<PAGE>
- --------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended Commission file number
MARCH 31, 1997 0-19730
-------------- -------
VIEWLOGIC SYSTEMS, INC.
-----------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 04-2830649
-------- ----------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
293 BOSTON POST ROAD WEST
MARLBORO, MASSACHUSETTS 01752-4615
- ----------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (508)480-0881
-----------------------------------------------------
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
--------- ----------
The number of shares outstanding of each of the issuer's
classes of common stock, as of:
DATE CLASS OUTSTANDING SHARES
April 30, 1997 Common stock, $.01 par value 16,585,318
<PAGE>
VIEWLOGIC SYSTEMS, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <S> <C>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Condensed Consolidated Statements of
Operations for the Three Months Ended
March 31, 1997 and 1996 1
Condensed Consolidated Balance Sheets
as of March 31, 1997 and December 31, 1996 2
Condensed Consolidated Statements of
Cash Flows for the Three Months Ended
March 31, 1997 and 1996 3
Notes to Condensed Consolidated
Financial Statements 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS. 6
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 11
SIGNATURES 12
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
VIEWLOGIC SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended March 31,
----------------------
1997 1996
---- ----
<S> <C> <C>
Revenue:
Software $19,446 $17,450
Services and other 13,125 11,362
------- -------
Total revenue 32,571 28,812
------- -------
Costs and expenses:
Cost of software 2,634 2,324
Cost of services and other 3,611 3,249
Selling and marketing 14,719 14,016
Research and development 7,958 6,173
Purchased research and development 5,500
General and administrative 2,174 2,489
------- -------
Total operating expenses 36,596 28,251
------- -------
Income (loss) from operations (4,025) 561
------- -------
Other income:
Interest income, net 533 385
Other income, net 1,658 44
------- -------
Total other income 2,191 429
------- -------
Income (loss) before income taxes (1,834) 990
Provision for income taxes 1,411 381
------- -------
Net income (loss) ($3,245) $609
======= =======
Income (loss) per common share:
Net income (loss) ($0.19) $0.04
======= =======
Weighted average number of common
and common equivalent shares
outstanding 17,438 16,883
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
1
<PAGE>
VIEWLOGIC SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- -----------
(unaudited)
<S> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $32,731 $41,297
Marketable securities 20,813 20,482
Accounts receivable (less allowance
for doubtful accounts, $1,888 in
1997 and $1,503 in 1996) 27,846 32,507
Prepaid expenses and other 6,447 6,779
Deferred income taxes 303 302
------- -------
Total current assets 88,140 101,367
------- -------
Marketable securities - non-current 6,992 5,565
------- -------
Property and equipment:
Equipment 27,108 25,360
Furniture and fixtures 3,760 3,625
------- -------
Total 30,868 28,985
Less accumulated depreciation 16,389 15,236
------- -------
Property and equipment - net 14,479 13,749
------- -------
Other assets:
Capitalized software costs - net 5,939 5,724
Purchased technology - net 3,037 2,261
Goodwill - net 2,401 1,582
Deposits and other 1,053 961
------- -------
Total other assets 12,430 10,528
------- -------
Total $122,041 $131,209
======= =======
Liabilities and stockholders' equity:
Current liabilities:
Current portion of capital lease
obligations $71 $32
Accounts payable 2,401 3,232
Accrued compensation 6,291 10,684
Accrued expenses 5,903 8,551
Deferred revenue 23,085 20,323
Deferred income taxes 1,304
------- -------
Total current liabilities 37,751 44,126
------- -------
Deferred income taxes 4,471 4,609
Capital lease obligations 231
Stockholders' equity:
Common stock, $.01 par value 176 174
Additional paid-in capital 75,722 73,944
Retained earnings 15,169 18,414
Unrealized holding gains, net of tax 575 1,470
Cumulative translation adjustment (1,486) (960)
------- -------
90,156 93,042
Less: Treasury stock, at cost (10,568) (10,568)
------- -------
Total stockholders' equity 79,588 82,474
------- -------
Total $122,041 $131,209
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
VIEWLOGIC SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($3,245) $609
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Purchased research and development 5,500
Depreciation 1,322 1,168
Gain on sale of investment (1,493)
Amortization of capitalized software
and purchased technology 926 626
Amortization of goodwill 88 58
Deferred income taxes (1)
Change in assets and liabilities:
Accounts receivable 4,661 3,158
Prepaid expense and other 402 (654)
Accounts payable (833) (287)
Accrued compensation (4,449) (980)
Accrued expenses (2,795) (1,335)
Deferred revenue 2,162 3,180
------- -------
Net cash provided by operating
activities 2,245 5,543
------- -------
Cash flows from investing activities:
Purchase of marketable securities (7,647) (6,287)
Proceeds from sale of marketable
securities 5,949 6,078
Expenditures for property and equipment (1,600) (1,593)
Capitalized software costs (917) (707)
Increase in deposits and other (89) (3)
Purchase of Eagle Design
Automation, Inc. net of cash (6,573)
------- -------
Net cash used in investing
activities (10,877) (2,512)
------- -------
Cash flows from financing activities:
Proceeds from issuance of common stock 904 743
Proceeds from exercise of stock options 876 60
Repurchase of common stock (3,466)
Principal payment of capital lease
obligations (35) (27)
Repayment of notes to former
Silerity shareholders (2,307)
Repayment of foreign tax grant (1,304)
------- -------
Net cash provided by (used in)
financing activities 441 (4,997)
------- -------
Effect of exchange rate changes on cash (375) (190)
------- -------
Net decrease in cash and cash equivalents (8,566) (2,156)
Cash and cash equivalents, beginning of
the period 41,297 34,387
------- -------
Cash and cash equivalents, end of the
period $32,731 $32,231
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
VIEWLOGIC SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
1. Basis of Presentation
---------------------
The accompanying unaudited condensed consolidated
financial statements have been prepared by Viewlogic
Systems, Inc. (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission
regarding interim financial reporting. Accordingly,
they do not include all of the information and
footnotes required by generally accepted accounting
principles for complete annual financial statements and
should be read in conjunction with the audited
financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31,
1996.
In the opinion of management the accompanying unaudited
condensed consolidated financial statements have been
prepared on the same basis as the audited financial
statements and include all adjustments, consisting only
of normal recurring adjustments, necessary for a fair
presentation of the interim periods presented. The
operating results for the interim periods presented are
not necessarily indicative of the results expected for
the full fiscal year.
2. Income per Common Share
-----------------------
Income per common share is computed using the weighted
average number of common and common equivalent shares
outstanding during each period presented.
In February 1997, the Financial Accounting Standards
Board issued SFAS No. 128, "Earnings per Share" which
will become effective for the Company for annual and
interim reporting periods ending after December 15,
1997. SFAS No. 128 replaces the presentation of
primary earnings per share with a basic earnings per
share (which excludes dilution) and a diluted earnings
per share. Had SFAS No. 128 been used for the periods
presented, there would have been no material effect on
reported earnings per share.
3. Eagle Design Automation, Inc. Acquisition
-----------------------------------------
On February 19, 1997, the Company purchased the 80% of
the capital stock of Eagle Design Automation, Inc.
("Eagle") not previously owned for $5,788 in cash and
assumption of net liabilities. This acquisition was
accounted for as a purchase and the total purchase
price of $6,597, including acquisition expenses, was
allocated to the assets acquired and the liabilities
assumed based on their estimated fair values. Of the
total, $5,500 was allocated to purchased research and
development and was charged to expense as of the
acquisition date. This allocation resulted in goodwill
of $907 which is being amortized over seven years and
purchased software of $1,000 to be amortized over five
years. In addition, the Company is required to pay the
former shareholders of Eagle additional payments based
on the sale by the Company of Eagle's products over the
three year period beginning after certain sales targets
have been met. There are no minimum or maximum
payments based on the sale of Eagle's products,
however, if current sales projections are met, such
additional payments could total approximately $5,500.
4
<PAGE>
The unaudited consolidated results of operations on a
pro forma basis as though the acquisition had occurred
as of the beginning of the periods presented are as
follows:
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Revenue $32,571 $28,812
Net income (loss) (3,658) 163
Net income (loss) per share $ (0.21) $ 0.01
</TABLE>
The pro forma financial information is presented for
informational purposes only and is not indicative of
the operating results that would have occurred had the
Eagle acquistion been consummated as of the above
dates, nor are they necessarily indicative of future
operating results.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
This discussion may contain certain forward looking
statements which involve risks and uncertainties, and the
Company's actual results may differ from those discussed.
Some of the factors that might cause such a difference are
discussed below. (See "Factors That May Affect Future
Results and Financial Condition.")
RESULTS OF OPERATIONS
The Company's revenue and net income for the three
months ended March 31, 1997 increased 13.0% to $32,571,000
and decreased 632.8% to a net loss of $3,245,000,
respectively, from the first three months of 1996. After
excluding the non-recurring charge for in-process research
and development of $5,500,000 associated with the first
quarter acquisition of Eagle Design Automation, Inc.
("Eagle"), net income for the quarter ended March 31, 1997
was $2,255,000. Excluding that non-recurring item and a
$1,493,000 pre-tax gain from the sale of an investment, net
income for the three months ended March 31, 1997 was
$1,337,000, which is a 119.5% increase over the first
quarter of 1996. Operating income before the non-recurring
item, as a percentage of revenue, was 4.5% in the first
quarter of 1997 as compared to 1.9% for the same period of
1996. Revenue increased by 13.0% whereas operating expenses
increased by only 10.1%, resulting in the increase in
operating income as a percentage of revenue.
On February 19, 1997, the Company acquired Eagle. The
acquisition has been accounted for as a purchase, and
accordingly, the condensed consolidated financial statements
and management's discussion and analysis reflect the
combined operations only after the February 19, 1997 closing
date.
The following table sets forth for the periods
indicated the percentage of revenue of certain items in the
Company's Condensed Consolidated Statements of Operations.
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Revenue: 100.0% 100.0%
Software 59.7 60.6
Services and other 40.3 39.4
Costs and expenses:
Cost of software 8.1 8.1
Cost of services and other 11.1 11.3
Selling and marketing 45.2 48.7
Research and development 24.4 21.4
Purchased research and
development 16.9
General and administrative 6.7 8.6
----- -----
Total operating expenses 112.4 98.1
----- -----
Income (loss) from operations (12.4) 1.9
Total other income 6.7 1.5
----- -----
Income (loss) before
income taxes (5.7) 3.4
Provision for income taxes 4.3 1.3
----- -----
Net income (loss) (10.0)% 2.1%
===== =====
</TABLE>
Revenue
- -------
The Company's total revenue increased 13.0% to
$32,571,000 in the first quarter of 1997 from $28,812,000 in
the first quarter of 1996. Software revenue increased by
11.4% to $19,446,000 in the first quarter of 1997 from
$17,450,000 in the first quarter of 1996. Services and
other revenue for the first
6
<PAGE>
quarter of 1997 increased by
15.5% from the same period of 1996 due to the increase in
maintenance and customer support revenue from a growing
installed base of customers, as well as increased consulting
and customization services and increased training programs.
The increase in total revenue was due to a 29.1% increase in
year-over-year revenues from the Company's ASIC verification
solutions, including the Chronologic VCS(TM) simulator, Quad
Motive(TM) timing analysis tool, and Sunrise TestGen(TM) tool
suite. Revenues on PC platforms, as a percentage of total
revenues, grew from 29.7% in the first quarter of 1996 to
30.8% in the same period of 1997, primarily as a result of
strong sales of Workview Office(R) on the NT platform. For
the immediate future, the Company anticipates that the rate
of growth of services and other revenue will be at least
equal to the software revenue growth rate.
International revenue represented 38.3% of revenue in
the first quarter of 1997 compared to 33.6% of revenue in
the same period of 1996. This increase was primarily due to
strong sales in Europe, where revenues increased 64.8% from
the first quarter of 1996 to the first quarter of 1997.
Cost of Revenue
- ---------------
Cost of software revenue increased 13.3% to $2,634,000
in the first quarter of 1997 from $2,324,000 in the first
quarter of 1996, primarily due to increased amortization of
capitalized software. This increase resulted in the
increase in cost of software, as a percentage of software
revenue, from 13.3% in the first quarter of 1996 to 13.5% in
the same period of 1997.
Cost of services and other revenue increased 11.1% to
$3,611,000 in the first quarter of 1997 from $3,249,000 in
the first quarter of 1996 due to increased personnel-related
costs and outside consulting fees to grow the Company's
consulting business, partially offset by the absence in 1997
of subcontracting costs associated with a major outsourcing
contract. These net increases in cost of services and other
revenue were offset by a larger increase in service and
other revenue, which resulted in the decrease in cost of
services and other revenue as a percentage of services and
other revenue from 28.6% in the first quarter of 1996 to
27.5% for the same period in 1997.
Selling and Marketing Expenses
- ------------------------------
Selling and marketing expenses increased 5.0% to
$14,719,000 in the first three months of 1997 from
$14,016,000 in the same period of 1996. The increase in
1997 is primarily due to higher personnel-related costs due
to an increase in the number of worldwide sales and
marketing personnel from 260 in March 1996 to 297 in March
1997, as well as an increase in commission expense on higher
revenues. This increase is partially offset by a decrease
in selling and marketing costs in Japan caused primarily by
a favorable change in the exchange rate. Selling and
marketing expenses, as a percentage of revenue, decreased
from 48.7% in the first quarter of 1996 to 45.2% for the
first quarter of 1997.
Research and Development Expenses
- ---------------------------------
Research and development costs increased 28.9% to
$7,958,000 in the first quarter of 1997 compared to
$6,173,000 in the same period of the prior year. This
increase primarily reflects higher personnel and outside
consulting-related costs associated with the development of
new products and enhancement of existing products, including
the establishment of a research and development facility in
India in the fourth quarter of 1996. Research and
development expenses, as a percentage of revenue, increased
from 21.4% in the first quarter of 1996 to 24.4% in the
first quarter of 1997.
The Company capitalized software development costs of
$917,000 and $707,000 in each of the first quarters of 1997
and 1996, respectively, in accordance with Statement of
Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise
Marketed." The amounts capitalized represent 10.3% of total
product development costs in both the first quarter of 1997
and 1996. Capitalized software costs are amortized over the
estimated life of the product
7
<PAGE>
(in most cases four years).
The amortization included in cost of software revenue was
$702,000 and $401,000 for the first three months of 1997 and
1996, respectively.
Purchased Research and Development
- ----------------------------------
The Company recorded a non-recurring expense of
$5,500,000 in the first quarter of 1997 for purchased
research and development expenses associated with the Eagle
acquisition.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses decreased 12.7% to
$2,174,000 in the first three months of 1997 from $2,489,000
in the same period of 1996. The decrease is primarily due
to the Company's share of declining losses of Eagle
recognized under the equity method of accounting and
decreased legal fees. General and administrative expenses,
as a percentage of revenue, decreased from 8.6% to 6.7% in
the first quarters of 1996 and 1997, respectively.
Income (Loss) from Operations
- -----------------------------
Income from operations decreased from $561,000 in the
first quarter of 1996 to a net loss of $4,025,000 in the
first three months of 1997. Excluding the non-recurring
costs associated with the first quarter Eagle acquisition,
income from operations for the first quarter of 1997
increased 162.9% to $1,475,000. This increase in operating
income primarily reflects a larger increase in first quarter
revenues offset by a lesser increase in first quarter
operating expenses from 1996 to 1997. Operating income
(loss) as a percentage of revenue decreased from 1.9% for
the first three months of 1996 to (12.4%) for the first
three months of 1997. Excluding the non-recurring cost of
the Eagle acquisition, operating income as a percentage of
revenue increased from 1.9% to 4.5% in the first quarters of
1996 and 1997, respectively.
Total Other Income
- ------------------
Total other income increased 410.7% to $2,191,000 in
the first quarter of 1997 from $429,000 in the same period
of 1996. This increase is due primarily to a $1,493,000
gain on the sale of an investment in the first quarter of
1997 and an increase in interest income from the first
quarter of 1996 to the first three months of 1997 due to a
larger average cash balance.
Income Taxes
- ------------
The provision for federal and state income taxes
increased from $381,000 for the first quarter of 1996 to
$1,411,000 for the first quarter of 1997, representing
effective tax rates of 38.5% in both of those periods
(excluding the non-recurring costs of $5,500,000 in 1997
related to purchased research and development associated
with the Eagle acquisition, which is not tax deductible.)
Net Income
- ----------
Net income decreased from $609,000, or $0.04 per share,
in the first quarter of 1996 to a net loss of $3,245,000, or
$0.19 per share, in the same period in 1997. Exluding the
after-tax effect of non-recurring items ($5,500,000
purchased research and development expense and $918,000 gain
on the sale of an investment) in the first quarter of 1997,
net income increased 119.5% to $1,337,000, or $0.08 per
share, in that period.
8
<PAGE>
Factors That May Affect Future Results and Financial Condition
- --------------------------------------------------------------
Future financial results are difficult or impossible to
predict, despite the Company's past financial performance.
Intense competition and rapid technological changes are
inherent in the EDA industry. The Company faces the many
risks and uncertainties posed by that competition and
technological change, including the risks and uncertainties
affecting and relating to success in continuously developing
and marketing new products; protection of its products by
effective utilization of intellectual property laws; product
quality, reliability, ease of use, feature set and price;
diversity of product line; general economic and business
conditions; the ability to hire, retain and motivate highly
qualified personnel; business conditions and growth in the
EDA industry; industry-wide price erosion; and customer
acceptance of the Company's products.
The Company's products are in various stages of their
life cycles. The Company's success is dependent on its
ability to develop complex and competitive new products, to
introduce them to the marketplace ahead of the competition
and to have them selected by customers. The Company is
striving to bring new products to market to meet customer
needs, but there is no assurance that it will succeed in
doing so. Since product life cycles are continually
becoming shorter, if new product introductions are delayed
or if new products do not address market needs then revenues
and profits for current and future products may be affected
as customers may shift to competitors to meet their
requirements. The Company's competitors consist of large
companies, many of which have greater market share and
substantially greater financial and other resources than the
Company; emerging companies with new and innovative
technology; and customers who develop their own EDA tools.
As is common in the software industry, the Company
frequently ships more product in the third month of each
quarter than in either of the first two months of the
quarter, and shipments in the third month are higher at the
end of that month. This pattern is likely to continue. The
concentration of sales in the last month of the quarter
makes the Company's quarterly financial results difficult to
predict. Also, if sufficient business does not materialize
or a disruption in the Company's production or shipping
occurs near the end of a quarter, the Company's revenues for
that quarter may be materially reduced.
A substantial portion of the Company's revenue is
derived from its international operations. As a result, the
Company's operations and financial results could be
significantly affected by international factors, such as
weak economic conditions in foreign markets and differing
technology or product preferences in different countries.
The highly technical nature of the Company's products
and services and the intense competition in the Company's
markets heightens the need and importance of hiring,
retaining and motivating highly qualified technical
personnel. The intense competition in the EDA industry
increases the difficulty in doing so and has created a
shortage of highly qualified engineering and sales
personnel.
Because of these and other factors, past financial
results may not be a useful predictor of future results and
any forward looking statements about the Company's financial
performance, business operations and other factors should be
viewed with caution. Also, the Company's participation in a
highly dynamic industry often results in significant
volatility of the Company's common stock price.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations to date primarily
through sales of equity securities, equipment financing
leases and positive cash flow from operations. As of March
31, 1997, the Company had $60,536,000 of cash and marketable
securities compared to $67,344,000 of cash and marketable
securities as of December 31, 1996. These balances included
$6,992,000 and $5,565,000 of non-current marketable
securities in 1997 and 1996, respectively. The decline in
cash and cash equivalents and
9
<PAGE>
marketable securities from
December 31, 1996 to March 31, 1997 is primarily due to the
cash payment of $6,573,000 in connection with the Company's
acquisition of Eagle and the $1,304,000 repayment of a
foreign tax grant in the first quarter of 1997. Working
capital as of March 31, 1997 was $50,389,000. As of March
31, 1997, the Company had $37,751,000 in current liabilities
and $231,000 of commitments under long-term capital lease
obligations.
Based on its operating plan, the Company currently
believes that its available cash and cash generated from
operations will be sufficient to fund the Company's
operations for the foreseeable future.
In February 1997, the Financial Accounting Standards
Board issued SFAS No. 128, "Earnings per Share" which will
become effective for the Company for annual and interim
reporting periods ending after December 15, 1997. SFAS No.
128 replaces the presentation of primary earnings per share
with a basic earnings per share (which excludes dilution)
and a diluted earnings per share. Had SFAS No. 128 been
used for the periods presented, there would have been no
material effect on reported earnings per share.
10
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
<S> <C>
10.1 - Investment Agreement by and among the
Company, Transitions Three, Limited
Partnership, Eagle Design Automation,
Inc., Gordon B. Hoffman and Geoffrey J.
Bunza, dated December 6, 1994.
10.2 - Shareholders' Agreement by and among the
Company, Transitions Three, Limited
Partnership, Eagle Design Automation,
Inc., Gordon B. Hoffman and Geoffrey J.
Bunza, dated December 6, 1994.
10.3 - Agreement by and among the Company, Eagle
Design Automation, Inc. ("Eagle"),
Transitions Three, Limited Partnership and
certain of the shareholders of Eagle,
dated as of December 17, 1996.
10.4 - Stock Purchase Agreement by and among the
Company, Eagle Design Automation, Inc.
("Eagle") and all of the shareholders of
Eagle, dated as of February 19, 1997.
10.5 - Salary Continuation Agreement and Release
between the Company and Alain Hanover.
11 - Statement Regarding Computation of Per
Share Earnings
27 - Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
On March 3, 1997, the Company filed a Current Report
on Form 8-K (the "Form 8-K"). The Company
reported, in Item 2 of the Form 8-K, the purchase of
Eagle Design Automation, Inc. and included, pursuant
to Item 7 of the Form 8-K, certain required
exhibits.
11
<PAGE>
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.
Date: May 13, 1997 Viewlogic Systems, Inc.
-----------------------
(Registrant)
/s/ William J. Herman
---------------------
William J. Herman, President,
Chief Executive Officer and
Director
/s/ Ronald R. Benanto
Date: May 13, 1997 ---------------------
Ronald R. Benanto, Senior
Vice President of Finance,
Chief Financial Officer
and Treasurer
12
<PAGE>
VIEWLOGIC SYSTEMS, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
------- ----
<S> <C> <C>
10.1(1) Investment Agreement by and among the --
Company, Transitions Three, Limited
Partnership, Eagle Design Automation,
Inc., Gordon B. Hoffman and Geoffrey
J. Bunza, dated December 6, 1994.
10.2(1) Shareholders' Agreement by and among --
the Company, Transitions Three, Limited
Partnership, Eagle Design Automation,
Inc., Gordon B. Hoffman and Geoffrey
J. Bunza, dated December 6, 1994.
10.3(2) Agreement by and among the Company, --
Eagle Design Automation, Inc. ("Eagle"),
Transitions Three, Limited Partnership
and certain of the shareholders of
Eagle, dated as of December 17, 1996.
10.4(2) Stock Purchase Agreement by and among --
the Company, Eagle Design Automation,
Inc. ("Eagle") and all of the
shareholders of Eagle, dated as of
February 19, 1997.
10.5 Salary Continuation Agreement and 14
Release between the Company and
Alain Hanover.
11 Statement Regarding Computation of 33
Per Share Earnings
27(3) Financial Data Schedule --
<FN>
(1) Incorporated herein by reference to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1994.
(2) Incorporated herein by reference to the Company's
Current Report on Form 8-K filed on March 5, 1997.
(3) In electronic version only.
</TABLE>
13
<PAGE>
Exhibit 10.5
SALARY CONTINUATION AGREEMENT AND RELEASE
-----------------------------------------
This AGREEMENT is entered into by and between VIEWlogic
Systems, Inc. (the "Company") and Alain Hanover ("Hanover").
WHEREAS, the parties wish to establish the terms of
Hanover's separation from the Company and salary continuation
arrangement;
NOW, THEREFORE, in consideration of the promises and
conditions set forth herein, the sufficiency of which is hereby
acknowledged, the Company and Hanover agree as follows:
1. TRANSITION PERIOD. Hanover will resign from all
offices and directorships of the Company and its subsidiaries
effective May 13, 1997, and shall provide a resignation letter in
the form attached hereto as Exhibit A. Until May 13, 1997,
Hanover shall be considered by the Company to remain on his
current, paid leave, provided, however, that until May 13, 1997,
Hanover will continue to have access to the Company's offices and
to the assistance of the Company's administrative staff. Hanover
will continue to receive his current benefits and to be paid his
current salary at the annualized rate of Two Hundred and Thirty-
Three Thousand Dollars ($233,000.00) (the "Base Salary") through
May 13, 1997 in accordance with the Company's regular payroll
practices. Payments will be net of applicable state and federal
taxes, health, disability and/or other benefit contributions
customarily taken from Hanover's salary payments and employee
contributions, if any, to the applicable Company 401(K) plan.
14
<PAGE>
2. SALARY CONTINUATION. In return for the execution
of this Salary Continuation Agreement and Release (the
"Agreement"), Hanover shall resign as an employee of the Company
effective December 31, 1998 and Hanover's employment with the
Company shall terminate on December 31, 1998. The Company will
continue to pay Hanover his Base Salary during the period from
May 13, 1997 through November 15, 1997 in accordance with the
Company's regular payroll practices. During the period from
November 15, 1997 through December 31, 1998, the Company will pay
Hanover a total salary of One Hundred Sixteen Thousand Five
Hundred Dollars ($116,500.00) in equal installments in accordance
with the Company's regular payroll practices. Payments under
this paragraph will be net of applicable state and federal taxes,
health, disability and/or other benefit contributions customarily
taken from Hanover's salary payments and Employee contributions,
if any, to the applicable Company 401(k) plan.
Hanover shall remain eligible for bonuses through the second
fiscal quarter of 1997 in accordance with the 1997 Executive
Bonus Plan adopted by the Compensation Committee of the Company's
Board of Directors on January 23, 1997, provided, however, that
Hanover shall be eligible only for Quarter Bonuses and shall not
participate in any part of any bonus plan which depends upon year-
end or full year performance or results.
During the period from May 13, 1997 through December 31,
1998, Hanover will hold himself available at mutually agreeable
times to perform special projects and services for the Company as
15
<PAGE>
may be reasonably requested from time to time by the Chief
Executive Officer of the Company. The failure of the Company to
request the performance of such special projects or services
shall not alter or diminish the obligations of the Company
provided for in this Agreement.
Hanover shall not be entitled to any compensation, bonus
and/or benefit not expressly set forth in this Agreement.
Hanover shall not be entitled to participate in any new
compensation, bonus or benefit plan adopted by the Company, nor
any improvements to any existing compensation, bonus or benefit
plan adopted by the Company.
3. MEDICAL/DENTAL, DISABILITY AND LIFE INSURANCE.
(a) The Company shall allow Hanover to participate in
its medical, dental, disability and/or life insurance plans
through the earlier of December 31, 1998 or the date on which
Hanover becomes eligible for comparable coverage through another
employer. Hanover shall participate in such plans on a basis
comparable to other VIEWlogic executives in accordance with and
to the extent permitted by the terms of the plans and subject to
any changes in the plans that are applicable to other executive
participants. The parties further agree that if Hanover becomes
ineligible to participate in Company's medical, dental,
disability and/or life insurance plans prior to December 31, 1998
and is not eligible for comparable coverage through another
employer, the Company will continue to pay Hanover monthly
through December 31, 1998 an amount equal to the Company's
16
<PAGE>
contribution for the medical, dental, disability and/or life
insurance premiums last paid by the Company for Hanover during
the period in which Hanover was eligible for coverage under the
plans.
(b) The Company shall continue to pay the premiums for
the two "key-man" life insurance policies it maintains for its
benefit on the life of Hanover (U.S. Financial Life Insurance Co.
Policy No. 0010007149 and Security-Connecticut Life Insurance Co.
Policy No. 001023047B, collectively, the "key-man insurance
policies") until May 13, 1997. In exchange for the consideration
granted herein, the parties further agree that, after May 13,
1997, the Company will use reasonable efforts to transfer
ownership of the key-man insurance policies to Hanover, and
Hanover agrees to cooperate fully with the Company, including but
not limited to executing any documents which may be required, in
order to permit the Company to be paid the maximum possible cash
value of the key-man insurance policies prior to such transfer.
In the event Hanover fails to cooperate fully, in addition to any
other rights and remedies the Company might have, the Company
shall not be obligated to transfer ownership of the key-man
insurance policies to Hanover.
4. CONTRIBUTIONS TO 401(k) PLAN. The parties agree that
Hanover will be eligible to continue to be an active participant
in the Company's 401(k) plan for as long as he remains eligible
therefor under the terms of the plan and under federal and state
law, subject to any changes in the 401(k) plan that are
17
<PAGE>
applicable to executive participants, provided, however, that the
Company shall not continue to match Hanover's 401(k)
contributions after May 13, 1997.
5. TRANSFER OF CERTAIN COMPANY PROPERTY. On or before May
13, 1997, the Company shall transfer to Hanover for no
consideration ownership of certain office equipment previously
assigned to him. This equipment consists of: (1) a personal
computer; (2) a laptop computer; (3) a facsimile machine; (4) a
cellular telephone; and (5) any accessories related to the
foregoing that were previously provided.
6. STOCK OPTIONS. Since Hanover will remain an employee
of the Company until December 31, 1998, the parties agree that
Hanover's stock options will continue to vest and will remain in
effect and be exercisable according to the terms of his stock
option agreements through the period ending December 31, 1998,
plus, with respect to the exercise of any options, the number of
days provided in the applicable agreement for the exercise of
such options.
7. RELEASE. Hanover hereby fully, forever, irrevocably
and unconditionally releases, remises and discharges the Company,
its officers, directors, stockholders, corporate affiliates,
attorneys, agents and employees from any and all claims, charges,
complaints, demands, actions, causes of action, suits, rights,
debts, sums of money, costs, accounts, reckonings, covenants,
contracts, agreements, promises, doings, omissions, damages,
executions, obligations, liabilities, and expenses (including
18
<PAGE>
attorneys' fees and costs), of every kind and nature which he
ever had or now has against the Company, its officers, directors,
stockholders, corporate affiliates, attorneys, agents and
employees, including, but not limited to, all claims arising out
of his hiring or employment, all employment discrimination claims
under Title VII of the Civil Rights Act of 1964, 42 U.S.C. (S)2000e
ET SEQ., the Americans With Disabilities Act, 42 U.S.C. (S)12101 ET
SEQ., the Age Discrimination in Employment Act, 29 U.S.C. (S)621 ET
SEQ., and M.G.L. c.151B, (S)1 ET SEQ., and all wrongful discharge
claims and other common law claims, except for the obligations
set forth in this Agreement and in Hanover's stock option
agreements and any written amendments thereto.
8. REPRESENTATION ON LEGAL ACTION. Hanover further
represents and warrants that he has not filed any complaints,
charges, or claims for relief against the Company, its officers,
directors, stockholders, corporate affiliates, attorneys, agents
or employees with any local, state or federal court or
administrative agency which currently are outstanding.
9. NATURE OF AGREEMENT. Hanover understands and agrees
that this Agreement is a salary continuation agreement and
release and does not constitute an admission of liability or
wrongdoing on the part of the Company.
10. AMENDMENT. This Agreement shall be binding upon the
parties and may not be abandoned, supplemented, changed or
modified in any manner, orally or otherwise, except by an
instrument in writing of concurrent or subsequent date signed by
19
<PAGE>
a duly authorized representative of the parties hereto. This
Agreement is binding upon and shall inure to the benefit of the
parties and their respective agents, assigns, heirs, executors,
successors and administrators.
11. VALIDITY. Should any provision of this Agreement be
declared or be determined by any court of competent jurisdiction
to be illegal, invalid or unenforceable, the validity of the
remaining parts, terms, or provisions shall not be affected
thereby and said illegal, invalid or unenforceable part, term or
provision shall be amended to the extent and in a manner
necessary to most closely reflect the intent of the parties
hereto on the date hereof and to be legal, valid and enforceable.
12. CONFIDENTIALITY. The parties understand and agree that
the terms and contents of this Agreement, the contents of the
negotiations and discussions resulting in this Agreement, and any
dispute resolved by this Agreement shall be maintained as
confidential by the parties, their respective agents, attorneys
and representatives, and none of the above shall be disclosed
except to the extent required by federal or state law or
regulations or by any stock exchange or other entity the
authority of which the Company is subject (voluntarily or
otherwise) or as otherwise agreed to in writing by the authorized
agent of each party.
13. NON-DISPARAGEMENT. Hanover agrees that, as a condition
for the consideration provided herein, both monetary and
otherwise, he will not make any false, disparaging or derogatory
20
<PAGE>
statements in public or private regarding the Company or any of
its officers, directors, stockholders, corporate affiliates,
attorneys, agents or employees or the Company's business affairs
or financial condition.
14. PROPRIETARY AND CONFIDENTIAL INFORMATION AND
INVENTIONS. Hanover agrees that he shall remain bound by the
provisions of the Proprietary Information, Inventions and Non-
Competition Agreement previously executed between Hanover and
Qualogy Systems, Inc. (the Company's predecessor) and attached
hereto as Exhibit B, except to the limited extent it may be
modified by the provisions set forth in Paragraph 15 of this
Agreement.
15. NON-COMPETITION AGREEMENT.
(a) The parties understand and agree that Hanover
shall not be bound by the non-compete provision contained in
Section 12 of Exhibit B, hereto. However, in exchange for the
consideration set forth in this Agreement, Hanover agrees that,
until December 31, 1998, Hanover will not, without the express
written consent of the Chief Executive Officer of the Company,
affiliate in any way with or provide any advice or services to
(including, but not limited to, as an individual proprietor,
partner, stockholder, officer, employee, director, joint
venturer, investor, lender, consultant or in any other capacity
whatsoever (other than as the holder of not more than one percent
(1%) of the total outstanding stock of a publicly held company)),
or engage directly or indirectly in, any business or entity which
21
<PAGE>
competes with the Company and/or which operates in the Electronic
Design Automation ("EDA") industry.
(b) Hanover further agrees that until December 31,
1998 he will not recruit, solicit, induce, or attempt to induce,
any employee or employees of the Company to terminate their
employment with or otherwise cease their relationship with the
Company, or to affiliate with, join or engage directly or
indirectly in any business or entity which competes with the
Company and/or which operates in the EDA industry.
(c) Notwithstanding the provisions contained in
section (a) of this paragraph, nothing herein shall be construed
as preventing Hanover, with the written consent of the Company,
from joining the board of directors of, or providing consulting
services to, any business or entity in the EDA industry which
does not compete with the Company and which is not likely to
compete with the Company. The Company retains the right in its
discretion to determine whether a particular business or entity
in the EDA industry competes, or is likely to compete, with the
Company through December 31, 1998. Prior to December 31, 1998,
should Hanover wish to join the board of directors of, or provide
consulting services to, a business or entity in the EDA industry
which Hanover believes does not compete with the Company and is
not likely to compete with the Company, he shall not do so
without seeking and receiving the express written consent of the
Chief Executive Officer of the Company. Prior to December 31,
1998, the Company may withdraw any consent previously given, and
22
<PAGE>
Hanover shall immediately resign from the board of directors
and/or stop providing all consulting services, if the Company
deems that any business or entity not previously considered by
the Company to be a competitor has begun competing with the
Company or is likely to begin competing with the Company.
16. ENTIRE AGREEMENT. This Agreement contains and
constitutes the entire understanding and agreement between the
parties hereto with respect to Hanover's employment and
severance and settlement and cancels all previous oral and
written negotiations, agreements, commitments, and writings in
connection therewith.
17. APPLICABLE LAW. This Agreement shall be governed by
the laws of the Commonwealth of Massachusetts, and is binding
upon and shall inure to the benefit of the parties and their
respective agents, assigns, heirs, executors, successors and
administrators.
18. ACKNOWLEDGMENTS. Hanover acknowledges that he has been
given twenty-one days to consider this Agreement and that the
Company advised him to consult with any attorney of his own
choosing prior to signing this Agreement. Hanover may revoke this
Agreement by written notice to the Company for a period of seven
(7) days after the execution of this Agreement, and the Agreement
shall not be effective or enforceable until the expiration of
this seven (7) day revocation period.
19. VOLUNTARY ASSENT. Hanover affirms that no other
promises or agreements of any kind have been made to or with him
23
<PAGE>
by any person or entity whatsoever to cause him to sign this
Agreement, and that he fully understands the meaning and intent
of this Agreement. Hanover states and represents that he has had
an opportunity to fully discuss and review the terms of this
Agreement with an attorney. Hanover further states and
represents that he has carefully read this Agreement, understands
the contents herein, freely and voluntarily assents to all of the
terms and conditions hereof, and signs his name of his own free
act.
IN WITNESS WHEREOF, all parties have set their hand and seal
to this Agreement as of the date written below.
/s/ Alain J. Hanover Date: 5/5/97
- -------------------- -------------
ALAIN HANOVER
VIEWLOGIC SYSTEMS, INC.
By: /s/ Peter T. Johnson Date: 5/5/97
-------------------- ------------
Peter T. Johnson,
Vice President & General Counsel
24
<PAGE>
Exhibit A
William J. Herman,
Chief Executive Officer
VIEWlogic Systems, Inc.
293 Boston Post Road West
Marlboro, MA 01752
Dear Will:
Effective May 13, 1997, I hereby resign from my position as
a member of the Board of Directors of VIEWlogic Systems, Inc.
(the "Company") and from all offices and directorships that I may
hold in the Company and/or any of its subsidiary companies. I
also resign as an employee of the Company effective December 31,
1998.
Very truly yours,
Alain Hanover
25
<PAGE>
Exhibit B
QUALOGY SYSTEMS, INC.
PROPRIETARY INFORMATION, INVENTIONS AND
NON-COMPETITION AGREEMENT
AGREEMENT between Qualogy Systems, Inc., a Massachusetts
corporation (the "Company"), and the undersigned employee of the
Company.
WITNESSETH:
----------
In consideration of my employment or continued employment,
as the case may be, by the Company and of other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, I hereby agree with the Company as follows:
1. I recognize that the Company is engaged in a continuous
program of research, development, production, and marketing
respecting its business, present and future.
2. I understand that:
A. As part of my employment by the Company I am (or may be)
expected to make new contributions and inventions of value to the
Company; and
B. My employment by the Company creates a relationship of
confidence and trust between me and the Company with respect to
certain information:
(i) Applicable to the business of the Company; or
(ii) Applicable to the business of any client or customer of the
Company, which may be made known to me by the Company or by any
client or customer of the Company, or learned by me during the
period of my employment.
C. The Company possesses and will continue to possess
information that has been created, discovered, developed, or
otherwise become known to the Company (including, without
limitation, information created, discovered, developed or made
known by me during the period of or arising out of my employment
by the Company) or in which property rights have been assigned or
otherwise conveyed to the Company, which information has
commercial value in the business in which the Company is engaged
and is treated by the Company as confidential. All such
information
26
<PAGE>
is hereinafter called "Proprietary Information." By
way of illustration, but not limitation, Proprietary Information
includes processes, formulas, data. programs, know-how,
improvements, discoveries, developments, designs, inventions,
techniques, marketing plans, strategies, forecasts, new products,
unpublished financial statements, budgets, projections, licenses,
prices, costs, and customer and supplier lists. The development
and acquisition of the Proprietary Information are the result of
great effort and expense on the part of the Company and are
critical to the success and survival of the Company.
3. All Proprietary Information shall be the sole property of
the Company and its assigns, and the Company and its assigns
shall be the sole owner of all patents, copyrights, and other
rights in connection therewith. I hereby assign to the Company
any rights I may have or acquire in such Proprietary Information.
At all times, both during my employment by the Company and after
its termination for whatever reason, I will keep in strictest
confidence and trust all Proprietary Information, and I will not
use or disclose any Proprietary Information without the written
consent of the Company, except as may be necessary in the
ordinary course of performing my duties as an employee of the
Company.
4. I agree that during the period of my employment by the
Company, I will not, without the Company's express written
consent, engage in any employment or business other than for the
Company.
5. In the event of the termination of my employment by me or by
the Company for any reason, I will deliver to the Company all
documents, notes, drawings, specifications, data, and other
materials of any nature pertaining to my work with the Company
and I will not take with me any of the foregoing, any
reproduction of any of the foregoing, or any Proprietary
Information that is embodied in a tangible medium of expression.
6. I will promptly disclose to the Company (or any persons
designated by it) all discoveries, developments, designs,
improvements, inventions, formulas, processes, techniques, know-
how, programs, and data, whether or not patentable or registrable
under copyright or similar statutes, made or conceived or reduced
to practice or learned by me, either alone or jointly with
others, during the period of my employment that are related to or
useful in the business of the Company, result from tasks assigned
to me by the Company, or result from the use of premises owned,
leased, or contracted for the Company (all such discoveries,
developments, designs, improvements, inventions,
27
<PAGE>
formulas,processes, techniques, programs, know-how, and data are
hereinafter referred to as "Inventions"). I will also promptly
disclose to the Company, and the Company hereby agrees to receive
all such disclosures in confidence, all other discoveries,
developments, designs, improvements, inventions, formulas,
processes, techniques, programs, strategies, know-how, and data,
whether or not patentable or registrable under copyright or
similar statutes, made or conceived or reduced to practice or
learned by me, either alone or jointly with others, during the
period of my employment for the purpose of determining whether
they constitute "Inventions" as defined above.
7. I agree that all Inventions shall be the sole property of
the Company and its assigns, and the Company and its assigns
shall be the sole owners of all patents, copyrights, and other
rights in connection therewith. I hereby assign to the Company
any rights I may have or acquire in such Inventions. I further
agree as to all such Inventions to assist the Company in every
proper way (but at the Company's expense) to obtain and from time
to time enforce patents, copyrights, and other rights and
protections relating to said Inventions in any and all
countries, and to that end I will execute all documents for use
in applying for and obtaining such patents, copyrights, and other
rights and protections on and enforcing such Inventions, as the
Company may desire, together with any assignments thereof to the
Company or persons designated by it. My obligation to assist the
Company in obtaining and enforcing patents copyrights, and other
rights and protections relating to such Inventions in any and all
countries shall continue beyond the termination of my employment,
but the Company shall compensate me at a reasonable rate after my
termination for time actually spent by me at the Company's
request on such assistance. In the event the Company is unable,
after reasonable effort, to secure my signature on any document
or documents needed to apply for or prosecute any patent,
copyright or other right of protection relating to an Invention,
whether because of my physical or mental incapacity or for any
other reason whatsoever, I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents
as my agent and attorney-in-fact, to act for and in my behalf and
stead to execute and file any such application or applications
and to do all other lawfully permitted acts to further the
prosecution and issuance of patents, copyrights, or similar
protections thereon with the same legal force and effect as if
executed by me.
8. As a matter of record I have identified on item 1 of Exhibit
A all inventions or improvements relevant to the subject matter
of my employment by the Company that have been
28
<PAGE>
made or conceived or first reduced to practice by me alone or jointly with
others prior to my engagement by the Company and that I desire to remove
from the operation of the Agreement. I represent and warrant
that such list is complete. If there is no such list on Exhibit
A, I represent that I have made no such inventions and
improvements at the time of signing this Agreement.
9. I represent that my performance of all the terms of this
Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary
information acquired by me in confidence or in trust prior to my
employment by the Company. I have not entered into, and I agree
I will not enter into, any agreement either written or oral in
conflict herewith.
10. I represent, as part of the consideration for the offer of
employment extended to me by the Company and of my employment or
continued employment by the Company, that I have not brought and
will not bring with me to the Company for use in the performance
of any responsibilities at the Company any materials or documents
of a former employer that are not generally available to the
public, unless I have obtained express written authorization from
the former employer for their possession and use.
Accordingly, this is to advise the Company that the only
materials or documents of a former employer that are not
generally available to the public that I will bring to the
Company or use in my employment are identified on item 2 of
Exhibit A (if attached hereto), and as to each such item, I
represent that I have obtained express written authorization
for their possession and use in my employment with the Company.
11. I also understand that, in my employment with the Company, I
am not to breach any obligation of confidentiality that I have to
former employers, and I agree that I shall fulfill all such
obligations during my employment with the Company.
12. I agree that during the period of my employment with the
Company and for a period of twelve (12) months following the
termination of my employment by me or by the Company for any
reason, I will not without the express written consent of the
Company, directly or indirectly, engage in any business anywhere
in the United States of America which is engaged in design,
development, marketing or sale of computer software or integrated
systems which software or systems are intended for use in
computer aided design and/or computer aided engineering. It is
29
<PAGE>
understood that I shall be deemed to be engaged in a business of
the type referred to above if I am a director, officer, employee,
trustee, agent or partner of or consultant to any person, firm,
corporation, association, trust or other entity which is engaged
in such a business or if I or any member of my immediate family
owns, directly or indirectly, stock or shares of beneficial
interest or otherwise has a financial interest in such a firm,
corporation, association, trust or otherwise; provided, however,
that my ownership of one percent (1%) or less of the stock of a
company whose shares are listed on a national securities exchange
or on the automated quotation system of the National Association
of Securities Dealers shall not be deemed to be engaging
indirectly in the business of such company. The term "immediate
family" as used in this Agreement includes spouses and ancestors,
descendants, siblings and spouses of any of them.
13. I agree that during the period of my employment with the
Company and for a period of twelve (12) months following the
termination of my employment by me or by the Company for any
reason, I will not persuade, induce or encourage any other
employee of the Company to join or form any other corporation,
partnership, association, joint venture or business entity of any
kind engaged in, or to be engaged in the future in, the design,
development, marketing or sale of computer software or integrated
systems which software or systems are intended for use in
computer aided design and/or computer aided engineering, or in
any other business then engaged in by the Company.
14. As used in this Agreement, the period of my employment
includes any time during which I may be retained by the Company
as an employee or a consultant or act as a director.
15. This agreement shall be effective as of the day of my
employment by the Company, set forth on the signature page of
this Agreement.
16. In case any provision of this Agreement shall be determined
to be invalid or unenforeceable under applicable law, by reason
of being vague or unreasonable as to duration, or geographic
scope or scope of activities restricted, or for any other reason,
such provision shall, insofar as possible, be construed or
applied in such manner as will permit enforcement. If any
provision of this Agreement cannot be enforced at all, the
remaining provisions of this Agreement shall remain in effect and
shall be construed as though such provision had never been made a
part hereof. This Agreement shall be governed by and construed
in accordance with the laws of The Commonwealth of Massachusetts.
30
<PAGE>
17. This Agreement shall be binding upon me, my heirs,
executors, assigns, and administrators and shall inure to the
benefit of the Company and its successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, intending the same to take effect as a sealed
instrument.
Date of Employment: Oct. 1, 1984 Alain J. Hanover
-------------- --------------------
(Signature of Employee)
5 Foothill Rd, Framingham
--------------------------
(Address)
QUALOGY SYSTEMS, INC.
By: Ron Maxwell
---------------
Title: VP of Finance &
Treasurer
---------------
Date Executed: Oct. 5, 1984
--------------
31
<PAGE>
EXHIBIT A
---------
Item 1
- ------
Previous Inventions or improvements, if any:
NONE
Item 2
- ------
Materials or documents of former employer(s), if any:
NONE
32
<PAGE>
Exhibit 11
VIEWLOGIC SYSTEMS, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Weighted average number of
shares outstanding:
Common stock 16,550 16,813
Common equivalent shares
resulting from stock
options and warrants
(treasury stock method) 888 237
Less: Repurchased shares (167)
------ ------
Total 17,438 16,883
====== ======
Net income (loss) ($3,245) $ 609
====== ======
Net income (loss) per
common share ($ 0.19) $ 0.04
====== ======
</TABLE>
33
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Statement of Operations for the Three Months Ended March
31, 1997 and the Condensed Consolidated Balance Sheet as of March 31, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 32,731
<SECURITIES> 27,805
<RECEIVABLES> 29,734
<ALLOWANCES> 1,888
<INVENTORY> 0
<CURRENT-ASSETS> 88,140
<PP&E> 30,868
<DEPRECIATION> 16,389
<TOTAL-ASSETS> 122,041
<CURRENT-LIABILITIES> 37,751
<BONDS> 0
0
0
<COMMON> 176
<OTHER-SE> 79,412
<TOTAL-LIABILITY-AND-EQUITY> 122,041
<SALES> 19,446
<TOTAL-REVENUES> 32,571
<CGS> 2,634
<TOTAL-COSTS> 6,245
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 365
<INTEREST-EXPENSE> 32
<INCOME-PRETAX> (1,834)
<INCOME-TAX> 1,411
<INCOME-CONTINUING> (3,245)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,245)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.18)
</TABLE>
