SAN JOSE, Calif. - March 25, 1998 - Mentor Graphics Corporation (NASDAQ:MENT) today announced an agreement with Microsoft Corp. that establishes its Microtec® Division as a one-stop shop for developers of Windows CE. Microtec will adapt its industry-standard XRAY® Debugger and optimize its C, C++ and Java Compilers (Microtec Toolkit) for use with Windows CE on PowerPC and other microprocessors. Microtec is the first vendor to provide single-source sales and support for licenses, system-level development tools, and integration services for the Windows CE platform.

The XRAY Debugger will provide substantial help to developers integrating Windows CE with their own custom hardware, while the Microtec Compilers provide the fine control over size and performance optimizations needed by high-volume, resource-sensitive embedded applications.

"Microtec's proven experience in combining embedded software development tools with real-time operating systems will provide a significant advantage in bringing Windows CE to the broad area of embedded systems design and development projects," said Paul Zorfass, embedded analyst, International Data Corporation. "Microtec is a leader in meeting embedded requirements. These products will provide a basis for enhancing and constructing tools to expand usage of Windows CE."

"Microsoft is pleased to sign on Microtec as a new licensee of the Windows CE operating system," said Tony Barbagallo, business marketing manager, Windows CE at Microsoft. "Microtec will not only license and distribute Windows CE, but will also provide system integration and consulting support. With their expertise and support, Windows CE will be easily accessible to developers extending Windows into the area of embedded systems. Specifically, Microtec's tools will complement the Microsoft Windows CE Embedded Toolkit for Visual C++ for developers wishing to adapt Windows CE to their own custom hardware."

Anne-Marie Larkin, vice president and director, system software, semiconductor products sector, Motorola, stated, "The combination of the new Microtec Toolkit for Windows CE with Motorola's PowerPC hardware enables developers to quickly take embedded Windows CE-based applications from design to deployment. This is key because of the time-to-market pressures in the embedded industry. Microtec's advanced, embedded-focused tools are another critical element making PowerPC the processor of choice for embedded Windows CE-based applications."

Pat Byrne, general manager, Colorado Springs Division, Hewlett-Packard said, "As a longtime partner of Microtec, we recognize the extensive capabilities of the XRAY Debugger and the exceptional value it brings to the Windows CE developer. We're pleased that working together, we bring the developers exceptional target connection with the H-P Probe."

Meets full range of embedded needs

Microtec brings a long standing, in-depth understanding of embedded operating systems to Windows CE. For more than 17 years, the company has sold its VRTX® real-time operating system (RTOS) to designers of embedded systems with mission-critical reliability requirements, significant resource constraints (power, form factor, memory), and those who require "real-time" application software determinism measured in microseconds, such as an automobile's engine control system or a telephone switch. Windows CE allows Microtec to incrementally address a new class of embedded applications. These are devices which require sophisticated graphical user interfaces or can leverage a high degree of compatibility and interoperability with application software running on a desktop version of Microsoft Windows. Examples include consumer electronics, handheld instruments, office equipment, point-of-sale systems and information kiosks.

Consulting and integration services for VRTX and Windows CE

Since being founded in 1975, Microtec has gained expertise in developing and refining its VRTX RTOS as well as the tools for bringing an operating system into a custom embedded hardware environment. Microtec will provide the tools and system integration services to do the same for Windows CE. Microtec's sales and field support will help embedded developers select the operating system that is appropriate for the type of application and target hardware that they wish to develop. In turn, Microtec's consulting and system integration services will aid customers with application designs for both VRTX and Windows CE.

"As the industry's leading supplier of software development tools to the embedded market, we're pleased to team with Microsoft and Motorola," says Walden (Wally) Rhines, Mentor Graphics president and CEO. "Microtec's tools for Windows CE are a natural extension of its toolkit, and the distribution of Windows CE provides a win for everyone."

Availability and pricing

Licenses for Windows CE will be available from Microtec in April. The Microtec Toolkit for Windows CE includes the XRAY Debugger and Microtec C, C++ and Java Compilers for Windows CE. It will be available for PowerPC processors in the third quarter of 1998. The Toolkit for Windows CE is priced at $4600, or in packages with production licenses for Windows CE starting at $7000.

For more information, please call Microtec at (800) 950-5554 or visit its Web site at http://www.mentorg.com/microtec.

The Microtec Division of Mentor Graphics Corporation is an ISO 9001-certified and leading supplier of integrated and flexible embedded software development tools, real-time operating system (RTOS) solutions and services to more than 50,000 users worldwide. Microtec's proven VRTX RTOS, industry-standard XRAY Debugger and optimizing Microtec C and C++ Compilers can be used individually or together as an integrated solution to develop embedded applications for telecommunications, data communications, medical, transportation, industrial control and consumer electronics equipment. Microtec's products are Year 2000 compliant. Founded in 1975, Microtec has its headquarters in San Jose, California, and has sales, customer support and manufacturing facilities worldwide. Mentor Graphics Corporation, a world leader in electronic hardware and software design solutions, reported revenues over the last 12 months of $455 million. Additional company and product information, including the Microtec Year 2000 Compliance Statement, is available on the World Wide Web at http://www.mentorg.com/microtec.

Microtec, XRAY and VRTX are registered trademarks of Mentor Graphics Corporation. Motorola is a trademark of Motorola Inc. PowerPC is a trademark of International Business Machines Corp., used under license therefrom. All other names mentioned are trademarks, registered trademarks or service marks of their respective companies.