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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
 
                                   FORM 10-K
                             ---------------------
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
             SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
 
                                       OR
 
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
             SECURITIES EXCHANGE ACT OF 1934
 
                       COMMISSION FILE NO. 1-7760/0-20290
 
                           COMPUTERVISION CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
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                   DELAWARE                                      04-2491912
       (STATE OR OTHER JURISDICTION OF              (I.R.S. EMPLOYER IDENTIFICATION NO.)
        INCORPORATION OR ORGANIZATION)
 
              100 CROSBY DRIVE,
            BEDFORD, MASSACHUSETTS                                 01730
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)
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       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 275-1800
 
                             ---------------------
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 
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                                                          NAME OF EACH EXCHANGE ON
             TITLE OF EACH CLASS                              WHICH REGISTERED
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<S>                                            <C>
                    Common                                New York Stock Exchange
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          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                   11 3/8% Senior Subordinated Notes due 1999
 
                             ---------------------
 
     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  ___
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
 
     The aggregate market value of voting stock held by non-affiliates of the
registrant, based upon the closing sale price of such stock on March 25, 1997 on
the New York Stock Exchange was approximately $250,606,357. Shares of voting
stock held by each executive officer and director and by each person who owns
10% or more of the outstanding Common Stock have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.
 
     Number of shares of Common Stock outstanding as of March 25, 1997:
63,575,158.
 
                             ---------------------
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     Certain portions of the Proxy Statement for the Annual Meeting of
Stockholders to be held on June 10, 1997 are incorporated by reference in Part
III of the Form 10-K.
 
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<PAGE>   2
 
                                     PART 1
 
ITEM 1.  BUSINESS
 
     The Company develops, produces and markets software and provides support
services that are designed to aid manufacturing companies in enhancing their
product development and manufacturing processes. The Company's principal
products include design automation and product data management software.
Manufacturers use the Company's software to design, enhance, and modify their
products and to access, share and manage their product data collaboratively. The
Company's support services include implementation, consulting and training
services designed to assist customers in reengineering their product development
processes and in increasing productivity.
 
     The Company was organized under the laws of the State of Delaware on June
9, 1972 as Prime Computer, Inc. The Company's principal executive offices are
located at 100 Crosby Drive, Bedford, MA 01730 and its telephone number is (617)
275-1800.
 
RECENT DEVELOPMENTS
 
     On November 1, 1996, Kathleen A. Cote, President and Chief Operating
Officer of the Company, was appointed Chief Executive Officer of the Company.
Ms. Cote, who was named a Director of the Company on July 25, 1996, has been
with the Company since November 1986, serving in various positions, including
Vice President, Services and Vice President, Manufacturing.
 
     On March 19, 1997, the Company announced the termination of its agreement
with J.F. Lehman & Company for the sale of its Open Service Solutions ("OSS")
business unit and the signing of a non-binding letter of intent with M.D. Sass
Investors Services, Inc. ("Sass"), a 17% shareholder of the Company, for the
purchase by Sass of a 51% interest in the OSS business. In connection with this
transaction, the Company will receive from Sass $5.1 million in cash and will
receive from the entity that operates the OSS business (a) $25 million in cash
and (b) a promissory note in the amount of $25 million. The cash payment of $25
million will be funded by a bank loan to the OSS business, secured by its
assets. The Company will continue to own 49% of the OSS business, subject to an
option granted to Sass to purchase up to one-fifth of the balance of the
Company's equity position. The transaction is subject to execution and delivery
of a definitive agreement and to the availability of financing, receipt of
approval from the Company's banks, compliance with the Company's financing
instruments and other customary closing conditions. As a result, no assurance
can be given that the transaction will be consummated.
 
OVERVIEW
 
     The traditional computer-aided design, computer-aided manufacturing
("CAD/CAM") product development process has focused primarily on the design of
individual components or parts and optimization of the individual engineer's
productivity. Generally, this process is implemented through assembly of the
individually-designed components and physical mock-ups.
 
     To improve the design process, reduce development time and costs and
improve quality, many manufacturers are moving beyond the traditional product
development process to a process that focuses on complete assemblies,
substitutes electronic prototypes for physical prototypes and enables design and
build teams to work concurrently. This product development process, which is
marketed by the Company as "Electronic Product Definition" ("EPD"), is
"assembly-centric", while traditional product development is
"component-centric." EPD is the Company's product and process response to the
customer's need to concurrently create, manage, share and reuse electronic
product information in a collaborative environment. Companies from the
aerospace, automotive, white goods, shipbuilding and consumer products
industries today implement EPD in an effort to obtain a competitive advantage.
 
     EPD enables customers to create and store a single product definition that
can be made available in electronic form for further design work, simulation and
analysis, manufacturing planning, production
 
---------------
 
The following trademarks and service marks are used in this Form 10-K:
Computervision, CADDS, MEDUSA, Optegra, Personal Designer and Personal Machinist
are registered trademarks of the Company. Dimension III, Electronic Product
Definition, EPD, EPD.Connect and PELORUS are trademarks of, and Open Service
Solutions is a service mark of, the Company. Trade names and trademarks of other
companies appearing in this Form 10-K are the property of their respective
holders.
 
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engineering, and other related activities in the product development process.
Using the EPD approach, individuals from various disciplines of a customer's
extended enterprise and key suppliers can collaborate more effectively and can
concurrently access and manipulate design and manufacturing information early in
the development process where the greatest cost, quality, and productivity gains
can be achieved.
 
     Today, collaborative design environments are more often heterogeneous as
manufacturers and their suppliers employ different CAD/CAM systems. The Company
has developed its EPD approach to allow EPD to be implemented by users of
product information created using the Company's or another CAD/CAM system.
 
     The Company markets two families of software products which may be used
separately. When integrated and complemented by the Company's implementation and
support services, these products provide customers with a comprehensive EPD
capability.
 
     Design Automation Software -- which includes component modeling software
used to design, test, and manufacture individual components; and assembly
modeling software used by design teams to work concurrently to design and
assemble components digitally into complete products; and
 
     Product Data Management ("PDM") Software -- which is used to access, share,
view, configure and manage product data, including geometry and associated
product attributes, by cross-functional product teams in a collaborative manner
throughout the enterprise.
 
SOFTWARE PRODUCTS
 
     The Company's products include primarily software for design automation and
PDM. Although these products may be applied separately, the Company believes
that its customers achieve the greatest benefits from these products by applying
them in an integrated fashion to form an EPD environment.
 
     The Company's design automation software includes products that allow a
customer to create and store a single product definition that can be made
available in electronic form for simultaneous review and analysis by design and
build teams located throughout the customer's enterprise. These teams can use
the software for further design work, simulation and analysis, manufacturing
planning, production engineering, and other activities in the product
development process.
 
     The Company's PDM products provide data access needed to realize the
benefits of forming collaborative, concurrent design teams. These products
include software for product data management, configuration management, product
visualization, product structure navigation and workflow planning and
management.
 
     DESIGN AUTOMATION SOFTWARE
 
     Component Modeling Software.  The Company's CADDS family of component
modeling products provides integrated CAD/CAM solutions from conceptual design
to manufacturing. The principal strength of the Company's CADDS products is its
hybrid modeler, which allows designers to choose the appropriate design
technique (wireframe, surface or solids) and the appropriate modeling approach
(parametric or explicit) that is best suited for the design problem. Hybrid
modeling software facilitates the use of "legacy" data (which contributes to the
faster design of derivative products), and enhances sharing of CAD data with
extended enterprise suppliers and contractors. Hybrid modeling also enables
engineers to model complex parts and contributes to lowering part counts, rapid
prototyping and facilitating transfer of design data into the manufacturing
process.
 
     CADDS products also include integrated software development tools for
detail design, drafting and analysis and CAM packages for a variety of numerical
control and other manufacturing applications (e.g. five-axis numerical control).
 
     CADDS 5, the Company's current version of CADDS, incorporates feature-based
parametric and explicit solids modeling, variational geometry and sketching,
NURBS-based surface modeling and an easy-to-use, icon-driven user interface.
CADDS 5 operates on workstations marketed by Digital Equipment, Hewlett-Packard,
IBM, Silicon Graphics and Sun Microsystems.
 
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     Assembly Modeling Software.  The Company's Concurrent Assembly Mock-Up
("CAMU") software provides a multi-user, concurrent environment to enable
cross-functional teams to design and build products within the context of the
entire product assembly as compared to isolated component design. CAMU software
is designed to manage complex assemblies involving thousands of parts, and to
enable each member of a design and build team to see simultaneously the work of
others as well as the entire product structure. Users are able to design complex
product structures easily, readily change one part, reflect the changes in other
parts, and check the fit and configuration of individual design changes with the
product as a whole.
 
     PELORUS Products.  The Company continues to develop its Pelorus products to
provide a suite of design automotive applications built for the PC/Windows
platforms. Its Pelorus products are organized around principles of
assembly-concentricity, interoperability and associativity/flexibility.
 
     Other Software.  In addition, the Company markets a range of other software
products for DOS and UNIX operating systems, including its MEDUSA 2D integrated
drawing-based design environment and products, its Personal Designer and
Personal Machinist Series, and its Dimension III products for plant design and
plant maintenance.
 
     PRODUCT DATA MANAGEMENT SOFTWARE
 
     The Company's PDM products and software solutions are designed to improve
collaboration and information access and sharing throughout an enterprise. These
products provide for data management, configuration management, workflow
management, advanced product visualization and product structure navigation.
Using these products and software solutions, design and build teams have the
ability to leverage and control all information about product development and
related design, test, analysis and manufacturing processes. The integration of
the Company's PDM with design automation software products from the Company or
other design automation suppliers allows customers to implement a product
development process organized around a single common electronic definition of
the product. The Company's PDM products operate on Windows/NT and most major
UNIX platforms and support Oracle's industry-standard relational database
management software.
 
     The Company's principal data management software is its Optegra family of
object-oriented PDM software. Optegra employs object-oriented technology in a
client/server architecture and provides the capabilities to develop customized
templates for specific product development tasks such as management of
engineering change orders; to integrate data from multiple applications; and to
support concurrent enterprise-wide management of product data across an extended
enterprise.
 
     Data Management Software.  The Company's data management software products
provide single and distributed vaulting of product geometry and attribute data
("Optegra Vault" and "Optegra Distributed Vault"), control of access to such
data by clients and project organization support for engineering and related
applications. Vaulting is the electronic control of data stored in a secured
central depository. This software works with a variety of geometry systems,
including AutoCAD, IBM CATIA and Pro/ENGINEER, as well as the Company's CADDS
and MEDUSA applications.
 
     Configuration Management Software.  The Company's configuration management
software applications ("Optegra Configuration Master") simplify configuration
management by allowing manufacturers to manage and maintain a total product
configuration from a single database for its entire life cycle. The software
integrates engineering and manufacturing bills of material into one computerized
record of configuration and provides a means to track the history of each item.
 
     Workflow Management Software.  The Company's workflow management software
("Optegra Workflow Manager") permits organizations to distribute product-related
data in accordance with routing instructions. These instructions can be
predetermined or on an ad hoc basis.
 
     Other EPD Software.  On March 5, 1997, the Company announced a new software
tool, EPD.Connect, that is designed to provide a virtual work environment for
product manufacturers that improves team productivity by connecting members of a
design team with the information and applications specifically required for
their individual tasks. EPD.Connect software dynamically links a product to its
structure and
 
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associates it to the processes and applications used to create or modify the
product. A user is able to review at one time a graphical representation of the
product and its structure and any of the processes used in the design and
modification of the product, and to share the information with other members of
the design team. The Company anticipates its EPD. Connect software will be
shipped at the end of March 1997.
 
SOFTWARE SUPPORT SERVICES
 
     The Company's software support service offerings are developed to enhance
the productivity of its customers' people, processes and technology. Because of
the complexity of its customers' requirements, the Company markets a wide range
of services and ongoing support. The Company's service offerings include
assessment and design, installation and integration, customization, project
management, functional utilization of the Company's products and ongoing system
support.
 
     Software Services.  The Company provides software support services,
including bug fixes, enhancements and hotline support, through a global network
of service centers. This support network allows the Company to leverage
information and resources across diverse geographic areas to respond efficiently
to critical customer issues.
 
     Productivity Services.  The Company's productivity services include
business consulting, implementation consulting for EPD, design automation and
PDM products, and customer education and training.
 
     Business consulting is an integral part of the Company's EPD strategy and
includes the application of the Company's Product Development Diagnostic
consulting approach and its best practices database to re-engineering of the
Company's customers' design processes. The Product Development Diagnostic
approach assesses the effectiveness of people, processes and technology in a
customer's product development process, compares that with known industry best
practices and highlights opportunities for improvement.
 
     Implementation consulting services may include technology integration,
optimization and project management. Implementation consulting may also include
specialized software development to integrate the Company's software products to
the particular needs of the customer's product development process.
 
OPEN SERVICE SOLUTIONS
 
     The Company's Open Service Solutions (OSS) business provides services to
both the Company's software customers and to customers of selected third party
hardware and software vendors. The OSS offerings include system hardware and
operating systems services, network design and implementation, systems
integration, and database support and consulting for enterprise-wide systems and
networks. Open Service Solutions is a worldwide support organization that is ISO
9000 certified.
 
     On March 19, 1997 the Company signed a non-binding letter of intent with
M.D. Sass Investors Services, Inc. ("Sass"), a 17% shareholder of the Company,
for the purchase by Sass of a 51% interest in the OSS business. (See "Recent
Developments" above).
 
PRODUCT DEVELOPMENT
 
     The Company's software developers seek to understand customer requirements
and rapidly and cost effectively build and deliver high quality products and
enhancements that respond to those requirements. Its developers are organized
into concurrent design and build teams, each of which has a focus on specific
software development projects or basic technologies. The Company employs
advanced software development tools widely. The Company has three principal
development centers, located in Bedford, Massachusetts, San Diego, California
and Pune, India.
 
     During 1994, 1995 and 1996, the Company spent approximately $58.8 million,
$41.5 million and $40.1 million (including amounts capitalized as software
development), respectively, on software research, development and engineering,
constituting approximately 20%, 15% and 13% of its total software revenue.
 
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SALES, MARKETING AND DISTRIBUTION
 
     The Company's customers are principally automotive, aerospace,
shipbuilding, general mechanical and consumer goods manufacturers, for whom
rapid and cost effective product development is critical. These customers build
products having complex assemblies employing an extended enterprise of
geographically dispersed developers and manufacturers.
 
     Sales to these customers are complex and usually involve providing
diagnostic consulting and support for customer implementation of the Company's
software products in an EPD process. These customers typically purchase not only
software for component modeling, assembly design and product data management,
but also diagnostics, implementation consulting and training.
 
     The Company has developed a specialized sales and support organization,
which it refers to as its Global Industries Group, with knowledge of
industry-specific development processes and the skills to advise and support the
customer with respect to implementation of EPD.
 
     A key component of the Company's sales strategy is to target industry
leaders for each of the Company's principal markets. Among its principal
customers which are implementing the Company's EPD strategy are Lucas Aerospace
Ltd., Halliburton Energy Services, Lockheed Martin Corporation, The Raytheon
Company, BMW Rolls-Royce, Short Brothers, The Rover Group, Hughes Space and
Communications Company, Vickers Shipbuilding and Engineering Ltd., Fiat Auto
S.p.A., Peugeot S.A., Rolls-Royce Aerospace Group, Allison Engine Corporation
and the four principal partners of Airbus Industrie -- Aerospatiale S.N.I.,
British Aerospace Airbus Limited, Construcciones Aeronauticas, S.A. and
Daimler-Benz Aerospace Airbus GmbH.
 
     The Company markets its products and services through a worldwide direct
sales force located in the United States, Europe, Australia and Asia. In those
countries in which the Company does not have a direct sales force, the Company
distributes its products through international distributors.
 
     To complement the Company's worldwide direct sales organization, the
Company has established alternate channels of distribution, including
value-added resellers and systems integrators.
 
     While no one customer accounted for more than ten percent of the Company's
total revenue in 1996, the Company derived approximately 16% of its 1996
software product revenue from a contract with Electronic Data Systems, as a
systems integrator to the Rolls Royce Aerospace Group and Allison Engine
Corporation, and approximately 6% of its 1996 software product revenue related
to a contract with Peugot S.A. including Automobile Peugeot and Citroen.
 
INTERNATIONAL OPERATIONS
 
     During 1994, 1995, and 1996, international sales, including U.S. export
sales, accounted for approximately 69%, 73% and 73% of total revenue,
respectively. Financial information concerning domestic and international
operations and the Company's foreign currency hedging program appear in Note 8
and Note 2, respectively, of Notes to Consolidated Financial Statements.
 
     While computer technology and software have evolved toward universal
standards, there continue to be differences in languages, applications and
software usage among countries which are best recognized by local management.
Country managers work closely with the heads of each of the Company's business
units to tailor product development and marketing strategies to the needs of
each foreign market. The Company has a significant presence in each of the major
markets for its products, including North America, Germany, the United Kingdom,
France, Italy and Japan. In addition, the Company also markets its products in
Eastern Europe and the People's Republic of China.
 
PRODUCTION
 
     The Company designs, develops and produces the majority of its software
products and makes its products, user manuals and other documentation available
on a variety of electronic and printed media. Shipments are generally made
within one to two weeks of receiving an order which is common in the software
industry. In light of the short time between order and shipment of the Company's
products, the Company
 
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generally has relatively little backlog at any given date, and the Company does
not believe that backlog is representative of potential sales for any future
period.
 
     The Company has from time to time licensed from third parties certain
technology for inclusion in its products and expects that it will continue to do
so in the future. These licenses generally provide for the Company's payment of
royalties based on product sales. During 1995 and 1996, the Company expensed
approximately $12.6 million and $16.1 million, respectively, for royalties and
support fees to third parties.
 
COMPETITION
 
     The software markets in which the Company operates are highly competitive
and characterized by rapid advances in technology. To compete successfully, the
Company must continue to enhance its current products and services and develop
new products and services which can be offered at competitive prices and on a
timely basis.
 
     The Company considers its principal competitors in the EPD market to be IBM
(which markets a component modeling system, CATIA, developed and maintained by
Dassault Systems S.A.) and Unigraphics, a division of Electronic Data Systems.
In the design automation market, the Company's principal competitors are
Intergraph Corporation, Parametric Technology Corporation and Structural
Dynamics Research Corporation. In the product data management market, the
Company competes with a number of smaller companies, including Metaphase
Technology, Inc. and Sherpa Corporation. In the area of design automation for
complex assemblies, one of the Company's most significant sources of competition
also comes from design tools developed internally by manufacturers to meet their
own needs.
 
     The Company believes that the principal competitive factors in its markets
are its ability to provide EPD products and services, product quality and
functionality, product breadth and integration, support, ease of product use,
sales and marketing strength, customer support services, corporate reputation
and financial strength.
 
     Because of the intense competition and rapid technological changes in the
industry, the Company's business will be adversely affected if the Company
incurs significant delays in developing new products or enhancements, if such
products or enhancements do not gain customer acceptance, or if products or
technologies developed by others serve to render the Company's products or
technologies noncompetitive or obsolete. The Company is aware of ongoing efforts
by competitors to develop competitive products, and there can be no assurance
that competitors will not develop equivalent or superior products to those
produced by the Company. The Company's competitive position is also affected by
the financial strength of its competitors. Many of the Company's current and
potential competitors have greater financial and operating resources than the
Company and the Company has a higher debt-to-equity ratio and a higher cash debt
service than most of its competitors, and a negative net worth.
 
     The Company's services business competes on the basis of price and the
quality and reliability of its customer services, support, consulting and
training. As the Company continues to expand its services beyond its installed
customer base to products sold by other vendors and to networks and systems
integration services, the Company believes that competition will increase for
non-proprietary products.
 
PROPRIETARY RIGHTS
 
     The Company relies on a combination of contracts, patents, copyrights and
trade secrets to establish and protect its proprietary rights in technology. In
addition, the Company maintains relevant trademark registration in its major
markets. The Company distributes its products under software license agreements
which grant customers licenses to the Company's products and which contain
various provisions protecting the Company's ownership and confidentiality of the
licensed technology. The source code of the Company's products is protected as a
trade secret and as an unpublished copyrighted work. However, no assurance can
be given that others will not copy or otherwise obtain and use the Company's
products or technology without authorization. In addition, effective copyright
and trade secret protection may be unavailable or limited in certain foreign
countries.
 
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     The Company believes that, due to the rapid technological advances within
its industry, factors such as the technological and creative skills of its
personnel are more important to establishing and maintaining a technology
leadership position within the industry than are the various legal protections
of its technology.
 
     From time to time, the Company is subject to claims of infringement by it
of proprietary rights of third parties. There can be no assurance that such
claims, if resolved in a manner unfavorable to the Company, will not have a
material adverse effect on the Company.
 
EMPLOYEES
 
     As of December 31, 1996, the Company had a total of approximately 2,000
employees. The Company has not experienced any work stoppages, and it considers
its employee relations to be satisfactory.
 
EXECUTIVE OFFICERS
 
     The following persons are executive officers of the Company as of December
31, 1996, having been appointed to their respective positions to serve until the
election and qualification of their respective successors.
 
     Russell E. Planitzer, age 53, Chairman of the Board of the Company since
August 1989. Mr. Planitzer was Chief Executive Officer from April 1993 to
November 1996 and President of the Company from April 1993 to November 1995. Mr.
Planitzer was a General Partner of J.H. Whitney & Co. ("Whitney"), a private
investment banking firm, for more than five years. He resigned from Whitney in
November 1991. Mr. Planitzer is also a director of Intersolv, Inc.
 
     Kathleen A. Cote, age 48, President and Chief Executive Officer since
November 1996 and President and Chief Operating Officer from November 1995 to
November 1996. Previously, she was Vice President, Marketing and Services since
1994. Ms. Cote has been with the Company since November 1986, serving in various
positions, including Vice President, Customer Service and Vice President,
Manufacturing. She was appointed a Director of the Company in July 1996. Ms.
Cote is also a director of Bay Networks, Inc.
 
     Barry F. Cohen, PhD., age 52, Senior Vice President, Human Development and
Organizational Productivity since October 1993. Previously, he was the
co-founder of Possibilities, Inc., a consulting firm specializing in individual
development, organizational development and leadership development, for more
than five years.
 
     Anthony N. Fiore, Jr., age 50, Vice President, Business Operations and
General Counsel since 1994. Previously he served as Vice President, General
Counsel since December 1989. He has been Corporate Secretary since 1990. He
originally joined the Company in 1984.
 
     William A. Foniri, age 47, Vice President and Chief Financial Officer since
July 1996 and Treasurer since March 1996. Prior to that time, he served as Vice
President, Business Management from November 1995 to July 1996. Mr. Foniri has
been with the Company since 1980 serving in various finance and service
positions, including vice president, service business manager and director of
finance and business planning for the Company's service organization.
 
     Rock S. Gnatovich, age 43, Vice President, Worldwide Marketing since
February 1996. Mr. Gnatovich served in various positions at Structural Dynamics
Research Corporation from 1990 to 1995, the most recent being Vice President of
North American Product Data Management. Prior to that he worked for
approximately five years at each of CIMLINC and Applicon.
 
     James E. Hayden, age 43, Vice President, Controller since June 1995. He was
appointed Corporate Controller in June 1994. Mr. Hayden has been employed by the
Company since 1986 and has served in various positions within the finance
organization, including Director of Finance and Administration for the
international sales subsidiaries.
 
     Attilio Rimoldi, age 54, Senior Vice President, Research and Development
from January 1994 to February 1997. Mr. Rimoldi served as a consultant to the
Company from July 1992 to 1994, working with the
 
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Company's customers and software developers in Europe. Previously he worked for
Intergraph Corporation for nine years, first as Vice President of the Mechanical
Business Unit and most recently as President of its European Mechanical
Competence Center. In February 1997, Mr. Rimoldi left the Company.
 
     Edward D. Wagner, age 38, Vice President, Business Manager for PELORUS from
October 1995 until January 1997. Previously, Mr. Wagner was Vice President of
Marketing at Rasna Corporation from 1993 to 1995. From 1987 to 1993, he was a
founder and principal of Boston Communications, a marketing strategies and
public relations consulting firm that specialized in design automation. In
January 1997, Mr. Wagner left the Company.
 
ITEM 2.  PROPERTIES
 
     The Company's principal executive offices are located in Bedford,
Massachusetts. The Company's principal facilities are as follows:
 
<TABLE>
<CAPTION>
                                                                  TOTAL
                                                                 SQUARE        LEASE
                 LOCATION                    OPERATION           FOOTAGE     EXPIRATION
        --------------------------    -----------------------    -------     ----------
        <S>                           <C>                        <C>         <C>
        Bedford, MA(1)............    Administrative and R&D     284,500     12/31/2009
        Wiesbaden, Germany(1).....    Sales and Service           97,200     08/31/2005
</TABLE>
 
---------------
(1) These facilities have excess or vacant space which the Company is attempting
    to sublease.
 
     The Company also leases additional space in various locations throughout
the United States and abroad, primarily for sales, customer service and R&D
operations. The Company believes that its existing facilities are adequate to
meet its current requirements. Approximately 62.5% of the space in the
facilities listed in the foregoing table is currently used by the Company in its
operations.
 
     The Company has approximately 203,600 square feet of vacant leased
facilities that it is currently attempting to sublease. It is also subleasing
approximately 764,600 square feet at a loss. A substantial portion of these
sublet facilities are located in the Northeastern region of the United States
and in the United Kingdom. The Company is continuing its efforts to sublease all
its vacant facilities.
 
     If the Company is unsuccessful in its efforts to negotiate additional
subleases or extend existing subleases on these facilities, the future cash
needs to meet these facility obligations will be substantial, including
approximately $11 million in 1997, $12 million in 1998, and $12 million in 1999,
net of known sublease receipts and assuming there are no lump-sum settlements on
any of the leases. Based upon current and expected real estate conditions, the
Company has reserved approximately $61.5 million in connection with its vacant
facility obligations for financial reporting purposes as of December 31, 1996,
which it believes is adequate. (See Note 6, "Capital Leases, Lease Commitments
and Rent Expense" of Notes to Consolidated Financial Statements.)
 
ITEM 3.  LEGAL PROCEEDINGS
 
     (1) On March 28, 1991, Joseph and Josephine Dieter, former stockholders of
the Company, brought suit against the Company, DR Holdings, DR Acquisition
Corporation, a former subsidiary of DR Holdings, Mr. Russell E. Planitzer,
Chairman of the Board of Directors of the Company, and Messrs. Don E. Ackerman
and Peter M. Castleman, former directors of the Company, in the Court of
Chancery of Delaware as both an individual and a class action (on behalf of all
persons, other than the defendants, who were stockholders of the Company on
December 28, 1989). The suit arises out of the merger between the Company and
certain subsidiaries of DR Holdings, and the related merger agreement. The suit
alleges, among other things, that, in connection with the acquisition of the
Company by DR Holdings, the Board of Directors of the Company breached its
fiduciary duties to Company stockholders by (i) approving the merger which
plaintiffs allege was unfair to Company stockholders, and (ii) by not
withdrawing from the merger agreement and/or renegotiating the consideration
that was to be received by Company stockholders whose shares were not purchased
in the tender offer. The plaintiffs seek, among other things, an order granting
all Company stockholders as of
 
                                        8
<PAGE>   10
 
December 28, 1989 damages in an undetermined amount. The plaintiffs then filed
an amended and supplemented complaint which removed DR Holdings as a defendant
since it is in bankruptcy, and removed DR Acquisition Corporation since it had
been merged into the Company. The trial occurred in September of 1996. The
Company is in the process of filing post trial briefs and the Court is expected
to have the matter under submission by July, 1997. Although the parties have
engaged in post-trial settlement discussions, it is not yet possible to predict
the outcome or quantify any possible exposure of the Company. If this lawsuit is
not settled, and the court awards the plaintiffs substantial monetary damages,
it could have a material adverse effect on the Company's financial condition and
results of operations.
 
     (2) In a letter dated June 11, 1993, the United States Environmental
Protection Agency ("EPA") notified the Company of its potential liability
pursuant to the Comprehensive Environmental Response Compensation and Liability
Act ("CERCLA") for a release of hazardous substances disposed of at the Shaffer
Landfill portion of the Ironhorse Park Superfund Site in Billerica,
Massachusetts ("Shaffer Site"). The Company was one of approximately 60
businesses and individuals to receive such a letter. The Company is cooperating
with approximately 30 other potentially responsible parties ("PRPs") who have
formed a group, and expects to participate in the common efforts of that group.
The Company has informed the EPA of its intent to cooperate with the other PRPs
in common efforts. The Company investigated the extent of its involvement with
the Shaffer Site and participated in a confidential mediation process which
allocated remedial costs among the members of the PRP group. The Company has
received information through the PRP group indicating that the anticipated costs
of completing the EPA's proposed remedy at the Shaffer Site is likely to range
between $20 million and $30 million. After the PRPs failed to reach agreement
with the EPA regarding settlement, the Department of Justice ("DOJ") and the
Massachusetts Attorney General ("MAG") both filed complaints on January 5, 1995,
seeking past costs against 10 PRPs. The Company was not named. However, it could
be named later by the government, and some of the named defendants have
indicated they will commence third-party actions against other PRPs, including
the Company, if ongoing negotiations do not result in a settlement. Negotiations
have been ongoing relative to several substantive matters and the Company cannot
predict at this time if any agreement on issues will be reached with the
government.
 
     (3) Several tax issues which pertain to Computervision tax returns for
years prior to 1988 (when Computervision was acquired by Prime Computer, Inc.)
remain outstanding. The most significant issue involves the qualification of a
domestic international sales corporation ("DISC") for tax years 1983 and 1984.
If the DISC is disqualified, the Company will be subject to additional tax and
interest in the range of $9.0 million to $12.0 million after the usage of net
operating losses. A trial on these issues was held before the Tax Court on
October 25, 1994. On March 18, 1996 the Tax Court ruled in favor of the Company.
On April 16, 1996 the Company filed a Motion for Reconsideration with the Tax
Court on the one issue, which concerned whether income was reportable as capital
gain or ordinary income, on which the decision was unfavorable to the Company.
The Motion for Reconsideration was denied by the Judge on May 27, 1996. As to
the portion of the decision unfavorable to the government, the Company does not
know whether the government will appeal the decision. Even if the government
does not appeal the decision, the Company will owe some tax and interest on this
case, but is also owed a refund on a related case. The computation of the tax
payment and the timing of the tax payment and refund have not been determined.
The Company's calculation of the adjustments resulting from the Court's decision
were reviewed by Counsel and submitted to the IRS on November 12, 1996.
 
     (4) The Company is involved in numerous other legal proceedings and
litigation incidental to the normal course of the Company's business. The
Company believes that the ultimate disposition of these other proceedings and
litigation will not have a material adverse effect on the Company's financial
position.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     No matters were submitted to the vote of the security holders of the
Company during the fourth quarter of the fiscal year ended December 31, 1996.
 
                                        9
<PAGE>   11
 
                                    PART II
 
ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS
 
     The Company's common stock is listed on the New York Stock Exchange, ticker
symbol CVN. The Company's debentures and notes are not listed on any exchange.
 
     The high and low prices of the Company's common stock in 1995 and 1996, as
reported by the New York Stock Exchange's consolidated transaction reporting
system, are shown in the table below.
 
<TABLE>
<CAPTION>
                                                                       1995
                                                                   ------------
                                                                   HIGH     LOW
                                                                   ----     ---
            <S>                                                    <C>      <C>
            1st Quarter..........................................  $ 6 1/8  $3 5/8
            2nd Quarter..........................................  $ 6 3/4  $4 3/4
            3rd Quarter..........................................  $14 3/8  $6 1/4
            4th Quarter..........................................  $15 1/2  $9 3/4
</TABLE>
 
<TABLE>
<CAPTION>
                                                                       1996
                                                                   ------------
                                                                   HIGH     LOW
                                                                   ----     ---
            <S>                                                    <C>      <C>
            1st Quarter..........................................  $15 1/4  $ 9
            2nd Quarter..........................................  $12 3/4  $8 3/4
            3rd Quarter..........................................  $10 5/8  $5 3/4
            4th Quarter..........................................  $10 3/8  $7 7/8
</TABLE>
 
     The Company's Revolving Credit Agreement prohibits the Company from paying
cash dividends. The Company is also restricted from paying cash dividends under
the terms of the Indenture for its 11 3/8% Senior Subordinated Notes due 1999.
Although a prior bank credit agreement permitted limited dividends, on October
21, 1993, the Board of Directors of the Company voted to discontinue paying
dividends.
 
     As of March 25, 1997, there were 63,575,158 shares of the Company's common
stock outstanding held by approximately 3,071 shareholders of record.
 
ITEM 6.  SELECTED FINANCIAL DATA
 
     The response to this item is contained in Note 14, "Selected Financial
Data" of the Notes to the Consolidated Financial Statements.
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
     This Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the consolidated
financial statements and footnotes for the years ended December 31, 1994, 1995
and 1996 included elsewhere in this report. The amounts set forth below are in
thousands, except per share data.
 
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
 
     International operations accounted for approximately 69%, 73% and 73% of
the Company's total revenue during 1994, 1995 and 1996, respectively.
Consequently, the Company's results of operations were affected by movements in
foreign exchange rates. However, the Company enters into foreign exchange
forward contracts on firm intercompany balances in order to mitigate a portion
of the foreign exchange rate exposure.
 
     On September 25, 1996, the Company signed a definitive Asset Purchase
Agreement to sell its Open Service Solutions ("OSS") business to an affiliate of
J.F. Lehman & Company ("J.F. Lehman"). On March 19, 1997, the Company announced
the termination of its agreement with J.F. Lehman and the signing of a
non-binding letter of intent with M.D. Sass Investors Services, Inc. ("Sass"), a
17% shareholder of the Company, for the purchase by Sass of a 51% interest in
the OSS business. In connection with this transaction, the Company will receive
from Sass $5,100 in cash and will receive from the entity that operates the OSS
business (a) $25,000 in cash and (b) a promissory note in the amount of $25,000.
The cash payment of
 
                                       10
<PAGE>   12
 
$25,000 will be funded by a bank loan to the OSS business, secured by its
assets. The Company will continue to own 49% of the OSS business, subject to an
option granted to OSS to purchase up to one-fifth of the balance of the
Company's equity position. The transaction is subject to execution and delivery
of a definitive agreement and to the availability of financing, receipt of
approval from the Company's banks, compliance with the Company's financing
instruments and other customary closing conditions. As a result, no assurance
can be given that the transaction will be consummated.
 
  Software Revenue and Gross Margins
 
     Total 1996 software revenue increased $16,214 or 6% from 1995, as product
revenue increased $28,012 or 17% and service revenue decreased $11,798 or 10%.
Product and service revenue for 1996 included unfavorable foreign exchange
impacts of $3,700 and $3,400, respectively. The 1996 product revenue increase
was primarily attributable to volume increases and included $27,000 related to a
contract with Electronic Data Systems as systems integrator to the Rolls-Royce
Aerospace Group and Allison Engine Company and $11,200 related to a contract
with Peugeot SA, including Automobiles Peugeot and Citroen, while 1995 product
revenue included $11,900 related to contracts with the Airbus Consortium
(British Aerospace Airbus Limited, Aerospatiale S.N.I., and Daimler Benz
Aerospace Airbus GmbH). During 1996, revenue from the Company's CADDS and
product data management software products increased $17,600 or 17% and $16,000
or 56%, respectively, over 1995 primarily due to favorable customer response to
the Company's Electronic Product Definition products. Revenue from several of
the Company's older mechanical CAD software products declined by $5,400 or 20%
from 1995, as expected demand for these products declined. Service revenue
decreased primarily due to an unfavorable year over year foreign exchange
impact, continued lower maintenance revenue as a result of lower pricing on new
products and upgrades within the existing customer base, and decreased training
revenue, offset by increased consulting revenue.
 
     Total 1995 software revenue increased slightly from 1994, and included
favorable foreign exchange impacts of $5,900 and $7,400 on product and service
revenue, respectively. The 1995 product revenue included $11,900 related to
contracts with the Airbus Consortium (British Aerospace Airbus Limited,
Aerospatiale S.N.I. and Daimler Benz Aerospace Airbus GmbH) while 1994 product
revenue included $16,400 related to a contract with Rolls-Royce plc. Product
revenue increased slightly principally due to increases in CADDS software
products, offset by decreases in the Company's other product lines as the
Company transitioned to its newer products. Service revenue decreased slightly
from 1994, primarily due to continued lower maintenance revenue as a result of
lower unit prices as new products are introduced, offset by increased training
and consulting service revenue.
 
     Software product margins for 1996 were 91% compared to 90% and 81% for 1995
and 1994, respectively. The improvement in software product margins in 1996
primarily resulted from a decrease in amortization of previously capitalized
software costs, partially offset by increased royalties for software licensed
from third parties. The improvement in 1995 margins from 1994 primarily resulted
from a decrease in amortization of previously capitalized software costs.
 
     Services margins for 1996, 1995 and 1994 were 39%, 42% and 41%,
respectively. The decrease in services margins in 1996 was primarily due to
decreased maintenance margins resulting from competitive pricing pressures, and
decreased training margins. The improvement in 1995 margins from 1994 primarily
resulted from lower costs due to the full benefit of the 1994 reorganization of
software support into regional centers.
 
  Other Revenue and Gross Margins
 
     Other services revenue (representing the OSS business unit) for 1996
decreased $46,089 or 21% from 1995, and included an unfavorable year over year
foreign exchange impact of $3,200. The decrease was primarily due to the
expected continuing reduction in proprietary hardware services, which declined
approximately $41,700 or 31% year over year, as well as the disruption caused by
the September 25, 1996 agreement to sell the OSS business to J.F. Lehman.
 
                                       11
<PAGE>   13
 
     Other services revenue for 1995 decreased $66,985 or 23% from 1994. The
decrease was primarily due to the expected continuing reduction in hardware
services, which declined $60,996 or 30% year over year, offset by a favorable
year over year foreign exchange impact of $10,000.
 
     Other services margins for 1996, 1995 and 1994 were 23%, 30% and 32%,
respectively. The decreases in margins were attributable to several factors,
including the disruption caused by the Sepember 25, 1996 agreement to sell the
OSS business to J.F. Lehman, the recording of certain inventory reserve
provisions and a shift in the revenue mix towards system integration revenue
which contributes a lower margin.
 
  Selling and Administrative Expense
 
     Total selling and administrative expense for 1996 increased $2,455 or 2%
from 1995, and included a favorable year over year foreign exchange impact of
$2,600. The increase was primarily due to increased spending for marketing and
the cost of a special service bonus to the former CEO. Total selling and
administrative expense for 1995 decreased $14,712 or 9% from 1994, due to the
cost benefits associated with the resizing of the Company's administrative
operations. This decrease was partially offset by an unfavorable foreign
exchange impact for 1995 of $6,200. The decrease in other services selling and
administrative expense year over year results from a decrease in other services
revenue as a percentage of total revenue.
 
  Research, Development and Engineering Expense
 
     Software product research, development and engineering expense for 1996,
1995 and 1994 is net of amounts capitalized as software development costs of $0,
$0 and $1,545, respectively. Software product research, development and
engineering expenditures (software product research, development and engineering
expense plus capitalized software) as a percentage of total software revenue for
1996, 1995 and 1994 was 13%, 15% and 20%, respectively.
 
     Total 1996 research, development and engineering expense decreased $2,289
or 5% from 1995 primarily due to additional cost savings resulting from the
continued reallocation of development to the Company's development facility in
India. Total 1995 research, development and engineering expense decreased
$16,186 or 27% from the prior year. The 1995 decrease was primarily due to
reductions in costs as a result of the reorganization and refocus of research
and development activity, including reallocation of development to the Company's
development facility in India (opened in 1994), the elimination of managerial
positions while maintaining a focused software development capacity and the
elimination of non-strategic activities and product lines, offset by reduced
software capitalization.
 
  Non-recurring Charges
 
     The 1996 results include a non-recurring charge of $14,500 which represents
$3,500 of purchased in-process R&D associated with the acquisition of 3rd Angle
Ltd., a UK-based technology company, and $11,000 of restructuring costs
associated with the implementation of ongoing cost savings (primarily personnel
reductions and the closing of facilities). The 1996 results also include a
non-recurring charge of $5,000 associated with the write-off of fees and
expenses incurred in connection with the terminated agreement to sell the OSS
business to J.F. Lehman. There were no non-recurring charges in 1995 or 1994.
 
  Interest and Other Expense, Net
 
     Interest and other expense, net for 1996 decreased $14,118 or 31% from 1995
and decreased $4,757 or 10% in 1995 from 1994 due primarily to the redemption in
full of the $125,000 10 7/8% Senior Notes in the fourth quarter of 1995 (See
"Long-Term Liquidity" below) and a reduction in costs associated with the
Company's revolving line of credit.
 
  Income Taxes
 
     The provision for income taxes is lower than the statutory rate in all
periods primarily due to the benefit of prior year net operating loss
carryforwards (See Note 7 "Provision for Income Taxes" of Notes to Consolidated
Financial Statements).
 
                                       12
<PAGE>   14
 
  Extraordinary Charge
 
     During the fourth quarter of 1995, the Company recorded an extraordinary
charge relating to a redemption premium ($5,437) and fees ($2,493) associated
with the early retirement of the Company's $125,000 10 7/8% Senior Notes.
 
FACTORS THAT MAY AFFECT FUTURE RESULTS
 
     The software industry segment in which the Company operates is subject to
continuing changes and significant competitive pressures. The Company faces
several risks in its business, some of which are beyond its control. The
following is a discussion of some of the risks which the Company faces.
 
     Potential Fluctuations of Quarterly Operating Results; Impact of
Significant Contracts.  The Company's quarterly operating results may vary
significantly depending on factors such as the timing of significant orders and
the timing of new product introductions by the Company and its competitors. The
majority of the Company's software product revenues in each quarter result from
orders booked in that quarter and a substantial portion of the Company's orders
and shipments typically occur during the last two weeks of each quarter so that
forecasting of revenue is uncertain. As expenses in the short term are incurred
in advance of expected revenues, the Company may not be able to reduce expenses
commensurately with an unanticipated shortfall in revenue in a given quarter.
 
     The Company has focused its direct software sales efforts primarily on
large customers. The Company expects this reliance on large customers to
continue into 1997. As the software and services provided under large contracts
affect the customer's entire enterprise and affect the core of the customer's
product development efforts, the purchase decisions are made at senior
management levels of the enterprise and the sales cycle is generally much longer
than is typically the case, making the timing of such orders more difficult to
anticipate. In addition, the customer's own design cycle and capital spending
budget will affect the timing of orders. A large customer's delay in making
purchase decisions, or the Company's failure to obtain one or more significant
contracts could have a material adverse impact on the orders and shipments
planned for a current or future quarter.
 
     The Company also markets its products in Eastern Europe and the People's
Republic of China where issues of governmental approval and hard currency
availability further lengthen the sales cycle and affect the predictability of
orders.
 
     Large contracts increasingly require the Company to provide additional
consulting and other services. At times, the customer's implementation schedule
may differ from the Company's expectations and the Company may incur costs to
fulfill its contractual commitments before the customer requests implementation
services.
 
     In addition, the Company has historically experienced a seasonal decline in
revenue in the first and third quarters of each fiscal year, primarily due to
capital budgeting cycles of customers and the European holiday schedule,
respectively.
 
     New Products, Technological Change and Market Pressures.  The Company
continues to devote substantial resources to the research, development,
acquisition and marketing of design automation, product data management and
workflow technologies, and believes that their acceptance by customers is
critical to the future success of the Company. However, the development of new
technology and products is made increasingly complex and uncertain, as the
Company expands its use of third party technology through licensing or
acquisition. There can be no assurance that the Company will be successful in
developing, acquiring or licensing, and marketing these new products, that
customers will accept them or that competitors will not develop products or
technologies which render the Company's products or technologies noncompetitive
or obsolete.
 
     In addition to new technology, competitors are constantly marketing their
products in new ways, with new pricing, combinations of products and service
options which may affect the Company's own pricing and packaging decisions and
margins. Also, competitors are aligning with new partners and buying technology
to
 
                                       13
<PAGE>   15
 
strengthen the breadth of their product offerings and reduce the Company's
distinctive breadth of product offerings.
 
     Dependence on Certain Industries.  The Company sells its products to
customers in a number of industries, but its product revenues are heavily
concentrated in the automotive, aerospace and shipbuilding industries and may be
adversely affected by reductions in capital spending in these industries, as
well as cyclical economic trends affecting these industries. The Company's
future revenues would also be adversely affected by future declines in sales to
its automotive, aerospace and shipbuilding customers. In addition, customers in
these industries tend to continue with a technology choice for long periods (an
entire development cycle) so that an opportunity lost at a given customer will
not become a new opportunity for several years.
 
     OSS Business.  The Company has signed a non-binding letter of intent to
sell a 51% interest in the OSS business. The Company's failure to complete this
sale and the related transactions, and/or disruptions to the business caused
while the sale is being consummated, could have an adverse impact on OSS revenue
and, thereby, affect the Company's overall operating results and cash flow. In
addition, the Company's inability to offset attrition in maintenance revenue
with increased systems integration and networking revenue, and to offset a
revenue decline with reduced costs, would have an adverse impact on the
financial performance of the OSS business and the Company.
 
     Possible Limitations on Net Operating Loss Carryforwards.  In the past, the
Company has incurred substantial net operating loss carryforwards ("NOLs") which
may reduce taxes owed on future taxable income (See Note 7, "Provision for
Income Taxes" of Notes to Consolidated Financial Statements). The Internal
Revenue Code of 1986, as amended (the "Code") places annual limitations on the
ability of a corporation to use NOLs to offset taxable income for taxable years
following a change of more than 50% of the ownership of a corporation. In 1996,
a change of more than 50% of the ownership of the corporation occurred, which
results in an annual limitation on the usage of NOLs of approximately $40,000 to
$50,000. Although the Company has computed its NOLs and reported them to the
Internal Revenue Service (the "IRS") in a manner that indicates that they
generally will be available to be used to offset the Company's taxable income in
future years, there is a significant possibility that the IRS will disagree with
the Company's determination of the amount of NOLs that could be so used. In such
event, if the IRS were to prevail, the use of a portion or all of the Company's
NOLs could be disallowed and the Company would realize taxable income at an
earlier time than would otherwise be the case. In such an event, the Company
would be required to pay increased taxes from cash flow and could be required
for financial reporting purposes to increase its future provisions for income
taxes, thereby reducing the Company's net income.
 
     Other Risks.  The Company faces other risks in common with others in the
software industry which could also impair the Company's future financial
performance. For example, the market for high technology stocks is extremely
volatile and can be affected by factors beyond the Company's control, such as
the performance of the Company's competitors, market conditions in the CAD/CAM
and PDM industries or general economic conditions. International sales are
subject to additional risks, including the fact that foreign countries could
impose additional withholding taxes or otherwise further tax the Company's
income, impose tariffs or adopt other restrictions on foreign trade; agreements
and intellectual property rights may be difficult to enforce through a foreign
country's legal system; and unfavorable exchange rate shifts may be difficult to
anticipate. Despite a significant reduction in the Company's long term
indebtedness, the Company remains highly leveraged and has a stockholders'
deficit which may place the Company at a competitive disadvantage. The risks
from competition, liquidity needs, loss or challenge to proprietary rights and
litigation described elsewhere in this report could also have an adverse effect
on future financial results.
 
SHORT-TERM LIQUIDITY AND CAPITAL RESOURCES
 
     As a result of the 1996 and previous restructurings, including the 1993
exit from the hardware resale business, the Company has substantial cash payment
obligations that are unrelated to its current operations. The Company expects to
make cash payments in respect of such liabilities of approximately $27,000 in
1997. The Company will record a non-recurring charge of approximately $7,000 in
the first quarter of 1997, related
 
                                       14
<PAGE>   16
 
primarily to completing the separation of the OSS business from the software
business. In addition, the Company expects to record a non-recurring charge of
approximately $12,000 in the second quarter of 1997 related to restructuring the
software business due principally to the Company's failure to meet its revenue
plan for the first quarter of 1997 and the resulting revisions to its 1997
business plan, as described below. The Company believes that cash generated from
operations, supplemented by borrowings under the Revolving Credit Facility
("Revolving Credit Facility") and from factoring arrangements which may be
entered into from time to time will be sufficient to fund such cash payments, as
well as debt service, normal working capital and other cash requirements.
 
     The Revolving Credit Facility provided for a revolving line of credit (the
"Revolving Credit Line") of $50,000 for working capital and for sinking fund
payments on the Company's 8% Convertible Subordinated Debentures (unpaid
principal balance of $54,110 at December 31, 1996), of which $20,000 is
available for letters of credit. Pursuant to the terms of the Revolving Credit
Facility, the Company has granted the lenders a security interest in all of the
Company's U.S. assets. Letters of credit outstanding at December 31, 1996 were
$8,521 and there were no borrowings outstanding. The Revolving Credit Facility
requires the Company to satisfy certain financial and other covenants. As a
result of the non-recurring charges of $19,500 in the fourth quarter of 1996
(See "Non-recurring Charges" above) and an expected non-recurring charge of
$7,000 in the first quarter of 1997, the Company would not have satisfied the
financial covenants of its Revolving Credit Facility. As a result, the Company
and its lending banks signed an amendment which modifies the financial covenants
through December 31, 1997. The Company also agreed with its banks that it would
amend the Revolving Credit Facility to provide for a borrowing base limitation
and would limit outstanding borrowings to $18,800, including letters of credit
($3,800 outstanding at March 27, 1997) until the facility is so amended. Loans
under the Revolving Credit Facility will bear interest at a Base Rate or
Eurodollar rate, as selected by the Company, plus an Applicable Margin. On
December 31, 1996, the rates ranged from 7.5% to 9.25%.
 
     Due to the substantial shortfall in revenue for the quarter ended March 30,
1997, the Company was unable to satisfy certain of the financial covenants, as
amended, under the Revolving Credit Facility (under which no borrowings were
outstanding) ("Bank Covenants"). On April 15, 1997, the Company reached an
agreement with its lending banks to waive the default in the Bank Covenants for
the quarter ended March 30, 1997, to amend the Bank Covenants to conform with
the Company's revised business plan for 1997, and to implement a borrowing base
limitation (the "April 1997 Amendment"). Pursuant to the terms of the April 1997
Amendment, the Company may borrow funds secured by the accounts receivable of
the Company, Computervision Pty. Limited (Australia), Computervision S.A.
(France), Computervision GmbH (Germany) and Computervision Limited (U.K.). Until
such time as the April 1997 Amendment is executed, the Company may borrow on its
U.S. accounts receivable ($8,800 at March 30, 1997). Thereafter, until the
security interests are perfected, the Company may borrow the lesser of the
borrowing base limitation and (i) $25,000 for the period from April 15, 1997 to
June 30, 1997, and (ii) $35,000 thereafter. In addition, the April 1997
Amendment also limits the borrowings outstanding at the end of each fiscal
quarter ($18,000 for the second quarter of 1997, $21,000 for the third quarter
of 1997 and $16,000 for each subsequent quarter), and increases the interest
rate to LIBOR plus 2.5% for borrowings of $25,000 or less and LIBOR plus 3% for
borrowings greater than $25,000.
 
     Because the Company's borrowings under the amended Revolving Credit
Facility will be limited to a fixed percentage of the Company's accounts
receivable, the Company's ability to fund its operations over the short-term is
dependent upon its success in achieving its revised business plan for 1997. If
the Company is unsuccessful in achieving its business plan, its short-term
liquidity will be adversely impacted, which could require a curtailment of
certain business activities that in turn could have a material adverse effect on
the Company's business.
 
     As discussed above, the Company has signed a non-binding letter of intent
regarding the sale of 51% of its equity interest in the OSS business. If the
transaction is completed, the Company expects to use the net proceeds to meet
short-term working capital needs. If the transaction is not completed, the
Company expects to continue to manage the OSS business.
 
     The indenture governing the Company's 8% Convertible Subordinated
Debentures requires the Company to make, by December 1 of each year commencing
in 1995 and ending in 2008, sinking fund payments of
 
                                       15
<PAGE>   17
 
$5,500 per year. The Company may, however, satisfy this sinking fund
requirement, in whole or in part, through certain redemptions, or purchases and
delivery to the indenture trustee for cancellation, of 8% Convertible
Subordinated Debentures. The December 1995 sinking fund requirement was
satisfied by delivery for cancellation of debentures held by the Company. The
December 1996 sinking fund requirement was satisfied in part by delivery for
cancellation of $4,525 principal amount of debentures held by the Company. The
remaining requirement was satisfied by purchase and delivery of $975 principal
amount of debentures.
 
     Despite a significant reduction in the Company's long term indebtedness,
the Company remains highly leveraged and has a stockholders' deficit. This
indebtedness requires the Company to dedicate a significant portion of its cash
flow from operations to service its indebtedness and makes the Company more
vulnerable to unfavorable changes in general economic conditions.
 
LONG-TERM LIQUIDITY
 
     The Company's principal long-term liquidity requirements are payments for
interest, previously accrued restructuring obligations and capital expenditures
as well as the repayment of the Senior Subordinated Notes which mature in 1999.
The Company expects to meet its long-term liquidity requirements, including
repayment of its Senior Subordinated Notes, through funds generated from
operations, bank borrowings, and sales of equity and/or debt securities. The
Company believes that it will require additional funds in 1999 to satisfy these
obligations and, as a result, will seek to obtain such funds through a sale of
equity and/or debt securities or other financing arrangements. However, no
assurances can be given that such funds will be available when required or on
terms favorable to the Company.
 
     On October 25, 1995, the Company completed a public offering of 13,800
shares of common stock at $12 per share. The net proceeds from this sale,
approximately $155,000, were applied on December 4, 1995 to the redemption in
full of the outstanding $125,000 Senior Notes due in 1997. The total cost of the
redemption, including the redemption premium and interest accrued to the
redemption date, was approximately $135,000.
 
     Since 1989, the Company has incurred substantial obligations in connection
with the restructuring of the Company. The Company estimates that it will be
required to make cash payments of approximately $27,000, $14,000 and $12,000 in
1997, 1998 and 1999, respectively, of which $11,000, $12,000 and $12,000,
respectively, relate to vacant or partially vacant leased premises, net of known
sublease receipts and assuming that there are no lump-sum settlements on any of
the leases. To the extent the Company is unable to negotiate additional
subleases on its excess real estate or negotiate favorable settlements, the
Company's total future cash needs to meet these rental obligations and
anticipated operating costs will be approximately $73,000 through 2011,
including the amounts stated above. Based upon current and expected real estate
conditions, the Company has reserved $61,500 in connection with its net vacant
facility obligations for financial reporting purposes as of December 31, 1996,
which it believes to be adequate.
 
OPERATIONS AND INVESTMENTS
 
     The Company generated $7,882 of cash from operations during 1996 compared
to generating $11,961 of cash from operations in 1995. During 1996, current
assets used cash of $7,309 and current liabilities used cash of $36,510. During
1995, current assets generated cash of $12,460 and current liabilities used cash
of $57,917. The year to year change in current assets was driven primarily by
the 1996 investment in accounts receivable. The year to year change in current
liabilities resulted primarily from a reduction in restructuring payments made.
 
     The Company expended $11,479 for property and equipment during 1996
compared to $9,172 in 1995. The increase was primarily due to increased
leasehold improvements and the timing of development software license purchases.
Other assets increased $643 in 1996 and decreased $2,521 in 1995. The change was
primarily due to an increase in amounts capitalized for software purchases in
1996.
 
                                       16
<PAGE>   18
 
LEGAL PROCEEDINGS
 
     As discussed in Note 13 "Litigation" of Notes to Consolidated Financial
Statements, the Company is a party to several legal proceedings, certain of
which could have a material adverse effect upon the Company's business if
unfavorable judgments are rendered against the Company.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
     The financial statements and supplementary data of the Company on pages to
of this Form 10-K are indexed herein under Item 14(a)(1). See also the financial
statement schedules appearing herein, as indexed under Item 14(a)(2).
 
ITEM 9.  CHANGES AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
     None.
 
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Information concerning the Company's Directors is incorporated by reference
herein to material under the captions "Nominees and Other Members of the Board
of Directors" and "Certain Transactions -- Section 16(a) Beneficial Ownership
Reporting Compliance" in the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held on June 10, 1997 (the "Proxy Statement"). Information
concerning the Company's Executive Officers is included in Part I under the
caption "Executive Officers".
 
ITEM 11.  EXECUTIVE COMPENSATION
 
     The response to this Item is contained in the Company's Proxy Statement
under the caption "Compensation of Executive Officers" and is incorporated
herein by reference.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The response to this Item is incorporated herein by reference to the
material under the heading "Stock Ownership of Certain Beneficial Owners and
Management" in the Company's Proxy Statement.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Information concerning certain relationships and related transactions is
incorporated herein by reference to the material under the caption "Certain
Transactions" in the Company's Proxy Statement.
 
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K
 
14(a)(1) CONSOLIDATED FINANCIAL STATEMENTS
 
     Set forth below is a listing of the Consolidated Financial Statements of
the Company with reference to the page numbers in this Form 10-K at which such
Statements are disclosed.
 
<TABLE>
<CAPTION>
                                                                        PAGE NUMBERS OF
                                                                        THIS FORM 10-K
                                                                        ---------------
        <S>                                                             <C>
        Report of Management..........................................         19
        Report of Independent Public Accountants......................         20
        Consolidated Balance Sheets -- December 31, 1995 and 1996.....         21
        Consolidated Statements of Income for the Years Ended December
          31, 1994, 1995, and 1996....................................         22
</TABLE>
 
                                       17
<PAGE>   19
 
<TABLE>
<CAPTION>
                                                                        PAGE NUMBERS OF
                                                                        THIS FORM 10-K
                                                                        ---------------
        <S>                                                             <C>
        Consolidated Statements of Stockholders' Equity (Deficit) for
          the Years Ended December 31, 1994, 1995, and 1996...........         23
        Consolidated Statements of Cash Flows for the Years Ended
          December 31, 1994, 1995, and 1996...........................         24
        Notes to Consolidated Financial Statements....................         25
</TABLE>
 
14(a)(2)  CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
 
     The documents and schedules listed below are filed as part of this report:
 
<TABLE>
<CAPTION>
                                                                        PAGE NUMBER OF
                                                                        THIS FORM 10-K
                                                                        ---------------
        <S>                                                             <C>
        Schedule II -- Allowance for Doubtful Accounts................         45
</TABLE>
 
     All other schedules have been omitted since they are not required, not
applicable, or the information is included in the Consolidated Financial
Statements or notes thereto.
 
     Financial statements are presented on a consolidated basis since the
Company is primarily an operating company. All subsidiaries included in the
consolidated financial statements are wholly-owned by the Company with the
exception of the Company's Japanese subsidiary which is 70% owned by the
Company.
 
14(a)(3) EXHIBITS
 
     The exhibits filed as part of this Form 10-K are listed in the Exhibit
Index immediately preceding the exhibits. The Company has identified with an
asterisk in the Exhibit Index each management contract and compensation plan
filed as an exhibit to this Form 10-K in response to Item 14(c) of Form 10-K.
 
14(b) REPORTS ON FORM 8-K
 
     A report on Form 8-K was filed on October 1, 1996 to report that the
Company had signed an agreement for the sale of its Open Service Solutions
business to an investment group headed by J.F. Lehman & Company.
 
     A report on Form 8-K was filed on October 31, 1996 to report the Company's
financial results for the third quarter of 1996.
 
     A report on Form 8-K was filed on November 12, 1996 to report the
appointment of Kathleen A. Cote as Chief Executive Officer of the Company.
 
     A report on Form 8-K was filed on January 16, 1997 to report the Company's
preliminary financial results for the fourth quarter of 1996 and certain related
matters.
 
     A report on Form 8-K was filed on February 3, 1997 to report the Company's
financial results for the fourth quarter and year ended December 31, 1996.
 
     A report on Form 8-K was filed on March 25, 1997 to report (a) the
termination of the Company's agreement with J. F. Lehman & Co. to purchase its
Open Service Solutions (OSS) business unit, (b) the signing of a non-binding
letter of intent for the sale of 51% of OSS to M. D. Sass Investors Services,
Inc., an affiliate of the Company, and (c) the appointment of James P. Regan as
President and CEO of the renamed services business, CV Services International.
 
     A report on Form 8-K was filed on April 8, 1997 to report (a) the Company's
preliminary financial results for the first quarter of 1997 and (b) the election
of James B. Rubin, Senior Managing Director of M. D. Sass Investors Services,
Inc., a 17% shareholder of the Company, as a member of the Company's Board of
Directors.
 
                                       18
<PAGE>   20
 
                              REPORT OF MANAGEMENT
 
     The accompanying consolidated financial statements and related information
of Computervision Corporation and subsidiaries (the "Company") have been
prepared by management, which is responsible for their integrity and
objectivity. The statements have been prepared in conformity with generally
accepted accounting principles and necessarily include some amounts based on
management's best estimates and judgments.
 
     Management is also responsible for maintaining a system of internal
controls as a fundamental requirement for the operational and financial
integrity of results. The Company has established and maintains a system of
internal controls designed to provide reasonable assurance that the books and
records reflect the transactions of the Company and that its established
policies and procedures are carefully followed. The Company's internal control
system is based upon standard procedures, policies and guidelines and
organizational structures that provide an appropriate division of responsibility
and the careful selection and training of qualified personnel. Our internal
auditors monitor compliance with the system of internal controls by means of an
annual plan of internal audits. On an ongoing basis, the system of internal
controls is reviewed, evaluated and revised as necessary in light of the results
of constant management oversight, internal and independent audits, changes in
Computervision's business and other conditions.
 
     The Company's accompanying consolidated financial statements have been
audited by Arthur Andersen LLP, independent public accountants, whose audit was
made in accordance with generally accepted auditing standards. Management has
made available to Arthur Andersen LLP all of the Company's financial records and
related data, as well as the minutes of stockholders' and directors' meetings.
Furthermore, management believes that all representations made to Arthur
Andersen LLP during its audit were valid and appropriate. The Report of
Independent Public Accountants appears below.
 
     The Board of Directors exercises its oversight responsibility for the
consolidated financial statements through its Audit Committee, comprised of
Directors who are not employees of the Company. Periodically, the Committee
meets privately with the internal auditors and the independent auditors and
representatives of management to assure that each is carrying out its
responsibilities. To assure independence, Arthur Andersen LLP has full and free
access to the Audit Committee to discuss internal accounting control, auditing
and financial reporting matters.
 
<TABLE>
<S>                                                <C>
KATHLEEN A. COTE                                   WILLIAM A. FONIRI
President and Chief                                Vice President Finance, Chief
Executive Officer                                  Financial Officer and Treasurer
</TABLE>
 
                                       19
<PAGE>   21
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Computervision Corporation:
 
     We have audited the accompanying consolidated balance sheets of
Computervision Corporation and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of income, stockholders' equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Computervision Corporation and subsidiaries as of December 31, 1996 and 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
 
     Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in Item
14(a) (2) is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic consolidated financial
statements. The schedule has been subjected to the auditing procedures applied
in the audits of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.
 
                                            ARTHUR ANDERSEN LLP
 
Boston, Massachusetts
March 27, 1997 (except with
respect to the matter discussed
in Note 4, as to which
the date is April 15, 1997)
 
                                       20
<PAGE>   22
 
                           COMPUTERVISION CORPORATION
 
                          CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,     DECEMBER 31,
                                                                        1995             1996
                                                                    ------------     ------------
<S>                                                                 <C>              <C>
                                             ASSETS
CURRENT ASSETS
  Cash and cash equivalents.......................................  $     50,979     $     38,565
  Accounts receivable, less allowance for doubtful accounts of
     $3,623 and $2,929, respectively..............................        92,271          102,509
  Current deferred income taxes...................................        16,444            7,448
  Prepaid expenses and other current assets.......................        18,003           16,019
                                                                    ------------     ------------
          TOTAL CURRENT ASSETS....................................       177,697          164,541
PROPERTY AND EQUIPMENT, AT COST
  Land, buildings and leasehold improvements......................        41,367           35,524
  Production and test equipment...................................         7,230            4,777
  Computer systems and spares.....................................        99,780           67,001
  Office equipment and other......................................        22,261           19,251
                                                                    ------------     ------------
                                                                         170,638          126,553
  Less -- accumulated depreciation................................      (124,230)         (95,498)
                                                                    ------------     ------------
PROPERTY AND EQUIPMENT, NET.......................................        46,408           31,055
                                                                    ------------     ------------
DEFERRED INCOME TAX ASSETS........................................        10,766            4,113
CAPITALIZED SOFTWARE..............................................         2,105            1,276
DEFERRED FINANCE COSTS............................................         5,344            3,734
OTHER ASSETS......................................................         4,597            3,626
                                                                    ------------     ------------
                                                                    $    246,917     $    208,345
                                                                    ============     ============
 
                              LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
  Accounts payable................................................  $     27,259     $     19,776
  Notes payable and current portion of long-term debt.............         9,186            9,888
  Accrued compensation, severance and related costs...............        61,722           57,482
  Deferred revenue and customer advances..........................        39,148           40,503
  Accrued and deferred income taxes...............................        31,910           15,019
  Other current liabilities and accrued expenses..................        90,977           81,822
                                                                    ------------     ------------
          TOTAL CURRENT LIABILITIES...............................       260,202          224,490
                                                                    ------------     ------------
DEFERRED INCOME TAXES.............................................        27,284           30,174
LONG-TERM DEBT, LESS CURRENT PORTION..............................       222,641          217,346
OTHER LONG-TERM LIABILITIES.......................................        74,516           53,110
COMMITMENTS AND CONTINGENCIES (see Notes 2, 6 and 13)
STOCKHOLDERS' DEFICIT
  Preferred stock, $0.01 par value; 5,000,000 shares authorized;
     none issued and outstanding
  Common stock, $0.01 par value; 100,000,000 shares authorized;
     62,815,017 and 63,509,999 shares, respectively, issued and
     outstanding..................................................           628              635
  Capital in excess of par value..................................     1,183,056        1,186,109
  Retained deficit................................................    (1,533,351)      (1,511,148)
  Cumulative translation adjustment...............................        11,941            7,629
                                                                    ------------     ------------
          TOTAL STOCKHOLDERS' DEFICIT.............................      (337,726)        (316,775)
                                                                    ------------     ------------
                                                                    $    246,917     $    208,345
                                                                    ============     ============
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                       21
<PAGE>   23
 
                           COMPUTERVISION CORPORATION
 
                       CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                           1994           1995           1996
                                                         --------       --------       --------
<S>                                                      <C>            <C>            <C>
SOFTWARE REVENUE
  Product..............................................  $163,199       $163,716       $191,728
  Services.............................................   122,980        122,885        111,087
                                                         --------       --------       --------
          Total Software Revenue.......................   286,179        286,601        302,815
OTHER SERVICES REVENUE.................................   287,458        220,473        174,384
                                                         --------       --------       --------
          Total Revenue................................   573,637        507,074        477,199
COST OF SALES
  Software
     Product...........................................    30,218         17,181         16,382
     Services..........................................    72,682         70,704         67,748
  Other Services.......................................   196,743        154,870        134,686
                                                         --------       --------       --------
          Total Cost of Sales..........................   299,643        242,755        218,816
                                                         --------       --------       --------
GROSS PROFIT...........................................   273,994        264,319        258,383
SELLING AND ADMINISTRATIVE EXPENSE
  Software.............................................   117,503        113,611        119,465
  Other Services.......................................    37,720         26,900         23,501
RESEARCH, DEVELOPMENT AND ENGINEERING EXPENSE
  Software.............................................    57,223         41,533         40,144
  Other Services.......................................     2,096          1,600            700
NON-RECURRING CHARGES
  Software.............................................     --             --            14,500
  Other Services.......................................     --             --             5,000
                                                         --------       --------       --------
OPERATING INCOME
  Software.............................................     8,553         43,572         44,576
  Other Services.......................................    50,899         37,103         10,497
                                                         --------       --------       --------
          Total Operating Income.......................    59,452         80,675         55,073
INTEREST AND OTHER EXPENSE, NET........................    49,681         44,924         30,806
                                                         --------       --------       --------
INCOME BEFORE INCOME TAXES.............................     9,771         35,751         24,267
PROVISION FOR INCOME TAXES.............................     --             5,005          2,610
                                                         --------       --------       --------
NET INCOME BEFORE EXTRAORDINARY CHARGE.................     9,771         30,746         21,657
EXTRAORDINARY CHARGE...................................     --            (7,930)         --
                                                         --------       --------       --------
NET INCOME.............................................  $  9,771       $ 22,816       $ 21,657
                                                         ========       ========       ========
EARNINGS (LOSS) PER SHARE
  Earnings before extraordinary charge.................  $   0.20       $   0.58       $   0.33
  Extraordinary Charge.................................     --             (0.15)         --
                                                         --------       --------       --------
          Net Earnings.................................  $   0.20       $   0.43       $   0.33
                                                         ========       ========       ========
Weighted Average Shares Outstanding....................    48,367         52,591         64,784
                                                         ========       ========       ========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                       22
<PAGE>   24
 
                           COMPUTERVISION CORPORATION
 
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                             COMMON STOCK        CAPITAL
                                          ------------------    IN EXCESS                    CUMULATIVE
                                           NUMBER       PAR       OF PAR      ACCUMULATED    TRANSLATION
                                          OF SHARES    VALUE      VALUE         DEFICIT      ADJUSTMENT
                                          ---------    -----    ----------    -----------    -----------
<S>                                       <C>          <C>      <C>           <C>            <C>
BALANCE AT DECEMBER 31, 1993............    48,183     $ 482    $1,024,704    $(1,565,222)     $ 9,859
     Issuance of Common Stock under
       employee stock purchase plan.....       227         2           669              0            0
     Restricted Stock Compensation......         0         0           257              0            0
     Minimum pension liability
       adjustment.......................         0         0             0          7,824            0
     Translation adjustment.............         0         0             0              0        2,241
     Net income.........................         0         0             0          9,771            0
                                            ------      ----    ----------    -----------      -------
BALANCE AT DECEMBER 31, 1994............    48,410       484     1,025,630     (1,547,627)      12,100
     Issuance of Common Stock under
       employee stock purchase plan.....       165         2           671              0            0
     Issuance of Common Stock under
       stock option plan................       440         4         1,748              0            0
     Restricted Stock Compensation......         0         0           514              0            0
     Issuance of Common Stock, net of
       underwriting fees and expenses...    13,800       138       154,493              0            0
     Minimum pension liability
       adjustment.......................         0         0             0         (8,540)           0
     Translation adjustment.............         0         0             0              0         (159)
     Net income.........................         0         0             0         22,816            0
                                            ------      ----    ----------    -----------      -------
BALANCE AT DECEMBER 31, 1995............    62,815       628     1,183,056     (1,533,351)      11,941
     Issuance of Common Stock under
       employee stock purchase plan.....        83         1           678              0            0
     Issuance of Common Stock under
       stock option plan................       612         6         2,375              0            0
     Minimum pension liability
       adjustment.......................         0         0             0            546            0
     Translation adjustment.............         0         0             0              0       (4,312)
     Net income.........................         0         0             0         21,657            0
                                            ------      ----    ----------    -----------      -------
BALANCE AT DECEMBER 31, 1996............    63,510     $ 635    $1,186,109    $(1,511,148)     $ 7,629
                                            ======      ====    ==========    ===========      =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                       23
<PAGE>   25
 
                           COMPUTERVISION CORPORATION
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                         1994            1995            1996
                                                       ---------       ---------       --------
<S>                                                    <C>             <C>             <C>
CASH FLOWS FROM (USED FOR) OPERATIONS
     Net income......................................  $   9,771       $  22,816       $ 21,657
     Add items not requiring cash:
          Depreciation of property and equipment.....     42,460          25,093         21,748
          Amortization of intangibles................     14,474           5,864          1,715
          Amortization of finance costs and debt
            discounts................................      3,404           5,290          2,911
          Provision for doubtful accounts............      7,701              88            212
          Provision (benefit) for deferred income
            taxes....................................      1,216              67             17
          Charge for purchased in-process R&D........         --              --          3,500
     Changes in assets and liabilities:
          Accounts receivable........................     74,070          14,212        (11,306)
          Prepaid expenses and other.................     15,497          (1,752)         3,997
          Accounts payable, accrued expenses and
            income taxes.............................   (177,758)        (57,917)       (36,510)
          Other......................................     (1,336)         (1,800)           (59)
                                                       ---------       ---------       --------
               Total cash flows from (used for)
                 operations..........................    (10,501)         11,961          7,882
                                                       ---------       ---------       --------
INVESTING ACTIVITIES
     Expenditures for property and equipment.........    (15,116)         (9,172)       (11,479)
     (Increase) decrease in other assets.............        693           2,521           (643)
     Acquisition.....................................          0               0         (1,070)
                                                       ---------       ---------       --------
               Total cash flows used for
                 investments.........................    (14,423)         (6,651)       (13,192)
                                                       ---------       ---------       --------
FINANCING ACTIVITIES
     (Decrease) increase in notes payable............      7,739          (4,927)           465
     Payments on long-term borrowings................     (2,035)       (126,655)        (6,360)
     Net proceeds from Stock Offering................         --         154,631             --
     Proceeds from issuance of Common Stock..........        671           2,425          3,060
                                                       ---------       ---------       --------
     Total cash from (used for) financing
       activities....................................      6,375          25,474         (2,835)
                                                       ---------       ---------       --------
     Foreign exchange impact on cash.................     (5,563)          4,955         (4,269)
                                                       ---------       ---------       --------
     Net increase (decrease) in cash and cash
       equivalents...................................    (24,112)         35,739        (12,414)
     Cash and cash equivalents at beginning of
       period........................................     39,352          15,240         50,979
                                                       ---------       ---------       --------
     Cash and cash equivalents at end of period......  $  15,240       $  50,979       $ 38,565
                                                       =========       =========       ========
     Supplementary data requirements:
          Cash interest paid.........................  $  45,295       $  48,066       $ 27,299
          Cash taxes paid (refunded).................  $  (4,508)      $    (373)      $    957
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                       24
<PAGE>   26
 
                           COMPUTERVISION CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
(1) ORGANIZATION AND RECAPITALIZATION
 
     The Company develops, produces and markets software and provides support
services that are designed to aid manufacturing companies in enhancing their
product development and manufacturing processes. The Company's principal
products include design automation and product data management software.
Manufacturers use the Company's software to design, enhance and modify their
products and to access, share and manage their product data collaboratively. The
Company's support services include implementation, consulting and training
services designed to assist customers in reengineering their product development
processes and in increasing productivity.
 
     In 1989, DR Holdings Inc. of Delaware ("DR Holdings") acquired the Company
(the "Acquisition") in a purchase transaction. In August 1992, the Company
completed a recapitalization (the "Recapitalization"), which included the sale
of $300,000 of common stock and $300,000 of notes to the public. The proceeds
were used to retire debt. In addition, a loan from Lehman Brothers Holdings Inc.
("Lehman Holdings") was retired through the payment of cash and the issuance of
common stock of the Company. As a result of the Recapitalization, and subsequent
liquidation of DR Holdings, the common stock of the Company owned by DR Holdings
was distributed to its creditors.
 
     On October 25, 1995, the Company completed a public offering of 13,800
shares of common stock at $12.00 per share. The net proceeds from this sale,
approximately $155,000, were applied on December 4, 1995 to the redemption in
full of the outstanding $125,000 Senior Notes due in 1997. The total cost of the
redemption, including the redemption premium and interest accrued to the
redemption date, was approximately $135,000.
 
  OPERATING ENVIRONMENT
 
     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for discussion of the Company's current operating
environment and revenue trends.
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  PRINCIPLES OF CONSOLIDATION
 
     The consolidated financial statements include the accounts of the Company
and its domestic and foreign subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
 
  MANAGEMENT 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 revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
 
  REVENUE RECOGNITION
 
     In accordance with AICPA Statement of Position 91-1 "Software Revenue
Recognition", revenue from software sales is recognized at the time the product
is delivered, if collection is probable. Revenue from post-contract and other
services is deferred and recognized ratably over the contractual period. Revenue
from consulting and training services is recognized as the services are
provided.
 
                                       25
<PAGE>   27
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
  TRANSLATION OF FOREIGN CURRENCIES AND HEDGING INSTRUMENTS
 
     Assets and liabilities of foreign subsidiaries are translated into U.S.
dollars at the period-end exchange rates, while equity accounts are translated
at historical rates. Revenues and expenses are translated at the average
exchange rates during the period.
 
     The Company enters into forward foreign exchange contracts to hedge firm
intercompany balances. The Company does not engage in speculation and,
therefore, the forward exchange contracts do not subject the Company to risk due
to exchange rate movements as gains and losses on these contracts offset losses
and gains on the assets or liabilities of the transactions being hedged. As of
December 31, 1996 and 1995, the Company had $9,933 and $1,451 of net forward
exchange contracts outstanding, 65% and 84% of which were in European
currencies, respectively. The forward exchange contracts generally have
maturities of three months or less.
 
  PROPERTY AND EQUIPMENT
 
     The Company provides for depreciation and amortization by charges to
operations on the straight-line method in amounts estimated to expense the cost
of buildings, equipment and improvements over their estimated useful lives as
follows:
 
<TABLE>
<CAPTION>
                               ASSET CLASSIFICATION                         USEFUL LIVES
        ------------------------------------------------------------------  ------------
        <S>                                                                 <C>
        Buildings and leasehold improvements..............................   3-30 years
        Production and test equipment.....................................    3-8 years
        Computer systems and spares.......................................    3-5 years
        Office equipment and other........................................    3-8 years
</TABLE>
 
     Maintenance and repairs are charged to operations as incurred. When
equipment and improvements are fully depreciated, sold or otherwise disposed of,
the asset cost and accumulated depreciation are removed from the accounts and
the resulting gain or loss, if any, is included in the results of operations.
 
  CAPITALIZATION OF SOFTWARE DEVELOPMENT COSTS
 
     In accordance with Statement of Financial Accounting Standards No. 86
("SFAS 86"), "Accounting for the Costs of Computer Software to Be Sold, Leased
or Otherwise Marketed", the Company has capitalized certain computer software
development costs. During the years ended December 31, 1996, 1995 and 1994 the
Company capitalized $0, $0 and $1,545 of software costs, respectively. The
capitalized software is being amortized over lives ranging from three to five
years. The Company charged to expense $14,215, $5,359 and $1,715 of amortization
of capitalized software costs for the years ended December 31, 1994, 1995 and
1996, respectively.
 
  ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
 
     In 1996, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of", with no material impact on the
financial position or results of operations.
 
  STOCK-BASED COMPENSATION
 
     Effective January 1, 1996, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for
Stock-Based Compensation". The Company has elected to continue to account for
stock options at intrinsic value under APB Opinion No. 25 with disclosure of the
effects of fair value accounting on net income and earnings per share on a pro
forma basis (See Note 11 "Stock Plans").
 
                                       26
<PAGE>   28
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
  INCOME TAXES
 
     The Company adopted the liability method of accounting for income taxes
under Statement of Financial Accounting Standards No. 109 ("SFAS 109"),
"Accounting for Income Taxes" as of January 1, 1993 with no cumulative effect of
a change in accounting for income taxes on the reported results of operations.
 
  RECLASSIFICATIONS
 
     Certain prior year balances in the financial statements have been
reclassified to conform to the current year financial statement presentation.
 
  EARNINGS/LOSS PER SHARE
 
     Earnings/Loss Per Share for the years ended December 31, 1994, 1995 and
1996 have been computed based upon the weighted average number of shares of
Common Stock and equivalents outstanding, if dilutive, during the year. Fully
diluted net income per share for all periods has not been presented as it is not
materially different from primary net income per share. On October 25, 1995, the
Company completed a public offering of 13,800 shares of common stock. The net
proceeds of approximately $155,000 were applied on December 4, 1995 to the
redemption in full of the outstanding $125,000 Senior Notes due in 1997. If this
transaction had occurred as of January 1, 1995, the net earnings per share for
1995 would have been $0.55 vs the reported $0.43.
 
(3) CASH, CASH EQUIVALENTS AND FINANCIAL INSTRUMENTS
 
     The Company classifies all cash investments with an original maturity of
less than ninety days as cash equivalents and values them at cost which
approximates market. The Company's policy is to invest cash primarily in income
producing short-term money market instruments and to keep uninvested cash
balances at minimum levels.
 
     Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and accounts receivable. As of December 31, 1996, the Company had no significant
concentrations of credit risk.
 
  FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value: (i) forward foreign exchange contracts (used for hedging purposes)
were estimated by obtaining quotes from brokers and (ii) long-term debt was
estimated based on the closing market price of the issue for the Senior
Subordinated Notes and based upon the most recent quoted market prices for the
8% Convertible Subordinated Debentures.
 
     The estimated fair values of the Company's financial instruments at
December 31, 1995 and 1996 are as follows:
 
<TABLE>
<CAPTION>
                                                         1995                     1996
                                                 --------------------     --------------------
                                                 CARRYING      FAIR       CARRYING      FAIR
                                                  VALUE        VALUE       VALUE        VALUE
                                                 --------     -------     --------     -------
     <S>                                         <C>          <C>         <C>          <C>
     Forward foreign exchange contracts - net
       payable.................................       $67         $68         $201        $205
     Long-term debt:
       8% Convertible Subordinated
          Debentures...........................    36,066      46,822       36,654      50,322
       11 3/8% Senior Subordinated Notes.......   175,000     182,823      175,000     182,035
</TABLE>
 
                                       27
<PAGE>   29
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
     The Company would not be able to sell its forward foreign exchange
contracts without exposing the Company to significant risk of movements in
foreign exchange rates. Also, certain financing agreements prohibit repurchase
or redemption of the long-term debt before its maturity.
 
(4) NOTES PAYABLE AND LONG-TERM DEBT
 
     Notes payable and long-term debt at December 31, 1995 and 1996 consisted of
the following:
 
<TABLE>
<CAPTION>
                                                                     1995        1996
                                                                   --------    --------
        <S>                                                        <C>         <C>
        Notes Payable:
          Notes Payable to banks.................................  $  2,812    $  3,277
          Revolving Credit Facility..............................     --          --
                                                                   --------    --------
                  Total Notes Payable............................  $  2,812    $  3,277
                                                                   ========    ========
        Long-Term Debt:
          8% Convertible Subordinated Debentures, due 2009, net
             of unamortized discount of $19,019 and $17,456, and
             current portion of $975 and $5,500, respectively....  $ 35,091    $ 31,154
          11 3/8% Senior Subordinated Notes, due 1999............   175,000     175,000
          Other Long-Term Debt, less current portion of $5,399
             and $1,111..........................................    12,550      11,192
                                                                   --------    --------
                  Total Long-Term Debt, less current portion.....  $222,641    $217,346
                                                                   ========    ========
</TABLE>
 
     The average amount of short-term borrowings outstanding during 1996 was
$1,256, with a maximum outstanding of $11,500. The weighted average interest
rates on December 31, 1996 and for the year then ended was 9.25%.
 
  NOTES PAYABLE TO BANKS
 
     Notes payable to banks at December 31, 1995 and 1996 consisted of
borrowings by the Company's international subsidiaries under certain of the
Company's lines of credit. Borrowings under such lines bear interest at
prevailing or negotiated rates.
 
  REVOLVING CREDIT ARRANGEMENTS
 
     On November 17, 1995, the Company entered into a three-year, $50,000 credit
facility (the "Revolving Credit Facility") with Bankers Trust Company (Fleet
Bank of Massachusetts later became a co-agent) to replace the existing Revolving
Credit Agreement.
 
     The Revolving Credit Facility provided for a revolving line of credit (the
"Revolving Credit Line") of $50,000 for working capital and for sinking fund
payments on the Company's 8% Convertible Subordinated Debentures (unpaid
principal balance of $54,110 at December 31, 1996), of which $20,000 is
available for letters of credit. Pursuant to the terms of the Revolving Credit
Facility, the Company has granted the lenders a security interest in all of the
Company's U.S. assets. Letters of credit outstanding at December 31, 1996 were
$8,521 and there were no borrowings outstanding. The Revolving Credit Facility
requires the Company to satisfy certain financial and other covenants. As a
result of the non-recurring charges of $19,500 in the fourth quarter of 1996
(See Note 5 "Non-recurring Charges") and an expected non-recurring charge of
$7,000 in the first quarter of 1997, the Company would not have satisfied the
financial covenants of its Revolving Credit Facility. As a result, the Company
and its lending banks signed an amendment which modifies the financial covenants
through December 31, 1997. The Company also agreed with its banks that it would
amend the Revolving Credit Facility to provide for a borrowing base limitation
and would limit outstanding borrowings to $18,800 including letters of credit
($3,800 outstanding at March 27, 1997) until the facility is so amended.
 
                                       28
<PAGE>   30
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
Loans under the Revolving Credit Facility will bear interest at a Base Rate or
Eurodollar rate, as selected by the Company, plus an Applicable Margin. On
December 31, 1996, the rates ranged from 7.5% to 9.25%.
 
     Due to the substantial shortfall in revenue for the quarter ended March 30,
1997, the Company was unable to satisfy certain of the financial covenants, as
amended, under the Revolving Credit Facility (under which no borrowings were
outstanding) ("Bank Covenants"). On April 15, 1997, the Company reached an
agreement with its lending banks to waive the default in the Bank Covenants for
the quarter ended March 30, 1997, to amend the Bank Covenants to conform with
the Company's revised business plan for 1997, and to implement a borrowing base
limitation (the "April 1997 Amendment"). Pursuant to the terms of the April 1997
Amendment, the Company may borrow funds secured by the accounts receivable of
the Company, Computervision Pty. Limited (Australia), Computervision S.A.
(France), Computervision GmbH (Germany) and Computervision Limited (U.K.). Until
such time as the April 1997 Amendment is executed, the Company may borrow on its
U.S. accounts receivable ($8,800 at March 30, 1997). Thereafter, until the
security interests are perfected, the Company may borrow the lesser of the
borrowing base limitation and (i) $25,000 for the period from April 15, 1997 to
June 30, 1997, and (ii) $35,000 thereafter. In addition, the April 1997
Amendment also limits the borrowings outstanding at the end of each fiscal
quarter ($18,000 for the second quarter of 1997, $21,000 for the third quarter
of 1997 and $16,000 for each subsequent quarter), and increases the interest
rate to LIBOR plus 2.5% for borrowings of $25,000 or less and LIBOR plus 3% for
borrowings greater than $25,000.
 
     Because the Company's borrowings under the amended Revolving Credit
Facility will be limited to a fixed percentage of the Company's accounts
receivable, the Company's ability to fund its operations over the short term is
dependent upon its success in achieving its revised business plan for 1997. If
the Company is unsuccessful in achieving its business plan, its short-term
liquidity will be adversely impacted, which could require a curtailment of
certain business activities that in turn could have a material adverse effect on
the Company's business.
 
  CONVERTIBLE SUBORDINATED DEBENTURES
 
     The 8% Convertible Subordinated Debentures due December 1, 2009 are
convertible into cash at the rate of 33.33% of the principal amount at any time
prior to maturity at the option of the holder. No material conversions occurred
during the years ended December 31, 1994, 1995 and 1996. At the time of the
Acquisition, the 8% Convertible Subordinated Debentures were revalued to reflect
their current market values. The discount is being amortized to interest expense
over the remaining life of the debentures. A sinking fund requirement to retire
$5,500 principal amount of debentures per year began in December 1995. The
December 1995 sinking fund requirement was satisfied by delivery for
cancellation of debentures held by the Company. The December 1996 sinking fund
requirement was satisfied in part by delivery for cancellation of $4,525
principal amount of debentures held by the Company. The remaining requirement
was satisfied by purchase and delivery of $975 principal amount of debentures.
 
  SENIOR NOTES AND SENIOR SUBORDINATED NOTES
 
     The Company's previous Senior Notes bore interest at 10 7/8% per annum with
semi-annual interest payments due February 15 and August 15, commencing February
15, 1993. The Senior Notes were to mature on August 15, 1997 and were redeemable
in whole or in part at the option of the Company on or after August 15, 1995, at
104.35% of the principal amount thereof and on or after August 15, 1996 at
102.175% of the principal amount thereof, in each case together with accrued
interest to the date of redemption.
 
     On October 25, 1995 the Company completed a public offering of 13,800
shares of common stock at $12 per share. The net proceeds from this sale,
approximately $155,000, were applied on December 4, 1995 to the redemption in
full of the outstanding $125,000 Senior Notes due in 1997. The total cost of the
redemption, including the redemption premium and interest accrued to the
redemption date, was approximately $135,000.
 
                                       29
<PAGE>   31
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
     The Senior Subordinated Notes bear interest at 11 3/8% per annum with
semi-annual interest payments due February 15 and August 15, commencing on
February 15, 1993. The Senior Subordinated Notes mature on August 15, 1999 and
are redeemable in whole or in part at the option of the Company on or after
August 15, 1997, at 101.896% of the principal amount thereof, and on or after
August 15, 1998 at 100% of the principal amount thereof, in each case together
with accrued interest to the date of redemption.
 
     The Senior Subordinated Note indenture contains certain restrictions on the
payment of annual dividends and specifies certain events of default.
 
  INTEREST AND OTHER EXPENSE, NET
 
     Interest and Other Expense, net for the years ended December 31, 1994, 1995
and 1996 consists of the following:
 
<TABLE>
<CAPTION>
                                                             1994       1995       1996
                                                            -------    -------    -------
        <S>                                                 <C>        <C>        <C>
        Interest income...................................  $(1,307)   $(1,864)   $(1,750)
        Interest expense to third parties.................   46,741     46,113     32,277
        Interest expense to related parties...............    2,030      --         --
        Other expense, net................................    2,217        675        279
                                                            -------    -------    -------
             Interest and other expense, net..............  $49,681    $44,924    $30,806
                                                            =======    =======    =======
</TABLE>
 
(5) NON-RECURRING CHARGES
 
     The 1996 results include a non-recurring charge of $14,500 which includes
$3,500 related to the fair value of purchased in-process R&D associated with the
acquisition of 3rd Angle Ltd., a UK-based technology company. This in-process
R&D had not yet reached technological feasibility and had no alternative future
use. The balance relates to $11,000 of restructuring costs associated with the
implementation of ongoing cost savings (primarily personnel reductions of
approximately 100 positions in R&D, sales and marketing, and the closing of
facilities). The 1996 results also include a non-recurring charge of $5,000
associated with the write-off of fees and expenses incurred in connection with
the terminated agreement to sell the Open Service Solutions business to J.F.
Lehman & Company. There were no non-recurring charges in 1995 or 1994.
 
(6) CAPITAL LEASES, LEASE COMMITMENTS AND RENT EXPENSE
 
     The Company conducts its operations primarily in leased facilities under
lease arrangements expiring on various dates through the year 2014. Certain
long-term capital leases have been included in Property and Equipment and
Long-Term Debt in the accompanying consolidated balance sheets.
 
     Future minimum lease payments under capital and operating leases with
initial terms of one year or more are as follows:
 
<TABLE>
<CAPTION>
                                                                 CAPITAL       OPERATING
                       YEAR ENDING DECEMBER 31,                  LEASES         LEASES
        -------------------------------------------------------  -------       ---------
        <S>                                                      <C>           <C>
               1997............................................  $ 2,348       $  30,812
               1998............................................    2,359          25,859
               1999............................................    2,359          21,218
               2000............................................    1,799          18,873
</TABLE>
 
                                       30
<PAGE>   32
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                 CAPITAL       OPERATING
                       YEAR ENDING DECEMBER 31,                  LEASES         LEASES
        -------------------------------------------------------  -------       ---------
        <S>                                                      <C>           <C>
               2001............................................    1,647          15,863
               Thereafter......................................    4,722          71,026
                                                                 -------        --------
               Total minimum lease payments....................   15,234       $ 183,651
                                                                                ========
               Less: Amount representing interest on capital
                  leases.......................................    5,531
                                                                 -------
               Present value of minimum lease payments at
                  December 31, 1996............................  $ 9,703
                                                                 =======
</TABLE>
 
     Total rent payments for the Company (including vacant or partially vacant
leased premises) for the years ended December 31, 1994, 1995 and 1996 were
$70,440, $59,049 and $40,105, respectively.
 
     As a result of the Acquisition and the subsequent reorganization of the
Company (as discussed in Note 1), certain of the above facilities have been
considered excess. The Company has accrued $72,500 and $61,500 at December 31,
1995 and 1996, respectively, in connection with its net vacant facility
obligations.
 
(7) PROVISION FOR INCOME TAXES
 
     The components of domestic and foreign income (loss) from operations before
income taxes were as follows:
 
<TABLE>
<CAPTION>
                                                       1994          1995          1996
                                                     --------       -------       -------
        <S>                                          <C>            <C>           <C>
        Domestic...................................  $(14,129)      $10,869       $17,187
        Foreign....................................    23,900        24,882         7,080
                                                     --------       -------       -------
        Total income before income taxes...........  $  9,771       $35,751       $24,267
                                                     ========       =======       =======
</TABLE>
 
     Significant components of the provision for income taxes by taxing
jurisdiction are as follows:
 
<TABLE>
<CAPTION>
                                                               1994       1995      1996
                                                              -------    ------    ------
        <S>                                                   <C>        <C>       <C>
        Current:
             Federal........................................  $     0    $  150    $    0
             Foreign........................................   (1,216)    4,388     2,501
             State..........................................        0       400        92
                                                              -------    ------    ------
                  Total current.............................   (1,216)    4,938     2,593
        Deferred:
             Federal........................................        0         0         0
             Foreign........................................    1,216        67        17
             State..........................................        0         0         0
                                                              -------    ------    ------
                  Total deferred............................    1,216        67        17
                                                              -------    ------    ------
        Total income tax provision..........................  $     0    $5,005    $2,610
                                                              =======    ======    ======
</TABLE>
 
     The components of deferred tax assets, valuation allowance and deferred tax
liabilities are as follows:
 
<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                                 ----------------------
                                                                   1995         1996
                                                                 ---------    ---------
        <S>                                                      <C>          <C>
        Deferred tax assets and valuation allowance:
             Restructuring reserves and accruals...............  $  35,799    $  32,985
             Other reserves and accruals not yet deductible....     16,647       17,633
             Book over tax depreciation........................        606        9,591
             Liabilities assumed in purchase business
               combination.....................................      3,230        1,824
</TABLE>
 
                                       31
<PAGE>   33
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                                 ----------------------
                                                                   1995         1996
                                                                 ---------    ---------
        <S>                                                      <C>          <C>
             Tax loss carryforwards............................    167,221      152,701
             General business credit carryforward..............     17,199       17,053
             Alternative minimum tax credit carryforward.......      1,769        1,825
             Valuation allowance...............................   (188,052)    (182,945)
                                                                 ---------    ---------
                  Total net deferred tax assets................     54,419       50,667
        Deferred tax liabilities:
             Other expenses previously deducted on tax
               return..........................................      3,881          935
             Assets acquired in purchase business
               combination.....................................      7,076        6,287
             Investment in foreign subsidiaries................     43,529       43,529
                                                                 ---------    ---------
                  Total deferred tax liabilities...............     54,486       50,751
                                                                 ---------    ---------
                  Net deferred tax asset and liabilities.......  $     (67)   $     (84)
                                                                 =========    =========
</TABLE>
 
     SFAS 109 requires recognition of income tax benefits for loss
carryforwards, credit carryforwards, and certain temporary differences. The net
tax benefits have been reduced by a valuation allowance as they do not satisfy
the recognition criteria set forth in SFAS 109. Of the valuation allowance at
December 31, 1996, $7,083 will be recorded directly in equity when realized
related to stock option benefits and minimum pension liability adjustments.
 
     For U.S. tax return purposes at December 31, 1996, the Company has $469,809
of loss carryforwards and $18,878 of federal income tax credits which should be
available to reduce future income tax liabilities. These loss carryforwards will
expire beginning in 2003 through 2011 and the federal credit carryforwards will
expire in 1997 through 2003. The Company also has $111,866 of foreign loss
carryforwards at December 31, 1996. These foreign loss carryforwards will expire
beginning in 1997.
 
     The NOLs and tax credit carryforwards generally should be available to be
carried forward to future years. However, Section 382 of the Internal Revenue
Code of 1986, as amended (the "Code"), contains provisions which limit a
corporation's use of NOLs and tax credits after a change of more than 50% of the
ownership of the corporation. Subject to these limitations, the NOLs generally
are available to offset a taxpayer's taxable income in future years. In 1996, a
change of more than 50% of the ownership of the corporation occurred which
results in an annual limitation on the usage of NOLs of approximately $40,000 to
$50,000. Although the Company has computed its NOLs and reported them to the
Internal Revenue Service (the "IRS") in a manner that indicates that they
generally will be available to be used to offset the Company's taxable income in
future years, there is a significant possibility that the IRS will disagree with
the Company's determination of the amount of NOLs that could be so used. In such
event, if the IRS were to prevail, the use of a portion or all of the Company's
NOLs could be disallowed.
 
     The U.S. federal statutory tax rate on corporations was 35% in 1994, 1995
and 1996. A reconciliation between the Company's effective tax rate (provision
for income taxes as a percentage of income before income taxes) and the
statutory tax rate is as follows:
 
<TABLE>
<CAPTION>
                                           1994        %        1995        %        1996        %
                                          -------    -----    --------    -----    --------    -----
<S>                                       <C>        <C>      <C>         <C>      <C>         <C>
Tax provision (benefit) at federal
  statutory rate........................  $ 3,420     35.0%   $ 12,514     35.0%   $  8,494     35.0%
Increase (reduction) due to:
     Difference between U.S. tax rate
       and tax rates used in other
       jurisdictions....................    4,120     42.2%     (2,752)    (7.7)%       719      3.0%
     State taxes, net of federal income
       tax benefit......................        0      0.0%        260      0.7%         60      0.2%
     Decrease in valuation allowance....   (7,705)   (78.8)%   (10,882)   (30.4)%   (10,107)   (41.7)%
</TABLE>
 
                                       32
<PAGE>   34
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                           1994        %        1995        %        1996        %
                                          -------    -----    --------    -----    --------    -----
<S>                                       <C>        <C>      <C>         <C>      <C>         <C>
     Nondeductible compensation.........        0      0.0%      1,000      2.8%        400      1.6%
     Tax on repatriation of foreign
       income in excess of foreign tax
       credits..........................        0      0.0%      2,400      6.7%      1,674      6.9%
     Other, net.........................      165      1.6%      2,465      6.9%      1,370      5.7%
                                          -------    -----    --------    -----    --------    -----
Effective tax provision and rate........  $     0      0.0%   $  5,005     14.0%   $  2,610     10.7%
                                          =======    =====    ========    =====    ========    =====
</TABLE>
 
     At December 31, 1996, the undistributed earnings of the foreign
subsidiaries upon which no U.S. income taxes have been provided is immaterial.
 
(8) INDUSTRY SEGMENT AND GEOGRAPHIC OPERATIONS
 
     The Company operates in two industry segments: Software - providing CAD/CAM
solutions and services including training and consulting services incident to
those products; and OSS - providing services and training for other hardware and
software products. Segment financial information is as follows:
 
<TABLE>
<CAPTION>
                                                 SOFTWARE         OSS          CONSOLIDATED
                                                 --------       --------       ------------
        <S>                                      <C>            <C>            <C>
        1994
        Revenue................................  $286,179       $287,458         $573,637
        Gross Margin...........................   183,279         90,715          273,994
        Operating Expenses.....................   174,726         39,816          214,542
        Operating Income.......................     8,553         50,899           59,452
        Identifiable Assets
          Accounts Receivable..................    68,316         34,224          102,540
          Fixed Assets.........................    43,420         24,955           68,375
          Other................................     7,464            750            8,214
        Corporate Assets(b)....................        --             --           84,055
                                                                                 --------
        Total Assets...........................                                   263,184
        Capital Expenditures...................     6,077          9,039           15,116
        Depreciation and Amortization..........    31,782         25,152           56,934
        1995
        Revenue................................   286,601        220,473          507,074
        Gross Margin...........................   198,716         65,603          264,319
        Operating Expenses.....................   155,144         28,500          183,644
        Operating Income.......................    43,572         37,103           80,675
        Identifiable Assets
          Accounts Receivable..................    64,332         27,939           92,271
          Fixed Assets.........................    26,991         19,417           46,408
          Other................................     2,105            200            2,305
        Corporate Assets(b)....................        --             --          105,933
                                                                                 --------
        Total Assets...........................                                   246,917
        Capital Expenditures...................     2,032          7,140            9,172
        Depreciation and Amortization..........    18,811         12,146           30,957
        1996
        Revenue................................   302,815        174,384          477,199
        Gross Margin...........................   218,685         39,698          258,383
        Operating Expenses(a)..................   174,109         29,201          203,310
        Operating Income.......................    44,576         10,497           55,073
</TABLE>
 
                                       33
<PAGE>   35
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                 SOFTWARE         OSS          CONSOLIDATED
                                                 --------       --------         --------
        <S>                                      <C>            <C>            <C>
        Identifiable Assets
          Accounts Receivable..................    76,563         25,946          102,509
          Fixed Assets.........................    18,072         12,983           31,055
          Other................................     1,276             --            1,276
        Corporate Assets(b)....................        --             --           73,505
                                                                                 --------
        Total Assets...........................                                   208,345
        Capital Expenditures...................     7,255          4,224           11,479
        Depreciation and Amortization..........    13,138         10,325           23,463
</TABLE>
 
---------------
 
(a) Operating expenses for 1996 software company include a non-recurring charge
    of $14,500 for purchased R&D associated with an acquisition and
    restructuring costs associated with ongoing cost savings. Operating expenses
    for 1996 OSS business include a non-recurring charge of $5,000 associated
    with the write-off of fees and expenses incurred in connection with a
    terminated agreement to sell the OSS business.
 
(b) Corporate assets includes cash and cash equivalents, deferred tax assets,
    deferred finance costs, prepaid expenses and other assets.
 
     Geographic financial information is as follows:
 
<TABLE>
<CAPTION>
                                                                           ADJUSTMENTS
                                     UNITED                   PACIFIC          AND
                                     STATES       EUROPE        RIM        ELIMINATIONS    CONSOLIDATED
                                    --------     --------     --------     -----------     ------------
<S>                                 <C>          <C>          <C>          <C>             <C>
1994
Sales to unaffiliated customers...  $194,014     $275,544     $104,079      $       0        $573,637
Intercompany transfers............   106,726       28,976            0       (135,702)              0
                                    --------     --------     --------      ---------        --------
     Total revenue................   300,740      304,520      104,079       (135,702)        573,637
                                    ========     ========     ========      =========        ========
Operating income (loss)...........   (13,130)      42,396       30,186              0          59,452
                                    ========     ========     ========      =========        ========
Identifiable assets...............   109,634      116,102       37,448              0         263,184
                                    ========     ========     ========      =========        ========
1995
Sales to unaffiliated customers...  $164,891     $250,875     $ 91,308      $       0        $507,074
Intercompany transfers............    92,056       25,847            0       (117,903)              0
                                    --------     --------     --------      ---------        --------
     Total revenue................   256,947      276,722       91,308       (117,903)        507,074
                                    ========     ========     ========      =========        ========
Operating income..................    15,326       52,837       12,512              0          80,675
                                    ========     ========     ========      =========        ========
Identifiable assets...............    74,919      132,490       39,508              0         246,917
                                    ========     ========     ========      =========        ========
1996
Sales to unaffiliated customers...  $176,503     $221,702     $ 78,994      $       0        $477,199
Intercompany transfers............    86,291       10,238            0        (96,529)              0
                                    --------     --------     --------      ---------        --------
     Total revenue................   262,794      231,940       78,994        (96,529)        477,199
                                    ========     ========     ========      =========        ========
Operating income (loss)...........    23,133       32,014          (74)             0          55,073
                                    ========     ========     ========      =========        ========
Identifiable assets...............    56,757      122,629       28,959              0         208,345
                                    ========     ========     ========      =========        ========
</TABLE>
 
     Intercompany transfers between geographic areas are accounted for at prices
which approximate arm's length transactions. Expenses incurred in one geographic
area which benefit other areas have been allocated to each area on a percentage
of revenue basis.
 
                                       34
<PAGE>   36
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
     Sales to unaffiliated customers outside the United States, including U.S.
export sales, were approximately $395,805, $369,048 and $346,950 for the years
ended December 31, 1994, 1995 and 1996, respectively, which represented 69%, 73%
and 73% of total revenue.
 
(9) QUARTERLY RESULTS (UNAUDITED)
 
     Financial results by quarter for 1995 and 1996 are summarized below:
 
<TABLE>
<CAPTION>
                                                      FIRST       SECOND      THIRD       FOURTH
                                                     QUARTER     QUARTER     QUARTER     QUARTER
                                                     --------    --------    --------    --------
<S>                                                  <C>         <C>         <C>         <C>
1995
Total revenue......................................  $119,475    $131,362    $125,387    $130,850
Gross profit.......................................    59,231      66,977      65,214      72,897
Operating income...................................    14,547      20,209      21,221      24,698
Net income(a)......................................     2,946       7,127       8,023       4,720
Net earnings per share(b)..........................      0.06        0.14        0.16        0.08
 
1996
Total revenue......................................  $113,235    $118,957    $123,253    $121,754
Gross profit.......................................    60,528      64,206      67,914      65,735
Operating income (loss)(c).........................    17,084      19,467      22,753      (4,231)
Net income (loss)(c)...............................     8,168      10,653      13,094     (10,258)
Net earnings (loss) per share......................      0.13        0.16        0.20       (0.16)
</TABLE>
 
---------------
 
(a) Net income for the fourth quarter of 1995 includes an extraordinary charge
    of $7,930 relating to a redemption premium and fees associated with the
    early retirement of the Company's $125,000 10 7/8% Senior Notes.
 
(b) The sum of the quarterly per share amounts does not equal the full year
    total due to the Company's share offering in the fourth quarter of 1995.
 
(c) The fourth quarter of 1996 includes a non-recurring charge of $14,500 for
    purchased R&D associated with an acquisition and restructuring costs
    associated with ongoing cost savings, and a non-recurring charge of $5,000
    associated with the write-off of fees and expenses incurred in connection
    with a terminated agreement to sell the OSS business.
 
(10) EMPLOYEE RETIREMENT AND SALARY CONTINUATION PROGRAMS
 
     The Company maintains various employee retirement and salary continuation
programs, as discussed below. The Company does not, however, maintain any
post-employment benefit plans other than retirement plans.
 
  Capital Accumulation Plan
 
     The Capital Accumulation Plan is available to all U.S. employees upon
completion of one year of service. The plan provides various alternative
investment funds in which the employee may elect to contribute pre-tax savings
and the Company's matching contribution on a tax deferred basis. Under the plan,
each participant may elect to withhold a percentage of their annual
compensation. The Company makes matching contributions to the plan based on the
employee's length of service with the Company. The matching contributions are
made on a fiscal year basis to participants who are employed by the Company as
of December 31 of each fiscal year. The matching contribution expense for the
years ended December 31, 1994, 1995 and 1996 was $2,417, $1,989 and $1,905,
respectively.
 
                                       35
<PAGE>   37
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
  Pension Plans
 
     The Company and its subsidiaries maintain various defined benefit and
defined contribution pension plans covering substantially all employees.
Benefits under the defined benefit plans are based upon length of service and
average compensation and generally vest over two to ten years of service.
Effective April 1, 1990, the Company froze the benefits under the U.S. Pension
Plan indefinitely.
 
     The actuarially computed net periodic pension cost for the defined benefit
plans for the years ended December 31, 1994, 1995 and 1996 was comprised of the
following:
 
<TABLE>
<CAPTION>
                                                U.S. PLAN                      FOREIGN PLANS
                                       ----------------------------    -----------------------------
                                        1994      1995       1996       1994       1995       1996
                                       ------    -------    -------    -------    -------    -------
<S>                                    <C>       <C>        <C>        <C>        <C>        <C>
Interest cost........................  $2,427    $ 2,305    $ 2,607    $ 2,538    $ 2,628    $ 3,097
Service cost.........................       0          0          0      3,241      2,530      2,269
Actual return on plan assets.........    (176)    (1,877)    (1,247)       700     (4,148)    (3,779)
Net amortization and deferral........    (561)       707        (11)    (3,738)     1,184        579
                                       ------    -------    -------    -------    -------    -------
Net periodic pension cost............  $1,690    $ 1,135    $ 1,349    $ 2,741    $ 2,194    $ 2,166
                                       ======    =======    =======    =======    =======    =======
</TABLE>
 
     The funded status of the defined benefit plans as of December 31, 1995 and
1996 is as follows:
 
<TABLE>
<CAPTION>
                                                                U.S. PLAN         FOREIGN PLANS
                                                            -----------------   -----------------
                                                             1995      1996      1995      1996
                                                            -------   -------   -------   -------
<S>                                                         <C>       <C>       <C>       <C>
Actuarial present value of the accumulated benefit
  obligation............................................... $35,262   $35,898   $33,880   $41,125
Vested benefit obligation..................................  35,262    35,898    30,285    38,626
Projected benefit obligation...............................  35,262    35,898    38,424    45,994
Plan assets at fair value..................................  19,282    24,034    37,440    42,349
                                                            -------   -------   -------   -------
Excess of projected benefit obligation over plan assets....  15,980    11,864       984     3,645
Unrecognized net gain (loss)...............................  (8,540)   (7,994)    5,427     1,681
Minimum pension liability adjustment.......................   8,540     7,994         0         0
                                                            -------   -------   -------   -------
Accrued pension cost....................................... $15,980   $11,864   $ 6,411   $ 5,326
                                                            =======   =======   =======   =======
</TABLE>
 
     Three international plans had an accumulated benefit obligation in excess
of plan assets of $5,191 and $6,433 at December 31, 1995 and 1996, respectively.
 
     The following assumptions were used to determine the accrued pension cost
for the U.S. plan in 1995 and 1996, respectively: the discount rates for
computing the projected benefit obligation were 7.25% and 7.5%; the rate of
compensation increase was zero for both years since benefits were frozen; and
the annual rate of return on plan assets was 7.5% for both years. As a result of
reducing the discount rate for computing the projected benefit obligation at
December 31, 1995, the Company was required to record a minimum pension
liability adjustment of $8,540. The Company did not record the tax benefit on
this adjustment as realization was not assured. An adjustment of $546 was
recorded in 1996 to reflect the increase in the discount rate. The plan assets
consist primarily of guaranteed interest and investment contracts with insurance
companies and banks. The Company contributes all amounts deemed necessary on an
actuarial basis to provide the U.S. plan with assets sufficient to meet the
benefits to be paid to plan participants. The amounts are determined by an
independent actuary based on the Projected Unit Credit Actuarial Cost Method.
Based on the actuarial valuations, the Company contributed $4,062, $6,306 and
$4,919 to the plan during 1994, 1995 and 1996, respectively.
 
     The accrued international pension cost was actuarially computed using
assumptions applicable to each subsidiary plan and economic environment. The
following range of assumptions was used in the determination of the accrued
pension cost in 1995 and 1996, respectively: the discount rates for computing
the projected benefit obligation were 4.5% to 8.5% and 4.0% to 8.5%; the rates
of compensation increase were 3.5% to 6.0%
 
                                       36
<PAGE>   38
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
for both years; the rates of social security increases were 0.0% to 5.5% for
both years; and the annual rates of return on plan assets were 5.5% to 9.0% and
4.5% to 9.0%. Plan assets primarily consist of guaranteed interest and
investment contracts with insurance companies.
 
     The total expense for the defined contribution plans for the years ended
December 31, 1994, 1995 and 1996 was approximately $347, $117 and $60,
respectively.
 
  Officers Life Insurance and Supplementary Retirement Plan
 
     The Company had an Officers Life Insurance and Supplementary Retirement
Plan for certain former executives of the former Computervision. The full cost
of this plan has been accrued for in the Consolidated Balance Sheets. The
Company made retirement benefit payments of $294, $334 and $458 to certain
former executives under this plan for the years ended December 31, 1994, 1995
and 1996, respectively.
 
  Employment Agreements
 
     Russell E. Planitzer, Chairman of the Board of Directors and Kathleen A.
Cote, President and Chief Executive Officer, have each entered into employment
agreements with the Company which provide for severance payments in the event
their employment is terminated prior to the expiration of their employment
terms. The severance amounts range from $300 to $5,600, depending on the timing
and circumstances of the termination.
 
     All other executive officers have been afforded continuation of salary
protection for one year if their employment with the Company is involuntarily
terminated. The Company has entered into Retention Agreements with its corporate
officers and certain key employees that provide for a continuation of salary and
benefits in the event of a termination of employment under circumstances after a
change of control of the Company has occurred.
 
(11) STOCK PLANS
 
     The Company accounts for its stock issuance plans in accordance with
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees". Effective January 1, 1996, the Company adopted the provisions of
SFAS 123, "Accounting for Stock-Based Compensation". The Company has elected to
continue to account for stock options at intrinsic value with disclosure of the
effects of fair value accounting on net income and earnings per share on a pro
forma basis.
 
  Restricted Stock Agreements
 
     During 1994, the Company received 300 shares of Common Stock from Lehman
Holdings on the condition that the Company grant the shares to four executive
officers under a Restricted Stock Agreement. The shares were issued without
charge to four executive officers and vested ratably over a twelve month period
ending September 1995. The Restricted Stock Agreement qualified as a
compensatory stock plan, with the deferred compensation cost of $771 recognized
ratably over the twelve month period from the issuance date.
 
  Stock Option Plan
 
     In June 1992, the Board of Directors adopted the Company's 1992 stock
option plan which provides for the grant of options to officers, employees, and
consultants of the Company and its subsidiaries. A total of 4,400 shares of
Common Stock was originally reserved for issuance under the Stock Option Plan.
The Board of Directors amended the plan in September 1994 to authorize and
reserve an additional 5,000 shares for grant under the plan. Options granted may
be either incentive or non-qualified options. The options generally expire ten
years from the date of grant and vest ratably over the first five years or four
years, as determined by the
 
                                       37
<PAGE>   39
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
Compensation Committee. The Company has amended its 1992 Stock Option Plan to
provide that 50% of the then unvested options of each option holder shall vest
immediately upon a change of control of the Company.
 
  Director Stock Option Plans
 
     In April 1993, the Board of Directors adopted the Company's 1993 Director
Stock Option Plan to encourage ownership in the Company by non-employee
Directors whose continued services are considered essential to the Company's
future progress and to provide them with further incentive to remain as
Directors of the Company. A total of 200 shares of Common Stock were reserved
for issuance under this plan. Options for 102 shares were granted, of which 100
shares remain outstanding under this plan. Options granted are non-qualified and
at the fair market value at the date of grant and vest ratably over a five year
period.
 
     In January 1995, the Board of Directors adopted a new Director Option Plan
which was approved by stockholders at the 1995 Annual Meeting of Stockholders.
An additional 400 shares have been reserved for issuance. Options for 106 shares
were granted in January 1995 in recognition of past service at an exercise price
of $5.00 (fair value at grant date) and vest ratably over three years. The Plan
provides that Directors will receive an annual option grant of 6 shares each
that will vest in one year. The 1995 Director Option Plan supersedes the 1993
Director Stock Option Plan.
 
SUMMARY OF STOCK OPTION PLAN ACTIVITY
 
<TABLE>
<CAPTION>
                                                                             OUTSTANDING OPTIONS
                                                                         ---------------------------
                                                          RESERVED                  WEIGHTED-AVERAGE
                                                           SHARES        NUMBER      EXERCISE PRICE
                                                          --------       ------     ----------------
<S>                                                       <C>            <C>        <C>
Balance, December 31, 1993..............................    4,600        3,737           $ 8.09
     Additional Reserved................................    5,000
     Granted............................................    --           4,236             3.96
     Exercised..........................................    --            --
     Cancelled..........................................    --           (3,202)           8.67
                                                           ------        ------
Balance, December 31, 1994..............................    9,600        4,771             3.77
     Additional Reserved................................      400
     Granted............................................    --           2,310             7.66
     Exercised..........................................    --            (440)            4.08
     Cancelled..........................................    --            (572)            4.15
                                                           ------        ------
Balance, December 31, 1995..............................   10,000        6,069             5.30
     Granted............................................    --           2,396             9.90
     Exercised..........................................    --            (612)            3.84
     Cancelled..........................................    --            (754)            4.67
                                                           ------        ------
Balance, December 31, 1996..............................   10,000        7,099             7.02
                                                           ======        ======
</TABLE>
 
     At December 31, 1996 options to purchase 2,123 common shares were
exercisable with a weighted average exercise price of $4.87 and 2,901 shares
were available for future option grants.
 
     Had compensation costs for the stock option plans (including the Company's
Employee Stock Purchase Plan) been determined using the fair value method, the
Company's net income and earnings per share would have been reduced to the
following pro forma amounts:
 
                                       38
<PAGE>   40
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                    1995          1996
                                                                  --------      --------
        <S>                                                       <C>           <C>
        Net Income
             As reported........................................  $ 22,816      $ 21,657
             Pro forma..........................................  $ 21,690      $ 17,899
        Earnings per share
             As reported........................................  $   0.43      $   0.33
             Pro forma..........................................  $   0.42      $   0.28
</TABLE>
 
     Consistent with SFAS 123, pro forma net income and earnings per share have
not been calculated for options granted prior to January 1, 1995. Pro forma
compensation cost may not be representative of that to be expected in future
years.
 
     The weighted average fair value of options granted was $4.41 for options
granted during 1995 and $5.43 for options granted during 1996. The values were
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions used for grants in 1995 and 1996,
respectively; risk-free interest rates of 6.25% and 5.99%, expected dividend
yields of 0% for both periods, expected lives of 5 years for both years and
expected volatilities of 57% and 56%.
 
     The following is a summary of options outstanding and exercisable at
December 31, 1996;
 
<TABLE>
<CAPTION>
                                     OPTIONS OUTSTANDING                            OPTIONS EXERCISABLE
                    -----------------------------------------------------     --------------------------------
                      NUMBER        WEIGHTED-AVERAGE                            NUMBER
    RANGE OF        OUTSTANDING        REMAINING         WEIGHTED-AVERAGE     EXERCISABLE     WEIGHTED-AVERAGE
EXERCISE PRICES     AT 12/31/96     CONTRACTUAL LIFE      EXERCISE PRICE      AT 12/31/96      EXERCISE PRICE
----------------    -----------     ----------------     ----------------     -----------     ----------------
<S>                 <C>             <C>                  <C>                  <C>             <C>
 $2.50 - $6.00         3,850           7.4 years              $4.19              1,931             $4.27
 $6.00 - $10.00          876              9.6                  7.35                 16              6.57
$10.00 - $14.50        2,373              9.0                 11.49                176             11.92
                       -----                                                     -----
                       7,099              8.2                  7.02              2,123              4.87
                       =====                                                     =====
</TABLE>
 
  Employee Stock Purchase Plan
 
     In April 1993, the Company established a domestic and an international
employee stock purchase plan for all employees covering a total of 750 shares of
the Company's Common Stock. The plans permit employees of the Company to
withhold up to 10% of their base compensation to purchase the Company's common
stock at a 15% discount from the market price. The first offering commenced on
July 1, 1993. Employees purchased 90 and 227 shares in 1995 and 1994,
respectively, for $264 and $671. The 1993 plans were closed in 1995.
 
     In April 1995, the Company established a new domestic and international
employee stock purchase plan for all employees covering a total of 1,000 shares
of the Company's Common Stock. The purchase terms are identical to the prior
plan. The first offering commenced July 1, 1995. Employees purchased 83 and 75
shares in 1996 and 1995, respectively, for $678 and $409. For pro forma
compensation expense, the weighted average fair value of shares sold in 1996 was
$2.83.
 
  Stock Warrants
 
     In connection with a 1993 amendment to the Revolving Credit Facility, the
Banks were issued a Common Stock purchase warrant that permits the Banks to
purchase 200 shares of the Company's common stock at an exercise price of $3.88
per share (fair market value at date of issuance) through December 31, 1998. One
bank exercised its warrant to purchase 92 shares in February 1996 for $356.
 
                                       39
<PAGE>   41
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
(12) RELATED PARTIES
 
     The following summarizes the significant related party transactions (See
also Note 15 "Subsequent Event"):
 
     Several directors provided consulting services to the Company in 1994, 1995
and 1996 for which they received fees during a year ranging from $6 to $44.
 
     The Company recognized $11,200 of software product revenue from Peugeot SA
during the quarter ended March 31, 1996. A member of senior management of
Peugeot SA is also a director of the Company.
 
     At December 31, 1996, the Company had a loan of $200 outstanding to Mr.
Gnatovich of which $100 will be forgiven ratably over the next 4 years of
employment. The remaining $100 will be repaid by the deduction of $25 each year
from any bonus payments owed.
 
     In 1994, pursuant to separate, substantially identical Registration Rights
Agreements, the Company registered, under separate registration statements and
at the Company's sole expense, the shares of Common Stock owned by DR Holdings
and private purchasers of shares from Lehman Holdings. The Company is obligated
to maintain the Lehman Holdings purchasers' registration statement until May 31,
1997.
 
     In January 1993, Lehman Holdings (which at the time owned approximately 22%
of the outstanding Common Stock of the Company) provided a Revolving Loan
Facility to the Company which enabled the Company to borrow up to $25,000 if
necessary in connection with posting a bond or paying a settlement or judgment
in connection with certain antitrust litigation. In August 1993, Lehman Holdings
agreed to extend the termination date of the Revolving Loan Facility from
October 3, 1993 to July 3, 1994 for which it was paid an extension fee of $1,000
and a monthly availability fee of $250 through June 1994. In June 1994, the
Company borrowed approximately $7,500 under the Revolving Loan Facility to
settle the antitrust litigation and terminated the remainder of the commitment.
The Company paid interest at LIBOR plus 5% on this loan. The loan was repaid in
full on February 10, 1995.
 
     The Company's bylaws require that all transactions between the Company and
its officers, Directors and other affiliates must (i) be approved by a majority
of the members of the Company's Board of Directors and by a majority of the
disinterested members of the Company's Board and (ii) be on terms no less
favorable to the Company than could be obtained from third parties. In addition,
this policy requires that any loans by the Company to its officers, directors,
or other affiliates be for bona fide business purposes only. The terms of the
indentures associated with the Senior Subordinated Notes and the Revolving
Credit Facility also contain restrictions on transactions with affiliates.
 
(13) LITIGATION
 
     (1) On March 28, 1991, Joseph and Josephine Dieter, former stockholders of
the Company, brought suit against the Company, DR Holdings, DR Acquisition
Corporation, a former subsidiary of DR Holdings, Mr. Russell E. Planitzer,
Chairman of the Board of Directors of the Company, and Messrs. Don E. Ackerman
and Peter M. Castleman, former directors of the Company, in the Court of
Chancery of Delaware as both an individual and a class action (on behalf of all
persons, other than the defendants, who were stockholders of the Company on
December 28, 1989). The suit arises out of the merger between the Company and
certain subsidiaries of DR Holdings, and the related merger agreement. The suit
alleges, among other things, that, in connection with the acquisition of the
Company by DR Holdings, the Board of Directors of the Company breached its
fiduciary duties to the Company stockholders by (i) approving the merger which
plaintiffs allege was unfair to Company stockholders, and (ii) by not
withdrawing from the merger agreement and/or renegotiating the consideration
that was to be received by Company stockholders whose shares were not purchased
in the tender offer. The plaintiffs seek, among other things, an order granting
all Company stockholders as of December 28, 1989 damages in an undetermined
amount. The plaintiffs then filed an
 
                                       40
<PAGE>   42
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
amended and supplemented complaint which removed DR Holdings as a defendant
since it is in bankruptcy, and removed DR Acquisition Corporation since it had
been merged into the Company. The trial occurred in September of 1996. The
Company is in the process of filing post trial briefs and the Court is expected
to have the matter under submission by July 1997. Although the parties have
engaged in post-trial settlement discussions, it is not yet possible to predict
the outcome or quantify any possible exposure to the Company. If this lawsuit is
not settled, and the court awards the plaintiffs substantial monetary damages,
it could have a material adverse effect on the Company's financial condition and
results of operations.
 
     (2) In a letter dated June 11, 1993, the United States Environmental
Protection Agency ("EPA") notified the Company of its potential liability
pursuant to the Comprehensive Environmental Response Compensation and Liability
Act ("CERCLA") for a release of hazardous substances disposed of at the Shaffer
Landfill portion of the Ironhorse Park Superfund Site in Billerica,
Massachusetts ("Shaffer Site"). The Company was one of approximately 60
businesses and individuals to receive such a letter. The Company is cooperating
with approximately 30 other potentially responsible parties ("PRPs") who have
formed a group, and expects to participate in the common efforts of that group.
The Company has informed the EPA of its intent to cooperate with the other PRPs
in common efforts. The Company investigated the extent of its involvement with
the Shaffer Site and participated in a confidential mediation process which
allocated remedial costs among the members of the PRP group. The Company has
received information through the PRP group indicating that the anticipated costs
of completing the EPA's proposed remedy at the Shaffer Site is likely to range
between $20,000 and $33,000. After the PRPs failed to reach agreement with the
EPA regarding settlement, the Department of Justice ("DOJ") and the
Massachusetts Attorney General ("MAG") both filed complaints on January 5, 1995,
seeking past costs against 10 PRPs. The Company was not named. However, it could
be named later by the government and some of the named defendants have indicated
they will commence third-party actions against other PRPs, including the
Company, if ongoing negotiations do not result in a settlement. Negotiations
have been ongoing relative to several substantive matters and the Company cannot
predict at this time if any agreement on issues will be reached with the
government.
 
     (3) Several tax issues which pertain to Computervision tax returns for
years prior to 1988 (when Computervision was acquired by Prime Computer, Inc.)
remain outstanding. The most significant issue involves the qualification of a
domestic international sales corporation ("DISC") for tax years 1983 and 1984.
If the DISC is disqualified, the Company will be subject to additional tax and
interest in the range of $9,000 to $12,000 after the usage of net operating
losses. A trial on these issues was held before the Tax Court on October 25,
1994. On March 18, 1996 the Tax Court ruled in favor of the Company. On April
16, 1996 the Company filed a motion for Reconsideration with the Tax Court on
the one issue, which concerned whether income was reportable as capital gain or
ordinary income, on which the decision was unfavorable to the Company. The
Motion for Reconsideration was denied by the Judge on May 27, 1996. The Company
does not know whether the government will appeal the decision. Even if the
government does not appeal the decision, the Company will owe some tax and
interest on this case, but is also owed a refund on a related case. The
computation of the tax payment and the timing of the tax payment and refund have
not been determined. The Company's calculation of the adjustments resulting from
the Court's decision were reviewed by Counsel and submitted to the IRS on
November 12, 1996.
 
     (4) The Company is involved in numerous other legal proceedings and
litigation incidental to the normal course of the Company's business. The
Company believes that the ultimate disposition of these other proceedings and
litigation will not have a material adverse affect on the Company's financial
position.
 
                                       41
<PAGE>   43
 
                           COMPUTERVISION CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
(14) SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                 ------------------------------------------------------------------
                                    1992          1993          1994          1995          1996
                                 ----------     ---------     ---------     ---------     ---------
<S>                              <C>            <C>           <C>           <C>           <C>
Total revenue..................  $1,065,579     $ 827,315     $ 573,637     $ 507,074     $ 477,199
Gross profit...................     459,587       322,966       273,994       264,319       258,383
Operating income (loss)(a).....      48,733      (517,992)       59,452        80,675        55,073
Income (loss) from continuing
  operations(b)................    (142,189)     (571,107)        9,771        22,816        21,657
Net income (loss)..............    (225,872)     (571,107)        9,771        22,816        21,657
Pro forma earnings (loss) and
  earnings (loss) per share:(c)
     Continuing operations.....       (3.46)       (11.89)         0.20          0.43          0.33
     Net earnings (loss).......       (6.09)       (11.89)         0.20          0.43          0.33
Cash dividends declared and
  paid.........................      --             1,440        --            --            --
Total assets...................     904,312       412,713       263,184       246,917       208,345
Total long-term liabilities,
  less current portion.........     443,910       580,798       476,890       324,441       300,630
Stockholders' equity
  (deficit)....................      48,979      (530,177)     (509,413)     (337,726)     (316,775)
</TABLE>
 
---------------
 
(a) Operating income (loss) included non-recurring charges of $25,000, $515,800
    and $19,500 for the years ended December 31, 1992, 1993 and 1996,
    respectively.
 
(b) Loss from continuing operations for year ended December 31, 1992 also
    included charges of $64,050 associated with the Company's 1992
    Recapitalization.
 
(c) Pro forma earnings (loss) from continuing operations per share and pro forma
    net loss per share for the year ended December 31, 1992 have been adjusted
    to reflect the Company's issuance of 23,000 shares of common stock in 1992
    to retire certain long-term debt of the Company (see Note 1). The pro forma
    earnings (loss) from continuing operations per share and pro forma net
    earnings (loss) per share calculations, therefore, reflect, on a pro forma
    basis, the elimination of interest expense related to the retired portion of
    the debt and the issuance of the 23,000 shares.
 
(15) SUBSEQUENT EVENT
 
     On March 19, 1997, the Company announced the termination of its agreement
with J.F. Lehman & Company for the sale of its Open Service Solutions ("OSS")
business unit and the signing of a non-binding letter of intent with M.D. Sass
Investors Services, Inc. ("Sass"), a 17% shareholder of the Company, for the
purchase by Sass of a 51% interest in the OSS business. In connection with this
transaction, the Company will receive from Sass $5,100 in cash and will receive
from the entity that operates the OSS business (a) $25,000 in cash and (b) a
promissory note in the amount of $25,000. The cash payment of $25,000 will be
funded by a bank loan to the OSS business, secured by its assets. The Company
will continue to own 49% of the OSS business, subject to an option granted to
Sass to purchase up to one-fifth of the balance of the Company's equity
position. The transaction is subject to execution and delivery of a definitive
agreement and to the availability of financing, receipt of approval from the
Company's banks, compliance with the Company's financing instruments and other
customary closing conditions. As a result, no assurance can be given that the
transaction will be consummated.
 
                                       42
<PAGE>   44
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) 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.
 
Dated: April 15, 1997
 
                           COMPUTERVISION CORPORATION
                                  (REGISTRANT)
 
<TABLE>
<CAPTION>
                SIGNATURE                                 TITLE
------------------------------------------    ------------------------------
 
<C>                                           <S>
 
         By: /s/ KATHLEEN A. COTE             Chief Executive Officer
------------------------------------------
             Kathleen A. Cote
 
        By: /s/ WILLIAM A. FONIRI             Chief Financial Officer
------------------------------------------      (Principal Financial
            William A. Foniri                   Officer)
 
         By: /s/ JAMES E. HAYDEN              Corporate Controller
------------------------------------------      (Principal Accounting
             James E. Hayden                    Officer)
</TABLE>
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the Company
and in the capacities indicated as of April 15, 1997.
 
<TABLE>
<CAPTION>
                SIGNATURE                                 TITLE
------------------------------------------    ------------------------------
 
<C>                                           <S>
 
         /s/ RUSSELL E. PLANITZER             Chairman of the Board
------------------------------------------
           Russell E. Planitzer
 
       /s/ JEAN-SERGE G. BERTONCINI           Director
------------------------------------------
         Jean-Serge G. Bertoncini
            /s/ NORMAN A. BOLZ                Director
------------------------------------------
              Norman A. Bolz
 
            /s/ KEVIN J. BURNS                Director
------------------------------------------
              Kevin J. Burns
 
           /s/ KATHLEEN A. COTE               Director
------------------------------------------
             Kathleen A. Cote
 
          /s/ JOHN F. CUNNINGHAM              Director
------------------------------------------
            John F. Cunningham
 
          /s/ EUGENE M. FREEDMAN              Director
------------------------------------------
            Eugene M. Freedman
 
          /s/ LAWRENCE L. LANDRY              Director
------------------------------------------
            Lawrence L. Landry
</TABLE>
 
                                       43
<PAGE>   45
 
<TABLE>
<CAPTION>
                SIGNATURE                                 TITLE
------------------------------------------    ------------------------------
 
<C>                                           <S>
 
         /s/ ANDREW G. C. SAGE II             Director
------------------------------------------
           Andrew G. C. Sage II
 
                                              Director
------------------------------------------
              James E. Rubin
</TABLE>
 
                                       44
<PAGE>   46
 
                                                                     SCHEDULE II
 
                           COMPUTERVISION CORPORATION
 
                        ALLOWANCE FOR DOUBTFUL ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                  NET
                                                 BALANCE AT     PROVISIONS     DEDUCTIONS     BALANCE AT
                                                 BEGINNING      CHARGED TO        FROM          END OF
                                                 OF PERIOD      OPERATIONS     ALLOWANCE(1)     PERIOD
                                                 ----------     ----------     ----------     ----------
<S>                                              <C>            <C>            <C>            <C>
Year Ended December 31, 1996...................    $3,623         $  212        $   (906)       $2,929
Year Ended December 31, 1995...................    $5,498         $   88        $ (1,963)       $3,623
Year Ended December 31, 1994...................    $6,309         $7,701        $ (8,512)       $5,498
</TABLE>
 
---------------
(1) Accounts deemed uncollectible, net of recoveries.
 
                                       45
<PAGE>   47
 
                                 EXHIBIT INDEX
 
     The exhibits listed below are filed as part of this annual report:
 
<TABLE>
<C>      <S>                                                                              
  3.01   Amended and Restated Certificate of Incorporation of the Registrant, filed as
         Exhibit 3.02 to the Company's Registration Statement on Form S-1, File No.
         33-48455 and incorporated herein by reference. ................................
  3.02   Amended and Restated By-Laws of the Registrant, filed as Exhibit 3.04 to the
         Company's Registration Statement on Form S-1, File No. 33-48455 and
         incorporated herein by reference. .............................................
  4.01   Specimen Certificate for shares of the Registrant's Common Stock, filed as
         Exhibit 4.01 to the Company's Registration Statement on Form S-1, File No.
         33-48455 and incorporated herein by reference. ................................
  4.02   Description of Capital Stock (contained in the Amended and Restated Certificate
         of Incorporation of the Registrant filed as Exhibit 3.01). ....................
  4.03   Indenture, dated as of December 1, 1984, between a subsidiary of the Registrant
         and The Bank of New York, as Trustee, as amended, relating to the 8%
         Convertible Subordinated Debentures due 2009, filed as Exhibit 4.03 to the
         Company's Registration Statement on Form S-1, File No. 33-48455 and
         incorporated herein by reference. First Supplemental Indenture entered into as
         of February 8, 1988, to the Indenture dated as of December 1, 1984 relating to
         the 8% Convertible Subordinated Debentures due 2009, filed as Exhibit 4.03 to
         the Company's Annual Report in Form 10-K for the year ended December 31, 1993
         and incorporated herein by reference. Second Supplemental Indenture entered
         into as of December 31, 1992 to the Indenture dated as of December 1, 1984
         relating to the 8% Convertible Subordinated Debentures due 2009, filed as
         Exhibit 4.04 to the Company's Annual Report on Form 10-K for the year ended
         December 31, 1992 and incorporated herein by reference. .......................
  4.04   Indenture, dated as of February 1, 1987, between the Registrant and The Bank of
         New York (as successor trustee to The First National Bank of Boston), as
         Trustee, as amended, relating to the Registrant's 5 3/4% Convertible
         Subordinated Debentures due 2012, filed as Exhibit 4.04 to the Company's
         Registration Statement on Form S-1, File No. 33-48455 and incorporated herein
         by reference. .................................................................
  4.05   Indenture between the Registrant and United States Trust Company of New York,
         as Trustee, dated as of August 15, 1992 relating to the Registrant's 11 3/8%
         Senior Subordinated Notes due 1999, filed as Exhibit 4.09 to the Company's
         Registration Statement on Form S-1, File No. 33-48455 and incorporated herein
         by reference. .................................................................
  4.06   Common Stock Purchase Warrant dated December 22, 1993 and issued to Chemical
         Bank, filed as Exhibit 4.03 to the Company's Annual Report in Form 10-K for the
         year ended December 31, 1993 and incorporated herein by reference. ............
*10.01   1995 Directors' Stock Option Plan, filed as Exhibit 10.19 to the Company's
         Annual Report on Form 10-K for the year ended December 31, 1995 and
         incorporated herein by
         reference. ....................................................................
 10.02   Amended and Restated Lease Agreement dated as of January 1, 1995 between United
         Trust Fund Limited Partnership and Computervision Corporation, filed as Exhibit
         10.20 to the Company's Annual Report on Form 10-K for the year ended December
         31, 1995 and incorporated herein by reference. ................................
*10.03   1992 Stock Option Plan as amended September 15, 1994, April 18, 1995 and
         December 5, 1996. .............................................................
*10.04   Annual Management Incentive Plan, effective January 1, 1995, filed as Exhibit
         10.03 to the Company Annual Report on Form 10-K for the year ended December 31,
         1995 and incorporated herein by reference. ....................................
*10.05   Officer's Perquisites Plan, as amended, filed as Exhibit 10.10 to the Company's
         Registration Statement on Form S-1, File No. 33-48455 and incorporated herein
         by reference. .................................................................
 10.06   Form of Indemnity Agreement between the Company and each of its directors and
         officers, filed as Exhibit 10.12 to the Company's Registration Statement on
         Form S-1, File No. 33-48455 and incorporated herein by reference. .............
*10.07   Employment Agreement dated as of June 11, 1996 between the Company and Russell
         E. Planitzer. .................................................................
</TABLE>
<PAGE>   48
 
<TABLE>
<C>      <S>                                                                              
*10.08   Amended and Restated Employment Agreement dated as of September 4, 1996 between
         the Company and Kathleen A. Cote. .............................................
*10.09   Letter Agreement, dated August 17, 1993 between the Company and Barry F. Cohen,
         Ph.D. and Memorandum dated March 28, 1994 to Barry Cohen regarding Employment
         Agreement, filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K
         for the year ended December 31, 1993 and incorporated herein by reference. ....
*10.10   Letter Agreement, dated January 4, 1990, between the Company and Anthony N.
         Fiore, Jr., filed as Exhibit 10.25 to the Company's Registration Statement on
         Form S-1, File No. 33-48455 and incorporated herein by reference. .............
*10.11   Letter Agreement dated January 18, 1995 between the Company and Douglas P.
         Smith; Letter Agreement dated January 24, 1995 between the Company and Douglas
         P. Smith; Note dated January 19, 1995 between the Company and Douglas P. Smith,
         filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1994 and incorporated herein by reference. .................
*10.12   Letter Agreement dated June 15, 1994 between the Company and Attilio Rimoldi.
         Memorandum dated August 22, 1995 from Anthony N. Fiore, Jr. to Attilio Rimoldi,
         filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1994 and incorporated herein by reference. .................
*10.13   Letter Agreement dated June 5, 1995 between the Company and James E. Hayden,
         filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1995 and incorporated herein by reference. .................
*10.14   Letter Agreement dated September 21, 1995 between the Company and Edward D.
         Wagner, filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for
         the year ended December 31, 1995 and incorporated herein by reference. ........
*10.15   Letter Agreement dated October 6, 1992 between the Company and William A.
         Foniri, filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for
         the year ended December 31, 1995 and incorporated herein by reference. ........
*10.16   Letter Agreement dated February 19, 1996 between the Company and Rock
         Gnatovich, filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K
         for the year ended December 31, 1995 and incorporated herein by reference. ....
*10.17   Form of Consulting Agreement executed between the Company and Mr. Sage, filed
         as Exhibit 10.16 to the Company's Registration Statement on Form S-1, File No.
         33-48455 and incorporated herein by reference. ................................
*10.18   1995 Domestic and International Employee Stock Purchase Plans, filed as Exhibit
         10.17 to the Company's Annual Report on Form 10-K for the year ended December
         31, 1995 and incorporated herein by reference. ................................
*10.19   1993 Directors' Stock Option Plan, filed as Exhibit 10.43 to the Company's
         Post-Effective Amendment No. 1 to Registration Statement on Form -1, File No.
         33-48455 and incorporated herein by reference. ................................
*10.20   Management Retention Agreement dated as of September 4, 1996 between the
         Company and Barry F. Cohen. ...................................................
*10.21   Management Retention Agreement dated as of September 4, 1996 between the
         Company and Kathleen A. Cote. .................................................
*10.22   Management Retention Agreement dated as of September 4, 1996 between the
         Company and Anthony N. Fiore, Jr. .............................................
*10.23   Management Retention Agreement dated as of September 4, 1996 between the
         Company and William Foniri. ...................................................
*10.24   Management Retention Agreement dated as of September 4, 1996 between the
         Company and Rock S. Gnatovich. ................................................
*10.25   Management Retention Agreement dated as of September 4, 1996 between the
         Company and James Hayden. .....................................................
*10.26   Promissory Note dated July 16, 1996 between the Company and Rock S.
         Gnatovich......................................................................
*10.27   Promissory Note date March 18, 1996 between the Company and Douglas P. Smith;
         Promissory Note dated June 24, 1996 between the Company and Douglas P. Smith;
         Separation Agreement date September 25, 1996 between the Company and Douglas
         Smith; Consultant Agreement dated as of October 14, 1996 between the Company
         and Douglas P. Smith...........................................................
</TABLE>
<PAGE>   49
 
<TABLE>
<C>      <S>                                                                              
 10.28   Credit Agreement dated as of November 17, 1995 (the "Credit Agreement") between
         Bankers Trust Company ("Bankers Trust"), Fleet Bank of Massachusetts, NA
         ("Fleet") and the Company, filed as Exhibit 10.01 to the Company's Annual
         Report on Form 10-K for the year ended December 31, 1995 and incorporated
         herein by reference............................................................
 10.29   First Amendment to the Credit Agreement dated as of February 15, 1996..........
 10.30   Second Amendment to the Credit Agreement dated as of March 22, 1996............
 10.31   Third Amendment to the Credit Agreement dated as of March 27, 1997. ...........
 11.01   Statement re: computation of per share earnings. ..............................
 21.01   Subsidiaries. .................................................................
 23.01   Consent of Independent Public Accountants. ....................................
</TABLE>