-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H90TkN2fp3vOE05G2LDlaJBZVC3g71rX3tX2VC6AG+215JayZYnQzdk/AfCD+awf n2l4hr8QE1uayxytlfAt1A== 0001012870-98-002532.txt : 19981005 0001012870-98-002532.hdr.sgml : 19981005 ACCESSION NUMBER: 0001012870-98-002532 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19981002 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: QUICKTURN DESIGN SYSTEMS INC CENTRAL INDEX KEY: 0000914252 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 770159619 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: SEC FILE NUMBER: 005-43785 FILM NUMBER: 98719921 BUSINESS ADDRESS: STREET 1: 55 W TRIMBLE ROAD CITY: SAN JOSE STATE: CA ZIP: 951311013 BUSINESS PHONE: 4089146000 MAIL ADDRESS: STREET 1: 55 W TRIMBLE ROAD CITY: SAN JOSE STATE: CA ZIP: 95131-1013 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: QUICKTURN DESIGN SYSTEMS INC CENTRAL INDEX KEY: 0000914252 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 770159619 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: 55 W TRIMBLE ROAD CITY: SAN JOSE STATE: CA ZIP: 951311013 BUSINESS PHONE: 4089146000 MAIL ADDRESS: STREET 1: 55 W TRIMBLE ROAD CITY: SAN JOSE STATE: CA ZIP: 95131-1013 SC 14D9/A 1 AMENDMENT #11 TO SCHEDULE 14D9 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------------- SCHEDULE 14D-9 (AMENDMENT NO. 11) ---------------- 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) ---------------- 74838E102 (CUSIP Number of Class of Securities) ---------------- 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) ---------------- COPY TO: LARRY W. SONSINI, ESQ. WILSON SONSINI GOODRICH & ROSATI PROFESSIONAL CORPORATION 650 PAGE MILL ROAD PALO ALTO, CALIFORNIA 94304-1050 (650) 493-9300 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 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. Dated: October 2, 1998 QUICKTURN DESIGN SYSTEMS, INC.
By:/s/ Keith R. Lobo ---------------------------------- Keith R. Lobo President and Chief Executive Officer 3 EX-99.37 2 LETTER TO COMPANY'S STOCKHOLDERS 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. 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 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. 3 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 -------------------------------------------------- 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: - ------------------------------------------------------------------------------- A. DESCRIPTION OF SHARES WITHDRAWN: - ------------------------------------------------------------------------------- 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 - ------------------------------------------- 5. IF APPLICABLE, DTC, account number.......................... 6. Name of DTC account......................................... - ------------------------------------------------------------------------------- B. SHAREHOLDER SIGN HERE. - ------------------------------------------------------------------------------- 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 ......... - ------------------------------------------------------------------------------- C. SIGNATURE GUARANTEE. - ------------------------------------------------------------------------------- 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 =============================================================================== EX-99.38 3 PRESS RELEASE DATED OCTOBER 2, 1998 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 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 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 info@quickturn.com. 3 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 -----END PRIVACY-ENHANCED MESSAGE-----