Mentor Graphics Reports Fiscal First Quarter Results

MENTOR GRAPHICS CORPORATION
UNAUDITED RECONCILIATION OF ESTIMATED GAAP TO NON-GAAP
EARNINGS PER SHARE

The following table reconciles management's estimates of the specific items excluded from GAAP in the calculation of estimated non-GAAP net income (loss) per share for Q2 FY12 and fiscal 2012.



	Estimated			Estimated
	Q2 FY12			FY12
Diluted GAAP net income (loss) per share	$	(0.05	)	$	0.67
Non-GAAP Adjustments:
Amortization of purchased intangible assets (1)		0.03			0.08
Amortization of other identified intangible assets (2)		0.02			0.09
Equity plan-related compensation (3)		0.07			0.17
Special charges (4)		-			0.04
Other expense, net and interest expense (5)		0.01			0.14
Non-GAAP income tax effects (6)		(0.03	)		(0.18	)
Non-GAAP net income per share	$	0.05		$	1.01


(1) Excludes amortization of purchased intangible assets resulting from acquisition transactions. Purchased intangible assets are amortized over two to five years.
(2) Excludes amortization of other identified intangible assets including trade names, employment agreements, customer relationships, and deferred compensation resulting from acquisition transactions. Other identified intangible assets are amortized over two to five years. This line item also excludes amortization of purchased intangible assets identified as part of the fair value of the Frontline P.C.B. Solutions Limited Partnership investment. The purchased technology will be amortized over three years and other identified intangible assets will be amortized over three to four years.
(3) Excludes equity plan-related compensation expense.
(4) Excludes special charges consisting primarily of consulting fees associated with our proxy contest, costs incurred for employee rebalances (which includes severance benefits, notice pay and outplacement services), facility closures, and acquisition costs.
(5) Adjustment for fiscal 2012 reflects the amortization of original issuance debt discount and premium for our 6.25% Convertible Subordinated Debentures due 2026, the amortization of original issuance debt discount for our 4.00% Convertible Subordinated Debentures due 2031, and charges associated with the retirement of our 6.25% Convertible Subordinated Debentures and Term Loan.
(6) Non-GAAP income tax expense adjustment reflects the application of our assumed normalized effective 17% tax rate, instead of our GAAP tax rate, to our non-GAAP pre-tax income.

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