Strength in software bookings overcame weakness in emulation and consulting in the quarter, a pattern we see continuing through 2001. Customers continue to invest in key software tools like Calibre, ModelSim, FastScan and AutoActive RE that they require to get designs done, said Walden C. Rhines, chairman and CEO of Mentor Graphics. With ModelSim, for instance, we’ve been gaining share steadily, particularly in Verilog. Over 40% of our current sales are Verilog. Late in the quarter, we released ModelSim 5.5 with significantly improved Verilog performance which met with great initial customer acceptance and we have further improvements planned.

Mentor Graphics’ physical verification Calibre product line saw a strong quarter with expansion into 24 new accounts and a 50% growth in revenues. Calibre resolution enhancement technology (RET) revenues more than tripled. Also in the quarter Mentor Graphics signed a new programmable logic vendor for its ModelSim product. Mentor Graphics now has OEM relationships with virtually all of the programmable logic vendors.

Board Station RE, with AutoActive technology, had a strong start in the quarter winning in several accounts and demonstrating significant productivity improvements in automatic and interactive routing tasks. This product simplifies the difficult task of wiring together all of the components on a printed circuit board, significantly improving designer productivity. The company sees a several hundred million-dollar opportunity to upgrade both Mentor and its competitors’ installed base of an older, first generation router with a new best-in-class routing tool.

We continue to see a broadening of our customer base, said Gregory K. Hinckley, president and COO of Mentor Graphics. For instance, in the first quarter, the top ten customers accounted for just under 25% of our total bookings. In addition, we continue to see stronger and more stable pricing in both our new customer sales and our contract renewals.

Strong product revenue growth helped sustain gross margin at 79%. Expansion of the installed base, and a higher frequency of renewals among existing customers helped drive support revenue growth over 25% from the year ago quarter.

In the quarter, Mentor Graphics repurchased approximately 1.5M shares of stock.

SOURCE: COMPANY PRESS RELEASE