Mentor Graphics Reports Fiscal Fourth Quarter Results and

Mentor Graphics Reports Fiscal Fourth Quarter Results and Announces Board Has Increased Share Buyback Authorization


MENTOR GRAPHICS CORPORATION
UNAUDITED RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(In thousands, except percentages)


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2012			2011			2012			2011
GAAP gross margin	$	275,680		$	262,596		$	841,180		$	758,505
Reconciling items to non-GAAP gross margin:
Equity plan-related compensation		312			217			1,065			888
Amortization of purchased technology		1,924			3,343			9,796			13,771
Non-GAAP gross margin	$	277,916		$	266,156		$	852,041		$	773,164


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2012			2011			2012			2011
GAAP gross margin as a percent of total revenues		86.1	%		85.5	%		82.9	%		82.9	%
Non-GAAP adjustments detailed above		0.7	%		1.1	%		1.1	%		1.6	%
Non-GAAP gross margin as a percent of total revenues		86.8	%		86.6	%		84.0	%		84.5	%


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2012			2011			2012			2011
GAAP operating expenses	$	209,910		$	205,213		$	728,988		$	705,966
Reconciling items to non-GAAP operating expenses:
Equity plan-related compensation		(4,723	)		(3,703	)		(20,593	)		(19,623	)
Amortization of Frontline purchased technology and other identified intangible assets		(1,242	)		(1,242	)		(4,968	)		(4,347	)
Amortization of other identified intangible assets		(1,544	)		(1,605	)		(5,905	)		(7,347	)
Special charges		(5,786	)		(2,205	)		(13,174	)		(10,257	)
Non-GAAP operating expenses	$	196,615		$	196,458		$	684,348		$	664,392


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2012			2011			2012			2011
GAAP operating income	$	65,770		$	57,383		$	112,192		$	52,539
Reconciling items to non-GAAP operating income:
Equity plan-related compensation		5,035			3,920			21,658			20,511
Amortization of purchased technology		1,924			3,343			9,796			13,771
Amortization of Frontline purchased technology and other identified intangible assets		1,242			1,242			4,968			4,347
Amortization of other identified intangible assets		1,544			1,605			5,905			7,347
Special Charges		5,786			2,205			13,174			10,257
Non-GAAP operating income	$	81,301		$	69,698		$	167,693		$	108,772


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2012			2011			2012			2011
GAAP operating income as a percent of total revenues		20.5	%		18.7	%		11.1	%		5.7	%
Non-GAAP adjustments detailed above		4.9	%		4.0	%		5.4	%		6.2	%
Non-GAAP operating income as a percent of total revenues		25.4	%		22.7	%		16.5	%		11.9	%


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2012			2011			2012			2011
GAAP other expense, net and interest expense	$	(5,069	)	$	(5,788	)	$	(29,868	)	$	(20,527	)
Reconciling items to non-GAAP other expense, net and interest expense:
Net (gain) loss of unconsolidated entities		40			667			(1,392	)		938
Amortization of debt discount and retirement costs		1,272			755			16,429			3,326
Non-GAAP other expense, net and interest expense	$	(3,757	)	$	(4,366	)	$	(14,831	)	$	(16,263	)

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