Centigram Communications Reports Second Quarter 1999 Results.

SAN JOSE, Calif.--(BUSINESS WIRE)--May 18, 1999--

Centigram Communications Corporation (NASDAQ:CGRM) reported net revenues of $20.8 million for the second quarter, ended May 1, 1999, compared to pro forma net revenues of $15.5 million for the second quarter ended May 2, 1998, and $20.3 million for the first quarter, ended January 30, 1999.

The net loss for the second quarter was $192,000 or $0.03 per share, compared with a pro forma net loss of $5.7 million or $0.81 per share for the second quarter of 1998, and a net loss of $679,000 or $0.10 per share for the first quarter of 1999. Pro forma net revenues and net loss exclude product sales and expenses of the company's CPE business unit that was sold to Mitel Corporation in May 1998.

"The second quarter represented the fifth consecutive period of sequential revenue growth and new product availability in our Service Provider business. We were pleased that gross margin improved again this quarter due to increased software content in our product shipments," reported Bob Puette, president and chief executive officer of Centigram.

"Our short message service software is the first in a series of new, easier-to-use voice messaging applications available fully integrated into our enhanced services platform, or standalone as a competitively-priced entry-level product for non-Centigram environments," he concluded.

Centigram Communications Corporation (NASDAQ:CGRM) is a leading global provider of advanced wireless (analog, GSM, PCS, TDMA, CDMA and paging companies) and wireline (PTTs, BOCs, service bureaus, independent telcos and cable telephony companies) messaging and communications solutions to network operators in the telecom service provider market. The Company delivers these communications solutions by integrating voice and facsimile on its Series 6 communications server based on industry standard hardware and software. Centigram is headquartered at 91 East Tasman Drive, San Jose, Calif., 95134. Phone [phone], fax [phone], or Web http://www.centigram.com. Centigram has sales and support offices in North America, Europe, Asia, Latin America, and Australia.

This press release contains forward-looking statements regarding the industry and the Company. Actual results could differ materially from those projected in any forward-looking statements. The statements could be affected by the Company's "Sales and Distribution" and other risks as reflected in their 10-K document for fiscal year ended October 31, 1998 or 10-Q document for the first quarter ended January 30, 1999 filed with the Securities and Exchange Commission. In addition, the company's future success will depend in part upon the ability of the Company to continue to introduce new features and products as the Company's markets evolve, new technologies become available, and customers demand additional functionality. All trademarks and registered trademarks are the property of their respective owners. -0-

CENTIGRAM COMMUNICATIONS CORPORATION

Consolidated Condensed Statements of Operations

(In thousands, except       Quarter Ended          Six Months Ended
 per share amounts -       May 1      May 2        May 1      May 2
 unaudited)                1999       1998         1999       1998

Net revenue               $20,835     $21,202     $41,068     $39,360
Costs and expenses:
Cost of goods sold          8,893      10,153      17,827      19,224
Research and development    4,189       5,115       8,342      10,087
Selling, general and
 administrative             8,630      11,081      16,950      21,822
Total costs and expenses   21,712      26,349      43,119      51,133
Operating (loss)             (877)     (5,147)     (2,051)    (11,773)
Other income and expense,
 net                          795         606       1,385       1,329
Income (loss) before income
 taxes                        (82)     (4,541)       (666)    (10,444)
Provision for income taxes    110          65         205         140
Net income (loss)           $(192)    $(4,606)      $(871)   $(10,584)
Basic and diluted income
 (loss) per share          $(0.03)     $(0.66)     $(0.13)     $(1.51)
Diluted earnings (loss)
 per share                 $(0.03)     $(0.66)     $(0.12)     $(1.52)

Shares used for basic
 and diluted EPS            6,332       6,996       6,452       7,006


Consolidated Condensed Statements of Operations Pro forma

(In thousands, except        Quarter Ended         Six Months Ended
 per share amounts -       May 1        May 2      May 1      May 2
 unaudited)                1999         1998       1999       1998

Net revenue               $20,835     $15,524     $41,068     $28,340
Costs and expenses:
Cost of goods sold          8,893       7,703      17,827      14,496
Research and development    4,189       4,718       8,342       9,305
Selling, general and
 administrative             8,630       9,313      16,950      18,289
Total costs and expenses   21,712      21,734      43,119      42,090
Operating (loss)             (877)     (6,210)     (2,051)    (13,750)
Other income and expense,
 net                          795         617       1,385       1,356
Income (loss) before income
 taxes                        (82)     (5,593)       (666)    (12,394)
Provision for income taxes    110          65         205         140
Net income (loss)           $(192)    $(5,658)      $(871)   $(12,534)
Basic and diluted income
 (loss) per share          $(0.03)     $(0.81)     $(0.13)     $(1.79)

Shares used for basic and
 diluted EPS                6,332       6,996       6,452       7,006


Consolidated Condensed Balance Sheets

                                   May 1    October 31
(In thousands - unaudited)         1999        1998

Cash, cash equivalents and
 short-term investments            $43,059   $57,190
Accounts receivable, net            16,303    14,566
Inventories                          2,998     5,297
Other assets                        16,829    18,924
Current liabilities                 20,041    30,769
Stockholders' equity                59,148    65,208