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QUICKTURN DESIGN SYSTEMS, INC.
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MENTOR GRAPHICS CORPORATION
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MENTOR GRAPHICS CALLS QUICKTURN'S PATENT DAMAGES CLAIMS
"GROSSLY INFLATED"
WILSONVILLE, OR, NOVEMBER 4, 1998--Mentor Graphics Corporation (Nasdaq:
MENT) today called the amount of damages being sought by Quickturn Design
Systems, Inc. (Nasdaq: QKTN) in its patent infringement litigation with Mentor
"grossly inflated." Mentor stated its belief that the actual damages suffered by
Quickturn, if Quickturn succeeds in proving infringement, are at most
approximately $1 million (or up to a total of $3 million if the damages are
trebled)--not $75 million (or $225 million if trebled) as recently claimed by
Quickturn.
Mentor stated that the report submitted by its damages expert in the patent
case of "at most $1,091,724" of actual damages before any trebling is consistent
with Quickturn's prior willingness to enter into a stipulation limiting its
damages before any trebling to $3.5 million.
Mentor further stated that Quickturn, after strongly opposing the public
release of the Mentor and Quickturn experts' reports, has finally agreed to the
release of redacted versions of the two reports, exhibits to the reports and the
correspondence relating to the proposed cap on damages. Mentor is making both
experts' reports available today on a special Mentor Web site at
http://www.mentorg.com/file and intends to add the exhibits and correspondence
to this Web site at a later date.
Dr. Walden C. Rhines, President and Chief Executive Officer of Mentor
Graphics, said: "We have always believed that Quickturn's damages claims were
grossly inflated and that the claims were only made to try to mislead Quickturn
stockholders into rejecting our $12.125 per share, premium, cash tender offer
for all outstanding shares of Quickturn common stock.
"Quickturn has finally stopped trying to prevent the Quickturn stockholders
from seeing the so-called bases for Quickturn's damage claims. We are confident
that Quickturn stockholders will conclude that the report of Mentor's damages
expert, who stated that damages -- in the event that Quickturn actually proves
that Mentor infringed its patents --are 'not more than $548,336, and at the very
most, $1,091,724,' is grounded in reality. In our view, Quickturn's damage
claims are nothing more than a red herring in the context of Mentor's all-cash
premium offer."
Dr. Rhines called attention to these excerpts from the Mentor damages
expert's report:
- "First, it is simply inherently incredible to claim, as [Quickturn's
expert] does, that Quickturn has and will lose $93,000,000 in profits in
the period 1996-2003 because Mentor sold five items of equipment having a
gross value of $3.5 million during the period 1995-1997. No credible
analysis can reach those damage numbers based on Mentor's limited sales."
- "Second, [Quickturn's expert's] 'lost profits' damages with respect to
projected sales of equipment and maintenance to Bull, UB Networks, Radix,
Motorola, and National Semiconductor, which he states are $30,973,700
(even after discounting to present value), completely ignores sworn third
party testimony from the purchasing authorities of four of the five
companies that they WOULD NOT have purchased Quickturn's products. One
simply cannot base a rational lost profits claim on sales of equipment
that the purchaser states it would not have bought."
- "Third, [Quickturn's expert's] 'price erosion' claim (which yields
additional lost profits of $62,208,300 before discounting) is based on a
theory that (a) Quickturn would have been able to keep its prices
substantially the same as it charged in 1996 (in spite of the common
observation that electronics and computer equipment prices fell
dramatically over the same period), and (b) Mentor's limited presence in
the market in 1995-1997 caused and will cause Quickturn to dramatically
reduce its prices over a seven year period--including a six year period
after Mentor disappeared from the United States market."
- "Fourth, [Quickturn's expert] ignores some basic data points concerning
the behavior of the parties during this litigation that cast his numbers
into great doubt, including the facts that (a) Quickturn stipulated, and
the ITC [International Trade Commission] agreed, that its damages with
respect to Mentor's late 1996 and 1997 imports (which include the Motorola
and National Semiconductor
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sales) were only $425,000, and (b) Quickturn was apparently willing to
stipulate in August-September 1998 that its damages in the Portland case
were $3.5 million. There is no way to reconcile a number in the tens of
millions with this conduct."
As previously announced, the Dealer Manager for the Mentor Graphics Offer is
Salomon Smith Barney. MacKenzie Partners, Inc., which is acting as proxy
solicitor for the Special Meeting and as the Information Agent for Mentor's
Offer, can be reached toll-free at 800-322-2885 or by collect call at
212-929-5500.
Mentor Graphics' Offer to Purchase and ancillary documents are available on
a Mentor Graphics World Wide Web site at http://www.mentorg.com/file.
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Contacts: Anne M. Wagner Roy Winnick/Todd Fogarty
Vice President, Marketing Kekst and Company
503/685-1462 212/521-4800
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