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Mentor Graphics Announces New $125 Million Revolving Credit Agreement

Provides Increased Flexibility for Stock Repurchases and Dividends

WILSONVILLE, Ore., April 26, 2011 - Mentor Graphics Corporation (NASDAQ: MENT) announced today that it had entered into a new $125 million unsecured revolving credit agreement (the “New Revolver”) with a syndicate of banks led by Bank of America, N.A. and including Citibank, N.A., KeyBank National Association, U.S. Bank National Association and HSBC Bank USA, N.A. The New Revolver, which has a term of four years, replaces a $100 million existing revolving credit agreement.

Under the New Revolver, Mentor Graphics has greater flexibility to repurchase its stock and pay dividends because the prior unsecured revolving credit agreement limited the company to repurchasing no more than $15 million in stock and prohibited the company from paying dividends. The New Revolver contains customary terms including the ability of the company to choose interest rates based on LIBOR or prime rate.

“We are delighted to enter into the new revolving credit agreement, which is the final piece in the refinancing of Mentor’s debt to allow us to return capital to our shareholders,” said Gregory K. Hinckley, President of the Company. “The revolving credit agreement it replaces was due to expire in June 2011 and we would have had difficulty reaching a new revolving credit agreement, much less achieving flexibility to return capital to our shareholders, so long as our old convertible debt was outstanding. It was this situation, together with favorable rates and terms, that led to the decision to undertake the $253 million convertible note offering that we completed earlier this month. With the new convertible financing in place, we were then able to enter into the new revolving credit agreement, which should allow us the flexibility to return $150 million or more of capital to our shareholders through repurchases of stock or payments of dividends over the next three years.”

Important Information
On March 31, 2011, the company filed a definitive proxy statement with the Securities and Exchange Commission (the “SEC”) in connection with the company’s upcoming 2011 annual meeting of shareholders. Shareholders are advised to read the company’s definitive proxy statement, and any other relevant documents filed by the company with the SEC, before making any voting or investment decision because they contain important information. The definitive proxy statement is, and any other relevant documents and other material filed with the SEC concerning the company will be, when filed, available free of charge at http://www.sec.gov and http://www.mentor.com/company/investor_relations. In addition, copies of the proxy materials may be requested from the company’s proxy solicitor, MacKenzie Partners, Inc., by telephone at 1-800-322-2885 or by email at proxy@mackenziepartners.com.

Forward-Looking Statements
Statements in this press release regarding the company’s outlook for future periods constitute “forward-looking” statements based on current expectations within the meaning of the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company or industry results to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: (i) weakness or recession in the US, EU, Japan or other economies; (ii) the company’s ability to successfully offer products and services that compete in the highly competitive EDA industry; (iii) product bundling or discounting of products and services by competitors, which could force the company to lower its prices or offer other more favorable terms to customers; (iv) possible delayed or canceled customer orders, a loss of key personnel or other consequences resulting from the business disruption and uncertainty of prolonged proxy fights, offers to purchase the company’s securities or other actions of activist shareholders; (v) effects of the increasing volatility of foreign currency fluctuations on the company’s business and operating results; (vi) changes in accounting or reporting rules or interpretations; (vii) the impact of tax audits by the IRS or other taxing authorities, or changes in the tax laws, regulations or enforcement practices where the company does business; (viii) effects of unanticipated shifts in product mix on gross margin; and (ix) effects of customer seasonal purchasing patterns and the timing of significant orders, which may negatively or positively impact the company’s quarterly results of operations, all as may be discussed in more detail under the heading “Risk Factors” in the company’s most recent Form 10-K or Form 10-Q. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements to reflect future events or developments.