Mentor Graphics Reports 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,
	2009			2008			2009			2008
GAAP gross margin	$	211,412		$	248,489		$	661,909		$	749,637
Reconciling items to non-GAAP gross margin
Equity plan-related compensation		442			322			1,544			964
Prepaid royalty costs		-			-			103			-
Amortization of purchased intangible assets		3,363			1,955			12,403			9,468
Non-GAAP gross margin	$	215,217		$	250,766		$	675,959		$	760,069



	Three Months Ended January 31,						Twelve Months Ended January 31,
	2009			2008			2009			2008
GAAP gross margin as a percent of total revenues		87	%		87	%		84	%		85	%
Non-GAAP adjustments detailed above		2	%		1	%		2	%		1	%
Non-GAAP gross margin as a percent of total revenues		89	%		88	%		86	%		86	%



	Three Months Ended January 31,						Twelve Months Ended January 31,
	2009			2008			2009			2008
GAAP operating expenses	$	191,056		$	180,701		$	727,467		$	677,271
Reconciling items to non-GAAP operating expenses
Equity plan-related compensation		(6,648	)		(5,669	)		(26,679	)		(17,513	)
Amortization of other identified intangible assets		(3,014	)		(2,575	)		(11,113	)		(8,936	)
Rebalance, restructuring and other costs		(1,789	)		(4,988	)		(16,888	)		(10,148	)
Impairment of long-lived assets		(4,553	)		-			(4,553	)		-
In-process research and development		-			-			(22,075	)		(4,100	)
Non-GAAP operating expenses	$	175,052		$	167,469		$	646,159		$	636,574



	Three Months Ended January 31,						Twelve Months Ended January 31,
	2009			2008			2009			2008
GAAP operating income (loss)	$	20,356		$	67,788		$	(65,558	)	$	72,366
Reconciling items to non-GAAP operating income
Equity plan-related compensation		7,090			5,991			28,223			18,477
Prepaid royalty costs		-			-			103			-
Amortization of purchased and other identified intangible assets:
Cost of revenues		3,363			1,955			12,403			9,468
Amortization of intangible assets		3,014			2,575			11,113			8,936
Rebalance, restructuring and other costs		1,789			4,988			16,888			10,148
Impairment of long-lived assets		4,553			-			4,553			-
In-process research and development		-			-			22,075			4,100
Non-GAAP operating income	$	40,165		$	83,297		$	29,800		$	123,495



	Three Months Ended January 31,						Twelve Months Ended January 31,
	2009			2008			2009			2008
GAAP operating margin as a percent of total revenues		8	%		24	%		-8	%		8	%
Non-GAAP adjustments detailed above		9	%		5	%		12	%		6	%
Non-GAAP operating margin as a percent of total revenues		17	%		29	%		4	%		14	%



	Three Months Ended January 31,						Twelve Months Ended January 31,
	2009			2008			2009			2008
GAAP other income, net and interest expense	$	(4,993	)	$	(3,888	)	$	(12,526	)	$	(15,039	)
Reconciling items to non-GAAP other income, net and interest expense
Equity in losses of unconsolidated entities		344			-			1,432			-
Impairment of cost method investments		3,488			-			3,488			-
Debt retirement costs		-			612			-			1,064
Non-GAAP other income, net and interest expense	$	(1,161	)	$	(3,276	)	$	(7,606	)	$	(13,975	)

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