Mentor Graphics Reports Fiscal Fourth Quarter Results and

Mentor Graphics Reports Fiscal Fourth Quarter Results and Announces 11% Dividend Increase


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,
				2014			2013			2014			2013
Revenues:
	System and software		$	293,468		$	226,267		$	737,790		$	681,881
	Service and support			107,532			104,971			418,583			406,846
		Total revenues		401,000			331,238			1,156,373			1,088,727
Cost of revenues: (1)
	System and software			25,206			14,984			65,288			64,280
	Service and support			29,841			30,775			118,221			117,609
	Amortization of purchased technology			950			1,709			3,598			7,801
		Total cost of revenues		55,997			47,468			187,107			189,690
		Gross profit		345,003			283,770			969,266			899,037
Operating expenses:
	Research and development (2)			101,994			93,751			348,817			313,962
	Marketing and selling (3)			98,135			95,160			342,799			338,653
	General and administration ^a (4)			23,091			18,990			75,543			70,692
	Equity in earnings of Frontline (5)			(1,353	)		(134	)		(4,092	)		(1,764	)
	Amortization of intangible assets (6)			1,580			1,368			6,230			5,915
	Special charges ^a (7)			4,359			3,540			16,929			9,946
		Total operating expenses		227,806			212,675			786,226			737,404
Operating income				117,197			71,095			183,040			161,633
	Other income (expense), net (8)			359			(1,193	)		(520	)		(1,432	)
	Interest expense (9)			(4,803	)		(4,883	)		(19,452	)		(18,866	)
	Income before income tax			112,753			65,019			163,068			141,335
	Income tax expense (10)			7,646			3,536			9,510			2,701
		Net income		105,107			61,483			153,558			138,634
	Less: Loss attributable to noncontrolling interest (11)			(429	)		(263	)		(1,700	)		(102	)
		Net income attributable to Mentor Graphics
		shareholders	$	105,536		$	61,746		$	155,258		$	138,736
	Net income per share attributable to Mentor Graphics
	shareholders:
		Basic ^b	$	0.91		$	0.50		$	1.33		$	1.20
		Diluted ^b	$	0.89		$	0.49		$	1.29		$	1.17
	Weighted average number of shares outstanding:
		Basic		114,978			112,623			113,671			110,998
		Diluted		117,484			115,167			116,702			114,017

	^a Certain litigation costs have been reclassified from general and administration to special charges within operating expenses for the three and twelve months ended January 31, 2013. These reclassifications were made to conform to the current period presentation. These reclassifications had no impact on GAAP operating expense, operating income or net income for the three and twelve months ended January 31, 2013. Additional discussion regarding the reclassification will be provided in our Annual Report on Form 10-K for the year ended January 31, 2014.

	^b We have decreased the numerator of our basic and diluted earnings per share calculation by $573 and $4,486 for the three and twelve months ended January 31, 2014, respectively, and by $5,272 for the three and twelve months ended January 31, 2013 for the adjustment to increase the noncontrolling interest with redemption feature to its calculated redemption value, recorded directly to retained earnings.

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