Exhibit 99.1

               Mentor Graphics Announces Record Fourth
                  Quarter 2003 Revenue and Bookings

    WILSONVILLE, Ore.--(BUSINESS WIRE)--Jan. 7, 2004--In anticipation
of a presentation today at the Sixth Annual Needham & Co. Growth
Conference, Mentor Graphics Corporation (Nasdaq:MENT) announced that
its fourth quarter 2003 bookings and revenues had achieved record
levels, with revenues in excess of the $190 million previously
projected by the company. Bookings and revenues were particularly
driven by strength in its Calibre product line. Calibre bookings for
physical verification, extraction and resolution enhancement
technology more than tripled for the quarter compared to the same
period a year ago and grew more than 60% for the entire year. Book to
bill was significantly greater than one.
    The company noted that fourth quarter earnings before special
charges and amortization of intangibles (EBG) continue to be projected
to be approximately $.30 per share, because operating expenses were
adversely affected by both the strength of the Euro and significant
incentive payments to Calibre engineers triggered by the extraordinary
performance of the Calibre product line. Incentive payments of similar
magnitude are unlikely to occur in the future absent repeated
extraordinary performance by the Calibre product line.
    GAAP earnings, previously estimated to be $0.14 per share for the
fourth quarter, will be negatively affected by the foregoing factors
and pre-tax special charges totaling about $10 million or $0.14 per
share (on a pre-tax basis), which may be offset in part by the yet
unquantified effect of reevaluating U.S. deferred taxes charged upon
the 2002 transfer of IKOS intellectual property to a Mentor Graphics
foreign subsidiary.
    For the full year 2004, assuming the continuation of Euro/Dollar
conversion rates at current levels, Mentor Graphics continues to
forecast EBG of about $.80 per share and GAAP earnings, including the
impact of amortization of intangibles, of about $.50 per share. GAAP
earnings may be affected by the resolution of certain tax issues that
could reduce the effective tax rate, such as that described in the
preceding paragraph.
    The company emphasized that the foregoing results are preliminary
and are subject to adjustments upon final closing of financial results
and completion of the annual audit by independent accountants. Mentor
Graphics will release fourth quarter and full year 2003 results after
the close of the market on Tuesday, January 27, 2004.

    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
$650 million and employs approximately 3,600 people worldwide.
Corporate headquarters are located at 8005 S.W. Boeckman Road,
Wilsonville, Oregon 97070-7777; Silicon Valley headquarters are
located at 1001 Ridder Park Drive, San Jose, California 95131-2314.
World Wide Web site: http://www.mentor.com/.

    Calibre and IKOS are trademarks of Mentor Graphics Corporation.

    In the calculation of earnings, gross margin and operating
expenses before amortization of acquired intangibles and special
charges, Mentor Graphics excludes amortization of acquired intangibles
and write-offs of in-process R&D from acquisitions. Also excluded are
non-operating and non-recurring items classified as special charges
such as restructure expenses and asset impairments. These excluded
items are generally infrequent, less predictable and are often
non-cash in nature. Earnings before goodwill (EBG) income tax expense
calculation differs from a GAAP calculation as it assumes a normalized
effective tax rate based on multiple years of historical and forecast
future earnings. Mentor Graphics believes that excluding these items
provides investors with a representation of its core performance, and
a pro forma base line for assessing the future earnings potential of
Mentor Graphics.
    These pro forma measures should be assessed in conjunction with
GAAP earnings measures for a more complete understanding of the
Company's results. Since pro forma measures exclude certain items,
differences in earnings from GAAP can be significant; Mentor Graphics
management evaluates its performance under both measures for a
complete understanding of its results. Investors are encouraged to
review both measures for their evaluations and consider the GAAP
earnings measures as the most complete measure of Mentor Graphics
overall performance.
    Reconciliations between EBG and GAAP of Mentor Graphics' previous
projections for the fourth quarter of 2003 and full year 2004 were
included in the company's press release dated October 22, 2003
entitled "Mentor Graphics Reaffirms 2003 Outlook and Provides Initial
2004 Outlook" available on the company's website.

    Statements in this press release regarding the company's outlook
for future periods constitute "forward-looking" statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. 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) the Company's
ability to continue selling products and services during the
continuing slowdown in the electronics industry; (ii) the Company's
ability to manage expenses during the current slowdown in the
electronics industry; (iii) changes in accounting or reporting rules
or interpretations, changes in the tax environment worldwide,
limitations on repatriation of earnings, licensing and intellectual
property rights protection; (iv) the Company's ability to successfully
integrate and manage its future acquisitions; (v) the Company's
ability to successfully offer products and services that compete in
the highly competitive and dynamic EDA industry including the risk
that the Company's technology, products or inventory become obsolete;
(vi) the overall instability of diverse economies, including changes
in regional or worldwide economic or political conditions, government
trade restrictions, or war in the Middle East or elsewhere (vii)
effects of the increasing volatility of foreign currency fluctuations
on the Company's business and operating results, and (viii) effects of
unanticipated shifts in product mix on gross margin and unanticipated
shifts in geographic mix on the overall tax rate, all as may be
discussed in more detail under the heading "Factors That May Affect
Future Results and Financial Condition" 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 outlook
do not reflect potential impacts of mergers or acquisitions that have
not been announced or closed as of the time the statements are made.
Mentor Graphics 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.

    CONTACT: Mentor Graphics
             Ryerson Schwark, 503-685-1462
             (Public and Investor Relations)
             ry_schwark@mentor.com
             Dennis Weldon, 503-685-1462 (Treasurer)
             dennis_weldon@mentor.com