Mentor Graphics Reports Annual and Fiscal Fourth Quarter Results


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,
		2011			2010			2011			2010
GAAP gross margin	$	267,048		$	206,732		$	774,148		$	682,858
Reconciling items to non-GAAP gross margin
Equity plan-related compensation		217			300			888			1,618
Amortization of purchased technology		3,343			3,047			13,771			12,012
Non-GAAP gross margin	$	270,608		$	210,079		$	788,807		$	696,488


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2011			2010			2011			2010
GAAP gross margin as a percent of total revenues		87	%		87	%		85	%		85	%
Non-GAAP adjustments detailed above		1	%		2	%		1	%		2	%
Non-GAAP gross margin as a percent of total revenues		88	%		89	%		86	%		87	%


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2011			2010			2011			2010
GAAP operating expenses	$	211,109		$	182,988		$	723,053		$	684,025
Reconciling items to non-GAAP operating expenses
Amortization of Frontline purchased technology and other identified intangible assets		(1,242	)		-			(4,347	)		-
Equity plan-related compensation		(5,147	)		(4,883	)		(21,067	)		(24,541	)
Amortization of other identified intangible assets		(1,605	)		(2,630	)		(7,347	)		(11,184	)
Special charges		(2,205	)		(5,444	)		(10,257	)		(21,334	)
Non-GAAP operating expenses	$	200,910		$	170,031		$	680,035		$	626,966


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2011			2010			2011			2010
GAAP operating income (loss)	$	55,939		$	23,744		$	51,095		$	(1,167	)
Reconciling items to non-GAAP operating income
Amortization of Frontline purchased technology and other identified intangible assets		1,242			-			4,347			-
Equity plan-related compensation		5,364			5,183			21,955			26,159
Amortization of purchased intangible assets:
Cost of revenues		3,343			3,047			13,771			12,012
Amortization of intangible assets		1,605			2,630			7,347			11,184
Special Charges		2,205			5,444			10,257			21,334
Non-GAAP operating income	$	69,698		$	40,048		$	108,772		$	69,522


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2011			2010			2011			2010
GAAP operating income (loss) as a percent of total revenues		18	%		10	%		6	%		0	%
Non-GAAP adjustments detailed above		5	%		7	%		6	%		9	%
Non-GAAP operating income as a percent of total revenues		23	%		17	%		12	%		9	%


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2011			2010			2011			2010
GAAP other expense, net and interest expense	$	(5,788	)	$	(3,953	)	$	(20,527	)	$	(18,474	)
Reconciling items to non-GAAP other income (expense), net and interest expense
Equity in losses of unconsolidated entities		667			257			938			995
Impairment of cost method investment		-			-			-			113
Amortization of debt discount and retirement costs		755			713			3,326			2,410
Non-GAAP other expense, net and interest expense	$	(4,366	)	$	(2,983	)	$	(16,263	)	$	(14,956	)

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