7/22/2002 - Mentor Graphics Corporation (Nasdaq: MENT) today reported a loss of $.56 per share for its second quarter, 2002, on revenues of $135.4 million. Acquisition-related costs and emulation inventory writedowns resulted in a $28.1 million charge in the quarter. Earnings, excluding these charges, their tax effects and amortization of intangibles were, as expected, a loss of $.06 per share.
"Since late 2001, we had been projecting a first half 2002 recovery for EDA. Clearly, the recovery did not materialize. Recent difficulties in the personal computer market, added to the ongoing problems in the telecommunications market, continue to make closing business difficult," said Walden C. Rhines, CEO and chairman of Mentor Graphics. "We have taken advantage of this difficult market to make targeted acquisitions that expand our leadership in key market segments. With the acquisition of Innoveda, we enhanced our number one position in the printed circuit board (PCB) design market, and the acquisition of Ikos late last quarter moved us into number one in the emulation market. Overall, we believe we are well positioned for solid growth as the electronics industry recovers."
Mentor added 142 new customers in the quarter. Mentor continued to win competitively, replacing Hercules with Calibre® physical verification at three top 50 semiconductor companies in the quarter. In addition, Calibre Interactive™ won 10 new accounts with particular strength in the analog/mixed-signal segment. Mentor's leadership in PCB continued to grow with 6 competitive wins. FPGA Synthesis also showed continued strength. Mentor's analog/mixed-signal design tools also performed well, with orders up 40% from the year ago quarter.
During the quarter, Mentor launched, and had its first customer shipment of its new VStation-30M™ emulation system, which significantly expands capacity in its VStation™ emulation product line.
"We saw sluggishness across our business, with particular weakness in Europe," said Gregory K. Hinckley, president of Mentor Graphics. "As expected, emulation and consulting remained weak. We did have some highlights: the Pacific Rim grew 35% over the year ago quarter, and software bookings overall saw 15% growth over the year ago quarter. Furthermore, we continued to hold the line on pricing as our two largest renewals in the quarter averaged over 50% increases over their previous rates."
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 3,700 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: www.mentor.com
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 continue selling products and services during the current very severe slowdown in the electronics industry, particularly in the telecommunications, semiconductor and personal computer segments; (ii) the Company's ability to manage expenses during the current very severe slowdown in the electronics industry; (iii) the Company's ability to successfully integrate and manage its recent and future acquisitions; (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) possible material adverse impact from the Company's emulation litigation with Cadence Design Systems or other third parties; (vii) 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; (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.
Mentor Graphics and Calibre are registered trademarks of Mentor Graphic Corporation, and Calibre Interactive, VStation and VStation-30M are trademarks of Mentor Graphics Corporation. All other company or product names are the registered trademarks or trademarks of their respective owners.
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