<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 11)
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Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
QUICKTURN DESIGN SYSTEMS, INC.
(Name of Subject Company)
QUICKTURN DESIGN SYSTEMS, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(including the associated preferred stock purchase rights)
(Title of Class of Securities)
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74838E102
(CUSIP Number of Class of Securities)
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KEITH R. LOBO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
QUICKTURN DESIGN SYSTEMS, INC.
55 W. TRIMBLE ROAD
SAN JOSE, CALIFORNIA 95131
(408) 914-6000
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of person(s) filing statement)
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COPY TO:
LARRY W. SONSINI, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
(650) 493-9300
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<PAGE>
INTRODUCTION
The Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") originally filed on August 24, 1998, by Quickturn Design Systems,
Inc., a Delaware corporation (the "Company" or "Quickturn"), relates to an
offer by MGZ Corp., a Delaware corporation ("MGZ") and a wholly owned
subsidiary of Mentor Graphics Corporation, an Oregon corporation ("Mentor"),
to purchase all of the outstanding shares of the common stock, par value $.001
per share (including the associated preferred stock purchase rights), of the
Company. All capitalized terms used herein without definition have the
respective meanings set forth in the Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The response to Item 8 is hereby amended by deleting the last two paragraphs
of the section entitled "Litigation Concerning the Offer" and replacing them
with the following:
On September 22, 1998 Quickturn filed a motion in the Delaware federal
district court requesting the Court to reschedule the hearing on the
parties' cross motions for preliminary injunctions. On September 23, 1998,
the Court rescheduled the hearing on Quickturn's motion for preliminary
injunction to October 21, 1998. Mentor will proceed with the hearing for
its motion for preliminary injunction on October 6, 1998. Mentor filed its
opening brief in support of its motion for preliminary injunction on
September 24, 1998. A copy of the Company's Motion to Reschedule Hearing on
Cross Motions for Preliminary Injunctions is filed as Exhibit 36 hereto and
is incorporated herein by reference.
On September 28, 1998 Quickturn moved for summary judgement in the
Delaware Chancery Court actions on the grounds that as matter of law: (i)
the Board's decision to amend the Company's bylaws was not for the purpose
of, and does not have the effect of, entrenching the Board; (ii) the
Board's decision not to remove Quickturn from the protections provided by
Section 203 of Delaware Law is protected by the business judgement rule;
(iii) the Board's decision not to redeem the Rights under Quickturn's
Rights Agreement is appropriate under Delaware Law; and (iv) the Board's
adoption of a delayed redemption provision in the Rights Agreement falls
within the range of reasonableness allowed under Delaware Law.
The response to Item 8 is hereby amended further by adding the following to
the end of the section entitled "Proxy Solicitation":
On October 2, 1998 the Company mailed a letter to its stockholders and
issued a press release regarding such letter. Copies of the letter and the
press release are attached as Exhibits 37 and 38 hereto and are
incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
The response to Item 9 is hereby amended by the addition of the following
new exhibits:
Exhibit 37 Letter to the Company's stockholders dated October 2, 1998.
Exhibit 38 Press Release of the Company dated October 2, 1998.
2
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
<TABLE>
<C> <S>
Dated: October 2, 1998 QUICKTURN DESIGN SYSTEMS, INC.
</TABLE>
By:/s/ Keith R. Lobo
----------------------------------
Keith R. Lobo
President and Chief Executive
Officer
3
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EXHIBIT 37
[LOGO OF QUICKTURN APPEARS HERE]
October 2, 1998
Dear Fellow Stockholder:
Your Board of Directors is committed to growing Quickturn's businesses and
increasing the value of your investment. We can only be successful with your
continued support.
PARTICIPATE IN QUICKTURN'S BRIGHT FUTURE
DO NOT TENDER YOUR SHARES
DO NOT VOTE MENTOR'S GOLD PROXY CARD
Your Board of Directors strongly believes that Quickturn has a great future.
We see, as we believe Mentor Graphics does, the potential for dramatic growth
in our key technologies. Your Board determined that Mentor's offer is
inadequate, does not reflect the inherent value of the company, and is not in
the best interests of Quickturn or its stockholders. The Quickturn Board
strongly recommends that you not tender your shares to Mentor and urges that
you not return Mentor's gold proxy card. Your Board believes that Quickturn
will generate substantial returns for stockholders over the next two years and
thereafter.
BUT DON'T JUST TAKE OUR WORD FOR IT . . .
LET THE FACTS SPEAK FOR THEMSELVES
Today, Quickturn announced that it expects to exceed consensus analysts'
estimates for the third quarter of 1998. The revenue for the quarter ending
September 30, 1998 is expected to be approximately $25.5 million, compared to
the consensus analysts' estimates of $24.7 million. Excluding the legal and
advisory expenses of approximately $4.0 million related to Quickturn's defense
against Mentor's attempted hostile takeover, the company currently expects net
income for the third quarter to be approximately $600,000, or $0.03 per share,
compared to consensus analysts' estimates of a loss of $0.03 per share. Over
the last two quarters, customers in several countries delayed investment in
high-performance verification tools. More recently, we see that several key
customers have begun to reinvest in design and verification. In fact, as we
enter the fourth quarter, Quickturn has the strongest backlog we've seen this
year.
<PAGE>
READ WHAT THE EXPERTS ARE SAYING...
THE STATE OF WISCONSIN INVESTMENT BOARD (SWIB) -- one of Quickturn's largest
stockholders with approximately 2,101,500 shares -- stated that it "HAS
REJECTED THE CASH TENDER OFFER MADE BY MENTOR GRAPHICS." SWIB said that
MENTOR'S OFFER IS "INADEQUATE," and that "QUICKTURN'S STAND-ALONE RETURN
POTENTIAL OVER THE LONG-TERM SIGNIFICANTLY EXCEEDS THE PRICE BEING OFFERED BY
MENTOR GRAPHICS."
Jennifer Smith, an analyst specializing in electronic design automation
(EDA) at BancBoston Robertson Stephens, said in an August 25, 1998 research
report, "Despite the current slowdown in the EDA sector, due to weakness in
Asia and the semiconductor market in general, WE BELIEVE THAT QUICKTURN IS
WELL POSITIONED TO PARTICIPATE IN GREATER THAN MARKET GROWTH WHEN THE
SEMICONDUCTOR MARKET RETURNS TO HEALTH." In the report, Ms. Smith also said,
".....[W]E BELIEVE THAT THE PROPOSED BID FOR QUICKTURN ... MAY NOT BENEFIT BOTH
COMPANIES' SHAREHOLDERS as much as investments in new, emerging verification
solutions."*
DON'T BE MISLED BY MENTOR'S DESPERATE ATTEMPT
TO TAKE OVER QUICKTURN AND ITS FUTURE
Mentor is soliciting gold proxy cards from Quickturn stockholders in its
attempt to replace your company's Board with its slate of hand-picked
nominees. If Mentor's nominees are elected, their primary purpose will be to
facilitate Mentor's takeover of Quickturn at what your Board has determined is
an inadequate price. YOUR BOARD STRONGLY URGES YOU TO REJECT MENTOR'S
SOLICITATION AND TO THROW AWAY ANY GOLD PROXY CARD THAT YOU MAY RECEIVE.
YOUR BOARD BELIEVES THAT MENTOR UNDERSTANDS THE SCARCITY VALUE OF
QUICKTURN'S LEADERSHIP POSITION IN THE INDUSTRY AND ITS POWERFUL PATENT
PORTFOLIO. Mentor's numerous challenges to Quickturn's patents have failed --
the courts have rejected to date every one of Mentor's challenges. Your
Board's rejection of Mentor's offer affirms its continued confidence in
Quickturn's future and its determination that our stockholders should be given
every opportunity to participate fully in that future.
YOUR BOARD STRONGLY RECOMMENDS THAT QUICKTURN STOCKHOLDERS NOT TENDER THEIR
SHARES TO MENTOR'S OFFER AND NOT RETURN ANY MENTOR GOLD PROXY CARD THAT MAY
HAVE BEEN SENT TO YOU. THE QUICKTURN BOARD WILL CONTINUE TO ENSURE THAT YOUR
BEST INTERESTS -- NOT MENTOR'S -- ARE SERVED.
2
<PAGE>
PARTICIPATE IN QUICKTURN'S BRIGHT FUTURE
DON'T TENDER YOUR SHARES
DON'T VOTE MENTOR'S GOLD PROXY CARDS
If you have tendered, you can still withdraw your shares, if you act
promptly. If you hold your shares with a bank or broker, you merely need to
call your broker to withdraw your shares. If you hold your shares in
certificate form, please fill out the enclosed withdrawal form. If you have
any questions or require any assistance in withdrawing any shares you may have
tendered, please call Morrow & Co., Inc. toll-free at 1-800-662-5200.
On Behalf of the Board of Directors,
/s/ Keith R. Lobo
Keith R. Lobo
Chief Executive Officer and
President
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* First Call, BancAmerica Robertson Stephens: Jennifer M. Smith, August 25,
1998. Permission to use these quotations was neither sought nor obtained.
3
<PAGE>
CERTAIN INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements, including statements
regarding future periods as well as statements regarding the company's
markets. Actual results could differ materially from those described in the
forward-looking statements as a result of factors including, but not limited
to, the following: (i) review by the company's independent auditors; (ii) the
company is uncertain whether the recent weakness experienced in the Asia-
Pacific and domestic markets will continue in the foreseeable future; (iii)
product transitions to Quickturn's new Mercury Design Verification System may
be disrupted due to slow market acceptance or due to disruptions in
manufacturing or component availability; (iv) many of the company's customers
order on an as-needed basis and often delay delivery of firm purchase orders;
(v) the decision of customers to purchase the company's products involves a
lengthy sales cycle which could result, among other things, in fluctuations of
operating results and inventory obsolescence if expected orders are delayed or
not received; (vi) the company expects increased competition, which could
result in lost sales or price erosion; (vii) the company's patents and other
proprietary rights may not ensure adequate protection against competition;
(viii) the company serves the electronics and semiconductor industries, which
are noted for rapidly changing needs, there can be no assurance that
Quickturn's product enhancements or new product introductions will keep pace
with or meet those rapidly changing needs or that new products offered by
others will not be superior to those offered by Quickturn; and (ix) there can
be no assurance that Quickturn can retain the services of key employees and
key suppliers upon which the company is dependent to provide product advances,
timely production and high levels of product quality and reliability.
4
<PAGE>
--------------------------------------------------
HOW TO WITHDRAW YOUR QUICKTURN SHARES YOU'VE
TENDERED TO MENTOR GRAPHICS
--------------------------------------------------
Step 1: Fill out the information requested in sections A and B below completely.
======
STEP 2: Have section C (Signature Guarantee) completed and signed by an Eligible
====== Institution, as described in that section below.
STEP 3: Mail this completed form in the enclosed envelope and/or send it by
====== facsimile to one of the numbers listed on the reverse side so that it
will be received by the Depositary no later than 12:00 Midnight, New
York City time, October 6, 1998.
NOTE:
IF YOU TENDERED DIFFERENT SHARES, REGISTERED IN DIFFERENT NAMES, under
separate Letters of Transmittal, please use a separate Notice of
Withdrawal for each such Letter Of Transmittal.
IF YOU DO NOT KNOW YOUR CERTIFICATE NUMBER(S), you may call Boston
Equiserve at 1-781-575-3400 and request your certificate numbers.
================================================================================
GENTLEMEN:
The undersigned hereby withdraws the shares of Common Stock (the
"Shares") of Quickturn Design Systems, Inc. described below representing all
Shares tendered by the undersigned:
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A. DESCRIPTION OF SHARES WITHDRAWN:
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1. Name(s) of tendering shareholder(s).........................
2. Name(s) of registered holder(s) if different................
3. Number of Shares Withdrawn..................................
4. Certificate Numbers.........................................
ONLY FILL IN SECTIONS 5 AND 6 IF APPLICABLE
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5. IF APPLICABLE, DTC, account number..........................
6. Name of DTC account.........................................
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B. SHAREHOLDER SIGN HERE.
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Must be signed by all registered holders as names appear on stock
certificates or by all persons authorized to become registered holders by
certificates and documents previously transmitted or transmitted herewith.
Signatures of Owner(s)
............................ ..................................
(Print name) (Signature)
............................ ..................................
(Print name) (Signature)
Date ...................., 1998
If signature is by trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or representative capacity,
please set forth full title in the space below.
Capacity ......................................................................
Street or Box Number ............... City ........ State ........ Zip .........
<PAGE>
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C. SIGNATURE GUARANTEE.
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Must be completed by a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office or correspondent in the United States (required if
certificates have been delivered)
Authorized Signature .........................................
Name of Firm ...................... Date ..................... 1993
NOTICE OF WITHDRAWAL
of Shares of Common Stock of Quickturn Design Systems, Inc. Tendered Pursuant to
the Offer to Purchase Dated August 12, 1998 by Mentor Graphics Corporation
TO: IBJ SCHROEDER BANK & TRUST COMPANY
BY MAIL: BY HAND OR
OVERNIGHT COURIER:
IBJ Schroeder Bank & Trust Company IBJ Schroeder Bank & Trust Company
One State Street One State Street
P.O. Box 84 Securities Processing Department
Bowling Green Station Reorganization Department SC-1
New York, New York 10274-0084 New York, New York 10004
BY FACSIMILE
(212) 858-2611
CONFIRM FACSIMILE BY TELEPHONE:
(212) 858-2103
===============================================================================
SHAREHOLDERS WHO DESIRE ASSISTANCE:
SHAREHOLDERS WHO DESIRE ASSISTANCE IN WITHDRAWING SHARES TENDERED PURSUANT
TO THE MENTOR OFFER MAY CONTACT MORROW & CO., INC., WHICH IS ASSISTING
QUICKTURN DESIGN SYSTEMS, INC., AT THE TELEPHONE NUMBER SET FORTH BELOW:
MORROW & CO., INC.
TOLL FREE 1-800-662-5200
===============================================================================
<PAGE>
EXHIBIT 38
CONTACTS:
QUICKTURN DESIGN SYSTEMS, INC. ABERNATHY MACGREGOR FRANK
Raymond K. Ostby Pauline Yoshihashi
(408) 914-6000 (213) 630-6550
Matt Sherman
(212) 371-5999
FOR IMMEDIATE RELEASE
QUICKTURN MAILS LETTER TO STOCKHOLDERS
URGES STOCKHOLDERS NOT TO TENDER SHARES, NOT TO VOTE FOR MENTOR'S BOARD
NOMINEES
SAN JOSE, CALIF. (OCTOBER 2, 1998)--Quickturn Design Systems, Inc. (Nasdaq:
QKTN) announced today that it has mailed a letter to Quickturn stockholders
recommending that they not tender their shares to Mentor Graphics Corporation
(Nasdaq: MENT). In addition, the Quickturn Board strongly urges stockholders
not to support Mentor's attempt to replace the Quickturn Board with its slate
of hand-picked nominees. The complete text of the letter follows:
October 2, 1998
Dear Fellow Stockholder:
Your Board of Directors is committed to growing Quickturn's businesses and
increasing the value of your investment. We can only be successful with your
continued support.
PARTICIPATE IN QUICKTURN'S BRIGHT FUTURE
DO NOT TENDER YOUR SHARES
DO NOT VOTE MENTOR'S GOLD PROXY CARD
Your Board of Directors strongly believes that Quickturn has a great future.
We see, as we believe Mentor Graphics does, the potential for dramatic growth
in our key technologies. Your Board determined that Mentor's offer is
inadequate, does not reflect the inherent value of the company, and is not in
the best interests of Quickturn or its stockholders. The Quickturn Board
strongly recommends that you not tender your shares to Mentor and urges that
you not return Mentor's gold proxy card. Your Board believes that Quickturn
will generate substantial returns for stockholders over the next two years and
thereafter.
BUT DON'T JUST TAKE OUR WORD FOR IT . . .
LET THE FACTS SPEAK FOR THEMSELVES
Today, Quickturn announced that it expects to exceed consensus analysts'
estimates for the third quarter of 1998. The revenue for the quarter ending
September 30, 1998 is expected to be approximately $25.5 million, compared to
the consensus analysts' estimates of $24.7 million. Excluding the legal and
advisory expenses of approximately $4.0 million related to Quickturn's defense
against Mentor's attempted hostile takeover, the
<PAGE>
company currently expects net income for the third quarter to be approximately
$600,000, or $0.03 per share, compared to consensus analysts' estimates of a
loss of $0.03 per share. Over the last two quarters, customers in several
countries delayed investment in high-performance verification tools. More
recently, we see that several key customers have begun to reinvest in design
and verification. In fact, as we enter the fourth quarter, Quickturn has the
strongest backlog we've seen this year.
READ WHAT THE EXPERTS ARE SAYING...
THE STATE OF WISCONSIN INVESTMENT BOARD (SWIB) -- one of Quickturn's largest
stockholders with approximately 2,101,500 shares -- stated that it "HAS
REJECTED THE CASH TENDER OFFER MADE BY MENTOR GRAPHICS." SWIB said that
MENTOR'S OFFER IS "INADEQUATE," and that "QUICKTURN'S STAND-ALONE RETURN
POTENTIAL OVER THE LONG-TERM SIGNIFICANTLY EXCEEDS THE PRICE BEING OFFERED BY
MENTOR GRAPHICS."
Jennifer Smith, an analyst specializing in electronic design automation
(EDA) at BancBoston Robertson Stephens, said in an August 25, 1998 research
report, "Despite the current slowdown in the EDA sector, due to weakness in
Asia and the semiconductor market in general, WE BELIEVE THAT QUICKTURN IS
WELL POSITIONED TO PARTICIPATE IN GREATER THAN MARKET GROWTH WHEN THE
SEMICONDUCTOR MARKET RETURNS TO HEALTH." In the report, Ms. Smith also said,
".....[W]E BELIEVE THAT THE PROPOSED BID FOR QUICKTURN ... MAY NOT BENEFIT BOTH
COMPANIES' SHAREHOLDERS as much as investments in new, emerging verification
solutions."*
DON'T BE MISLED BY MENTOR'S DESPERATE ATTEMPT
TO TAKE OVER QUICKTURN AND ITS FUTURE
Mentor is soliciting gold proxy cards from Quickturn stockholders in its
attempt to replace your company's Board with its slate of hand-picked
nominees. If Mentor's nominees are elected, their primary purpose will be to
facilitate Mentor's takeover of Quickturn at what your Board has determined is
an inadequate price. YOUR BOARD STRONGLY URGES YOU TO REJECT MENTOR'S
SOLICITATION AND TO THROW AWAY ANY GOLD PROXY CARD THAT YOU MAY RECEIVE.
Your Board believes that Mentor understands the scarcity value of
Quickturn's leadership position in the industry and its powerful patent
portfolio. Mentor's numerous challenges to Quickturn's patents have failed --
the courts have rejected to date every one of Mentor's challenges. Your
Board's rejection of Mentor's offer affirms its continued confidence in
Quickturn's future and its determination that our stockholders should be given
every opportunity to participate fully in that future.
YOUR BOARD STRONGLY RECOMMENDS THAT QUICKTURN STOCKHOLDERS NOT TENDER THEIR
SHARES TO MENTOR'S OFFER AND NOT RETURN ANY MENTOR GOLD PROXY CARD THAT MAY
HAVE BEEN SENT TO YOU. THE QUICKTURN BOARD WILL CONTINUE TO ENSURE THAT YOUR
BEST INTERESTS -- NOT MENTOR'S -- ARE SERVED.
2
<PAGE>
PARTICIPATE IN QUICKTURN'S BRIGHT FUTURE
DON'T TENDER YOUR SHARES
DON'T VOTE MENTOR'S GOLD PROXY CARDS
If you have tendered, you can still withdraw your shares, if you act
promptly. If you hold your shares with a bank or broker, you merely need to
call your broker to withdraw your shares. If you hold your shares in
certificate form, please fill out the enclosed withdrawal form. If you have
any questions or require any assistance in withdrawing any shares you may have
tendered, please call Morrow & Co., Inc. toll-free at 1-800-662-5200.
On Behalf of the Board of Directors,
/s/ Keith R. Lobo
Keith R. Lobo
Chief Executive Officer and
President
- --------
* First Call, BancAmerica Robertson Stephens: Jennifer M. Smith, August 25,
1998. Permission to use these quotations was neither sought nor obtained.
Quickturn Design Systems, Inc. is the leading provider of verification
products and time-to-market engineering (TtME(TM)) services for the design of
complex ICs and electronic systems. The company's products are used worldwide
by developers of high-performance computing, multimedia, graphics and
communications systems. Quickturn is headquartered at 55 W. Trimble Road, San
Jose, CA 95131-1013; Telephone: 408/914-6000. For more information, visit the
Quickturn Web site at www.quickturn.com or send e-mail to [email protected].
3
<PAGE>
CERTAIN INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements, including statements
regarding future periods as well as statements regarding the company's
markets. Actual results could differ materially from those described in the
forward-looking statements as a result of factors including, but not limited
to, the following: (i) review by the company's independent auditors; (ii) the
company is uncertain whether the recent weakness experienced in the Asia-
Pacific and domestic markets will continue in the foreseeable future; (iii)
product transitions to Quickturn's new Mercury Design Verification System may
be disrupted due to slow market acceptance or due to disruptions in
manufacturing or component availability; (iv) many of the company's customers
order on an as-needed basis and often delay delivery of firm purchase orders;
(v) the decision of customers to purchase the company's products involves a
lengthy sales cycle which could result, among other things, in fluctuations of
operating results and inventory obsolescence if expected orders are delayed or
not received; (vi) the company expects increased competition, which could
result in lost sales or price erosion; (vii) the company's patents and other
proprietary rights may not ensure adequate protection against competition;
(viii) the company serves the electronics and semiconductor industries, which
are noted for rapidly changing needs, there can be no assurance that
Quickturn's product enhancements or new product introductions will keep pace
with or meet those rapidly changing needs or that new products offered by
others will not be superior to those offered by Quickturn; and (ix) there can
be no assurance that Quickturn can retain the services of key employees and
key suppliers upon which the company is dependent to provide product advances,
timely production and high levels of product quality and reliability.
4
