June 28, 1999, Montreal, Canada - The privately held Matrox group of companies, which includes Matrox Electronic Systems Ltd. (MES) and Matrox Graphics Inc. (MGI), today announced their 23rd consecutive year of profitability with joint sales totaling US$550 million for the 1998/99 fiscal year, ended March 31, 1999. Of that total, Matrox Graphics accounts for US$473 million and Matrox Electronic Systems for US$77 million.

"Matrox's uninterrupted profitability is a testament to our commitment to provide the highest quality in high-performance products," said Lorne Trottier, president, Matrox Graphics. "We are pleased to report that the Video Products Group doubled sales revenues over the past fiscal year, and that despite the challenges to the graphics and imaging industries in 1998, we have shown a profit, maintained market share and strengthened our competitive edge. Both companies are now poised for continued profitability and growth in both the short and long term."

Customers included Compaq, Hewlett Packard, IBM, Dell, Siemens and Intergraph; numerous system integrators, including PREMIO, Mitsuba, MAXDATA, Olidata, AEE and UMAX; value-added resellers (VARs); and Taiwan-based motherboard manufacturers Gigabyte, Asustek, FIC and Mitac.

Under Matrox Electronic Systems, the Matrox Video Products Group doubled sales revenues over the previous year. As a leading designer and manufacturer of PC-based, broadcast quality digital video hardware, the Matrox Video Products Group attributes this growth primarily to the Matrox DigiSuite brand which in 1998 became the best-selling realtime nonlinear editing platform on Microsoft® Windows® NT with over 10,000 seats worldwide. In addition, the DigiSuite products were recognized with a total of 17 international awards for excellence and technological innovation.

Matrox Electronic Systems' imaging group, Matrox Imaging, saw fiscal year 1998/99 revenues increase over the previous year's very strong financial results. A leading designer and manufacturer of PC-based hardware and software for machine vision, image analysis and medical imaging, Matrox Imaging experienced sales growth despite declining capital spending by semiconductor and electronics manufacturers-industries that account for 50 per cent of the division's business. In contrast, several competitors reported significant decreases in revenues and net income and were forced to adopt cost-containment measures as a result of these industry slowdowns. Fiscal year 1998/99 saw Matrox Imaging enter into strategic OEM agreements with key robotics and semiconductor suppliers, including Adept Technology Inc., Seiko Instruments USA, Speedline Technologies Inc., and Semiconductor Technologies and Instruments Inc. (STI). Manufacturers cited a comprehensive product line, commitment to research and development, and high-caliber technical assistance as the reasons for making Matrox Imaging the vision component supplier of choice for their next generation systems.

Several key changes have been implemented over the last 12 months to position the company to achieve this. In an effort to reduce costs and maximize competitiveness, Matrox Graphics transferred the majority of manufacturing to Asia and Europe, with the bulk of manufacturing operations concentrated in China. This was complemented by a shift from 0.35 to 0.25 micron graphics chip technology, which reduced costs while increasing performance. Diversifying the company's product line and investing significantly in research and development also continue to sharpen Matrox Graphics' edge in an increasingly competitive marketplace.

The Matrox Video Products Group again expects strong revenue growth based on the addition of the Matrox DigiSuite DTV to its product line. DigiSuite DTV will meet the realtime editing needs of broadcasters and post-production facilities as they re-tool for the digital television era.

Matrox Imaging is forecasting increased revenue and profits in the next fiscal year. Innovative and cost-effective hardware and software solutions, including a new line of vision subsystems and continued refinements to an award-winning development library, ensure the division is well positioned to take advantage of increased capital equipment spending by the recovering semiconductor and electronics industries.

In the upcoming fiscal year, Matrox Networks expects to expand its network of Internet access solutions and anticipates increased sales through current and new contracts.

Matrox Electronic Systems Ltd. encompasses three divisions: the Matrox Video Products Group, Matrox Imaging and Matrox Networks. The Matrox Video Products Group designs and manufactures a complete line of open-architecture, PC-based, broadcast-quality digital video hardware and Windows NT development tools for OEMs, systems integrators and end-users in the television broadcast, cable, multimedia and post-production industries. Matrox Imaging is a leading designer and manufacturer of PC-based hardware and software for machine vision, image analysis and medical imaging applications, while Matrox Networks provides high performance networking solutions that include a full and versatile line of switches, hubs, NICs and Internet access products.

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