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,
	2016			2015			2016			2015
GAAP gross profit	$	271,326		$	243,627		$	660,814		$	701,518
Reconciling items to non-GAAP gross profit:
Equity plan-related compensation		785			665			2,277			1,981
Amortization of purchased technology		1,828			1,844			5,400			5,496
Non-GAAP gross profit	$	273,939		$	246,136		$	668,491		$	708,995


	Three Months Ended October 31,						Nine Months Ended October 31,
		2016			2015			2016			2015
GAAP gross profit as a percent of total revenues		84.1	%		83.9	%		82.1	%		83.1	%
Non-GAAP adjustments detailed above		0.8	%		0.8	%		1.0	%		0.9	%
Non-GAAP gross profit as a percent of total revenues		84.9	%		84.7	%		83.1	%		84.0	%


	Three Months Ended October 31,						Nine Months Ended October 31,
		2016			2015			2016			2015
GAAP operating expenses	$	215,012		$	217,939		$	610,315		$	644,227
Reconciling items to non-GAAP operating expenses:
Equity plan-related compensation		(10,306	)		(9,360	)		(31,241	)		(28,908	)
Amortization of other identified intangible assets		(1,462	)		(2,364	)		(4,536	)		(6,817	)
Special charges		(1,500	)		(4,831	)		(5,936	)		(43,994	)
Non-GAAP operating expenses	$	201,744		$	201,384		$	568,602		$	564,508


	Three Months Ended October 31,						Nine Months Ended October 31,
		2016			2015			2016			2015
GAAP operating income	$	56,314		$	25,688		$	50,499		$	57,291
Reconciling items to non-GAAP operating income:
Equity plan-related compensation		11,091			10,025			33,518			30,889
Amortization of purchased technology		1,828			1,844			5,400			5,496
Amortization of other identified intangible assets		1,462			2,364			4,536			6,817
Special charges		1,500			4,831			5,936			43,994
Non-GAAP operating income	$	72,195		$	44,752		$	99,889		$	144,487


	Three Months Ended October 31,						Nine Months Ended October 31,
		2016			2015			2016			2015
GAAP operating income as a percent of total revenues		17.5	%		8.8	%		6.3	%		6.8	%
Non-GAAP adjustments detailed above		4.9	%		6.6	%		6.1	%		10.3	%
Non-GAAP operating income as a percent of total revenues		22.4	%		15.4	%		12.4	%		17.1	%


	Three Months Ended October 31,						Nine Months Ended October 31,
		2016			2015			2016			2015
GAAP other income, net and interest expense	$	(4,875	)	$	(4,595	)	$	(13,176	)	$	(13,532	)
Reconciling items to non-GAAP other income, net and interest expense:
Equity in losses of unconsolidated entities		36			72			81			33
Amortization of original issuance debt discount		1,786			1,663			5,263			4,900
Non-GAAP other income, net and interest expense	$	(3,053	)	$	(2,860	)	$	(7,832	)	$	(8,599	)

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