|
MENTOR GRAPHICS CORPORATION |
||||||||||||||||
|
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS |
||||||||||||||||
| (In thousands, except earnings per share data) | ||||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP net income (loss) attributable to Mentor Graphics shareholders | $ | 3,437 | $ | 31,212 | $ | (9,999 | ) | $ | 21,327 | |||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Equity plan-related compensation: (1) | ||||||||||||||||
| Cost of revenues | 781 | 608 | 1,492 | 1,316 | ||||||||||||
| Research and development | 4,567 | 3,800 | 8,890 | 8,118 | ||||||||||||
| Marketing and selling | 2,846 | 2,366 | 5,701 | 4,846 | ||||||||||||
| General and administration | 3,732 | 3,812 | 6,344 | 6,584 | ||||||||||||
| Acquisition - related items: | ||||||||||||||||
| Amortization of purchased assets | ||||||||||||||||
| Cost of revenues (2) | 1,787 | 1,794 | 3,572 | 3,652 | ||||||||||||
| Amortization of intangible assets (3) | 1,520 | 2,234 | 3,074 | 4,453 | ||||||||||||
| Special charges (4) | 1,445 | 2,186 | 4,436 | 39,163 | ||||||||||||
| Other income, net (5) | 43 | (14 | ) | 45 | (39 | ) | ||||||||||
| Interest expense (6) | 1,754 | 1,633 | 3,477 | 3,237 | ||||||||||||
| Non-GAAP income tax effects (7) | (5,977 | ) | (6,018 | ) | (8,471 | ) | (15,300 | ) | ||||||||
| Noncontrolling interest (8) | - | (200 | ) | - | (400 | ) | ||||||||||
| Total of non-GAAP adjustments | 12,498 | 12,201 | 28,560 | 55,630 | ||||||||||||
| Non-GAAP net income attributable to Mentor Graphics shareholders | $ | 15,935 | $ | 43,413 | $ | 18,561 | $ | 76,957 | ||||||||
| GAAP weighted average shares (diluted) | 109,874 | 119,368 | 108,215 | 118,986 | ||||||||||||
| Non-GAAP adjustment | - | - | 2,172 | - | ||||||||||||
| Non-GAAP weighted average shares (diluted) | 109,874 | 119,368 | 110,387 | 118,986 | ||||||||||||
| Net income (loss) per share attributable to Mentor Graphics shareholders: | ||||||||||||||||
| GAAP (diluted) | $ | 0.03 | $ | 0.26 | $ | (0.09 | ) | $ | 0.18 | |||||||
| Non-GAAP adjustments detailed above | 0.12 | 0.10 | 0.26 | 0.47 | ||||||||||||
| Non-GAAP (diluted) | $ | 0.15 | $ | 0.36 | $ | 0.17 | $ | 0.65 | ||||||||
|
|
||||||||||||||||
| (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 generally amortized over two to five years. |
| (3) | Other identified intangible assets are generally amortized to operating expense over two to five years. Other identified intangible assets include trade names, customer relationships, and backlog resulting from acquisition transactions. |
| (4) | Three months ended July 31, 2016: Special charges consist of (i) $556 for EVE litigation costs, (ii) $442 of costs incurred for employee rebalances which include severance benefits and notice pay, and (iii) $447 in other adjustments. |
| Three months ended July 31, 2015: Special charges consist of (i) $944 for EVE litigation costs, (ii) $840 of costs incurred for employee rebalances which include severance benefits and notice pay, and (iii) $402 in other adjustments. | |
| Six months ended July 31, 2016: Special charges consist of (i) $2,530 of costs incurred for employee rebalances which include severance benefits and notice pay, (ii) $1,363 for EVE litigation costs, and (iii) $543 in other adjustments. | |
| Six months ended July 31, 2015: Special charges consist of (i) $25,435 for severance costs incurred for the voluntary early retirement program, (ii) $10,703 of costs incurred for employee rebalances which include severance benefits and notice pay, (iii) $2,519 for EVE litigation costs, and (iv) $506 in other adjustments. | |
| (5) | Amount represents (income) loss for 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. |
| (8) | Adjustment for the impact of amortization of intangible assets, equity plan-related compensation, and income tax expense on noncontrolling interest. |
