GAAP net income attributable to Mentor Graphics shareholders | $ | 33,544 | $ | 13,213 | ||||||
| GAAP weighted average shares | 116,003 | 114,935 | ||||||||
| Non-GAAP adjustment | 4,753 | 2,479 | ||||||||
| Non-GAAP weighted average shares (diluted) | 120,756 | 117,414 | ||||||||
| Net income (loss) per share attributable to Mentor Graphics shareholders: | ||||||||||
| GAAP | $ | (0.08 | ) | $ | (0.02 | ) | ||||
| Noncontrolling interest adjustment (9) | - | (0.01 | ) | |||||||
| Non-GAAP adjustments detailed above | 0.36 | 0.14 | ||||||||
| Non-GAAP (diluted) | $ | 0.28 | $ | 0.11 | ||||||
| (1) | Equity plan-related compensation expense is the fair value of all share-based payments to employees for stock options and restricted stock units, and purchases made as a result of the employee stock purchase plans. | ||
| (2) | Amount represents amortization of purchased technology resulting from acquisitions. Purchased technology is amortized over two to five years. | ||
| (3) | Other identified intangible assets are amortized to operating expense generally over two to five years. Other identified intangible assets include trade names, customer relationships, and backlog which are the result of acquisition transactions. The amount presented for the three months ended April 30, 2014 also includes $116 of amortization of other identified intangible assets for Frontline, which were fully amortized in the first quarter of fiscal 2015. | ||
| (4) | Three months ended April 30, 2015: Special charges consist of (i) $25,435 of severance costs incurred for the voluntary early retirement program, (ii) $9,863 of costs incurred for employee rebalances which include severance benefits, notice pay, and outplacement services, (iii) $1,575 for EVE litigation costs, and (iv) $104 in other adjustments. | ||
| Three months ended April 30, 2014: Special charges consist of (i) $3,958 for EVE litigation costs, (ii) $1,125 of costs incurred for employee rebalances which include severance benefits, notice pay, and outplacement services, and (iii) $843 in other adjustments. | |||
| (5) | Amount represents (income) loss on an investment accounted for under the equity method of accounting. | ||
| (6) | Amount represents the amortization of original issuance debt discount. | ||
| (7) | Non-GAAP income tax expense adjustment reflects the application of our assumed normalized effective 19% tax rate, instead of our GAAP tax rate, to our non-GAAP pre-tax income for the three months ended April 30, 2015 and a 17% tax rate for the three months ended April 30, 2014. | ||
| (8) | Adjustment for the impact of amortization of intangible assets, equity plan-related compensation, and income tax expense on noncontrolling interest. | ||
| (9) | Non-GAAP EPS excludes from the numerator of our earnings per share calculation the adjustment of the noncontrolling interest to the calculated redemption value, recorded directly to retained earnings. | ||
