WILSONVILLE, Ore. — (BUSINESS WIRE) — February 28, 2013 — Mentor Graphics Corporation (NASDAQ: MENT) today announced financial results for the company’s fiscal fourth quarter and year ended January 31, 2013. The company reported revenues of $331.2 million, non-GAAP earnings per share of $.58, and GAAP earnings per share of $.49. For the full fiscal year, revenues were $1,088.7 million, non-GAAP earnings per share were a record $1.42, and GAAP earnings per share were $1.17.

“The fourth quarter was our sixteenth quarter in a row of exceeding non-GAAP earnings guidance. It capped a year in which Mentor Graphics achieved all-time records in revenue, operating margin and non-GAAP earnings per share,” said Walden C. Rhines, chairman and CEO of Mentor Graphics. “Like our peers in EDA, we continue to benefit from semiconductor retooling requirements driven by advanced design activity. Also like some others in our industry, our business benefits from the growth of the market for system-level design, which is outpacing the market for chip design software.”

In fiscal year 2013 revenue grew 7.3 % while non-GAAP and GAAP earnings per share grew 26% and 58% respectively. Non-GAAP and GAAP operating margins for the year were all-time records at 19.3% and 14.8% respectively. For the full fiscal year, non-GAAP operating expense was up 2.0% and up 1.2% on a GAAP basis.

“The company delivered record operating results in fiscal 2013, primarily as a result of continued expense control,” said Gregory K. Hinckley, president of Mentor Graphics. “We solidly exceeded our non-GAAP operating margin target in fiscal 2013 and on a GAAP basis our margins are among the best in technical software. In recent years we have successfully balanced our investment in product and market development and the sales channel while delivering continuous improvement in operating results.”

During the fourth quarter the company announced two products related to printed circuit board design: the next-generation PADS® flow, with enhancements to interactive routing, improved usability and Chinese language support; and the newest release of the market-leading HyperLynx® product for high-speed design and analysis. Another announcement this quarter was the Tessent® IJTAG solution, which allows designers to reuse existing test, monitoring and debugging logic embedded in IP blocks. With the new T3Ster® DynTIM Tester™ technology, the company launched a new method of measuring thermal characteristics of interface materials. The company also introduced a hardware emulation solution for testing ARM Cortex-A9 MPCore processor-based System-on-Chip (SoC) designs using Veloce® emulators.

During the quarter the company also announced that Tesla Motors, a world leader in the production of electric automobiles, has standardized on the Capital® toolset for their electrical systems design. India-based Mahindra & Mahindra Ltd., a leading global tractor manufacturer, also standardized on the Capital products for design, engineering and analysis in their tractor and automotive divisions.

Share Repurchase

In the fourth quarter of fiscal year 2013 the company used $14 million to repurchase 825 thousand shares at an average price of $16.85. During fiscal year 2013 the company repurchased 2.2 million shares for $34 million at an average cost of $15.11 per share. The company has repurchased $124 million of Mentor Graphics stock over the past two fiscal years and has $76 million available under its current share repurchase program.

Outlook

For the full fiscal year 2014, the company expects revenues of about $1.155 billion, non-GAAP earnings per share of about $1.53, and GAAP earnings per share of approximately $1.41. For the first quarter of fiscal 2014, the company expects revenues of about $225 million, non-GAAP earnings per share of about $.05, and GAAP earnings per share that are approximately break-even.

Fiscal Year Definition

Mentor Graphics’ fiscal year runs from February 1 to January 31. The fiscal year is dated by the calendar year in which the fiscal year ends. As a result, the first three fiscal quarters of any fiscal year will be dated with the next calendar year, rather than the current calendar year.

Discussion of Non-GAAP Financial Measures

Mentor Graphics’ management evaluates and makes operating decisions using various performance measures. In addition to our GAAP results, we also consider adjusted gross margin, operating margin, net income, and earnings per share which we refer to as non-GAAP gross margin, operating margin, net income, and earnings per share, respectively. These non-GAAP measures are derived from the revenues of our product, maintenance, and services business operations and the costs directly related to the generation of those revenues, such as cost of revenue, research and development, sales and marketing, and general and administrative expenses, that management considers in evaluating our ongoing core operating performance. These non-GAAP measures exclude amortization of intangible assets, special charges, equity plan-related compensation expenses, interest expense attributable to net retirement premiums or discounts on the early retirement of debt and associated debt issuance costs, interest expense associated with the amortization of debt discount and premium on convertible debt, the equity in income (loss) of unconsolidated entities (except Frontline PCB Solutions Limited Partnership (Frontline)), and the impact on diluted earnings per share of changes in the calculated redemption value of the noncontrolling interests, which management does not consider reflective of our core operating business.