<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/ 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: 0-20923
SUMMIT DESIGN, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 93-1137888
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
9305 S. W. GEMINI DRIVE,
BEAVERTON, OREGON 97008
(Address of principal executive office)
Registrant's Telephone number, including area code: (503) 643-9281
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, the Registrant had outstanding 13,946,044 shares of Common
Stock.
Item 2 of Part I of this report on Form 10-Q has been omitted pursuant to Rule
12b-25 of the Securities Exchange Act of 1934.
<PAGE>
SUMMIT DESIGN, INC.
INDEX
PART I FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheet as of March 31, 1997
(unaudited) and December 31, 1996. 3
Condensed Consolidated Statements of Operations (unaudited) for
the three month periods ended March 31, 1997 and 1996. 4
Condensed Consolidated Statements of Cash Flows (unaudited) for
the three month periods ended March 31, 1997 and 1996. 5
Notes to Condensed Consolidated Financial Statements. 6
Item 2 To be filed by amendment.
PART II OTHER INFORMATION
Item 1 Not Applicable
Item 2 Changes in Securities 8
Item 3 Not Applicable
Item 4 Not Applicable
Item 5 Not Applicable
Item 6 Exhibits and Reports on Form 8-K 8
Signature 9
Exhibit Index 10
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<PAGE>
Part I FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements
SUMMIT DESIGN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . $ 19,859 $ 19,772
Accounts receivable. . . . . . . . . . . . . . . . 5,888 5,567
Prepaid expenses and other . . . . . . . . . . . . 498 487
-------------- -----------------
Total current assets . . . . . . . . . . . . . 26,245 25,826
Furniture and equipment, net . . . . . . . . . . . . . . 1,908 1,832
Deferred taxes . . . . . . . . . . . . . . . . . . . . . 500 500
Deposits and other assets. . . . . . . . . . . . . . . . 487 468
-------------- -----------------
Total assets . . . . . . . . . . . . . . . . . $ 29,140 $ 28,626
-------------- -----------------
-------------- -----------------
LIABILITIES
Current liabilities:
Long-term debt, current portion. . . . . . . . . . $ 391 $ 462
Capital lease obligation, current portion. . . . . 34 65
Accounts payable . . . . . . . . . . . . . . . . . 1,860 1,453
Accrued liabilities. . . . . . . . . . . . . . . . 2,773 2,870
Deferred revenue . . . . . . . . . . . . . . . . . 2,732 3,758
-------------- -----------------
Total current liabilities. . . . . . . . . . . 7,790 8,608
Long-term debt, less current portion . . . . . . . . . . 675 675
Capital lease obligations, less current portion. . . . . 92 95
Deferred revenue, less current portion . . . . . . . . . 175 67
-------------- -----------------
Total liabilities. . . . . . . . . . . . . . . 8,732 9,445
-------------- -----------------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, $.01 par value. Authorized
30,000 shares; issued and outstanding
13,907 shares at March 31, 1997 and 13,873
shares at December 31, 1996. . . . . . . . . . . . . . . 139 139
Additional paid-in capital . . . . . . . . . . . . . . . 33,249 33,235
Accumulated deficit. . . . . . . . . . . . . . . . . . . (12,980) (14,193)
-------------- -----------------
Total stockholders' equity . . . . . . . . . . . . 20,408 19,181
-------------- -----------------
Total liabilities and stockholders' equity . . . . $ 29,140 $ 28,626
-------------- -----------------
-------------- -----------------
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements
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<PAGE>
SUMMIT DESIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1997 1996
-------- ---------
<S> <C> <C>
Revenue:
Product licenses. . . . . . . . . . . . . . . . . . $ 4,878 $ 3,547
Maintenance and services. . . . . . . . . . . . . . 1,481 918
Other . . . . . . . . . . . . . . . . . . . . . . . 142 142
-------- ---------
Total revenue. . . . . . . . . . . . . . . . . 6,501 4,607
Cost of revenue:
Product licenses. . . . . . . . . . . . . . . . . . 185 132
Maintenance and services. . . . . . . . . . . . . . 109 102
-------- ---------
Total cost of revenue. . . . . . . . . . . . . 294 234
-------- ---------
Gross profit . . . . . . . . . . . . . . . . . 6,207 4,373
Operating expenses:
Research and development. . . . . . . . . . . . . . 1,431 1,412
Sales and marketing . . . . . . . . . . . . . . . . 2,517 2,225
General and administrative. . . . . . . . . . . . . 1,177 714
-------- ---------
Total operating expenses . . . . . . . . . . . 5,125 4,351
Income from operations . . . . . . . . . . . . . . . . . 1,082 22
Interest expense . . . . . . . . . . . . . . . . . . . . (7) (67)
Other income, net. . . . . . . . . . . . . . . . . . . . 218 15
-------- ---------
Income (loss) before income taxes. . . . . . . . . . . . 1,293 (30)
Income tax provision . . . . . . . . . . . . . . . . . . 80 176
-------- ---------
Net income (loss). . . . . . . . . . . . . . . . . . . . $ 1,213 $ (206)
-------- ---------
-------- ---------
Net income (loss) per share. . . . . . . . . . . . . . . $ 0.08 $ (0.02)
-------- ---------
-------- ---------
Number of shares used in per share calculation . . . . . 14,829 12,278
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements
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<PAGE>
SUMMIT DESIGN, INC.
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) . . . . . . . . . . . . . . . . . . $ 1,213 $ (206)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . 194 245
Loss on asset disposition . . . . . . . . . . . . 1 -
Changes in assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . (321) 1,196
Prepaid expenses and other . . . . . . . . . . (11) 10
Accounts payable . . . . . . . . . . . . . . . 408 (236)
Accrued liabilities. . . . . . . . . . . . . . (96) (131)
Deferred revenue . . . . . . . . . . . . . . . (918) 980
Other, net . . . . . . . . . . . . . . . . . . 35 (140)
-------- ---------
Net cash provided by operating activities 505 1,718
-------- ---------
Cash flows from investing activities:
Additions to furniture and equipment. . . . . . . . . (251) (129)
Note receivable from employee . . . . . . . . . . . . (75) -
-------- ---------
Net cash used in investing activities . . . . . . . (326) (129)
-------- ---------
Cash flows from financing activities:
Issuance of common stock, net of issuance costs . . . 14 893
Short term borrowings . . . . . . . . . . . . . . . . - (959)
Principal payments of debt obligations. . . . . . . . (71) (164)
Principal payments of capital lease obligations . . . (35) (45)
-------- ---------
Net cash used in financing activities. . . . . . . (92) (275)
-------- ---------
Increase in cash and cash equivalents. . . . . . . 87 1,314
Cash and cash equivalents, beginning of period . . . . . . 19,772 704
-------- ---------
Cash and cash equivalents, end of period . . . . . . . . . $ 19,859 $ 2,018
-------- ---------
-------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . $ 7 $ 64
Income taxes . . . . . . . . . . . . . . . . . . 32 187
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements
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<PAGE>
SUMMIT DESIGN, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared by Summit
Design, Inc. ("the Company") in accordance with the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
in accordance with such rules and regulations. In the opinion of management,
the accompanying unaudited financial statements reflect all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly
the financial position of the Company, and its results of operations and cash
flows. These financial statements should be read in conjunction with the
audited financial statements and notes thereto for the years ended December
31, 1996, 1995, and 1994 included in the Company's Form 10-K filed for
December 31, 1996.
The results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997 or any other future interim period, and the Company makes no
representations related thereto.
2. Acquisition of TriQuest Design Automation, Inc.
On February 28, 1997, the Company acquired TriQuest Design Automation, Inc.,
a California corporation ("TriQuest") TriQuest develops hardware description
language analysis and optimization tools for the design of high performance,
deep submicron integrated circuits. The aggregate consideration for the
acquisition (including shares of common stock reserved for issuance upon
exercise of TriQuest options assumed by the Company) was 775,000 shares of
the Company's common stock. The transaction was accounted for as a "pooling
of interests" in accordance with generally accepted accounting principles. In
compliance with such principles, the Company's operating results have been
restated to include the results of TriQuest as if the acquisition had
occurred at the beginning of the first period presented.
3. Balance Sheet Components (in thousands)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
(Unaudited)
<S> <C> <C>
Accounts Receivable:
Trade . . . . . . . . . . . . . . . . . . . . . . . $ 6,266 $ 6,000
Less allowance for doubtful accounts. . . . . . . . (378) (433)
-------------- -----------------
. . . . . . . . . . . . . $ 5,888 $ 5,567
-------------- -----------------
-------------- -----------------
Furniture and equipment:
Office furniture equipment. . . . . . . . . . . . . $ 595 $ 513
Computer equipment. . . . . . . . . . . . . . . . . 3,106 3,124
Leasehold improvements. . . . . . . . . . . . . . . 44 41
-------------- -----------------
3,745 3,678
Less: accumulated depreciation . . . . . . . . . . . . . (1,837) (1,846)
-------------- -----------------
$ 1,908 $ 1,832
-------------- -----------------
-------------- -----------------
Accrued expenses:
Commissions payable . . . . . . . . . . . . . . . . $ 103 $ 173
Payroll and related benefits. . . . . . . . . . . . 1,633 1,610
Accrued management relocation costs . . . . . . . . - 24
Accounting and legal. . . . . . . . . . . . . . . . 265 301
Sales and state income taxes payable. . . . . . . . 128 115
Other . . . . . . . . . . . . . . . . . . . . . . . 644 647
-------------- -----------------
Total current liabilities. . . . . . . . . . . $ 2,773 $ 2,870
-------------- -----------------
-------------- -----------------
</TABLE>
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<PAGE>
SUMMIT DESIGN, INC.
Notes to Condensed Financial Statements
(Unaudited)
Long-term debt:
Marketing grant payable to the Israeli government . $ 364 $ 364
Chief Scientist grant payable to the Israeli
government. . . . . . . . . . . . . . . . . . . . . 702 773
--------- --------
1,066 1,137
Less current portion. . . . . . . . . . . . . . . . . (391) (462)
--------- --------
Non current portion . . . . . . . . . . . . . . . . . $ 675 $ 675
---------- ---------
---------- ---------
4. Impact of Recently Issued Accounting Standards
During February 1997, the Financial Accounting Standards Board issued
Statement of Financial Standards No. 128, "Earnings Per Share" ("SFAS 128")
and Statement of Financial Accounting Standards No. 129 "Disclosure of
Information about Capital Structure" ("SFAS 129"), which are effective for
the Company's 1997 fiscal year. The Company's management has studied the
implications of SFAS 128 and SFAS 129, and based on the initial evaluation,
does not expect the adoption to have a material impact on the Company's
financial condition or results of operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
To be filed by amendment.
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<PAGE>
PART II
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
In February 1996, in connection with the Company's acquisition of TriQuest
Design Automation, Inc. ("TriQuest"), the Company issued 544,973 shares of the
Company's Common Stock to the existing shareholders of TriQuest in exchange for
all of the outstanding shares of capital stock of TriQuest. Such shares were
not registered under the Securities Act of 1933, as amended (the "Securities
Act"), and such issuance was deemed to be exempt from registration in reliance
on Regulation D under Section 4(2) of the Securities Act as a transaction by an
issuer not involving a public offering. The recipients of the securities of the
securities represented their intentions to acquire the securities for investment
only, had access to all relevant information regarding the Company necessary to
evaluate the investment and were either accredited investors or relied upon a
purchaser representative.
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Statement of Computation of Net Income per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
On March 14, 1997, the Company filed a report on Form 8-K dated
February 28, 1997 in conjunction with the acquisition of TriQuest
Design Automation, Inc. ("TriQuest"). On May 14, 1997, the Company
amended this filing on Form 8K/A to include the financial
statements of TriQuest and the pro forma combined financial
statements for the Company and TriQuest.
- 8 -
<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.
SUMMIT DESIGN, INC.
By: /s/ C. Albert Koob
----------------------
C. Albert Koob
Vice President - Finance,
Chief Financial Officer and Secretary
(Principal Financial and Accounting
Officer and Duly Authorized
Officer)
Date: May 15, 1997
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<PAGE>
EXHIBIT INDEX
EXHIBIT 11.1 Statement of Computation of Net Income Per Share
EXHIBIT 27 Financial Data Schedule
- 10 -
<PAGE>
EXHIBIT 11.1
SUMMIT DESIGN, INC.
STATEMENT OF COMPUTATION OF
NET INCOME PER SHARE
(In thousands, except per share data)
Three Months Ended March 31,
----------------------------
1997 1996
-------- --------
Weighted average number of
common shares outstanding 13,902 2,150
Common stock equivalents arising
from stock options (1) 927 1,025
Convertible preferred shares (2) - 9,103
-------- --------
14,829 12,278
Net income (loss) $ 1,213 $ (206)
-------- --------
-------- --------
Net income (loss) per share $ 0.08 $ (0.02)
-------- --------
-------- --------
(1) Assumes exercise of all outstanding options and options issued within one
year of the date of the initial public offering which options are
considered exercised in all periods presented prior to the initial public
offering.
(2) Assumes conversion of all preferred shares outstanding as of the date of
the filing of the initial public offering which shares are considered
outstanding for all periods presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<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> 19,859
<SECURITIES> 0
<RECEIVABLES> 6,266
<ALLOWANCES> 378
<INVENTORY> 0
<CURRENT-ASSETS> 26,245
<PP&E> 3,745
<DEPRECIATION> 1,837
<TOTAL-ASSETS> 29,140
<CURRENT-LIABILITIES> 7,790
<BONDS> 0
0
0
<COMMON> 139
<OTHER-SE> 20,269
<TOTAL-LIABILITY-AND-EQUITY> 29,140
<SALES> 6,501
<TOTAL-REVENUES> 6,501
<CGS> 294
<TOTAL-COSTS> 294
<OTHER-EXPENSES> 5,125
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> 1,293
<INCOME-TAX> 80
<INCOME-CONTINUING> 1,213
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,213
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
