Definitive Additional Materials

2011 Mentor Graphics Corp.

www.mentor.com

Forward-Looking Statements

This

presentation

may

contain

“forward-looking”

statements

based

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

the

Company

industry

results

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

unanticipated

shifts

product

mix

gross

margin;

and

(ix)

effects

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”

the

Company’s

most

recent

Form

10-K

Form

10-Q.

Given

these

uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking

statements. In addition, statements regarding guidance do not reflect potential impacts of mergers or

acquisitions that have not been announced or closed as of the time the statements are made. 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.

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

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

charge

http://www.sec.gov

and

http://www.mentor.com/company/investor_relations.

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.

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Summary

Mentor achieved record results in fiscal 2011 driven by strong overall

bookings growth of approximately 30%

—

All-time record revenues of $915 million

—

Non-GAAP

earnings

per

$0.70

(49%

increase

from

fiscal

2010)

For full-year fiscal 2012, company expects:

—

Revenue to be approximately $1 billion (up 9%)

—

Non-GAAP

earnings

per

~$1.00

(up

43%)

Mentor focuses on building #1 product positions —

segment leader gains

share while others may lose ground

Expect Mentor’s growth to continue to exceed underlying growth of traditional

EDA

New applications including automotive and aerospace design are expected to

continue to grow rapidly with minimal competition from EDA companies

Growth anticipated to be between 8 and 10%, non-GAAP operating margin

trending towards 20%+, generating significant cash flow*. Mentor presently

anticipates using its strong cash flow to return approximately $150 million of

capital to shareholders through stock repurchases or dividends

Mentor Graphics Investor Presentation, April 2011

*For a reconciliation of non-GAAP to GAAP financial measures, see the appendix to this presentation

2011 Mentor Graphics Corp.

www.mentor.com

Summary (continued)

The Mentor Board unanimously believes that continued execution of

our strategic plan offers the greatest value to all Mentor shareholders

Board remains open to any opportunity to enhance shareholder value,

just as it was in 2008 when it evaluated the offer from Cadence

$17 per share “stalking horse”

proposal made by Icahn undervalues

the company and its future prospects

Analysis shows Icahn’s platform of a public sale is risky and

potentially destructive

—

Substantial regulatory and commercial risk to in-market combination

The Mentor Board urges shareholders to reject Icahn’s nominees, as

the Board believes they:

—

Run on a singular risky platform of selling Mentor without any other

stated vision or specific strategy

—

Do not have the collective knowledge, skill and experience of Mentor’s

current Board

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Successful FY 2011 Operating Expense

Programs

Aggressive program to reduce internal expenses

—

Implemented structural changes to commission and incentive plans

—

Reduced stock compensation expense

—

Modified ESPP plan provisions

—

Froze senior executive wages since 2007

Reduced outside expenditures

—

Lowered expenditures on outside services in FY11 by over 10% year-

over-year

—

Decreased FY11 travel expenses by 20% from FY09 level

Extracted facilities savings in excess of $4 million worldwide in FY11

Reduced non-GAAP SG&A expense by over 500 bps as % of revenue in last 2 years*

On track to reduce non-GAAP SG&A expense by approximately 200 bps as % of revenue in FY12**

Goal to achieve long-term operating model of 20% operating profit over next 2 years

Mentor Graphics Investor Presentation, April 2011

*For a reconciliation of non-GAAP to GAAP financial measures, see the appendix to this presentation

**For a reconciliation of non-GAAP to GAAP financial measures, see the appendix to this presentation; estimate

does

not

account

for

increased

costs

incurred

connection

with

Icahn’s

proxy

contest

2011 Mentor Graphics Corp.

www.mentor.com

Strengthened Balance Sheet and Disciplined

Use of Leverage

No near-term debt obligations

Renewing $100 million bank facility and replaced convertible debt

Overview of recent convertible offering

$253 million Convertible Offering and concurrent $25 million share repurchase

provide the following benefits relative to Mentor’s former 6.25% Convertible

Subordinated Debentures:

Lower interest rate of 4.00% vs. 6.25%

Increases conversion price to $20.54 from $17.97

Increases flexibility by pushing out initial put date from 2013 to 2018 and maturity

from 2026 to 2031

Reduces dilution by using $25 million of proceeds to repurchase approx. 1.7 million

shares (net decrease of approximately 300,000 shares on a fully diluted basis)

Enables Mentor to refinance revolving credit facility

Proceeds used in part to repay the outstanding amounts owing under Mentor’s $18.5

million aggregate principal amount term loan due 2013

Make whole provision in-line with prior convertible debt and precedent transactions

—

will not have a material impact on the ability of a potential acquiror to

consummate a transaction

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Fiscal 2012 Business Outlook

Strong end-of-year momentum –

bookings, revenue, new customers, consulting,

training, support reinstatements and software and hardware benchmark activity

Q1 FY 2012 expected revenue of approximately $225 million, up 25% year-over-

year, and non-GAAP EPS of approximately $0.15, up from a loss of $0.02*

—

GAAP EPS of approximately $0.06, up from a loss of $0.22 in the prior year

Fiscal 2012 revenue guidance of approximately $1 billion, up 9% year-over-year,

and non-GAAP EPS of approximately $1.00, up 43% from the prior year*

—

GAAP EPS of approximately $0.77, up approximately 200% from $0.26 in the

prior year

Forecasting fiscal 2012 non-GAAP operating income margin of approximately

15%, a gain of another 200 bps, and 50% earnings leverage on incremental

revenues*

Revenue growth outlook, at 9%, is consistent with that of our two principal

competitors

Mentor Graphics Investor Presentation, April 2011

*For a reconciliation of non-GAAP to GAAP financial measures, see the appendix to this presentation

2011 Mentor Graphics Corp.

www.mentor.com

Long-Term Outlook and Capital Policy

Mentor’s leading industry products, presence in emerging markets and

leverageable operating model, create a platform anticipated to generate

significant returns for shareholders

EPS growth driven by top line momentum and operating margin expansion;

should be further enhanced by the use of our strong free cash flow to

repurchase shares

—

Mentor has historically operated on a leveraged net debt basis to reduce our

overall cost of capital and we presently anticipate using our strong cash flow to

return approximately $150 million of capital to shareholders through stock

repurchases or dividends

Mentor Graphics Investor Presentation, April 2011

Long-Term

FY12

Model

Revenue Growth

9% Y-o-Y

8-10% CAGR

Growth in-line with industry analyst expectations

15%

20%+

Mild gross margin expansion due to both scale efficiencies and

structural operating changes

R&D constant at ~30% of revenues

SG&A declining as % of revenue due to scale efficiencies

Assumptions

Operating Margin

(non-GAAP)*

* For a reconciliation of non-GAAP to GAAP financial measures, see the appendix to this presentation

2011 Mentor Graphics Corp.

www.mentor.com

Mentor Delivers Shareholder Value

Mentor Graphics Investor Presentation, April 2011

Source:

Institutional

Brokers’

Estimate

System,

Capital

* For a reconciliation of non-GAAP to GAAP financial measures, see the appendix to this presentation

09-Mar-09: NASDAQ

recent low

$10

$12

$14

$16

$18

Mar-2009

Jul

-2009

Oct-2009

Feb-2010

Jun-2010

Oct-2010

Feb-2011

Daily from 09-Mar-2009 to 15-Apr-2011

History of Outperforming Analyst Estimates

Actual

IBES Median (1-Month Prior)

Quarter

Date

Revenue

Non-GAAP

EPS*

Revenue

Non-GAAP

EPS

Q4'FY11

Feb-2011

307

0.48

293

0.46

Q3'FY11

Nov-2010

239

0.22

220

0.16

Q2'FY11

Aug-2010

188

0.01

180

(0.04)

Q1'FY11

May-2010

181

(0.02)

183

(0.02)

Q4'FY10

Feb-2010

237

0.30

230

0.28

Q3'FY10

Nov-2009

189

0.05

183

0.01

Q2'FY10

Aug-2009

183

0.02

165

(0.10)

Q1'FY10

May-2009

194

0.09

202

0.08

2011 Mentor Graphics Corp.

www.mentor.com

Key Dates Relating to the Proxy Contest

27-May-2010 –

Icahn filed an initial 13D disclosing 6.86% ownership in Mentor

June-2010

–

Icahn filed 13D amendments disclosing up to 10.8% ownership in Mentor; filing on June 30, 2010

indicated that Icahn met with representatives of Mentor and looked forward to further conversations and working

constructively together

24-June-2010

–

Mentor adopted a limited duration shareholder rights plan with a 15% trigger, set to expire

December 31, 2011

July-2010

–

Icahn filed 13D amendments disclosing up to 14.1% ownership in Mentor

24-Aug-2010

–

Icahn filed a 13D amendment disclosing 14.98% ownership in Mentor

May-2010 to Jan-2011

–

Mentor and Icahn’s associates had periodic business discussions; Icahn did not indicate

any interest in nominating a slate of directors, engaging in a proxy solicitation or making a conditional proposal to

purchase the Company

4-Feb-2011

–

Mentor announced that its Annual Meeting would be held on May 12, 2011

8-Feb-2011

–

Icahn announces the intent to nominate three directors for election and belief that Mentor should be

put up for sale

11-Feb-2011

–

Icahn announced its three nominees for election as director and

its intent to make certain

proposals with respect to the Company’s bylaws

22-Feb-2011

–

Icahn announced a conditional proposal to acquire Mentor for $17/share, which Icahn

subsequently characterized as a “stalking horse”

offer

15-Mar-2011 –

Mentor announced that its Board adopted certain amendments to the Company’s bylaws; Mentor

filed a preliminary proxy statement that recommended a proposal for another amendment to the bylaws, identical to

one of Icahn’s proposals

18-Mar-2011 –

Icahn withdrew its proposals regarding amendments to the Company’s bylaws

28-Mar-2011

–

Mentor announced that its Board rejected Icahn’s “stalking horse”

proposal

29-Mar-2011

–

Mentor announced the commencement of its convertible debt financing and

concurrent share

repurchase; Icahn offered to provide non-convertible, limited duration “stalking horse”

financing in lieu of Mentor

proceeding with the convertible financing

31-Mar-2011

–

Mentor announced that its Board rejected Icahn’s “stalking horse”

financing proposal and affirmed

its decision to proceed with the convertible debt financing; Mentor filed its definitive proxy statement

12-May-2011

–

Annual Meeting date

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Icahn Has One Goal –

A Risky Exit Strategy

Icahn platform has one plank –

that Mentor “should be put up for sale”

In furtherance of his goal, Icahn seeks to replace three experienced, independent and

highly-qualified directors with:

—

David Schechter –

an employee of Icahn’s, who has no prior industry experience,

and

whose

director

history

includes

positions

WCI

Communities

and

BKF

Capital

(companies that lost substantial shareholder value)

—

José

Maria Alapont –

the President and CEO of Federal Mogul, a company 76%

owned by Icahn

—

Gary Meyers –

the former President and CEO of Synplicity, a small EDA company

that

averaged

SG&A

expense

percentage

revenue

well

above

Mentor’s

and

generated a negative return for shareholders prior to its sale to Synopsys for

approximately $220 million in 2008

Mentor’s Board is open to any opportunity to enhance shareholder value and

periodically

reviews

its

strategy

and

alternatives

–

however,

has

determined

that

Icahn’s proposed course of action entails significant commercial and regulatory risk

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Icahn’s Platform Carries Multiple Risks

Icahn’s platform of simply putting the company up for sale demonstrates a fundamental lack of

knowledge about the EDA industry

Mentor

undertook

analysis

the

regulatory

risks

inherent

any combination with Cadence or

Synopsys (the two companies that could be logical strategic buyers) following Cadence’s proposal in

2008. The FTC issued a Second Request; Cadence withdrew its proposal shortly thereafter

Mentor updated its analysis in connection with the Icahn proposal. The analysis showed that serious

regulatory risks persist

If combined with Cadence, ~75% of Mentor’s total revenues would be derived from product areas

in which Mentor and Cadence have a combined 50% to nearly 100% share of the product area

overlapping

If combined with Synopsys, ~65% of Mentor’s total revenues would be derived from product areas

in which Mentor and Synopsys have a combined 50% to nearly 100% share of the product area

overlapping

For these reasons, Mentor believes a transaction between Mentor and either Cadence or Synopsys

would face serious regulatory risks and a substantial risk that the deal would fail to close

Any discussions concerning a combination with Cadence or Synopsys entail significant commercial

risk including disruption to:

—

The growth and stability of the company’s customer base

—

The company’s relationship with its employees

This disruption could result in serious adverse effects should discussions commence but not result in

a completed transaction because of regulatory risks

We believe electing nominees committed to a sale process that is

risky and unwise does not make sense

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Icahn’s $17 per Share “Stalking Horse”

Proposal

Icahn proposed, as a part of his platform to put the company up for sale, a

$17 per share “stalking horse”

bid

After carefully reviewing the proposal, together with its financial advisors,

the Board unanimously determined that continued execution of Mentor’s

strategic plan offers greatest long-term value to all Mentor shareholders

Proposal undervalues the company and its future prospects

—

Excellent prospects for continued growth and shareholder value creation

—

Portfolio of highly profitable #1 product positions

—

Focused on building #1 product positions

—

Strength in PCB, design for physical verification, emulation and

transportation

We believe Icahn wants to catalyze a liquidity event for the significant

stake he has taken in Mentor’s stock

Icahn’s platform would create a significant conflict for his nominees if they

were elected to Mentor’s Board

Mentor’s Board remains open to any opportunity to enhance

shareholder value, but Icahn’s proposal undervalues Mentor and

represents a conflict of interest for Icahn’s nominees

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Mentor’s Strong Corporate Governance

Profile

Strong, experienced, independent Board

—

Wholly independent Nominating & Corporate Governance and Audit &

Compensation committees

—

All independent directors have a deep understanding of Mentor’s

business, significant technology sector knowledge and experience

serving as public company directors

Structural profile ensures accountability

—

Annually elected board

—

Special meetings may be called by shareholders

Responsive to Icahn’s governance proposals

—

Amended bylaws to permit shareholders to call special meetings

—

Amended bylaws to limit the directors’

ability to increase the size of the

Board and to change the frequency of elections

—

Amended bylaws to opt out of Oregon Control Share Act

Proposal to shareholders to opt out of the Oregon Business

Combination Statute

Mentor’s Board is Experienced, Independent,

Accountable and Responsive

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Summary

Mentor achieved record results in fiscal 2011 driven by strong overall

bookings growth of approximately 30%

—

All-time record revenues of $915 million

—

Non-GAAP

earnings

per

$0.70

(49%

increase

from

fiscal

2010)

For full-year fiscal 2012, company expects:

—

Revenue to be approximately $1 billion (up 9%)

—

Non-GAAP

earnings

per

~$1.00

(up

43%)

Mentor focuses on building #1 product positions —

segment leader gains

share while others may lose ground

Expect Mentor’s growth to continue to exceed underlying growth of traditional

EDA

New applications including automotive and aerospace design are expected to

continue to grow rapidly with minimal competition from EDA companies

Growth anticipated to be between 8 and 10%, non-GAAP operating margin

trending towards 20%+, generating significant cash flow*. Mentor presently

anticipates using its strong cash flow to return approximately $150 million of

capital to shareholders through stock repurchases or dividends

Mentor Graphics Investor Presentation, April 2011

*For a reconciliation of non-GAAP to GAAP financial measures, see the appendix to this presentation

2011 Mentor Graphics Corp.

www.mentor.com

Summary (continued)

The Mentor Board unanimously believes that continued execution of

our strategic plan offers the greatest value to all Mentor shareholders

Board remains open to any opportunity to enhance shareholder value,

just as it was in 2008 when it evaluated the offer from Cadence

$17 per share “stalking horse”

proposal made by Icahn undervalues

the company and its future prospects

Analysis shows Icahn’s platform of a public sale is risky and

potentially destructive

—

Substantial regulatory and commercial risk to in-market combination

The Mentor Board urges shareholders to reject Icahn’s

nominees, as the Board believes they:

—

Run on a singular risky platform of selling Mentor without any

other stated vision or specific strategy

—

Do not have the collective knowledge, skill and experience of

Mentor’s current Board

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Mentor Directors

Dr. Walden C. Rhines

Dr. Rhines has been Chairman of the Board and Chief Executive Officer of the Company since 2000, and was President and

Chief

Executive

Officer

the

Company

from

1993

2000.

currently

director

TriQuint

Semiconductor,

Inc.

(manufacturer of semiconductors), and served as a director of Cirrus Logic, Inc. (manufacturer of semiconductors) from 1995 to

2009. Dr. Rhines is currently in his fifth term as chair of the Electronic Design Automation Consortium. He is also a board

member of the Semiconductor Research Corporation. He has previously served as chair of the Semiconductor Technical Advisory

Committee of the Department of Commerce, and as a member of the boards of directors of the Computer and Business Equipment

Manufacturers’

Association

(CBEMA),

SEMI–Sematech/SISA

semiconductor

equipment

suppliers

board),

University

Michigan

National

Advisory

Council,

Lewis

and

Clark

College

and

SEMATECH.

Prior

joining

Mentor,

Dr.

Rhines

was

Executive

Vice

President,

Semiconductor

Group

Texas

Instruments

Incorporated

from

1987

1993.

During

21–year

career

Texas

Instruments,

held

numerous

executive

and

management

positions.

was

co–inventor

patented

invention

that

fundamental to solid state lighting and DVDs.

Dr.

Rhines

nominated

for

election

because

has

been

our

CEO

for

the

past

years,

has

extensive

executive

management

experience,

and has deep and broad knowledge of the semiconductor and electronics design industries.

Gregory K. Hinckley

Mr. Hinckley has been President of the Company since 2000, and was Executive Vice President, Chief Operating Officer and

Chief Financial Officer of the Company from 1997 to 2000. He continued to function as the Company’s Chief Financial Officer

from 2000 to July 2007, and again became the Chief Financial Officer in December 2008. He is a director of Intermec, Inc. (a

provider of integrated system solutions), Super Micro Computer, Inc. (a server board, chassis and server systems supplier), and SI

Bone, Inc. (a privately held medical device company). Until 2007, Mr. Hinckley was also a director of Amkor Technology, Inc. (a

provider

semiconductor

packaging

and

test

services).

Prior

joining

Mentor,

Mr.

Hinckley

was

Vice

President,

and

then

Senior

Vice

President,

VLSI

Technology,

Inc.

semiconductor

company)

from

1992

1997.

Mr. Hinckley is nominated for election because he has been our Chief Operating Officer for the past 14 years and has broad

business management experience with technology companies.

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Mentor Directors

Sir Peter Bonfield

Sir

Peter

Bonfield

has

been

self–employed

international

business

advisor

since

2002

and

has

been

Chairman

NXP

Semiconductor

N.V.

semiconductor

company)

since

2006.

served

Chairman

the

Executive

Committee

and

Chief

Executive

Officer

British Telecommunications PLC (a provider of telecom services) from 1996 to 2002 and before that served as Chairman and Chief

Executive

Officer

ICL

plc

UK–based

information

technology

company).

Sir

Peter

director

Sony

Corporation

worldwide

provider of electronics, games, music, movies and financial services), Taiwan Semiconductor Manufacturing Company Ltd. (a

manufacturer

semiconductors),

Telefonaktiebolaget

Ericsson

telecommunications

equipment

manufacturer),

and

Actis

LLP

(a private equity investor in emerging markets). He previously served as a director of AstraZeneca PLC (a pharmaceuticals company)

from

1995

2007.

senior

advisor

N.M.

Rothschild

London

and

member

the

advisory

boards

the

Longreach

Group

and

New

Venture

Partners.

also

serves

advisor

Apax

Partners

LLP

and

board

mentor

CMi.

has

received

numerous honors for his contributions to business, including a knighthood, and is a fellow of the Royal Academy of Engineering.

Sir Peter is nominated for election because he has extensive international business and CEO experience.

Marsha B. Congdon

Ms.

Congdon

has

been

self–employed

private

investor

since

1997.

She

served

Vice

President,

Policy

and

Strategy,

West Inc. (a provider of communications services) from 1995 to 1997; Chief Executive Officer Oregon and regional Vice

President

for

West

Inc.

from

1992

1994;

and

Vice

President

and

Chief

Executive

Officer

for

West

Inc.

Oregon

from

1987 to 1992. Ms. Congdon also held executive positions with Directory Publishing Corp., DEX Publishing, AT&T,

Northwestern Bell and Pacific Northwestern Bell. She previously served as a director of two publicly traded companies, Bohemia

Corp. from 1989 until its merger with Weyerhaeuser Co. in 1991, and US Bank Corporation from 1988 until its merger with First

Bank

System,

Inc.

1997.

She

currently

serves

the

board

the

not–for–profit

entity,

Jackson

Hospital

Injury

Institute

Miami,

Florida.

She

has

served

the

boards

the

National

Multiple

Sclerosis

Foundation,

Marylhurst

University,

the

Oregon

Symphony, Reed College and the Oregon Investment Council. She was a founding director of the Oregon Children’s Foundation.

She

past

chair

the

Economic

Development

Commissions

for

each

Oregon

and

South

Dakota.

Ms.

Congdon

has

been

guest lecturer at the Kennedy School, Harvard and served as a McKenzie Judge for the Harvard Business Review. In 2009, she

was asked by the State Department to chair a strategic planning training session for the Royal University of Phnom Pehn.

Ms. Congdon is nominated for election because she has extensive executive leadership and board experience with a wide range

profit

and

not–for–profit

companies.

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Mentor Directors

Mentor Graphics Investor Presentation, April 2011

Dr. James R. Fiebiger

Dr. Fiebiger has been a self–employed semiconductor industry consultant since 2005. He served as Chairman of the Board and

Chief Executive Officer of Lovoltech Inc. (a semiconductor company) from 1999 to 2004; Vice Chairman and Managing Director

of Technology Licensing of Gatefield Corporation (a semiconductor company) from 1998 to 2000; and President and Chief

Executive Officer of Gatefield Corporation from 1996 to 1998. From 1987 to 1993, Dr. Fiebiger was President and Chief

Operating Officer of VLSI Technology, Inc., an application–specific integrated circuit (“ASIC”) semiconductor company which

developed electronic design automation (“EDA”) tools for ASIC design and manufactured the ASICs designed using their EDA

tools. Dr. Fiebiger has also held executive positions such as Chief Executive Officer, Senior Corporate Vice President and Vice

President with leading semiconductor manufacturers, including Thomson–Mostek, Motorola and Texas Instruments. Dr. Fiebiger

is a director of Power Integrations, Inc. (a supplier of high–voltage integrated circuits), Pixelworks, Inc. (a fabless semiconductor

company) and QLogic Corporation (a developer of semiconductor and board and box–level products), and served as a director of

Actel Corporation (a developer of field programmable gate arrays) until it was acquired in November 2010.

Dr. Fiebiger is nominated for election because he has extensive management experience in the semiconductor industry, and

considerable experience as a board member of both hardware and software solutions providers.

Kevin C. McDonough

Mr. McDonough has been President of Kammstone LLC (a consulting firm providing services to the electronics industry) since

2002. He previously served as President and Chief Executive Officer of ChipData, Inc. (an internet service company) from 1999

to 2002; Vice President and General Manager of National Semiconductor Corporation (a manufacturer of electronic components)

from 1997 to 1999; and Senior Vice President of Engineering of Cyrix Corporation (a manufacturer of microprocessors) from

1989 to 1997. Mr. McDonough spent 15 years in various semiconductor design and product development roles at Texas

Instruments, where he was listed as inventor on 23 patents.

Mr. McDonough is nominated for election because he has CEO experience running a software company serving the electronics

design market. He has extensive engineering experience in semiconductor design.

2011 Mentor Graphics Corp.

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Mentor Directors

Patrick B. McManus

Mr. McManus has been self-employed as a private investor since 1987. He was Chief Financial Officer of Charles Schwab

Corporation from 1984 to 1987, and Chief Financial Officer of various companies prior to 1984 including Univest, Pacific

Express Airlines, Acurex Solar Corporation and Itel Corporation.

Earlier in his career, he was controller of the African and

Middle East division of Singer Corporation.

Mr. McManus is nominated for election because he has strong financial credentials that he brings to his role as Chair of our

Audit Committee, and broad business experience, including international experience.

Dr. Fontaine K. Richardson

Dr. Richardson has been self-employed as a private investor since 2000. He was General Partner of Eastech III and Vice

President of Eastech Management Company (affiliated private venture capital firms) from 1983 to 2000. From 1984 to 2003, Dr.

Richardson served as a director for the public company, Banyan Systems/ePresence (a computer software company that created

and distributed a network operating system). In addition, he has

been a director of Network Engines, Inc. (a provider of computer

hardware and integration services) since 2002, including four years of service as lead director. Dr. Richardson was a director and

co-founder of Applicon Incorporated (an early provider of CAD/CAM hardware and software products). He has been a director

of numerous private hardware/software product companies, including Advanced Color Technology, Raster Technologies,

Autographix, Meta Graphics, Aries Technology, and Channel Computing.

Dr. Richardson is nominated for election because, as a private venture capitalist and longtime director of numerous technology

companies, he has broad industry and business experience.

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

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.

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Non-GAAP Financial Measures (cont.)

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.

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Non-GAAP Financial Measures (cont.)

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.

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Non-GAAP Financial Measures (cont.)

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.

Mentor Graphics Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Non-GAAP Financial Measures (cont.)

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 Investor Presentation, April 2011

2011 Mentor Graphics Corp.

www.mentor.com

Non-GAAP Financial Measures (cont.)

Mentor Graphics Investor Presentation, April 2011

2011

2010

2009

GAAP net income (loss)

28,584

(21,889)

(91,252)

Non-GAAP adjustments:

Equity plan-related compensation: (1)

Cost of revenues

888

1,618

1,544

Research and development

7,785

10,931

12,005

Marketing and selling

6,112

8,406

8,627

General and administration

5,726

5,204

6,047

System and software cost of revenues (2)

103

Acquisition -