Mentor Graphics Reports Fiscal Third Quarter Results


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


	Three Months Ended October 31,						Nine Months Ended October 31,
	2012			2011			2012			2011
GAAP gross margin	$	218,497		$	210,262		$	615,267		$	565,500
Reconciling items to non-GAAP gross margin:
Equity plan-related compensation		393			249			1,080			753
Amortization of purchased technology		1,759			1,761			6,092			7,872
Non-GAAP gross margin	$	220,649		$	212,272		$	622,439		$	574,125


	Three Months Ended October 31,						Nine Months Ended October 31,
	2012			2011			2012			2011
GAAP gross margin as a percent of total revenues		81.3	%		83.9	%		81.2	%		81.5	%
Non-GAAP adjustments detailed above		0.8	%		0.8	%		1.0	%		1.2	%
Non-GAAP gross margin as a percent of total revenues		82.1	%		84.7	%		82.2	%		82.7	%


	Three Months Ended October 31,						Nine Months Ended October 31,
	2012			2011			2012			2011
GAAP operating expenses	$	180,688		$	184,857		$	524,729		$	519,078
Reconciling items to non-GAAP operating expenses:
Equity plan-related compensation		(5,316	)		(4,865	)		(16,082	)		(15,870	)
Amortization of Frontline purchased technology and other identified intangible assets		(1,242	)		(1,242	)		(3,726	)		(3,726	)
Amortization of other identified intangible assets		(1,242	)		(1,296	)		(4,547	)		(4,361	)
Special charges		(1,146	)		(1,164	)		(3,800	)		(7,388	)
Non-GAAP operating expenses	$	171,742		$	176,290		$	496,574		$	487,733


	Three Months Ended October 31,						Nine Months Ended October 31,
	2012			2011			2012			2011
GAAP operating income	$	37,809		$	25,405		$	90,538		$	46,422
Reconciling items to non-GAAP operating income:
Equity plan-related compensation		5,709			5,114			17,162			16,623
Amortization of purchased technology		1,759			1,761			6,092			7,872
Amortization of Frontline purchased technology and other identified intangible assets		1,242			1,242			3,726			3,726
Amortization of other identified intangible assets		1,242			1,296			4,547			4,361
Special Charges		1,146			1,164			3,800			7,388
Non-GAAP operating income	$	48,907		$	35,982		$	125,865		$	86,392


	Three Months Ended October 31,						Nine Months Ended October 31,
	2012			2011			2012			2011
GAAP operating income as a percent of total revenues		14.1	%		10.1	%		12.0	%		6.7	%
Non-GAAP adjustments detailed above		4.1	%		4.3	%		4.6	%		5.7	%
Non-GAAP operating income as a percent of total revenues		18.2	%		14.4	%		16.6	%		12.4	%


	Three Months Ended October 31,						Nine Months Ended October 31,
	2012			2011			2012			2011
GAAP other expense, net and interest expense	$	(4,595	)	$	(2,779	)	$	(14,222	)	$	(24,799	)
Reconciling items to non-GAAP other expense, net and interest expense:
Net gain of unconsolidated entities		(38	)		(1,484	)		(110	)		(1,432	)
Amortization of debt discount and retirement costs		1,342			1,250			3,955			15,157
Non-GAAP other expense, net and interest expense	$	(3,291	)	$	(3,013	)	$	(10,377	)	$	(11,074	)

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