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 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except earnings per share data)


	Three Months Ended January 31,						Twelve Months Ended January 31,
		2012			2011			2012			2011
Revenues:
System and software	$	220,046		$	216,313		$	631,549		$	562,355
Service and support		100,309			90,992			383,089			352,398
Total revenues		320,355			307,305			1,014,638			914,753
Cost of revenues: (1)
System and software ^a		13,737			13,984			54,972			42,865
Service and support ^a		29,014			27,382			108,690			99,612
Amortization of purchased technology		1,924			3,343			9,796			13,771
Total cost of revenues ^a		44,675			44,709			173,458			156,248
Gross margin ^a		275,680			262,596			841,180			758,505
Operating expenses:
Research and development ^a (2)		90,180			88,573			310,758			296,631
Marketing and selling ^a (3)		89,890			87,699			326,608			312,834
General and administration ^a (4)		22,756			25,421			74,811			80,948
Equity in earnings of Frontline (5)		(246	)		(290	)		(2,268	)		(2,051	)
Amortization of intangible assets (6)		1,544			1,605			5,905			7,347
Special charges (7)		5,786			2,205			13,174			10,257
Total operating expenses ^a		209,910			205,213			728,988			705,966
Operating income ^a		65,770			57,383			112,192			52,539
Other income (expense), net (8)		(314	)		(755	)		1,576			(2,116	)
Interest expense (9)		(4,755	)		(5,033	)		(31,444	)		(18,411	)
Income before income tax		60,701			51,595			82,324			32,012
Income tax expense (benefit) (10)		3,366			996			(1,063	)		3,428
Net income ^a		57,335			50,599			83,387			28,584
Less: Loss attributable to noncontrolling interest (11)		(485	)		-			(485	)		-
Net income attributable to Mentor Graphics shareholders ^a
Net income attributable to Mentor Graphics shareholders ^a	$	57,820		$	50,599		$	83,872		$	28,584
Net income per share attributable to Mentor Graphics shareholders:
Basic	$	0.53		$	0.46		$	0.76		$	0.27
Diluted	$	0.52		$	0.45		$	0.74		$	0.26
Weighted average number of shares outstanding:
Basic		109,290			110,128			110,138			107,743
Diluted		112,122			113,082			112,915			109,861

^a Certain items have been reclassified between cost of revenues and operating expenses, and within operating expenses for the twelve months ended January 31, 2012, and the three and twelve months ended January 31, 2011. These reclassifications were made to conform to the current period presentation, more closely align with other companies in our industry, and provide a clearer depiction of where certain operating costs are being utilized. While these reclassifications reduced gross margin, they had no impact on operating income or net income for the twelve months ended January 31, 2012, and the three and twelve months ended January 31, 2011. Additional discussion regarding the reclassifications will be provided in our Annual Report on Form 10-K for the year ended January 31, 2012.

Refer to following page for a description of footnotes.

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