Mentor Graphics Corp. (NASDAQ: MENT) today issued the following
open letter to the shareholders of Mentor Graphics regarding the
company’s Annual Meeting of Shareholders scheduled for May 12,
2011.
The Mentor Graphics Board strongly recommends that Mentor
Graphics shareholders vote FOR the company’s director nominees on
the WHITE proxy card by
telephone or internet and discard any proxy materials received from
Carl Icahn.
BECAUSE TIME IS SHORT, THE COMPANY
ENCOURAGES ALL SHAREHOLDERS TO VOTE THE WHITE PROXY CARD BY
TELEPHONE OR INTERNET
May 5, 2011
Dear Fellow Mentor Graphics Shareholders:
At next week’s Annual Meeting of Shareholders, you will have the
opportunity to vote on your Board of Directors’ record of value
creation. We urge you to support the Board and management team that
has delivered excellent results and created value for Mentor
Graphics’ shareholders.
The current Board and management team have combined strategic
vision with disciplined financial execution, which has made your
company the fastest growing of the ‘Big 3’ EDA companies.
MENTOR GRAPHICS CONTINUES TO DELIVER
EXCELLENT RESULTS
AND CREATE SHAREHOLDER VALUE
In fiscal year 2011, the company:
- Delivered record revenues of $915
million, a 14% increase from the preceding fiscal year;
- Achieved non-GAAP earnings per share of
$0.70, a 49% increase from the preceding fiscal year; and
- Reported GAAP earnings per share of
$0.26, up from a loss of $0.23 per share the prior fiscal
year.
THE FIRST QUARTER OF FISCAL 2012 WAS EVEN
STRONGER
Mentor Graphics’ momentum from the last fiscal year accelerated
in the first quarter with strong financial results. In the first
quarter of fiscal year 2012, the company:
- Expects results to exceed prior
guidance with revenues of about $230 million, up over 25% from the
prior fiscal first quarter;
- Exceeded guidance in eight of the last
nine quarters, and met guidance in the remaining quarter;
- Expects non-GAAP earnings in the range
of $0.18 to $0.20 per share and a GAAP loss in the range of $0.02
to $0.06 per share;
- Expects to achieve a non-GAAP operating
margin of approximately 14%, and a GAAP operating margin of
approximately 8%; and
- Expects to report an approximate 7%
year-over-year increase in bookings.
OUR OUTLOOK FOR THE BALANCE OF 2012 REMAINS
STRONG
Our outlook for the remainder of fiscal year 2012 is strong,
with forecasted revenues of approximately $1 billion, an increase
of 9% compared to fiscal year 2011. We are estimating non-GAAP
operating margin to be approximately 15% and GAAP operating margin
11%, up from 12% and 6% respectively in fiscal year 2011.
MENTOR GRAPHICS IS COMMITTED TO RETURNING
$150 MILLION OF CAPITAL TO SHAREHOLDERS OVER THE NEXT THREE
YEARS
We expect to generate significant cash flow through Mentor
Graphics’ growth and increasing margins, and intend to use this
cash flow to return approximately $150 million of capital to
shareholders through stock repurchases or dividends over the next
three years.
MENTOR GRAPHICS’ BOARD AND MANAGEMENT HAVE
DELIVERED
SHARE PRICE OUTPERFORMANCE
The successful execution of Mentor Graphics’ strategy is
reflected in Mentor Graphics’ stock price, which has outperformed
its two closest competitors and general market indices, over one,
three and five year periods ending April 21, 2011.
Mentor Synopsys
Cadence NASDAQ Composite Mentor
Rank 1 Year 51% 15% 35% 12%
#1
3 Years 58% 21% (9)% 19% #1
5 Years 27% 22%
(46)% 21% #1
TWO LEADING PROXY ADVISORY FIRMS SUPPORT THE
ELECTION OF ALL MENTOR GRAPHICS’ NOMINEES
Glass Lewis & Co. and Egan-Jones Proxy Services, two leading
proxy advisory firms, recently issued reports supporting your Board
and its nominees. Both firms recommend that shareholders vote for
ALL of Mentor Graphics’ nominees and reject all of Icahn’s
nominees. Another proxy advisory firm, Institutional Shareholder
Services (ISS), provided a split recommendation for two of the
three Icahn nominees, which we believe reflects ISS’s general
tendency of supporting minority representation for shareholder
activists, as well as a failure to analyze Icahn’s stated plan to
pursue a public sale of the company.
DO NOT BE PERSUADED BY ICAHN’S PLATFORM OF A
PUBLIC SALE PROCESS WITH ITS SIGNIFICANT REGULATORY AND COMMERCIAL
RISK — IT COULD SERIOUSLY DAMAGE THE VALUE OF YOUR
COMPANY
The linchpin of Icahn’s platform for his nominees — his “Plan
A”— continues to be a risky public sale process for your company.
This public sale process might provide Icahn with liquidity, but
has the potential for significant value destruction and could
derail the business and financial momentum that Mentor Graphics
currently enjoys. It is clear that Icahn is simply continuing to
ignore the regulatory obstacles and commercial risks to any
transaction with Synopsys or Cadence, despite knowing that the
analysis we recently performed shows that there are serious
regulatory risks to any transaction with these two companies. He
also continues to ignore the destruction of value through loss of
customers and employees from any failed process to sell the
company.
Icahn is now attempting to piggyback on the Board’s focus and
progress on further expense reduction and share repurchase through
his so-called “Plan B,” which calls for further expense reduction
and share repurchase. The truth is that there is simply nothing
new in Icahn’s “Plan B” that Mentor Graphics is not already doing
and therefore no need to elect Icahn’s nominees.
Your Vote is Important and We Urge You to
Vote FOR Your Board’s Nominees TODAY by Telephone, Internet or by
Signing, Dating and Returning the WHITE Proxy Card.
On behalf of your Board of Directors, we appreciate your support
and continued interest in Mentor Graphics. If you have any
questions please contact MacKenzie Partners, Inc., which is
assisting us in connection with this year’s Annual Meeting, at
(212) 929−5500 or TOLL−FREE at (800) 322−2885.
Sincerely,
/s/
Walden C. Rhines
Chairman of the Board and Chief Executive Officer
About Mentor Graphics
Mentor Graphics Corporation (NASDAQ: MENT) is a world leader in
electronic hardware and software design solutions, providing
products, consulting services and award-winning support for the
world’s most successful electronic, semiconductor and systems
companies. Established in 1981, the company reported revenues over
the last 12 months of about $915 million. Corporate headquarters
are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon
97070-7777. World Wide Web site: http://www.mentor.com/.
Important Information
On March 31, 2011, the company filed a definitive proxy
statement with the Securities and Exchange Commission (the “SEC”)
in connection with the company’s upcoming 2011 annual meeting of
shareholders. Shareholders are advised to read the company’s
definitive proxy statement and any other relevant documents filed
by the company with the SEC, before making any voting or investment
decision because they contain important information. The definitive
proxy statement is, and any other relevant documents and other
material filed with the SEC concerning the company will be, when
filed, available free of charge at http://www.sec.gov and http://www.mentor.com/company/investor_relations.
In addition, copies of the proxy materials may be requested from
the company’s proxy solicitor, MacKenzie Partners, Inc., by
telephone at 1-800-322-2885 or by email at proxy@mackenziepartners.com.
Forward-Looking Statements
Statements in this material regarding the company’s outlook for
future periods constitute “forward-looking” statements based on
current expectations within the meaning of the Securities Exchange
Act of 1934. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of the company or
industry results to be materially different from any results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
following: (i) weakness or recession in the US, EU, Japan or other
economies; (ii) the company’s ability to successfully offer
products and services that compete in the highly competitive EDA
industry; (iii) product bundling or discounting of products and
services by competitors, which could force the company to lower its
prices or offer other more favorable terms to customers; (iv)
possible delayed or canceled customer orders, a loss of key
personnel or other consequences resulting from the business
disruption and uncertainty of prolonged proxy fights, offers to
purchase the company’s securities or other actions of activist
shareholders; (v) effects of the increasing volatility of foreign
currency fluctuations on the company’s business and operating
results; (vi) changes in accounting or reporting rules or
interpretations; (vii) the impact of tax audits by the IRS or other
taxing authorities, or changes in the tax laws, regulations or
enforcement practices where the company does business; (viii)
effects of unanticipated shifts in product mix on gross margin; and
(ix) effects of customer seasonal purchasing patterns and the
timing of significant orders, which may negatively or positively
impact the company’s quarterly results of operations, all as may be
discussed in more detail under the heading “Risk Factors” in the
company’s most recent Form 10-K or Form 10-Q. Given these
uncertainties, prospective investors are cautioned not to place
undue reliance on such forward-looking statements. The company
disclaims any obligation to update any such factors or to publicly
announce the results of any revisions to any of the forward-looking
statements to reflect future events or developments.
Discussion of Non-GAAP Financial Measures
The company’s management evaluates and makes operating decisions
using various performance measures. In addition to our GAAP
results, we also consider adjusted gross margin, operating margin,
net income (loss), and earnings (loss) per share which we refer to
as non-GAAP gross margin, operating margin, net income (loss), and
earnings (loss) per share, respectively. These non-GAAP measures
are derived from the revenues of our product, maintenance, and
services business operations and the costs directly related to the
generation of those revenues, such as cost of revenue, research and
development, sales and marketing, and general and administrative
expenses, that management considers in evaluating our ongoing core
operating performance. These non-GAAP measures exclude amortization
of intangible assets, special charges, equity plan-related
compensation expenses and charges, interest expense attributable to
net retirement premiums or discounts on the early retirement of
debt and associated debt issuance costs, interest expense
associated with the amortization of debt discount and premium on
convertible debt, impairment of long-lived assets, impairment of
cost method investments, and the equity in income or losses of
unconsolidated entities (except Frontline P.C.B. Solutions Limited
Partnership (Frontline)), which management does not consider
reflective of our core operating business.
Identified intangible assets consist primarily of purchased
technology, backlog, trade names, customer relationships and
employment agreements. Special charges primarily consist of costs
incurred for employee terminations due to a reduction of personnel
resources driven by modifications of business strategy or business
emphasis. Special charges may also include expenses incurred
related to potential acquisitions, abandonment of in-process
research and development, excess facility costs, asset-related
charges, post-acquisition rebalance costs and restructuring costs,
including severance and benefits.
Equity plan-related compensation expenses represent the fair
value of all share-based payments to employees, including grants of
employee stock options. For purposes of comparability across other
periods and against other companies in our industry, non-GAAP net
income (loss) is adjusted by the amount of additional tax expense
or benefit that we would accrue using the normalized effective tax
rate described below applied to the non-GAAP results.
Management excludes from our non-GAAP measures certain recurring
items to facilitate its review of the comparability of our core
operating performance on a period-to-period basis because such
items are not related to our ongoing core operating performance as
viewed by management. Management considers our core operating
performance to be that which can be affected by our managers in any
particular period through their management of the resources that
affect our underlying revenue and profit generating operations
during that period. Management uses this view of our operating
performance for purposes of comparison with our business plan and
individual operating budgets and allocation of resources.
Additionally, when evaluating potential acquisitions, management
excludes the items described above from its consideration of target
performance and valuation. More specifically, management adjusts
for the excluded items for the following reasons:
- Amortization charges for our intangible
assets are excluded as they are inconsistent in amount and
frequency and are significantly impacted by the timing and
magnitude of our acquisition transactions. We therefore consider
our operating results without these charges when evaluating our
core performance. Generally, the most significant impact to
inter-period comparability of our net income (loss) is in the first
twelve months following an acquisition.
- Special charges are incurred based on
the particular facts and circumstances of acquisition and
restructuring decisions and can vary in size and frequency. These
charges are excluded as they are not ordinarily included in our
annual operating plan and related budget due to the
unpredictability of economic trends and the rapidly changing
technology and competitive environment in our industry. We
therefore exclude them when evaluating our managers’ performance
internally.
- We view equity plan-related
compensation as a key element of our employee retention and
long-term incentives, not as an expense that we use in evaluating
core operations in any given period.
- Interest expense attributable to net
retirement premiums or discounts on the early retirement of debt,
the write-off of associated debt issuance costs and the
amortization of the debt discount and premium on convertible debt
are excluded. Management does not consider these charges as a part
of our core operating performance. The early retirement of debt and
the associated debt issuance costs are not included in our annual
operating plan and related budget due to unpredictability of market
conditions which could facilitate an early retirement of debt. We
do not consider the amortization of the debt discount and premium
on convertible debt to be a direct cost of operations.
- Impairment of cost method investments
can occur when the fair value of the investment is less than its
cost. This can occur when there is a significant deterioration in
the investee’s earnings performance, significant adverse changes in
the general market conditions of the industry in which the investee
operates, or indications that the investee may no longer be able to
conduct business. These charges are inconsistent in amount and
frequency. We therefore consider our operating results without
these charges when evaluating our core performance.
- Equity in earnings or losses of
unconsolidated subsidiaries, with the exception of our investment
in Frontline, represents the net income (losses) in an investment
accounted for under the equity method. The amounts represent our
equity in the net income (losses) of a common stock investment. The
carrying amount of our investment is adjusted for our share of
earnings or losses of the investee. The amounts are excluded as we
do not control the results of operations for these investments, we
do not participate in regular and periodic operating activities and
management does not consider these businesses a part of our core
operating performance.
- In connection with the company’s
acquisition of Valor on March 18, 2010, we also acquired Valor’s
50% interest in Frontline, a joint venture. We report our equity in
the earnings or losses of Frontline within operating income. We
actively participate in regular and periodic activities such as
budgeting, business planning, marketing and direction of research
and development projects. Accordingly, we do not exclude our share
of Frontline’s earnings or losses from our non-GAAP results as
management considers the joint venture to be core to our operating
performance.
- Income tax expense (benefit) is
adjusted by the amount of additional tax expense or benefit that we
would accrue if we used non-GAAP results instead of GAAP results in
the calculation of our tax liability, taking into consideration our
long-term tax structure. We use a normalized effective tax rate of
17%, which reflects the weighted average tax rate applicable under
the various jurisdictions in which we operate. This non-GAAP tax
rate eliminates the effects of non-recurring and period specific
items which are often attributable to acquisition decisions and can
vary in size and frequency and considers our US loss carryforwards
that have not been previously benefited. This rate is subject to
change over time for various reasons, including changes in the
geographic business mix and changes in statutory tax rates. Our
GAAP tax rate for the fiscal year ended January 31, 2011 was 11%.
The GAAP tax rate considers certain mandatory and other
non-scalable tax costs which may adversely or beneficially affect
our tax rate depending upon our level of profitability in various
jurisdictions.
In certain instances our GAAP results of operations may not be
profitable when our corresponding non-GAAP results are profitable
or vice versa. The number of shares on which our non-GAAP earnings
per share is calculated may therefore differ from the GAAP
presentation due to the anti-dilutive effect of stock options in a
loss situation.
Non-GAAP gross margin, operating margin, and net income (loss)
are supplemental measures of our performance that are not required
by, or presented in accordance with, GAAP. Moreover, they should
not be considered as an alternative to any performance measure
derived in accordance with GAAP, or as an alternative to cash flow
from operating activities as a measure of our liquidity. We present
non-GAAP gross margin, operating margin, and net income (loss)
because we consider them to be important supplemental measures of
our operating performance and profitability trends, and because we
believe they give investors useful information on period-to-period
performance as evaluated by management. Non-GAAP net income (loss)
also facilitates comparison with other companies in our industry,
which use similar financial measures to supplement their GAAP
results. Non-GAAP net income (loss) has limitations as an
analytical tool, and therefore should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. In the future we expect to continue to incur
expenses similar to the non-GAAP adjustments described above and
exclusion of these items in our non-GAAP presentation should not be
construed as an inference that these costs are unusual, infrequent
or non-recurring. Some of the limitations in relying on non-GAAP
net income (loss) are:
- Amortization of intangibles represents
the loss in value as the technology in our industry evolves, is
advanced, or is replaced over time. The expense associated with
this loss in value is not included in the non-GAAP net income
(loss) presentation and therefore does not reflect the full
economic effect of the ongoing cost of maintaining our current
technological position in our competitive industry, which is
addressed through our research and development program.
- We regularly engage in acquisition and
assimilation activities as part of our ongoing business and
regularly evaluate our businesses to determine whether any
operations should be eliminated or curtailed. We therefore will
continue to experience special charges on a regular basis. These
costs also directly impact our available funds.
- We perform impairment analyses on cost
method investments when triggering events occur and adjust the
carrying value of assets when we determine it to be necessary.
Impairment charges could therefore be incurred in any period.
- Our stock option and stock purchase
plans are important components of our incentive compensation
arrangements and will be reflected as expenses in our GAAP
results.
- Our income tax expense (benefit) will
be ultimately based on our GAAP taxable income and actual tax rates
in effect, which often differ significantly from the 17% rate
assumed in our non-GAAP presentation. In addition, if we have a
GAAP loss and non-GAAP net income, our non-GAAP results will not
reflect any projected GAAP tax benefits. Similarly, in the event we
were to have GAAP net income and a non-GAAP loss, our GAAP tax
expense would be replaced by a credit in our non-GAAP
presentation.
- Other companies, including other
companies in our industry, calculate non-GAAP net income (loss)
differently than we do, limiting its usefulness as a comparative
measure.
MENTOR GRAPHICS
CORPORATION
RECONCILIATION OF
NON-GAAP ADJUSTMENTS
(In thousands, except earnings per share data)
Year Ended January 31,
2011 2010 GAAP net income (loss) $ 28,584 $ (21,889 )
Non-GAAP adjustments: Equity plan-related compensation: (1) Cost of
revenues 888 1,618 Research and development 7,785 10,931 Marketing
and selling 6,112 8,406 General and administration 5,726 5,204
Acquisition - related items: Amortization of purchased assets Cost
of revenues (2) 13,771 12,012 Amortization of intangible assets (3)
7,347 11,184 Frontline purchased technology and intangible assets
(4) 4,347 - Special charges (5) 10,257 21,334 Other income
(expense), net (6) 938 1,108 Interest expense (7) 3,326 2,410
Non-GAAP income tax effects (8) (12,298 ) (7,028 )
Total of non-GAAP adjustments 48,199 67,179
Non-GAAP net income $ 76,783 $ 45,290
GAAP weighted average shares (diluted) 109,861 96,474 Non-GAAP
adjustment - 1,901 Non-GAAP weighted
average shares (diluted)a 109,861 98,375
GAAP net income (loss) per share (diluted) $ 0.26 $
(0.23 ) Non-GAAP adjustments detailed above 0.44
0.70 Non-GAAP net income per share (diluted)a $ 0.70
$ 0.47 a Diluted non-GAAP net income per share
for the twelve months ended January 31, 2010 includes $633 of
convertible debt interest, net of tax, added back to non-GAAP net
income and 1,415 of corresponding dilutive shares added to the
diluted weighted average number of shares outstanding.
(1 ) Equity plan-related compensation expense.
(2 ) Amount represents amortization of purchased
technology resulting from acquisitions. Purchased intangible assets
are amortized over two to five years.
(3 ) Other
identified intangible assets are amortized to other operating
expense over two to five years. Other identified intangible assets
include trade names, employment agreements, customer relationships,
and deferred compensation which are the result of acquisition
transactions.
(4 ) Amount represents amortization of
purchased technology and other identified intangible assets
identified as part of the fair value of the Frontline P.C.B.
Solutions Limited Partnership (Frontline) investment. Mentor
Graphics acquired a 50% joint venture in Frontline as a result of
the Valor Computerized Systems, Ltd. acquisition in the first
quarter of fiscal 2011. The purchased technology will be amortized
over three years, other identified intangible assets will be
amortized over three to four years, and are reflected in the income
statement in the equity in earnings of Frontline results. This
expense is the same type as being adjusted for in notes (3) and (4)
above.
(5 ) Twelve months ended January 31, 2011:
Special charges consist of (i) $6,114 of costs incurred for
employee rebalances which includes severance benefits, notice pay,
and outplacement services, (ii) $2,083 in advisory fees, (iii)
$1,432 in lease restoration costs, (iv) $900 related to the
abandonment of excess leased facility space, (v) $(566) related to
a casualty loss, (vi) $360 related to an asset abandonment, (vii)
$(231) in acquisition costs, and (viii) $165 in other costs. Twelve
months ended January 31, 2010: Special charges consist of (i)
$10,713 of costs incurred for employee rebalances which includes
severance benefits, notice pay, and outplacement services, (ii)
$4,700 in advisory fees, (iii) $2,530 related to the abandonment of
excess leased facility space, (iv) $2,067 in acquisition costs, (v)
$566 related to a casualty loss, (vi) $405 related to an asset
abandonment, (vii) $302 in lease restoration costs, and (viii) $51
in other costs.
(6 ) Twelve months ended January 31,
2011: Loss of $938 on investment accounted for under the equity
method of accounting. Twelve months ended January 31, 2010: Other
income (expense), net consists of: (i) loss of $995 on investment
accounted for under the equity method of accounting and (ii) an
impairment of $113 for an investment accounted for under the cost
method.
(7 ) Twelve months ended January 31, 2011:
$2,981 in amortization of original issuance debt discount and
premiums and $345 in premium on partial redemption of the $110.0M
convertible debt. Twelve months ended January 31, 2010: $2,764 in
amortization of original issuance debt discount and $(354) in
discounts and unamortized debt costs related to a partial
redemption of the $110.0M convertible debt.
(8 )
Non-GAAP income tax expense adjustment reflects the application of
our assumed normalized effective 17% tax rate, instead of our GAAP
tax rate, to our non-GAAP pre-tax income.
MENTOR GRAPHICS
CORPORATION
UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP
EARNINGS PER
SHARE
The following table reconciles management's
estimates of the specific items excluded from GAAP in the
calculation of estimated non-GAAP net income (loss) per share for
the first quarter of fiscal 2012.
Estimated
Q1 FY12
Diluted GAAP net income (loss) per share $(0.06) - $(0.02) Non-GAAP
Adjustments: Amortization of purchased intangible assets (1) 0.03
Amortization of other identified intangible assets (2) 0.02 Equity
plan-related compensation (3) 0.05 Special charges (4) 0.03 Other
expense, net and interest expense (5) 0.11 Non-GAAP income tax
effects (6)
(0.00) - (0.02)
Non-GAAP net income (loss) per share
$0.18 - $0.20
(1 )
Excludes amortization of purchased intangible assets resulting from
acquisition transactions. Purchased intangible assets are amortized
over two to five years.
(2 ) Excludes amortization of
other identified intangible assets including trade names,
employment agreements, customer relationships, and deferred
compensation resulting from acquisition transactions. Other
identified intangible assets are amortized over two to five years.
This line item also excludes amortization of purchased intangible
assets identified as part of the fair value of the Frontline P.C.B.
Solutions Limited Partnership investment. The purchased technology
will be amortized over three years and other identified intangible
assets will be amortized over three to four years.
(3
) Excludes equity plan-related compensation expense.
(4 ) Excludes special charges consisting primarily of
consulting fees associated with our proxy contest, costs incurred
for employee rebalances (which includes severance benefits, notice
pay and outplacement services), facility closures, and acquisition
costs.
(5 ) Adjustment for the first quarter of
fiscal 2012, reflects the amortization of original issuance debt
discount and premium for our 6.25% Convertible Subordinated
Debentures due 2026, the amortization of original issuance debt
discount for our 4.00% Convertible Subordinated Debentures due
2031and charges associated with the retirement of our 6.25%
Convertible Subordinated Debentures and Term Loan.
(6
) Non-GAAP income tax expense adjustment reflects the
application of our assumed normalized effective 17% tax rate,
instead of our GAAP tax rate, to our non-GAAP pre-tax income. The
preliminary GAAP income tax provision embedded in these results
includes a number of assumptions subject to change in the normal
course of the close process.
MENTOR GRAPHICS
CORPORATION
UNAUDITED
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES
(In thousands, except percentages)
Estimated
Three Months Ended April 30, 2011 Q1 FY12 GAAP
operating income $ 17,394 Reconciling items to non-GAAP operating
income: Amortization of Frontline purchased technology and other
1,242 identified intangible assets Equity plan-related compensation
5,097 Amortization of purchased intangible assets: Cost of revenues
3,357 Amortization of intangible assets 1,611 Special Charges
3,759 Non-GAAP operating income $ 32,460
Three Months Ended April 30,
2011 Q1 FY12 GAAP operating income as a percent of total
revenues 8 % Non-GAAP adjustments detailed above 6 %
Non-GAAP operating income as a percent of total revenues 14
%
MENTOR GRAPHICS
CORPORATION
UNAUDITED
RECONCILIATION OF GAAP FINANCIAL MEASURES
TO NON-GAAP
FINANCIAL MEASURES
(In thousands, except percentages)
Estimated Twelve Months Ended January 31, FY12
FY11 GAAP operating income $ 110,763 $ 52,539 Reconciling
items to non-GAAP operating income: Amortization of Frontline
purchased technology and other identified intangible assets 4,968
4,347 Equity plan-related compensation 19,151 20,511 Amortization
of purchased intangible assets: Cost of revenues 9,576 13,771
Amortization of intangible assets 5,217 7,347 Special Charges
3,759 10,257 Non-GAAP operating income
$ 153,434 $ 108,772
Twelve Months Ended January 31, FY12 FY11 GAAP
operating income as a percent of total revenues 11 % 6 % Non-GAAP
adjustments detailed above 4 % 6 % Non-GAAP operating
income as a percent of total revenues 15 % 12 %
If you have any questions, require
assistance in voting your shares, or need
additional copies of Mentor Graphics’ proxy
materials, please call MacKenzie Partners
at the phone numbers listed below.
MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
(212) 929-5500 (call collect)
Or
TOLL-FREE (800) 322-2885
Mentor Graphics Corp. (NASDAQ:MENT)
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