Preliminary Mentor Graphics Second Quarter Results Weaker Than Expected

7/8/2002 - Mentor Graphics Corporation (Nasdaq: MENT) today announced that it expects to report revenues in excess of $135 million and a loss, including normal acquisition-related charges, in the range of $30 million or $.40 per share for the second quarter of 2002. These results are preliminary and are subject to adjustments that may occur with final closing of accounting records and the review of independent auditors.

Included in the expected loss is a special charge caused primarily by the write-off of in-process R&D of approximately $25 million related to the previously announced acquisitions of IKOS and Innoveda. The loss also includes charges for write-down of emulation inventory, and the write-off of bank fees on an interim bridge loan facility that was arranged for the acquisition of Innoveda. These two items are expected to total about $8 to $9 million. In addition to these items, operating expenses for the quarter are expected to include approximately $4.5 million of redundant sales and administrative expenses that have been identified between Mentor and the two acquired companies. These expenses will be eliminated by the beginning of the fourth quarter 2002. Before the effects of these charges and expenses, results were approximately break even.

Business activity in the quarter was healthier than the company had experienced since late 2000. In fact, as recently as the last business day of the quarter, management expected that bookings and revenue would be consistent with forecasts. However, several large transactions did not close.

Second quarter results will be reported after market close on July 19, 2002.

Mentor Graphics Corporation (Nasdaq: MENT) is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world's most successful electronics and semiconductor companies. Established in 1981, the company reported revenues over the last 12 months of about $600 million and employs approximately 3,500 people worldwide. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777; Silicon Valley headquarters are located at 1001 Ridder Park Drive, San Jose, California 95131-2314. World Wide Web site:

Mentor Graphics is a registered trademark of Mentor Graphics Corporation. All other company or product names are the registered trademarks or trademarks of their respective owners.

Statements in this press release regarding the Company's outlook for future periods constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company or industry results to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: (i) the Company's ability to successfully offer products and services that compete in the highly competitive and dynamic EDA industry including the risk that the Company's technology, products or inventory become obsolete; (ii) the Company's ability to continue selling products and services during the current very severe slowdown in the electronics industry, particularly in the telecommunications and semiconductor segments; (iii) the Company's ability to manage expenses during the slowdown in the electronics industry; (iv) the overall instability of diverse economies, including changes in regional or worldwide economic or political conditions, government trade restrictions, changes in accounting or reporting rules or interpretations, changes in the tax environment worldwide, limitations on repatriation of earnings, licensing and intellectual property rights protection; (v) the completion of customer contracts and the terms of delivery of software, hardware and other services; (vi) the Company's ability to successfully integrate and manage its recent and future acquisitions; (vii) possible adverse impact from the Company's emulation litigation with Cadence Design Systems or other third parties; (viii) effects of the increasing volatility of foreign currency fluctuations on the Company's business and operating results, and (ix) effects of unanticipated shifts in product mix on gross margin and unanticipated shifts in geographic mix on the overall tax rate, all as may be discussed in more detail under the heading "Factors That May Affect Future Results and Financial Condition" in the Company's most recent Form 10-K or Form 10-Q. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. In addition, statements regarding outlook do not reflect potential impacts of mergers or acquisitions that have not been announced or closed as of the time the statements are made. Mentor Graphics disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements to reflect future events or developments.

For more information, please contact:
Ryerson Schwark
Public and Investor Relations

Dennis Weldon

Previous Page | News by Category | News Search

If you found this page useful, bookmark and share it on: