Diehl Graphsoft announces third quarter/nine months results.

COLUMBIA, Md.--(BUSINESS WIRE)--April 11, 1997--

Sales and net income up for both periods,

but net income continues to be affected

by heavy marketing costs for major new Windows product

Diehl Graphsoft Inc. (NASDAQ-Small Cap Market/DIEG) reported sales for the fiscal three months and nine months ended Feb. 28, 1997 and Feb. 29, 1996 respectively were ahead of the previous year's periods.

While net income for the third fiscal quarter and nine months was also ahead of last year's periods it was adversely affected by extensive marketing costs for its MiniCad for Windows and a softening for its Macintosh based products.

Sales for the third fiscal quarter were $1,405,611 up 33.9% from last year's figures of $1,049,988. Net income for the three months was $53,902 or $.02 per share versus $8,419 or $.00 per share on approximately the same amount of weighted average shares outstanding.

Sales for the nine month fiscal periods for 1997 and 1996 were $4,702,748 and $3,305,138, an increase of 42.3% for fiscal 1997. Net income for the same periods was $633,323 or $.20 per share and $394,817 or $.13 per share respectively.

Richard Diehl, president and chief executive officer of Diehl, in commenting on the results, said, "Our strategy to shift our primary growth emphasis to the Windows market sector remains on target.

"Our first windows product, MiniCad 6, introduced in July 1996, continues to receive a very positive response and the demand for it grows, both domestically and abroad. In the third quarter, it amounted to approximately 40% of our revenue base."

He continued, "Since we believe our primary growth will come from this sector, we have been very aggressively marketing this product to the broader Windows market even though the costs are having a short-term negative impact on margins. However, we believe these expenses are essential for building the company's long-term presence in this sector."

Mr. Diehl added, "In the past quarter we received a major order for this product from Japan and have continued its localization into the native language of additional overseas countries. This move has served as an important selling advantage for our international distributors."

In discussing the second and traditional market segment of the company's business, Mr. Diehl said, "Revenues from our Macintosh products, where we have a major position in our market sector with architectural professionals, continued to be sluggish in large part, we believe, because of Apple's recent sales decline and its current efforts at product reorganization.

"However, even with our current emphasis on the Windows product, over the long-term we still believe our sales from Apple products will play an important role for our company, especially from overseas markets where Macintosh is heavily utilized."

He concluded, "Diehl remains financially very strong with virtually no debt and more than $7 million in cash and marketable securities. Further, most of our marketing expenses continue to be paid from operating cash flows." Mr. Diehl noted that the company is the only one which has a mid-price CAD program available in both the Windows and Macintosh platform.

Diehl is a leading supplier and marketer of 2D/3D CAD software with Microsoft's Windows software, Apple Macintosh and Power Macintosh. The company's products are sold primarily to architectural, design and drafting professionals throughout the world through both direct sales and distributor and dealer channels. Approximately 50% of its sales are sold internationally. -0-

                          Diehl Graphsoft Inc.
                         Statements of Income
                              (Unaudited)

                      For the three months       For the nine months
                              ended                     ended
                      Feb. 28,     Feb. 29,     Feb. 28,     Feb. 29,
                        1997         1996        1997         1996

Sales                $1,405,611  $1,049,988   $4,702,748  $3,305,138
Cost of sales           369,004     345,072    1,093,610     864,344
                     ----------  ----------   ----------  ----------
Gross profit          1,036,607     704,916    3,609,138   2,440,794
                     ----------  ----------   ----------  ----------

Operating expenses:
  General and
    administrative      445,078     488,948    1,322,769   1,171,931
  Selling and marketing 554,516     249,691    1,419,242     709,120
  Research and
    development          54,239      42,061      165,571     168,296
                     ----------  ----------   ----------  ----------
  Total operating
    expenses          1,053,833     780,700    2,907,582   2,049,347
                     ----------  ----------   ----------  ----------

Income (loss) from
  operations            (17,226)    (75,784)     701,556     391,447
                     ----------  ----------   ----------  ----------

Other income and expenses:
  Interest income        99,535      90,956      287,224     245,123
  Gain (loss) on
    disposition
    of equipment           (457)     (6,753)        (457)     (6,753)
                     ----------  ----------   ----------  ----------
  Total other income
    and expenses         99,078      84,203      286,767     238,370
                     ----------  ----------   ----------  ----------

Income before income
  taxes                  81,852       8,419      988,323     629,817

Provision for income
  taxes                  27,950          --      355,000     235,000
                     ----------  ----------   ----------  ----------

Net income           $   53,902  $    8,419   $  633,323  $  394,817
                     ==========  ==========   ==========  ==========
Net income per share $      .02  $      .00   $      .20  $      .13
                     ==========  ==========   ==========  ==========
Weighted average
  number of shares
  outstanding         3,160,124   3,159,406    3,167,040   3,039,345
                     ==========  ==========   ==========  ==========

CONTACT: Diehl Graphsoft Inc.

Richard Diehl, president and CEO,

Joseph Schmelzle, CFO, 410/290-5114

or

The Neilson/Hetrick Group

Win Neilson, 717/671-0929