<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 March 31, 1999

[ ]  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 0-27692

                                  OrCAD, INC.
            (Exact Name of Registrant as Specified in its Charter)

                                   Delaware
        (State or Other Jurisdiction of Incorporation or Registration)

                                  93-1062832
                     (I.R.S. Employer Identification No.)

               9300 S.W. Nimbus Avenue, Beaverton, Oregon  97008
         (Address of Principal Executive Offices, Including Zip Code)

                           Telephone: (503) 671-9500
             (Registrant's Telephone Number, Including Area Code)


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.  [X] Yes  [ ] No

The number of shares outstanding of the Company's Common Stock ($.01 par value)
as of March 31, 1999 was 9,398,896 shares.

                                       1
<PAGE>
 
                                  OrCAD, INC.
                                        
                                     INDEX

 
PART I.  FINANCIAL INFORMATION                                         PAGE NO.
-------------------------------------------------------------------------------
 
Item 1.  FINANCIAL STATEMENTS
 
               Consolidated Balance Sheets - March 31, 1999
               and December 31, 1998                                       3
 
               Consolidated Statements of Operations - Three months
                ended March 31, 1999 and 1998                              4 
               
 
               Consolidated Statements of Cash Flows - Three months
               ended March 31, 1999 and 1998                               5
 
         Notes to consolidated financial statements                        6
 
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS                    10
 
Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
         RISK                                                             18
 
 
 
PART II. OTHER INFORMATION
--------------------------------------------------------------------------------
 
Item 1.  LEGAL PROCEEDINGS                                                19
 
Item 2.  CHANGES IN SECURITIES                                            19
 
Item 6.  EXHIBITS AND REPORTS ON FORM 8-K                                 19
 
         SIGNATURES                                                       20

                                       2
<PAGE>
 
<TABLE>
<CAPTION>
                                                     OrCAD, Inc.
                                              CONSOLIDATED BALANCE SHEETS
                                                    (in thousands)
 
                                                                                           March 31,               December 31,
                                                                                              1999                     1998
                                                                                       -------------------      -------------------
                                         Assets
Current assets:
<S>                                                                                    <C>                      <C>
     Cash and cash equivalents                                                              $13,008                  $ 8,454
     Short-term investments                                                                  27,810                   36,038
     Trade accounts receivable, net of doubtful accounts and sales
      return allowances of $883 and $1,018, respectively                                      7,413                    7,990
     Inventory, net                                                                             376                      382
     Other current assets                                                                     2,551                    2,631
                                                                                       -------------------     -------------------
           Total current assets                                                              51,158                   55,495
                                                                                       -------------------     -------------------

Investments, long-term                                                                        2,438                       --
Fixed assets, net                                                                             3,640                    3,616
Purchased software technology, net                                                              205                      255
Goodwill and intangible assets, net                                                           2,589                    2,734
Other assets                                                                                  1,704                    1,188
                                                                                       -------------------     -------------------
           Total assets                                                                     $61,734                  $63,288
                                                                                       ===================     ===================

                            Liabilities and Stockholders' Equity
Current liabilities:
     
     Accounts payable                                                                      $    898                  $   734
     Accrued payroll and related liabilities                                                  1,468                    1,978
     Accrued liabilities                                                                      2,657                    2,683
     Accrued income taxes                                                                       533                    1,192
     Deferred revenue                                                                         6,467                    6,592
                                                                                      -------------------      -------------------
           Total current liabilities                                                         12,023                   13,179

Commitments and contingencies
 
Stockholders' equity:
     Common stock                                                                               94                       94
     Additional paid-in capital                                                             38,478                   38,476
     Treasury stock                                                                           (887)                      --
     Retained earnings                                                                      12,085                   11,587
     Accumulated other comprehensive loss                                                      (49)                     (35)
     Notes receivable-employee stock purchases                                                 (10)                     (13)
                                                                                      -------------------      -------------------
           Total stockholders' equity                                                       49,711                   50,109
                                                                                      -------------------      -------------------
           Total liabilities and stockholders' equity                                      $61,734                  $63,288
                                                                                      ===================      ===================
</TABLE>
                                                                                
          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
 
<TABLE>
<CAPTION>
                                                            OrCAD, Inc.
                                               CONSOLIDATED STATEMENTS OF OPERATIONS
                                               (in thousands, except per share data)

                                                                                     Three Months Ended
                                                                                           March 31,
                                                                        -----------------------------------------------
                                                                                  1999                     1998
                                                                        ---------------------      --------------------
<S>                                                                     <C>                        <C>                
Revenue:
   Products                                                                     $ 7,718                   $ 8,806
   Service                                                                        3,861                     2,835
                                                                        ---------------------      --------------------
     Total revenue                                                               11,579                    11,641
 
Costs and expenses:
   Cost of revenue - products                                                       938                       864
   Cost of revenue - service                                                        740                       561
   Research and development                                                       2,894                     3,042
   Marketing and sales                                                            4,555                     4,655
   General and administrative                                                     1,166                     1,361
   Merger and acquisition related charges                                           995                     4,081
                                                                         ---------------------      -------------------- 
     Total costs and expenses                                                    11,288                    14,564
                                                                         ---------------------      --------------------
Income (loss) from operations                                                       291                    (2,923)
                                                                         ---------------------      --------------------
Other income (expense):
   Interest income, net                                                             426                       501
   Other, net                                                                        (6)                       (7)
                                                                         ---------------------      --------------------
     Total other income                                                             420                       494
                                                                         ---------------------      --------------------

Income (loss) before income taxes                                                   711                    (2,429)
   Income tax expense (benefit)                                                     213                      (850)
                                                                         =====================      ====================
Net income (loss)                                                               $   498                   $(1,579)
                                                                         =====================      ====================         
Basic net income (loss) per share                                               $  0.05                   $ (0.17)
                                                                         =====================      ====================
Diluted net income (loss) per share                                             $  0.05                   $ (0.17)
                                                                         =====================      ====================
Shares used in basic net income (loss) per share calculation                      9,349                     9,252
Shares used in diluted net income (loss) per share  calculation                   9,503                     9,252

</TABLE>
                                                                                
         See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
<TABLE>
<CAPTION>
                                                           OrCAD, Inc.
                                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                         (in thousands)

                                                                                             Three Months Ended March 31,
                                                                                        --------------------------------------
                                                                                              1999                  1998
                                                                                        ----------------     -----------------
<S>                                                                                     <C>                  <C>                 
Cash flows from operating activities:
    Net income (loss)                                                                      $    498              $ (1,579)
    Adjustments to reconcile net income (loss) to
     net cash provided by operating activities:
            Depreciation and amortization                                                       537                   462
            Provision for losses on trade accounts receivable and  sales returns               (129)                  155
            Provision for inventory reserves                                                    (81)                    9
            Deferred income taxes                                                                 -                    (5)
            Loss on disposal of fixed assets                                                    (10)                    -
            Changes in assets and liabilities:
               Trade accounts receivable                                                        651                 1,437
               Inventory                                                                         79                    31
               Other assets                                                                    (456)                  514
               Accounts payable                                                                 226                  (368)
               Accrued payroll and related liabilities                                         (509)                 (439)
               Accrued liabilities                                                               27                 1,640
               Deferred revenue                                                                 (77)                  (72)
               Accrued income taxes                                                            (649)               (1,098)
                                                                                        -----------------    ------------------
                              Total adjustments                                                (391)                2,266
                                                                                        -----------------    ------------------
    Net cash provided by operating activities                                                   107                   687
                                                                                        -----------------    ------------------
 
Cash flows from investing activities:
    Acquisition of fixed assets                                                                (407)                 (456)
    Proceeds from sale of fixed assets                                                            -                    (3)
    Intangible assets acquired                                                                    -                     -
    Proceeds from maturity of investment securities                                          66,139                33,888
    Purchases of investment securities                                                      (60,355)              (42,088)
                                                                                        -----------------    ------------------
        Net cash provided by (used in) investing activities                                   5,377                (8,659)
                                                                                        ----------------     -----------------
 
Cash flows from financing activities:
    Repayment (issuance) of notes receivable - employee stock purchases, net                      3                  (111)
    Repurchase of common stock                                                                 (887)                    -
    Proceeds from issuance of common stock, net                                                   2                    24
                                                                                        ----------------     -----------------
        Net cash used in financing activities                                                  (882)                  (87)
                                                                                        ----------------     -----------------
        Effects of exchange rate on cash                                                        (48)                  (34)
                                                                                        ----------------     -----------------
            Net increase (decrease) in cash and cash equivalents                              4,554                (8,093)

Cash and cash equivalents at the beginning of period                                          8,454                31,644
                                                                                        ----------------     -----------------
Cash and cash equivalents at the end of period                                             $ 13,008              $ 23,551
                                                                                        ================     =================
Supplemental disclosures of cash flow information:
    Income taxes paid                                                                      $    534              $  1,509
</TABLE>
                                                                                
    See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
 
                                 OrCAD, INC. 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (in thousands, except share data)
                                  (Unaudited)

1.   Basis of Presentation

     The accompanying financial statements of OrCAD, Inc. ("OrCAD," or the
     "Company") have been prepared in conformity with generally accepted
     accounting principles.  However, certain information or footnote
     disclosures normally included in financial statements prepared in
     accordance with generally accepted accounting principles have been
     condensed, or omitted, pursuant to the rules and regulations of the
     Securities and Exchange Commission.  In the opinion of management, the
     statements include all adjustments necessary (which are of a normal and
     recurring nature) for the fair presentation of the results of the interim
     periods presented.  These financial statements should be read in
     conjunction with the Company's audited consolidated financial statements
     for the year ended December 31, 1998, as included in the Company's Annual
     Report on Form 10-K filed with the Securities and Exchange Commission on
     March 31, 1999.

2.   Acquisitions

     On January 20, 1998 OCA Merger Corporation, a wholly-owned subsidiary of
     OrCAD, was merged with and into MicroSim Corporation ("MicroSim") and all
     of the issued and outstanding shares of MicroSim common stock and all of
     the outstanding options and other rights to acquire MicroSim common stock
     were converted into and exchanged for 2,427,632 shares of OrCAD common
     stock (the "MicroSim merger"). The MicroSim merger was accounted for as a
     pooling of interests and accordingly, the results of MicroSim have been
     included in the accompanying consolidated financial statements for all
     periods presented. OrCAD incurred merger-related charges of $4,081 in
     connection with the MicroSim merger relating primarily to financial
     advisory fees, legal and accounting services, personnel severance costs,
     the cancellation and continuation of contractual obligations and other
     integration costs.

     On April 15, 1998, OrCAD U.K. Ltd., a wholly-owned subsidiary of OrCAD,
     purchased certain assets and assumed certain liabilities of ARS
     Microsystems Ltd. ("ARS") for $999. ARS was previously the Company's value-
     added reseller in the United Kingdom. The cost of the acquisition was
     allocated on the basis of the estimated fair value of the assets acquired
     and the liabilities assumed. Intangible assets of $925 represents the
     estimated fair value of the customer list acquired from ARS.

     On September 20, 1998, OrCAD entered into an Agreement and Plan of
     Reorganization ("Agreement") with Summit Design, Inc. ("Summit"), a
     publicly-held Delaware corporation, and Hood Acquisition Corp., a Delaware
     corporation and a wholly-owned subsidiary of Summit, pursuant to which
     Summit would acquire OrCAD. On February 2, 1999, OrCAD and Summit announced
     that the Agreement had been terminated by mutual agreement. The Company
     recorded a pre-tax charge to earnings of $995 in the first quarter of 1999
     relating to the termination of the Agreement. This charge represents
     investment banking, legal, accounting, travel, and other expenses OrCAD
     incurred during the merger process.

3.   Basic and Diluted Net Income (Loss) Per Share

     Basic net income (loss) per share was computed using the weighted average
     number of common shares outstanding during the period. Diluted net income
     (loss) per share was computed using the 

                                       6
<PAGE>
 
     weighted average number of common and dilutive common equivalent shares
     outstanding during the period in which the Company reports net income.
     Dilutive common equivalent shares consist of common stock issuable upon
     exercise of stock options. For diluted net income (loss) per share, 153,913
     shares were added to the weighted average number of shares outstanding for
     the first quarter of 1999, representing potential dilution for stock
     options outstanding, calculated using the treasury stock method.

4.   Use of Estimates

     Generally accepted accounting principles require management to make
     estimates and assumptions that affect the reported amount of assets,
     liabilities and disclosure of contingent assets and liabilities at the date
     of the financial statements and the reported amounts of revenues and
     expenses during the reporting periods. Actual results could differ from
     those estimates.

5.   Revenue Recognition

     The Company accounts for revenue recognition in accordance with Statement
     of Position ("SOP") 97-2, "Software Revenue Recognition." SOP 97-2
     generally requires revenue earned on software arrangements involving
     multiple elements to be allocated to each element based on the relative
     fair values of the elements. The revenue allocated to software products is
     generally recognized upon the delivery of the products. The revenue
     allocated to extended support agreements is recognized ratably over the
     term of the maintenance agreement and revenue allocated to service elements
     is recognized as the services are performed. 

     OrCAD's revenue is primarily comprised of revenue from the licensing of its
     software products and from the provision of maintenance, training, and
     consulting services to customers. OrCAD recognizes revenue from software
     licenses after shipment of product and when no significant contractual
     obligations remain outstanding. When OrCAD receives payment prior to
     shipment or fulfillment of a significant obligation to the customer, such
     payments are recorded as deferred revenue and recognized as revenue upon
     shipment or fulfillment of such obligation. A portion of revenue from
     product sales is deferred and recognized ratably over the maintenance
     period, generally three to twelve months. Deferred revenue on extended
     support agreements that are sold separately from product sales is
     recognized ratably over the contract period, generally one year. Revenue
     from customer training, support and other services is recognized as the
     services are performed.

     OrCAD sells its products internationally, exclusive of Japan and the United
     Kingdom, through value-added resellers ("VARs") and recognizes revenue from
     sales to VARs after shipment of product and when no significant contractual
     obligations remain outstanding.

     OrCAD provides a thirty-day right of return and a ninety-day warranty that
     its products are free from defects. Estimated sales returns and estimated
     warranty costs are recorded upon shipment of the product.

6.   Software Development Costs

     Under Statement of Financial Accounting Standards ("SFAS") No. 86, software
     development costs are to be capitalized beginning when a product's
     technological feasibility has been established and ending when a product is
     made available for general release to customers. To date, the establishment
     of technological feasibility of the Company's products has occurred shortly
     before general release, and accordingly no costs have been capitalized.

7.   Income Taxes

     The provision for income taxes has been recorded based on the Company's
     current estimate of the Company's annual effective tax rate.  This rate
     differs from the combined federal and state statutory rate of approximately
     38.5% primarily due to the benefit of the Company's foreign 

                                       7
<PAGE>
 
     sales corporation, research and experimentation tax credits, and certain
     investment income which is exempt from federal tax.

8.   Cash Equivalents and Investments

     Cash equivalents consist of highly liquid investments with original
     maturity dates of three months or less. Cash equivalents are stated at cost
     and consist primarily of money market funds, municipal bonds and municipal
     notes. The carrying amount approximates fair value due to the short-term
     nature of these instruments. Investments, which primarily consist of
     corporate debt securities, auction rate receipts, market auction preferred
     notes, and municipal bonds, are reported at fair value and are classified
     as available-for-sale securities. Those instruments with original maturity
     dates greater than three months and less than one year from the balance
     sheet date are considered to be short-term investments. Instruments with
     original maturity dates greater than one year from the balance sheet date
     are considered to be long-term investments. The cost of securities sold is
     determined using the specific identification method when computing realized
     gains and losses. Fair value is determined using available market
     information.

9.   Comprehensive Income

     The Company accounts for comprehensive income in accordance with SFAS No.
     130, "Reporting Comprehensive Income". This statement establishes standards
     for reporting comprehensive income and its components in the consolidated
     financial statements. The objective of SFAS No. 130 is to report changes in
     equity that result from transactions and economic events other than
     transactions with owners. Comprehensive income is the total of net income
     and all other non-owner changes in equity. The reconciliation of net income
     to comprehensive income is as follows:
 
<TABLE>
<CAPTION>
                                                            Three Months
                                                           Ended March 31,
                                           -------------------------------------------
                                                    1999                     1998
                                           ------------------       ------------------
<S>                                        <C>                      <C>
Net income (loss)                                  $ 498                  $(1,579)
Unrealized loss on investments, net                   (7)                      (6)
Foreign currency translation adjustment               (7)                     (27)
                                           ------------------       ------------------
Comprehensive income (loss)                        $ 484                  $(1,612)
                                           ==================       ==================
</TABLE>


10.  Segment Reporting

     The following table provides segmented financial data for OrCAD, Inc. and
     each of its subsidiaries for the three months ended March 31, 1999 and
     1998.

<TABLE>
<CAPTION>
                                                                   Three Months Ended March 31, 1999
                                     -----------------------------------------------------------------------------------------------
                                                                                                                    Consolidated
                                        OrCAD            OrCAD              OrCAD             Elimination             Financial
                                         Inc.            Japan               U.K.            Adjustments (1)            Data
                                    ------------     ------------     ---------------       -----------------     -----------------
<S>                                   <C>              <C>              <C>                  <C>                  <C>
Product revenue                          $ 6,912           $1,377              $  473                 $(1,044)             $ 7,718
Service revenue                            3,365              329                 228                     (61)               3,861
                                    ------------     ------------     ---------------       -----------------     ------------------
Total revenue                             10,277            1,706                 701                  (1,105)              11,579
Income (loss) before taxes                   579               98                 (78)                    112                  711
Net income (loss)                            445               19                 (78)                    112                  498
Total assets                              57,910            2,578               1,988                    (742)              61,734

</TABLE>

                                       8
<PAGE>
 
<TABLE>
<CAPTION>
                                                                     Three Months Ended March 31, 1998
                                    ------------------------------------------------------------------------------------------------
                                                                                                                      Consolidated
                                         OrCAD             OrCAD             OrCAD              Elimination            Financial
                                         Inc.              Japan              U.K.            Adjustments (1)            Data
                                    ------------      ------------      --------------      ------------------     -----------------
<S>                                 <C>               <C>               <C>                 <C>                    <C>
Product revenue                          $ 8,198           $ 1,485               --                    $ (877)             $ 8,806
Service revenue                            2,824                45               --                       (34)               2,835
                                    ------------      ------------      --------------      -----------------      -----------------
Total revenue                             11,022             1,530               --                      (911)              11,641
Income (loss) before taxes                (2,269)             (160)              --                        --               (2,429)
Net income (loss)                         (1,436)             (143)              --                        --               (1,579)
Total assets                              52,681             1,896               --                       628               55,205
_______
</TABLE>

(1)  The elimination adjustments are necessary to eliminate intercompany
     accounts and transactions in consolidation.

                                       9
<PAGE>
 
Item 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Introduction

     OrCAD develops, markets, and supports software products that assist
electronics designers in the management of component data and in the design of
integrated circuits ("ICs"), printed circuit boards ("PCBs"), field-programmable
gate arrays ("FPGAs"), and complex programmable logic devices ("CPLDs").  ICs,
PCBs, FPGAs and CPLDs are found in a majority of today's electronic products,
and are often referred to as "mainstream" components.  OrCAD's products enable
electronics designers to reduce time to market, improve product capability and
reduce design costs.  OrCAD's Windows-based EDA solutions support the design
process for mainstream components, from schematic capture to programmable logic
design and verification to circuit simulation and printed circuit board layout.
The Company operates primarily in one business segment, comprising the
electronic design automation industry.

     OrCAD is currently in the process of expanding the services it offers to
customers by investing in an Internet-based business initiative ("Internet-based
business initiative") to develop a virtual supply network, accessible through
the Company's website and current products. The latest release of OrCAD products
in December 1998 ("Release 9.0") began this process with an integration of the
Company's entire product line through a new OrCAD Interchange Architecture (the
"Interchange Architecture"). The Interchange Architecture features OrCAD Capture
as the single interface and database for project management and design entry.
The OrCAD Capture interface connects engineers through an Internet Component
Assistant ("ICA") to a choice of products for component information management;
mixed schematic/VHDL, FPGA and CPLD design; simulation and synthesis;
analog/mixed-signal design; and PCB layout. The ICA enables users to access a
growing Internet-parts catalog, complete with data sheets and schematic symbols,
which currently consists of more than 400,000 components supplied by third party
distributors.

Results of Operations

Three Months Ended March 31, 1999 and 1998
 
Total Revenue

     OrCAD derives revenue from the licensing of its software products and from
the provision of maintenance, training, and consulting services to customers.
OrCAD does not expect to derive any significant revenue from the Internet-based
business initiative in 1999.

     Total revenue decreased $62,000, or 1%, to $11.6 million in the first
quarter of 1999 from $11.6 million in the first quarter of 1998. A decline in
product revenue, partially offset by an increase in service revenue, contributed
to the total revenue decline in 1999. As a percentage of total revenue, product
revenue decreased to 67% in the first quarter of 1999 from 76% in the first
quarter of 1998. Conversely, service revenue increased as a percentage of total
revenue to 33% in the first quarter of 1999 from 24% in the comparable period
in 1998.

                                       10
<PAGE>
 
     Product revenue decreased $1.1 million, or 12%, to $7.7 million in the
first quarter of 1999 from $8.8 million in the first quarter of 1998. The
decrease in product revenue in 1999 was primarily attributable to decreased
sales of the OrCAD Pspice and OrCAD Express product families offset by increased
sales of the OrCAD Capture and OrCAD Layout product families. Moreover, a
reduction in product upgrade revenue across all product families contributed to
the decline. This decrease was primarily the result of a new software locking
system that complicated product and upgrade installation, thereby reducing the
efficiency of the Company's sales force.

     Service revenue increased $1.0 million, or 36%, to $3.9 million in the
first quarter of 1999 from $2.8 million in the first quarter of 1998. The
increase in service revenue in 1999 is primarily attributable to an increased
emphasis on the OrCAD PSpice product family maintenance revenue, in addition to
continued focus on training and consulting services, and renewals of extended
support agreements from a larger installed base. Prior to the MicroSim merger,
maintenance on the OrCAD PSpice product family had not been actively marketed.

     Total North American revenue decreased $852,000, or 11%, to $7.1 million in
the first quarter of 1999 from $7.9 million in the first quarter of 1998. Total
revenue generated outside of North America increased $790,000, or 21%, to $4.5
million in the first quarter of 1999 from $3.7 million in the first quarter of
1998. As a percentage of total revenue, North American revenue decreased to 61%
in the first quarter of 1999 from 68% in the comparable period in 1998, and
revenue generated outside of North America increased to 39% in the first quarter
of 1999 from 32% in the comparable period in 1998. The increase in the
proportion of revenue generated outside of North America in 1999 is attributable
to the expansion of the European sales market coupled with a decline in North
American sales.

Cost of Revenue

     The cost of product revenue represents the costs associated with the
licensing of OrCAD's products, such as the expenses of reproducing product
documentation, media, packaging, hardware locks, software locks, shipping costs
and royalties paid to external developers. The cost of product revenue increased
$74,000, or 9%, to $938,000 in the first quarter of 1999 from $864,000 in the
first quarter of 1998. The increase in cost of product revenue in 1999 is
primarily the result of royalty costs associated with synthesis technology built
into the OrCAD Express product line, slightly offset by a reduction in inventory
obsolescence and materials cost. As a percentage of product revenue, cost of
product revenue increased to 12% in the first quarter of 1999 from 10% in the
comparable period in 1998.

     The cost of service revenue includes the costs of providing software
maintenance, such as technical support and the costs of providing consulting and
training services. Cost of service revenue increased $179,000, or 32%, to
$740,000 in the first quarter of 1999 from $561,000 in the first quarter of
1998. The increase in cost of service revenue in 1999 is primarily attributable
to increased sales of maintenance contracts and the expansion of OrCAD's
Enterprise Services organization. As a percentage of service revenue, the cost
of service revenue remained relatively constant at 19% and 20% in the first
quarter of 1999 and 1998, respectively.

Research and Development

     Research and development expenses include the costs of developing new
products and enhancements to existing products. Software development costs are
generally expensed as incurred, as technological feasibility is generally not
established until shortly before the release of a new product and no material
development costs are incurred after establishment of technological feasibility.
Research and 

                                       11
<PAGE>
 
development expenses decreased $148,000, or 5 %, to $2.9 million in the first
quarter of 1999 from $3.0 million in the first quarter of 1998. The decrease in
research and development expenses in 1999 reflects a decrease in personnel
costs. The number of employees in the research and development function
decreased to 98 as of March 31, 1999 from 104 as of March 31, 1998. As a
percentage of total revenue, research and development expenses decreased
slightly to 25% in the first quarter of 1999 from 26% in the comparable period
in 1998. OrCAD expects research and development expenses to increase in absolute
terms.

Marketing and Sales

     Marketing and sales expenses include salaries, commissions and related
personnel costs, and other sales and promotional expenses. Marketing and sales
expenses decreased $100,000, or 2%, to $4.6 million in the first quarter of 1999
from $4.7 million in the first quarter of 1998. This decrease in marketing and
sales expenses primarily resulted from a reduction in advertising, sales meeting
and travel expenditures in the first quarter of 1999, partially offset by
increases in personnel expenses. The number of employees in the marketing and
sales function increased to 123 as of March 31, 1999 from 96 as of March 31,
1998. As a percentage of total revenue, marketing and sales expenses decreased
in the first quarter of 1999 to 39% from 40% in the comparable period in 1998.
OrCAD expects marketing and sales expenses to increase in absolute terms.

General and Administrative

     General and administrative expenses include the costs associated with
OrCAD's executive office, human resources, finance, and administration
functions. General and administrative expenses decreased $195,000, or 14%, to
$1.2 million in the first quarter of 1999 from $1.4 million in the first quarter
of 1998. The decrease in 1999 is primarily the result of a reduction in
administrative costs associated with investor relations and the Company's
allowance for doubtful accounts. As a percentage of total revenue, general and
administrative expenses decreased to 10% in the first quarter of 1999 from 12%
in the comparable period in 1998. OrCAD expects general and administrative
expenses to increase in absolute terms.

Merger and Acquisition Related Charges

     In the first quarter of 1999, OrCAD incurred merger and acquisition related
charges of $995,000 in connection with the termination of the Agreement to merge
with Summit. This charge represents investment banking, legal, accounting,
travel, and other expenses OrCAD incurred during the merger process.

     In the first quarter of 1998, OrCAD incurred merger and acquisition related
charges of $4.1 million in connection with the MicroSim merger relating
primarily to financial advisory fees, legal and accounting services, personnel
severance costs, the cancellation and continuation of contractual obligations,
and other integration costs. Personnel severance costs relate primarily to the
termination of approximately 35 employees, most of whom were employed by
MicroSim, in connection with the elimination and redirection of certain of
MicroSim's general, administrative, sales, and marketing related functions to
OrCAD's Beaverton, Oregon headquarters. OrCAD also recognized certain costs for
asset impairments and the cancellation and continuation of contractual
obligations related primarily to MicroSim's facility lease as a result of the
aforementioned elimination and redirection of operating functions to Beaverton,
Oregon. The total cash outflows for each of the respective merger and
acquisition related charges to date are as follows: personnel severance--$1.6
million; legal, accounting, investment 

                                       12
<PAGE>
 
banking and investor relations--$1.2 million; continuation and cancellation of
contractual obligations--$139,000; asset impairment--$114,000; and other--
$325,000. Payments related to the continuation and cancellation of contractual
obligations continue to be made in accordance with the terms of the agreements
that existed prior to the consummation of the MicroSim merger.

Income from Operations

     Income from operations increased $3.2 million to $291,000 in the first
quarter of 1999 as compared to a loss from operations of $2.9 million in the
first quarter of 1998. Excluding merger and acquisition related charges of
$995,000 and $4.1 million in the first quarter of 1999 and 1998, respectively,
income from operations increased $128,000, or 11%, to $1.3 million in the first
quarter of 1999 from $1.2 million in the comparable period in 1998. The increase
in income from operations in 1999, excluding merger and acquisition related
charges, is the result of reduced research and development, marketing and sales,
and general and administrative expenses measured as a percentage of total
revenue, partially offset by increased costs associated with product and service
revenue.

Other Income, Net

     Other income, net primarily consists of interest income, gains and losses
on the disposal of fixed assets, sublease income, royalty income and foreign
currency transaction gains and losses. Interest income consists primarily of the
earnings on available cash balances and marketable securities, which have
generally been invested in money market funds, auction rate receipts, market
auction preferred notes, municipal bonds, and corporate debt securities. Other
income, net decreased $74,000, or 15%, to $420,000 in the first quarter of 1999
from $494,000 in the first quarter of 1998. In the latter portion of the second
quarter of 1998, OrCAD moved certain of its investments into securities that are
generally exempt from Federal income tax and yield interest at a lower rate than
the taxable investment securities the Company previously held.

Income Tax Expense

     OrCAD's estimated effective tax rate for the first quarter of 1999 and 1998
was 30% and 35%, respectively. These rates differ from the combined federal and
state statutory rate of approximately 38.5% primarily due to the benefit of
OrCAD's foreign sales corporation, utilization of research and experimentation
tax credits, and certain investment income which is exempt from Federal income
tax. Income tax expense increased to $213,000 in the first quarter of 1999 as
compared to an income tax benefit of $850,000 in the first quarter of 1998.

Liquidity and Capital Resources

     Increases and decreases in cash and cash equivalents are the result of the
generation or use of cash in operating, investing and financing activities. Cash
and cash equivalents increased $4.6 million to $13.0 million at March 31, 1999
from $8.5 million at December 31, 1998. Cash provided by operating activities
decreased to $107,000 in the first quarter of 1999 from $687,000 in the first
quarter of 1998. Cash provided by operating activities decreased in 1999
primarily as a result of an increase in other assets and accrued liabilities,
partially offset by a decrease in accounts receivable.

     Cash provided by investing activities increased to $5.4 million in the
first quarter of 1999 as compared to cash used in investing activities of $8.7
million in the comparable period in 1998. This 

                                       13
<PAGE>
 
increase was primarily the result of proceeds from the maturity of investment
securities, partially offset by purchases of investment securities.

     Cash used in financing activities increased to $882,000 in the first
quarter of 1999 from $87,000 in the first quarter of 1998. This increase is
primarily due to the repurchase of shares of the Company's common stock. In
February 1999, OrCAD announced its intention to repurchase up to 500,000 shares
of its outstanding common stock. Under this repurchase program, common stock may
be purchased from time-to-time in the open market and transactions may be
negotiated based on market conditions. Pursuant to this program, as of March 31,
1999, OrCAD had spent a total of $887,000 to purchase 125,000 shares of its
common stock, at prices ranging from $7.08 to $7.12 per share.

     The functional currencies of OrCAD Japan and OrCAD U.K. are the Japanese
yen and the British pound, respectively, both of which must be translated into
U.S. dollars for consolidated financial reporting. Generally, Japanese sales are
denominated in the Japanese yen. During the first quarter of 1999, the value of
the U.S. dollar against the Japanese Yen fell by approximately 8% as compared to
the first quarter of 1998. The weakening of the U.S. dollar in the first quarter
of 1999 resulted in higher reported revenue and operating expenses as compared
to the first quarter of 1998 due to translation of the Japanese yen to U.S.
dollars for consolidated financial reporting. OrCAD U.K. did not begin operating
until the second quarter of 1998, therefore, fluctuations in the British Pound
did not affect the Company's consolidated comparative financial statements.
OrCAD's business and operating results will be impacted by the effects of future
U.S. dollar and foreign currency fluctuations.

Year 2000

     OrCAD is aware of the potential inability of computer programs to
adequately process date information after December 31, 1999 (the "year 2000
issue"). OrCAD has anticipated problems surrounding the year 2000 issue and
modified its current product offerings as necessary to make them year 2000
compliant. The year 2000 issue with regard to OrCAD's product offerings is not
expected to have any material adverse effect on OrCAD's business, financial
condition or results of operations.

     In addition, OrCAD has implemented a program to review the year 2000
compliance status of computer software programs licensed from third parties and
used in its internal business processes to obtain appropriate assurances of year
2000 compliance from manufacturers of these products. OrCAD believes that it
will be able to complete its year 2000 compliance review and make any necessary
modifications prior to the end of 1999. OrCAD further believes that such a
review and modification, if necessary, will not require OrCAD to incur any
additional material expense. However, the compliance of systems acquired from
third parties is dependent on factors outside OrCAD's control. If key systems,
or a significant number of systems fail as a result of year 2000 problems, OrCAD
could incur substantial expense and experience a disruption of business
operations, which could have a material adverse effect on OrCAD's business,
financial condition and results of operations.

     Furthermore, the purchasing patterns of customers and potential customers
may be affected by the year 2000 issue, as companies may be required to devote
significant resources to correct or replace their current software systems for
year 2000 compliance. These expenditures may result in reduced funds available
to purchase OrCAD's software products, which could have a material adverse
effect on the Company's business, financial condition, and results of
operations. There can be no assurance that there will not be any year 2000 issue
related operating problems or material expenses that will occur with 

                                       14
<PAGE>
 
respect to OrCAD's computer systems or in connection with the interface with
OrCAD's major vendors or suppliers.

Variability of Operating Results

     OrCAD's quarterly operating results have in the past varied and may in the
future vary significantly depending on factors such as demand for the Company's
products, increased competition, timing of new product announcements, releases
and pricing changes by OrCAD or its competitors, length of sales cycles, market
acceptance or delays in the introduction of new or enhanced versions of OrCAD's
products, timing of significant orders, impact of the Internet-based business
initiative, seasonal factors, mix of direct and indirect sales, product mix,
changes in tax laws and tax rates, domestic and international economic
conditions, changes in the financial condition of or the relationship with
distributors, merger and acquisition activities, the integration of acquired
entities, and market conditions in the EDA industry.

     In particular, OrCAD's quarterly operating results have in the past
fluctuated as a result of the timing of the introduction of new products and new
versions of existing products to the market, with customers waiting to place
orders until new or enhanced products became available and met quality and
performance levels required for widespread adoption. Quarterly operating results
have also fluctuated as a result of seasonality of customer buying patterns.

     A substantial portion of OrCAD's revenue in each quarter results from
orders booked in that quarter, and a significant portion of a quarter's revenue
is often booked in the final month of a quarter. Revenue from quarter to quarter
is difficult to forecast, as minimal backlog exists at the end of any quarter
because OrCAD's products typically are shipped and revenue recognized promptly
after receipt of customers' orders. OrCAD's expense levels are based, in part,
on its expectations as to future revenue. If revenue levels are below
expectations, operating results are likely to be adversely affected. In
particular, OrCAD's net income may be disproportionately affected by a reduction
in revenue because only a small portion of its expenses vary with its revenue.

     OrCAD has historically experienced growth and expansion of its operations.
However, the Company experienced a slight decline in revenues in both the fourth
quarter of 1998 and the first quarter of 1999 as compared to the same periods in
the prior year. There can be no assurance that OrCAD will be able to grow in
future periods, that it will be able to sustain its historical rate of revenue
growth, or that its operations will remain profitable. Due to the foregoing
factors, OrCAD believes that period-to-period comparisons of its results of
operations are not necessarily meaningful and should not be relied upon as
indications of future performance.

     The Company sells its software products and provides services to customers
throughout the world.  Managing global operations presents challenges associated
with economic conditions, organizational alignment, cultural and language
differences. Moreover, each region in the global EDA market exhibits unique
characteristics that can cause purchasing patterns to differ significantly from
period to period.  Although international markets provide the Company with
significant revenue opportunities, periodic downturns, trade balance issues,
political instability and fluctuations in interest and foreign currency exchange
rates are all risks that could affect global product and service demand.  Many
countries are currently experiencing banking and currency difficulties that
could or have lead to economic recession in those countries and could result in
a decline in the purchasing power of the Company's customers in those countries.
This in turn could result in the cancellation or delay of orders 

                                       15
<PAGE>
 
for the Company's products from customers in those countries, thus, adversely
affecting the Company's business, operating results, and financial condition.
 
     New releases of the Company's products occur from time-to-time which may
exhibit or include new features or characteristics. Unexpected product
attributes or configuration changes may cause confusion or distraction in the
marketplace, adversely affecting the purchasing patterns of the Company's
customers and the ability of the Company's Sales and Technical Support
organizations to efficiently resolve inquiries while maintaining the ability to
pursue new business opportunities. OrCAD experienced a decline in product
revenue in the first quarter of 1999 resulting from the impact of the customer
transition to the Company's latest product release, which included a new
software locking mechanism. There can be no assurance that the new software
locking mechanism, or future product feature or characteristic changes, will not
disrupt revenue streams in future periods, adversely affecting the Company's
business, operating results, and financial condition.
 
     The Company is dependent upon the efforts and abilities of its senior
management, its research and development staff and a number of other key
management, sales, support, technical, and service personnel.  The Company has
recently increased its focus on the offering of professional services to its
customers, the growth of which is directly dependent upon the attraction and
retention of personnel.  The market for highly skilled employees is intensely
competitive.  To the extent that the Company is not able to attract, retain,
train, and motivate highly skilled employees who are able to provide EDA and
other design services that satisfy customers' expectations, the Company's
business, operating results, and financial condition could be materially
adversely affected.

     Acquisitions of complimentary businesses are an integral part of the
Company's overall business strategy.  There are several risks associated with
this strategy, including but not limited to, integration of sales channels,
training and education of sales forces for new product offerings, integration of
product development efforts, retention of key employees, retention of systems of
internal controls, and integration of information systems.  All of these factors
can impair the Company's ability to forecast and meet quarterly revenue and
earnings targets and effectively manage the business for long-term growth.
While the Company is aware of and is addressing such issues, there can be no
assurance that these challenges will be effectively met, and there can be no
assurance that the Company's failure to effectively meet these challenges will
not materially adversely affect the Company's business, operating results, and
financial condition.

     OrCAD's success is dependent, in part, upon its proprietary technology.
The Company generally relies on patents, copyrights, trademarks, and trade
secret laws to establish and maintain its proprietary rights to its technology
and products.  OrCAD has been issued a number of patents.  There can be no
assurance that any of these patents will not be challenged, invalidated or
circumvented, or that any rights granted thereunder will provide competitive
advantages to the Company.  In addition, the laws of some foreign countries may
not permit the protection of OrCAD's proprietary rights to the same extent as
the laws of the United States.

     Because of the existence of a large number of patents in the EDA industry,
there can be no assurance that OrCAD products or any of their components do not
infringe on the patent rights of others.  If a third party were to allege
infringement, OrCAD believes that, based on industry practice, any necessary
license or rights under such patents may be obtained on terms that would not
have a material adverse effect on the Company's business, operating results or
financial condition.  Nevertheless, there can be no assurance that the necessary
licenses would be available on acceptable terms, or at all, or that the Company
would prevail in any such challenge.  Some of the Company's products are
designed to 

                                       16
<PAGE>
 
include software or other intellectual property licensed from third parties. It
may be necessary in the future to seek or renew such licenses. The inability to
obtain certain licenses or other rights on favorable terms could have a material
adverse effect on the Company's business, operating results, or financial
condition.

     Software products of the complexity of OrCAD's may contain errors that may
be detected at any point in the products' life cycles.  The Company has
discovered software errors in certain of its products in the past.  The
correction of these errors has caused delays in shipment.  There can be no
assurance, despite arduous testing by OrCAD, its customers, and potential
customers, that errors will not be detected.  Errors may result in the loss of,
or delay in market acceptance and sales.  Such errors may require the Company to
divert development resources, incur increased service and royalty costs and the
Company may suffer injury to its reputation. There can be no assurance that such
errors will not have a material adverse effect on the Company's business,
financial condition, results of operations, or cash flows.

     OrCAD recently extended its business emphasis to include an Internet-based
business initiative. OrCAD's prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies entering
new and rapidly evolving markets such as online commerce. Such risks for OrCAD
include, but are not limited to, an evolving and unpredictable business model,
investments into the development and implementation of online services, and the
management of its growth. To address these risks, OrCAD must, among other
things, maintain and increase its customer base, implement and successfully
execute its business, marketing and sales strategy, continue to develop and
upgrade its technology and transaction-processing systems, supplement its web 
presence, provide superior customer service and order fulfillment, respond to
competitive developments and attract, retain and motivate senior management,
research and development staff, and a number of key management, sales, support,
technical, and service personnel.

     OrCAD intends to invest resources in developing, acquiring and implementing
technology-driven enhancements to its online services and website, including
continuing to make its user interface faster, more user-friendly and intuitive
while at the same time incorporating additional content and user options within
its new Interchange Architecture. The success of the Internet-based business
initiative will depend in large part upon the continued development of an
infrastructure for providing Internet access and services. The Internet could
lose its viability due to delays in the development or adoption of new standards
and protocols intended to handle increased levels of Internet activity or due to
governmental regulation. There can be no assurance that the infrastructure or
complementary services necessary to make the Internet a viable commercial
marketplace will be developed or that, if they are developed, the Internet will
become a viable marketing and sales channel for the types of products and
services that OrCAD offers in its Internet-based business initiative. If the
infrastructure or complementary services necessary to make the Internet a viable
commercial marketplace are not developed or if the Internet does not become a
viable commercial marketplace, the Company's business, prospects, financial
condition and results of operations may be materially adversely affected.

     The Internet-based business initiative also depends on a number of third
parties, over whom OrCAD has limited control. The Company does not own a gateway
onto the Internet, but instead relies on an Internet service provider to connect
OrCAD's web sites to the Internet. From time to time, OrCAD has experienced
temporary interruptions in its web site connection and also its
telecommunications access. Continuous or prolonged interruptions in the
Company's web site connections or in its telecommunications access could have a
material adverse effect on the Company's business, prospects, financial
condition and results of operations.

                                       17
<PAGE>
 
     In addition, the Internet-based business initiative depends on the
availability of component data supplied from third parties. If the component
data offered by third parties, which are necessary to create the on-line parts
catalog offered by the Interchange Architecture, are not developed, maintained,
or available, or if the Internet does not become a viable commercial marketplace
for such data, the Company's business, prospects, financial condition
and results of operations may be materially adversely affected.

Effect of Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS 133 establishes accounting
and reporting standards requiring that every derivative instrument be recorded
in the balance sheet as either an asset or liability measured at its fair value.
The standard also requires that changes in the derivatives' fair value be
recognized currently in results of operations unless specific hedge accounting
criteria are met. SFAS 133 is effective for fiscal years beginning after June
15, 1999. OrCAD does not expect SAFS 133 to have a material impact on its
consolidated financial statements.

     In December 1998, the American Institute of Certified Public Accountants
("AICPA") issued SOP 98-9, "Modification of SOP 97-2, Software Revenue
Recognition, with Respect to Certain Transactions." This statement of position
amends certain paragraphs of SOP 97-2 to require recognition of revenue using
the residual method for certain transactions. Under the residual method, revenue
is recognized as follows: (1) the total fair value of undelivered elements, as
indicated by vendor specific objective evidence, is deferred and subsequently
recognized in accordance with the relevant sections of SOP 97-2 and (2) the
difference between the total arrangement fee and the amount deferred for the
undelivered elements is recognized as revenue related to the delivered elements.
SOP 98-9 is effective for fiscal years beginning after March 15, 1999. Also, the
provisions of SOP 98-4 will continue to be deferred until the date SOP 98-9
becomes effective. OrCAD does not expect SOP 98-9 to have a material impact on
its consolidated financial statements.

Item 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

     The Company's exposure to market risk for changes in interest rates relates
primarily to its investment portfolio. The Company mitigates its risk by
diversifying its investments among high credit quality securities in accordance
with the Company's investment policy. The Company does not hedge any interest
rate exposures.

Foreign Currency Risk

     The Japanese yen is the functional currency of the Company's subsidiary in
Japan and the British pound is the functional currency of the Company's
subsidiary in the U.K. The Company occasionally enters into foreign exchange
forward contracts to hedge certain balance sheet exposures and inter-company
balances against future movements in foreign exchange rates. As of March 31,
1999, there were no forward contracts outstanding. The Company also maintains
cash balances denominated in currencies other than the U.S. dollar. If foreign
exchange rates were to weaken against the U.S. dollar, 

                                       18
<PAGE>
 
the Company believes that the fair value of these foreign currency amounts would
decline by an immaterial amount.

PART II - OTHER INFORMATION

Item 1:  LEGAL PROCEEDINGS

     OrCAD is currently a party to an arbitration proceeding instituted by
Deutsch Technology Research ("DTR") before the American Arbitration Association.
DTR seeks to recover more than $1.0 million in damages from OrCAD in this
arbitration. DTR's claims arise under an agreement OrCAD and DTR entered into in
March 1997 ("DTR Agreement"), pursuant to which OrCAD agreed to market DTR's
products and not to market competing products. In January 1998, OrCAD merged
with MicroSim Corporation ("MicroSim"), a company that sold products which
competed with DTR's products. OrCAD's merger with MicroSim breached the DTR
Agreement. OrCAD has attempted, without success, to negotiate a settlement with
DTR. An arbitrator has been assigned for this dispute and a hearing date has
been set for September 1999. In addition, DTR filed a lawsuit in March 1999
against MicroSim in Santa Clara County Superior Court alleging that MicroSim
tortiously interfered with DTR's contractual and prospective relationship with
OrCAD.

     From time to time, OrCAD becomes involved in ordinary, routine or
regulatory legal proceedings incidental to the business of OrCAD. OrCAD is not
presently a party to any litigation, the outcome of which is expected to have a
material adverse effect on OrCAD's business, financial condition or results of
operations.

Item 2:  CHANGES IN SECURITIES

     During the first quarter of 1999, the Company sold securities without
registration under the Securities Act of 1933, as amended (the "Securities Act")
upon the exercise of stock options granted under the Company's stock option
plans.  An aggregate of 4,552 shares of Common Stock were issued at exercise
prices ranging from $.35 to $3.50.  These transactions were effected in reliance
upon Rule 701 promulgated pursuant to the authority of the Securities and
Exchange Commission under Section 3(b) of the Securities Act.


Item 6:  EXHIBITS AND REPORTS ON FORM 8-K
 
         (a)  Exhibits:

              27.1  Financial Data Schedule

         (b)  Reports on Form 8-K

     The Company filed a Current Report on Form 8-K on February 3, 1999,
reporting the termination of the Agreement and Plan of Reorganization dated
September 20, 1998 among Summit Design, Inc., Hood Acquisition Corp., and OrCAD.
No financial statements were filed as part of this report.

                                      19
<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.

                                    OrCAD, Inc.



            Dated: May 14, 1999     /s/  P. David Bundy
                                    -------------------------
                                    Vice President, Finance and Secretary
                                    (Principal Financial and Accounting Officer)

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