Mentor Graphics Reports Fiscal Second Quarter Results

WILSONVILLE, Ore. -- August 20, 2008 -- Mentor Graphics Corporation (Nasdaq: MENT) today announced fiscal second quarter revenue of $182.4 million, a GAAP loss of $.19 per share, and a non-GAAP loss of $.02 per share.

“Mentor Graphics continues to execute against its plan in an environment which remains challenging,” said Walden C. Rhines, chairman and CEO of Mentor Graphics. “Our young and innovative product portfolio has enabled Mentor Graphics to continue to perform as customers adopt new process nodes. Customer adoption of leading-edge physical place and route technology at 45nm is accelerating, and is rapidly expanding Mentor’s base of Olympus-SoC users.”

During the quarter, the company unveiled its sub-45nm integrated circuit (IC) implementation strategy, blending the strengths of its Calibre® design for manufacturing (DFM), Olympus-SoC™ place and route, design for test (DFT) and yield learning solutions. The company also built on its leadership in automotive electrical system design with a new version of its CHS™ software. The company’s inFact™ intelligent testbench software was updated to allow it to automatically scale across a server farm of up to 1000 CPUs. The company announced that it had enhanced its award-winning support with personalized support web portals, allowing customers to quickly and easily access the support content they need.

The company made two acquisitions in the quarter. It acquired substantially all of the assets of Ponte Solutions to extend the company’s Calibre DFM product line. The company also acquired Flomerics, a market leading provider of thermal simulation and analysis tools.

“We predicted a tough environment this year and we continue to see it. Despite this, the company performed better than our guidance for the quarter,” said Gregory K. Hinckley, president of Mentor Graphics. “We saw some bright spots in our newer products with Calibre DFM and automotive both performing quite well. Additionally, consulting was up 25% over last year. I view increased bookings in consulting as a leading indicator of an improving business climate. Lastly, our cost-saving initiatives are on track to meet or exceed our goals. Mentor is committed to delivering the most effective cost control program within the EDA industry.”

GUIDANCE

For fiscal 2009, the company continues to expect revenue growth of about 4% to $915 million, with non-GAAP earnings per share in the range of $1.05 - $1.10 and GAAP earnings per share in the range of $0.22 - $0.27. For fiscal third quarter, the company expects revenue of about $220 million with Non-GAAP earnings per share of approximately $.15 - $.20 and GAAP earnings of $0.03 - $0.08.

Financial tables

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About Mentor Graphics

Mentor Graphics Corporation (Nasdaq: MENT) is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world’s most successful electronics and semiconductor companies. Established in 1981, the company reported revenues over the last 12 months of about $850 million and employs approximately 4,500 people worldwide. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070- 7777. World Wide Web site: http://www.mentor.com/.