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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 1997
CADENCE DESIGN SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-10606 77-0148231
(Commission File No.) (IRS Employer Identification No.)
2655 SEELY ROAD
BUILDING 5
SAN JOSE, CALIFORNIA 95134
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (408) 943-1234
------------------
1.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
THIS CURRENT REPORT ON FORM 8-K CONTAINS FORWARD LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES, INCLUDING RISKS THAT THE UNITED STATES
FEDERAL TRADE COMMISSION (THE "FTC") MIGHT WITHDRAW ITS ACCEPTANCE OF THE
AGREEMENT DESCRIBED IN ITEM 5 BELOW, IN WHICH CASE THE FTC MIGHT REOPEN ITS
INVESTIGATION WITH RESPECT TO THE MERGER DESCRIBED IN THIS ITEM 2; THAT THE
INTEGRATION OF THE OPERATIONS, TECHNOLOGIES, PRODUCTS AND EMPLOYEES OF
CADENCE DESIGN SYSTEMS, INC., A DELAWARE CORPORATION ("CADENCE"), AND COOPER
& CHYAN TECHNOLOGY, INC., A DELAWARE CORPORATION ("CCT"), MIGHT NOT OCCUR AS
ANTICIPATED; THAT THE SYNERGIES EXPECTED TO RESULT FROM THE MERGER DESCRIBED
BELOW MIGHT NOT OCCUR AS ANTICIPATED; AND THAT MANAGEMENT'S ATTENTION MIGHT
BE DIVERTED FROM DAY-TO-DAY BUSINESS ACTIVITIES. ACTUAL RESULTS AND
DEVELOPMENTS MAY DIFFER MATERIALLY FROM THOSE DESCRIBED IN THIS CURRENT
REPORT. FOR MORE INFORMATION ABOUT CADENCE AND RISKS RELATING TO INVESTING
IN CADENCE, REFER TO CADENCE'S MOST RECENT REPORTS ON FORM 10-K AND FORM
10-Q, AND THE RECENT REGISTRATION STATEMENT ON FORM S-4 RELATED TO THE MERGER
DESCRIBED BELOW, AS FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
On May 7, 1997, Wyoming Acquisition Sub, Inc. ("Merger Sub"), which was a
wholly owned subsidiary of Cadence, was merged with and into CCT, pursuant to
an Agreement and Plan of Merger and Reorganization dated as of October 28,
1996 among Cadence, Merger Sub and CCT, as amended by the First Amendment
thereto dated as of December 17, 1996 (said Agreement and Plan of Merger and
Reorganization, as so amended, being referred to herein as the "Agreement").
The terms of the Agreement were determined through arms' length negotiations
between Cadence and CCT.
The merger of Merger Sub with and into CCT (the "Merger") became
effective at the time of the filing of a Certificate of Merger with the
Delaware Secretary of State on May 7, 1997 (the "Effective Time"). At the
Effective Time: (i) Merger Sub ceased to exist; (ii) CCT, as the surviving
corporation in the Merger, became a wholly owned subsidiary of Cadence; and
(iii) subject to the provisions of the Agreement relating to the payment of
cash in lieu of fractional shares, each share of CCT Common Stock, par value
$0.01 per share ("CCT Common Stock"), outstanding immediately prior to the
Effective Time (except for any such shares held by CCT as treasury stock and
any such shares held by Cadence or any subsidiary of Cadence or CCT, which
shares, if any, were canceled) was converted into the right to receive
eighty-five hundredths (0.85) of a share of Common Stock, $0.01 par value per
share, of Cadence ("Cadence Common Stock").
In addition, pursuant to the Agreement, at the Effective Time, all rights
with respect to CCT Common Stock under CCT stock options then outstanding,
were converted into and became rights with respect to Cadence Common Stock,
and Cadence assumed each such outstanding CCT stock option in accordance with
the terms of the stock option plan under which it was issued and the stock
option agreement by which it is evidenced. By virtue of the assumption by
Cadence of such CCT stock options, from and after the Effective Time: (i)
each CCT stock option assumed by Cadence may be exercised solely for Cadence
Common Stock; (ii) the number of shares of Cadence Common Stock subject to
each such CCT stock option is equal to the number of shares of CCT Common
Stock subject to such CCT stock option immediately
2.
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prior to the Effective Time multiplied by 0.85 (the exchange ratio in the
Merger), rounded down to the nearest whole share (with cash, less the
applicable exercise price, being payable for any fraction of a share); and
(iii) the per share exercise price under each such CCT stock option was
adjusted by dividing the per share exercise price under such CCT stock option
by 0.85 and rounding up to the nearest cent.
The former stockholders of CCT are receiving approximately 11,400,000
shares of Cadence Common Stock pursuant to the Merger. In addition,
approximately 1,900,000 shares of Cadence Common Stock may be issued in
connection with the exercise of the CCT stock options assumed by Cadence.
The Merger is intended to be a tax-free reorganization under the Internal
Revenue Code of 1986, as amended, and is expected to be accounted for as a
pooling of interests. A copy of the press release announcing the
consummation of the Merger is attached hereto as Exhibit 99.1.
CCT develops, markets and supports software tools that help designers
route the interconnections among electronic components on high performance
printed circuit boards and integrated circuits ("ICs").
ITEM 5. OTHER EVENTS.
On May 6, 1997, Cadence agreed to the issuance of a Consent Order by the
FTC in order to facilitate the closing of the Merger. By accepting the terms
of the Consent Order, Cadence agreed to expand its "Connections" third-party
software integration program to enable independent software vendors to
develop and market interfaces to Cadence's IC design tools. Cadence also
agreed to give the FTC prior notice of certain future acquisitions of IC
routing tool developers and vendors. The agreement between Cadence and the
FTC, the proposed Consent Order and certain related documents will be subject
to public comment for 60 days from the date such documents were placed on the
public record, after which time the FTC will decide whether to withdraw,
modify or make final its acceptance of Cadence's agreement with the FTC.
Such documents were placed on the public record on May 15, 1997. A copy of
the press release announcing Cadence's agreement with the FTC is attached
hereto as Exhibit 99.2. A copy of the agreement between Cadence and the FTC,
the proposed Consent Order and certain related documents is attached hereto
as Exhibit 99.3 and is also available at http://www.ftc.gov.
3.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
Exhibit No. Description
2.1 Agreement and Plan of Merger and Reorganization dated as of
October 28, 1996, among Cadence, Merger Sub and CCT
(incorporated by reference from Amendment No. 1 to the
Registration Statement on Form S-4 filed by Cadence with the
Securities and Exchange Commission on December 19, 1996 (No.
333-16779)).
2.2 First Amendment to Agreement and Plan of Merger and
Reorganization dated as of December 17, 1996, among Cadence,
Merger Sub and CCT (incorporated by reference from Amendment
No. 1 to the Registration Statement on Form S-4 filed by
Cadence with the Securities and Exchange Commission on
December 19, 1996 (No. 333-16779)).
99.1 Press Release dated May 7, 1997 announcing consummation of the
Merger.
99.2 Press Release dated May 6, 1997 announcing agreement between
Cadence and the FTC.
99.3 Agreement between Cadence and the FTC, proposed FTC Consent
Order and certain related documents.
4.
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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 hereunto duly authorized.
CADENCE DESIGN SYSTEMS, INC.
Dated: May 20, 1997 By: /S/ R.L. SMITH MCKEITHEN
--------------------------------------
R.L. Smith McKeithen
Vice President and General Counsel
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EXHIBIT 99.1
CADENCE COMPLETES MERGER WITH CCT
COMBINATION RESULTS IN IMMEDIATE SYNERGIES FOR CUSTOMERS FACING SYSTEM-CHIP
AND HIGH-SPEED PCB CHALLENGES
SAN JOSE, Calif., May 7/PRNewswire/-- CADENCE DESIGN SYSTEMS, INC. (NYSE:CDN)
announced that its merger transaction with Cooper & Chyan Technology, Inc.
(CCT) (Nasdaq: CCTI-NEWS) will be consummated today in a move that
immediately results in the industry's leading solution for the design of
sophisticated integrated circuits and high-speed printed circuit boards. The
merger will address one of the most critical aspects of next-generation
electronic product design: how the elements contained on leading edge silicon
chips and printed circuit boards are designed and connected together.
"Given the staggering speed of innovation in silicon process technology, we
are facing an impending productivity crisis in electronic product design"
said Joe Costello, president and CEO of Cadence. "The powerful combination of
intellectual capital resident in Cadence and CCT will enable us to radically
accelerate the delivery of innovative technology solutions necessary to
address these paramount issues."
Customers are benefiting today from the combination of complementary design
solutions already available from Cadence and CCT. With the completion of the
merger, the two companies can immediately focus on enhancing the
interoperability between their respective market leading tools. "The
technical and cultural synergies between Cadence and CCT make this a very
solid merger that will have immediate impact on the productivity of our
customers," said Jack Harding, former CEO of CCT, now a Cadence senior vice
president. "I am confident that the combination of our two organizations will
generate substantial leverage."
On Tuesday, the United States Federal Trade Commission (FTC) accepted
Cadence's agreement to comply with a Consent Order. The agreement calls for
Cadence to expand its Connections Program to enable independent software
developers to provide interfaces to Cadence's integrated circuit (IC) design
tools. The FTC has 60 days in which to withdraw, modify or make final its
acceptance of Cadence's agreement with the FTC, during which time the
agreement, the proposed Consent Order and related documents will be made
available for public comment.
Pursuant to the merger, each outstanding share of CCT common stock is being
exchanged for .85 shares of Cadence common stock. This results in a total
issuance of approximately 11.4 million Cadence shares in exchange for all
outstanding shares of CCT stock. Cadence is also assuming CCT employee stock
options, which are becoming options to purchase approximately 1.9 million
shares of Cadence common stock. As a result of the merger, CCT is becoming a
wholly-owned subsidiary of Cadence. The merger is expected to be accounted
for as a "pooling of interests."
This news release contains forward looking statements that involve risks and
uncertainties, including risks that the FTC might withdraw its acceptance of the
agreement with Cadence, in which case the FTC might reopen its investigation
with respect to the CCT merger; that the
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integration of the operations, technologies, products and employees of
Cadence and CCT might not occur as anticipated; that the synergies expected
to result from the merger might not occur as anticipated; and that
management's attention might be diverted from day-to-day business activities.
Actual results and developments may differ materially from those described in
this release. For more information about Cadence and risks arising when
investing in Cadence, refer to Cadence's most recent reports on Form 10-K and
Form 1O-Q, and recent registration statement on Form S-4 related to the
merger, as filed with the United States Securities and Exchange Commission.
Cadence Design Systems, Inc. provides comprehensive services and technology
for the product development requirements of the world's leading electronics
companies. Cadence is the largest supplier of software tools and
professional services used to accelerate and manage the design of
semiconductors, computer systems, networking and telecommunications
equipment, consumer electronics, and a variety of other electronic-based
products. With more than 3,500 employees and annual sales of $742 million in
1996, Cadence has sales offices and research facilities around the world.
The company is headquartered in San Jose, Calif. and traded on the New York
Stock Exchange under the symbol CDN. More information about the company can
be obtained from the World Wide Web at HTTP://WWW.CADENCE.COM.
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EXHIBIT 99.2
FTC GIVES GREEN LIGHT TO CADENCE/CCT MERGER
AGREEMENT TO CONSENT ORDER PAVES WAY FOR COMPLETION OF TRANSACTION
SAN JOSE, Calif., May 6 /PRNewswire/ -- CADENCE DESIGN SYSTEMS, INC.
(NYSE:CDN) today announced that it has agreed to the issuance of a Consent
Order by the United States Federal Trade Commission (FTC) in order to
facilitate the closing of its merger transaction with Cooper & Chyan
Technology, Inc. (CCT)(Nasdaq:CCTI-NEWS).
By accepting the terms of the Consent Order, Cadence has agreed to expand its
Connections third-party software integration program to enable independent
software vendors to develop and market interfaces to Cadence's integrated
circuit (IC) design tools. Cadence also agreed to give the FTC prior notice
of certain future acquisitions of IC routing tool developers and vendors. The
FTC has 60 days in which to withdraw, modify or make final its acceptance of
Cadence's agreement with the FTC, during which time the agreement, proposed
Consent Order and related documents will be made available for public
comment. Cadence expects to complete the CCT merger by the close of business
Wednesday, May 7, 1997.
"The FTC's order is completely consistent with the Cadence philosophy and the
direction in which we are moving," said Joe Costello, president and CEO of
Cadence. "Today's historic agreement with the FTC represents a true win-win
for us and our customers. It paves the way for a powerful combination of
technology between Cadence and CCT, as well as between Cadence and other EDA
vendors."
Cadence's Connections Program offers third-party companies an ability to link
their products with Cadence's tools and methodologies for electronic product
design. It currently has more than 100 members. Under the proposed FTC
Consent Order, companies developing commercial IC routing technology will
have the right to participate in the Connections Program on terms "no less
favorable than the terms applicable to any other participants."
"This formalizes an even stronger level of commitment to openness on our
part, and it's an openness that fits our solutions-oriented business model,"
said Costello. "The FTC has demonstrated its concern for fair competition
and we will fully comply with the conditions they have outlined for
completion of the merger."
A complete copy of the agreement between Cadence and the FTC, the Consent
Order (File No. 971-0033), and related documents, including an FTC press
release on the issuance of the Consent Order, will be available at
HTTP://WWW.FTC.GOV.
This news release contains forward looking statements that involve risks and
uncertainties, including risks that the FTC might withdraw its acceptance of
the agreement with Cadence, in which case the FTC might reopen its
investigation with respect to the CCT merger; that the integration of the
operations, technologies, products and employees of Cadence and CCT might not
occur as anticipated; that the synergies expected to result from the merger
might not occur as anticipated; and that management's attention might be
diverted from day-to-day business
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activities. Actual results and developments may differ materially from those
described in this release. For more information about Cadence and risks
arising when investing in Cadence, refer to Cadence's most recent reports on
Form 10-K, and Form 10-Q and recent registration statement on Form S-4
related to the merger, as filed with the United States Securities and
Exchange Commission.
Cadence Design Systems, Inc. provides comprehensive services and technology
for the product development requirements of the world's leading electronics
companies. Cadence is the largest supplier of software tools and
professional services used to accelerate and manage the design of
semiconductors, computer systems, networking and telecommunications
equipment, consumer electronics, and a variety of other electronic-based
products. With more than 3,500 employees and annual sales of $742 million in
1996, Cadence has sales offices and research facilities around the world.
The company is headquartered in San Jose, Calif. and traded on the New York
Stock Exchange under the symbol CDN. More information about the company can
be obtained from the World Wide Web at HTTP://WWW.CADENCE.COM.
<PAGE>
EXHIBIT 99.3
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the matter of
CADENCE DESIGN SYSTEMS, INC., File No. 971-0033
a corporation.
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission") having initiated an
investigation of the proposed acquisition by Cadence Design Systems, Inc.
("Cadence") of Cooper & Chyan Technology, Inc. ("CCT"), and it now appearing
that Cadence is willing to enter into an Agreement Containing Consent Order
("Agreement") to promote the development of open interfaces and to provide
for other relief,
IT IS HEREBY AGREED by and between Cadence, by its duly authorized
officers and its attorneys, and counsel for the Commission that:
1. Proposed respondent Cadence is a corporation organized, existing,
and doing business under and by virtue of the laws of the State of Delaware,
with its office and principal place of business located at 2655 Seely Road,
San Jose, California 95134.
2. Cadence admits all the jurisdictional facts set forth in the draft
of Complaint here attached.
3. Cadence waives:
(a) any further procedural steps;
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(b) the requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
(c) all rights to seek judicial review or otherwise to challenge
or contest the validity of the Order entered pursuant to this Agreement; and
(d) any claim under the Equal Access to Justice Act.
4. This Agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
Agreement is accepted by the Commission, it, together with the draft of
Complaint contemplated thereby, will be placed on the public record for a
period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance of
this Agreement and so notify Cadence, in which event it will take such action
as it may consider appropriate, or issue and serve its Complaint (in such
form as the circumstances may require) and decision, in disposition of the
proceeding.
5. This Agreement is for settlement purposes only and does not
constitute an admission by Cadence that the law has been violated as alleged
in the draft of Complaint here attached, or that the facts as alleged in the
draft Complaint, other than jurisdictional facts, are true.
6. This Agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the Commission's
Rules, the Commission may, without further notice to Cadence, (1) issue its
Complaint corresponding in form and substance with the draft of Complaint
here attached and its decision containing the following Order in disposition
of the proceeding and (2) make information public with respect thereto. When
so entered, the Order shall have the same
<PAGE>
force and effect and may be altered, modified or set aside in the same manner
and within the same time provided by statute for other orders. The Order
shall become final upon service. Delivery by the U.S. Postal Service of the
Complaint and decision containing the agreed-to Order to Cadence's address as
stated in this Agreement shall constitute service. Cadence waives any right
it may have to any other manner of service. The Complaint may be used in
construing the terms of the Order, and no Agreement, understanding,
representation, or interpretation not contained in the Order or the Agreement
may be used to vary or contradict the terms of the Order.
7. Cadence has read the proposed Complaint and Order contemplated
hereby. Cadence understands that once the Order has been issued, it will be
required to file one or more compliance reports showing that it has fully
complied with the Order. Cadence further understands that it may be liable
for civil penalties in the amount provided by law for each violation of the
Order after it becomes final.
ORDER
I.
IT IS ORDERED that, as used in this Order, the following definitions
shall apply:
A. "Cadence" means Cadence Design Systems, Inc., its directors,
officers, employees, agents and representatives, predecessors, successors,
and assigns; its subsidiaries, divisions, groups and affiliates controlled by
Cadence Design Systems, Inc., and the respective directors, officers,
employees, agents, and representatives, successors, and assigns of each.
B. "CCT" means Cooper & Chyan Technology, Inc., a company organized,
existing, and doing business under and by virtue of the laws of the State of
Delaware, with its office and
<PAGE>
principal place of business located at 1601 South De Anza Boulevard,
Cupertino, California 95014.
C. "Respondent" means Cadence.
D. "Commission" means the Federal Trade Commission.
E. "Acquisition" means the acquisition by Cadence of CCT.
F. "Independent Software Interface Programs" means Respondent's
Connections Program-TM-, any successor program thereto, or other licensing
program, promotional program or other arrangement by which Respondent enables
independent software developers to provide interfaces to Respondent's
Integrated Circuit Design Tools (including, e.g., licenses to the SKILL
Programming Language, the SKILL Development Environment, the Virtuoso Layout
Editor, and other intellectual property and documentation made available
through such programs).
G. "Integrated Circuit Design Tool" means electronic design automation
software for integrated circuit design.
H. "Integrated Circuit Routing Tool" means an Integrated Circuit
Design Tool for the automated routing of connections between electronic
components within an integrated circuit.
I. "Commercial Integrated Circuit Routing Tool" means an Integrated
Circuit Routing Tool marketed for sale or intended by the developer for use
other than solely for the developer's internal use.
II.
IT IS FURTHER ORDERED that:
A. Respondent shall permit developers of Commercial Integrated Circuit
Routing Tools to participate in Independent Software Interface Programs. The
terms by which developers
<PAGE>
of Commercial Integrated Circuit Routing Tools participate in Respondent's
Independent Software Interface Programs shall be no less favorable than the
terms applicable to any other participants in Respondent's Independent
Software Interface Programs.
B. The purpose of this Paragraph II is to enable independent software
developers to develop and sell Integrated Circuit Routing Tools for use in
conjunction with Respondent's Integrated Circuit Design Tools, in competition
with Integrated Circuit Routing Tools offered by Respondent, and to remedy
the lessening of competition resulting from the proposed Acquisition as
alleged in the Commission's Complaint.
III.
IT IS FURTHER ORDERED that, for a period of ten (10) years from the date
this Order becomes final, Respondent shall not, without prior notification to
the Commission, directly or indirectly:
A. Acquire any stock, share capital, equity, or other interest in any
concern, corporate or non-corporate, engaged in the development or sale of
Integrated Circuit Routing Tools in the United States within the year
preceding such acquisition; provided, however, that an acquisition of such
stock, share capital, equity or other interest will be exempt from the
requirements of this paragraph if it is solely for the purpose of investment
and Respondents will hold no more than ten (10) percent of the shares of any
class of security; or
B. Acquire any assets used or previously used (and still suitable for
use) in the development or sale of Integrated Circuit Routing Tools in the
United States; provided, however, that such an acquisition will be exempt
from the requirements of this paragraph if the purchase price is less than
$5,000,000 (five million dollars).
<PAGE>
The prior notifications required by this paragraph shall be given on the
Notification and Report Form set forth in the Appendix to Part 803 of Title
16 of the Code of Federal Regulations as amended (hereinafter referred to as
"the Notification"), and shall be prepared, transmitted and kept confidential
in accordance with the requirements of that part, except that: no filing fee
will be required for any such notification; notification shall be filed with
the Secretary of the Commission and a copy shall be delivered to the Bureau
of Competition; notification need not be made to the United States Department
of Justice; and notification is required only of Respondent and not of any
other party to the transaction. Respondent shall provide the Notification to
the Commission at least thirty (30) days prior to the consummation of any
such transaction (hereinafter referred to as the "initial waiting period").
If, within the initial waiting period, the Commission or its staff makes a
written request for additional information and documentary material,
Respondent shall not consummate the transaction until at least twenty (20)
days after complying with such request for additional information and
documentary material. Early termination of the waiting periods in this
paragraph may, where appropriate, be granted by letter from the Bureau of
Competition. Notwithstanding, prior notification shall not be required by
this paragraph for a transaction for which notification is required to be
made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C.
Section 18a.
IV.
IT IS FURTHER ORDERED that, within sixty (60) days after the date this
Order becomes final, Respondent shall submit to the Commission a verified
written report setting forth in detail a full description of the manner and
form in which it intends to comply, is complying, and has complied with
Paragraph II of this Order.
<PAGE>
V.
IT IS FURTHER ORDERED that, one year from the date this Order becomes
final, annually thereafter for the next nine (9) years, and at other times as
the Commission may require, Respondent shall file with the Commission
verified written reports setting forth in detail the manner and form in which
Respondent has complied and is complying with this Order.
VI.
IT IS FURTHER ORDERED that Respondent shall notify the Commission at
least thirty (30) days prior to any proposed change in the corporate
Respondent such as dissolution, assignment, sale resulting in the emergence
of a successor corporation, or the creation or dissolution of subsidiaries or
any other change in the corporation that may affect compliance obligations
arising out of the Order.
VII.
IT IS FURTHER ORDERED that, for the purpose of determining or securing
compliance with this Order, upon written request, Respondent shall permit any
duly authorized representative of the Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence, memoranda and
other records and documents in the possession or under the control of
Respondent relating to any matters contained in this Order; and
B. Upon five (5) days' notice to Respondent and without restraint or
interference from it, to interview officers, directors, or employees of
Respondent.
<PAGE>
VIII.
IT IS FURTHER ORDERED that this Order shall terminate ten (10) years
from the date this Order becomes final.
Signed this ___ day of ____________, 19_____.
FEDERAL TRADE COMMISSION CADENCE DESIGN SYSTEMS, INC.,
A CORPORATION
By:/s/ Robert N. Cook By:/s/ Joseph B. Costello
---------------------------------- -----------------------------------
Robert N. Cook Joseph B. Costello
Attorney Chief Executive Officer
Bureau of Competition
By:/s/ Morris A. Bloom By:/s/ Christopher O.B. Wright
---------------------------------- -----------------------------------
Morris A. Bloom Christopher O.B. Wright
Attorney Counsel for Cadence Design
Bureau of Competition Systems, Inc.
Cooley Godward LLP
Approved: Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306-2155
/s/ M. Howard Morse
- -------------------------------------
M. Howard Morse
Assistant Director
Bureau of Competition
/s/ George S. Cary
- -------------------------------------
George S. Cary
Deputy Director
Bureau of Competition
/s/ William J. Baer
- -------------------------------------
William J. Baer
Director
Bureau of Competition
<PAGE>
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the Matter of
CADENCE DESIGN SYSTEMS, INC., File No. 971-0033
a corporation.
INTERIM AGREEMENT
This Interim Agreement is by and between Cadence Design Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware
("Cadence"), and the Federal Trade Commission, an independent agency of the
United States Government, established under the Federal Trade Commission Act
of 1914, 15 U.S.C. Section 41, ET SEQ. (the "Commission").
PREMISES
WHEREAS, Cadence has proposed to acquire all of the voting securities of
Cooper & Chyan Technology, Inc. ("CCT") pursuant to the Agreement and Plan of
Merger and Reorganization by and between Cadence and CCT, dated October 28,
1996 ("the proposed Merger");
WHEREAS, the Commission is now investigating the proposed Merger to
determine if it would violate any of the statutes the Commission enforces;
WHEREAS, if the Commission accepts the Agreement Containing Consent
Order ("Consent Agreement") in this matter, the Commission will place it on
the public record for a period of at least sixty (60) days and subsequently
may either withdraw such acceptance or issue
<PAGE>
and serve its Complaint and decision in disposition of the proceeding
pursuant to the provisions of Section 2.34 of the Commission's Rules;
WHEREAS, the Commission is concerned that if an understanding is
not reached during the period prior to the final issuance of the
Consent Agreement by the Commission (after the 60-day public notice
period), there may be interim competitive harm;
WHEREAS, the entering into this Interim Agreement by Cadence shall
in no way be construed as an admission by Cadence that the proposed
Merger constitutes a violation of any statute; and
WHEREAS, Cadence understands that no act or transaction
contemplated by this Interim Agreement shall be deemed immune or exempt
from the provisions of the antitrust laws or the Federal Trade
Commission Act by reason of anything contained in this Interim
Agreement.
NOW, THEREFORE, Cadences agrees, upon the understanding that the
Commission has not yet determined whether the proposed Merger will be
challenged, and in consideration of the Commission's agreement that, at
the time it accepts the Consent Agreement for public comment, it will
grant early termination of the Hart-Scott-Rodino waiting period, as
follows:
1. Cadence agrees to execute the Consent Agreement and be bound
by the terms of the Order contained in the Consent Agreement, as if it
were final, from the date Cadence signs the Consent Agreement.
2. Cadence agrees that, from the date Cadence signs the Consent
Agreement until the first of the dates listed in subparagraphs 2.a. and
2.b., it will comply with the provisions of this Interim Agreement:
<PAGE>
a. ten (10) business days after the Commission withdraws its
acceptance of the Consent Agreement pursuant to the provisions of Section
2.34 of the Commission's Rules; or
b. the date the Order is final.
3. Cadence waives all rights to contest the validity of this Interim
Agreement.
4. For the purpose of determining or securing compliance with this
Interim Agreement, subject to any legally recognized privilege, and upon
written request, and on reasonable notice, Cadence shall permit any duly
authorized representative or representatives of the Commission:
a. access, during the office hours of Cadence and in the
presence of counsel, to inspect and copy all books, ledgers, accounts,
correspondence, memoranda, and other records and documents in the
possession or under the control of Cadence relating to compliance with
this Interim Agreement; and
b. upon five (5) days' notice to Cadence and without restraint
or interference from them, to interview officers, directors, or
employees of Cadence who may have counsel present, regarding any such
matters.
5. This Interim Agreement shall not be binding until accepted by the
Commission.
Dated: May 6, 1997.
FEDERAL TRADE COMMISSION CADENCE DESIGN SYSTEMS, INC.
By: /s/ Stephen Calkins By: /s/ R.L. Smith McKeithen
-------------------------------- --------------------------------
Stephen Calkins R.L. Smith McKeithen
General Counsel Vice President and
General Counsel
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UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the matter of
CADENCE DESIGN SYSTEMS, INC., Docket No.
a corporation.
COMPLAINT
Pursuant to the provisions of the Federal Trade Commission Act and
the Clayton Act, and by virtue of the authority vested in it by said
Acts, the Federal Trade Commission, having reason to believe that
Cadence Design Systems, Inc. proposes to merge with Cooper & Chyan
Technology, Inc. in violation of Section 5 of the Federal Trade
Commission Act, as amended, 15 U.S.C. Section 45, and in violation of
Section 7 of the Clayton Act, as amended, 15 U.S.C. Section 18, and it
appearing to the Commission that a proceeding in respect thereof would
be in the public interest, hereby issues its complaint stating its
charges as follows:
I. THE RESPONDENT
1. Respondent Cadence Design Systems, Inc. ("Cadence") is a
corporation organized, existing, and doing business under and by virtue
of the laws of the State of Delaware, with its office and principal
place of business located at 2655 Seely Road, San Jose, California
95134. Cadence has annual worldwide sales of approximately $741
million, nearly all of which is attributable to electronic design
automation products and services, and more than $70 million of which is
attributable to sales of integrated circuit layout environments.
<PAGE>
2. At all times relevant herein, the respondent has been, and is
now, a corporation as "corporation" is defined in Section 4 of the
Federal Trade Commission Act, 15 U.S.C. Section 44; and at all times
relevant herein, the respondent has been, and is now, engaged in
commerce as "commerce" is defined in Section 4 of the Federal Trade
Commission Act, 15 U.S.C. Section 44, and Section 1 of the Clayton Act,
15 U.S.C. Section 12.
II. THE PROPOSED MERGER
3. Cooper and Chyan Technology, Inc. ("CCT") is a corporation
organized, existing, and doing business under the laws of Delaware.
CCT has annual worldwide sales of approximately $37.6 million, of which
approximately $13 million is attributable to integrated circuit routing
tools and related services, with the balance attributable to printed
circuit board routing tools and related services.
4. Pursuant to an Agreement and Plan of Merger and
Reorganization dated October 28, 1996, Cadence plans to acquire control
of CCT by exchanging Cadence voting securities for the outstanding
voting securities of CCT in a transaction valued at more than $400
million (the "Proposed Merger").
III. THE RELEVANT MARKETS
5. Research, development, and sale of constraint-driven,
shape-based integrated circuit routing tools constitute one relevant
line of commerce within which to analyze the competitive effects of the
Proposed Merger. A constraint-driven, shape-based integrated circuit
routing tool is software used to automate the determination of the
connections between the electronic components within an integrated
circuit. An integrated circuit is a complex electronic
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circuit that consists of as many as five million or more miniature
electronic components --such as transistors, resistors, capacitors, and
diodes -- on a piece of semiconductor material smaller than a postage
stamp.
6. There are no acceptable substitutes for constraint-driven,
shape based integrated circuit routing tools. Routing tools based on
other technology cannot accommodate unique problems that arise at deep
submicron scales of integrated circuit design (less than .35 micron).
Furthermore, at deep submicron scales of design, it is not commercially
feasible to route integrated circuit designs without automation. Given
the sheer complexity and density of deep submicron integrated circuit
designs, as well as the intense time-to-market pressures faced by
semiconductor companies in today's fast-paced electronics industry,
hand routing is not an alternative for the timely and accurate design
of integrated circuits.
7. Integrated circuit layout environments also constitute a
relevant line of commerce in which to analyze the competitive effects
of the Proposed Merger. Integrated circuit layout environments are
software infrastructures within which integrated circuit designers
access integrated circuit layout tools, including constraint-driven,
shape-based routing tools. Integrated circuit layout tools and
integrated circuit layout environments are used during the physical
design stage of the integrated circuit design process. The physical
design stage is distinct from, and occurs after, the logical design
stage of the integrated circuit design process.
8. The relevant geographic market within which to analyze the
Proposed Merger is worldwide.
<PAGE>
IV. CONCENTRATION
9. CCT is currently the only firm with a commercially viable
constraint-driven, shape-based integrated circuit routing tool. At
least one other firm with constraint-driven, shape-based routing
technology is in the process of developing a constraint-driven,
shape-based integrated circuit routing tool.
10. Cadence is the dominant supplier of integrated circuit layout
environments. Cadence's leading competitor in the supply of integrated
circuit layout environments is the Avant! Corporation. Avant! and
several of its top executives have been charged criminally with
conspiracy and theft of trade secrets from Cadence.
V. ENTRY CONDITIONS
11. There are substantial barriers to entry in the market for
constraint-driven, shape-based integrated circuit routing tools.
Constraint-driven, shape-based integrated circuit routing tools are
technologically complex and difficult to develop. DE NOVO entry takes
approximately two to three and a half years for a company that already
possesses certain underlying core technology that can be used to
develop a constraint-driven, shape-based integrated circuit router
(such as shape-based routing technology for printed circuit boards).
Entry is likely to take even longer for a company that does not possess
such technology.
12. In order to achieve the necessary compatibility between the
integrated circuit layout tools that they use, integrated circuit
designers select integrated circuit layout tools that have interfaces
to a common integrated circuit layout environment.
13. Since Cadence is the dominant supplier of integrated circuit
layout environments, a constraint-driven, shape-based integrated
circuit routing tool that lacks an interface into a
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Cadence integrated circuit layout environment is less likely to be
selected by integrated circuit designers than a constraint-driven,
shape-based integrated circuit routing tool that possesses an interface
into a Cadence integrated circuit layout environment.
14. An integrated circuit layout environment is not likely to be
selected by integrated circuit designers unless a full set of
compatible integrated circuit layout tools is available. A full set of
integrated circuit layout tools includes at least placement, routing,
and analysis and verification tools, each of which must be able to
interface into the integrated circuit layout environment that the
integrated circuit designer has selected.
VI. EFFECTS OF THE PROPOSED MERGER ON COMPETITION
15. It is in Cadence's interest to make available to users of a
Cadence integrated circuit layout environment a complete a set of
integrated circuit layout tools, because to do so makes the Cadence
integrated circuit layout environment more valuable to integrated
circuit designers. Cadence historically has provided access to Cadence
integrated circuit layout environments to suppliers of complementary
integrated circuit layout tools chat Cadence does not supply.
16. Cadence does not, however, have incentives to provide access
to a Cadence integrated circuit layout environment to suppliers of
integrated circuit layout tools that compete with Cadence products.
Cadence historically has been reluctant to provide access to Cadence
integrated circuit layout environments to suppliers of integrated
circuit layout tools that compete with Cadence products.
17. Prior to the Proposed Merger, Cadence did not have a
commercially viable constraint-driven, shape-based integrated circuit
routing tool. As a result of the Proposed
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Merger, Cadence will own the only currently available commercially
viable constraint-driven, shape-based integrated circuit routing tool.
For this reason, the Proposed Merger will make Cadence less likely to
permit potential suppliers of competing constraint-driven, shape-based
integrated circuit routing tools to obtain access to Cadence
integrated circuit layout environments.
18. Without access to Cadence integrated circuit layout
environments, developers are less likely to gain successful entry into
the market for constraint-driven, shape-based integrated circuit
routing tools.
19. The Proposed Merger will make it more likely that successful
entry into the constraint-driven, shape-based integrated circuit
routing tool market would require simultaneous entry into the market
for integrated circuit layout environments. This need for dual-level
entry will decrease the likelihood of entry into the market for
constraint-driven, shape-based integrated circuit routing tools.
20. The Proposed Merger may substantially lessen competition or
tend to create a monopoly in the market for constraint-driven,
shape-based integrated circuit routing tools. The Proposed Merger may,
among other things, lead to higher prices, reduced service, and less
innovation.
VII. VIOLATIONS CHARGED
21. The Proposed Merger of Cadence Design Systems, Inc. and
Cooper & Chyan Technology, Inc., described in paragraph 4, violates
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.
Section 45 and Section 7 of the Clayton Act, as amended, 15 U.S.C.
Section 18.
<PAGE>
WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission
on this ________ day of __________ 1997, issues its complaint against
said respondent.
By the Commission.
Seal Donald S. Clark
Secretary
Issued:
