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Cadence and Quickturn Agree to Merge

Stock-for-Stock Transaction Valued at $253 Million; Value of $14 per share to Quickturn Shareholders

SAN JOSE, Calif. — December 9, 1998 — Cadence Design Systems, Inc. (NYSE:CDN) and Quickturn Design Systems, Inc. (NASDAQ:QKTN) today announced that the boards of directors of both companies unanimously approved a definitive merger agreement under which Cadence will acquire Quickturn in a tax-free, stock-for-stock transaction with an aggregate purchase price of $253 million. Upon closing of the merger, each shareholder of Quickturn will receive Cadence common stock with a value of $14 per share.

Quickturn is a leading provider of emulation systems and time-to-market engineering (TtMETM) services for the verification of complex integrated circuits (ICs) and electronic systems. Cadence is a world leader in electronic design software and services.

Jack Harding, President and CEO of Cadence, said: "We are presenting Quickturn's shareholders with an extraordinary opportunity to participate in the increased growth and earnings potential that this very compelling business combination will deliver.

"As the complexity of chip design increases, the complexity of verification increases exponentially. By integrating Quickturn's hardware-based emulation approach with our software design and simulation systems, we will dramatically improve our ability to meet customer demand for faster development of high-speed systems on a chip. We believe this merger will be seen as an important milestone in the development of next generation verification solutions," Harding said.

"The combination of Cadence and Quickturn meets our objectives for growing our business through acquisitions of complementary businesses that have management depth and engineering talent," Harding added. Keith R. Lobo, President and CEO of Quickturn, said: "A merger with Cadence is a superior outcome for our shareholders, our employees, and our customers, and allows Quickturn to continue to pursue its business strategy. Cadence has a proven business strategy, a strong balance sheet and an excellent track record in acquiring and integrating companies. We believe our shareholders will recognize the value of this combination, which yields both short-term benefits and tremendous potential upside in the long term. We look forward to leveraging Cadence's strong international sales channels to make our technology available to a larger customer base."

Terms of the Merger Agreement

Cadence said the merger would be accounted for as a pooling of interests and that it expects the transaction to be accretive to earnings in 1999. As a result of the merger, Quickturn will become a wholly-owned subsidiary of Cadence.

Quickturn has issued Cadence an option to purchase 19.9% of the outstanding common stock of Quickturn for $14 a share, which will become exercisable under certain conditions.

The merger is subject to certain conditions, including compliance with applicable regulatory requirements, and approval by Quickturn's shareholders. It is expected to close in the first quarter of 1999. Goldman, Sachs & Co. acted as financial advisor to Cadence. Hambrecht & Quist LLC acted as financial advisor to Quickturn.

About Cadence

Cadence Design Systems, Inc. provides comprehensive services and software for the product development requirements of the world's leading electronics companies. Cadence is the largest supplier of software products, consulting services, and design services used to accelerate and manage the design of semiconductors, computer systems, networking and telecommunications equipment, consumer electronics, and a variety of other electronic-based products. With more than 4,000 employees and 1997 annual sales of $916 million, Cadence has sales offices, design centers, and research facilities around the world. The company is headquartered in San Jose, Calif. and traded on the New York Stock Exchange under the symbol CDN. More information about the company, its products and services may be obtained from the World Wide Web at http://www.cadence.com.

About Quickturn

Quickturn Design Systems, Inc. is a leading provider of verification hardware and time-to-market engineering (TtMETM) 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 in San Jose, Calif. For more information, visit the Quickturn Web site at http://www.quickturn.com or send e-mail to info@quickturn.com.

This release contains forward-looking statements based on current expectations or beliefs as well as a number of assumptions about future events, and that are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The reader is cautioned not to put undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to a number of uncertainties and other factors, many of which are outside the control of Cadence and Quickturn. The forward-looking statements in this release address a variety of subjects including, for example, the expected date of closing of the acquisition, the transaction being accretive to earnings in 1999, and the potential benefits of the merger. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements: the risk that Quickturn's business will not be successfully integrated with Cadence's business; costs associated with the merger; the inability to obtain the approval of Quickturn's shareholders; matters arising in connection with the parties' efforts to comply with applicable regulatory requirements relating to the transaction; and increased competition and technological changes in the industry in which Cadence and Quickturn compete. For a detailed discussion of these and other cautionary statements, please refer to Cadence's and Quickturn's filings with the Securities and Exchange Commission, including their respective Annual Reports on Form 10-K for the year ended December 31, 1998 and their respective Quarterly Reports on Form 10-Q for the quarter ended September 30, 1998.

 

Cadence Contacts
Media Contact
Laurie Stanley
Cadence Design Systems, Inc.
408-428-5019
Investor Contact
Ray Bingham
Cadence Design Systems, Inc.
408-944-7503

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