Mentor Graphics Reports Fiscal Second Quarter Results and

Mentor Graphics Reports Fiscal Second Quarter Results and Announces Quarterly Dividend


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,
	2015			2014			2015			2014
GAAP gross profit	$	234,799		$	211,304		$	457,891		$	406,012
Reconciling items to non-GAAP gross profit:
Equity plan-related compensation		608			544			1,316			1,079
Amortization of purchased technology		1,794			1,841			3,652			3,202
Non-GAAP gross profit	$	237,201		$	213,689		$	462,859		$	410,293


	Three Months Ended July 31,						Six Months Ended July 31,
	2015			2014			2015			2014
GAAP gross profit as a percent of total revenues		83.5	%		81.2	%		82.8	%		79.2	%
Non-GAAP adjustments detailed above		0.9	%		0.9	%		0.9	%		0.9	%
Non-GAAP gross profit as a percent of total revenues		84.4	%		82.1	%		83.7	%		80.1	%


	Three Months Ended July 31,						Six Months Ended July 31,
	2015			2014			2015			2014
GAAP operating expenses	$	195,533		$	194,392		$	426,288		$	387,456
Reconciling items to non-GAAP operating expenses:
Equity plan-related compensation		(9,978	)		(8,616	)		(19,548	)		(16,210	)
Amortization of other identified intangible assets		(2,234	)		(2,026	)		(4,453	)		(3,892	)
Special charges		(2,186	)		(5,108	)		(39,163	)		(11,034	)
Non-GAAP operating expenses	$	181,135		$	178,642		$	363,124		$	356,320


	Three Months Ended July 31,						Six Months Ended July 31,
	2015			2014			2015			2014
GAAP operating income	$	39,266		$	16,912		$	31,603		$	18,556
Reconciling items to non-GAAP operating income:
Equity plan-related compensation		10,586			9,160			20,864			17,289
Amortization of purchased technology		1,794			1,841			3,652			3,202
Amortization of other identified intangible assets		2,234			2,026			4,453			3,892
Special charges		2,186			5,108			39,163			11,034
Non-GAAP operating income	$	56,066		$	35,047		$	99,735		$	53,973


	Three Months Ended July 31,						Six Months Ended July 31,
	2015			2014			2015			2014
GAAP operating income as a percent of total revenues		14.0	%		6.5	%		5.7	%		3.6	%
Non-GAAP adjustments detailed above		5.9	%		7.0	%		12.3	%		6.9	%
Non-GAAP operating income as a percent of total revenues		19.9	%		13.5	%		18.0	%		10.5	%


	Three Months Ended July 31,						Six Months Ended July 31,
	2015			2014			2015			2014
GAAP other income (expense), net and interest expense	$	(4,585	)	$	(4,911	)	$	(8,937	)	$	(9,754	)
Reconciling items to non-GAAP other income (expense), net and interest expense:
Equity in (income) loss of unconsolidated entities		(14	)		55			(39	)		68
Amortization of original issuance debt discount		1,633			1,521			3,237			3,015
Non-GAAP other income (expense), net and interest expense	$	(2,966	)	$	(3,335	)	$	(5,739	)	$	(6,671	)

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