<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _____________
Commission File Number: 0-22738
QUICKTURN DESIGN SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0159619
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
440 Clyde Avenue, Mountain View, California 94043
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (415) 967-3300
NO CHANGE
----------------------------------------------------------
(Former name or former address, if changed since last report)
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 [ ]
As of May 5, 1997 there were 16,751,695 shares of the registrant's common stock
outstanding.
This quarterly report on Form 10-Q contains 14 pages, of which this is page 1.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
QUICKTURN DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1997 1996*
----------- ----------
(unaudited) (unaudited)
<S> <C> <C>
Revenue
Product revenue $ 15,527 $ 19,393
Maintenance and service revenue 5,875 4,475
---------- ----------
Total revenue 21,402 23,868
Cost of revenue
Cost of product revenue 5,281 6,297
Cost of maintenance and service revenue 1,553 847
---------- ----------
Total cost of revenue 6,834 7,144
Gross profit 14,568 16,724
Operating expenses
Research and development 5,787 4,267
Sales and marketing 8,534 7,187
General and administrative 2,508 1,563
Merger related costs 1,200 ---
---------- ----------
Total operating expenses 18,029 13,017
Operating income (loss) (3,461) 3,707
Other income, net 392 312
---------- ----------
Net income (loss) before provision for
(benefit from) income taxes (3,069) 4,019
Provision for (benefit from) income taxes (951) 1,275
---------- ----------
Net income (loss) $ (2,118) $ 2,744
---------- ----------
---------- ----------
Net income (loss) per share $ (0.13) $ 0.16
---------- ----------
---------- ----------
Number of shares used in per share calculations 16,562 17,445
---------- ----------
---------- ----------
</TABLE>
* Q1 1996 has been restated to reflect the merger of the Company and SpeedSim,
Inc., which was accounted for as a pooling of interests.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
- 2 -
<PAGE>
QUICKTURN DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996*
----------- ------------
ASSETS (unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 14,462 $ 25,790
Marketable securities 8,456 10,614
Accounts receivable, net of allowance for
doubtful accounts of $1,840 in 1997 and 1996 21,668 21,768
Inventories 14,163 10,141
Prepaid expenses and other current assets 2,626 2,991
Deferred income taxes 5,871 5,871
---------- ----------
Total current assets 67,246 77,175
Marketable securities 27,972 18,198
Fixed assets, net 10,560 11,243
Deferred income taxes 2,939 2,939
Other assets 2,021 2,422
---------- ----------
$ 110,738 $ 111,977
---------- ----------
---------- ----------
LIABILITIES
Current liabilities
Current portion of long term debt $ 2,961 $ 3,502
Accounts payable 3,814 894
Accrued liabilities 11,653 14,586
Deferred revenue 10,686 8,950
---------- ----------
Total current liabilities 29,114 27,932
STOCKHOLDERS' EQUITY
Common stock, $.001 par value:
Authorized: 20,000,000 shares
Issued and outstanding: 16,580,497 shares
in 1997; 16,526,904 shares in 1996 17 17
Additional paid-in capital 77,895 77,545
Cumulative translation adjustment (563) ---
Unrealized holding gain (loss) on marketable
securities (128) 10
Retained earnings 5,124 7,242
Deferred compensation (721) (769)
---------- ----------
Total stockholders' equity 81,624 84,045
---------- ----------
$ 110,738 $ 111,977
---------- ----------
---------- ----------
</TABLE>
* December 31, 1996 has been restated to reflect the merger of the Company and
SpeedSim, Inc., which was accounted for as a pooling of interests.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
- 3 -
<PAGE>
QUICKTURN DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1997 1996*
----------- ----------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (2,118) $ 2,744
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities
Depreciation and amortization 1,906 1,902
Amortization of deferred compensation 48 ---
Write down of inventories 1,136 (2)
Changes in current assets and liabilities
Accounts receivable 100 5,073
Inventories (5,158) (1,851)
Prepaid expenses and other current assets 365 (213)
Accounts payable and accrued liabilities (13) (4,763)
Deferred revenue 1,736 5,035
--------- ---------
Net cash provided by (used in) operating
activities (1,998) 7,925
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets (1,137) (1,061)
Sale of marketable securities 5,040 8,002
Purchase of marketable securities (12,875) (9,657)
Increase (decrease) in other assets 396 (1,523)
--------- ---------
Net cash used in investing activities (8,576) (4,239)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long term debt (541) (875)
Proceeds from stock issuances 350 870
--------- ---------
Net cash used in financing activities (191) (5)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents (563) ---
Net increase (decrease) in cash and cash equivalents (11,328) 3,681
Cash and cash equivalents at beginning of period 25,790 17,658
--------- ---------
Cash and cash equivalents at end of period $ 14,462 $ 21,339
--------- ---------
--------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for
Interest $ 116 $ 131
Income taxes $ 2,284 $ 3,993
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES
Unrealized holding loss on marketable securities $ 138 $ 136
</TABLE>
* Q1 1996 has been restated to reflect the merger of the Company and SpeedSim,
Inc., which was accounted for as a pooling of interests.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
- 4 -
<PAGE>
QUICKTURN DESIGN SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements are unaudited (except for
the balance sheet information as of December 31, 1996, which is derived from
the Company's audited financial statements) and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair presentation of the financial position
and operating results for the interim periods. The condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto, together with management's discussion
and analysis of financial condition and results of operations contained in
the Company's 1996 Annual Report to Stockholders. The results of operations
for the three months ended March 31, 1997 are not necessarily indicative of
the results for the entire fiscal year ending December 31, 1997, or any
future interim period.
2. Inventories comprise: (in thousands)
March 31, December 31,
1997 1996
----------- ------------
(unaudited)
Raw materials $ 9,702 $ 8,431
Work in process 4,461 1,710
-------- --------
$ 14,163 $ 10,141
-------- --------
-------- --------
3. Reclassification: Certain prior year amounts have been reclassified to
conform to the current year presentation.
4. SpeedSim Merger: On February 7, 1997, the Company acquired SpeedSim,
Inc. ("SpeedSim"), a provider of cycle-based simulation software for the
verification of digital logic designs (the "SpeedSim Merger"), for 2.8
million shares of Quickturn common stock. The acquisition was accounted for
as a pooling of interests. The Company incurred direct transaction costs of
at least $1.2 million associated with the acquisition, which have been
charged to operations during the quarter ended March 31, 1997. All financial
information herein has been restated to include the operations of SpeedSim.
5. Recent Accounting Pronouncements: In February 1997, The Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 128 ("SFAS 128"), "Earnings Per Share," which specifies the computation,
presentation and disclosure requirements for earnings per share. SFAS 128
supercedes Accounting Principles Board Opinion No. 15 and is effective for
financial statements issued for periods ending after December 15, 1997. SFAS
128 requires restatement of all prior-period earnings per share data
presented after the effective date. SFAS 128 will not have a material impact
on the Company's financial position, results of operations or cash flows.
6. Fiscal Year: Effective in 1997, the Company changed its fiscal year to
December 31 from a 52-week or 53-week year, ending on the last Sunday in
December. The change had no significant impact on the current period results
of operations.
- 5 -
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
TOTAL REVENUE The Company's 1997 first quarter revenue of $21.4 million
represented a 10% decrease compared to the first quarter revenue in the prior
fiscal year and was a 30% decrease compared to revenue in the prior quarter.
The revenue decrease was primarily attributable to the delay of customer
purchase decisions for the Company's emulation products. The Company
believes that the delay in such decisions was due to customers reacting to
structural changes within their respective segments of the electronics
industry and to near term uncertainty generated by new competition. The
Company is uncertain about the potential timing of a return to historic order
rates. International sales accounted for approximately 23% and 41% of total
revenue in the first quarters of the current and prior fiscal years,
respectively. The decrease in international sales as a percentage of total
revenue was primarily due to decreased sales in Europe and the Asia-Pacific
markets excluding Japan. Revenue from most international customers is
denominated in U.S. dollars. However, receivables from certain other
international customers are denominated in local currencies. Such
receivables are hedged, where practicable, by forward exchange contracts to
minimize the impact of foreign exchange rate movements on the Company's
operating results. See Note 2 of the Notes to Consolidated Financial
Statements in the Company's 1996 Annual Report to Stockholders. There can be
no assurance that fluctuations in the currency exchange rates in the future
will not have a material adverse impact on the receivables derived from
foreign currency denominated sales and thus the Company's operating results
and financial condition.
Many of the Company's customers order on an as-needed basis and often delay
delivery of firm purchase orders until the commencement dates of such
customers' development projects are determined. Moreover, a significant
portion of the Company's revenue in each quarter generally results from
shipments in the last few weeks of the quarter; therefore, a delay in the
shipment of a few orders can have a significant impact upon total revenue and
results of operations in a given quarter.
A relatively limited number of customers have historically accounted for a
substantial portion of the Company's revenue. These customers represent
early adopters of emulation technology, typically for the design of complex
integrated circuits. In particular, the Company's top ten customers
represented 64% and 53% of revenue in the first quarters of 1997 and 1996,
respectively. The Company expects that sales of its products to a relatively
limited number of customers will continue to account for a high percentage of
revenue for the foreseeable future. The loss of a major customer or any
reduction in orders by such a customer could have an adverse effect on the
Company's financial condition or results of operations.
The Company believes that in the future its results of operations in a
quarterly period could be impacted by the timing of customer development
projects and related purchase orders for the Company's emulation systems, new
product announcements and releases by the Company, and economic conditions
generally and in the electronics industry specifically.
- 6 -
<PAGE>
GROSS MARGINS
Gross margins were 68% in the first quarter of the current year and 70% in
the prior quarter and in the first quarter of the prior year. The decrease
in gross margins was primarily due to a smaller revenue base over which to
spread fixed costs and a decreasing average price per logic gate. The
Company expects competitive pressures to increase in its market from existing
companies and new entrants, which among other things could accelerate the
trend of such decreasing average price per logic gate. Accordingly, there
can be no assurance that the Company will be able to sustain its recent gross
margins. Furthermore, to the extent that the Company's cost reduction goals
are achieved, any resulting cost savings that are passed on to the Company's
customers may also have an adverse effect on gross margins.
RESEARCH AND DEVELOPMENT
Research and development expenses increased by 36% in the first quarter of
1997 compared to the first quarter of the previous year. This increase was
primarily attributable to increased staffing, prototype and equipment costs
necessary to enhance current products and to develop the next generation
emulation and cycle-based simulation products. As a percentage of total
revenue, research and development expenses were approximately 27% for the
first quarter of the current year and 18% for the first quarter of the
previous year. The Company expects to continue to invest a significant
amount of its resources in research and development.
SALES AND MARKETING
Sales and marketing expenses increased 19% in the first quarter of 1997
compared to the first quarter of the previous year. This increase was
largely due to headcount increases to support both domestic and foreign
markets. As a percentage of revenue, sales and marketing expenses were
approximately 40% in the first quarter of 1997 compared to approximately 30%
in the first quarter of 1996. The Company expects that sales and marketing
expenses will continue to increase in absolute dollar amounts as the Company
expands its sales and marketing efforts.
GENERAL AND ADMINSTRATIVE
General and administrative expenses increased by 60% in the first quarter of
1997 compared to the first quarter of the previous year. This increase was
largely due to increased legal costs related to a patent infringement
lawsuit filed by the Company in January 1996. See "Part II., Item 1. Legal
Proceedings" of this Form 10-Q. As a percentage of revenue, general and
administrative expenses were approximately 12% for the first quarter of the
current year and 7% for the first quarter of the prior year. The Company
expects general and administrative expenses to increase in 1997 due primarily
to continued legal costs associated with the lawsuit.
MERGER RELATED COSTS
In connection with its acquisition of SpeedSim, Inc. (the "SpeedSim Merger"),
the Company recorded one-time charges of $1.2 million in the first quarter of
1997 that included fees for investment banking, legal and accounting services
and other costs of consolidating.
OTHER INCOME, NET
Other income increased by $80,000 in the first quarter of 1997 compared to
the same period in 1996 due primarily to an increase in interest income
associated with a greater average quarterly balance of cash and cash
equivalents and marketable securities.
- 7 -
<PAGE>
PROVISION FOR INCOME TAXES
The effective tax rates of 31% for both the three months ended March 31, 1997
and March 31, 1996, respectively, were lower than the statutory federal rate
of 35% primarily because of federal and state general business credits,
interest income on investments in tax-exempt obligations and benefit from
foreign sales corporation.
NET INCOME (LOSS) AND QUARTERLY RESULTS
A net loss of $2.1 million was recorded in the first quarter of 1997 compared
to net income of $2.8 million in the first quarter of 1996. This decrease in
net income was due primarily to decreased revenue, increased operating
expenses and a one-time expense of $1.2 million related to the SpeedSim
Merger, partially offset by decreased taxes.
FACTORS AFFECTING OPERATING RESULTS
COMPETITION
The EDA industry is highly competitive and rapidly changing. The Company
faces significant competition for emulation-based system-level verification,
in addition to competition from traditional design verification methodologies
which rely on the approach of building and then testing complete system
prototypes. Because of customers' requirements for a design verification
methodology which reduces the number of costly design iterations and improves
product quality, the Company expects competition in the market for
system-level verification to increase as other companies attempt to introduce
emulation products and product enhancements. Moreover, the Company competes
with companies that have significantly greater financial, technical and
marketing resources, greater name recognition and larger installed customer
bases than the Company. In addition, many of these competitors have
established relationships with current and potential customers of the
Company. Increased competition could result in price reductions, reduced
margins and loss of market share, all of which could materially adversely
affect the Company. The Company believes that the principal competitive
factors in the EDA market are quality of results, the mission-critical nature
of the technology, technical support, product performance, reputation, price
and support of industry standards. The Company believes that it currently
competes favorably with respect to these factors. However, there can be no
assurance that the Company will be able to compete successfully against
current and future competitors or that competitive pressures faced by the
Company will not materially adversely affect its business, operating results
and financial condition.
In addition, competitors may resort to litigation as a means of competition.
Such litigation may result in substantial costs to the Company and
significant diversion of management time. In 1995, Mentor Graphics
Corporation, ("Mentor") filed suit against the Company for declarative
judgment of noninfringement, invalidity and unenforceability of several of
the Company's patents. Six of the Company's patents are now involved in the
disputes and the Company has filed counterclaims against Mentor and Mentor's
French subsidiary, Meta Systems ("Meta"), for infringement and threatened
infringement of those six patents. Furthermore, in January 1996, the Company
filed a complaint with the International Trade Commission, seeking to stop
unfair importation of hardware logic emulation systems manufactured by Meta
on the grounds that such systems infringe the Company's patents. See Note 14
of the Notes to Consolidated Financial Statements in the Company's 1996
Annual Report to Stockholders. Although patent and intellectual property
disputes in the EDA industry are often settled through licensing,
cross-licensing or similar arrangements, costs associated with such
litigation and arrangements may be substantial.
- 8 -
<PAGE>
RISKS ASSOCIATED WITH THE SPEEDSIM MERGER
On February 7, 1997, the Company completed the SpeedSim Merger. There can be
no assurance that the Company will not incur additional charges in subsequent
quarters to reflect costs associated with the SpeedSim Merger or that
management will be successful in its efforts to integrate the operations of
the acquired company. Although the Company believes the SpeedSim Merger is
in the best interest of the Company and its stockholders, there are
significant risks associated with these types of transactions, including but
not limited to: (i) difficulties in the integration of SpeedSim, (ii)
difficulties in maintaining revenue levels during product transitions, (iii)
difficulties or delays in achieving product and technology integration
benefits, and (iv) increased competition from other software companies.
Moreover, SpeedSim is a company in the early stages of development. As a
result, the Company believes that the increases in operating expenses
associated with the development and integration of these new technologies
could, in the near term, greatly exceed any associated increases in revenue
which could have an adverse impact on operating results.
OTHER FACTORS
Other factors which could adversely affect the Company's quarterly operating
results in the future include efficiencies as they relate to managing
inventories and fixed assets, the timing of expenditures in anticipation of
increased sales, customer product delivery requirements and shortages of
components or labor. Moreover, a significant portion of the Company's total
revenue in each quarter generally results from shipments in the last few
weeks of the quarter; therefore, a delay in the shipment of a few orders can
have a significant impact upon total revenue and results of operations in a
given quarter. Additionally, as a significant portion of the Company's total
revenue and net income may come from international operations, fluctuations
of the U.S. dollar against foreign currencies and the seasonality of
Asia-Pacific, European, and other international markets could impact the
Company's results of operations and financial condition in a particular
quarter.
Due to the factors above, the Company's future earnings and stock price may
be subject to significant volatility, particularly on a quarterly basis. Any
shortfall in total revenue or earnings from levels expected by securities
analysts has had and could in the future have an immediate and significant
adverse effect on the trading price of the Company's common stock.
Additionally, the Company may not learn of such shortfalls until late in a
fiscal quarter, which could result in an even more immediate and adverse
effect on the trading price of the Company's common stock.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $11.3 million from December 31, 1996
to March 31, 1997. Net cash used in operations was $2.0 million, due
primarily to increased inventory of $4.0 million and net loss of $2.1
million, partially offset by $1.9 million of depreciation and amortization
and $1.7 million of increased deferred revenue. Net cash used in investments
was $8.6 million due primarily to purchases of marketable securities of $12.9
million, offset by sales of marketable securities of $5.0 million. Net cash
used in financing activities was $191,000 due to payments of capital lease
obligations of $541,000, offset by proceeds from stock issuances of $350,000.
- 9 -
<PAGE>
The Company believes that its cash and cash equivalents, together with its
existing credit facility and the cash flows expected to be generated by
operations, will be sufficient to meet its anticipated cash needs for working
capital, capital expenditures and marketing expansion through at least 1997.
Thereafter, if cash generated from operations is insufficient to satisfy the
Company's liquidity requirements, the Company may sell additional equity or
debt securities or obtain additional credit facilities.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In January 1995, the Company and certain of its officers and directors were
named in a securities class action filed in the United States District Court
for the Northern District of California. In September 1995, the Court
dismissed with prejudice all claims against several defendants, including the
Company's outside directors. The Court also dismissed with prejudice many of
the allegations and claims asserted against the Company and certain of its
officers. The Company believed that it had meritorious defenses to the claims
remaining in the action. Nevertheless, in order to avoid further legal
expenses and conserve management resources, the Company entered into a
Stipulation of Settlement with plaintiffs in January 1997. The Company's
contribution to the $2.75 million settlement, net of insurance proceeds, was
not material. On April 2, 1997, the Court granted final approval of the
settlement as fair, adequate and reasonable to the parties. The Court
entered the Final Judgment and Order of Dismissal of the action on April 4,
1997.
Additionally, in January 1996, the Company filed a complaint with the
International Trade Commission (the "ITC") in Washington, DC, seeking to stop
unfair importation of logic emulation systems manufactured by Meta Systems, a
subsidiary of Mentor. In the complaint, the Company alleges that Mentor's
hardware logic emulation systems infringe the Company's patents. In July
1996, the ITC Administrative Law Judge issued an Initial Determination
granting a Temporary Exclusion Order stopping the importation of Mentor's
emulation systems into the U.S., absent the posting of a bond by Mentor. The
ITC Initial Determination included a Cease and Desist Order against all sales
activities regarding unbonded Mentor emulation products imported into the
U.S. In August 1996, the ITC ratified the judges' Initial Determination.
The Company is continuing its legal efforts with the ITC to obtain a
permanent Exclusion Order prohibiting the importation of Mentor's emulation
products into the U.S. The Company also is engaged in a Federal District
Court case with Mentor and Meta involving six of the Company's patents.
Mentor and Meta are seeking a declaratory judgment of noninfringement,
invalidity and unenforceability of the patents in dispute, and the Company
has filed counteractions against Mentor and Meta for infringement and
threatened infringement of the six patents. Mentor has also claimed in this
Federal District Court case that press releases issued by the Company were
defamatory and interfered with Mentor's prospective economic relations. Aptix
Corporation also recently filed a suit against the Company alleging various
violations of the antitrust laws and unfair competition. The Company does
not believe that Mentor's defamation and tortious interference claims or the
antitrust and unfair competition claims by Aptix are meritorious and has
mounted vigorous defenses against them. The outcome of these actions cannot
be predicted with certainty.
- 10 -
<PAGE>
The Company is engaged in certain other legal and administrative proceedings
incidental to its normal business activities. While it is not possible to
determine the ultimate outcome of these actions at this time, management
believes that any liabilities resulting from such proceedings, or claims
which are pending or known to be threatened, will not have a material adverse
effect on the Company's consolidated financial position or results of
operations.
ITEM 2. CHANGES IN SECURITIES
In connection with the SpeedSim Merger, on February 7, 1997, the Company
issued an aggregate of 2,404,346 shares of the Company's Common Stock (the
"Merger Shares") to the existing stockholders of SpeedSim in exchange for all
of the outstanding shares of capital stock of SpeedSim. The Merger Shares
were issued pursuant to the exemption for the registration requirements of
the Securities Act of 1933, as amended (the "1933 Act") afforded by Section
4(2) of the 1933 Act. The stockholders of SpeedSim were either accredited or
sophisticated investors with access to all relevant information regarding the
Company necessary to evaluate the investment and represented to the Company
that the shares were being acquired for investment intent.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11.1: Statement of computation of earnings per share.
Exhibit 27: Financial Data Schedule
(b) REPORT ON FORM 8-K
A Current Report on Form 8-K dated February 7, 1997 was filed with the
Securities and Exchange Commission by the Company in the quarter ended March
31, 1997 to report the SpeedSim Merger.
- 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.
QUICKTURN DESIGN SYSTEMS, INC.
-------------------------------------
(Registrant)
Date May 13, 1997 By: /s/ Raymond K. Ostby
- --------------------------------- --------------------------------------
Raymond K. Ostby,
Vice-President, Finance and Administration,
Chief Financial Officer and Secretary
(Principal Accounting Officer and
Duly Authorized Officer)
- 12 -
<PAGE>
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996*
-------- --------
Weighted average shares outstanding:
Common stock 16,562 14,832
Common stock equivalents -- 2,613
-------- -------
Weighted average common shares and equivalents 16,562 17,445
Net income (loss) $(2,118) $ 2,744
-------- -------
-------- -------
Net income (loss) per share (1) $ (0.13) $ 0.16
-------- -------
-------- -------
- --------------------------
* Q1 1996 has been restated to reflect the merger of the Company and
SpeedSim Inc., which was accounted for as a pooling of interests.
(1) There is no difference between primary and fully diluted net income per
share.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF OPERATIONS AND
CONSOLIDATED STATEMENT OF CASH FLOWS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE
PERIOD ENDING 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-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 14,462
<SECURITIES> 8,456
<RECEIVABLES> 23,508
<ALLOWANCES> 1,840
<INVENTORY> 14,163
<CURRENT-ASSETS> 67,246
<PP&E> 34,295
<DEPRECIATION> 23,735
<TOTAL-ASSETS> 110,738
<CURRENT-LIABILITIES> 29,114
<BONDS> 0
0
0
<COMMON> 17
<OTHER-SE> 81,607
<TOTAL-LIABILITY-AND-EQUITY> 110,738
<SALES> 21,402
<TOTAL-REVENUES> 21,402
<CGS> 6,834
<TOTAL-COSTS> 6,834
<OTHER-EXPENSES> 18,029
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128
<INCOME-PRETAX> (3,069)
<INCOME-TAX> (951)
<INCOME-CONTINUING> (2,118)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,118)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
