Mentor Graphics Announces Revenues of $123M; Product

Revenue Growth Rate Hits 25% - WITH PHOTO - Wilsonville, Ore. (PROTEXT) - Mentor Graphics Corporation(Nasdaq: MENT) today announced first quarter revenue was $123million, up 13.5% from the first quarter of 1998, andearnings-per-share was $.07, before special charges. The productgrowth rate year-over-year for the quarter rose to 25%, makingMentor Graphics the fastest growing major electronic designautomation company on total, as well as product revenue. (Photo: http://www.newscom.com/cgi-bin/prnh/19990428/SFW078 ) "Competitive wins across the business continue to drive ourproduct revenue growth," said Walden C. Rhines, president and CEOof Mentor Graphics. "Our investment in next generation tools likethe Calibre(R) physical verification solution is paying off withstrong market-share gains, as we reap the benefit of the strongindustry growth in deep sub-micron. Similarly, our IC Station(R)product bookings more than doubled as competitors' older productsdid not meet the need for leading-edge custom design accelerationtools that allow designers to quickly and efficientlytrouble-shoot key areas of deep-submicron designs wheretraditional place-and-route tools fail." Earnings-per-share after special charges was a loss of $.13.Special charges related primarily to the completion of ouracquisition of the minority equity position in Exemplar Logic,Quickturn Design Systems acquisition related expenses, and therestructure of some businesses. Total gross margin for thequarter was 75.7%, a first quarter record for Mentor Graphics. "The market is healthy and vibrant, and we remain bullish onthe state of our business," said Gregory K. Hinckley, CFO and COOof Mentor Graphics. "North America remained strong, and we saw aresurgence in Asia. Additionally, Y2K issues seem to have helpedus as customers consolidated their established flows inpreparation for the new millennium. Our BoardStation(R) producttook significant share in the printed circuit board market withbookings up over 100% year-on-year." Mentor Graphics Corporation is a world leader in electronichardware and software design solutions, providing products andconsulting services for the world's largest electronics andsemiconductor companies. Established in 1981, the companyreported revenues over the last 12 months of over $500 millionand employs approximately 2,600 people worldwide. Companyheadquarters are located at 8005 S.W. Boeckman Road, Wilsonville,Oregon (USA) 97070-7777. World Wide Web site:http://www.mentor.com. Investor Relations Web site:http://www.mentor.com/investor_relations. Certain statements contained in the press release constitute"forward-looking" statements within the meaning of Section 21E ofthe Securities Exchange Act of 1934, as amended. Suchforward-looking statements involve known and unknown risks,uncertainties and other factors that may cause the actualresults, performance or achievements of the Company or industryresults to be materially different from any results, performanceor achievements expressed or implied by such forward-lookingstatements. Such factors include, among others, the following:(i) the Company's ability to successfully offer products andservices that compete in the highly competitive and dynamic EDAindustries including the risk that the company's technology,products or inventory become obsolete; (ii) effects of theincreasing volatility of foreign currency fluctuations on theCompany's business and operating results; (iii) the overallinstability of Asian or other economies, including changes inregional or worldwide economic or political conditions,government trade restrictions, limitations on repatriation ofearnings, licensing and intellectual property rights protection;and (iv) the Company's ability to recruit and retain necessarypersonnel to research and develop, market, sell and serviceproducts. Given these uncertainties, prospective investors arecautioned not to place undue reliance on such forward-lookingstatements. Mentor Graphics disclaims any obligation to updateany such factors or to publicly announce the results of anyrevisions to any of the forward-looking statements to reflectfuture events or developments. NOTE: IC Station, Boardstation, Calibre and Mentor Graphicsare registered trademarks of Mentor Graphics Corporation. Allother company or product names are the registered trademarks ortrademarks of their respective owners. CONTACT: Ryerson E. Schwark, Public and Investor Relations,(USA) 503-685-1660 or ry_schwark@mentor.com, or Dennis M. Weldon,Treasurer, (USA) 503-685-1462 or dennis_weldon@mentor.com, bothof Mentor Graphics Corporation.

MENTOR GRAPHICS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited) Three months ended March 31,

1999

1998 Revenues:

System and software

$72,740$58,206

Service and support

49,83349,802

Total revenues

122,573108,008 Cost of revenues:

System and software

7,4466,256

Service and support

22,38224,547

Total cost of revenues

29,82830,803

Gross margin

92,74577,205 Operating expenses:

Research and development

28,86928,405

Marketing and selling

42,31538,954

General and administration

12,89610,505

Special charges

16,5755,775

Total operating expenses

100,65583,639 Operating loss

(7,910)(6,434)

Other loss, net

(2,821)(3,123)

Loss before income taxes

(10,731)(9,557)

Income tax benefit

(2,361)(2,103)

Net loss

$(8,370)$(7,454) Net loss per share:

Basic

$(.13)$(.12)

Diluted

$(.13)$(.12) Weighted average number of shares outstanding:

Basic

66,21364,582

Diluted

66,21364,582

MENTOR GRAPHICS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

As of

As of

March 31, 1999 Dec 31,1998

(Unaudited) Assets Current assets:

Cash and short-term investments

$95,985$137,585

Trade accounts receivable, net

124,013125,844

Other receivables

7,1727,575

Prepaid expenses and other

17,31723,503

Deferred income taxes

10,81310,937

Total current assets

255,300305,444 Property, plant and equipment, net

92,00995,214 Term receivables, long-term

50,26636,430 Other assets, net

27,76327,035

Total assets

$425,338$464,123 Liabilities and Stockholders' Equity Current liabilities:

Short-term borrowings

--24,000

Accounts payable

6,23310,101

Income taxes payable

17,69420,408

Accrued payroll and related liabilities

24,65941,958

Accrued liabilities

39,37433,295

Deferred revenue

46,39036,484

Total current liabilities

134,350166,246 Other long-term deferrals

1,6081,425

Total liabilities

135,958167,671 Minority interest

1,1541,170 Stockholders' equity:

Common stock

305,845303,352

Accumulated deficit

(30,617)(22,246)

Accumulated other comprehensive income

12,99814,176

Total stockholders' equity

288,226295,282

Total liabilities and

stockholders' equity

$425,338$464,123 ots Original Text Service: Mentor Graphics CorporationInternet: http://www.newsaktuell.de Contact: Ryerson E.Schwark, Public and Investor Relations, (USA) 503-685-1660, orry_schwark@mentor.com, or Dennis M. Weldon, Treasurer, (USA)503-685-1462, or dennis_weldon@mentor.com, both of MentorGraphics Corporation Photo:http://www.newscom.com/cgi-bin/prnh/19990428/SFW078 or NewsCom,(USA) 213-237-5431 Web site: http://www.mentor.com

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