Innoveda Divests of System-Level Design Software Business -- Reports First Quarter 2002 Results
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Innoveda Divests of System-Level Design Software Business -- Reports First Quarter 2002 Results

MARLBORO, Mass.--(BUSINESS WIRE)--April 23, 2002--Innoveda, Inc. (Nasdaq: INOV - news), a leading electronic design automation company, announced today the divestiture of its system-level design (SLD) software unit to Divestiture Growth Capital (DivestCap).

The SLD business unit will begin operations immediately as a separate company, under the name Summit Design, Inc., headquartered in Westlinn, Oregon. This new company will be managed by Larry Gerhard, chief executive officer, and Guy Moshe, former vice president and general manager of the SLD business unit at Innoveda. Financial terms were not disclosed.

"System-level design is an emerging market with new methodologies that require intense focus and commitment of resources, particularly in sales and engineering," said William J. Herman, chairman and chief executive officer, Innoveda. "It was in the best interest of our respective customers to complete this transaction and allow the two companies to concentrate on their core strengths. Innoveda is focused on PCB systems design with its proven, industry-leading solutions and the emerging automotive solutions segment."

"We are excited about the opportunities ahead of us and we are moving forward immediately to execute against our business plan," said Larry Gerhard, chief executive officer, Summit Design. "Because the products, infrastructure and resources already are in place, we can provide a seamless transition for customers and begin engaging new prospects."

With more than 30 years of senior management experience, Gerhard has been president, CEO and director of major electronics corporations including Enterprise Communications & Computing, Inc., Ventura Software and Decision Data, Inc. as well as vice president of engineering at Raytheon Data Systems.

Prior to joining Innoveda, Guy Moshe was a founder and director of marketing and sales at Israeli-based SEE Technologies. He also held positions at Daisy, worked as a design engineer in computerized vehicles at Aniam Maracoht Ltd., and managed the computerized process of all the Kibbutzim in Drom Hasharon in Israel.

"Divestiture Growth Capital's investment will catalyze growth opportunities and further differentiate Summit as a leading player in its market," said Charles Hale, Partner, Divestiture Growth Capital. "This transaction will be beneficial to both Summit's and Innoveda's customers and employees. We are extremely excited about our investment."

Innoveda Reports First Quarter Results

Innoveda reported its financial results for the first quarter, ended March 30, 2002. For the first quarter 2002, revenue was $15.7 million with an operating loss, before amortization, of $2.2 million. The net loss for the quarter was $3.1 million, or $0.08 per share. The economic climate and the company's restructuring in August 2001 contributed to a decline in year-over-year results. For the same period last year, Innoveda reported revenue of $27.3 million, operating income, before amortization, of $1.8 million and a net loss of $2.1 million, or $0.05 per share.

About Innoveda

Innoveda, Inc. (Nasdaq "INOV") is a worldwide leader in electronic design automation (EDA) technology, software and services for businesses in the consumer electronics, computer, telecommunications, automotive and aerospace industries. The company's innovative solutions are intended to empower people for mission-critical areas of the design process. Headquartered in Marlboro, Mass., Innoveda has sales offices and research centers worldwide. Additional information can be found at:

About Divestiture Growth Capital

DivestCap is a technology investment fund dedicated to buying, financing, and growing information technology divestitures. For the divestiture, DivestCap builds value by providing the active financial and operating expertise each investment needs to realize its potential. For the selling company, DivestCap creates shareholder value by structuring transactions quickly, fairly, and flexibly.

Forward-Looking Statements

This press release includes forward-looking statements that are subject to a number of risks and uncertainties. All statements, other than statements of historical facts, included in this press release including, without limitation, statements regarding Innoveda's financial projections for any period, strategy, future operations, financial position, prospects, plans, goals and objectives of management are forward-looking statements. When used in this press release, the words "will", "believe", "anticipate", "intend", "estimate", "expect", "project", "plan" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee future results, levels of activity, performance or achievements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future transactions or strategic alliances. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the availability of financial resources, management's efforts to reduce expenses in specific business areas or across the company, recent economic uncertainty, weakness in the business of our customers, Innoveda's ability to develop new products and market acceptance of those products, the effects of business combinations and dispositions and any related financial charges, Innoveda's ability to successfully integrate its business combinations, the cyclical nature of the electronics industry, the failure of Innoveda's quarterly results to meet market expectations, the intense competition Innoveda faces, and the other risks described in Innoveda's annual report on Form 10-K for the fiscal year ended December 29, 2001 as filed with the Securities and Exchange Commission on March 29, 2002, and the other public filings made by Innoveda with the SEC, which factors are incorporated herein by reference.


                                INNOVEDA, INC.
                       (in thousands, except per share data)

                                           First Quarter Ended
                                  March 30, 2002       March 31, 2001
                                  --------------       --------------
 Software                            $5,730                 $15,381
 Maintenance                          8,454                  10,352
 Services                             1,523                   1,525
                                    -------------          -----------
  Total revenue                      15,707                  27,258

Cost and expenses:
 Cost of software                     1,226                   1,759
 Cost of maintenance                  1,051                   1,025
 Cost of services                     1,329                   1,579
 Sales and marketing                  7,991                  11,288
 Research and development             4,920                   7,652
 General and administrative           1,359                   2,166
 Amortization of intangibles(1)       1,890                   4,702
 Amortization of stock compensation(1)  147                     146
                                     ---------------       -----------
  Total operating expenses           19,913                  30,317

  Operating loss                     (4,206)                 (3,059)

  Other expense                        (295)                    (18)
                                     ---------------       -----------
Loss before income tax benefit        (4,501)                (3,077)

Income tax benefit                    (1,440)                  (970)
                                     ----------------       ----------
Net loss                             $(3,061)                $(2,107)
                                     ================       ==========

Net loss per share:
 Basic and diluted                    $(0.08)                 $(0.05)
                                     ================        =========

Weighted average shares outstanding:
 Basic and diluted                     40,035                   39,036
                                     ================        =========
                                     ================        =========

(1)Operating income (loss)
  excluding amortization               $(2,169)                 $1,789
                                     ================         ========
                                     ================         ========

                          INNOVEDA, INC.
                          (in thousands)

                                March 30, 2002       December 29, 2001
                                --------------       -----------------


Current assets:
 Cash and cash equivalents          $8,597                  $7,704
 Accounts receivable, net           16,087                  21,876
 Prepaid expenses and other          2,347                   3,744
 Deferred income taxes               3,962                   3,960
                               -----------------          ------------
  Total current assets              30,993                  37,284

Equipment and furniture, net         4,264                   4,850
Capitalized software costs, net      2,415                   2,342
Purchased technology and other
 intangibles, net                   23,528                  25,404
Goodwill and other                   1,968                   2,412
                               -------------------         -----------
 Total assets                      $63,168                 $72,292
                               ===================         ===========
                               ===================         ===========


Current liabilities:
 Long-term debt, current portion   $4,875                   $4,000
 Capital lease obligations, current
  portion                             158                      270
 Accounts payable                   2,572                    3,648
 Accrued liabilities               14,960                   18,122
 Deferred revenue                  20,160                   20,776
                               -----------------       ---------------
                                   42,725                   46,816

Long-term debt                          -                    1,750
Other long-term liabilities         1,338                    1,322
Deferred income taxes               9,299                   10,013
                               ------------------      ---------------
                               ------------------      ---------------
 Total liabilities                 53,362                   59,901

Common stock                          406                      403
Treasury stock                     (1,663)                  (1,663)
Additional paid-in capital        117,663                  117,440
Notes due from stockholders          (932)                    (932)
Deferred compensation                (379)                    (526)
Accumulated deficit              (104,711)                (101,650)
Accumulated other comprehensive
 loss                                (578)                    (681)
                                --------------------   ---------------
                                --------------------   ---------------
Total stockholders' equity          9,806                    12,391

Total liabilities and
 stockholders' equity             $63,168                   $72,292
                                ==================     ===============

     Investor Contact: Kevin O'Brien
     Vice President
     Finance and Chief Financial Officer
     (508) 303-5253
     Innoveda Investor Relations
     (508) 303-5507
     Press Contact: Len Harmon
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