Mentor Graphics Reports Fiscal Third Quarter Results


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

	Three Months Ended October 31,						Nine Months Ended October 31,
		2015			2014			2015			2014
GAAP gross profit	$	243,627		$	245,142		$	701,518		$	651,154
Reconciling items to non-GAAP gross profit:
Equity plan-related compensation		665			608			1,981			1,687
Amortization of purchased technology		1,844			2,050			5,496			5,252
Non-GAAP gross profit	$	246,136		$	247,800		$	708,995		$	658,093


	Three Months Ended October 31,						Nine Months Ended October 31,
		2015			2014			2015			2014
GAAP gross profit as a percent of total revenues		83.9	%		83.8	%		83.1	%		80.9	%
Non-GAAP adjustments detailed above		0.8	%		0.9	%		0.9	%		0.8	%
Non-GAAP gross profit as a percent of total revenues		84.7	%		84.7	%		84.0	%		81.7	%


	Three Months Ended October 31,						Nine Months Ended October 31,
		2015			2014			2015			2014
GAAP operating expenses	$	217,939		$	215,419		$	644,227		$	602,875
Reconciling items to non-GAAP operating expenses:
Equity plan-related compensation		(9,360	)		(8,494	)		(28,908	)		(24,704	)
Amortization of other identified intangible assets		(2,364	)		(2,233	)		(6,817	)		(6,125	)
Special charges		(4,831	)		(8,375	)		(43,994	)		(19,409	)
Non-GAAP operating expenses	$	201,384		$	196,317		$	564,508		$	552,637


	Three Months Ended October 31,						Nine Months Ended October 31,
		2015			2014			2015			2014
GAAP operating income	$	25,688		$	29,723		$	57,291		$	48,279
Reconciling items to non-GAAP operating income:
Equity plan-related compensation		10,025			9,102			30,889			26,391
Amortization of purchased technology		1,844			2,050			5,496			5,252
Amortization of other identified intangible assets		2,364			2,233			6,817			6,125
Special charges		4,831			8,375			43,994			19,409
Non-GAAP operating income	$	44,752		$	51,483		$	144,487		$	105,456


	Three Months Ended October 31,						Nine Months Ended October 31,
		2015			2014			2015			2014
GAAP operating income as a percent of total revenues		8.8	%		10.2	%		6.8	%		6.0	%
Non-GAAP adjustments detailed above		6.6	%		7.4	%		10.3	%		7.1	%
Non-GAAP operating income as a percent of total revenues		15.4	%		17.6	%		17.1	%		13.1	%


	Three Months Ended October 31,						Nine Months Ended October 31,
		2015			2014			2015			2014
GAAP other income (expense), net and interest expense	$	(4,595	)	$	(5,315	)	$	(13,532	)	$	(15,069	)
Reconciling items to non-GAAP other income (expense), net and interest expense:

Equity in losses of unconsolidated entities		72			78			33			146
Amortization of original issuance debt discount		1,663			1,548			4,900			4,563
Non-GAAP other income (expense), net and interest expense	$	(2,860	)	$	(3,689	)	$	(8,599	)	$	(10,360	)

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