UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarter Ended June 30, 1995. Commission File No. 0-13442
MENTOR GRAPHICS CORPORATION
(Exact name of registrant as specified in its charter)
Oregon 93-0786033
(State or other jurisdiction of (IRS Employer incorporation
or organization) Identification No.)
8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (503) 685-7000
NO CHANGE
Former name, and former
fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Number of shares of common stock, no par value, outstanding as of
July 31, 1995: 54,326,189
MENTOR GRAPHICS CORPORATION
Index to Form 10Q
PART I FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Consolidated Statements of Operations for the three 3
months ended June 30, 1995 and 1994
Consolidated Statements of Operations for the six 4
months ended June 30, 1995 and 1994
Consolidated Balance Sheets as of June 30, 1995 5
and December 31, 1994
Consolidated Statements of Cash Flows for the 6
six months ended June, 1995 and 1994
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 9-14
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 16
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Mentor Graphics Corporation
Consolidated Statements of Operations
(In thousands, except net income per share)
(Unaudited)
Three Months Ended
June 30,
1995 1994
Revenues:
System and software $46,956 $44,589
Service and support 46,812 36,717
Total revenues 93,768 81,306
Cost of revenues:
System and software 8,271 7,454
Service and support 20,014 15,692
Total cost of revenues 28,285 23,146
Gross margin 65,483 58,160
Expenses:
Research and development 17,601 16,132
Marketing, general
and administration 37,638 36,562
Restructuring adjustment (2,040) --
Merger related charges 800 --
Total expenses 53,999 52,694
Operating income 11,484 5,466
Other income, net 1,827 345
Income before income taxes 13,311 5,811
Provision for income taxes 1,330 960
Net income $11,981 $4,851
Net income per common and
common equivalent share $ .22 $ .09
Weighted average number of
common and common
equivalent shares outstanding 55,486 52,044
See accompanying notes to unaudited consolidated financial
statements.
Mentor Graphics Corporat
Consolidated Statements of Operations
(In thousands, except net income per share)
(Unaudited)
Six Months Ended
June 30,
1995 1994
Revenues:
System and software $89,892 $93,821
Service and support 89,601 71,251
Total revenues 179,493 165,072
Cost of revenues
System and software 16,437 16,461
Service and support 38,383 30,830
Total cost of revenues 54,820 47,291
Gross margin 124,673 117,781
Expenses:
Research and development 34,803 33,566
Marketing, general
and administration 72,638 73,760
Restructuring adjustment (2,040) --
Merger related charges 800 --
Total expenses 106,201 107,326
Operating income 18,472 10,455
Other income, net 2,988 908
Income before income taxes 21,460 11,363
Provision for income taxes 3,030 1,900
Net income $18,430 $9,463
Net income per common and
common equivalent share $ .34 $ .18
Weighted average number
of common and common
equivalent shares outstanding 54,972 52,014
See accompanying notes to unaudited consolidated financial
statements.
Mentor Graphics Corporation
Consolidated Balance Sheets
(In thousands)
As of As of
June 30, 1995 December 31, 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $145,404 $130,676
Short-term investments 29,290 7,180
Trade accounts receivable, net 76,025 82,285
Other receivables 4,037 4,853
Prepaid expenses and other 11,458 13,012
Total current assets 266,214 238,006
Property, plant and equipment, net 96,693 97,701
Cash and investments, long-term 30,000 30,000
Other assets 29,376 28,090
Total $422,283 $393,797
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 7,588 $ 8,450
Accounts payable 7,539 11,570
Income taxes payable 11,347 12,793
Accrued and other liabilities 43,242 48,765
Deferred revenue 23,033 17,649
Total current liabilities 92,749 99,227
Long-term debt 53,449 53,625
Other long-term deferrals 1,410 1,877
Total liabilities 147,608 154,729
Stockholders' equity:
Common stock 265,582 254,271
Accumulated defici (10,703) (27,877)
Foreign currency
translation adjustment 19,796 12,674
Total stockholders' equity 274,675 239,068
Total $422,283 $393,797
See accompanying notes to unaudited consolidated financial
statements.
Mentor Graphics Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
1995 1994
Operating Cash Flows:
Net income $18,430 $ 9,463
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Depreciation and amortization of
property, plant & equipment 11,151 12,530
Deferred taxes (41) (21)
Amortization of other assets 4,263 3,694
Charge for in process R&D 400 --
Restructuring adjustment (2,040) --
Changes in operating assets and
liabilities:
Trade accounts receivable 8,718 (6,235)
Prepaid expenses and other assets 2,201 (3,203)
Accounts payable (4,273) (3,360)
Accrued liabilities (3,901) (5,107)
Other liabilities and deferrals 2,590 946
Net cash provided by operating
activities 37,498 8,707
Investing Cash Flows:
Maturities (purchases) of short-term
investments (21,543) 6,523
Purchases of property and equipment (9,260) (6,537)
Capitalization of software
development costs (3,060) (3,073)
Purchase of businesses (2,930) --
Net cash used by investing activities (36,793) (3,087)
Financing Cash Flows:
Proceeds from issuance of common stock 11,310 6,062
Increase (decrease) in short-term
borrowings (1,066) 837
Repayment of long-term debt (176) (11)
Adjustment for pooling of interests (331) 899
Cash Distribution -- (463)
Net cash provided by financing activities 9,737 7,324
Effect of exchange rate changes on
cash and cash equivalents 4,286 2,623
Net change in cash and cash equivalents 14,728 15,567
Cash and cash equivalents at beginning
of period 130,676 95,958
Cash and cash equivalents at end
of period $145,404 $111,525
See accompanying notes to unaudited consolidated financial
statements.
MENTOR GRAPHICS CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
(1) General - The accompanying financial statements have been
prepared in conformity with generally accepted accounting
principles. However, certain information and footnote
disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. In the
opinion of management, the statements include all adjustments
necessary for a fair presentation of the results of the interim
periods presented. Certain reclassifications have been made in
the accompanying financial statements for 1994 to conform with
the 1995 presentation.
(2) Acquisitions - On May 4, 1995, the Company completed the
acquisition of Axiom Datorer Skandinavien AB (Axiom). Axiom is
primarily engaged in developing, marketing and supporting
software library tools used to model electronic components
primarily for the printed circuit board and to a lesser extent
the application specific integrated circuit markets of the
electronic design automation (EDA) industry. Axiom's product
offerings are complementary to the CompanyOs current broad line
of EDA tools and systems. The total purchase price was $480 in
addition to Axiom's net deficit of $413 for a total acquisition
cost basis of $893. The transaction was accounted for as a
purchase, and therefore, the Consolidated Balance Sheet of
Axiom has been included in the accompanying Consolidated
Balance sheets as of June 30, 1995. The cost of the
acquisition was allocated on the basis of estimated fair value
of the assets and liabilities assumed. This allocation
resulted in a charge for in-process R&D of $400, goodwill
capitalization of $398 and technology capitalization of $95.
The charge for in-process R&D was a result of allocating a
portion of the acquisition cost to Axiom's in-process product
development that had not reached technological feasibility.
The goodwill costs will be amortized over a three year period
to R&D expense primarily to recognize the value of the
development work-force acquired. The technology costs will be
amortized over a three year period to system and software cost
of revenues. Financial results subsequent to the acquisition
date have been included in the Consolidated Statements of
Operations and Cash Flows. The separate operational results of
Axiom were not material compared to the CompanyOs overall
results of operations, and accordingly pro-forma financial
statements of the combined entities have been omitted.
On May 31, 1995, the Company issued 1,512 shares of its common
stock for all outstanding common stock of Exemplar Logic, Inc.
(Exemplar). Exemplar develops, markets and supports a family
of software tools for high-level-design-automation for the
application specific integrated circuit and field programmable
gate array markets. Exemplar's product offerings are
complementary to the Company's line of EDA tools and systems.
The Company accounted for this transaction as a pooling of
interests. The balance sheet of Exemplar is included in the
accompanying Consolidated Balance Sheet as of June 30, 1995 and
Exemplar's results of operations are included in the
accompanying Consolidated Statement of Operations for all of
1995. The Company's prior year financial statements were not
restated due to the relative materiality of Exemplar's separate
financial statements for 1994 and prior. Merger expenses of
$350 were for services rendered to facilitate completion of the
merger agreement and severance costs.
(3) Restructuring- Implementation of the Company's restructuring
plan approved by management in December 1993, and modified in
1994 continued during the second quarter of 1995. Costs
remaining to be incurred in executing the restructuring plan
consist primarily of direct costs associated with severance and
relocation of employees, facilities closures and write-offs of
excess equipment and intangible software technology assets
related to discontinued product development activities.
During the second quarter of 1995, several elements of the
restructuring plan were adjusted due to updated information.
Costs associated with an international reorganization have been
modified due to additional cost information related to
implementation activities associated with a new global
information system. In addition, certain actions associated
with a product discontinuance plan will not be taken as the
technology will be used by the Company's consulting
organization. As a result, the Company recorded a $2,040
credit during the second quarter of 1995 reflecting these lower
costs.
(4) Capitalization of Software Development Costs - During the first
six months of 1995 and 1994, $3,060 and $3,073 of new product
development costs were capitalized and included in other assets
on the Consolidated Balance Sheets, respectively. Amortization
of previously capitalized software development costs amounted
to $2,472 and $3,487 for the six months ended June 30, 1995 and
1994, respectively, and is included in system and software cost
of revenues on the Consolidated Statements of Operations.
(5) Supplemental Disclosures of Cash Flow Information - The
following provides additional information concerning cash flow
activities:
Six Months Ended
June 30,
1995 1994
Interest paid $ 1,099 $ 1,053
Income taxes paid, net of refunds $ 3,822 $ 1,147
(6) Subsequent Event - Stock Repurchase Announcement - On August
4, 1995 the Board of Directors approved a plan to repurchase,
from time to time over the next eighteen months on the open
market, up to $50,000 in market value of the Company's common
shares.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
(All numerical references are in thousands, except for percentages)
RESULTS OF OPERATIONS
REVENUES AND GROSS MARGINS
System and Software
System and software revenues for the quarter ended June 30, 1995,
totaled $46,956, representing an increase of $2,367 or 5% from the
second quarter of 1994. For the first six months of 1995, system
and software revenues declined $3,929 or 4% from the same period a
year ago. Second quarter system and software gross margins slightly
decreased to 82% in 1995 compared to 83% in the same period of 1994.
For the first six months of 1995 and 1994, system and software gross
margins were 82%.
System and software revenues were lower in the first half of 1995
versus the same period of 1994 due to a one-time contract which
yielded approximately $11,000 in the first quarter of 1994. This
year-to-year decline was off-set by the acquisitions of Anacad
Electrical Engineering Software GmbH (Anacad), Exemplar and Axiom
which contributed approximately $3,600 of system and software
revenues for the first six months of 1995 compared to zero for the
same period a year ago. System and software product revenues are
shifting from maturing product offerings to new product offerings.
The extent to which sales of new products will off-set declining
sales of older products will remain difficult to predict for some
time.
System and software gross margin levels are dependent on such
factors as third party software content for which royalties are
paid, lower margin hardware revenue levels, and amortization of
previously capitalized software development costs and purchased
technology costs. Third party software royalty costs have been
favorably impacted by acquisitions of third parties where existing
agreements were in place. The Company continues to have other third
party contracts that contribute varying levels of revenues and cost
of revenues quarter to quarter. Future trends of third party
revenue content are difficult to predict since they are dependent on
such variables as new third party agreements, potential acquisitions
of third parties where existing agreements are in place, and varying
levels of customer demand for third party product offerings.
The overall mix of hardware versus software continues to move toward
software. The Company experienced some hardware sales to meet
customer requests when gross margins were above a minimum level. In
the first half of 1995, the hardware component of system and
software revenue declined to 8% from 9% for the period last year.
The Company expects hardware revenue to decline at a moderate rate
for the second half of 1995.
Amortization of previously capitalized software development costs to
system and software cost of revenues was $1,336 and $2,472 for the
second quarter and first six months of 1995, respectively, compared
to $1,477 and $3,487 for the same periods a year ago. In 1994,
amortization reflected a higher level of capitalized costs
accumulated during development of Version 8 software products. The
amortization level declined in the first half of 1995 as several
capitalized projects became fully amortized during the prior year.
Purchased technology amortization to system and software cost of
goods sold was $1,109 and $106 for the six months ended June 30,
1995 and 1994, respectively. The increase in purchased technology
amortization is due to various technology acquisitions in 1994,
including the purchase of Anacad on September 30, 1994. Exclusive
of additional acquisitions, amortization of capitalized software
development and purchased technology costs are expected to be
approximately flat for the next several quarters.
Service and Support
Service and support revenues for the second quarter of 1995 were
$46,812, representing an increase of 27% from the comparable quarter
of 1994. For the first six months of 1995, service and support
revenues totaled $89,601, representing an increase of 26% from the
same period of 1994.
Growth in software support revenue is attributable to growth in the
Company's installed customer base, and continued success of the
Company's software support programs. The Company continues to
experience higher renewal rates for its software support program due
partially to the improved quality of the current software product
offerings. Since growth in software support is dependent on
continued success of the software product offerings and increases in
the Company's installed customer base, future software support
revenue levels are difficult to predict.
Professional and other service revenues for the second quarter of
1995 were $13,000, an increase of 71% from the comparable quarter of
1994. For the first six months of 1995, professional and other
service revenues totaled $24,900, an increase of 51% from the same
period of 1994. Overall professional service revenues are expected
to continue to grow. In particular, integrated circuit technology
center (ICTC) custom design services are experiencing increased
demand. Over the past year, the Company has added resources to the
ICTC business in response to the increased demand resulting in
higher revenue levels as more design contracts are completed.
Service and support gross margins were 57% for each of the quarters
ended June 30, 1995 and 1994, and 57% for each of the first six
months of 1995 and 1994, respectively. Service and support gross
margins were favorably impacted by higher software support revenue
volume and unfavorably impacted by professional service margins.
Consistent with consulting and training business models, gross
margins generated by the Company's professional service activities
have been and are expected to continue to be lower than software
support. Service and support gross margins are expected to be lower
as growth in the professional service business is expected to be
higher than growth in software support.
OPERATING EXPENSES
The following summarizes research and development (R&D) costs:
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Gross R&D $18,697 $18,332 $37,863 $36,639
Capitalized R&D (1,096) (2,200) (3,060) (3,073)
Net R&D $17,601 $16,132 $34,803 $33,566
Higher gross R&D expenses are attributable to merger and acquisition
activity off-set by lower base business head count. The
acquisitions of Anacad, Exemplar and Axiom resulted in additional
R&D expenses of $2,866 in the first half of 1995, compared to zero
in the same period of 1994. The Company closed an Integrated
Circuit Division R&D site during the first quarter of 1994,
consolidating activities with other pre-existing locations resulting
in lower expense levels for the first six months of 1995 compared to
the same period of 1994. R&D expenses are expected to increase as
new business opportunities are funded for the second half of 1995.
During the second quarter and the first six months of 1995,
marketing, general and administration (MG&A) expenses were $37,638
and $72,638, respectively, compared to $36,562 and $73,760 for the
same periods of 1994, respectively. The increase in MG&A expenses
is principally attributable to merger and acquisition activity
discussed above, off-set by lower base business head count. The
acquisitions of Anacad, Exemplar and Axiom resulted in additional
MG&A expenses of $4,200 in the first half of 1995, compared to zero
in the same period of 1994. In 1994, the Company streamlined its
North American, European and Japanese organizations to improve the
ratio of selling and administrative expense compared to regional
revenue levels. This process was executed throughout 1994 resulting
in lower expense levels as the year progressed. In addition,
corporate administrative costs have been reduced to better align
spending levels with industry business model standards. Spending
levels should remain approximately flat with second quarter levels
exclusive of normal seasonality and possible future acquisitions.
Normal seasonality is expected to result in slightly lower MG&A
costs in the third quarter and increased MG&A costs in the fourth
quarter.
MERGER RELATED CHARGES
Merger related charges are the result of a write-off of in-process
R&D of $400 associated with the Axiom transaction and $400 in
expenses primarily associated with the acquisition of Exemplar for
services rendered to facilitate completion of the merger agreement
and severance costs. On May 4, 1995, the Company completed the
acquisition of Axiom. The total purchase price of Axiom was $480 in
addition to Axiom's net deficit of $413 for a total acquisition cost
basis of $893. The acquisition was accounted for as a purchase. The
cost of the acquisition has been allocated on the basis of estimated
fair value of the assets and liabilities assumed. This allocation
resulted in a one-time charge for in-process R&D of $400,
capitalization of goodwill of $398 and capitalization of technology
of $95. The charge for in-process R&D was a result of allocating a
portion of the acquisition cost to Axiom's in-process product
development that had not reached technological feasibility. On May
31, 1995, the Company completed the merger with Exemplar. The
transaction was accounted for as a pooling of interests. The
CompanyOs prior year financial statements were not restated due to
relative materiality of Exemplar's separate financial statements for
1994 and prior years.
RESTRUCTURING COSTS
Implementation of the Company's restructuring plan approved by
management in December 1993, and modified in 1994 continued during
the second quarter of 1995. Costs remaining to be incurred in
executing the restructuring plan consist primarily of direct costs
associated with severance and relocation of employees, facilities
closures and write-offs of excess equipment and intangible software
technology assets related to discontinued product development
activities.
During the second quarter of 1995, several elements of the
restructuring plan were adjusted due to updated information. Costs
associated with an international reorganization have been modified
due to additional cost information related to implementation
activities associated with a new global information system. In
addition, certain actions associated with a product discontinuance
plan will not be taken as the technology will be used by the
Company's consulting organization. As a result, the Company
recorded a $2,040 credit during the second quarter of 1995
reflecting these lower costs.
Approximately $9,000 of the December 31, 1995 restructuring accrual
of $11,897 should result in cash outflows during 1995. For the
first half of 1995, restructure-related cash outflows were
approximately $2,300. For the second half of 1995, disbursements
are anticipated to be near $7,000. Approximately $1,000, primarily
related to facilities closures, is expected to be disbursed after
1995.
OTHER INCOME (EXPENSE)
During the second quarter and the first six months of 1995, other
income was $1,827 and $2,988, compared to other income of $331 and
$889 for the same periods of 1994, respectively. Interest income
from investments was $2,338 and $4,008 for the second quarter and
first six months of 1995, respectively, compared to $990 and $2,082
for the same periods of 1994. The increase in interest income is
primarily attributable to higher average cash, cash equivalents and
short term investments outstanding during the comparable quarters.
During the second quarter and first six months of 1995, interest
expense amounted to $465 and $1,106, respectively, down from $869
and $1,504 for the comparable periods in 1993. The decrease in
interest expense is due to lower average debt outstanding and lower
average interest rates for the comparable periods.
PROVISION FOR INCOME TAXES
The provision for income taxes amounted to $1,330 for the quarter
ended June 30, 1995, as compared to $960 for the same period in
1994. For the first six months of 1995, the provision for income
taxes was $3,030 compared to $1,900 for the same period a year ago.
Effective January 1, 1993 the Company adopted Statement No. 109,
"Accounting for Income Taxes." At that time a valuation allowance
for certain current deferred tax assets, and net operating loss and
tax credit carryforwards was established. The valuation allowance
as of December 31, 1994 was $46,213, of which $1,974 was related to
deferred tax assets of the Company's Japanese subsidiary. The
reserve was established when it was more likely than not that some
portion of the deferred tax asset would not be realized. Based on
current operating income levels before tax for the Company's
Japanese subsidiary, it has been determined that it is now more
likely than not that Japan's deferred tax assets will be realized.
As such, the tax provision for the second quarter and the last six
months of 1995 has been adjusted for the reversal of the valuation
allowance for the Japanese deferred tax assets. This reversal,
in addition to changes in operating income forecasts of certain tax
jurisdictions, results in a lower effective tax rate than was posted
in the first quarter of 1995. The Company's income tax position for
each year combines the effects of available tax benefits in certain
countries where the Company does business, benefits from available net
operating loss carrybacks, and tax expense for subsidiaries with pre-
tax income. As such, the Company's income tax position and
resultant effective tax rate is uncertain for the remainder of 1995.
EFFECTS OF FOREIGN CURRENCY FLUCTUATIONS
The Company experienced a net gain from foreign currency
transactions of $57 and $153 during the second quarter and first six
months of 1995, respectively, compared to a net gain of $38 and a
net loss of $53 during the same periods a year ago. These amounts
are comprised of realized gains and losses on cash transactions
involving various foreign currencies, and unrealized gains and
losses related to foreign currency receivables and payables
resulting from exchange rate fluctuations between the various
currencies in which the Company operates. Foreign currency gains
and losses are included as a component of other income. The
"foreign currency translation adjustment", as reported in the equity
section of the Consolidated Balance Sheet at June 30, 1995,
increased to $19,796 from $12,674 at the end of 1994. This reflects
the increase in the value of net assets denominated in foreign
currencies against the U.S. dollar since year-end 1994.
During the period from December 31, 1994 to June 30, 1995, the U.S.
dollar weakened approximately 15% against the Japanese yen and 7%
against the European currencies. Generally, a weakening of the U.S.
dollar makes the Company's products less expensive in foreign
markets, which has a positive impact on the Company's revenues over
time. In addition, a weakening U.S. dollar results in higher
reported revenues and operating expenses due to translation of local
currency activity to U.S. dollars for consolidated financial
reporting.
The Company generally realizes approximately half of its revenue
outside the United States and expects this to continue in the
future. As such, the Company's business and operating results may
be impacted by the effects of future foreign currency fluctuations.
LIQUIDITY AND CAPITAL RESOURCES
CASH AND INVESTMENTS
Total cash and investments at June 30, 1995 were $174,694 compared
to $137,856 at the end of 1994. Cash provided by operations was
$37,498 for the first six months of 1995 compared to $8,707 during
the same period of 1994. Cash provided by operations was positively
impacted by net income of $18,430 for the first six months of 1995
compared to $9,463 for the same period of 1994. In addition, strong
collection efforts decreased trade receivables by $8,718 offset by
decreased accounts payable of $4,273 due primarily to higher year
end activity in an attempt to match costs with fiscal year budgets.
Cash and short-term investments at June 30, 1995 were positively
impacted by proceeds from the issuance of common stock of $11,310,
offset by decreased short-term borrowings of $1,066, investment in
property, plant and equipment of $9,260, and new business
investments of $2,930.
TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable decreased to $76,025 at June 30, 1995 from
$82,285 at year-end 1994. This decrease was attributable to a more
evenly distributed shipment pattern during the first six months of
1995 compared to the fourth quarter of 1994. As a result, a higher
percent of shipments made during the second quarter of 1995 were
converted into cash collections before the period ended.
OTHER ASSETS
Other assets increased to $29,376 at June 30, 1995 from $28,090 at
year-end 1994. Net capitalized software development costs increased
by $588 as capitalization and amortization were $3,060 and $2,472,
respectively, during the first six months of 1995. This increase
was also attributable to the purchase of Axiom for $493 and $1,700
spent on investment in other technology companies in which the
Company owns a minority interest. This increase in other assets was
offset by amortization of goodwill and purchased technology of
$1,791.
CAPITAL RESOURCES
Total capital expenditures increased to $9,260 through June 30,
1995, compared to $6,537 for the same period of 1994. The increase
in capital expenditures is primarily a result of costs associated
with a new global information system. These expenditures will
continue as the year progresses. The Company anticipates that
current cash balances, anticipated cash flows from operating
activities, and existing credit facilities will be sufficient to
meet its working capital needs for at least the next twelve months.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The 1995 Annual Meeting of Shareholders of Company was held pursuant
to notice at 5:00 p.m. Pacific time on May 4, 1995 at Company's
offices in Wilsonville, Oregon. There were present at the meeting,
in person or represented by proxy, the holders of 48,074,035 shares
of the outstanding common stock, which represented approximately
93.07% of the outstanding shares. Voting information set forth
below was provided by American Stock Transfer & Trust Company, the
Company's Transfer Agent for its common stock, as Inspector of
Election. The matters voted on at the meeting and the votes cast
are as follows:
Issue One-Election of Nominees for Directors. The nominees for
directors listed below and presented to the meeting were elected
directors of the Company upon each receiving the affirmative vote of
the holders of approximately 92.8% of those shares represented at
the meeting, to serve until the next annual meeting of the
shareholders and until their successors shall have been elected and
qualified.
FOR WITHHOLD
Jon A. Shirley 47,943,846 130,189
Marsha B. Congdon 47,940,071 133,964
James R. Fiebiger 47,941,913 132,122
Walden C. Rhines 47,944,046 129,989
Fontaine K. Richardson 47,943,746 130,289
Issue Two-Amendment of the Company's 1989 Employee Stock Purchase
Plan. The shareholders approved certain amendments to the Company's
1989 Employee Stock Purchase Plan by the affirmative vote of the
holders of approximately 78.7% of those shares represented at the
meeting.
FOR AGAINST ABSTAIN BROKER NONVOTES
40,695,427 5,934,967 1,443,646 0
Issue Three-Ratification of KPMG Peat Marwick. The shareholders
ratified the engagement of KPMG Peat Marwick as independent auditors
of the Company by the affirmative vote of the holders of
approximately 92.6% of those shares represented at the meeting.
FOR AGAINST ABSTAIN BROKER NONVOTES
47,864,261 45,792 163,982 0
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: None.
(b) No reports were filed on Form 8-K during the quarter
for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized, on August 14,
1995.
MENTOR GRAPHICS CORPORATION
(Registrant)
R. Douglas Norby
R. Douglas Norby
Senior Vice President, and
Chief Financial Officer
James J. Luttenbacher
James J. Luttenbacher
Corporate Controller, and
Chief Accounting Officer
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