Mentor Graphics Reports Fiscal First Quarter Results

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


			Three Months Ended April 30,
			2009			2008

GAAP gross margin			$	164,735		$	145,345
Reconciling items to non-GAAP gross margin
Equity plan-related compensation				499			376
Prepaid royalty costs				-			103
Amortization of other identified intangible assets				2,948			3,238
Non-GAAP gross margin			$	168,182		$	149,062


			Three Months Ended April 30,
			2009			2008

GAAP gross margin as a percent of total revenues				85	%		81	%
Non-GAAP adjustments detailed above				2	%		2	%
Non-GAAP gross margin as a percent of total revenues				87	%		83	%


			Three Months Ended April 30,
			2009			2008

GAAP operating expenses ^a			$	170,881		$	176,010
Reconciling items to non-GAAP operating expenses
Equity plan-related compensation				(7,271	)		(6,175	)
Amortization of other identified intangible assets				(2,870	)		(2,433	)
Rebalance, restructuring, and other costs				(5,695	)		(9,650	)
Non-GAAP operating expenses ^a			$	155,045		$	157,752


			Three Months Ended April 30,
			2009			2008

GAAP operating loss ^a			$	(6,146	)	$	(30,665	)
Reconciling items to non-GAAP operating income
Equity plan-related compensation				7,770			6,551
Prepaid royalty costs				-			103
Amortization of other identified intangible assets:
Cost of revenues				2,948			3,238
Amortization of intangible assets				2,870			2,433
Rebalance, restructuring, and other costs				5,695			9,650
Non-GAAP operating income (loss) ^a			$	13,137		$	(8,690	)


			Three Months Ended April 30,
			2009			2008

GAAP operating margin as a percent of total revenues ^a				-3	%		-17	%
Non-GAAP adjustments detailed above				10	%		12	%
Non-GAAP operating margin as a percent of total revenues ^a				7	%		-5	%


			Three Months Ended April 30,
			2009			2008

GAAP Other income, net and interest expense ^b			$	(4,053	)	$	(2,380	)
Reconciling items to non-GAAP other income, net and interest expense
Equity in losses of unconsolidated entities and impairment of investments				437			168
Amortization of debt discount and debt retirement costs				421			615
Non-GAAP Other income, net and interest expense ^b			$	(3,195	)	$	(1,597	)

	^a	Adjusted for the reclassification of the French research and development credit.
	^b	Adjusted for the retrospective adoption of FSP APB 14-1.

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