<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1 to
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 28, 1997
SUMMIT DESIGN, INC.
- -------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-20923 93-1137888
- -------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification Number)
incorporation)
9305 S.W. GEMINI DRIVE, BEAVERTON, OREGON 97008
- -------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 643-9281
N/A
- -------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
This Current Report on Form 8-K/A amends Item 7 of the Current
Report on Form 8-K filed with the Securities and Exchange
Commission on March 14, 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) TriQuest Design Automation, Inc. Financial Statements
Report of Independent Accountants
Balance Sheets as of December 31, 1996 and 1995
Statements of Operations for the Period from Inception,
February 15, 1995 to December 31, 1995 and the Year Ended
December 31, 1996
Statements of Stockholders' Equity for the Period from
Inception, February 15, 1995 to December 31, 1995
and the Year Ended December 31, 1996
Statements of Cash Flows for the Period from Inception,
February 15, 1995 to December 31, 1995 and
the Year Ended December 31, 1996
Notes to Financial Statements
(b) Pro Forma Consolidated Financial Statements
Pro Forma Consolidated Balance Sheet as of December 31,
1996
Pro Forma Consolidated Statement of Operations for the
Year Ended December 31, 1996
Notes to Pro Forma Consolidated Financial Statements
(c) Exhibits
23.1 Consent of Independent Accountants
2
<PAGE>
[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
TriQuest Design Automation, Inc.
We have audited the accompanying balance sheets of TriQuest Design
Automation, Inc. as of December 31, 1995 and 1996, and the related statements
of operations, stockholders' equity (deficit) and cash flows for the period
from inception, February 15, 1995 to December 31, 1995 and the year ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TriQuest Design Automation,
Inc. as of December 31, 1995 and 1996, and the results of their operations
and their cash flows for the period from inception, February 15, 1995 to
December 31, 1995 and the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Portland, Oregon
February 20, 1997
1
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 111,714 $ 175,632
Accounts receivable, less allowance for doubtful accounts of $3,000
in 1996.......................................................... 219,000
Prepaid expenses and other......................................... 10,327 13,352
---------- -----------
Total current assets.............................................. 122,041 407,984
Furniture and equipment, net........................................ 42,861 90,459
Deposits and other assets........................................... 745 55,000
---------- -----------
Total assets...................................................... $ 165,647 $ 553,443
---------- -----------
---------- -----------
LIABILITIES
Current liabilities:
Note payable to bank............................................... $ 50,335
Accounts payable................................................... 47,222 $ 45,571
Accrued liabilities................................................ 69,455 245,539
Deferred revenue................................................... 708,187
---------- -----------
Total current liabilities......................................... 167,012 999,297
---------- -----------
Commitments and contingencies (Notes 5 and 9)
STOCKHOLDERS' EQUITY (DEFICIT)
Convertible preferred stock, no par value. Authorized 7,354,500
shares; issued and outstanding: 1,354,500 shares in 1995 and
6,204,162 in 1996; aggregate liquidation preference of $1,421,608
at December 31, 1996.............................................. 444,304 1,421,608
Common stock, no par value. Authorized 20,000,000 shares; issued and
outstanding 2,346,391 shares in 1995, and 2,480,891 shares in
1996.............................................................. 42,683 45,779
Accumulated deficit................................................. (488,352) (1,913,241)
---------- -----------
Total stockholders' equity (deficit).............................. (1,365) (445,854)
---------- -----------
Total liabilities and stockholders' equity (deficit).............. $ 165,647 $ 553,443
---------- -----------
---------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM INCEPTION, FEBRUARY 15, 1995 TO DECEMBER 31, 1995 AND
THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
1995 1996
----------- -------------
<S> <C> <C>
Revenue:
Product licenses................................................. $ 64,880
Maintenance and services......................................... 85,722
-------------
Total revenue.................................................. 150,602
-------------
Cost of revenue:
Product licenses................................................. 24,397
-------------
Total cost of revenue.......................................... 24,397
-------------
Gross profit................................................... 126,205
-------------
Operating expenses:
Research and development......................................... $ 230,277 561,881
Sales and marketing.............................................. 106,552 629,330
General and administrative....................................... 158,417 352,352
----------- -------------
Total operating expenses....................................... 495,246 1,543,563
----------- -------------
Loss from operations........................................... (495,246) (1,417,358)
Other income (expense), net....................................... 7,694 (6,731)
----------- -------------
Loss before income tax provision............................... (487,552) (1,424,089)
Income tax provision.............................................. 800 800
----------- -------------
Net loss....................................................... $ (488,352) $ (1,424,889)
----------- -------------
----------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION, FEBRUARY 15, 1995 TO DECEMBER 31, 1995
AND THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CONVERTIBLE
------------------------
PREFERRED STOCK COMMON STOCK
------------------------ --------------------- ACCUMULATED
SHARES AMOUNT SHARES AMOUNT DEFICIT TOTAL
----------- ----------- ---------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Founder's common stock issued.................. 2,700,000 $ 47,795 $ 47,795
Common stock issued............................ 121,000 5,000 5,000
Repurchase of common stock..................... (474,609) (10,112) (10,112)
Series A preferred stock, net of issue costs... 1,354,500 $ 444,304 444,304
Net loss....................................... $ (488,352) (488,352)
----------- ----------- ---------- --------- ------------- -----------
Balance, December 31, 1995..................... 1,354,500 444,304 2,346,391 42,683 (488,352) (1,365)
Common stock issued............................ 134,500 3,096 3,096
Series B preferred stock, net of issue cost.... 4,849,662 977,304 977,304
Net loss....................................... (1,424,889) (1,424,889)
----------- ----------- ---------- --------- ------------- ----------
Balance, December 31, 1996..................... 6,204,162 $ 1,421,608 2,480,891 $ 45,779 $ (1,913,241) $ (445,854)
----------- ----------- ---------- --------- ------------- ---------
----------- ----------- ---------- --------- ------------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION, FEBRUARY 15, 1995 TO DECEMBER 31,1995
AND THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
1995 1996
----------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................ $ (488,352) $ (1,424,889)
Adjustment to reconcile net income to net cash provided by (used
in) operating activities:
Depreciation and amortization................................... 10,561 36,937
Loss on sale of assets.......................................... 407 12,502
Changes in assets and liabilities:
Accounts receivable............................................ (219,000)
Prepaid expenses and other..................................... (10,327) (3,025)
Accounts payable............................................... 47,222 (1,651)
Accrued liabilities............................................ 69,455 176,084
Deferred revenue............................................... 708,187
Deposits and other, net........................................ (745) (54,255)
----------- -------------
Net cash used in operating activities........................... (371,779) (769,110)
----------- -------------
Cash flows from investing activities:
Additions to equipment........................................... (30,018) (98,837)
Proceeds from sale of assets..................................... 2,200 1,800
----------- -------------
Net cash used in investing activities........................... (27,818) (97,037)
----------- -------------
Cash flows from financing activities:
Issuance of common stock......................................... 26,784 3,096
Issuance of preferred stock...................................... 444,304 977,304
Repurchase of common stock....................................... (10,112)
Short-term borrowings............................................ 50,335 (50,335)
----------- -------------
Net cash provided by financing activities....................... 511,311 930,065
----------- -------------
Increase for the period......................................... 111,714 63,918
Cash and cash equivalents, beginning of period..................... -- 111,714
----------- -------------
Cash and cash equivalents, end of period........................... $ 111,714 $ 175,632
----------- -------------
----------- -------------
Supplemental disclosure of noncash investing and financing
activities:
Common stock issued to Founders for equipment.................... $ 26,011 $ --
----------- -------------
----------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
TriQuest Design Automation, Inc. (TriQuest or the Company) designs,
markets, and licenses high-level behavioral and RTL optimization
software for the design of high performance, deep submicron integrated
circuits and field programmable gate arrays.
TriQuest Design Automation, Inc. is headquartered in Campbell,
California.
The following is a summary of the Company's significant accounting
policies:
REVENUE RECOGNITION
Product licenses revenue is derived from the sale of products to
distributors and end-users. Revenue from the sale of product licenses is
recognized upon delivery of the product if remaining vendor obligations
are insignificant and collection of the resulting receivable is
probable. The Company provides a ninety-day warranty on certain
products. Estimated sales returns and provisions for insignificant
vendor obligations and estimated warranty costs are recorded upon
delivery of the product.
Maintenance and services revenue includes software maintenance and other
service revenue, primarily from consulting. Software maintenance
revenue, including maintenance bundled with the initial license, is
deferred and recognized ratably over the life of the maintenance
contract. Other services revenue is recognized as the related service is
performed.
RESEARCH AND DEVELOPMENT COSTS
Costs related to research, design and development of products are
charged to research and development expense as incurred. Software
development costs are capitalized beginning when a product's
technological feasibility has been established by completion of a
working model of the product and ending when a product is available for
general resale to customers. To date, completion of a working model of
the Company's products and general release have substantially coincided.
As a result, the Company has not capitalized any software development
costs since such costs have not been significant.
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with an
original or remaining maturity of three months or less when purchased to
be cash equivalents.
FURNITURE AND EQUIPMENT
Furniture and equipment, consisting primarily of computer equipment and
office furniture, are stated at cost, net of related depreciation.
Maintenance and repairs are charged to expense as incurred. Depreciation
is computed using the straight-line method over a three year estimated
useful life. Upon disposal of an asset subject to depreciation, the cost
and related accumulated depreciation are removed from the accounts and
resulting gains and losses are reflected in operations.
6
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial reporting
and tax bases of assets and liabilities and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period of change. Valuation
allowances are established when necessary, to reduce deferred tax assets
to the amounts expected to be realized.
CONCENTRATION OF CREDIT RISK
The Company sells its products to commercial end-users directly and
through independent and affiliated distributors in North America, Europe
and Asia. The Company's end-user customers include companies in a wide
range of industries, including semiconductor devices, semiconductor test
equipment, telecommunications, computer/peripherals, consumer
electronics, aerospace/defense and other electronics entities. The
Company performs ongoing credit evaluations of its customers' financial
condition and generally does not require collateral. The Company
maintains allowances for potential losses.
At December 31, 1996, substantially all of the Company's cash and cash
equivalents are invested in interest-bearing deposits with three banks.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of financial instruments including cash and cash
equivalents, accounts receivable, accounts payable and accrued
liabilities approximated fair value as of December 31, 1996 because of
the relatively short maturity of these instruments.
7
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. FURNITURE AND EQUIPMENT:
Furniture and equipment consists of the following:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Office furniture and equipment....................................... $ 4,401 $ 12,322
Computer equipment................................................... 48,018 118,178
Leasehold improvements............................................... 2,987
--------- ---------
52,419 133,487
Less accumulated depreciation and amortization....................... (9,558) (43,028)
--------- ---------
$ 42,861 $ 90,459
--------- ---------
--------- ---------
</TABLE>
3. NOTE PAYABLE TO BANK:
During 1995, the Company had available a $100,000 line of credit with
Union Bank of California, which was collateralized by a Certificate of
Deposit. The balance outstanding at December 31, 1995 was $50,335 and
was paid in 1996. The agreement was terminated in 1996.
4. ACCRUED LIABILITIES:
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
1995 1996
--------- ----------
<S> <C> <C>
Payroll and related benefits........................................ $ 54,355 $ 42,950
Legal and accounting................................................ 15,100 50,543
Marketing........................................................... 48,699
Distributor commission.............................................. 59,931
Other............................................................... 43,416
--------- ----------
$ 69,455 $ 245,539
--------- ----------
--------- ----------
</TABLE>
8
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. LEASES:
The Company has entered into noncancelable operating leases for the use
of a building and certain equipment. Rental expense was approximately
$11,125, and $54,500 for the periods ended December 31, 1995 and 1996,
respectively.
Future minimum lease payments under these operating leases
are as follows:
<TABLE>
<CAPTION>
1996
----------
<S> <C>
1997..................... $ 75,253
1998..................... 75,253
1999..................... 22,287
----------
$ 172,793
----------
----------
</TABLE>
6. STOCKHOLDERS' EQUITY:
PREFERRED STOCK
<TABLE>
<CAPTION>
1995 1996
---------- -------------
<S> <C> <C>
Series A--no par; 1,354,500 shares authorized, issued and
outstanding; $444,304 liquidation preference............. $ 444,304 $ 444,304
Series B--no par; 6,000,000 shares authorized, 4,849,662 issued
and outstanding; $977,304 liquidation preference at
December 31, 1996........................................ 977,304
---------- ------------
$ 444,304 $ 1,421,608
---------- ------------
---------- ------------
</TABLE>
Each share of preferred stock has voting rights and is convertible
(subject to anti-dilutive adjustments in certain circumstances) into one
share of common stock at the option of the holder, or automatically upon
the sale of the Company's common stock pursuant to a public offering or
upon a majority vote of the holders of such preferred stock.
In the event of a liquidation, which includes a merger or sale of
substantially all of the Company's assets, the holders of Series A and B
preferred stock have preference rights of $444,304 and $977,304,
respectively. Holders of Series A and B preferred stock share ratably
with holders of common stock after payment or distribution of the
respective preferential amounts.
9
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. STOCKHOLDERS' EQUITY, CONTINUED:
PREFERRED STOCK, CONTINUED
If, in the event of liquidation, the Company's assets are insufficient
to pay the holders of any particular series of preferred stock their
full preferential amount, then legally available assets of the Company
will be distributed ratably among holders of that series of preferred
stock after payment of the full preferential amount has been made to all
series of preferred stock having a senior liquidation preference.
Each share of Series A preferred stock has a dividend rate of $.01667
and each share of Series B preferred stock has a dividend rate of
$.0103. Dividends are not cumulative and none have been declared or paid
to date.
1995 STOCK OPTION PLAN
The Company has a stock plan pursuant to which the Company may grant
options to employees and consultants. Under the terms of the plan, the
option price is fair value as determined by the Board of Directors at
the time the option is granted. Under the plan, 5,907,031 shares of
common stock are authorized for issuance. Options granted are
immediately exercisable, and ownership generally vests at 12.5% six
months after the date of grant and the remainder at 1/48 of the grant
amount in each successive month thereafter. Shares issued are subject to
repurchase until vested. Options expire no later than 10 years after the
date of grant.
At December 31, 1996, options to purchase 862,929 shares were vested.
Options outstanding and transactions were as follows:
<TABLE>
<CAPTION>
EXERCISE
OPTIONS PRICE RANGE
---------- -------------
<S> <C> <C>
Balance, December 31, 1994
Options granted.............................................. 124,000 $ .02--$.033
Options exercised............................................ (1,000) .02-- .033
Options canceled............................................. (79,500) .033
----------
Balance December 31, 1995....................................... 43,500
Options granted.............................................. 4,708,940 .02-- .033
Options exercised............................................ (134,500) .02-- .033
Options canceled............................................. (657,834) .02-- .033
----------
Balance December 31, 1996....................................... 3,960,106
-----------
-----------
</TABLE>
10
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. STOCKHOLDERS' EQUITY, CONTINUED:
1995 STOCK OPTION PLAN, CONTINUED
In January 1997, the Company granted a distributor, 100,000 Nonstatutory
Stock Options at an exercise price of $.30 per share. In connection with
the agreement, the distributor must achieve a minimum sales quota and
continue to remain as sales representatives to TriQuest through December
31, 1997. The options vest one-sixth per month beginning January 1, 1997
for each month that the distributor continues to serve as TriQuest's
sales representatives.
In January 1997, the Company granted 170,000 Incentive Stock Options at
an exercise price of $.30 per share in conjunction with an employment
agreement entered into at that time.
The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards (SFAS) No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION. Accordingly, no compensation expense has been
recognized for the stock option plan. Had compensation been determined
for the plan based upon the fair value as the grant dates for awards
consistent with the provisions of SFAS No. 123, the Company's net loss
would have been affected as follows:
<TABLE>
<CAPTION>
1995 1996
---------- ------------
<S> <C> <C>
Net loss--as reported....................................... $ 488,352 $ 1,424,889
Net loss--pro forma......................................... 488,752 1,434,489
</TABLE>
The fair value of each option grant is estimated on the date of the
grant with the following weighted average assumptions: dividend yield of
0%; risk free interest rate of 6%; and expected lives of 8 years.
FOUNDERS STOCK PLAN
The Founders of the Company were issued 2,700,000 shares of stock in
accordance with the Founders Restricted Stock Purchase Agreement. Shares
of stock issued under this plan vested 25% on June 1, 1995, and the
remainder vests at the rate of 4.6875% of the amount issued in each
successive quarter thereafter. At December 31, 1996, 984,846 shares were
vested.
The Company has the option to repurchase unvested shares of common stock
issued to Founders if they cease to be employed by the Company. During
1995, 474,609 shares of unvested stock were repurchased by the Company.
11
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
6. STOCKHOLDERS'EQUITY, CONTINUED:
COMMON SHARES RESERVED
As of December 31, 1996, the Company has reserved shares of common stock
for issuance as follows:
<TABLE>
<CAPTION>
<S> <C>
Conversion of preferred stock........................... 7,354,500
Exercise of common stock options........................ 5,771,531
----------
13,126,031
----------
----------
</TABLE>
7. INCOME TAXES:
The Company's provision for income taxes consists of state minimum
taxes.
At December 31, 1996, the Company had net operating loss carryforwards
for federal and state income tax purposes which can be used to offset
future income subject to taxes. In addition, there are unused research
and experimentation credits which may be available for offset against
future federal income taxes after use of the loss carryforwards. The
utilization of these net operating losses may be limited in the event of
a change in the ownership of the Company. Such loss carryforwards and
tax credits are summarized below:
<TABLE>
<CAPTION>
EXPIRATION
AMOUNT DATES
------------ -----------
<S> <C> <C>
Federal and state loss carryforwards...................... $ 1,330,000 2010-2011
Research and experimentation credits...................... 42,000 2010-2011
</TABLE>
The approximate effects of temporary differences which give rise to
deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Deferred tax assets:
Federal and state net operating loss carryforwards................ $ 88,000 $ 532,000
Research and experimentation credit carryforwards............... 10,000 42,000
Deferred revenue................................................ 103,000
Other deferred tax items........................................ 10,000 33,000
---------- ----------
Total gross deferred tax assets............................... 108,000 710,000
Less valuation allowances......................................... (108,000) (710,000)
---------- ----------
Net deferred tax assets......................................... $ -- $ --
---------- ----------
---------- ----------
</TABLE>
12
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES, CONTINUED:
The Company has established a valuation allowance against its deferred
tax assets due to the uncertainty surrounding the realization of such
assets. Management evaluates on a quarterly basis the recoverability of
the deferred tax assets and the level of the valuation allowance. The
net change in the valuation allowance for the year ended December 31,
1996 was an increase of approximately $602,000. Approximately $444,000
of the increase in the valuation allowance for the year ended December
31, 1996 resulted from the operating loss generated in such year.
8. 401(k) PLAN:
The Company has a 401(k) plan (the Plan) covering substantially all
employees meeting minimum service requirements. The Plan allows for the
Company to make discretionary matching contributions as determined by a
committee of the Board of Directors. No contributions have been made to
date for the Company.
9. COMMITMENTS AND CONTINGENCIES:
The Company entered into an agreement with Kanematsu Corporation
(Kanematsu) during the second quarter of 1996, which granted to
Kanematsu an exclusive right to market, sell, and distribute TriQuest
products in Japan. Under the terms of the agreement, Kanematsu agreed to
order $450,000 in inventory from the Company to be used for sales within
the Japanese market. The Company produced and shipped products with an
aggregate sales price of $450,000 to Kanematsu in 1996 of which $288,000
was paid at December 31, 1996. Kanematsu had not sold any of the product
to third parties as of December 31, 1996. Per the terms of the
agreement, Kanematsu has the right to return the product at any time for
a full exchange or refund until the product is sold to a third party.
The Company has reflected the entire amount as deferred revenue at
December 31, 1996. Revenue associated with these products will be
recognized as sales to an end-user occur.
The Company has entered into employment agreements with certain of its
employees. These agreements provide for base annual compensation and
certain incentive bonuses and stock options on various vesting schedules
as well as severance compensation in the event of termination without
cause.
13
<PAGE>
TRIQUEST DESIGN AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. SUBSEQUENT EVENTS:
In February 1997, the Company entered into an agreement with Summit
Design, Inc., a publicly-held software company headquartered in
Beaverton, Oregon under which Summit agreed to acquire the Company. The
aggregate acquisition consideration, including shares to be reserved for
issuance upon exercise of options to purchase TriQuest common stock
which will be assumed by Summit, is 775,000 shares of Summit common
stock.
14
<PAGE>
SUMMIT DESIGN, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1996
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Triquest Design Pro Forma
Summit Design, Inc. Automation, Inc. Consolidated
-------------------- ---------------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................... $ 19,596 $ 176 $ 19,772
Accounts receivable, less allowance for
doubtful accounts of $430, $3 and $433...... 5,348 219 5,567
Prepaid expenses and other.................... 474 13 487
---------- ---------- ----------
Total current assets........................ 25,418 408 25,826
Furniture and equipment, net...................... 1,741 91 1,832
Deferred taxes.................................... 500 500
Deposits and other assets......................... 413 55 468
---------- ---------- ----------
Total assets................................ $ 28,072 $ 554 $ 28,626
---------- ---------- ----------
---------- ---------- ----------
LIABILITIES
Current liabilities:
Long-term debt, current portion............... $ 462 $ -- $ 462
Capital lease obligation, current portion..... 65 -- 65
Accounts payable.............................. 1,407 46 1,453
Accrued liabilities........................... 2,624 246 2,870
Deferred revenue.............................. 3,050 708 3,758
---------- ---------- ----------
Total current liabilities................... 7,608 1,000 8,608
Long-term debt, less current portion.............. 675 -- 675
Capital lease obligations, less current portion... 95 -- 95
Deferred revenue, less current portion............ 67 -- 67
---------- ---------- ----------
Total liabilities........................... 8,445 1,000 9,445
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, $.01 par value. Authorized 30,000
shares; 13,353 shares issued and outstanding at
December 31, 1996............................... 134 5 139
Additional paid-in capital........................ 31,772 1,463 33,235
Accumulated deficit............................... (12,279) (1,914) (14,193)
---------- ---------- ----------
Total stockholders' equity.................. 19,627 (446) 19,181
---------- ---------- ----------
Total liabilities and stockholders'
equity.................................. $ 28,072 $ 554 $ 28,626
---------- ---------- ----------
---------- ---------- ----------
The accompanying notes are an integral part of the pro forma consolidated financial statements
</TABLE>
<PAGE>
SUMMIT DESIGN, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the year ended December 31, 1996
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Triquest Design Pro Forma
Summit Design, Inc. Automation, Inc. Consolidated
-------------------- ---------------- ------------
<S> <C> <C> <C>
Revenue:
Product licenses....................................... $ 15,179 $ 65 $ 15,244
Maintenance and services............................... 4,215 85 4,300
Other.................................................. 567 567
---------- ---------- ----------
Total revenue........................................ 19,961 150 20,111
Cost of revenue:
Product licenses....................................... 571 2 573
Maintenance and services............................... 439 21 460
---------- ---------- ----------
Total cost of revenue................................ 1,010 23 1,033
---------- ---------- ----------
Gross profit....................................... 18,951 127 19,078
Operating expenses:
Research and development............................... 5,204 562 5,766
Sales and marketing.................................... 8,622 630 9,252
General and administrative............................. 2,821 352 3,173
---------- ---------- ----------
Total operating expenses............................. 16,647 1,544 18,191
Income (loss) from operations.............................. 2,304 (1,417) 887
Interest expense........................................... (97) (2) (99)
Other income (expense), net................................ 223 (5) 218
---------- ---------- ----------
Income (loss) before income taxes.......................... 2,430 (1,424) 1,006
Income tax provision (benefit)............................. (246) 1 (245)
---------- ---------- ----------
Net income (loss).......................................... $ 2,676 $ (1,425) $ 1,251
---------- ---------- ----------
---------- ---------- ----------
Net income (loss) per share................................ $ 0.22 $ (2.22) $ 0.10
---------- ---------- ----------
---------- ---------- ----------
Number of shares used in per share calculation............. 12,372 641 13,013
The accompanying notes are an integral part of the pro forma consolidated financial statements
</TABLE>
<PAGE>
SUMMIT DESIGN, INC. AND SUBSIDIARIES
Footnotes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma financial statements have been prepared
to present the effect of the acquisition by the Company of TriQuest Design
Automation, Inc. (TriQuest). The pro forma financial statements have been
prepared based upon the historical financial statements of the Company and
TriQuest as if the acquisition had occurred at January 1, 1996.
The Pro Forma Consolidated Statement of Operations may not be indicative of
the results of operations that actually would have occurred if the transaction
had been in effect as of the beginning of the period nor do they purport to
indicate the results of future operations of the Company. The pro forma
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's 1996 Annual Report on Form 10-K and
the audited financial statements and notes thereto for TriQuest included
elsewhere in the report on Form 8-K/A. Management of the Company believes that
all adjustments necessary to present fairly such pro forma financial statements
have been made based on the terms and structure of the transaction.
2. PRO FORMA ADJUSTMENTS
The shares used in per share calculations have been adjusted to reflect the
shares issued to the stockholders of TriQuest to effect the merger.
<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 hereunto duly authorized.
Dated: May 12, 1997 SUMMIT DESIGN, INC.
/s/ C. Albert Koob
------------------------------------
C. Albert Koob
Vice President of Finance and
Chief Financial Officer
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Summit Design, Inc. on Form S-8 (File No. 333-18063) of our
report dated February 20, 1997 on the financial statements of TriQuest Design
Automation, Inc. as of December 31, 1995 and 1996 and for the period from
inception, February 15, 1995 to December 31, 1995 and the year ended December
31, 1996, which report is included in this report on Form 8-K/A.
COOPERS & LYBRAND L.L.P.
Portland, Oregon
May 12, 1997
