<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 31, 1994
CADENCE DESIGN SYSTEMS, INC.
- - -------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-10606 77-0148231
- - ---------------------------- ----------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
555 River Oaks Parkway, San Jose, CA 95134
- - -------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 943-1234
<PAGE> 2
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Pursuant to paragraph (a)(4) of Item 7 of Form 8-K, the following
financial statements were omitted from the disclosure contained in the Second
Quarter 1994 Form 10-Q but are filed herewith:
(i) Audited balance sheets of Redwood as of January 31, 1993 and
1994, the related audited statements of operations, stockholders' equity and
cash flows of Redwood for the years ended January 31, 1992, 1993 and 1994 and a
manually signed report of Arthur Andersen LLP with respect to the balance
sheets of Redwood as of January 31, 1993 and 1994 and the statements of
operations, stockholders' equity and cash flows for the years ended January 31,
1992, 1993 and 1994, which are attached as Exhibit 99.01 hereto;
(ii) Unaudited balance sheet of Redwood as of July 31, 1994 and the
related unaudited statements of operations and cash flows of Redwood for the
six month periods ended July 31, 1993 and 1994, which are attached as Exhibit
99.02 hereto.
(b) Pro Forma Financial Information.
Pursuant to paragraph (b)(2) of Item 7, the unaudited pro forma
condensed combined balance sheets of the Registrant and Redwood as of June 30,
1994 and the unaudited pro forma condensed combined statements of operations of
the Registrant and Redwood for the year ended December 31, 1993 and for the six
months ended June 30, 1994 are attached as Exhibit 99.03 hereto. The
Registrant's statement of income for the year ended December 31, 1993 has been
reclassified in response to comments received from the Securtities and Exchange
Commssion ("SEC") on such financial statements. In prior filings, the Company
had reported the operating results of a disposed division as a discontinued
operation in its statements of income. The SEC requested that the results of
operations and the loss on disposal of the division be reclassified as
components of continuing operations since the division was not deemed by the
SEC to be a major line of business. As a result, the Company has classified
the loss from operations of the disposed division within operating expenses and
the loss on disposal of $6.0 million within other expense in the accompanying
pro forma condensed combined statement of operations. The unaudited pro forma
condensed combined financial statements give effect to the merger of the
Registrant and Redwood on a purchase accounting basis. The pro forma condensed
combined balance sheet assumes the merger took place on June 30, 1994 and
combines the June 30, 1994 balance sheet of the Registrant with the July 31,
1994 balance sheet of Redwood. The pro forma combined statements of income
assumes that the merger took place as of the beginning of each company's most
recently completed fiscal year and combines the Registrant's historical results
for the year ended December 31, 1993 and the six months ended June 30, 1994
with the corresponding results for Redwood for its fiscal year ended January
31, 1994 and the six months ended July 31, 1994, respectively. The pro forma
information is presented for illustrative purposes only and is not necessarily
indicative of the operating results or financial position that would have
occurred had the acquisition of Redwood by the Registrant been consummated at
the beginning of the periods presented, nor is it necessarily indicative of
future operating results or financial position. These pro forma financial
statements are based on and should be read in conjunction with the historical
consolidated financial statements and the related notes thereto of the
Registrant and Redwood.
(c) Exhibits.
<TABLE>
<S> <C>
2.01 Agreement of Merger and Plan of Reorganization by and among Registrant,
Simon Software,
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
Inc. and Redwood dated as of July 8, 1994. (Filed as Exhibit 2.01 to the Registrant's Form 10-Q/A, Amendment
No. 1 to the Registrant's Form 10-Q, filed November 14, 1994 (the "Form 10-Q/A"), and incorporated herein by
reference).
2.02 Agreement of Merger dated as of August 1, 1994 between Redwood and CDS Acquisition Corporation. (Filed as
Exhibit 2.02 to the Registrant's Form 10-Q/A, Amendment No. 1 to the Registrant's Form 10-Q/A and incorporated
herein by reference).
+23.01 Consent of Arthur Andersen LLP.
+99.01 Audited balance sheets of Redwood as of January 31, 1993 and 1994, the related audited statements of
operations, stockholders' equity and cash flows of Redwood for the years ended January 31, 1992, 1993 and 1994
and a manually signed report of Arthur Andersen LLP with respect to the balance sheets of Redwood as of
January 31, 1993 and 1994 and the statements of operations, stockholders' equity and cash flows for the years
ended January 31, 1992, 1993 and 1994.
+99.02 Unaudited balance sheet of Redwood as of July 31, 1994 and the related unaudited statements of income
operations and cash flows of Redwood for the six month periods ended July 31, 1993 and 1994.
99.03 Unaudited pro forma condensed combined balance sheets of the Registrant and Redwood as of June 30, 1994 and
the unaudited pro forma condensed combined statements of operations of the Registrant and Redwood for the year
ended December 31, 1993 and for the six months ended June 30, 1994.
</TABLE>
+ Previously filed
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 9, 1995
CADENCE DESIGN SYSTEMS, INC.
By: /s/ H. Raymond Bingham
----------------------
H. RAYMOND BINGHAM
Executive Vice President
and Chief Financial Officer
4
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
2.01 Agreement of Merger and Plan of Reorganization by and among
Registrant, Simon Software, Inc. and Redwood dated as of July
8, 1994. (Filed as Exhibit 2.01 to the Registrant's Form 10-
Q/A, Amendment No. 1 to the Registrant's Form 10-Q, filed
November 14, 1994 (the "Form 10-Q/A"), and incorporated herein
by reference).
2.02 Agreement of Merger dated as of August 1, 1994 between Redwood
and CDS Acquisition Corporation. (Filed as Exhibit 2.02 to
the Registrant's Form 10-Q/A, Amendment No. 1 to the
Registrant's Form 10-Q/A and incorporated herein by
reference).
+23.01 Consent of Arthur Andersen LLP.
+99.01 Audited balance sheets of Redwood as of January 31, 1993 and
1994, the related audited statements of operations,
stockholders' equity and cash flows of Redwood for the years
ended January 31, 1992, 1993 and 1994 and a manually signed
report of Arthur Andersen LLP with respect to the balance
sheets of Redwood as of January 31, 1993 and 1994 and the
statements of operations, stockholders' equity and cash flows
for the years ended January 31, 1992, 1993 and 1994.
+99.02 Unaudited balance sheet of Redwood as of July 31, 1994 and the
related unaudited statements of operations and cash flows of
Redwood for the six month periods ended July 31, 1993 and
1994.
99.03 Unaudited pro forma condensed combined balance sheets of the
Registrant and Redwood as of June 30, 1994 and the unaudited
pro forma condensed combined statements of operations of the
Registrant and Redwood for the year ended December 31, 1993
and for the six months ended June 30, 1994.
</TABLE>
+ Previously filed
<PAGE> 1
EXHIBIT 99.03
Unaudited pro forma condensed combined balance sheets of the Registrant and
Redwood as of June 30, 1994 and the unaudited pro forma condensed combined
statements of operations of the Registrant and Redwood for the year ended
December 31, 1993 and for the six months ended June 30, 1994.
<PAGE> 2
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
reflect the acquisition by Cadence Design Systems, Inc. ("the Company") of
Redwood Design Automation, Inc. ("Redwood") in exchange for approximately
419,000 shares of the Company's common stock, valued at $15.50 per share. The
acquisition was accounted for using the purchase method of accounting. The pro
forma condensed combined balance sheet assumes the merger took place on June
30, 1994 and combines the June 30, 1994 balance sheet of the Company with the
July 31, 1994 balance sheet of Redwood. The pro forma combined statements of
operations assumes that the merger took place as of the beginning of each
company's most recently completed fiscal year and combines the Company's
statements of operations for the year ended December 31, 1993 and the six
months ended June 30, 1994 with Redwood's statements of operations for the year
ended January 31, 1994 and the six months ended July 31, 1994, respectively.
The pro forma statements of operations do not include the effect of any
nonrecurring charges directly attributable to the acquisition.
The pro forma combined statements of operations are not necessarily indicative
of operating results which would have been achieved had the merger been
consummated as of the beginning of such periods and should not be construed as
representative of future operations.
The pro forma combined condensed financial statements should be read in
conjunction with the historical consolidated financial statements and the
related notes thereto of the Company for the year ended December 31, 1993,
previously filed on Form 10-K/A and for the six months ended June 30, 1994,
previously filed on Form 10-Q and the financial statements of Redwood which are
included elsewhere herein.
<PAGE> 3
CADENCE DESIGN SYSTEMS, INC. AND REDWOOD DESIGN AUTOMATION, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1994
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR PURCHASE
--------------------------------- PRO FORMA
CADENCE REDWOOD DR CR BALANCES
------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
CURRENT ASSETS:
CASH AND CASH INVESTMENTS $ 68,387 $ 1,751 $ 0 $ 0 $ 70,138
SHORT-TERM INVESTMENTS 28,412 0 0 0 28,412
ACCOUNTS RECEIVABLE, NET 74,156 392 0 0 74,548
INVENTORIES 5,204 0 0 0 5,204
OTHER CURRENT ASSETS 15,185 103 0 0 15,288
-------- -------- ------- ------- --------
TOTAL CURRENT ASSETS 191,344 2,246 0 0 193,590
NET PROPERTY & EQUIPMENT 93,421 531 0 0 93,952
OTHER ASSETS 11,227 50 0 2,500 (2) 8,777
PURCHASED SOFTWARE & INTANGIBLES, NET 10,189 0 6,755 (1,3,4) 4,653 (5) 12,291
CAPITALIZED SOFTWARE 30,484 0 0 0 30,484
-------- -------- ------- ------- --------
TOTAL ASSETS $336,665 $ 2,827 $ 6,755 $ 7,153 $339,094
======== ======== ======= ======= ========
LIABILITIES:
ACCOUNTS PAYABLE $ 13,598 $ 207 $ 0 $ 0 $ 13,805
LOANS & LEASES - CURRENT 2,792 329 0 0 3,121
ACCRUED LIABILITIES 52,317 134 0 1,214 (4) 53,665
DEFERRED REVENUE 52,731 331 0 0 53,062
INCOME TAXES PAYABLE 5,548 0 0 0 5,548
-------- -------- ------- ------- --------
TOTAL CURRENT LIABILITIES 126,986 1,001 0 1,214 129,201
-------- -------- ------- ------- --------
LOANS & LEASES - LONG TERM 2,292 2,817 2,500 (2) 0 2,609
DEFERRED INCOME TAXES 2,202 0 0 0 2,202
LEASE LIABILITIES 9,819 0 0 0 9,819
OTHER LONG TERM LIABILITIES 2,558 0 0 0 2,558
-------- -------- ------- ------- --------
TOTAL LONG TERM LIABILITIES 16,871 2,817 2,500 0 17,188
-------- -------- ------- ------- --------
PUT WARRANTS 44,270 0 0 0 44,270
-------- -------- ------- ------- --------
STOCKHOLDERS' EQUITY (DEFICIT):
PREFERRED STOCK 0 10,900 10,900 (3) 0 0
COMMON STOCK 465 80 80 (3) 4 (1) 469
STOCK NOTES RECEIVABLE (3) (20) 0 20 (3) (3)
PAID-IN CAPITAL 209,602 0 0 4,546 (1) 214,148
TREASURY STOCK (76,750) 0 0 0 (76,750)
RETAINED EARNINGS (DEFICIT) 14,292 (11,951) 4,653 (5) 11,951 (3) 9,639
ACCUMULATED TRANSLATION ADJUSTMENT 932 0 0 0 932
-------- -------- ------- ------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 148,538 (991) 15,633 16,521 148,435
-------- -------- ------- ------- --------
TOTAL LIABILITIES & EQUITY $336,665 $ 2,827 $18,133 $17,735 $339,094
======== ========= ======= ======= ========
</TABLE>
(1) ENTRY TO RECORD THE ACQUISITION OF REDWOOD BY THE ISSUANCE OF
APPROXIMATELY 419,000 SHARES OF THE COMPANY'S COMMON STOCK
(2) ENTRY TO ELIMINATE NOTE RECEIVABLE AND LOAN
(3) ENTRY TO ELIMINATE THE STOCKHOLDERS' DEFICIT OF REDWOOD
(4) ENTRY TO RECORD OBLIGATIONS OF REDWOOD TO STOCKHOLDERS AND OTHERS PAYABLE
PRIOR TO THE CLOSING OF THE ACQUISITION AND FACILITY RELOCATION COSTS
(5) ENTRY TO WRITE-OFF IN-PROCESS RESEARCH AND DEVELOPMENT AS IT HAD NOT
REACHED TECHNOLOGICAL FEASIBILITY
W
<PAGE> 4
CADENCE DESIGN SYSTEMS, INC. AND REDWOOD DESIGN AUTOMATION, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
PRO FORMA
CADENCE REDWOOD DEBIT CREDIT RESULTS
-------- -------- ------- ------ ---------
<S> <C> <C> <C> <C> <C>
REVENUE:
PRODUCT $241,011 $ 312 $ 0 $0 $241,323
MAINTENANCE 127,612 0 0 0 127,612
-------- ------- ------- -- --------
TOTAL REVENUE 368,623 312 0 0 368,935
-------- ------- ------- -- --------
COST OF REVENUE:
PRODUCT 73,594 287 1,051 (1) 0 74,932
MAINTENANCE 15,757 0 0 0 15,757
-------- ------- ------- -- --------
TOTAL COST OF REVENUE 89,351 287 1,051 0 90,689
-------- ------- ------- -- --------
GROSS MARGIN 279,272 25 (1,051) 0 278,246
-------- ------- ------- -- --------
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT 69,088 2,380 0 0 71,468
MARKETING AND SALES 160,212 2,273 0 0 162,485
GENERAL & ADMINISTRATIVE 38,737 558 0 0 39,295
RESTRUCTURING COSTS 13,450 0 0 0 13,450
LOSS FROM OPERATIONS OF
DISPOSED DIVISION 6,200 0 0 0 6,200
-------- ------- ------- -- --------
TOTAL OPERATING EXPENSES 287,687 5,211 0 0 292,898
-------- ------- ------- -- --------
LOSS FROM OPERATIONS (8,415) (5,186) (1,051) 0 (14,652)
OTHER EXPENSE (4,364) (35) 0 0 (4,399)
-------- ------- ------- -- --------
NET LOSS $(12,779) $(5,221) $(1,051) $0 $(19,051)
======== ======= ======= == ========
NET LOSS PER SHARE $ (0.30) $ (0.44)
======== ========
WEIGHTED AVERAGE SHARES 43,060 419 43,479
======== ======= ========
</TABLE>
(1) ENTRY TO RECORD ONE YEAR'S AMORTIZATION OF CAPITALIZED PURCHASED
INTANGIBLES BASED ON AN ESTIMATED LIFE OF TWO YEARS.
<PAGE> 5
CADENCE DESIGN SYSTEMS, INC. AND REDWOOD DESIGN AUTOMATION, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1994
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
PRO FORMA
CADENCE REDWOOD DEBIT CREDIT RESULTS
-------- ------- ----- ------ ---------
<S> <C> <C> <C> <C> <C>
REVENUE:
PRODUCT $123,832 $ 419 $ 0 $ 0 $124,251
MAINTENANCE 73,989 15 0 0 74,004
-------- ------- ----- ---- --------
TOTAL REVENUE 197,821 434 0 0 198,255
-------- ------- ----- ---- --------
COST OF REVENUE:
PRODUCT 38,976 208 525 (1) 0 39,709
MAINTENANCE 7,134 0 0 0 7,134
-------- ------- ----- ---- --------
TOTAL COST OF REVENUE 46,110 208 525 0 46,843
-------- ------- ----- ---- --------
GROSS MARGIN 151,711 226 (525) 0 151,412
-------- ------- ----- ---- --------
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT 35,288 1,225 0 0 36,513
MARKETING AND SALES 78,442 1,181 0 0 79,623
GENERAL & ADMINISTRATIVE 20,406 325 0 0 20,731
PROVISION FOR SETTLEMENT OF
LITIGATION 10,054 0 0 0 10,054
-------- ------- ----- ---- --------
TOTAL OPERATING EXPENSES 144,190 2,731 0 0 146,921
-------- ------- ----- ---- --------
INCOME (LOSS) FROM OPERATIONS 7,521 (2,505) (525) 0 4,491
OTHER INCOME (EXPENSE) 790 (49) 0 0 741
-------- ------- ----- ---- --------
INCOME (LOSS) BEFORE INCOME TAXES 8,311 (2,554) (525) 0 5,232
PROVISION FOR INCOME TAXES (2,078) 0 0 769 (2) (1,309)
-------- ------- ----- ---- --------
NET INCOME (LOSS) $ 6,233 $(2,554) $(525) $769 $ 3,923
======== ======== ====== ==== ========
NET INCOME PER SHARE $ 0.14 $ 0.09
WEIGHTED AVERAGE SHARES 44,973 419 45,392
======== ===== ========
</TABLE>
(1) ENTRY TO RECORD SIX MONTHS AMORTIZATION OF CAPITALIZED PURCHASED
INTANGIBLES BASED ON AN ESTIMATED LIFE OF TWO YEARS.
(2) ENTRY TO ADJUST CONSOLIDATED TAX PROVISION TO THE COMPANY'S ANNUAL
EFFECTIVE RATE.
<PAGE> 6
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. In August 1994 the Company acquired all of the outstanding stock of Redwood
Design Automation, Inc. ("Redwood") for approximately 419,000 shares of the
Company's common stock. The purchase price also includes $2.5 million of
advances made to Redwood, prior to the acquisition, of which $.7 million was
offset against the cash of Redwood as of the closing date and the remaining
amount of $1.8 million was not repaid. Redwood was a development stage company
formed to design, develop and market software for use in electronic system
design. The acquisition was accounted for as a purchase. In connection with
the acquisition, net intangibles of $6.8 million were acquired of which $4.7
million was allocated to research and development in process and will be
charged to operations as the technology had not achieved technological
feasibility and had no alternative future use. The remaining $2.1 million will
be amortized over a useful life of two years. The pro forma combined condensed
financial statements reflect the combined operations of the two companies.
The pro forma combined condensed statements of operations for the year ended
December 31, 1993 and six months ended June 30, 1994 exclude the impact of the
one-time charge associated with expensing in-process research and development
as it had not reached technological feasibility. The charge is included in the
Company's results of operations for the quarter in which the transaction closed
which was the third quarter of 1994.
2. The pro forma combined condensed financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. However, the Company believes
that the disclosures are adequate to make the information presented not
misleading. These pro forma combined condensed financial statements should be
read in conjunction with the financial statements and the notes thereto
included in the Company's annual report on Form 10-K/A for the year ended
December 31, 1993 and the financial statements of Redwood included in this
filing.
3. Net income per share for each period is calculated by dividing net income
by the weighted average number of common stock and common stock equivalents
outstanding during the period plus approximately 419,000 shares of the
Company's common stock which was exchanged for all outstanding shares of
Redwood common and preferred stock. Common stock equivalents consist of
dilutive shares issuable upon the exercise of outstanding common stock options
and warrants. Net loss per share is calculated by dividing net loss by the
weighted average number of shares of common stock. Fully diluted net income
(loss) per share is substantially the same as primary net income (loss) per
share.
