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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON February 4, 1998
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DATAWORKS CORPORATION
(Exact name of Registrant as specified in its charter)
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California 33-0209937
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
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5910 Pacific Center Boulevard, Suite 300
San Diego, CA 92121
(Address of principal executive offices)
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1995 EQUITY INCENTIVE PLAN
1995 EMPLOYEE STOCK PURCHASE PLAN
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(Full title of the plans)
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Stuart W. Clifton
Chairman, President and Chief Executive Officer
DATAWORKS CORPORATION
5910 Pacific Center Boulevard, Suite 300
San Diego, California 92121
(Name and address of agent for service)
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(619) 546-9600
(Telephone number, including area code, of agent for service)
Copies to:
Frederick T. Muto, Esq.
Thomas A. Coll, Esq.
COOLEY GODWARD LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
(619) 550-6000
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 1,025,000 shares $15.00-20.9375 $20,270,138 $5,980
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c). The price per share and the
aggregate offering price are calculated on the basis of (a) the weighted
average of $15.00 - $18.375, the exercise price for shares subject to
outstanding options previously granted under the 1995 Equity Incentive
Plan, as amended (the "Equity Plan") and the 1995 Non-Employee Directors'
Plan, as amended (the "Directors' Plan") (collectively, the "Plans"), and
(b) the average of the high and low sales prices of Registrant's Common
Stock on January 26, 1998 as reported on the Nasdaq National Market for
shares (i) issuable under the Plans and (ii) registered for resale purposes
only pursuant to the Form S-3 Prospectus contained herein. Of the 1,025,000
shares registered hereby, 875,292 shares are reserved for issuance under
the Plans and 149,708 shares are registered for resale purposes only
pursuant to the Form S-3 Prospectus contained herein. The following chart
shows the calculation of the registration fee:
<TABLE>
<CAPTION>
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OFFERING PRICE PER AGGREGATE OFFERING
TYPE OF SHARES NUMBER OF SHARES SHARE PRICE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares issuable pursuant
to outstanding options
under the Equity Plan 282,873 $15.00 - $18.375 $ 4,792,791
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Shares issuable pursuant
to outstanding options
under the Directors' Plan 21,666 $18.125 $ 392,696
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Shares available for grant
pursuant to the Plans 570,753 $20.9375 $11,950,140
- ------------------------------------------------------------------------------------------------
Shares registered for resale
under S-3 Prospectus 149,708 $20.9375 $ 3,134,511
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</TABLE>
<PAGE> 3
PROSPECTUS
149,708 SHARES
DATAWORKS CORPORATION
COMMON STOCK
----------------
This Prospectus relates to 149,708 shares (the "Shares") of Common Stock, no
par value per share (the "Common Stock"), of DataWorks Corporation ("DataWorks"
or the "Company"). The Shares may be offered by certain shareholders of the
Company (the "Selling Shareholders") from time to time in transactions on the
Nasdaq National Market, in privately negotiated transactions or a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Shareholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Selling Shareholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling Shareholders
will be received by the Company. The Company has agreed to bear certain expenses
in connection with the registration and sale of the Shares being offered by the
Selling Shareholders. The Company has agreed to indemnify the Selling
Shareholders against certain liabilities, including certain liabilities under
the Securities Act of 1933, as amended. See "Plan of Distribution."
The Common Stock of the Company is traded on the Nasdaq National Market under
the Symbol "DWRX." On February 3, 1998, the last sale price for the Common
Stock as reported by the Nasdaq National Market was $22.50 per share.
----------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 4, 1998
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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH
IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at
the Commission's following Regional Offices: Chicago Regional Office, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661; and New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048. Copies
of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission also maintains a site on the World Wide
Web that contains reports, proxy and information statements and other
information regarding the Company. The address for such site is
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement under the
Securities Act with respect to the Common Stock offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement and
the exhibits and schedules thereto, which may be inspected without charge at,
and copies thereof may be obtained at prescribed rates from, the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1997, the Company's Proxy Statement for the
1997 Annual Meeting of Shareholders filed pursuant to Rule 14a-6 of the Exchange
Act, the Company's Prospectus/Joint Proxy Statement dated August 22, 1997, the
Company's Registration Statement on Form S-4
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(No. 333-33451) filed on August 12, 1997 (as amended), the Company's Current
Report on Form 8-K dated July 31, 1997, the Company's Current Report on Form 8-K
dated September 29, 1997, the Company's Current Report on Form 8-K dated
February 3, 1998, and the description of the common stock contained in the
Company's Registration Statement on Form 8-A filed on September 20, 1995, each
as filed by the Company with the Commission, are hereby incorporated by
reference in this Prospectus except as superseded or modified herein. All
documents filed with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus. The Company will provide
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the documents that have been or may be incorporated by reference
herein (other than exhibits to such documents which are not specifically
incorporated by reference into such documents). Such requests should be directed
to the Chief Financial Officer at the Company's principal executive offices at
5910 Pacific Center Boulevard, Suite 300, San Diego, California 92121, (619)
546-9600.
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THE COMPANY
Except for the historical information contained or incorporated by reference
herein, this Prospectus (and the information incorporated herein by reference)
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed here or
incorporated by reference. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in the following
section, as well as those discussed elsewhere in this Prospectus and any other
documents incorporated herein by reference.
DataWorks Corporation ("DataWorks" or the "Company") develops, markets,
implements and supports open systems, client/server-based Enterprise Resource
Planning ("ERP") software for mid-range discrete manufacturing companies with
annual revenues between $3 million and $1 billion. The Company's products and
services facilitate enterprise-wide management of resources and information and
allow mid-range manufacturers to reduce order fulfillment cycle times, improve
operating efficiencies and measure critical company performance against defined
plan objectives. DataWorks' products enable its customers to manage
make-to-stock and make-to-order production methods, as well as multiple hybrid
or "mixed mode" production methods, within a single manufacturing site or across
multiple sites. The Company's products also help customers adapt to growth,
changing levels of operations, and business process re-engineering, which is
becoming commonplace among manufacturing concerns.
The Company was incorporated in California in 1986. The Company's executive
offices are located at 5910 Pacific Center Boulevard, Suite 300, San Diego,
California 92121, and its telephone number is (619) 546-9600.
RECENT ACQUISITIONS
In September 1996, the Company acquired DCD Corporation ("DCD") in a
stock-for-stock transaction accounted for as a pooling-of-interests.
Accordingly, the financial results of DCD have been consolidated with the
financial results of the Company included in this Prospectus. In connection with
the acquisition, the shareholders of DCD received approximately 1.8 million
shares of the Common Stock of the Company, which constituted approximately 22.6%
of the outstanding Common Stock immediately after the acquisition.
DCD designs, develops, markets and supports software for use by lower tier
mid-range manufacturers in the make-to-order manufacturing industry. The
principal products acquired by DataWorks in the transaction were Vista and
Vantage. The Company believes that this acquisition allows it to achieve several
important strategic objectives, including both the addition of complementary
products to better serve various markets and a significant expansion of the
Company's customer and revenue base.
In September 1997, the Company acquired Interactive Group, Inc. in a
stock-for-stock transaction accounted for as a pooling of interests the
("Interactive Merger"). In connection with the acquisition, the stockholders of
Interactive received approximately 3,700,000 shares of
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Common Stock of the Company, which constituted approximately 27% of the
outstanding Common Stock immediately after the acquisition. Option and warrant
holders of Interactive received rights to acquire an aggregate of approximately
421,391 shares of Common Stock of the Company.
Interactive develops, markets, implements and supports integrated business
information systems that enable discrete manufacturers to manage their
enterprise-wide information requirements. Interactive's primary software
product, INFOFLO, supports make-to-order and make-to-stock manufacturers in
their business re-engineering efforts by providing customer-oriented
capabilities that allow manufacturers to reduce order fulfillment cycle times,
improve operating efficiencies and measure critical company performance against
defined plan objectives. There can be no assurance that the Interactive Merger
will benefit the Company in the long term. The Interactive Merger and the
business and other relevant information with respect to Interactive are
described in the Company's Prospectus/Joint Proxy Statement dated August 22,
1997, the Company's Registration Statement on Form S-4 (No. 333-33451) filed on
August 12, 1997 (as amended), and the Company's Current Report on Form 8-K dated
September 29, 1997, each of which is incorporated herein by reference.
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RISK FACTORS
An investment in the shares being offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to other information contained in this Prospectus and in
any other documents incorporated herein by reference in evaluating an investment
in the shares of Common Stock offered hereby.
Fluctuations in Quarterly Operating Results. The Company has experienced
significant fluctuations in its revenues and operating results from quarter to
quarter and anticipates that it will continue to experience such quarterly
fluctuations. The Company's revenues and operating results have generally been
higher in the fourth quarter than in any preceding quarter of the year. The
Company believes that fourth quarter revenues are positively impacted by
year-end capital purchases by some large corporate customers, as well as by the
Company's sales compensation plans. Seasonal factors, which the Company believes
are common in the computer software industry, are likely to increase as the
Company focuses on larger corporate accounts. As a result of these seasonal
factors, first quarter revenues in any year are typically lower than revenues in
the immediately preceding fourth quarter. In addition, the Company's revenues
occur predominantly in the third month of each quarter and tend to be
concentrated in the latter half of that third month. Accordingly, the Company's
quarterly results of operations are difficult to predict, and delays in product
delivery or in closings of sales near the end of a quarter could cause quarterly
revenues and, to a greater degree, net income to fall substantially short of
anticipated levels. Factors that may contribute to such fluctuations in addition
to seasonal factors include: the number of new orders and product shipments; the
size and timing of individual orders; the timing of shipment of hardware or
database software by third party vendors necessary in order for the Company to
recognize revenues; the timing of introduction of products or product
enhancements by the Company, the Company's competitors or other providers of
hardware, software and components for the Company's market; lengthy sales
cycles; competition and pricing in the software industry; market acceptance of
new products; reduction in demand for existing products and shortening of
product life cycles as a result of new product introductions by competitors;
product quality problems; customer order deferrals in anticipation of new
products; changes in customer budgets; changes in Company strategy; changes in
Company operating expenses; personnel changes; fluctuations in foreign currency
exchange rates; changes in the mix of products sold; conditions or events in the
manufacturing industry; and general economic conditions.
The Company's sales figures for DataFlo and ManFact II, the Company's
principal products, generally reflect a relatively high amount of revenues per
order. The loss or delay of individual orders for these products, therefore,
could have a more significant impact on the revenues and quarterly results of
the Company than on those of companies with higher sales volumes and lower
revenues per order. The Company's software products generally are shipped as
orders are received, and revenues are recognized upon delivery of the products,
provided no significant vendor obligations exist and collection of the related
receivable is deemed probable. As a result, software license revenues in any
quarter are substantially dependent on orders booked and shipped in that
quarter. The timing of license revenues derived from sales of the Company's
DataFlo and ManFact II products is difficult to predict because of the length of
the sales cycle for
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these products, which is typically three to nine months from the initial
contact. Because the Company's operating expenses are based on anticipated
revenue trends and because a high percentage of the Company's expenses are
relatively fixed, a delay in the recognition of revenue from a limited number of
license transactions could cause significant variations in operating results
from quarter to quarter and could result in losses. To the extent such expenses
precede, or are not subsequently followed by, increased revenues, the Company's
operating results would be materially adversely affected. In addition, the
achievement of anticipated revenues is substantially dependent on the ability of
the Company to attract, on a timely basis, and retain skilled personnel,
especially sales, service and implementation personnel. As a result of these
factors, the Company's revenues for any quarter are subject to significant
variation and difficult to predict; and period-to-period comparisons of the
Company's results of operations are not necessarily meaningful and should not be
relied upon as indications of future performance. Fluctuations in operating
results may also result in volatility in the price of the Company's Common
Stock. See "--Ability to Recruit Sales, Service and Implementation Personnel,"
"--Dependence on Key Employees" and "--Possible Volatility of Stock Price."
Integration of Operations. The Company acquired DCD in September 1996, and
Interactive in September 1997. The process of rationalizing product lines,
management services, administrative organizations, facilities, management
information systems and other aspects of operations, while managing a larger and
geographically expanded entity, presents a significant challenge to the
management of DataWorks. There can be no assurance that the Company's current
integration plans, including integration of the Company's and Interactive's
businesses, will be successful or that the anticipated benefits of business
combinations will be fully realized. The dedication of management resources to
such integration may detract attention from the day-to-day business of the
Company. The difficulties of integration may be increased by the necessity of
coordinating geographically separated organizations, integrating personnel with
disparate business backgrounds and combining different corporate cultures.
Integration has caused the Company to incur certain additional expenses, and
there can be no assurance, that there will not continue to be substantial costs
associated with the integration process, that such activities will not result in
a decrease in revenues or that there will not be other material adverse effects
of these integration efforts. Such effects could materially reduce the earnings
of the Company. The Company incurred acquisition and related costs totaling $3.7
million in the third quarter of 1996 in connection with the acquisition of DCD
and $15.6 million in the third quarter of fiscal 1997 in connection with the
acquisition of Interactive, including transaction and integration costs. There
can be no assurance that DataWorks will not incur additional charges in
subsequent quarters to reflect costs associated with its acquisitions. See "--
Management of Growth."
Competition. The business information systems industry is intensely
competitive, rapidly changing and significantly affected by new product
offerings and other market activities. A number of companies offer products
similar to the Company's products, which are directed at the market for ERP
systems. Many of the Company's existing competitors, as well as a number of
potential competitors, have more established and larger marketing and sales
organizations, significantly greater financial and technical resources and a
larger installed base of customers than the Company. In addition, potential
customers that have a large installed base of legacy systems may resist
committing the time and resources necessary to convert to an open systems-
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based client/server software product. The Company has no proprietary barriers to
entry which would limit competitors from developing similar products or selling
competing products in the Company's markets. Accordingly, there can be no
assurance that such competitors will not offer or develop products that are
superior to the Company's products or that achieve greater market acceptance. In
addition, suppliers of relational database management systems ("RDBMS") or
companies that develop management information software applications for large
multinational manufacturers are beginning to market to the upper tier of the
mid-range market targeted by the Company or otherwise develop applications that
compete effectively in the Company's markets. Furthermore, the Company intends
to focus its marketing and product development efforts increasingly toward the
upper end of its target market, which could result in increased competition. As
a result, competition (including price competition) is likely to increase
substantially, which may result in price reductions and loss of market share. In
addition, potential customers may increasingly demand that ERP systems
incorporate certain popular RDBMS software not currently integrated into certain
of DataWorks' product offerings that are offered by its competitors. As the
client/server computing market expands, a large number of companies, some with
significantly greater resources than the Company, may enter the market or
increase their market share by acquiring or entering into alliances with
competitors of the Company. There can be no assurance that the Company will be
able to compete successfully against its competitors or that the competitive
pressures faced by the Company will not adversely affect its financial
performance.
The Company has a large number of competitors that vary in size, primary
computer platforms and overall product scope. Within its market, the primary
competition comes from independent software vendors in four distinct groups
including (i) large multinational system developers in the upper tier of the
Company's mid-range market, including Baan Company, Oracle Corporation
("Oracle") and qad, Inc., (ii) companies offering high levels of functionality
on the AS/400 platform such as System Software Associates, Inc. and J.D. Edwards
Company, (iii) traditional mid-range market sector firms such as ROI Systems and
Symix Systems, Inc., and (iv) lower priced PC network-based offerings from
companies such as Fourth Shift Corporation, Lilly Software Associates and Macola
Software, Inc. There is also a large number of regional manufacturing software
suppliers that leverage as competitive advantages their concentrated local
support, reputation and, typically, lower price.
The Company's principal market is highly fragmented and consists of a few
large multinational suppliers and a much larger number of small regional
competitors. The Company believes that its industry will experience
consolidation as business information systems become more complex and as more
manufacturers adopt sophisticated business information systems, forcing smaller
companies in the industry, such as the Company, to specialize or merge with
their competitors. In order to compete effectively in the broad markets which
the Company presently targets, the Company will need to continue to grow and
attain sufficient size to ensure that it can develop new products on a timely
basis in response to evolving technology and new customer demands and can sell
such products to a variety of manufacturing industries worldwide. No assurance
can be given that the Company will be able to grow sufficiently to enable it to
compete effectively. The Company anticipates that a significant source of future
competition may be from larger manufacturing software companies that may tailor
their products for the mid-
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range market. Only a few of the larger and better capitalized software systems
companies currently compete in the Company's targeted market. There can be no
assurance that such companies will not develop products that are superior to the
Company's products or that achieve greater market acceptance.
Ability to Recruit Sales, Service and Implementation Personnel. The ability
to achieve anticipated revenues is substantially dependent on the ability of the
Company to attract on a timely basis and retain skilled personnel, especially
sales, service and implementation personnel. In addition, the Company believes
that its future success will depend in large part on its ability to attract and
retain highly skilled technical, managerial, marketing and professional services
personnel to ensure the quality of products and services provided to its
customers. Competition for such personnel, in particular for product
development, sales and implementation personnel, is intense, and the Company
competes in the market for such personnel against numerous companies, including
larger, more established companies with significantly greater financial
resources than the Company. There can be no assurance that the Company will be
successful in attracting and retaining skilled personnel. The Company's
inability to attract and retain qualified employees could have a material
adverse effect on the Company's business and operations. See "--Dependence on
Key Employees" and "--Rapid Technological Change and New Products."
Introduction of ECS System. The Company currently anticipates commencing beta
shipments of the initial phase of its ECS system in early 1998. However, there
can be no assurance that the Company will commence such shipments in 1998, or at
all. In addition, in connection with the Interactive Merger, the Company
acquired certain Oracle-based products which will allow the Company to redirect
and focus its ECS project to the Microsoft centric sequel server-based product.
This redirection creates an opportunity for the Company to cease development of
certain features of the ECS product.
The Company has limited experience in selling products to customers in the
upper tier of the mid-range manufacturing market and anticipates that selling
products to such customers will result in a longer sales cycle and will require
a different strategy than that employed by the Company in selling products to
customers in the mid-tier market. For example, as part of its upper tier
marketing strategy, the Company is exploring potential relationships with third
party integrators to facilitate implementation of the ECS system. There can be
no assurance that any such relationships will be formed or, if formed, will
prove beneficial to the Company. Accordingly, even if customer shipments of the
ECS system are timely commenced, there can be no assurance that the Company will
be successful in effectively marketing the ECS system or that the ECS system
will achieve market acceptance. See "--Rapid Technological Change and New
Products."
Management of Growth. The Company's business has grown rapidly, both
internally and through acquisitions. The Company's business will grow
dramatically as a result of the Interactive Merger. There can be no assurance
that the Company will be able to manage its recent growth or growth attributable
to the Interactive Merger, and assimilate its new employees and products
successfully. To manage its growth effectively, the Company will be required to
expand, train and manage its employee base, enhance its operating and financial
systems, and
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effectively expand its product line. If the Company continues to grow, there can
be no assurance that the management skills and systems currently in place will
be adequate or that the Company will be able to manage any additional growth
effectively. See "--Integration of Operations."
Dependence on Key Employees. The Company's continued success depends to a
significant extent upon its ability to retain certain key employees, including
Stuart W. Clifton, Norman R. Farquhar, Robert W. Brandel, Robert C. Vernon and
Mark Hellinger. The loss of certain key employees or the Company's inability to
attract and retain other qualified employees could have a material adverse
effect on the Company's business and operations. See "--Ability to Recruit
Sales, Service and Implementation Personnel" and "--Rapid Technological Change
and New Products."
Rapid Technological Change and New Products. The market for the Company's
software products is characterized by rapid technological advances, evolving
industry standards, changes in end-user requirements and frequent new product
introductions and enhancements. The introduction of products embodying new
technologies, such as the planned introduction of the initial phase of the ECS
system, and the emergence of new industry standards, could render the Company's
existing products and products currently under development obsolete and
unmarketable. Accordingly, the Company's future success will depend upon its
ability to enhance its current products and develop and introduce new products
that keep pace with technological developments, satisfy varying end-user
requirements and achieve market acceptance. Any failure by the Company to
anticipate or respond adequately to technological developments or end-user
requirements, or any significant delays in product development or introduction,
could damage the Company's competitive position and have an adverse effect on
revenues. There can be no assurance that the Company will be successful in
developing and marketing new products, including the ECS system, or product
enhancements on a timely basis or that the Company will not experience
significant delays in the future, which could have a material adverse effect on
the Company's business and operations. In addition, there can be no assurance
that new products or product enhancements developed by the Company will achieve
market acceptance. The Company may need to increase the size of its product
development staff in the near term to meet these challenges. There can be no
assurance that the Company will be successful in hiring and training an adequate
number of qualified product development personnel to meet its needs. See
"--Introduction of ECS System," "--Dependence on Key Employees."
Software programs as complex as those offered by the Company may contain
undetected errors or "bugs" when first introduced or as new versions are
released that, despite testing by the Company, are discovered only after a
product has been installed and used by customers. There can be no assurance that
errors will not be found in future releases of the Company's software, or that
any such errors will not impair the market acceptance of these products and
adversely affect operating results. Problems encountered by customers installing
and implementing new releases or with the performance of the Company's products
could have a material adverse effect on the Company's business and operations.
Dependence on Manufacturing Industry. The Company's business depends
substantially upon the capital expenditures of mid-range discrete manufacturers,
which in part depend upon the
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demand for such manufacturers' products. A recession or other adverse events
affecting the manufacturing industry in the United States or other markets
served by the Company could affect such demand, forcing manufacturers in the
Company's target markets to curtail or postpone capital expenditures on business
information systems. Any such change in the amount or timing of capital
expenditures in its target markets could have a material adverse effect on the
Company's business and operations.
Dependence on Third Party Software and Hardware. Most of the Company's
products incorporate and use software products and computer hardware and
equipment developed by other entities. The RDBMS currently used in the Company's
products are those which the Company believes are best suited for the particular
applications required by the mid-range discrete manufacturers. These RDBMS have
been developed by UniData, Inc. (previously Millsoft, Inc.) ("UniData"), VMark
Software, Inc. ("VMark"), Progress Software Corporation and Microsoft
Corporation ("Microsoft"). The operating systems on which the Company's products
can function (UNIX, SCO-UNIX, UnixWare, VMS and Microsoft NT) have been
developed or are owned by Novell Corporation ("Novell"), Digital Equipment
Corporation ("DEC") and Microsoft. The computer hardware and related equipment
sold as part of the Company's turnkey systems are manufactured by
Hewlett-Packard Company ("Hewlett-Packard"), International Business Machines
Corporation ("IBM"), DEC and others. Further, Interactive's products incorporate
and use software products and computer hardware and equipment developed by other
entities, which will increase the Company's dependence on third-party vendors.
There can be no assurance that all of the entities with which the Company does
or will do business will remain in business, that such entities will continue to
support these product lines, that their product lines will remain viable or that
these products will otherwise continue to be available to the Company. If any of
these entities ceases to do business or abandons or fails to enhance a
particular product line, the Company may need to seek other suppliers. This
could have a material adverse effect on the Company's business and operations.
In addition, there can be no assurance that the Company's current suppliers will
not significantly alter their pricing in a manner adverse to the Company.
International Operations and Risk of International Sales. The Company derived
approximately 4% of its total revenues from operations outside North America in
1996. Interactive derived approximately 32% of its total revenues in 1996 from
such sources, and the Company will likely increase its emphasis on international
sales. The international business is subject to various risks common to
international activities, including exposure to currency fluctuations, political
and economic instability, the greater difficulty of administering business
abroad and the need to comply with a wide variety of foreign import and United
States export laws and regulatory requirements. The Company does not currently
engage in foreign currency hedging transactions but may hedge a portion of its
currency exposure in the future as management deems appropriate.
Intellectual Property and Proprietary Rights. The Company relies on a
combination of copyright, trademark and trade secret laws, employee and
third-party nondisclosure agreements and other industry standard methods for
protecting ownership of its proprietary software. There can be no assurance,
however, that, in spite of these precautions, an unauthorized third party will
11
<PAGE> 14
not copy or reverse-engineer certain portions of the Company's products or
obtain and use information that the Company regards as proprietary. The Company
provides the source code for its application software under licenses to its
customers to enable them to customize the software to meet particular
requirements. Although the Company's source code license contains
confidentiality and nondisclosure provisions, there can be no assurance that
such customers will take adequate precautions to protect the Company's source
code or other confidential information. In addition, the laws of some foreign
countries do not protect the Company's proprietary rights to the same extent as
do the laws of the United States. There can be no assurance that the mechanisms
used by the Company to protect its software will be adequate or that the
Company's competitors will not independently develop software products that are
substantially equivalent or superior to the Company's software products.
The Company has and may from time to time receive notices from third parties
claiming that the Company's products infringe upon third party proprietary
rights. The Company expects that, as the number of software products in the
industry increases and the functionality of these products further overlaps,
software products will increasingly be subject to such claims. Any such claim,
with or without merit, could result in costly litigation and require the Company
to enter into royalty or licensing arrangements. Such royalty or license
arrangements, if required, may not be available, if at all, on terms acceptable
to the Company.
Product Liability. Because the Company markets and sells its software
products on a turnkey basis, which includes rendering professional consulting
services, the Company incurs significant risks of professional and other
liability. No assurance can be given that the limitations of liability set forth
in the Company's license agreements or other contracts would be enforceable or
would otherwise protect the Company from liability for damages to a customer
resulting from a defect in one of the Company's products or arising as a result
of professional services rendered by the Company. Such a claim, if successful
and of sufficient magnitude, could have a material adverse effect on the
Company's business and operations.
Influence of Existing Shareholders. As of January 28, 1998, the Company's
executive officers, directors and their affiliates beneficially owned
approximately 23% of the Company's outstanding shares of Common Stock. As a
result, these shareholders, if acting together, would be able to influence
matters requiring approval by the shareholders of the Company, including the
election of a majority of the directors. The voting power of these shareholders
under certain circumstances could have the effect of delaying or preventing a
change in control of the Company. The Company has entered into agreements with
its executive officers and directors indemnifying them against losses they may
incur in legal proceedings arising from their service to the Company.
Possible Volatility of Stock Price. The market price of the Company's Common
Stock has fluctuated since its initial public offering in October 1995. The
price of the Company's stock may be subject to significant fluctuations in the
future in response to variations in quarterly operating results of the Company,
announcements of new products by the Company or by its competitors, and general
trends in the software industry, as well as fluctuations in the stock market
that are unrelated to the operating performance of particular companies. Also,
the
12
<PAGE> 15
Company's revenues or operating results in future quarters may be below the
expectations of public market securities analysts and investors, which could
cause the price of the Company's stock to decline, perhaps substantially. Such
stock price and market fluctuations could adversely affect the Company.
Effect of Certain Charter Provisions. The Company's Board of Directors has
the authority to issue up to 5,000,000 shares of Preferred Stock and to
determine the price, rights, preferences and privileges of those shares without
any further vote or action by the shareholders. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
the holders of any Preferred Stock that may be issued in the future. The
issuance of Preferred Stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. The Company has no present plan to
issue any shares of Preferred Stock.
SELLING SHAREHOLDERS
The following table sets forth information regarding the Selling
Shareholders and the respective number of shares of Common Stock beneficially
owned by each Selling Shareholder that may be offered pursuant to this
Prospectus. Such information has been obtained from the Selling Shareholders:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SELLING SHAREHOLDER NUMBER OF SHARES
- -------------------------------------------------------------------------------
<S> <C>
Barney, Mitchell 1,862
- -------------------------------------------------------------------------------
Barry, David D 2,070
- -------------------------------------------------------------------------------
Batten, Paul 2,114
- -------------------------------------------------------------------------------
Beres, Kenneth 902
- -------------------------------------------------------------------------------
Bernier, Robert 777
- -------------------------------------------------------------------------------
Bodine, Kathleene 669
- -------------------------------------------------------------------------------
Borg, Richard 612
- -------------------------------------------------------------------------------
Borg, William 1,704
- -------------------------------------------------------------------------------
Bosley, John 1,130
- -------------------------------------------------------------------------------
Bott, Clare 750
- -------------------------------------------------------------------------------
Brandt, Goetz 965
- -------------------------------------------------------------------------------
Bressler, Paul 890
- -------------------------------------------------------------------------------
Bromberg, Susan 672
- -------------------------------------------------------------------------------
Cary, William 1,589
- -------------------------------------------------------------------------------
Costa, Robert 717
- -------------------------------------------------------------------------------
Cranford, Scott 649
- -------------------------------------------------------------------------------
Dickinson, Kenneth 1,023
- -------------------------------------------------------------------------------
Dobransky, Mark 1,285
- -------------------------------------------------------------------------------
Eakes, Travis 1,156
- -------------------------------------------------------------------------------
Eilers, Jon 1,743
- -------------------------------------------------------------------------------
Farquhar, Norman R 2,616
- -------------------------------------------------------------------------------
Foley, Katharine 992
- -------------------------------------------------------------------------------
Freeze, Greg 832
- -------------------------------------------------------------------------------
Gallagher, Craig 352
- -------------------------------------------------------------------------------
George, Andrew 844
- -------------------------------------------------------------------------------
Ghattas-Smith, Stephen 730
- -------------------------------------------------------------------------------
Grad, Michael K 958
- -------------------------------------------------------------------------------
Hiraoka, John 2,022
- -------------------------------------------------------------------------------
Hiraoka, Marie 2,611
- -------------------------------------------------------------------------------
Hiraoka, Scott 392
- -------------------------------------------------------------------------------
Hollinger, David 695
- -------------------------------------------------------------------------------
Korsen, Aaron 1,666
- -------------------------------------------------------------------------------
Lambert, Keith 706
- -------------------------------------------------------------------------------
Langston, Douglas 862
- -------------------------------------------------------------------------------
Leader, Howard 1,592
- -------------------------------------------------------------------------------
Lewis, Priscilla 1,154
- -------------------------------------------------------------------------------
Mintz, Mike 869
- -------------------------------------------------------------------------------
Misenhelter, John 807
- -------------------------------------------------------------------------------
Moen, Phillip A 3,088
- -------------------------------------------------------------------------------
Morrison, Robert 852
- -------------------------------------------------------------------------------
Olcha, Keith 973
- -------------------------------------------------------------------------------
Palmer, Lee Bradley 1,407
- -------------------------------------------------------------------------------
Parsons, Donna 3,383
- -------------------------------------------------------------------------------
Pitzer, Andrea 791
- -------------------------------------------------------------------------------
Pungello, Paul J 1,022
- -------------------------------------------------------------------------------
Reul, Thomas F 1,413
- -------------------------------------------------------------------------------
Riley, Richard 944
- -------------------------------------------------------------------------------
Root, Theodore R 1,969
- -------------------------------------------------------------------------------
Roper, David 1,404
- -------------------------------------------------------------------------------
Rude, Corinne 1,522
- -------------------------------------------------------------------------------
Rudolf, Anthony 1,812
- -------------------------------------------------------------------------------
Russo, Rick 1,871
- -------------------------------------------------------------------------------
Rutherford, Marc 723
- -------------------------------------------------------------------------------
Sarkissian, Geoffrey 1,814
- -------------------------------------------------------------------------------
Schweet, Paul 3,395
- -------------------------------------------------------------------------------
Seim, Stephen 1,017
- -------------------------------------------------------------------------------
Smith, Verdie 739
- -------------------------------------------------------------------------------
Stone, Randall A 1,602
- -------------------------------------------------------------------------------
</TABLE>
Additionally, certain unnamed non-affiliates of the Company holding
fewer than 1,000 shares each, may use the reoffer prospectus for reoffers and
resales of the remaining shares registered hereunder.
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Shareholders may sell Shares
from time to time in transactions on the Nasdaq National Market, in
privately-negotiated transactions or a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders or the purchasers of the Shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commission).
13
<PAGE> 16
The Selling Shareholders and any broker-dealers who act in connection with
the sale of Shares hereunder may be deemed to be "underwriters" as that term is
defined in the Securities Act of 1933, as amended (the "Securities Act"), and
any commissions received by them and profit on any resale of the Shares as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Cooley Godward LLP, San Diego, California
("Cooley Godward").
EXPERTS
The consolidated financial statements of DataWorks Corporation at December
31, 1996 and 1995 and for each of the three years in the period ended December
31, 1996, incorporated by reference herein and appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference, which, as to each of the
two years in the period ended December 31, 1995, is based in part on the report
of Price Waterhouse LLP, independent accountants. The financial statements
referred to above have been so incorporated in reliance upon such reports given
upon the authority of such firms as experts in accounting and auditing.
14
<PAGE> 17
INCORPORATION BY REFERENCE OF CONTENTS OF
REGISTRATION STATEMENT ON FORM S-8
NO. 33-99586
The contents of Registration Statement on Form S-8 No. 33-99586 filed with the
Securities and Exchange Commission on November 20, 1995, are incorporated by
reference herein.
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
<S> <C>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of Romito, Tomasetti & Associates, P.C.
23.4 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this Registration
Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 Registrant's 1995 Equity Incentive Plan, as amended (the "Equity Plan").(1)
99.2 Registrant's 1995 Non-Employee Directors' Stock Option Plan, as amended.(1)
99.3 Registrant's 1995 Employee Stock Purchase Plan, as amended.(1)
</TABLE>
- ------------------
(1) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated herein by reference.
EXEMPTION FROM REGISTRATION CLAIMED
On July 31, 1997 and January 30, 1998, the Company issued and sold an
aggregate of 149,708 shares of Common Stock for cash, at a discounted
rate, pursuant to its Employee Stock Purchase Plan to certain employees
of the Company who may sell shares pursuant to the S-3 Prospectus
contained herein. Each of these issuances was deemed to be exempt from
registration under the Securities Act, by virtue of Section 4(2)
thereof, as transactions not involving any public offering. The shares
were issued to employees of the Company who were provided with adequate
access to information about the Company.
15
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on the 28th day
of January, 1998.
DATAWORKS CORPORATION
By: /s/ STUART W. CLIFTON
--------------------------------------
Stuart W. Clifton
Chief Executive Officer, President and
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stuart W. Clifton, Norman R. Farquhar and
Rick E. Russo, and each or any one of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for the
undersigned and in his name, place and stead, in any and all capacities, to sign
any or all amendments (including post-effective amendments) to the Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
16
<PAGE> 19
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ STUART W. CLIFTON President, Chief Executive January 28 , 1998
- ---------------------------- Officer, Chairman of the Board
Stuart W. Clifton and Director
(Principal Executive Officer)
/s/ NORMAN R. FARQUHAR Executive Vice President, Chief January 28 , 1998
- ---------------------------- Financial Officer and Director
Norman R. Farquhar (Principal Financial Officer)
/s/ RICK E. RUSSO Vice President, Finance and January 28 , 1998
- ---------------------------- Secretary (Principal Accounting
Rick E. Russo Officer)
/s/ NATHAN W. BELL Director January 28 , 1998
- ----------------------------
Nathan W. Bell
/s/ TONY N. DOMIT Director January 28 , 1998
- ----------------------------
Tony N. Domit
/s/ WILLIAM P. FOLEY II Director January 28 , 1998
- ----------------------------
William P. Foley II
/s/ RONALD S. PARKER Director January 28 , 1998
- ----------------------------
Ronald S. Parker
/s/ ROY THIELE-SARDINA Director January 28 , 1998
- ----------------------------
Roy Thiele-Sardina
/s/ ROBERT C. VERNON President, International January 28 , 1998
- ---------------------------- Operations and Director
Robert C. Vernon
</TABLE>
17
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
<S> <C>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of Romito, Tomasetti & Associates, P.C.
23.4 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this Registration
Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 Registrant's 1995 Equity Incentive Plan, as amended (the "Equity Plan").(1)
99.2 Registrant's 1995 Non-Employee Directors' Stock Option Plan, as amended.(1)
99.3 Registrant's 1995 Employee Stock Purchase Plan, as amended.(1)
</TABLE>
- ------------------
(1) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated herein by reference.
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
February 3, 1998
DataWorks Corporation
5910 Pacific Center Blvd., Suite 300
San Diego, CA 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by DataWorks Corporation (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission, covering the registration of up to 875,292 shares of the
Company's Common Stock, no par value (the "Plan Shares"), for issuance upon
exercise of (i) options granted or available for grant under the Company's 1995
Equity Incentive Plan; (ii) options granted or available for grant under the
Company's 1995 Non-Employee Directors' Stock Option Plan (the "Options"); and
(iii) shares issuable to employees under the Company's 1995 Employee Stock
Purchase Plan (collectively, the "Plans") and up to 149,708 shares of the
Company's Common Stock, no par value (the "Resale Shares") for reissuance by
certain stockholders pursuant to the S-3 Prospectus contained within the
Registration Statement.
In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus, the Plans, the Company's Amended
and Restated Articles of Incorporation and Bylaws, and the originals or copies
certified to our satisfaction of such records, documents, certificates,
memoranda and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinion expressed below. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Resale Shares are validly issued, fully paid and nonassessable, and
that the Plan Shares, when sold and issued in accordance with the Registration
Statement and the Plans, will be validly issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
Thomas A. Coll
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the 1995 Equity Incentive Plan, 1995 Employee Stock
Purchase Plan and 1995 Non-Employee Directors' Stock Option Plan and the S-3
Prospectus constituting part of the Registration Statement of DataWorks
Corporation of our report dated January 31, 1997, with respect to the
consolidated financial statements included in its Annual Report (Form 10-K) for
the year ended December 31, 1996 and our report dated February 19, 1997 with
respect to the supplemental consolidated financial statements of DataWorks
Corporation included in its Current Report on Form 8-K dated February 3, 1998,
filed with the Securities and Exchange Commission. We also consent to the
reference to our firm under the caption "Experts" in the S-3 Prospectus
included in such Registration Statement.
ERNST & YOUNG LLP
San Diego, California
February 2, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 and in the Prospectus constituting part of this
Registration Statement on Form S-3 of DataWorks Corporation of our report dated
April 5, 1996, relating to the financial statements of DCD Corporation,
appearing on page F-3 of the DataWorks Corporation Annual Report on Form 10-K
for the year ended December 31, 1996. We also consent to the incorporation by
reference of our report dated April 5, 1996, relating to the financial
statements of DCD Corporation, appearing on page F-3 of the DataWorks
Corporation Current Report on Form 8-K dated February 3, 1998. We also consent
to the reference to us under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
- ---------------------------
Price Waterhouse LLP
Minneapolis, Minnesota
February 2, 1998
<PAGE> 1
Exhibit 23.3
CONSENT OF ROMITO, TOMASETTI & ASSOCIATES, P.C.
INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of DataWorks Corporation of our report dated March 17, 1995, with
respect to the combined financial statements of Intrepid Software, Inc.,
included in the financial statements of Interactive Group, Inc. for the fiscal
year ended December 31, 1996.
/s/ Romito, Tomasetti & Associates, P.C.
Burlington, Massachusetts
February 3, 1998
