<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarter ended December 28, 1996 or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________ to __________
COMMISSION FILE NUMBER 0-18623
-----------------------
IKOS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0100318
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19050 PRUNERIDGE AVE., CUPERTINO, CA 95014
(Address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(408) 255-4567
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK $.01 PAR VALUE 8,290,000
--------------------------- ---------
(Title of Class) (Outstanding as of December 28, 1996)
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<PAGE>
IKOS SYSTEMS, INC.
FORM 10-Q
QUARTER ENDED DECEMBER 28, 1996
INDEX
-----
Part I: Financial Information
Item 1: Financial Statements
PAGE
Consolidated Balance Sheets at
December 28, 1996 and September 28, 1996........... 3
Consolidated Statements of Income
for the three months ended
December 28, 1996 and December 30, 1995............ 4
Consolidated Statements of Cash Flows
for the three months ended
December 28, 1996 and December 30, 1995............ 5
Notes to Consolidated Financial Statements.......... 6
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations...... 7
Part II: Other Information
Item 6: Exhibits and Reports on Form 8-K.................... 12
Signatures.......................................... 15
2
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
IKOS SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
December 28, September 28,
1996 1996
----------- ------------
ASSETS (Unaudited) (1)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................................................. $ 13,852 $ 10,590
Short-term investments.................................................................... 10,341 14,638
Accounts receivable (net of allowances for
doubtful accounts of $426 and $271, respectively)....................................... 10,812 9,193
Inventories............................................................................... 3,780 3,514
Deferred tax assets....................................................................... 4,187 4,187
Prepaid expenses and other assets......................................................... 339 537
-------- --------
Total current assets.................................................................. 43,311 42,659
Equipment and leasehold improvements
Office and evaluation equipment......................................................... 3,208 3,088
Machinery and equipment................................................................. 5,943 5,738
Leasehold improvements.................................................................. 330 331
-------- --------
9,481 9,157
Less allowances for depreciation and amortization..................................... (5,804) (5,565)
-------- --------
3,677 3,592
Intangible assets (net of amortization of
$736 and $421, respectively)............................................................ 5,572 5,890
Deferred tax assets....................................................................... 1,127 1,125
Other assets.............................................................................. 200 205
-------- --------
$ 53,887 $ 53,471
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................................................... $ 2,594 $ 4,775
Accrued payroll and related expenses...................................................... 2,665 2,406
Accrued commissions....................................................................... 329 725
Income taxes payable...................................................................... 2,950 1,745
Other accrued liabilities................................................................. 994 496
Deferred maintenance revenues............................................................. 2,601 3,843
Current portion of long-term debt......................................................... 750 750
-------- --------
Total current liabilities............................................................. 12,883 14,740
Long-term debt, less current portion......................................................... 50 350
Accrued rent................................................................................. 231 237
Commitments
Stockholders' equity:
Preferred stock, $.01 par value; 10,000 shares
authorized, none issued and outstanding................................................. -- --
Common stock, $.01 par value; 25,000 shares
authorized, 8,290 and 8,179 shares
issued and outstanding, respectively.................................................... 83 82
Additional paid-in capital................................................................ 55,397 54,994
Accumulated deficit....................................................................... (14,757) (16,932)
-------- --------
Total stockholders' equity............................................................ 40,723 38,144
-------- --------
$ 53,887 $ 53,471
======== ========
</TABLE>
(1) Derived from audited financial statements
See notes to consolidated financial statements.
3
<PAGE>
IKOS SYSTEMS INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 28, December 30,
1996 1995
------- ------
<S> <C> <C>
Net revenues
Product.................................................................................... $11,852 $7,639
Maintenance................................................................................ 2,337 1,638
------- ------
Total net revenues........................................................................ 14,189 9,277
Cost of revenues
Product.................................................................................... 2,692 1,917
Maintenance................................................................................ 421 219
------- ------
Total cost of revenues.................................................................... 3,113 2,136
------- ------
Gross profit.............................................................................. 11,076 7,141
Operating expenses:
Research and development................................................................... 2,351 1,541
Sales and marketing........................................................................ 4,200 3,494
General and administration................................................................. 1,028 689
Amortization of intangibles................................................................ 315 --
------- ------
Total operating expenses.................................................................. 7,894 5,724
------- ------
Income from operations...................................................................... 3,182 1,417
Other income (expense):
Interest income............................................................................ 277 197
Interest expense........................................................................... -- (18)
Other...................................................................................... 31 29
------- ------
Total other income........................................................................ 308 208
------- ------
Income before provision for income taxes.................................................... 3,490 1,625
Provision for income taxes.................................................................. 1,315 250
------- ------
Net income.............................................................................. $ 2,175 $1,375
======= ======
Net income per share........................................................................ $0.25 $0.18
======= ======
Common and common equivalent shares used
in computing per share amounts............................................................ 8,856 7,519
======= ======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
IKOS SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents in thousands
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 28, December 30,
1996 1995
------- -------
<S> <C> <C>
Operating activities:
Net income........................................................................................ $ 2,175 $ 1,375
Adjustments to reconcile net income to net
cash provided by (used in ) operating activities:
Depreciation and amortization.................................................................... 557 243
Deferred tax assets.............................................................................. (2) --
Accrued rent..................................................................................... (6) --
Changes in operating assets and liabilities:
Accounts receivable.............................................................................. (1,619) 2,233
Inventories...................................................................................... (266) (309)
Prepaid expenses and other current assets........................................................ 198 140
Other assets..................................................................................... 5 (1)
Accounts payable................................................................................. (2,181) 681
Accrued payroll and related expenses............................................................. 259 22
Accrued commissions.............................................................................. (396) (529)
Income taxes payable............................................................................. 1,205 38
Other accrued liabilities........................................................................ 498 (314)
Deferred maintenance revenues.................................................................... (1,242) 814
------- -------
Net cash provided by (used in) operating activities.......................................... (815) 4,393
Investing activities:
Purchases of equipment and leasehold improvements................................................ (324) (494)
Purchase of short-term investments............................................................... (5,816) (5,505)
Maturities of short-term investments............................................................. 10,113 450
------- -------
Net cash provided (used in) investment activities............................................ 3,973 (5,549)
Financing activities:
Principal payments on long-term borrowings....................................................... (300) (206)
Sale of common stock............................................................................. 404 10,516
------- -------
Net cash provided by financing activities.................................................... 104 10,310
------- -------
Increase in cash and cash equivalents.............................................................. 3,262 9,154
Cash and cash equivalents at beginning of period................................................... 10,590 7,305
------- -------
Cash and cash equivalents at end of period......................................................... $13,852 $16,459
======= =======
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
IKOS SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The accompanying consolidated financial statements at December 28,
1996 and for the three month periods ended December 28, 1996 and December
30, 1995, have been prepared in conformity with generally accepted
accounting principles, consistent with those applied in, and should be read
in conjunction with, the audited consolidated financial statements for the
year ended September 28, 1996 included in the Form 10-K as filed with the
Securities and Exchange Commission on December 20, 1996. The unaudited
interim financial information reflects all normal recurring adjustments
which are, in the opinion of management, necessary for a fair statement of
results for the interim periods presented. The results for the three month
period ended December 28, 1996 are not necessarily indicative of results
expected for the full year.
2. Revenue Recognition
Product revenues, which include licensing and software revenues, are
generally recognized on shipment provided that no significant vendor or
post-contract support obligations remain outstanding and collection of the
resulting receivable is deemed probable. Insignificant vendor and post-
support obligations are accrued upon shipment. Revenue under maintenance
contracts is recognized ratably over the term of the related contract,
generally twelve months.
3. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market and consisted of (in thousands):
<TABLE>
<CAPTION>
December 28, September 28,
1996 1996
------------ --------------
<S> <C> <C>
Purchase parts $ 965 $ 631
Work-in-process 2,077 2,245
Finished goods 738 638
------ ------
Total inventories $3,780 $3,514
====== ======
</TABLE>
4. Net Income Per Share
Net income per share is based on the weighted average number of common
shares outstanding during the period. Common equivalent shares from
options have been included in the computation when dilutive.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-looking statements in this Quarterly Report on Form 10-Q are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that all forward-looking statements
involve risks and uncertainties, including, without limitation, those contained
under the section entitled "Factors That May Affect Future Results of
Operations" and other risks detailed from time to time in the Company's periodic
reports and other information filed with the Securities and Exchange Commission.
NET REVENUES
Net revenues for the first quarter of fiscal 1997 totaled $14,189,000, an
increase of approximately 53% over the same quarter in fiscal 1996. The increase
is primarily the result of the continued growth in sales of the Voyager product
line, increased maintenance revenues and initial commercial shipments of the
Company's new emulator product. For the three months ended December 28, 1996,
the Voyager product line contributed over 66% of net revenues while the
maintenance and emulator revenues were over 16% and 10% of net revenues,
respectively. These totals represented increases over the same prior year
period of 43% and 40% for maintenance and the Voyager product line,
respectively, and were the result of a larger customer base and continued
acceptance of the Company's simulation and acceleration solutions. The Company
began its initial commercial shipments of its new emulator product line during
the quarter.
International sales for the first quarter of fiscal 1997 increased approximately
194% over the same quarter in fiscal 1996 and accounted for over 43% of net
revenues for the quarter. The Company realized significant growth in
international revenues primarily in the Asian marketplace. The Company expects
international revenue to continue to approximate 40% of its total revenues.
GROSS PROFIT MARGINS
Gross profit margins improved slightly to approximately 78% of net revenues for
the first quarter of fiscal 1997, up from 77% during the first quarter of fiscal
1996. Gross profit margins are expected to be comparable in subsequent quarters
provided revenues of newer products continue to increase.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses in the first quarter of fiscal 1996 totaled
$2,351,000, representing an increase of approximately 53% over $1,541,000 of
expenses incurred in the same quarter of fiscal year 1996. The increase in
research and development expenses is primarily the result of increased headcount
and associated expenses. The Company expects research and development expenses
to increase in absolute dollars over the remainder of the year as the Company
continues its development of its future generation of products.
7
<PAGE>
SALES AND MARKETING EXPENSES
Sales and marketing expenses increased to $4,200,000 for the first quarter of
1997 or 20% when compared to $3,494,000 for the same period in fiscal 1996. The
increase is primarily the result of additional headcount and increased
commissions as a result of higher revenue levels, as well as increased expenses
for international operations. Sales and marketing expenses are expected to
continue to increase in absolute dollars over the next three fiscal quarters
reflecting increased headcount, commission expense and marketing expenses.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $1,028,000 in the first quarter of
fiscal 1997. This compares to $689,000 for the same period in fiscal 1996. The
increase is due to several factors including additional headcount, increased
investor relations expenses, professional services and profit sharing expenses.
General and administrative expenses are expected to remain relatively flat over
the next three fiscal quarters of fiscal 1997.
INCOME TAXES
The Company's first quarter provision for income taxes differs from the federal
statutory rate primarily due to benefits associated with its foreign sales
corporation, research credits, and foreign taxes assessed at an overall rate
lower than the federal statutory rate and costs associated with non deductible
goodwill amortization and state income taxes. The Company's 1996 provision for
income taxes for the first quarter consisted primarily of federal alternative
minimum tax, state and foreign taxes and Japanese withholding taxes. The tax
rate during this period was substantially below the federal statutory rate due
to the utilization of net operating loss carryovers for which no benefit had
previously been taken.
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
Potential Fluctuations in Quarterly Results - The Company's quarterly operating
- -------------------------------------------
results have in the past and may in the future vary significantly depending on
factors including the timing of customer development projects and purchase
orders, new product announcements and releases by the company and other
companies, gain or loss of significant customers, price discounting of the
Company's products, the timing of expenditures, customer product delivery
requirements, availability and cost of components or labor and economic
conditions generally and in the electronics industry specifically. Any
unfavorable change in these or other factors could have a material adverse
effect on the Company's operating results for a particular quarter. Operating
results in any period should not be considered indicative of the results to be
expected for any future period, and there can be no assurance that the Company's
net revenues will continue to increase, that its recent rate of quarterly
revenue and earnings growth will be sustained, or that the Company will remain
profitable in any future period.
Continued Acceptance and Development of the Company's Products - Substantially
- --------------------------------------------------------------
all of the Company's product revenues since fiscal 1993 have been derived from
the sale of its Voyager and Gemini simulation systems. There can be no assurance
that market acceptance of these products will continue. Because the market for
hardware-assisted simulation products is evolving, it is difficult to predict
with any assurance whether the market for hardware-assisted simulation products
will continue to expand. There can be no assurances that such market will expand
or, even if such market expands that the Company's products will achieve the
market acceptance required to maintain revenue growth and continued
profitability in the future.
8
<PAGE>
During the first fiscal quarter of 1997, the Company recorded its first
commercial shipment of its new emulation product. The success of the Company in
selling and supporting emulation products will depend on a variety of factors,
including timely and efficient implementation of manufacturing processes,
effective sales, marketing and customer service, and the absence of performance
problems or other difficulties that may require design modifications and related
expenses and may hinder or damage market acceptance of the products. While the
Company's emulation systems have been designed to provide cost and ease of use
advantages intended to broaden the market for logic emulation, there can be no
assurance that its products, if successfully developed, will be able to achieve
such goals. Moreover as the market for emulation products is new and evolving,
it is difficult to predict with any assurance whether the market for emulation
products will continue to expand.
Competition - The EDA industry is highly competitive and rapidly changing. The
- -----------
Company's products are specifically targeted at the emerging portion of the
industry relating to complex designs that the Company believes benefit from
simulation and emulation products. The Company experiences significant
competition in both the simulation and emulation product environments. The
Company expects competition in the market for verification tools to increase as
other companies attempt to introduce new products, such as cycle-based software
simulation products and product enhancements. Increased competition could result
in price reductions, reduced margins and loss of market share, all of which
could materially adversely affect the Company. In addition, current competitors
or other entities may develop other products that have significant advantages
over the Company's products. There can be no assurance that the Company will be
able to compete successfully against current and future competitors or that
competitive pressures faced by the Company will not materially adversely affect
its operating results.
New Products and Technological Change - The EDA industry is characterized by
- -------------------------------------
extremely rapid technological change in both hardware and software development,
frequent new product introductions, evolving industry standards and changing
customer requirements. The introduction of products embodying new technologies
and the emergence of new industry standards can render existing products
obsolete and unmarketable. The Company's future success will depend upon its
ability to enhance its current series of simulation systems and to design,
develop and support its future simulation and emulation products on a timely
basis. There can be no assurance that the Company will be successful in
developing and marketing product enhancements or new products that respond to
technological change or evolving industry standards or changing customer
requirements. If the Company is unable, for technological or other reasons, to
develop and introduce products in a timely manner in response to changing market
conditions or customer requirements, the Company's business, operating results
and financial condition will be materially and adversely affected. Moreover,
from time to time, the Company may announce new products or technologies that
have the potential to replace the Company's existing product offerings. There
can be no assurance that the announcement of new product offerings will not
cause customers to defer purchases of existing Company products, which could
adversely affect the Company's results of operations.
9
<PAGE>
Dependence on Electronics Industry - The Company is dependent upon the
- ----------------------------------
electronics industry and, in particular, new system and IC design projects. The
electronics industry is characterized by rapid technological change, short
product life cycles, fluctuations in manufacturing capacity and pricing and
margin pressures, all of which cause it to be volatile. As a result, the
electronics industry has historically experienced sudden and unexpected
downturns, at which time the number of new system and IC design projects
decrease. Because most of the Company's sales occur upon the commencement of new
projects for system and IC products, the Company is dependent upon the rate of
commencement of new system and IC design projects. Accordingly, negative factors
affecting the electronics industry could have a material adverse effect on the
Company's results of operations.
Dependence Upon Certain Suppliers - Certain key components, including certain
- ---------------------------------
proprietary application-specific integrated circuits and subassemblies used in
the Company's products are presently available from sole or limited sources.
The inability to develop alternative sources for these sole or limited source
components or to obtain sufficient quantities of these components could result
in delays or reductions in product shipments which could adversely affect the
Company's operating results. The Company generally purchases these components,
including semiconductor memories used in the Company's hardware simulators,
pursuant to purchase orders placed from time to time in the ordinary course of
business and has no supply arrangements with any of these source suppliers that
require the suppliers to provide components in guaranteed quantities or at set
prices. Any prolonged inability to obtain components or subassemblies in
sufficient quantities or quality or on favorable pricing or delivery terms, or
any other circumstances that would require the Company to seek alternative
sources of supply, could have a material adverse effect on the Company's
operating results and could damage the Company's relationships with its
customers.
Customer Concentration - A relatively limited number of customers have
- ----------------------
historically accounted for a substantial portion of the company's net revenues.
the company expects that sales of its products to a limited number of customers
will continue to account for a high percentage of net revenues for the
foreseeable future. The loss of a major customer or any reduction in orders by
such customers, including reductions due to market or competitive conditions in
the electronics or eda industries, would have an adverse effect on the Company's
results of operations. Moreover, the Company's ability to increase its sales
will depend in part upon its ability to obtain orders from new customers, as
well as the financial condition and success of its existing customers and the
general economy; there can be no assurance that such increases will occur.
LIQUIDITY AND CAPITAL RESOURCES
As of December 28, 1996, the Company had $24,193,000 in cash, cash equivalents
and short term investments which compares to $25,228,000 as of September 28,
1996.
Net cash used in operating activities was $815,000 for the three months ended
December 28, 1996. The $815,000 cash used in operations and was primarily due
to a decrease in deferred maintenance revenues, an increase in accounts
receivable due to higher net revenues and the pay down of accounts payable
offset by net income adjusted for depreciation and amortization and an increase
in income taxes payable.
10
<PAGE>
Net cash provided by investing activities was approximately $3,973,000 due
primarily to net maturities of approximately $10,113,000 of short-term
investments offset by the purchase of approximately $324,000 of equipment and
purchases of approximately $5,816,000 of short-term investments. The Company
expects capital expenditures to increase throughout the remainder of the year,
as the expected headcount additions will require additional workstations.
Net cash provided by financing activities for the three months ended December
28, 1996 was approximately $104,000 which was a result of exercise of options by
Company employees offset by the payment of $300,000 on long-term debt.
The Company's primary unused sources of funds at December 28, 1995, consisted of
$24,193,000 of cash, cash equivalents and short-term investments. The Company
believes that its present cash position and cash generated from operations will
be sufficient to meet its capital needs for at least the next twelve months.
11
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1-5. Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) INDEX TO EXHIBITS
Exh. No. Documentation Description Page
- -------- ------------------------- ----
2.1 Agreement and Plan of Reorganization among the
Company, VMW Acquisition Corporation and VMW dated May
14, 1996 (Incorporated by reference to Exhibit 2.1 of
the Company's registration statement on Form S-3
effective June 26, 1996).
3.1 Certificate of Incorporation (Incorporation by
reference to Exhibit 3.1 of the Company's registration
statement on Form S-1 effective July 25, 1990).
3.2 Certificate of Amendment of Certificate of
Incorporation filed May 5, 1994 (Incorporated by
reference to Exhibit 4.1 of the Company's registration
statement on Form S-2 effective October 12, 1995).
3.3 Certificate of Amendment of Certificate of
Incorporation filed April 24, 1995 (Incorporated by
reference to Exhibit 4.2 of the Company's registration
statement on Form S-2 effective October 12, 1995).
3.4 By-laws (Incorporated by reference to Exhibit 3.2 of
the Company's registration statement on Form S-1
effective July 25, 1990).
4.1 Rights agreement dated as of January 27, 1992 between
the Company and Manufacturers Hanover Trust Company of
California, Rights Agent. (Incorporated by reference
to Exhibit (C)1, in the Company's report on Form 8-K
filed February 10, 1992).
4.2 Registration rights agreement by and among the Company
and certain former stockholders of VMW (Incorporated
by reference to Exhibit 4.1 of the Company's
registration statement on Form S-3 effective July 26,
1996).
10.1 Lease Agreement for the Company's principal facility
dated March 20, 1992, between Ames Avenue Associates
and the Company, as amended. (Incorporated by
reference to Exhibit 10.1 of the Company's annual
report on 10-K for the year ending September 26,
1992).
12
<PAGE>
Exh. No. Documentation Description Page
- -------- ------------------------- ----
10.2 Form of Director and Officer Indemnity Agreement.
(Incorporated by reference to Exhibit 10.6 of the
Company's registration statement on Form S-1 effective
July 25, 1990).
10.3 1988 Stock Option Plan. (Incorporated by reference to
Exhibit 10.14 of the Company's registration statement
on Form S-1 effective July 25, 1990).
10.4 Patent Cross License Agreement dated May 17, 1989 with
Zycad Corporation (Incorporated by reference to
Exhibit 10.20 of the Company's registration statement
on Form S-1 effective July 25, 1990).
10.5 International Distributorship Agreement dated April
11, 1988, with C. Itoh & Co., Ltd. (Incorporated by
reference to Exhibit 10.24 of the Company's
registration statement on Form S-1 effective July 25,
1990). Confidential Treatment has been granted as to
certain portions of this Exhibit.
10.6 OEM Software License Agreement between CAD Language
Systems, Inc. and IKOS Systems, Inc. dated June 22,
1989 and amendment dated September 1991 (Incorporated
by reference to Exhibit 10.18 of the Company's Annual
Report for the year ended September 28, 1991).
10.7 Technology Transfer and Joint Development Agreement
with Racal-Redac, Inc. dated July 1, 1993
(Incorporated by reference to Exhibit 10.19 of the
Company's quarterly report on Form 10-Q for the
quarter ended July 3, 1993). Confidential Treatment
has been granted as to certain portions of this
Exhibit.
10.8 Settlement Agreement and Release dated March 31, 1994
between Racal Redac, Inc. and the Company
(Incorporated by reference to Exhibit 10.13 of the
Company's registration statement on Form S-2 effective
October 12, 1995).
10.9 Software License Agreement with Compass Design
Automation dated December 31, 1993 (Incorporated by
reference to Exhibit 10.17 of the Company's quarterly
report on Form 10-Q for the quarter ended January 1,
1994).
10.10 Agreement dated June 2, 1994, by and between the
Company and Gerald S. Casilli (Incorporated by
reference to Exhibit 10.18 of the Company's quarterly
report on Form 10-Q for the quarter ended July 2,
1994).
10.11 Agreement dated June 2, 1994, by and between the
Company and Daniel R. Hafeman (Incorporated by
reference to Exhibit 10.18 of the Company's quarterly
report on Form 10-Q for the quarter ended July 2,
1994).
13
<PAGE>
Exh. No. Documentation Description Page
- -------- ------------------------- ----
10.12 Agreement dated June 2, 1994, by and between the
Company and Stephen McLaughlin. (Incorporated by
reference to Exhibit 10.18 of the Company's quarterly
report on Form 10-Q for the quarter ended July 2,
1994).
10.13 Agreement dated June 2, 1994, by and between the
Company and Larry A. Melling (Incorporated by reference
to Exhibit 10.18 of the Company's quarterly report on
Form 10-Q for the quarter ended July 2, 1994).
10.14 Agreement dated June 2, 1994, by and between the
Company and Ramon A. Nunez (Incorporated by reference
to Exhibit 10.18 of the Company's quarterly report on
Form 10-Q for the quarter ended July 2, 1994).
10.15 Agreement dated June 2, 1994, by and between the
Company and Joseph W. Rockom (Incorporated by reference
to Exhibit 10.18 of the Company's quarterly report on
Form 10-Q for the quarter ended July 2, 1994).
10.16 The Company's 1995 Outside Directors Stock Option Plan
(Incorporated by reference to Exhibit 10.22 of the
Company's registration statement on Form S-2 effective
October 12, 1995).
10.17 Development and OEM Agreement for Verilog/IKOS Co-
simulation Interface dated August 26, 1994 by and
between the Company and Precedence Incorporated
(Incorporated by reference to Exhibit 10.24 of the
Company's registration statement on Form S-2 effective
October 12, 1995).
10.18 Amendment to OEM Agreement for the acquisition of
certain software technology, by and between Compass
Design Automation, Inc. and the Company dated December
27, 1995 (Incorporated by reference to Exhibit 10.20 of
the Company's quarterly report on Form 10-Q for the
quarter ended December 30, 1995).
10.19 Amended and Restated Employment Agreement dated August
1, 1995 by and between the Company and Ramon Nunez
(Incorporated by reference to Exhibit 10.21 of the
Company's quarterly report on Form 10-Q for the quarter
ended December 30, 1995).
10.20 Patent License Agreement dated December 22, 1993
between Massachusetts Institute of Technology and the
Company (Incorporated by reference to Exhibit 10.20 of
the Company's quarterly report on Form 10-Q for the
quarter ended June 29, 1996). Confidential treatment
has be granted as to certain portions of this Exhibit.
14
<PAGE>
Exh. No. Documentation Description Page
- -------- ------------------------- ----
10.21 The Company's 1995 Stock Option Plan (Incorporated by
reference to Exhibit 10.21 of the Company's Annual
Report on Form 10-K for the year ended September 28,
1996).
10.22 The Company's 1996 Employee Stock Purchase Plan
(Incorporated by reference to Exhibit 10.22 of the
Company's Annual Report on Form 10-K for the year ended
September 28, 1996).
11.1 Statement of Computation of Earnings per Share.
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K - Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IKOS SYSTEMS, INC.
------------------
Registrant
Date: February 10, 1997 /s/ Joseph W. Rockom
----------------- --------------------------
(JOSEPH W. ROCKOM, CFO)
Principal Financial Officer,
Duly Authorized Officer
15
<PAGE>
EXHIBIT 11.1
IKOS SYSTEMS INC.
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
December 28, December 30,
1996 1995
------------ ------------
<S> <C> <C>
Net income $2,175 $1,375
====== ======
Number of shares used in computing per share amounts:
Weighted average common shares outstanding 8,241 6,886
Common equivalent shares attributable to stock
options (treasury stock method) 615 633
------ ------
Total weighted average common shares outstanding 8,856 7,519
====== ======
Net income per share $0.25 $0.18
====== ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-START> SEP-29-1996
<PERIOD-END> DEC-28-1996
<CASH> 13,852
<SECURITIES> 10,341
<RECEIVABLES> 11,238
<ALLOWANCES> 426
<INVENTORY> 3,780
<CURRENT-ASSETS> 43,311
<PP&E> 9,481
<DEPRECIATION> 5,804
<TOTAL-ASSETS> 53,887
<CURRENT-LIABILITIES> 12,883
<BONDS> 0
0
0
<COMMON> 83
<OTHER-SE> 40,640
<TOTAL-LIABILITY-AND-EQUITY> 53,887
<SALES> 11,852
<TOTAL-REVENUES> 14,189
<CGS> 2,692
<TOTAL-COSTS> 3,113
<OTHER-EXPENSES> 7,894
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,490
<INCOME-TAX> 1,315
<INCOME-CONTINUING> 2,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,175
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
