<PAGE>




                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q



------ -------------------------------------------------------------------------
  X    Quarterly report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 for the quarterly period ended September 30, 1999 or
------ -------------------------------------------------------------------------

------ -------------------------------------------------------------------------
       Transition report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 for the transition period from __________ to________
------ -------------------------------------------------------------------------

Commission file number:  000-20923



                               SUMMIT DESIGN, INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                   93-1137888
(State or other jurisdiction of                (I.R.S. Employer Identification
  incorporation or organization)                         Number)


                            9305 S. W. GEMINI DRIVE,
                             BEAVERTON, OREGON 97008
                     (Address of principal executive office)
       Registrant's Telephone number, including area code: (503) 643-9281


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X  No
                                      ---

As of November 11, 1999, the Registrant had outstanding 15,801,465 shares of
Common Stock.



<PAGE>


                               SUMMIT DESIGN, INC.
                                      INDEX



PART I     FINANCIAL INFORMATION

<TABLE>
<S>                                                                                     <C>
Item 1   Condensed Consolidated Financial Statements

         Condensed Consolidated Balance Sheets as of September 30, 1999
         (unaudited) and December 31, 1998.                                             3

         Condensed Consolidated Statements of Operations for the
         three months ended September 30, 1999 and 1998 and
         for the nine months ended September 30, 1999 and 1998(unaudited).              4

         Condensed Consolidated Statements of Cash Flows for
         the nine months ended September 30, 1999 and 1998 (unaudited).                 5

         Notes to Condensed Consolidated Financial Statements.                          6

Item 2   Management's Discussion and Analysis of Financial
              Condition and Results of Operations                                       9

PART II     OTHER INFORMATION

Item 6   Exhibits and Reports on Form 8-K                                               41

Items 1, 2,3, 4 and 5      Not Applicable                                               41

Signature                                                                               42

Exhibit Index                                                                           43
</TABLE>



                                      -2-
<PAGE>


                               SUMMIT DESIGN, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                September 30, 1999   December 31, 1998
                                                ------------------   -----------------
                                                   (Unaudited)

<S>                                                     <C>           <C>
                     ASSETS

Current assets:


   Cash and cash equivalents ......................     $ 27,008      $ 27,693
   Accounts receivable, net .......................        6,217         8,852
   Prepaid expenses and other .....................        1,003           862
   Deferred income taxes ..........................          792           792
                                                        --------      --------
     Total current assets .........................       35,020        38,199

Furniture and equipment, net ......................        3,734         4,113
Intangibles, net ..................................        1,038         2,870
Goodwill, net .....................................        2,179         2,742
Deposits and other assets .........................          146         2,286
                                                        --------      --------
        Total assets ..............................     $ 42,117      $ 50,210
                                                        ========      ========

                  LIABILITIES
Current liabilities:
   Long-term debt, current portion ................     $     56      $     54
   Capital lease obligation, current portion ......            8            43
   Accounts payable ...............................        1,072         2,520
   Accrued liabilities ............................        5,287         5,687
   Deferred revenue ...............................        4,843         5,640
                                                        --------      --------
     Total current liabilities ....................       11,266        13,944

Long-term debt, less current portion ..............         --             156
Deferred revenue, less current portion ............          102           146
Deferred income tax ...............................          489           489
                                                        --------      --------
     Total liabilities ............................       11,857        14,735
                                                        --------      --------

Commitments and contingencies

              STOCKHOLDERS' EQUITY
Common stock, $.01 par value. Authorized
    30,000 shares; issued and outstanding 15,702
    shares at September 30, 1999 and 15,457 shares
    at December 31, 1998 ..........................          157           155
Additional paid-in capital ........................       44,360        44,039
Accumulated deficit ...............................      (14,257)       (8,719)
                                                        --------      --------
     Total stockholders' equity ...................       30,260        35,475
                                                        --------      --------
        Total liabilities and stockholders' equity      $ 42,117      $ 50,210
                                                        ========      ========
</TABLE>




       The accompanying notes are an integral part of the condensed consolidated
       financial statements


                                      -3-
<PAGE>


                               SUMMIT DESIGN, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                           Three Months Ended           Nine Months Ended
                                                              September 30,               September 30,
                                                         ---------------------        ----------------------
                                                            1999         1998           1999         1998
                                                            ----         ----           ----         ----
<S>                                                        <C>           <C>          <C>           <C>
Revenue:

   Product licenses ..................................     $  4,871      $  8,705     $ 13,477      $ 25,480
   Maintenance and services ..........................        2,983         2,518        8,376         6,929
   Other .............................................         --              91         --             274
                                                           --------      --------     --------      --------
     Total revenue ...................................        7,854        11,314       21,853        32,683

Cost of revenue:
   Product licenses ..................................          217           179          476           490
   Maintenance and services ..........................          270           269          876           773
   Amortization of purchased technologies ............          140           165          472           496
                                                           --------      --------     --------      --------
     Total cost of revenue ...........................          627           613        1,824         1,759
                                                           --------      --------     --------      --------
        Gross profit .................................        7,227        10,701       20,029        30,924

Operating expenses:
   Research and development ..........................        2,571         3,021        7,739         8,928
   Sales and marketing ...............................        2,590         3,235        8,678         9,541
   General and administrative ........................        1,465         1,122        4,004         3,264
   Amortization of goodwill and other intangibles ....          529           698        1,924         2,093
   Non-recurring charges .............................        2,665          --          4,005           227
                                                           --------      --------     --------      --------
     Total operating expenses ........................        9,820         8,076       26,350        24,053

Income (loss) from operations ........................       (2,593)        2,625       (6,321)        6,871

Other income, net ....................................          293           298          783           790
                                                           --------      --------     --------      --------
Income (loss) before income taxes ....................       (2,300)        2,923       (5,538)        7,661
Income tax provision .................................         --           1,162         --           3,043
                                                           --------      --------     --------      --------

Net income (loss) ....................................     $ (2,300)     $  1,761     $ (5,538)     $  4,618
                                                           ========      ========     ========      ========

Earnings (loss) per share:
     Basic ...........................................     $  (0.15)     $   0.12     $ ( 0.35)     $   0.31
                                                           ========      ========     ========      ========
     Diluted .........................................     $  (0.15)     $   0.11     $ ( 0.35)     $   0.28
                                                           ========      ========     ========      ========

Number of shares used in computing earnings (loss) per
share:
     Basic ...........................................       15,694        15,245       15,646        15,072
     Diluted .........................................       15,694        16,100       15,646        16,208
</TABLE>



       The accompanying notes are an integral part of the condensed consolidated
       financial statements



                                      -4-
<PAGE>


                               SUMMIT DESIGN, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  Nine Months Ended
                                                                     September 30,
                                                              -----------------------------
                                                                 1999            1998
                                                              -------------   -------------
<S>                                                             <C>           <C>
Cash flows from operating activities:
     Net income (loss) ....................................     $ (5,538)     $  4,618
     Adjustments to reconcile net income (loss) to net cash
              provided by (used in) operating activities:
          Depreciation and amortization ...................        3,620         3,439
          Amortization of future contingent share
           liability.......................................         --           1,650
          Loss on asset disposition .......................           34          --
          Deferred taxes ..................................         --             (81)
          Equity in losses of and transactions with
           unconsolidated joint venture ...................          255           420
          Provision for impairment of note receivable .....        2,665          --
          Changes in assets and liabilities:
               Accounts receivable ........................        2,635        (2,523)
               Prepaid expenses and other .................         (141)         (249)
               Other, net .................................          184            98
               Accounts payable ...........................       (1,448)          536
               Accrued liabilities ........................         (400)        1,303
               Deferred revenue ...........................         (840)         (641)
                                                                --------      --------
        Net cash provided by operating activities .........        1,026         8,570
                                                                --------      --------
Cash flows from investing activities:
     Additions to furniture and equipment .................         (891)       (1,811)
     Proceeds from sale of assets .........................           11          --
     Notes receivable from related parties, net ...........         (965)         (855)
     Loan to a joint venture ..............................         --            (750)
                                                                --------      --------
        Net cash used in investing activities .............       (1,845)       (3,416)
                                                                --------      --------
Cash flows from financing activities:
     Issuance of common stock, net of issuance costs ......          323         1,118
     Tax benefit of option exercises ......................         --             875
     Payments to acquire treasury stock ...................         --          (2,329)
     Principal payments of debt obligations ...............         (154)          (91)
     Principal payments of capital lease obligations ......          (35)          (38)
                                                                --------      --------
        Net cash provided by (used in) financing activities          134          (465)
                                                                --------      --------
        Increase (decrease) in cash and cash equivalents ..         (685)        4,689
Cash and cash equivalents, beginning of period ............       27,693        19,973
                                                                --------      --------
Cash and cash equivalents, end of period ..................     $ 27,008      $ 24,662
                                                                ========      ========
Supplemental disclosure of cash flow information:
     Cash paid during the period for:
          Interest ........................................     $      2      $      3
          Income taxes ....................................        1,198         2,063
Supplemental disclosure of non-cash financing activities:
     Retirement of treasury stock .........................         --          11,555
</TABLE>







       The accompanying notes are an integral part of the condensed consolidated
       financial statements


                                      -5-
<PAGE>


                               SUMMIT DESIGN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


1.       BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared by Summit
Design, Inc. ("Summit" or "the Company") in accordance with the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted in accordance with such rules and regulations. In the opinion of
management, the accompanying unaudited financial statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position of the Company, and its results of
operations and cash flows. These financial statements should be read in
conjunction with the audited financial statements and notes thereto for the
years ended December 31, 1998, 1997 and 1996 included in the Company's Form 10-K
filed for December 31, 1998.

The results of operations for the nine months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999 or any other future interim period, and the Company makes no
representations related thereto.

2.       BALANCE SHEET COMPONENTS (IN THOUSANDS)


<TABLE>
<CAPTION>
                                             September 30, 1999  December 31, 1998
                                             ------------------  -----------------
                                               (Unaudited)
<S>                                                 <C>          <C>
Accounts receivable:

   Trade receivables ..........................     $ 6,609      $ 9,363

   Less allowance for doubtful accounts .......        (392)        (511)
                                                    -------      -------
                                                    $ 6,217      $ 8,852
                                                    =======      =======

Furniture and equipment:
   Office furniture equipment .................     $   680      $ 1,201
   Computer equipment .........................       5,305        5,138
   Leasehold improvements .....................         940          491
                                                    -------      -------
                                                      6,925        6,830
Less: accumulated depreciation and amortization      (3,191)      (2,717)
                                                    -------      -------
                                                    $ 3,734      $ 4,113
                                                    =======      =======

Accrued liabilities:
   Payroll and related benefits ...............     $ 2,871      $ 3,051
   Severance ..................................       1,136         --
   Sales and marketing ........................         360          332
   Accounting and legal .......................         433          310
   Federal and state income taxes payable .....         352        1,549
   Sales taxes payable ........................          39          160
   Other ......................................          96          285
                                                    -------      -------
     Total accrued liabilities ................     $ 5,287      $ 5,687
                                                    =======      =======
</TABLE>



                                      -6-
<PAGE>

                               SUMMIT DESIGN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


3.       RECONCILIATION OF EARNINGS PER SHARE

On January 1, 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share." In accordance with SFAS No. 128,
basic earnings per share is computed using the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed
using the weighted average number of common and dilutive common equivalent
shares outstanding during the period. Dilutive common equivalent shares consist
of common stock issuable upon exercise of stock options using the treasury stock
method. The following provides a reconciliation of the numerators and
denominators of the basic and diluted per share computations:

<TABLE>
<CAPTION>
                                                    Three months ended           Nine months ended
                                                       September 30,                 September 30,
                                                  ------------------------- ---------------------------
                                                     1999         1998             1999       1998
                                                     ------       -------          ----       ----
<S>                                               <C>             <C>         <C>           <C>
Numerator:
   Net income (loss)                              $   (2,300)     $ 1,761     $  (5,538)    $ 4,618
                                                  ==========      =======     =========     =======


Denominator:
   Denominator for basic earnings (loss)
     per share weighted average shares               15,694       15,245        15,646      15,072

   Effect of dilutive securities:
     Employee stock options                             --           855          --         1,136
                                                  ----------      -------     ---------     -------

   Denominator for diluted earning (loss)
     per share                                       15,694       16,100        15,646      16,208
                                                  ==========      =======     =========     =======


Net income (loss) per share - basic               $   ( 0.15)     $  0.12     $ ( 0.35)     $  0.31
                                                  ==========      =======     =========     =======

Net income (loss) per share - diluted             $    (0.15)     $  0.11     $ ( 0.35)     $  0.28
                                                  ==========      =======     =========     =======
</TABLE>



4.       BUSINESS SEGMENTS, EXPORTS AND MAJOR CUSTOMERS:

The Company operates in a single industry segment comprising the electronic
design automation industry. Net revenue by geographic region (in thousands) and
as a percentage of total revenue for each region outside North America is as
follows:

<TABLE>
<CAPTION>
                                       Three months ended          Nine months ended
                                          September 30,                 September 30,
                                         1999         1998             1999       1998
                                      ----------------------      ----------------------
<S>                                   <C>           <C>           <C>           <C>
    Europe ......................     $  1,378      $  1,351      $  4,300      $  4,210
     Japan ......................        1,678         1,831         5,076         5,671
    Other Asia Pacific ..........          344         1,185           704         1,993

As a Percentage of Total Revenue:
    Europe ......................         17.5%         11.9%         19.7%         12.9%
     Japan ......................         21.4%         16.2%         23.2%         17.4%
    Other Asia Pacific ..........          4.4%         10.5%          3.2%          6.1%
</TABLE>


                                      -7-
<PAGE>

Sales through one distributor accounted for 21.4%, 16.2%, 23.2%, and 17.4% of
the Company's total revenue for the three months ended September 30, 1999 and
1998, and for the nine months ended September 30, 1999 and 1998, respectively.
Sales to Credence Systems Corporation ("CSC") accounted for 22.1% and 25.2% of
the Company's total revenue for the three and nine months ended September 30,
1998. Such revenue included $2.5 million and $8.2 million, respectively of
Visual Testbench license and maintenance sales made pursuant to an OEM agreement
with CSC. As of December 31, 1998, CSC had fully satisfied its obligation to
purchase Visual Testbench Licenses pursuant to the OEM agreement and the Company
does not expect to receive any additional revenue from sales of Visual Testbench
licenses. The Company did not receive any revenue from CSC for the nine months
ended September 30, 1999. Revenue generated pursuant to another OEM agreement
accounted for 13.8%, 12.2%, 13.0%, and 9.0% of the Company's total revenue for
the three months ended September 30, 1999 and 1998 and for the nine months ended
September 30, 1999 and 1998, respectively. Foreign operations of Summit Design
(EDA) Ltd. accounted for less than 10% of total revenue of the Company for the
three and nine months ended September 30, 1999. Identifiable assets of the
Company's Israeli subsidiary were less than 10% of total assets at December 31,
1998. Additionally, one customer accounted for 10.2% of total revenue for the
three months ended September 30, 1999.

5.       SUBSEQUENT EVENTS

On September 16, 1999, the Company entered into a definitive agreement to
merge with Viewlogic Systems, Inc. ("Viewlogic") a privately held software
company headquartered in Marlboro, Massachusetts under which the Company will
acquire Viewlogic. Each share of Viewlogic Preferred and Common Stock will be
exchanged for 0.67928 shares for Summit Common Stock upon closing of the
transaction. In addition, the Company will assume all options outstanding
under Viewlogic's stock option plan.  The Company intends to account for this
acquisition as a purchase. Although Summit will be acquiring Viewlogic, after
such transaction, Viewlogic stockholders will hold a controlling interest in
Summit. Accordingly, for accounting purposes, the acquisition will be a
"reverse acquisition" and Viewlogic will be the "accounting acquirer". As
Viewlogic will be the accounting acquirer, its accounts will be recorded at
historical cost and the assets and liabilities of Summit will be recorded at
their estimated fair value as of the closing date. The transaction is subject
to the approval of Viewlogic's and the Company's stockholders and standard
closing conditions.

6.       NON-RECURRING CHARGES

Non-recurring charges of $2.7 million for the three months ended September
30, 1999 relate to the impairment of a note receivable. As of September 30,
1999, the Company has loaned $2.7 million to an independent software company
pursuant to a secured loan agreement entered into July 1997. During the three
months ended September 30, 1999 the Company terminated its agreement with the
independent software company. This decision by the Company impaired the
viability of the independent software company as a going concern due to a
lack of financial support. Based on this development, the Company recorded
$2.7 million in provision for the impairment of the note receivable.
Non-recurring charges of $4.0 million for the nine months ended September 30,
1999 relate to severance obligations of $1.3 million to certain management
personnel, which will be paid in future periods and a charge of $2.7 million
for the impairment of a note receivable. Non-recurring charges of $227,000
for the nine months ended September 30, 1998 relate to the acquisition of
ProSoft.

                                      -8-
<PAGE>

ITEM 2            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

IMPORTANT NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Words such as "anticipates," "expects," "intends," "plans," "believes,"
"seeks," "estimates" and similar expressions identify such forward-looking
statements. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
indicated in the forward-looking statements. Factors which could cause actual
results to differ materially include those set forth in the following
discussion, and, in particular, the risks discussed below under the subheading
"Additional Risk Factors that Could Affect Operating Results and Market Price of
Stock." Unless required by law, the Company undertakes no obligation to update
publicly any forward-looking statements.

OVERVIEW

Summit Design, Inc. ( the "Company") was founded in December 1993 to act as the
holding company for Test Systems Strategies, Inc. ("TSSI") and SEE Technologies,
(now Summit Design (EDA) Ltd.) collectively, the "Reorganization"). TSSI was
founded in 1979 to develop and market integrated circuit ("IC" or "chip")
manufacturing test products. In January 1993, TSSI retained a new Chief
Executive Officer and began to restructure its senior management team.
Thereafter, the Company broadened its strategy from focusing primarily on
manufacturing test products to include providing HLDA design creation and
verification tools and integrating these with its core technology. As part of
its strategy, in early 1994, TSSI acquired SEE Technologies, an Israeli company
that, through its predecessor, began operations in 1983 and had operated
primarily as a research and development and consulting company focused on the
electronic design automation ("EDA") market. As a result of the Reorganization,
TSSI and SEE Technologies became wholly-owned subsidiaries of the Company in the
first quarter of 1994.

Prior to the Reorganization, the Company's TDS product and related maintenance
revenue accounted for all of the Company's revenue. After the Reorganization and
through June 30, 1997, the Company's revenue was predominantly derived from two
product lines, Visual HDL, which includes Visual HDL for VHDL and Visual HDL for
Verilog, and TDS. As a result of the July 1997 sale of the TDS product line,
Design to Test products are no longer a source of revenue for the Company. With
the acquisition of TriQuest Design Automation, Inc. ("TriQuest") in February
1997, Simulation Technologies Corp ("SimTech"), in September 1997, and ProSoft
OY ("ProSoft") in June 1998, the Company has also derived revenue from
verification products which include hardware-software co-verification, code
coverage, and HDL debugging products as well as analysis, verification and RTL
optimization tools.

Revenue consists primarily of fees for licenses of the Company's software
products, maintenance and customer training. Product license revenue is derived
from the sale of software licenses to distributors and end-users. Revenue from
the sale of software licenses is recognized upon shipment of the product if
remaining vendor obligations are insignificant and collection of the resulting
receivable is probable, otherwise revenue from such software products is
deferred until such time as vendor obligations are met. Maintenance revenue is
deferred and recognized ratably over the term of the maintenance agreement,
which is typically 12 months. Revenue from customer training is recognized when
the service is performed. Revenue earned on software arrangements involving
multiple elements is allocated to each element based on vendor-specific
objective evidence (VSOE) of the fair value of the various elements within the
arrangement. The Company sells its products through a direct sales force in
North America and selected European countries and through distributors in the
Company's other international markets. Revenue from product sales through
distributors is recognized net of the associated distributor discounts. Fees
received for granting distribution rights are deferred and recognized ratably
over the term of the distribution agreement. Although the Company has not
adopted a formal return policy, the Company generally reimburses customers in
full for returned products. Estimated sales returns are recorded when the
related revenue is recognized.



                                      -9-
<PAGE>

The Company's products perform a variety of functions, certain of which are, and
in the future may be, offered as separate products or discrete point solutions
by the Company's existing and future competitors. For example, certain companies
currently offer design entry products without simulators. There can be no
assurance that such competition will not cause the Company to offer point
solutions instead of, or in addition to, the Company's current software
products. Such point solutions would be priced lower than the Company's current
product offerings and could cause the Company's average selling prices to
decrease. Accordingly, based on these and other factors, the Company expects
that average selling prices for its products may continue to fluctuate in the
future.

The Company entered into a joint venture with Anam, effective April 1, 1996,
pursuant to which the joint venture corporation (Summit Asia, Ltd. ("Summit
Asia")) acquired exclusive rights to sell, distribute and support all of the
Company's products in the Asia-Pacific regions, excluding Japan. Prior to that
date, Anam was an independent distributor of the Company's products in Korea. In
April 1998, the joint venture corporation, Summit Asia, which is headquartered
in Korea, was renamed Asia Design Corporation ("ADC"). In May 1998, the Company
exchanged a portion of its ownership in ADC for ownership in another company
located in Hong Kong, Summit Design Asia, Ltd. ("SDA"). SDA also acquired an
equity investment in ADC. In June 1998, the Company and Anam each loaned SDA
$750,000, which is guaranteed by ADC. SDA acquired from ADC the exclusive rights
to sell, distribute and support the Company's products in Asia Pacific region,
excluding Japan. SDA granted distribution rights to the Company's products to
ADC for the Asia Pacific region, excluding Japan. In December 1998, SDA
cancelled ADC's distribution rights in all areas except Korea and granted
non-exclusive distribution rights to Semiconductor Technologies Australia
("STA") for the Asia Pacific region, excluding Japan and Korea. For the nine
months ended September 30, 1999 and 1998, sales through SDA accounted for 2.3%
and 3.1% of the Company's revenue, respectively.

The Company accounts for its ownership interest in SDA and ADC on the equity
method of accounting and, as a result, the Company's share of the earnings and
losses of SDA and ADC are recognized as income or losses in the Company's income
statement in "Other income, net." The Company does not expect SDA or ADC to
recognize a profit for the foreseeable future and thus does not expect to
recognize income from its investment in SDA or ADC for the foreseeable future,
if at all. There can be no assurance that the restructuring will result in SDA
or ADC becoming profitable or that revenue attributable to sales in the Asia
Pacific region, excluding Japan, would increase.

Approximately 43.3%, 38.6%, 46.1%, and 36.3% of the Company's total revenue for
the three months ended September 30, 1999 and 1998, and for the nine months
ended September 30, 1999 and 1998, respectively, were attributable to sales made
outside the United States, which includes the Asia Pacific region and Europe.
Approximately, 25.8%, 26.7%, 26.5% and 23.4% of the Company's revenue for the
three months ended September 30, 1999 and 1998, and for the nine months ended
September 30, 1999 and 1998, respectively, were attributable to sales made in
the Asia Pacific region. Approximately 17.5%, 11.9%, 19.7%, and 12.9% of the
Company's revenue for the three months ended September 30, 1999 and 1998, and
for the nine months ended September 30, 1999 and 1998, respectively, were
attributable to sales made in Europe. The increase in the percentage of revenue
from sales made outside the United States in 1999 is primarily the result of a
decrease in domestic sales made to Credence Systems Corporation ("CSC") in 1998
pursuant to an OEM agreement. As of December 31, 1998, CSC had satisfied its
obligations under the OEM agreement and the Company will not receive any
additional revenue pursuant to the OEM agreement. The Company expects that
international revenue will continue to represent a significant portion of its
total revenue. The Company's international revenue is currently denominated in
U.S. dollars. As a result, increases in the value of the U.S. dollar relative to
foreign currencies could make the Company's products more expensive and,
therefore, potentially less competitive in those markets. The Company pays the
expenses of its international operations in local currencies and does not engage
in hedging transactions with respect to such obligations. International sales
and operations are subject to numerous risks, including tariff regulations and
other trade barriers, requirements for licenses, particularly with respect to
the export of certain technologies, collectability of accounts receivable,
changes in regulatory requirements, difficulties in staffing and managing
foreign operations and extended payment terms. There can be no assurance that
such factors will not have a material adverse effect on the Company's future
international sales and operations and, consequently, on the



                                      -10-
<PAGE>

Company's business, financial condition, results of operations or cash flows. In
addition, financial markets and economies in the Asia Pacific region have been
experiencing adverse economic conditions. Demand for and sales of the Company's
products in the Asia Pacific region have continued to decrease and there can be
no assurance that such adverse economic conditions will not worsen. In June
1999, the Company lowered Seiko's specified quotas due to the adverse economic
conditions in the Asia Pacific Region. As a result, Summit expects sales through
Seiko to decrease for at least the current and following two quarters.(1)

On February 28, 1997, the Company completed its acquisition of TriQuest.
TriQuest develops HDL analysis, optimization, and verification tools for the
design of high performance, deep submicron integrated circuits. The transaction
has been accounted for as a "pooling of interest" in accordance with generally
accepted accounting principles.

Effective July 1, 1997, the Company sold substantially all of the assets used in
its business of developing and marketing its Test Development Series "TDS"
Products (the "Asset Sale") to CSC. As of July 1, 1997, TDS products ceased to
be a source of such revenues. CSC assumed the Company's obligations under TDS
maintenance contracts entered into prior to the closing and the Company has not
recognized deferred revenue associated with such contracts since June 30, 1997.

The Company maintained exclusive rights to its Visual Testbench technology and
CSC agreed to purchase a minimum of $16 million of Visual Testbench licenses
over a thirty-month period beginning July 1997, subject to specified quarterly
maximums and certain additional conditions, and $2 million of maintenance over
an eighteen month period beginning July 1997. In December 1998, the Company and
CSC agreed to amend the agreement and as of December 31, 1998, CSC had satisfied
its obligation to purchase $16 million of Visual Testbench licenses. CSC also
obtained shared ownership of the Visual Testbench source code in December 1998
and has the right to sell Visual Testbench licenses based on the source code
received from the Company.

On September 9, 1997, the Company acquired SimTech, a company that develops and
distributes hardware-software co-verification, code coverage and HDL debugging
software. The aggregate consideration for the acquisition was 1,256,800 shares
of the Company's common stock, 723,200 options to purchase the Company's common
stock and $3.9 million in cash. The transaction was accounted for using the
purchase method of accounting. Accordingly, SimTech's results of operations for
the period from September 9, 1997 are included in the consolidated statements of
operations. The purchase price was allocated to the net assets acquired based on
their estimated fair market values at the date of acquisition.

After discussion with the Staff of the Securities and Exchange Commission (the
"Staff") the Company restated the consolidated financial statements as of and
for the quarters ended September 30, 1997, March 31, 1998, June 30, 1998 and
September 30, 1998 and as of December 31, 1997 and for the year ended December
31, 1997 to reflect a change in the original accounting treatment to the
September 1997 acquisition of SimTech.

In connection with the acquisition of SimTech, the Company repurchased 939,000
shares of common stock in a private transaction at an average price of $12.30
per share for $11.6 million in September 1997.

On December 23, 1997, the Company announced that the Board of Directors had
authorized the repurchase of up to 750,000 shares of the Company's Common Stock.
From January 1, 1998 to May 12, 1998, the Company repurchased 162,500 shares of
its common stock at a cost of $2.3 million. The Company subsequently issued
these shares through the exercise of stock options during the three months ended
June 30, 1998. On June 29, 1998, the Company cancelled this stock repurchase
plan.

----------------------
(1) This paragraph contains forward-looking statements reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations. Investors are strongly
encouraged to review the section entitled "Additional Risk Factors That Could
Affect Operating Results and Market Price of Stock" commencing on page 22 for a
discussion of factors that could affect future performance.



                                      -11-
<PAGE>

On June 30, 1998, the Company completed its acquisition of ProSoft. ProSoft
develops software tools used to verify embedded systems software prior to the
availability of a hardware prototype. The aggregate consideration for the
acquisition (including shares of common stock reserved for issuance upon
exercise of ProSoft options, which were exchanged for options of the Company)
was 248,334 shares of common stock. The transaction has been accounted for as a
pooling of interests in accordance with generally accepted accounting
principles. In compliance with such principles, the Company's financial
statements have been restated to include the accounts of ProSoft as if the
acquisition had occurred at the beginning of the first period presented.

In September 1998, the Company announced its proposed acquisition of OrCAD, Inc.
In February 1999, the Company announced that its planned acquisition of OrCAD,
Inc. had been terminated. During the quarter ended December 31, 1998, the
Company incurred approximately $1.0 million in costs related to the terminated
acquisition.

RECENT DEVELOPMENTS

On September 16, 1999, the Company entered into a definitive agreement to
merge with Viewlogic Systems, Inc. ("Viewlogic") a privately held software
company headquartered in Marlboro, Massachusetts under which the Company will
acquire Viewlogic. Each share of Viewlogic Preferred and Common Stock. In
addition, the Company will assume all options outstanding under Viewlogic's
stock option plan will be exchanged for 0.67928 shares for Summit Common
Stock upon closing of the transaction. The Company intends to account for
this acquisition as a purchase. Although Summit will be acquiring Viewlogic,
after such transaction, Viewlogic stockholders will hold a controlling
interest in Summit. Accordingly, for accounting purposes, the acquisition
will be a "reverse acquisition" and Viewlogic will be the "accounting
acquirer". As Viewlogic will be the accounting acquirer, its accounts will be
recorded at historical cost and the assets and liabilities of Summit will be
recorded at their estimated fair value as of the closing date. The
transaction is subject to the approval of Viewlogic's and the Company's
stockholders and standard closing conditions.

As of September 30, 1999, the Company has loaned $2.7 million to an
independent software company pursuant to a secured loan agreement entered
into during July 1997. Borrowings under the agreement bear interest at prime
plus 2%. During the three months ended September 30, 1999, the Company
terminated its relationship with the independent software company.  This
decision by the Company impaired the viability of the independent software
company as a going concern due to a lack of financial support.  Based on this
development, the Company recorded $2.7 million in provision for impairment of
the note receivable.

In addition to the risks stated below in "Additional Risk Factors That Could
Affect Operating Results and Market Price of Stock", if the Company's
proposed business combination with Viewlogic is completed, the combined
Company's operating results will be subject to the following additional risks:


                                     -12-

<PAGE>

THE EXCHANGE RATIO FOR SUMMIT COMMON STOCK TO BE RECEIVED BY VIEWLOGIC
STOCKHOLDERS IN THE BUSINESS COMBINATION IS FIXED AND WILL NOT BE ADJUSTED IN
THE EVENT OF ANY INCREASE OR DECREASE IN STOCK PRICE.

Under the merger agreement, each outstanding share of Viewlogic capital stock
will be converted into the right to receive 0.67928 of a share of Summit
common stock. The exchange ratio is fixed and will not be adjusted in the
event of any increase or decrease in the market price of Summit common stock.
Accordingly, the market value of the consideration to be received by the
stockholders of Viewlogic in the business combination will depend entirely on
the market price of Summit common stock upon the completion of the business
combination. The market price of Summit common stock at the completion of the
business combination may vary from its price on the date the merger agreement
was signed, the date of this joint proxy statement/prospectus and the date of
the special meetings. The market price may vary because of many factors,
including:

    - changes in the business, operations or prospects of Summit;

    - the timing of the completion of the business combination;

    - the prospects of post-business combination operations of the combined
      company; and

    - general market conditions.

THE INHERENT UNCERTAINTY PRIOR TO COMPLETION OF THE BUSINESS COMBINATION MAY
CAUSE SUMMIT'S OR VIEWLOGIC'S CUSTOMERS TO DELAY PURCHASING DECISIONS AND MAY
REDUCE THE LIKELIHOOD OF SUMMIT MEETING THE EXPECTATIONS OF INVESTORS AND
ANALYSTS.

The business combination of two companies can be unsettling to customers.
Summit and Viewlogic believe that a number of their respective customers may
delay their purchase decisions until they have the opportunity to learn more
about the business plans of the combined company. As a result, the quarterly
results of one or both of the companies could fail to meet the expectations of
investors and analysts.


                                      -13-
<PAGE>


THE SHARES OF SUMMIT COMMON STOCK WHICH ARE ISSUABLE UNDER THE MERGER AGREEMENT
MAY DILUTE SUMMIT'S EARNINGS PER SHARE.

A number of shares equal to approximately 51% of Summit's outstanding common
stock after the business combination will be issued to the stockholders of
Viewlogic upon completion of the business combination. Additionally, shares
equal to approximately 7% of the outstanding Summit common stock after the
business combination will be reserved for issuance upon the exercise of
options to purchase Viewlogic common stock assumed by Summit under the merger
agreement. The issuance of Summit common stock in connection with the
business combination and upon the exercise of Viewlogic options assumed by
Summit may cause a dilution of earnings per share which may negatively impact
the price of Summit common stock.

IF SUMMIT AND VIEWLOGIC CANNOT BE SUCCESSFULLY INTEGRATED THE ANTICIPATED
SYNERGIES MAY NOT BE REALIZED, IN FULL, IF AT ALL.

The Summit board of directors and the Viewlogic board of directors have each
unanimously approved the merger agreement with the expectation that the
business combination will result in cost savings and beneficial product and
operating synergies. Following the business combination, in order to maintain
and increase profitability the combined company will need to successfully
integrate and streamline overlapping functions. For example, Summit's
operations in Beaverton, Oregon, will be relocated. The desired cost savings
may not be achieved and the integration of Summit's and Viewlogic's
operations may not be accomplished smoothly, expeditiously or successfully.
The difficulties of achieving these goals may be increased by the need to
combine two corporate cultures.

THE INTEGRATION OF SUMMIT'S AND VIEWLOGIC'S BUSINESSES MAY DISTRACT
MANAGEMENT FROM ACHIEVING ITS OPERATIONAL OBJECTIVES WHICH COULD LIMIT THE
COMBINED COMPANY'S ABILITY TO RETAIN ITS EMPLOYEES.

The integration of the companies' businesses following the business
combination will require the dedication of management resources, which may
distract management's attention from the day-to-day business of the combined
company. The business of the combined company may also be disrupted by
employee uncertainty and lack of focus during integration. The retention by
Viewlogic and Summit of key employees is critical to ensure continued
advancement, development and support of the companies' technologies as well
as on-going sales and marketing efforts. During the pre-merger and
integration phases, competitors may intensify their efforts to recruit key
employees. The combined company may not be able to retain key technical,
sales or marketing personnel after the business combination which would
adversely affect the combined company's business.

THE COMBINED COMPANY MAY NOT SUCCESSFULLY INTEGRATE RECENT BUSINESS ACQUISITIONS
OF SUMMIT AND VIEWLOGIC.

Each of Summit and Viewlogic has recently completed other business
acquisitions. This business combination, if approved, would be the largest
for either company. The difficulties of integrating Summit's and Viewlogic's
businesses may be exacerbated by the size and number of recent acquisitions.
Products, technologies, distribution channels, key personnel and businesses
of previously acquired companies may not effectively integrate into the
combined company's business or product offerings. Moreover, this integration
may adversely affect the combined company's business.


                                     -14-

<PAGE>

THE COMBINED COMPANY WILL BE MANAGED BY A NEW MANAGEMENT TEAM WHICH WILL HAVE
SIGNIFICANT CONTROL OVER ITS BUSINESS AND DIRECTION.

After the business combination, the current management of Viewlogic will be
able to exert significant control over the combined company, its business and
direction, subject to the oversight of the combined company's board of
directors. The manner in which the new management team conducts the business
of the combined company, and the direction in which the new management team
moves the business, may differ from the manner and direction in which the
current management of Summit would direct the combined company or Summit on a
stand-alone basis. Such control by the new management team, together with the
effects of future market factors and business conditions, could ultimately
evolve into an integration and business strategy that, when implemented,
differs from the strategy and business direction currently recommended by
Summit's current management and board of directors. The new management team,
and any change in business or direction, may not improve, and could adversely
impact, the combined company's financial condition and results of operations.

BOTH COMPANIES WILL INCUR SUBSTANTIAL EXPENSES RELATING TO THE BUSINESS
COMBINATION.

Summit and Viewlogic estimate that the negotiation and implementation of the
business combination will result in aggregate costs of approximately $3.9
million, primarily relating to costs associated with combining the companies
and the fees of attorneys, accountants and Summit's financial advisor. This
estimate may be incorrect, or unanticipated events may substantially increase
the costs of combining the operations of the companies. In addition, the
combined company expects to record a non-cash expense of approximately $2.1
million with respect to the write-off of acquired in-process research and
development. In any event, the companies anticipate that costs associated
with the business combination and the write-off of acquired in-process
research and development and goodwill amortization will negatively impact
results of operations in the quarter in which the business combination is
completed. In addition, Summit and Viewlogic expect to amortize approximately
$22.2 million of acquired intangible assets over a period of three to five
years, and this will negatively impact results of operations for the duration
of the period.

THE PROPOSED BUSINESS COMBINATION WITH VIEWLOGIC MAY NOT BE CONSUMMATED.

The proposed business combination with Viewlogic is subject to stockholder
approval and other conditions. In addition, either Summit or Viewlogic may
terminate the transaction. If the business combination is not consummated, it
may adversely affect Summit's business and the market price of Summit's
common stock.

                                      -15-

<PAGE>

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain financial data
as a percentage of revenue.


<TABLE>
<CAPTION>
                                                  Three Months Ended           Nine Months Ended
                                                     September 30,               September 30
                                                 ----------------------    ---------------------
                                                   1999        1998        1999        1998
                                                 --------    --------    --------    -------
<S>                                              <C>         <C>         <C>         <C>
Revenue:
     Product licenses .....................        62.0%       76.9%      61.7%       78.0%
     Maintenance and services .............        38.0        22.3       38.3        21.2
     Other ................................         --          0.8        --          0.8
                                                   -----      -----       -----      ------

          Total revenue ...................       100.0       100.0      100.0       100.0
Cost of revenue:
     Product licenses .....................         2.8         1.6        2.2         1.5
     Amortization of purchased technologies         3.4         2.3        4.0         2.4
     Maintenance and services .............         1.8         1.5        2.1         1.5
                                                   -----      -----       -----      ------
          Total cost of revenue ...........         8.0         5.4        8.3         5.4
          Gross profit ....................        92.0        94.6       91.7        94.6
Operating expenses:
     Research and development .............        32.7        26.7       35.4        27.3
     Sales and marketing ..................        33.0        28.6       39.7        29.2
     General and administrative ...........        18.7         9.9       18.3        10.0
     Amortization of goodwill and other
        intangibles .......................         6.7         6.2        8.8         6.4
     Non-recurring charges (a) ............        33.9         --        18.3         0.7
                                                   -----      -----       -----      ------

          Total operating expenses ........       125.0        71.4      120.5        73.6
                                                   -----      -----       -----      ------

Income from operations ....................       (33.0)       23.2      (28.8)       21.0
Other income (expense), net ...............         3.7         2.6        3.6         2.4
                                                   -----      -----       -----      ------

Income before income taxes ................       (29.3)       25.8      (25.2)       23.4
Income tax provision ......................         --         10.2        0.0         9.3
                                                   -----      -----       -----      ------

Net income ................................       (29.3)%      15.6%     (25.2)%      14.1%
                                                   ======      =====      ======      =====
</TABLE>



(a) Non-recurring charges of $2.7 million for the three months ended September
30, 1999 relate to the impairment of a note receivable. Non-recurring charges of
$4.0 million for the nine months ended September 30, 1999 relate to severance
obligations of $1.3 million to certain management personnel, which will be paid
in future periods and a charge of $2.7 million for the impairment of a note
receivable. Non-recurring charges of $227,000 for the nine months ended
September 30, 1998 relate to the acquisition of ProSoft.


                                      -16-
<PAGE>


TOTAL REVENUE

Total revenue decreased by 30.6% from $11.3 million for the three months
ended September 30, 1998 to $7.9 million for the three months ended September
30, 1999. Total revenue decreased 33.1% from $32.7 million to $21.9 million
for the nine months ended September 30, 1999. Sales through one distributor
accounted for 21.4%, 16.2%, 23.2%, and 17.4% of the Company's total revenue
for the three months ended September 30, 1999 and 1998, and for the nine
months ended September 30, 1999 and 1998, respectively. Sales to CSC
accounted for 22.1% and 25.2% of the Company's total revenue for the three
and nine months ended September 30, 1998. Such revenue included $2.5 million
and $8.2 million, respectively of Visual Testbench license and maintenance
sales made pursuant to an OEM agreement with CSC. As of December 31, 1998,
CSC had fully satisfied its obligation to purchase Visual Testbench Licenses
pursuant to the OEM agreement.  The Company did not receive any revenue from
CSC for the nine months ended September 30, 1999 and does not expect to
receive revenue in the future from CSC for the sale of Visual Testbench.
Revenue generated pursuant to another OEM agreement accounted for 13.8%,
12.2%, 13.0%, and 8.9% of the Company's total revenue for the three months
ended September 30, 1999 and 1998 and for the nine months ended September 30,
1999 and 1998, respectively. Additionally, one customer accounted for 10.2%
of total revenue for the three months ended September 30, 1999.

REVENUE

PRODUCT LICENSE REVENUE

The Company's product licenses revenue is derived from license fees from the
Company's HLDA products. Product licenses revenue decreased by 44.0% from $8.7
million for the three months ended September 30, 1998 to $4.9 million for the
three months ended September 30, 1999. Product licenses revenue decreased by
47.1% from $25.5 million for the nine months ended September 30, 1998 to $13.5
million for the nine months ended September 30, 1999. The decrease in product
licenses revenue was primarily attributable to the Company ceasing to receive
revenue from CSC pursuant to the OEM Agreement. The decrease was also
attributable to decreased sales as a result of the Company hiring fewer sales
and marketing personnel than planned in the fourth quarter of 1998 and the first
two quarters of 1999 and attrition in the existing sales force during the first
two quarters of 1999.

MAINTENANCE AND SERVICES REVENUE

The Company's maintenance and services revenue is derived from maintenance
contracts related to the Company's HLDA products and training classes offered to
purchasers of the Company's software products. Maintenance and services revenue
increased 18.5% from $2.5 million for the three months ended September 30, 1998
to $3.0 million for the three months ended September 30, 1999. Maintenance and
services revenue increased 20.9% from $6.9 million for the nine months ended
September 30, 1998 to $8.4 million for the nine months ended September 30, 1999.
This increase is primarily attributable to maintenance contract renewals by the
installed base of HLDA customers, and to a lesser extent from non-recurring
engineering services provided to one customer, which is not expected to reoccur.

OTHER REVENUE

Other revenue consists of revenue from one-time technology sales and fees
received for granting distribution rights. Other revenue decreased 100% from
$91,000 for the three months ended September 30, 1998 to $0 for the three months
ended September 30, 1999. Other revenue decreased 100% from $274,000 for the
nine months ended September 30, 1998 to $0 for the nine months ended September
30, 1999. Although the Company renewed a significant distribution agreement the
renewal did not include additional fees. As a result, the distribution rights
fees paid at the inception of the agreement and amortized into revenue at
$91,000 each quarter over the agreement period were no longer a source of other
revenue as of December 31, 1998.



                                      -17-
<PAGE>


COST OF REVENUE

COST OF PRODUCT LICENSES REVENUE

Cost of product licenses revenue includes product packaging, software
documentation, labor and other costs associated with handling, packaging and
shipping product and other production related costs. The cost of product
licenses revenue increased 21.2% from $179,000 for the three months ended
September 30, 1998 to $217,000 for the three months ended September 30, 1999.
The increase is primarily due to increases in royalty expense and the provision
for impairment of certain inventory. The cost of product licenses revenue
decreased 2.9% from $490,000 for the nine months ended September 30, 1998 to
$476,000 for the nine months ended September 30, 1999. As a percentage of
product licenses revenue, the cost of product licenses revenue increased from
2.1% of product license revenue for the three months ended September 30, 1998 to
4.5% of product license revenue for the three months ended September 30, 1999.
As a percentage of product licenses revenue, the cost of product licenses
revenue increased from 1.9% of product license revenue for the nine months ended
September 30, 1998 to 3.5% of product license revenue for the nine months ended
September 30, 1999. This increase as a percentage of product license revenue was
primarily due to fixed costs spread over decreased product license revenue.

COST OF MAINTENANCE AND SERVICES REVENUE

Cost of maintenance and services revenue, which consists primarily of personnel
costs for customer support and training classes offered to purchasers of the
Company's products, increased 0.4% from $269,000 for the three months ended
September 30, 1998 to $270,000 for the three months ended September 30, 1999.
Cost of maintenance and services revenue increased 13.3% from $773,000 for the
nine months ended September 30, 1998 to $876,000 for the nine months ended
September 30, 1999. As a percentage of maintenance and services revenue, the
cost of maintenance and services revenue decreased from 10.7% for the three
months ended September 30, 1998 to 9.1% for the three months ended September 30,
1999. As a percentage of maintenance and services revenue, the cost of
maintenance and services revenue decreased from 11.2% for the nine months ended
September 30, 1998 to 10.5% for the nine months ended September 30, 1999.

AMORTIZATION OF PURCHASED TECHNOLOGIES

The Company recorded $2.4 million of purchased technologies (intangibles) as
part of the SimTech acquisition which are being amortized to cost of revenue on
a straight-line basis over periods ranging from two to five years beginning
September 9, 1997. The Company expensed approximately $140,000 and $165,000 for
the three months ended September 30, 1999 and 1998, respectively. The Company
expensed approximately $472,000 and $496,000 for the nine months ended September
30, 1999 and 1998, respectively.


OPERATING EXPENSES

RESEARCH AND DEVELOPMENT

Research and development expenses consist of the engineering and operations
support costs of developing new products and enhancements to existing products
and performing quality assurance activities. Research and development expenses
decreased 14.9% from $3.0 million for the three months ended September 30, 1998
to $2.6 million for the three months ended September 30, 1999. Research and
development expenses decreased 13.3% from $8.9 million for the nine months ended
September 30, 1998 to $7.7 million for the nine months ended September 30, 1999.
Research and development expenses for the three and nine months ended September
30, 1998 included $550,000 and $1,650,000, respectively, of compensation expense
recorded in connection with the Company's acquisition of SimTech in September
1997.



                                      -18-
<PAGE>

The Company recorded a total of $4.4 million of compensation expense for shares
issued as part of the acquisition which were contingent upon continued
employment and were being expensed as the employment obligation lapsed. This
expense was being recorded on a straight-line basis over the two year employment
obligation period. However, in December 1998, the employment agreements to which
this contingent compensation related were amended to eliminate the continued
employment obligation and at that time, the remaining unrecorded compensation
was expensed. Excluding the $550,000 compensation expense recorded in the three
months ended September 30, 1998, research and development expense increased 4.0%
from $2.5 million for the three months ended September 30, 1998 to $2.6 million
for the same period in 1999. Excluding the $1,650,000 compensation expense
recorded in the nine months ended September 30, 1998, research and development
expense increased 6.3% from $7.3 million for the nine months ended September 30,
1998 to $7.7 million for the same period in 1999.

As a percentage of total revenue, research and development expenses increased
from 26.7% and 27.3% for the three and nine months ended September 30, 1998,
respectively, to 32.7% and 35.4% for the three and nine months ended September
30, 1999, respectively. The increase in research and development expenses as a
percent of revenue is the result of a decrease in total revenues for the three
and nine months ended September 30, 1999. The Company continues to believe that
significant investment in research and development is required to remain
competitive in its markets, and the Company therefore anticipates that research
and development expense will increase in absolute dollars in future periods, but
may vary as a percent of revenue.(2)

SALES AND MARKETING

Sales and marketing expenses, consisting primarily of salaries, commissions and
promotional costs, decreased 19.9% from $3.2 million for the three months ended
September 30, 1998 to $2.6 million for the three months ended September 30,
1999. Sales and marketing expenses decreased 9.1% from $9.5 million for the nine
months ended September 30, 1998 to $8.7 million for the nine months ended
September 30, 1999. This decrease was primarily attributable to the Company
hiring fewer sales and marketing personnel than planned in the fourth quarter of
1998 and the first two quarters of 1999 and attrition in the existing sales
force during the first quarter of 1999.

As a percentage of total revenue, sales and marketing expenses increased from
28.6% for the three months ended September 30, 1998 to 33.0% for the three
months ended September 30, 1999. As a percentage of total revenue, sales and
marketing expenses increased from 29.2% for the nine months ended September 30,
1998 to 39.7% for the nine months ended September 30, 1999. The increase as a
percentage of total revenue was primarily attributable to the decrease in total
revenue for 1999. In the future, the Company expects sales and marketing
expenses to continue to increase in absolute dollars, in part due to the hiring
of additional sales and marketing personnel.(2)

GENERAL AND ADMINISTRATIVE

General and administrative expenses consist primarily of the corporate, finance,
human resource, information services, administrative, and legal and accounting
expenses of the Company. General and administrative expenses increased 30.6%
from $1.1 million for the three months ended September 30, 1998, to $1.5 million
for the three months ended September 30, 1999. General and administrative
expenses increased 22.7% from $3.3 million for the nine months ended September
30, 1998, to $4.0 million for the nine months ended September 30, 1999. As a
percentage of total revenue, general and administrative expenses increased from
9.9% for the three months ended September 30, 1998 to 18.7% for the three months
ended September 30, 1999. As a percentage of total revenue, general and
administrative expenses increased from 10.0% for the nine months ended September
30, 1998 to 18.3% for the nine months ended September 30, 1999. The

-------------------------
(2) This sentence contains forward-looking statements reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations. Investors are strongly
encouraged to review the section entitled "Additional Risk Factors That Could
Affect Operating Results and Market Price of Stock" commencing on page 19 for a
discussion of factors that could affect future performance.


                                      -19-
<PAGE>

increase in general and administrative expenses as a percentage of total
revenue and in actual dollars was primarily attributable to the addition of
four positions, the cost of the CEO search, a legal reserve for a pending
settlement, and a decrease in total revenue for the three and nine months
ended September 30, 1999.

AMORTIZATION OF INTANGIBLES AND GOODWILL

The Company recorded $4.1 million in intangibles (excluding $2.4 million of
purchased technologies) and $3.8 million of goodwill as part of the SimTech
acquisition which are being amortized to expense on a straight-line basis over
periods ranging from two to five years beginning September 9, 1997. The Company
expensed approximately $529,000 and $698,000 for the three months ended
September 30, 1999 and 1998, respectively. The Company expensed approximately
$1.9 million and $2.1 million for the nine months ended September 30, 1999 and
1998, respectively.

NON-RECURRING CHARGES

During the nine months ended September 30, 1999, the Company recorded $1.3
million in non-recurring charges related to severance obligations for certain
management personnel. During the same period, the Company also recorded $2.7
million in provision for impairment of a loan receivable. As of September 30,
1999, the Company has loaned $2.7 million to an independent software company
pursuant to a secured loan agreement entered into July 1997. During the three
months ended September 30, 1999 the Company terminated its agreement with the
independent software company. This decision by the Company impaired the
viability of the independent software company as a going concern due to a
lack of financial support. Based on this development, the Company recorded
$2.7 million in provision for the impairment of the note receivable. For the
three months ended September 30, 1998 the Company incurred one-time charges
of $227,000 related to the acquisition of ProSoft.

OTHER INCOME, NET

Other income consists of interest income associated with available cash
balances, gains or losses from the sale of property and equipment, the Company's
pro rata share of the earnings and losses of SDA and ADC and foreign exchange
rate differences resulting from paying operating expenses of foreign operations
in the local currency. Other income was approximately $293,000, $298,000,
$783,000, and $790,000 for the three months ended September 30, 1999 and 1998
and for the nine months ended September 30, 1999 and 1998, respectively.

INCOME TAX PROVISION

The income tax provision decreased from $1.2 million for the three months ended
September 30, 1998 to $0 for the three months ended September 30, 1999. The
income tax provision decreased from $3.0 million for the nine months ended
September 30, 1998 to $0 for the nine months ended September 30, 1999. The 1998
income tax provision reflects the Company's estimated consolidated tax rate for
federal, state and foreign taxes of approximately 40% of taxable income due to
the non-deductibility of amortization and compensation expense related to the
SimTech acquisition. The Company's estimated effective rate for the year ending
December 31, 1999 is 0%, as the Company does not expect to generate either
taxable income or net operating losses in 1999.



                                      -20-
<PAGE>

EFFECTIVE CORPORATE TAX RATES

Prior to 1996, the Company had experienced losses for income tax purposes in the
United States. As of December 31, 1998, the Company has recognized the benefit
of its U.S. net operating loss carryforwards and tax credit carryforwards in
their financial statements.

The Company's Israeli operations are performed entirely by Summit Design
(EDA) Ltd., which is a separate taxable Israeli entity. The Company's
existing Israeli production facility has been granted "Approved Enterprise"
status under the Israeli Investment Law, which entitles the Company to
reductions in the tax rate normally applicable to Israeli companies with
respect to the income generated by its "Approved Enterprise" programs. In
particular, the tax holiday covers the seven year period beginning the first
year in which Summit Design (EDA) Ltd. generates taxable income from its
"Approved Enterprise" (after using any available NOLs), provided that such
benefits will terminate in 2006 regardless of whether the seven year period
has expired. The tax holiday provides that, during such seven year periods, a
portion of the Company's taxable income from its Israeli operations will be
taxed at favorable tax rates. The Company has recently applied for "Approved
Enterprise" status with respect to a new project and intends to apply in the
future with respect to additional projects. There can be no assurance that
the Company will be granted any approvals and therefore there can be no
assurance the Company will continue to have favorable tax status in Israel.
Management of the Company intends to permanently reinvest earnings of the
Israeli subsidiary outside the U.S. If such earnings were remitted to the
U.S., additional U.S. federal and foreign taxes may be due.

The Company had foreign income tax net operating losses of approximately $5.6
million at December 31, 1998. These foreign losses were generated in Israel over
several years and have not yet received final assessment from the Israeli
government. Consequently, management is uncertain as to the availability of a
substantial portion of such foreign loss carryforwards.

The Company is also subject to risk that United States and foreign tax laws and
rates may change in a future period or periods, and that any such changes may
materially adversely affect the Company's tax rate. Any increase in the
Company's effective tax rate, or variations in the effective tax rate from
period to period, could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flows.


LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations primarily through a public offering in
1996, the private placement of capital stock, as well as capital equipment
leases, borrowings under its bank line of credit, Israeli research and
development grants and cash generated from operations. As of September 30, 1999,
the Company had approximately $27.0 million in cash and cash equivalents.

As of September 30, 1999, the Company has loaned $2.7 million to an
independent software company pursuant to a secured loan agreement entered
into during July 1997. Borrowings under the agreement bear interest at prime
plus 2%. During the three months ended September 30, 1999, the Company
terminated its relationship with the independent software company.  This
decision impaired the viability of the independent software company as a
going concern due to lack of financial support.  The Company recorded $2.7
million in provision for impairment of the note receivable.

As of September 30, 1999, the Company had working capital of approximately $23.8
million.

For the nine months ended September 30, 1999, net cash generated by operating
activities was approximately $1.0 million. For the nine months ended
September 30, 1998, net cash generated by operating activities was
approximately $8.6 million. Cash generated by operations for the nine months
ended September 30, 1999 resulted primarily from a net loss offset by
depreciation, amortization, provision for loan impairment, decreases in
accounts payable and collections of accounts receivable.

Net cash used in investing activities was approximately $1.9 million and $3.4
million for the nine months ended September 30, 1999 and 1998, respectively. Net
cash used in investing activities was related to the



                                      -21-
<PAGE>


acquisition of furniture and equipment and a loan to an independent software
company for the nine months ended September 30, 1999 and 1998. Net cash used in
investing activities also included loans to a joint venture for the nine months
ended September 30, 1998.

Net cash generated by financing activities was approximately $134,000 for the
nine months ended September 30, 1999. Net cash used by financing activities was
approximately $465,000 for the nine months ended September 30, 1998. For the
nine months ended September 30, 1999, financing activity cash was primarily
generated by proceeds from the issuance of common stock through stock options
plans, offset by payments of debt obligations and capital leases. For the nine
months ended September 30, 1998 the use of cash was primarily from repurchasing
162,500 shares of the Company's common stock, less proceeds from the issuance of
common stock and a tax benefit from option exercises.

The Company presently believes that its current cash and cash equivalents will
satisfy the Company's anticipated working capital and other cash requirements
through the Company's 2000 fiscal year. (2)

YEAR 2000

The Year 2000 issue results from computer programs written using two, rather
than four, digits to define the applicable year. These computer programs may
recognize a date using "00" as the year 1900 instead of 2000 and cause system
failures or miscalculations, material disruptions of business operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business operations. If the Company,
its significant customers, suppliers, service providers and other related third
parties fail to take the necessary steps to correct or replace these problematic
computer programs, the Year 2000 issue could have a material adverse effect on
the Company. The Company cannot, however, quantify the impact at this time.

The Company has upgraded or replaced the software packages underlying its
financial, production, communication, desktop and other systems, as
appropriate, to address the Year 2000 issue. It has also performed an
in-depth analysis of all of its products and has determined that all
significant products are Year 2000 compliant. Moreover, the Company has
contacted all major external third parties that provide products and services
to the Company to assess their readiness for the Year 2000.

Management believes it has completed the review and assessment phase of affected
systems within the Company and those which are external to the Company. This
assessment indicated that most of the Company's significant internal information
systems could be affected by the Year 2000 issue, and that the Company could be
negatively impacted by non-compliance of related third parties.

The Company's products are subject to periodic upgrades. These upgrades are
typically released to end-users once a year. Management believes its products
are Year 2000 compliant, and will continue to test upgrades for Year 2000
compliance.

The Company has queried its important suppliers and service providers and is
presently obtaining assurances and verification from those selected third
parties that they are or will be Year 2000 compliant. The inability of those
parties to complete their Year 2000 resolution process could materially impact
the Company. The effects of non-compliance by third parties where no system
interface exists is not determinable.

The Company is currently in the process of creating contingency plans for its
internal information technology systems and products and in relation to third
parties with whom it has material relationships. These contingency plans are
expected to be in place during November 1999.


--------------------
(2) This sentence contains forward-looking statements reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations. Investors are strongly
encouraged to review the section entitled "Additional Risk Factors That Could
Affect Operating Results and Market Price of Stock" commencing on page 22 for a
discussion of factors that could affect future performance.

                                      -22-
<PAGE>

Concurrent with performing the above steps, the Company has made certain
investments in systems, applications and products to address Year 2000
issues. The Company has not tracked internal resources dedicated to the
resolution of the Year 2000 issue and, therefore, is unable to quantify
internal costs incurred to date that are associated with the Year 2000 issue.
The Company has, however, hired external consultants to resolve internal
information system issues related to the resolution of the Year 2000 issue.
Identifiable expenditures for these consultants were approximately $250,000
through September 30, 1999. Expenditures to resolve Year 2000 issues have not
been, nor are they expected to be, material.

The Company's plans to complete the Year 2000 modifications are based upon
management's best estimates, which were derived utilizing numerous assumptions
of future events including continued availability of certain resources, and
other factors. However, there can be no assurance that these estimates will be
achieved and actual results could differ materially from those plans. Specific
factors that might cause such material differences included the availability and
cost of personnel trained in this area, and the ability to locate and correct
all relevant computer codes.

ADDITIONAL RISK FACTORS THAT COULD AFFECT OPERATING RESULTS AND MARKET PRICE OF
STOCK


SUMMIT'S QUARTERLY RESULTS WILL LIKELY FLUCTUATE AND AFFECT THE MARKET PRICE OF
SUMMIT'S COMMON STOCK.

VARIOUS FACTORS WILL CAUSE SUMMIT'S QUARTERLY RESULTS TO FLUCTUATE.

Summit's quarterly operating results and cash flows have fluctuated in the
past and have fluctuated significantly in certain quarters. These fluctuations
resulted from several factors, including, among others:

- the size and timing of orders;

- large one-time charges incurred as a result of an acquisition or
  consolidation;

- seasonal factors;

- the impairment of a note receivable

- the rate of acceptance of new products;

- product, customer and channel mix;

- lengthy sales cycles; and

- level of sales and marketing staff.


                                     -23-

<PAGE>

These fluctuations will likely continue in future periods because of the
above factors. Additional factors potentially causing fluctuations include,
among others:

- corporate acquisitions and consolidations and the integration of acquired
  entities and any resulting large one-time charges;

- the timing of new product announcements and introductions by Summit and
  Summit's competitors;

- the rescheduling or cancellation of customer orders;

- the ability to continue to develop and introduce new products and product
  enhancements on a timely basis;

- the level of competition;

- purchasing and payment patterns, pricing policies of competitors;

- product quality issues;

- currency fluctuations; and

- general economic conditions.

SUMMIT'S REVENUE IS DIFFICULT TO FORECAST BECAUSE OF THE TIMING OF REVENUE
RECOGNITION AND UNPREDICTABLE NATURE OF CUSTOMER BEHAVIOR.

Summit's revenue is difficult to forecast for several reasons. Summit
operates with little product backlog because Summit typically ships its
products shortly after it receives orders. Consequently, license backlog at
the beginning of any quarter has in the past represented only a small portion
of that quarter's expected revenue. Correspondingly, license fee revenue in
any quarter is difficult to forecast because it is substantially dependent on
orders booked and shipped in that quarter. Moreover, Summit generally
recognizes a substantial portion of its revenue in the last month of a
quarter, frequently in the latter part of the month. Any significant deferral
of purchases of Summit's products could have a material adverse affect on its
business, financial condition and results of operations in any particular
quarter. To the extent that significant sales occur earlier than expected,
operating results for subsequent quarters may also be adversely affected.
Quarterly license fee revenue is difficult to forecast also because Summit's
typical sales cycle ranges from six to nine months and varies substantially
from customer to customer. In addition, Summit makes a portion of its sales
through indirect channels, and these sales can be difficult to predict.

                                      -24-
<PAGE>


SHORTFALLS IN REVENUE COULD ADVERSELY IMPACT QUARTERLY OPERATING RESULTS.

Summit establishes its expenditure levels for product development, sales and
marketing and other operating activities based primarily on Summit's
expectations as to future revenue. Because a high percentage of Summit's
expenses are relatively fixed in the near term, if revenue in any quarter
falls below expectations, expenditure levels could be disproportionately high
as a percentage of revenue and materially adversely affect Summit's operating
results.

SUMMIT'S OPERATING RESULTS WILL LIKELY FLUCTUATE.

Summit believes that its quarterly revenue, expenses and operating results
will likely vary significantly from quarter to quarter, that period-to-period
comparisons of Summit's operating results are not necessarily meaningful and
that, as a result, you should not rely on these comparisons as indications of
Summit's future performance. Additionally, as of December 31, 1998, Credence
Systems Corporation, or CSC, one of Summit's larger customers, had satisfied
its obligation to purchase a minimum number of Visual Testbench licenses
pursuant to an OEM agreement entered into in July 1997, and Summit does not
expect to receive any additional revenue from sales of Visual Testbench to
CSC. Summit will need to replace this revenue, and the failure to replace
this revenue would have a material adverse affect on Summit's operating
results. In addition, Summit operates with high gross margins, and a downturn
in revenue has had a significant impact on income from operations and net
income. Summit's results of operations fell below investors' and market
makers' expectations for the quarter ended September 30, 1999 and could be
below investors' and market makers' expectation in other quarters, which
could have a material adverse effect on the market price of Summit's common
stock.

SUMMIT DEPENDS ON ITS HLDA PRODUCTS BECAUSE THESE PRODUCTS MAKE UP MOST OF ITS
REVENUE.

Summit's future success depends primarily upon the broad market acceptance of
Summit's existing and future HLDA products. Summit commercially shipped its
first HLDA product, Visual HDL for VHDL, in the first quarter of 1994. For
the years ended December 31, 1998, 1997 and 1996, revenue from HLDA products
and related maintenance contracts represented 100%, 88.8%, and 63.9%,
respectively, of Summit's total revenue. As a result, factors adversely
affecting sales of these products, including increased competition, inability
to successfully introduce enhanced or improved versions of these products,
product quality issues and technological change, could have a material
adverse effect on Summit's business, financial condition and results of
operations.


                                     -25-

<PAGE>

SUMMIT MAY NOT GAIN BROAD MARKET ACCEPTANCE OF HLDA PRODUCTS, AND FAILURE TO DO
SO WILL MATERIALLY ADVERSELY AFFECT SUMMIT'S BUSINESS.

Summit's HLDA products incorporate certain unique design methodologies and
thus represent a departure from industry standards for design creation and
verification. Summit believes that broad market acceptance of Summit's HLDA
products will depend on several factors, including, among others:

- the ability to significantly enhance design productivity;

- ease of use;

- interoperability with existing electronic design automation tools;

- price; and

- the customer's assessment of Summit's financial results and Summit's
  technical, managerial, service and support expertise.


                                      -26-
<PAGE>


Summit also depends on its distributors to assist it in gaining market
acceptance of its products. These distributors may not give sufficient
priority to marketing Summit's products. They may even discontinue offering
Summit's products. In addition, Summit's HLDA products may not achieve broad
market acceptance. A decline in the demand for, or the failure to achieve
broad market acceptance of, Summit's HLDA products will have a material
adverse effect on Summit's business, financial condition, results of
operations or cash flows.

Although demand for HLDA products has increased in recent years, the market
for HLDA products is still emerging. The market may not continue to grow.
Even if it does grow, businesses may not continue to purchase Summit's HLDA
products. If the market for HLDA products fails to grow or grows more slowly
than Summit currently anticipates, it will materially adversely affect
Summit's business, financial condition, results of operations or cash flows.

Traditionally, electronic design automation customers have been risk averse
in accepting new design methodologies. Because many of Summit's tools use new
design methodologies, this risk aversion on the part of potential customers
presents an ongoing marketing and sales challenge and makes the introduction and
acceptance of new products unpredictable.

SUMMIT FACES INTENSE COMPETITION IN THE INDUSTRY AND MUST COMPETE SUCCESSFULLY
IN VARIOUS ASPECTS OR ITS BUSINESS MAY SUFFER.

The electronic design automation industry is highly competitive, and Summit
expects competition to increase as other electronic design automation companies
introduce HLDA products. In the HLDA market, Summit principally competes with
Mentor Graphics and a number of smaller firms. Indirectly, Summit also competes
with other firms that offer alternatives to HLDA. These other firms could also
offer more directly competitive products in the future. Some of these companies
have significantly greater financial, technical and marketing resources and
larger installed customer bases than Summit. Some of Summit's current and future
competitors offer a more complete range of electronic design automation
products. They may also distribute products that directly compete with Summit's
HLDA products by selling such products together with their core product line. In
addition, Summit's products perform a variety of functions, and its existing and
future competitors are offering, or may offer in the future, some of the same
functions as separate products or discrete point solutions. For example, some
companies currently offer design entry products without simulators. Such
competition may cause Summit to offer point solutions instead of, or in addition
to, Summit's current software products. Summit would have to price such point
solutions lower than Summit's current product offerings, causing Summit's
average selling prices to decrease. This, in turn, could have a material adverse
effect on Summit's business, financial condition, results of operations, or cash
flows.


                                     -27-

<PAGE>

Summit competes on the basis of various factors including, among others:

- product capabilities;

- product performance;

- price;

- support of industry standards;

- ease of use;

- first to market; and

- customer technical support and service.

Summit believes that its products are competitive overall with respect to
these factors. However, in particular cases, Summit's competitors may offer
HLDA products with functionality sought by Summit's prospective customers and
which differs from those Summit offers. In addition, some competitors may
achieve a marketing advantage by establishing formal alliances with other
electronic design automation vendors. Further, the electronic design
automation industry in general has experienced significant consolidation in
recent years, and the acquisition of one of Summit's competitors by a larger,
more established electronic design automation vendor could create a more
significant competitor. Summit may not compete successfully against current
and future competitors, and competitive pressures may have a material adverse
effect on Summit's business, financial condition, results of operations, or
cash flows. Summit's current and future competitors may develop products
comparable or superior to Summit's or more quickly adapt new technologies,
evolving industry trends or customer requirements. Increased competition
could result in price reductions, reduced margins and loss of market share,
all of which could have a material adverse effect on Summit's business,
financial condition, results of operations or cash flows.


                                      -28-
<PAGE>



SUMMIT DEPENDS ON THE ELECTRONICS INDUSTRY MARKET TO GENERATE DEMAND FOR ITS
PRODUCTS.

The electronics industry involves rapid technological change, short product
life cycles, fluctuations in manufacturing capacity and pricing and margin
pressures. Correspondingly, certain segments, including the computer,
semiconductor, semiconductor test equipment and telecommunications
industries, have experienced sudden and unexpected economic downturns. During
these periods, capital spending often falls, and the number of design
projects often decreases. Because Summit's sales depend upon capital spending
trends and new design projects, negative factors affecting the electronics
industry could have a material adverse effect on Summit's business, financial
condition, results of operations, or cash flows. A number of electronics
companies, including Summit's customers, have experienced a slowdown in their
businesses. Summit's future operating results may reflect substantial
fluctuations from period to period as a consequence of these industry
patterns, general economic conditions affecting the timing of orders from
customers and other factors.

SUMMIT DEPENDS ON THIRD PARTIES FOR PRODUCT INTEROPERABILITY AND MUST GAIN
ACCESS TO THE PRODUCTS OF THESE THIRD PARTIES FOR TIMELY DEVELOPMENT.

Because Summit's products must interoperate, or be compatible, with
electronic design automation products of other companies, particularly
simulation and synthesis products, Summit must have timely access to third
party software to perform development and testing of products. Although
Summit has established relationships with a variety of electronic design
automation vendors to gain early access to new product information, any of
these parties may terminate these relationships with limited notice. In
addition, these relationships are with companies that are Summit's current or
potential future competitors, including Synopsys, Mentor Graphics and
Cadence. If any of these relationships terminate and Summit were unable to
obtain, in a timely manner, information regarding modifications of third
party products, Summit would not have the ability to modify its software
products to interoperate with these third party products. As a result, Summit
could experience a significant increase in development costs, the development
process would take longer, product introductions would be delayed, and
Summit's business, financial condition, results of operations or cash flows
could be materially adversely affected.

SUMMIT MUST DEVELOP NEW PRODUCTS TO KEEP PACE WITH TECHNOLOGICAL CHANGE AND
EVOLVING INDUSTRY STANDARDS.

The electronic design automation industry is characterized by extremely rapid
technological change, frequent new product introductions and evolving
industry standards. The introduction of products with new technologies and
the emergence of new industry standards can render existing products obsolete
and unmarketable. In addition, customers in the electronic design automation
industry require software products that allow them to reduce time to market,
differentiate their products, improve their engineering productivity and
reduce their design errors. Summit's future success will depend upon its
ability to enhance its current products, develop and introduce new products
that keep pace with technological developments and emerging industry
standards and address the increasingly sophisticated needs of Summit's
customers. Summit may not succeed in developing and marketing product
enhancements or new products that respond to technological change or emerging
industry standards. It may experience difficulties that could delay or
prevent the successful development, introduction and marketing of these
products. Summit's products may not adequately meet the requirements of the
marketplace and achieve market acceptance. If Summit cannot, for
technological or other reasons, develop and introduce products in a timely
manner in response to changing market conditions, industry standards or other
customer requirements, particularly if Summit has pre-announced the product
releases, its business, financial condition, results of operations or cash
flows will be materially adversely affected.


                                     -29-

<PAGE>

SUMMIT'S SOFTWARE MAY HAVE DEFECTS.

Summit's software products may contain errors that may not be detected until
late in the products' life cycles. Summit has in the past discovered software
errors in certain of its products and has experienced delays in shipment of
products during the period required to correct these errors. Despite testing
by Summit and by current and prospective customers, errors may persist,
resulting in loss of, or delay in, market acceptance and sales, diversion of
development resources, injury to Summit's reputation or increased service and
warranty costs, any of which could have a material adverse effect on its
business, financial condition, results of operations or cash flows.


                                      -30-
<PAGE>


SUMMIT DEPENDS ON ITS DISTRIBUTORS TO SELL ITS PRODUCTS, ESPECIALLY
INTERNATIONALLY, BUT THESE DISTRIBUTORS MAY NOT DEVOTE SUFFICIENT EFFORTS TO
SELLING SUMMIT'S PRODUCTS.

Summit relies on distributors for licensing and support of Summit's products
outside of North America. Approximately 42.8%, 23.4%, 23.1%, 28.7% and 45.6%
of Summit's revenue for the nine months ended September 30, 1999 and 1998 and
for the years ended December 31, 1998, 1997 and 1996, respectively, came from
sales made through distributors. Effective April 1, 1996, Summit entered into
a joint venture with Anam pursuant to which the joint venture corporation,
Summit Asia, acquired exclusive rights to sell, distribute and support all of
Summit's products in the Asia Pacific region, excluding Japan. In April 1998,
the joint venture corporation, Summit Asia, which is headquartered in Korea,
was renamed Asia Design Corporation, or ADC. In May 1998, Summit exchanged a
portion of its ownership in ADC for ownership in another company located in
Hong Kong which was renamed Summit Design Asia, Ltd., or SDA. SDA also has an
equity investment in ADC. In June 1998, Summit and Anam each loaned SDA
$750,000, which is guaranteed by ADC. SDA acquired from ADC the exclusive
rights to sell, distribute and support Summit's products in the Asia Pacific
region, excluding Japan. SDA granted distribution rights to Summit's products
to ADC for the Asia Pacific region, excluding Japan. In December 1998, SDA
canceled ADC's distribution rights in all areas except Korea. In April 1999,
SDA granted non-exclusive distribution rights to Semiconductor Technologies
Australia for the Asia Pacific region, excluding Japan and Korea. This
restructuring, however, may not result in SDA or ADC becoming profitable.
Revenue attributable to sales in the Asia Pacific region, excluding Japan,
may not increase either. In addition, in the first quarter of 1996, Summit
entered into a three-year, exclusive distribution agreement for Summit's HLDA
products in Japan with Seiko. The agreement is renewable for successive
five-year terms by mutual agreement of Summit and Seiko and is terminable by
either party for breach. The agreement was renewed for an additional
five-year term which began in February 1999. If Seiko fails to meet specified
quotas for two or more quarterly periods, Summit can terminate the
exclusivity, subject to Seiko's right to pay a specified fee to maintain
exclusivity. Sales through Seiko accounted for 23.2%, 17.4%, 17.8%, 14.5%,
and 15.1%, of Summit's total revenue for the nine months ended September 30,
1999 and 1998 and for the years ended December 31, 1998, 1997, and 1996,
respectively. In June 1999, Summit lowered Seiko's specified quotas due to
the adverse economic conditions in the Asia Pacific Region. As a result,
Summit expects sales through Seiko to decrease for at least the current and
following two quarters.

Summit's relationships with Seiko, SDA and ADC may not effectively maintain
or increase sales relative to the levels experienced prior to such
relationships. Summit also has independent distributors in Europe and depends
on the continued viability and financial stability of these distributors.
Since Summit's products are used by skilled design engineers, distributors
must possess sufficient technical, marketing and sales resources and must
devote these resources to a lengthy sales cycle, customer training and
product service and support. Only a limited number of distributors possess
these resources. In addition, Seiko, SDA and ADC, as well as Summit's other
distributors, may offer products of several different companies, including
Summit's competitors. Summit's current distributors may not continue to
market or service and support Summit's products effectively. Any distributor
may discontinue to sell Summit's products or devote its resources to products
of other companies. The loss of, or a significant reduction in, revenue from
Summit's distributors could have a material adverse effect on its business,
financial condition, results of operations or cash flows.


                                     -31-

<PAGE>

SUMMIT FACES THE RISKS ASSOCIATED WITH INTERNATIONAL SALES AND OPERATIONS,
INCLUDING ITS BUSINESS ACTIVITIES IN EUROPE AND THE ASIA PACIFIC REGION.

Approximately 46.1%, 36.3%, 35.8%, 33.2%, and 49.8% of Summit's revenue for
the nine months ended September 30, 1999 and 1998 and for the years ended
December 31, 1998, 1997 and 1996, respectively, were attributable to sales
made outside the United States, which includes the Asia Pacific region and
Europe. Approximately, 26.5%, 23.4%, 21.9%, 22.3%, and 34.3% of Summit's
revenue for the nine months ended September 30, 1999 and 1998 and for the
years ended December 31, 1998, 1997 and 1996, respectively, were attributable
to sales made in the Asia Pacific region and approximately 19.7%, 12.9%,
13.9%, 11.4% and 15.5% of Summit's revenue for the nine months ended
September 30, 1999 and 1998 and for the years ended December 31, 1998, 1997
and 1996, respectively, were attributable to sales made in Europe. Summit
expects that international revenue will continue to represent a significant
portion of its total revenue. Summit's international revenue is currently
denominated in U.S. dollars. As a result, increases in the value of the U.S.
dollar relative to foreign currencies could make its products more expensive
and, therefore, potentially less competitive in those markets. Summit pays
the expenses of its international operations in local currencies and does not
engage in hedging transactions with respect to such obligations.
International sales and operations involve numerous risks, including, among
others:

- tariff regulations and other trade barriers;

- requirements for licenses, particularly with respect to the export of
  certain technologies;

- collectability of accounts receivable;

- changes in regulatory requirements; and

- difficulties in staffing and managing foreign operations and extended
  payment terms.

                                      -32-
<PAGE>


These factors may have a material adverse effect on Summit's future
international sales and operations and, consequently, on its business,
financial condition, results of operations or cash flows. In addition,
financial markets and economies in the Asia Pacific region have been
experiencing adverse conditions. Demand for and sales of Summit's products in
the Asia Pacific region have decreased, and these adverse economic conditions
may worsen. Demand for and sales of Summit's products in this region may
further decrease.

In order to successfully expand international sales, Summit may need to
establish additional foreign operations, hire additional personnel and
recruit additional international distributors. This will require significant
management attention and financial resources and could adversely affect
Summit's operating margins. In addition, to the extent that Summit cannot
effect these additions in a timely manner, Summit can only generate limited
growth in international sales, if any. Summit may not maintain or increase
international sales of its products, and failure to do so could have a
material adverse effect on its business, financial condition, results of
operations or cash flows.

SUMMIT MUST MANAGE GROWTH AND ACQUISITIONS EFFECTIVELY, OR ITS FINANCIAL
CONDITION OR RESULTS OF OPERATIONS MAY SUFFER.

Summit's ability to achieve significant growth will require it to implement
and continually expand its operational and financial systems, recruit
additional employees and train and manage current and future employees.
Summit expects any growth to place a significant strain on its operational
resources and systems. Failure to effectively manage any growth would have a
material adverse effect on Summit's business, financial condition, results of
operations or cash flows.

Summit has completed a series of acquisitions, including the acquisition of
TriQuest in February 1997, SimTech in September 1997, and ProSoft in June
1998 and regularly evaluates acquisition opportunities. Summit's future
acquisitions could result in potentially dilutive issuances of equity
securities, the incurrence of debt and contingent liabilities and
amortization expenses related to goodwill and other intangible assets, and
large one-time charges which could materially adversely affect Summit's
results of operations. Product and technology acquisitions entail numerous
risks, including difficulties in the assimilation of acquired operations,
technologies and products, diversion of management's attention to other
business concern, risks of entering markets in which Summit has no or limited
prior experience and potential loss of key employees of acquired companies.
Summit's management has had limited experience in assimilating acquired
organizations and products into its operations. Summit may not integrate
successfully the operations, personnel or products that have been acquired or
that might be acquired in the future, and the failure to do so could have a
material adverse affect on its results of operations.


                                     -33-

<PAGE>

SUMMIT FACES THE RISKS ASSOCIATED WITH OPERATIONS IN ISRAEL, INCLUDING
POLITICAL AND CURRENCY FLUCTUATION RISKS.

Summit's research and development operations related to Visual HDL products
are located in Israel. Economic, political and military conditions may affect
Summit's operations in that country. Hostilities involving Israel, for
example, could materially adversely affect Summit's business, financial
condition and results of operations. Restrictions on Summit's ability to
manufacture or transfer outside of Israel any technology developed under
research and development grants from the government of Israel further
heightens the impact. See "Summit relies on Israeli research, development and
marketing grants for certain benefits." In addition, while all of Summit's
sales are denominated in U.S. dollars, a portion of its annual costs and
expenses in Israel are paid in Israeli currency. These costs and expenses
were approximately $5.2, $4.7 and $4.3 million in 1998, 1997 and 1996,
respectively. Payment in Israeli currency subjects Summit to foreign currency
fluctuations and to economic pressures resulting from Israel's generally high
rate of inflation, approximately 9%, 7% and 11% during 1998, 1997 and 1996,
respectively. Summit's primary expense in Israeli currency is employee
salaries for research and development activities. As a result, an increase in
the value of Israeli currency in comparison to the U.S. dollar could increase
the cost of research and development expenses and general and administrative
expenses. Currency fluctuations, changes in the rate of inflation in Israel
or any of the other aforementioned factors may have a material adverse effect
on Summit's business, financial condition, results of operations, or cash
flows. In addition, coordination with and management of the Israeli
operations requires Summit to address differences in culture, regulations and
time zones. Failure to successfully address these differences could disrupt
Summit's operations.

                                      -34-
<PAGE>



SUMMIT CURRENTLY ENJOYS CERTAIN TAX BENEFITS UNDER AN ISRAELI "APPROVED
ENTERPRISE" STATUS WHICH IT MAY NOT ENJOY IN THE FUTURE AND WHICH IN TURN MAY
ADVERSELY AFFECT SUMMIT'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The Israeli government has granted Summit's Israeli production facility the
status of an "Approved Enterprise" under the Israeli Investment Law for the
Encouragement of Capital Investments, 1959. Taxable income of a company
derived from an "Approved Enterprise" is eligible for certain tax benefits,
including significant income tax rate reductions for up to seven years
following the first year in which the "Approved Enterprise" has Israeli
taxable income (after using any available net operating losses). The period
of benefits cannot extend beyond 12 years from the year of commencement of
operations or 14 years from the year in which approval was granted, whichever
is earlier. The tax benefits derived from a certificate of approval for an
"Approved Enterprise" relate only to taxable income attributable to such
"Approved Enterprise" and are conditioned upon fulfillment of the conditions
stipulated by the Israeli Investment Law, the related regulations and the
criteria set forth in the certificate of approval. In the event of Summit's
failure to comply with these conditions, the tax benefits could be canceled,
in whole or in part, and Summit would have to refund the amount of the
canceled benefits, adjusted for inflation and interest. Summit has not
realized any "Approved Enterprise" tax benefits from Summit's Israeli
operations as of December 31, 1995, since the Israeli operations were still
incurring losses at that time. During 1996, Summit realized income of $1.4
million from Summit's Israeli operations and "Approved Enterprise" tax
benefits of $53,000. During 1997, Summit realized income of $2.7 million from
its Israeli operations and "Approved Enterprise" tax benefits of $702,000.
During 1998, Summit realized income of $4.3 million from its Israeli
operations and "Approved Enterprise" tax benefits of $1.9 million. Summit has
recently applied for "Approved Enterprise" status with respect to a new
project and intends to apply in the future with respect to additional
projects. Summit's Israeli production facility may not continue to operate or
qualify as an "Approved Enterprise". The benefits under the "Approved
Enterprise" regulations may not continue, or be applicable, in the future.
Summit intends to permanently reinvest earnings of the Israeli subsidiary
outside the United States. If these earnings are remitted to the United
States, Summit may have to pay additional U.S. federal and foreign taxes. The
loss of, or any material decrease in, these income tax benefits could have a
material adverse effect on Summit's business, financial condition, results of
operations or cash flows.


                                     -35-

<PAGE>

SUMMIT DEPENDS ON ITS KEY PERSONNEL AND ITS ABILITY TO HIRE ADDITIONAL QUALIFIED
PERSONNEL.

Summit's future success will depend in large part on its key technical and
management personnel and its ability to continue to attract and retain
highly-skilled technical, sales and marketing and management personnel.
Summit has entered into employment agreements with certain of its executive
officers. These agreements, however, do not guarantee the services of these
employees and do not contain noncompetition provisions. Summit recently
amended the employment agreement with Richard Davenport, Summit's President.
As amended, Mr. Davenport's employment agreement provides that he is entitled
to certain guaranteed severance payments. Mr. Davenport may or may not
continue his employment with Summit.

Competition for personnel in the software industry in general, and the
electronic design automation industry in particular, is intense. Summit has
in the past experienced difficulty in recruiting qualified personnel. Summit
may fail to retain its key personnel or attract and retain other qualified
technical, sales and marketing and management personnel in the future. The
loss of any key employees or the inability to attract and retain additional
qualified personnel may have a material adverse effect on Summit's business,
financial condition, results of operations or cash flows. Additions of new
personnel and departures of existing personnel, particularly in key
positions, can be disruptive and can result in departures of additional
personnel, which could have a material adverse effect on Summit's business,
financial condition, results of operations or cash flows.



                                      -36-
<PAGE>


SUMMIT NEEDS TO EXPAND ITS SALES AND MARKETING ORGANIZATIONS.

Summit's success will depend on its ability to build and expand its sales and
marketing organizations. Summit hired fewer sales and marketing personnel
than planned in the fourth quarter of 1998 and the first two quarters of 1999
and experienced attrition in the existing sales force during the first
quarter of 1999. In part, as a result of the lack of sales people, Summit's
revenues for the fourth quarter of 1998 were lower than expected. In February
1998, Summit's Senior Vice President of Worldwide Marketing and Sales
resigned. Summit's future success will depend in part on its ability to hire
and retain qualified sales and marketing personnel and the ability of these
new persons to rapidly and effectively transition into their new positions.
Competition for qualified sales and marketing personnel is intense, and
Summit may not be able to hire and retain the number of sales and marketing
personnel needed, which would have a material adverse effect on its business,
financial condition, results of operations or cash flows.

SUMMIT RELIES ON ISRAELI RESEARCH, DEVELOPMENT AND MARKETING GRANTS FOR
CERTAIN BENEFITS. FAILURE TO OBTAIN SIMILAR GRANTS AND BENEFITS IN THE FUTURE
WILL ADVERSELY AFFECT SUMMIT'S BUSINESS.

Summit's Israeli subsidiary obtained research and development grants from the
Office of the Chief Scientist in the Israeli Ministry of Industry and Trade
of approximately $232,000 and $608,000 in 1993 and 1995, respectively. As of
December 31, 1997, Summit has repaid all amounts. The terms of the grants
prohibit the manufacture of products developed under these grants outside of
Israel and the transfer of the technology developed pursuant to these grants
to any person, without the prior written consent of the Chief Scientist.
Summit has developed its Visual HDL for VHDL products under grants from the
Chief Scientist. They are, therefore, subject to these restrictions. If
Summit were unable to obtain the consent of the government of Israel, it
would be unable to take advantage of potential economic benefits such as
lower taxes, lower labor and other manufacturing costs and advanced research
and development facilities that may be available if these technology and
manufacturing operations could be transferred to locations outside of Israel.
In addition, Summit would be unable to minimize risks particular to
operations in Israel, such as hostilities involving Israel. Although Summit
is eligible to apply for additional grants from the Chief Scientist, it has
no present plans to do so. Summit received a marketing fund grant from the
Israeli Ministry of Industry and Trade for an aggregate of $423,000. Summit
must repay the grant at the rate of 3% of the increase in exports over the
1993 export level of all Israeli products. As of September 30, 1999, Summit
still owes $92,000 under the grant.

SUMMIT DEPENDS ON ITS INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS BUT
PROTECTION OF THESE RIGHTS IS LIMITED.

Summit's success depends in part upon its proprietary technology. Summit
relies on a combination of copyright, trademark and trade secret laws,
confidentiality procedures, licensing arrangements and technical means to
establish and protect its proprietary rights. As part of Summit's
confidentiality procedures, Summit generally enters into non-disclosure
agreements with employees, distributors and corporate partners, and limit
access to, and distribution of, its software, documentation and other
proprietary information. In addition, Summit protects its products with
hardware locks and software encryption techniques designed to deter
unauthorized use and copying. Despite these precautions, a third party may
still copy or otherwise obtain and use Summit's products or technology
without authorization, or develop similar technology independently.


                                     -37-

<PAGE>

Summit provides its products to end-users primarily under "shrink-wrap"
license agreements included within the packaged software. In addition, Summit
delivers certain of its verification products electronically under an
electronic version of a "shrink wrap" license agreement. These agreements are
not negotiated with or signed by the licensee, and thus may not be
enforceable in certain jurisdictions. In addition, the laws of some foreign
countries do not protect Summit's proprietary rights as fully as do the laws
of the United States. Summit's means of protecting its proprietary rights in
the United States or abroad may not be adequate, and competitors may also
independently develop similar technology.

SUMMIT MAY FACE INFRINGEMENT CLAIMS, AND INTELLECTUAL PROPERTY LITIGATION
WILL BE COSTLY FROM BOTH THE ECONOMIC AND BUSINESS PERSPECTIVES.

Summit could face an increasing number of infringement claims as the number
of products and competitors in Summit's industry segment grows, the
functionality of products in Summit's industry segment overlaps and an
increasing number of software patents are granted by the United States Patent
and Trademark Office. A third party may claim such infringement by Summit
with respect to current or  future products. Any such claims, with or without
merit, could be time-consuming, result in costly litigation, cause product
delays or require Summit to enter into royalty or licensing agreements. These
royalty or license agreements, if required, may not be available on
acceptable terms or at all. Failure to protect Summit's proprietary rights or
claims of infringement could have a material adverse effect on Summit's
business, financial condition, results of operations or cash flows.

                                      -38-
<PAGE>


SUMMIT'S STOCK PRICE MAY FLUCTUATE DRAMATICALLY.

The stock markets have experienced price and volume fluctuations that have
particularly affected technology companies, resulting in changes in the
market prices of the stocks of many companies which may not have been
directly related to the operating performance of those companies. These broad
market fluctuations may adversely affect the market price of Summit's common
stock. In addition, factors such as announcements of technological
innovations or new products by Summit or its competitors, market conditions
in the computer software or hardware industries and quarterly fluctuations in
Summit's operating results may have a significant adverse effect on the
market price of Summit's common stock.

SUMMIT MAY FACE YEAR 2000 COMPUTER PROBLEMS.

Summit is currently working to address the potential impact of the Year 2000
on the processing of information by its computerized systems, including
interfaces to significant business partners.

Summit has substantially completed its planned Year 2000 compliance
activities with respect to its products and internal systems, software,
equipment and facilities. Based solely on these activities, management
believes that all products and material internal systems, software, equipment
and facilities are substantially Year 2000 compliant. Summit does not
anticipate that potential Year 2000 issues will have a material adverse
impact on its financial position or operating results.

However, Summit could be adversely impacted if any of its critical business
partners were to experience a severe business interruption due to a failure
to address their internal Year 2000 issues in a timely manner. If a severe
disruption occurs and is not corrected in a timely manner, a revenue or
profit shortfall may result during calendar year 2000. Based solely on
responses received to date from its business partners, Summit has no reason
to believe that there will be such a material adverse impact. However, if the
responses received from its business partners are inaccurate or happen to
change, then there could be such a material adverse impact. Management is
evaluating Year 2000 business interruption scenarios and developing
appropriate contingency plans.


                                     -39-

<PAGE>

ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The Company is exposed to market risk from interest rate changes, foreign
currency fluctuations, and changes in the market values of its investments.

INTEREST RATE RISK. The Company invests its excess cash in debt instruments of
the U.S. Government and its agencies, and in high-quality corporate issuers and,
by policy, limits the amount of credit exposure to any one issue. The Company
attempts to protect and preserve its invested funds by limiting default, market
and reinvestment risk.

Investments in both fixed rate and floating rate interest earning instruments
carry a degree of interest rate risk. Fixed rate securities may have their fair
market value adversely impacted due to a rise in interest rates, while floating
rate securities may produce less income than expected if interest rates fall.
Due in part to these factors, the Company's future investment income may fall
short of expectations due to changes in interest rates and the Company may
suffer losses in principal if forced to sell securities which have declined in
market value due to changes in interest rates.

FOREIGN CURRENCY RISK. The Company pays the expenses of its international
operations in local currencies. The Company's international operations are
subject to risks typical of an international business, including, but not
limited to: differing economic conditions, changes in political climate,
differing tax structures, other regulations and restrictions, and foreign
exchange rate volatility. Accordingly, the Company's future results could be
materially adversely impacted by changes in these or other factors.

The Company is also exposed to foreign exchange rate fluctuations as they
relate to operating expenses as the financial results of foreign subsidiaries
are translated into U.S. dollars in consolidation. As exchange rates vary,
these results, when translated, may vary from expectations and adversely
impact overall expected profitability. The effect of foreign exchange rate
fluctuations on the Company in 1999 was not material.

INVESTMENT RISK. The Company has made equity investments in ADC and SDA and
has provided loans to ADC and a privately-held, independent software company
for business and strategic purposes. These investments are included in other
long-term assets and are accounted for under the equity method when ownership
is greater than 20% and the Company does not exert control. For these
investments in privately-held companies, the Company's policy is to regularly
review the assumptions underlying the operating performance and cash flow
forecasts in assessing the carrying values. The Company identifies and
records impairment losses on long-lived assets when events and circumstances
indicate that such assets might be impaired.


                                      -40-
<PAGE>


PART II

Item 1.  Legal Proceedings

         Not applicable

Item 2.  Changes in Securities

         Not applicable

Item 3.  Defaults Upon Senior Securities

         Not applicable

Item 4.  Submission of Matters to a Vote of Security Holders

         Not applicable

Item 5.  Other Information

         Not applicable

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         10.1     Amendment to employment agreement between the Registrant and
                  Richard Davenport dated October 24, 1999.
         27.1     Financial Data Schedule

(b)      Reports on Form 8-K

              On July 6, 1999, the Company filed a Current Report on Form 8-K
              dated July 6, 1999 in connection with a press release issued by
              the Company announcing preliminary results for the second quarter
              of 1999.

              On September 21, 1999, the Company filed a Current Report on Form
              8-K dated September 16, 1999 in connection with a press release
              issued by the Company announcing the signing of a definitive
              agreement to merge the Company with Viewlogic Systems, Inc.



                                      -41-
<PAGE>

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                               SUMMIT DESIGN, INC.


                                 BY:  /s/ C. Albert Koob
                                    ------------------------------------

                                 C. Albert Koob
                                 Vice President - Finance,
                                 Chief Financial Officer and Secretary
                                 Principal Financial and Accounting
                                 Officer and Duly Authorized Officer


Date:    November 11, 1999


                                      -42-
<PAGE>

EXHIBIT INDEX

EXHIBIT 10.1    Amendment to employment agreement between the Registrant and
                Richard Davenport dated October 24, 1999.

EXHIBIT 27.1    Financial Data Schedule




                                      -43-