Mentor Graphics Reports Fiscal Second Quarter Results


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

	Three Months Ended July 31,						Six Months Ended July 31,
	2016			2015			2016			2015
GAAP gross profit	$	204,714		$	234,799		$	389,488		$	457,891
Reconciling items to non-GAAP gross profit:
Equity plan-related compensation		781			608			1,492			1,316
Amortization of purchased technology		1,787			1,794			3,572			3,652
Non-GAAP gross profit	$	207,282		$	237,201		$	394,552		$	462,859

	Three Months Ended July 31,						Six Months Ended July 31,
	2016			2015			2016			2015
GAAP gross profit as a percent of total revenues		80.5	%		83.5	%		80.8	%		82.8	%
Non-GAAP adjustments detailed above		1.0	%		0.9	%		1.1	%		0.9	%
Non-GAAP gross profit as a percent of total revenues		81.5	%		84.4	%		81.9	%		83.7	%

	Three Months Ended July 31,						Six Months Ended July 31,
	2016			2015			2016			2015
GAAP operating expenses	$	198,464		$	195,533		$	395,303		$	426,288
Reconciling items to non-GAAP operating expenses:
Equity plan-related compensation		(11,145	)		(9,978	)		(20,935	)		(19,548	)
Amortization of other identified intangible assets		(1,520	)		(2,234	)		(3,074	)		(4,453	)
Special charges		(1,445	)		(2,186	)		(4,436	)		(39,163	)
Non-GAAP operating expenses	$	184,354		$	181,135		$	366,858		$	363,124

	Three Months Ended July 31,						Six Months Ended July 31,
	2016			2015			2016			2015
GAAP operating income (loss)	$	6,250		$	39,266		$	(5,815	)	$	31,603
Reconciling items to non-GAAP operating income:
Equity plan-related compensation		11,926			10,586			22,427			20,864
Amortization of purchased technology		1,787			1,794			3,572			3,652
Amortization of other identified intangible assets		1,520			2,234			3,074			4,453
Special charges		1,445			2,186			4,436			39,163
Non-GAAP operating income	$	22,928		$	56,066		$	27,694		$	99,735

	Three Months Ended July 31,						Six Months Ended July 31,
	2016			2015			2016			2015
GAAP operating income (loss) as a percent of total revenues		2.5	%		14.0	%		(1.2	%)		5.7	%
Non-GAAP adjustments detailed above		6.5	%		5.9	%		6.9	%		12.3	%
Non-GAAP operating income as a percent of total revenues		9.0	%		19.9	%		5.7	%		18.0	%

	Three Months Ended July 31,						Six Months Ended July 31,
	2016			2015			2016			2015
GAAP other income, net and interest expense	$	(5,052	)	$	(4,585	)	$	(8,301	)	$	(8,937	)
Reconciling items to non-GAAP other income, net and interest expense:
Equity in losses (earnings) of unconsolidated entities		43			(14	)		45			(39	)
Amortization of original issuance debt discount		1,754			1,633			3,477			3,237
Non-GAAP other income, net and interest expense	$	(3,255	)	$	(2,966	)	$	(4,779	)	$	(5,739	)

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