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Mentor Graphics Proceeds with Convertible Debt Offering

Offering Will Reduce Cash Interest Payments and Extend Debt Maturity

WILSONVILLE, Ore., March 31, 2011 — Mentor Graphics Corp. (NASDAQ: MENT) today announced that the company’s Board of Directors had affirmed its decision to proceed with the $253 million offering of 4.00% Convertible Subordinated Debentures due 2031 (the “4.00% Debentures”) announced on March 29, 2011.

The offering of the 4.00% Debentures allows the company to replace not only its outstanding 6.25% Convertible Subordinated Debentures due 2026 but also its $18.5 million secured term loan. The offering provides the following financial benefits:

• Reduces the cash interest rate on outstanding debentures from 6.25% to 4.00%;

• Increases the conversion price on Mentor’s debentures from $17.97 to $20.54 per share;

• Reduces dilution by using $25.0 million of proceeds to repurchase approximately 1.7 million shares;

• Extends the date on which debenture holders can force repayment by five years, from 2013 to 2018;

• Provides Mentor the ability to negotiate an amendment to extend the term of its existing revolving credit facility beyond 2013; and

• Effectively reduces interest costs from the company’s secured term loan from 4.81% to 4.00%.

The initial purchasers of the 4.00% Debentures exercised their over-allotment option to purchase $33 million of additional 4.00% Debentures on March 30, 2011. Commenting on the offering, Gregory K. Hinckley, President and Chief Financial Officer of Mentor, stated, “the high level of institutional investor interest in our new convertible debt offering resulted in attractive terms for the company and demonstrated strong investor support for Mentor’s business strategy and long-term prospects.”

The company also announced that its Board has rejected Carl Icahn’s stalking horse loan proposal that was received on the night of March 29, 2011 after the company had priced its 4.00% Debentures offering. The Board noted that Mr. Icahn’s last-minute debt financing proposal lacked detail on important terms. To the extent that proposed basic terms were provided, the Board noted that the Icahn proposal had a higher interest rate and found that the Icahn proposal for only a two and one half year maturity would interfere with the company’s ability to negotiate a meaningful extension of its revolving credit facility that is set to expire in June 2011, creating unnecessary risk in the company’s capital structure. Mr. Icahn’s proposal was also not a binding commitment. Moreover, prior to the launch of the 4.00% Debentures offering, Mentor’s Board carefully had evaluated the merits of a non-convertible debt financing as compared to a convertible debt financing and concluded that the latter was the more appropriate course of action. For these and other reasons, the Board affirmed that it was in the best interests of the company and its shareholders that the company proceed with the offering of its 4.00% Debentures.

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 electronic, semiconductor and systems companies. Established in 1981, the company reported revenues over the last 12 months of about $915 million. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777. World Wide Web site: http://www.mentor.com/.

(Mentor Graphics and Mentor are registered trademarks of Mentor Graphics Corporation. All other company or product names are the registered trademarks or trademarks of their respective owners.)

Important Information

This press release may be deemed to be solicitation material in respect of the solicitation of proxies from shareholders in connection with the company's upcoming 2011 annual meeting of shareholders (the "2011 Annual Meeting"). Shareholders are advised to read the company's definitive proxy statement related to the 2011 Annual Meeting and any other relevant documents filed by the company with the Securities and Exchange Commission (the "SEC") when they become available because they will contain important information. The definitive proxy statement, 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.

Information Regarding Participants

The company, its directors and certain of its executive officers and employees identified in its preliminary proxy statement filed with the SEC on March 28, 2011 may be participants in the solicitation of proxies from shareholders in connection with the 2011 Annual Meeting. Information about the directors and other individuals and their interests is available in the preliminary proxy statement (and will be available in the definitive proxy statement to be filed with the SEC), a free copy of which may be obtained as described above.

Forward-Looking Statements

Statements in this press release regarding the company's guidance 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. In addition, statements regarding guidance do not reflect potential impacts of mergers or acquisitions that have not been announced or closed as of the time the statements are made. 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.