<PAGE> 1
As filed with the Securities and Exchange Commission on August 18, 1998
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ARBOR SOFTWARE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 77-0277772
(State or Other Jurisdiction (I.R.S. Employer Identification
of Incorporation or Organization) Number)
1344 CROSSMAN AVENUE
SUNNYVALE, CALIFORNIA 94089
(408) 744-9500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STEPHEN V. IMBLER
CHIEF FINANCIAL OFFICER
ARBOR SOFTWARE CORPORATION
1344 CROSSMAN AVENUE
SUNNYVALE, CALIFORNIA 94089
(408) 744-9500
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
ROBERT V. GUNDERSON, JR., ESQ.
STEVEN M. SPURLOCK, ESQ.
GUNDERSON DETTMER STOUGH
VILLENEUVE FRANKLIN & HACHIGIAN, LLP
155 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 321-2400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Title of each class of Amount to Proposed Maximum Proposed Maximum Amount of
Securities to be Registered be Registered Offering Price per Security(1) Aggregate Offering Price(1) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 16,855 shares $30.75 $518,291.25 $180
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</TABLE>
(1) The price of $30.75 per share, which was the average of the high and low
prices of the Common Stock on the Nasdaq National Market on August 11, 1998
is set forth solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) of the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE> 2
The information contained herein is subject to change, completion or amendment
without notice. A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities may not be
sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
Subject to Completion, dated August 18, 1998
16,855 SHARES
ARBOR SOFTWARE CORPORATION
COMMON STOCK
-----------------
This Prospectus relates to the public offering, which is not being
underwritten, of 16,855 shares (the "Shares") of Common Stock, $0.001 par value
(the "Common Stock") of Arbor Software Corporation ("Arbor" or the "Company").
The Shares may be offered by certain stockholders of the Company (the
"Selling Stockholders") from time to time in transactions on the Nasdaq National
Market, in privately negotiated transactions, or by 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 Stockholders 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 Stockholders 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 Stockholders" and "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. The Company has agreed to bear certain
expenses in connection with the registration and sale of the Shares being
offered by the Selling Stockholders.
On August 17, 1998, the closing sale price of the Company's Common Stock
on the Nasdaq National Market was $33.8125 per share. The Common Stock is traded
on the Nasdaq National Market under the symbol "ARSW."
-----------------
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-----------------
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.
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The date of this Prospectus is ______________, 1998
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C>
AVAILABLE INFORMATION........................................................................1
INFORMATION INCORPORATED BY REFERENCE........................................................2
THE COMPANY..................................................................................3
RISK FACTORS.................................................................................4
USE OF PROCEEDS.............................................................................
DIVIDEND POLICY.............................................................................
SELLING STOCKHOLDERS........................................................................14
DESCRIPTION OF CAPITAL STOCK................................................................16
PLAN OF DISTRIBUTION........................................................................18
LEGAL MATTERS...............................................................................19
EXPERTS.....................................................................................19
</TABLE>
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Arbor, Arbor Software and Essbase are registered trademarks of the
Company, and Essbase-Ready, WIRED for OLAP and the Arbor Software logo are
trademarks of the Company. All other trademarks or trade names referred to
herein are the property of their respective owners.
-----------------
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 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, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and New York Regional Office, 7 World Trade
Center, 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. 20549-1004. Reports, proxy
and information statements and other information filed electronically by the
Company with the Commission are available at the Commission's world wide web
site at http://www.sec.gov.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments, exhibits and schedules, referred
to as the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act") with the Commission, with respect to the Shares offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and to
which reference is hereby made. Statements contained in this Prospectus
regarding the contents of any contract or other document to which reference is
made are not necessarily complete, and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in its entirety by such
reference. The Registration Statement, including the exhibits and schedules
thereto, may be inspected at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such material may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
upon the payment of the fees prescribed by the Commission.
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INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the 1934 Act are hereby incorporated by reference in this
Prospectus and made a part hereof:
1. The Company's Annual Report on Form 10-K for the year ended
March 31, 1998, filed with the Commission on June 10, 1998;
2. The Company's Current Report on Form 8-K, dated March 5, 1998,
filed with the Commission on March 17, 1998;
3. The Company's Current Report on Form 8-K, dated May 25, 1998,
filed with the Commission on May 29, 1998, and as amended on
June 25, 1998;
4. The Company's Current Report on Form 8-K, dated June 12, 1998,
filed with the Commission on June 17, 1998;
5. The Company's Current Report on Form 8-K, dated July 31,
1998, filed with the Commission on August 10, 1998;
6. The description of the Company's Capital Stock contained in the
Company's Registration Statement filed on Form 8-A, dated
October 9, 1995, and as amended on Form 8-A/A, dated November 3,
1995.
7. The Company's definitive proxy statement included in the Form
S-4 filed with the Commission on June 18, 1998, as amended.
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.
Upon written or oral request, the Company will provide without charge to
each person to whom a copy of the Prospectus is delivered a copy of the
documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference
herein). Requests should be directed to Investor Relations, Arbor Software
Corporation, 1344 Crossman Avenue, Sunnyvale, California 94089, (408) 744-9500.
-----------------
NO DEALER, SALESPERSON, SELLING STOCKHOLDER OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, included or
incorporated by reference in this Prospectus.
THE COMPANY
Arbor develops and markets enterprise on-line analytical processing
("OLAP") software for management reporting, analysis and planning applications.
The Company's Arbor Essbase software is a powerful OLAP solution that integrates
data from throughout an enterprise, including data from relational databases,
data warehouses and other data repositories, and allows users to perform
multidimensional analysis on this data utilizing spreadsheets, query tools,
report writers and web browsers. Arbor Essbase users can easily access and
organize large volumes of historical and projected data, rapidly perform
interactive what-if scenario analyses and share this information with users
throughout the enterprise. Arbor Essbase consists principally of Arbor Essbase
OLAP Server, and complementary products that extend and enhance the
functionality of the Arbor Essbase solution, including user tools, developer
tools, server management and data integration modules, and application modules.
Arbor Essbase is easy to use and deploy rapidly, possesses robust calculation
capabilities, provides rapid response to user requests and incorporates
user-generated scenario data. Arbor Essbase also has the flexibility to
reorganize and present data from a variety of perspectives without disturbing
the integrity of the underlying historical data or causing the degradation of
network performance.
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RISK FACTORS
This Prospectus contains or incorporates by reference forward-looking
statements that involve risks and uncertainties. The statements contained or
incorporated by reference in this Prospectus that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, including without limitation statements regarding the Company's
expectations, beliefs, intentions or strategies regarding the future. All
forward-looking statements included in this document are based on information
available to the Company on the date hereof, and all forward-looking statements
in documents incorporated by reference are based on information available to the
Company as of the date of such documents. The Company assumes no obligation to
update any such forward-looking statements. The Company's actual results may
differ materially from those discussed in the forward-looking statements as a
result of certain factors, including those set forth in the following risk
factors and elsewhere in this Prospectus and incorporated by reference herein.
In evaluating the Company's business, prospective investors should carefully
consider the following factors in addition to the other information set forth in
this Prospectus and incorporated by reference herein, including without
limitation, the factors discussed in "Risk Factors" set forth in the definitive
proxy statement included in Form S-4 as filed with the Securities and Exchange
Commission on June 18, 1998 in connection with the pending merger of the Company
with Hyperion (the "Merger") (as described in the Form 8-K, dated May 25, 1998,
as filed with the Commission on May 29, 1998, and as amended on June 25, 1998),
is incorporated by reference in this Prospectus.
Fluctuations in Quarterly Results; Future Operating Results Uncertain.
The Company's quarterly operating results could vary significantly in the future
depending on a number of factors, including: (i) demand for the Company's Arbor
Essbase software and related products; (ii) the number, timing and significance
of product enhancements and new product announcements by the Company and its
current or future competitors; (iii) changes in pricing policies by the Company
or its competitors; (iv) the level of price and product competition; (v)
unanticipated events or announcement relating to the Merger; (vi) the Company's
relationships with and the consistency of sales generated by its indirect
channel partners; (vii) the integration of newly acquired products, technologies
and businesses, if any, by the Company; (viii) the impact of acquisitions by
competitors and indirect channel partners; (ix) changes in the mix of indirect
channels through which its products are offered; (x) customer order deferrals in
anticipation of enhancements to its products or enhancements or new products of
competitors or in anticipation of the Merger; (xi) the ability of the Company to
develop, introduce and market new and enhanced versions of Arbor Essbase and
complementary products on a timely basis; (xii) changes in the Company's sales
incentive strategy; (xiii) the timing of revenue recognition under the Company's
agreements and changes in accounting standards with respect to revenue
recognition; (xiv) the size, timing and structure of significant licenses;
(xv)changes in Company strategy; (xvi) the level of the Company's international
revenues; (xvii) the renewal of maintenance and support agreements;
(xviii)product life cycles; (xix) software defects and other product quality
problems;(xx) personnel changes; (xxi) changes in the level of operating
expenses; (xxii)successful development and marketing of platform-specific
versions of Arbor Essbase by certain third parties that independently market
such versions;(xxiii) foreign currency exchange rates; and (xxiv) general
domestic and international economic and political conditions. The operating
results of many software companies reflect seasonal trends, and the Company's
business, operating results and financial condition may experience comparatively
slower growth in its first fiscal quarter and summer months, which overlap into
its second fiscal quarter. The Company sells substantially more product towards
the end of each quarter, particularly in the last two weeks of the quarter, due
in part to established buying patterns within the software industry. As a
result, the magnitude of any quarterly fluctuations have not been, and may not
become in the future, evident until the last few days of a quarter. Arbor
Essbase orders are typically shipped shortly after receipt, and as a result the
Company has limited ability to predict quarterly revenues at the beginning of
any quarter. As a result, license revenues in any quarter are substantially
dependent on orders booked and shipped in that quarter.
Due to all of the foregoing, revenues for any future quarter are not
predictable with any significant degree of accuracy. Quarterly revenues are also
difficult to forecast because the Company's sales cycle, from initial evaluation
to license and maintenance and support purchases, varies substantially from
customer to customer. Accordingly, the Company believes that period-to-period
comparisons of its operating results are not necessarily
4
<PAGE> 7
meaningful and should not be relied upon as indications of future performance.
Although the Company has experienced significant growth in total revenues in
recent years, the Company does not believe that historical growth rates are
sustainable. Accordingly, the rate at which the Company has grown in the past
should not be considered indicative of future revenue growth, if any, or future
operating results. There can be no assurance that the Company will remain
profitable on a quarterly or annual basis.
The Company's expense levels are based in significant part on the
Company's expectations of future revenues and therefore are higher than past
expense levels, and are relatively fixed in the short run. If revenue levels are
below expectations, net income is likely to be disproportionately affected.
There can be no assurance that the Company will be able to achieve or maintain
profitability on a quarterly or annual basis in the future. In addition, it is
possible that in some future quarter the Company's operating results will be
below the expectations of public market analysts or investors. In such event, or
in the event that adverse conditions prevail or are perceived to prevail
generally or with respect to the Company's business, the price of the Company's
Common Stock would likely be materially adversely affected.
Competition. The market in which the Company competes is intensely
competitive, highly fragmented and characterized by rapidly changing technology
and evolving standards. The Company's current and potential competitors offer a
variety of planning and analysis software solutions and generally fall within
three categories: (i) vendors of multidimensional database and analysis software
such as Oracle Corporation (Express); Gentia Software plc (formerly known as
Planning Sciences International plc and Planning Sciences, Inc.) (Gentia);
Applix, Inc. (TM1); Seagate Software, a subsidiary of Seagate Technology,
Inc.(Holos); and Microsoft Corporation (Microsoft OLAP Server, currently in
beta);(ii) vendors of dedicated software applications for budgeting and
financial consolidation such as Hyperion (Pillar and Enterprise); and (iii)
vendors of relational/on-line analytical processing database software (ROLAP)
such as Information Advantage, Inc. (Decision Suite); Informix Corporation
(Metacube);and Microstrategy, Inc. (DSS Agent).
The Company has experienced and expects to continue to experience
increased competition from current and potential competitors, many of whom have
significantly greater financial, technical, marketing and other resources than
the Company. Such competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements or devote greater
resources to the development, promotion and sale of their products than the
Company. Also, certain current and potential competitors have greater name
recognition or more extensive customer bases that could be leveraged, thereby
gaining market share to the Company's detriment. The Company expects additional
competition as other established and emerging companies enter into the on-line
analytical processing ("OLAP") software market and new products and technologies
are introduced. In addition, as the Company develops and enhances Arbor Essbase
and complementary products, the resulting new functionality may duplicate the
functionality of, and thus compete with, other products offered by indirect
channel partners. Increased competition could result in price reductions, fewer
customer orders, reduced gross margins and loss of market share, any of which
would materially adversely affect the Company's business, operating results and
financial condition.
The Company's future success depends, in part, upon the availability of
third party tools and applications that address customer requirements and work
with Arbor Essbase through the Company's Arbor Essbase Application Programming
Interface ("API"). Failure by third parties to support the Company's API or
failure by the Company to adopt industry standard API's, if and when they
emerge, could materially adversely affect the Company's business, operating
results and financial condition.
Current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third parties,
thereby increasing the ability of their products to address the needs of the
Company's existing and prospective customers. Further competitive pressures,
such as those resulting from competitors' discounting of their products, may
require the Company to reduce the price of Arbor Essbase and complementary
products, which would materially adversely affect the Company's business,
operating results and financial condition. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors, and the failure to do so would have a material adverse effect upon
the Company's business, operating results and financial condition.
5
<PAGE> 8
Management of Growth; Acquisition-related Risks. The Company's rapid
growth has placed, and is expected to continue to place, a significant strain on
the Company's managerial, operational, financial and other resources. As of June
30, 1998, the Company had grown to 456 employees since its inception in April
1991, and the Company expects that continued hiring of new personnel will be
required to support the growth of its business. The Company's future success
will depend, in part, upon its ability to manage its growth effectively,
particularly as the Company enhances and extends the functionality of Arbor
Essbase with complementary products and expands its international distribution.
This will require that the Company continue to implement and improve its
operational, administrative and financial and accounting systems and controls
and to expand, train and manage its employee base. There can be no assurance
that the Company's systems, procedures or controls will be adequate to support
the Company's operations or that the Company's management will be able to
achieve the rapid execution necessary to exploit the market for the Company's
business model. See "-- Hiring and Retention of Personnel."
A key component of the Company's growth strategy is the acquisition of
complementary businesses, products and technologies that meet the Company's
criteria for revenues, profitability, growth potential and operating strategy.
The successful implementation of this strategy depends on the Company's ability
to identify suitable acquisition candidates, acquire such companies on
acceptable terms and integrate their operations successfully with those of the
Company. There can be no assurance that the Company will be able to identify
suitable acquisition candidates or that the Company will be able to acquire such
candidates on acceptable terms. Moreover, in pursuing acquisition opportunities
the Company may compete with other companies with similar growth strategies,
certain of which competitors may be larger and have greater financial and other
resources than the Company. Competition for these acquisition targets could also
result in increased prices of acquisition targets and a diminished pool of
companies available for acquisition. Acquisitions, such as the acquisition of
AppSource Corporation in December 1997 and the Merger involve a number of other
risks, including, among other things, adverse effects on the Company's reported
operating results from goodwill amortization, acquired in-process technology,
stock compensation expense and increased compensation expense resulting from
newly hired employees, difficulties in managing diverse geographic sales and
research and development operations, the diversion of management attention,
potential disputes with the sellers of acquired entities, the possible failure
to retain key acquired personnel and the impairment of relationships with
employees and strategic partners as a result of such acquisitions or the
integration of new personnel. Due to the foregoing, the Company's pursuit of an
acquisition strategy or any individual acquisition may have a material adverse
effect on the Company's business, operating results and financial condition.
The Company's future performance will depend on the Company's ability to
integrate any organizations acquired by the Company, including Hyperion if the
Merger is approved, which, even if successful, may take a significant period of
time, will place a significant strain on the Company's resources, and could
subject the Company to additional expenses during the integration process. As a
result, there can be no assurance that the Company will be able to integrate
acquired businesses successfully, including Hyperion if the Merger is approved,
or in a timely manner in accordance with its strategic objectives. If the
Company is unable to manage internal or acquisition-based growth effectively,
the Company's business, operating results and financial condition will be
materially adversely affected.
Uncertainty Relating to Integration as a Result of the Merger. The
integration of Hyperion's and the Company's business and personnel following the
Merger presents difficult challenges for Arbor's management, particularly in
light of the increased time and resources required to effect the combination
with Hyperion. Further, both the Company and Hyperion entered into the Agreement
and Plan of Merger with the expectation that the Merger will result in synergies
for the combined company. The combined company, however, will be more complex
and diverse than either Arbor or Hyperion individually, and the combination and
continued operation of their business operations will be difficult. While the
management and the board of directors of both the Company and Hyperion believe
that the combination can be effected in a manner that will realize the value of
the combined company, the management group of the combined company has limited
experience in combinations of this complexity or size. Accordingly, there can be
no assurance that the process of effecting these business combinations can be
effectively managed to realize the synergies anticipated to result therefrom.
6
<PAGE> 9
The Company and Hyperion entered into the Agreement and Plan of Merger,
among other reasons, in order to achieve potential mutual benefits from
combining each of their respective expertise and product lines for the
enterprise software market. Realization of these potential benefits will
require, among other things, integrating the companies' respective product
offerings and coordinating the combined company's sales and marketing and
research and development efforts. The Company and Hyperion each have different
systems and procedures in many operational areas that must be rationalized and
integrated. There can be no assurance that such integration will be accomplished
effectively, expeditiously or efficiently. The difficulties of such integration
may be increased by the necessity of coordinating geographically separated
divisions, integrating personnel with disparate business backgrounds and
combining different corporate cultures. The integration of certain operations
following the Merger will require the dedication of management resources that
may temporarily distract attention from the day-to-day business of the combined
company. The business of the combined company may also be disrupted by employee
uncertainty and lack of focus during such integration. There can also be no
assurance that the combined company will be able to retain all of its key
technical, sales and other key personnel. Failure to effectively accomplish the
integration of the operations of the Company and Hyperion could have a material
adverse effect on the combined company's business, operating results and
financial condition. Moreover, uncertainty in the marketplace or customer
hesitation relating to the Merger could negatively affect the combined company's
business, operating results and financial condition.
Cost of Integration; Transaction Expenses. Transaction costs relating to
the Merger and the anticipated combination of certain operations of the Company
and Hyperion are expected to result in one-time charges to the combined
company's earnings. Although it will not be feasible to determine the actual
amount of these charges until the operational and transition plans are
completed, the management of the Company and Hyperion believe that the aggregate
charge will be approximately $20 million before taxes, although such amount
maybe increased by unanticipated additional expenses incurred in connection with
the Merger. This aggregate charge is expected to include the estimated costs
associated with financial advisory, accounting and legal fees, printing
expenses, filing fees and other merger-related costs. While the exact timing of
these expenses cannot be determined at this time, the management of the Company
anticipates that this aggregate charge to earnings will be recorded primarily in
the quarter ending September 30, 1998, the time at which the Merger is expected
to be consummated.
Potential Dilutive Effect to Stockholders. Although the Company and
Hyperion believe that beneficial synergies will result from the Merger, there
can be no assurance that the combining of the Company's and Hyperion's
businesses, even if achieved in an efficient and effective manner, will result
in combined results of operations and financial condition superior to that which
would have been achieved by each company independently, or as to the period of
time required to achieve such result. The issuance of the Company's Common Stock
in connection with the Merger is likely to have a dilutive effect on the
Company's earnings per share and there is no assurance that Company stockholders
would not achieve greater returns on investment were the Company to remain an
independent company.
Dependence Upon Indirect Channel Partners. In addition to its direct
sales force, the Company relies on indirect channel partners such as OEMs, VARs
and distributors for licensing and support of Arbor Essbase in the United States
and internationally. Sales by indirect channel partners for the quarter ended
June 30, 1998 and the fiscal years ended March 31, 1998 and 1997 were 29%, 23%
and 25% of total revenues, respectively. The Company's indirect channel partners
generally offer products of several different companies, including, in some
cases, products that compete with Arbor Essbase, and if the Merger is approved,
products that are competitive with Hyperion. Further, as the Company enhances
the functionality in Arbor Essbase, develops complementary products or expands
its product offerings through acquisition or other means, including the Merger,
such enhancements and complementary products may duplicate the functionality of
products already offered by its channel partners. In such event, sales of the
Company's products by such channel partner may decline. There can be no
assurance that the Company's current indirect channel partners will elect, or be
able, to market or support Arbor Essbase or the Company's complementary products
effectively or be able to release their Arbor Essbase embedded products in a
timely manner, that the Company will be able to effectively manage channel
conflicts, that economic conditions or industry demand will not adversely affect
these or other indirect channel partners or that these indirect channel partners
will not devote greater resources to marketing and supporting the products of
other companies. No assurance can be given that revenues derived from indirect
channel partners will not fluctuate significantly in
7
<PAGE> 10
subsequent periods or terminate entirely. The Company has been involved in
litigation with a significant channel partner and, although such litigation has
been settled, there can be no assurance that there will be no future disputes
with current or future channel partners. Such disputes could materially
adversely affect the Company's business, operating results and financial
condition.
Product Concentration; Dependence upon the Market for OLAP Server
Software. All of the Company's revenues to date have been derived from licenses
for Arbor Essbase and complementary products and services. The Company currently
expects that Arbor Essbase-related revenues, including revenues from
complementary products, as well as maintenance and support contracts, will
continue to account for substantially all of the Company's revenues for the
foreseeable future. If the Merger is approved by the stockholders of Arbor and
Hyperion and the other closing conditions are satisfied, Arbor Essbase related
revenues are expected to still account for a significant portion of the combined
company's revenues for the foreseeable future. As a result, the Company's future
operating results are dependent upon continued market acceptance of Arbor
Essbase, enhancements and extensions thereto and applications and tools
therefor. There can be no assurance that Arbor Essbase will achieve continued or
increased market acceptance or that the Company will be successful in marketing
Arbor Essbase, enhancements thereto or applications therefor. A decline in
demand for, or market acceptance of, Arbor Essbase as a result of competition,
technological change or other factors would have a material adverse effect on
the Company's business, operating results and financial condition. The Company
intends to continue its efforts to improve and enhance Arbor Essbase by
maintaining its commitment to an open architecture, extending its partnerships,
integrating third party technologies, enhancing its linkage with leading
general-purpose database management systems, continuing to evolve the Arbor
Essbase OLAP Server, and developing complementary products. No assurance can be
given that such efforts will enhance the value of the Company's product
offerings to customers.
Although sales of Arbor Essbase have increased in recent years, the
market in which the Company competes is undergoing rapid change, and there can
be no assurance that existing customers will continue to purchase or that
potential customers will purchase Arbor Essbase and complementary products. The
Company has spent, and intends to continue to spend, considerable resources
educating potential customers about Arbor Essbase and its functions and the
market for OLAP solutions. However, there can be no assurance that such
expenditures will enable Arbor Essbase to achieve any additional degree of
market acceptance, and if the market for Arbor Essbase or utilization of OLAP
tools and complementary applications in general fails to grow or grows more
slowly than the Company currently anticipates, the Company's business, operating
results and financial condition would be materially adversely affected.
Historically, the software industry has experienced significant periodic
downturns, often in connection with, or in anticipation of, declines in general
economic conditions during which MIS budgets often decrease. As a result, the
Company's business, operating results and financial condition may in the future
reflect substantial fluctuations from period to period as a consequence of
patterns and general economic conditions in the software industry.
Risks Associated with International Operations. The Company's future
financial performance will depend in large part on the growth and performance of
the Company's international operations. The Company believes that in order to
increase sales opportunities and profitability it will be required to expand its
international operations. The Company maintains offices in Vancouver, British
Columbia, Canada; London, United Kingdom; Paris, France; Frankfurt, Hamburg and
Munich, Germany; and Sydney, Australia and is currently investing significant
time, financial resources and management attention to developing its
international operations, including the development of certain third party
distributor relationships and the hiring of additional sales representatives.
However, there can be no assurance that the Company will be successful in
expanding its international operations or that the Company will be able to
maintain or increase international market demand for Arbor Essbase. To the
extent that the Company is unable to do so in a timely manner, the Company's
international sales will be limited, and the Company's business, operating
results and financial condition would be materially adversely affected. In the
event of a dispute with an international distributor, it is possible that the
Company would incur additional costs and expenses and certain obstacles to
termination of the relationship, as the laws of certain foreign jurisdictions
are more favorable to distributors than those of the United States. In addition,
as the Company establishes and protects its trademarks in jurisdictions outside
the United States, it is possible it will encounter opposition from entities
claiming rights to such trademarks in those jurisdictions.
8
<PAGE> 11
International revenues, which are attributable primarily to direct
export sales to customers in Europe, accounted for 14%, 16% and 13% of total
revenues in the quarter ended June 30, 1998 and the fiscal years ended March 31,
1998 and 1997, respectively. International sales are subject to inherent risks,
including the impact of possible recessionary environments in economies outside
the United States, higher costs of doing business, costs of localizing products
for different languages, longer receivables collection periods and greater
difficulty in accounts receivable collection, unexpected changes in regulatory
requirements, difficulties and costs of staffing and managing foreign
operations, reduced protection for intellectual property rights in some
countries, potentially adverse tax consequences and political and economic
instability. There can be no assurance that the Company or its indirect channel
partners will be able to sustain or increase international revenues from
international licenses and maintenance, support and other services, or that the
foregoing factors will not have a material adverse effect on the Company's
future international revenues and, consequently, on the Company's business,
operating results and financial condition. The Company's direct international
sales are currently denominated in either United States dollars, British pounds
sterling, German deutsche marks or French francs. Although exposure to currency
fluctuations has not been material to date, there can be no assurance that
fluctuations in the currency exchange rates in the future will not have a
material adverse impact on revenues from direct international sales and thus the
Company's business, operating results or financial condition. Sales generated by
the Company's indirect channel partners are currently paid to the Company in
United States dollars. If, in the future, international indirect sales are
denominated in local currencies, foreign currency translations may contribute to
significant fluctuations in, and could have a material adverse effect upon, the
Company's business, operating results and financial condition.
Risks Associated with New Versions and New Products; Rapid Technological
Change. The software industry, and specifically the market in which the Company
competes, is characterized by rapid technological change, frequent introductions
of new products, changes in customer demands and evolving industry standards.
The introduction of products embodying new technologies and the emergence of new
industry standards can render existing products obsolete and unmarketable. The
life cycle of each version of Arbor Essbase is difficult to estimate. The
Company's future success will depend upon its ability to address the
increasingly sophisticated needs of its customers by developing and introducing
enhancements to Arbor Essbase and complementary products on a timely basis that
keep pace with technological developments and emerging industry standards and
customer requirements. There can be no assurance that the Company will be
successful in developing and marketing enhancements to Arbor Essbase and
complementary products that respond to technological change, evolving industry
standards or customer requirements, that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction and sale of such enhancements or that such enhancements will
adequately meet the requirements of the marketplace and achieve any significant
degree of market acceptance. The Company has in the past experienced delays in
the release dates of enhancements to Arbor Essbase and complementary products.
If the release dates of any future enhancements of Arbor Essbase or
complementary products are delayed, or if when released, such products fail to
achieve market acceptance, the Company's business, operating results and
financial condition could be materially adversely affected. There can be no
assurance that the introduction or announcement of new product offerings by the
Company or the Company's competitors will not cause customers to defer or forego
purchases of current versions of Arbor Essbase or complementary products, which
could have a material adverse effect on the Company's business, operating
results and financial condition.
Hiring and Retention of Personnel. The Company's future operating
results depend in significant part upon the continued service of its key
technical, sales and senior management personnel, none of whom is bound by an
employment agreement for a term of service. The Company's future success also
depends on its continuing ability to attract and retain highly qualified
technical, sales and managerial personnel. Competition for such personnel is
intense, and there can be no assurance that the Company will be able to retain
its key managerial, technical or sales personnel or attract such personnel in
the future. Two members of senior management recently joined the Company and
there can be no assurance that the new management will be able to work
effectively with existing management. The Company has at times experienced and
continues to experience difficulty in recruiting qualified personnel, and there
can be no assurance that the Company will not experience such difficulties in
the future, particularly in the San Francisco Bay Area, where the employment
market for qualified marketing and engineering personnel is extremely
competitive. The Company, either directly or through personnel search firms,
actively recruits qualified research and development, financial and sales
personnel. If the Company is unable to hire and retain qualified personnel in
the future, such inability could have a material adverse effect on the Company's
business, operating results and
9
<PAGE> 12
financial condition. As stock options are a customary component of compensation
packages in the software industry, the Company will need to increase the size of
its stock option pool, and there can be no assurance that requisite stockholder
approval will be achieved. Without adequate stock option reserves, recruiting
may be increasingly difficult. The business of the Company is likely to be
disrupted by employee uncertainty and lack of focus as a result of the Merger,
and the necessary integration of the combined company if such Merger is approved
and the other closing conditions are satisfied. Such disruption could materially
adversely affect the Company's business, operating results and financial
conditions.
Risk of Software Defects. Software products as internally complex as
Arbor Essbase frequently contain errors or defects, especially when first
introduced or when new versions or enhancements are released. Despite product
testing by the Company, the Company has in the past released versions of Arbor
Essbase with defects and has discovered software errors in Arbor Essbase and
certain enhanced versions of Arbor Essbase after their introduction. Although
the Company has not experienced material adverse effects resulting from any such
defects and errors to date, there can be no assurance that, despite testing by
the Company and by current and potential customers, defects and errors will not
be found in new versions or enhancements after commencement of commercial
shipments, including the recently released Arbor Essbase OLAP Server 5 ("Arbor
Essbase 5"), resulting in loss of revenues or delay in market acceptance, which
could have a material adverse effect upon the Company's business, operating
results and financial condition.
Risks Associated with Litigation and Related Costs. The Company's
ongoing litigation with Gentia Software plc (formerly known as Planning Sciences
International plc and Planning Sciences, Inc.) ("Gentia Software") has resulted
in and will continue to result in increased legal costs to the Company. No
assurance can be given as to when the litigation proceedings will be resolved or
that management will not be distracted from their normal duties as a result of
the proceedings. The Company believes that it has meritorious claims against
Gentia Software and meritorious defenses against Gentia Software's claims that
U.S. Patent No. 5,359,724 (the " `724 patent") is invalid, and intends to pursue
vigorously its claims and defend against Gentia Software's claims. In addition,
Gentia Software has filed two requests for reexamination of the `724 patent by
the U.S. Patent and Trademark Office, both of which have been granted. The
reexamination proceedings are currently pending. The outcomes of the Gentia
Software litigation and the patent reexamination proceedings are uncertain at
this time, and no assurance can be given that the outcome of the litigation will
be in the Company's favor, or that the U.S. Patent and Trademark Office will not
declare the `724 patent invalid or narrow the scope of its claims. Management
believes that the outcome of the Gentia Software litigation or the reexamination
proceedings will not have a material adverse effect on the Company's business,
operating results or financial condition. However, should the `724 patent be
declared invalid or the scope of its claims narrowed, competitors may be able to
implement the technology described in the `724 patent, which could result in
increased competition. Increased competition could materially adversely affect
the Company's future business. See "-- Competition."
Proprietary Rights and Risks of Infringement. The Company relies
primarily on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality procedures and contractual provisions to protect its
proprietary rights. The Company also believes that factors such as the
technological and creative skills of its personnel, new product developments,
frequent product enhancements, name recognition and reliable product maintenance
are essential to establishing and maintaining a technology leadership position.
The Company seeks to protect its software, documentation and other written
materials under contract trade secret and copyright laws, which afford only
limited protection. The Company currently has one United States patent and
corresponding patent applications pending in Europe, Canada and Australia. There
can be no assurance that the Company's patent will not be invalidated,
circumvented or challenged, that the rights granted thereunder will provide
competitive advantages to the Company or that any of the Company's pending or
future patent applications, whether or not being currently challenged by
applicable governmental patent examiners, will be issued with the scope of the
claims sought by the Company, if at all. Furthermore, there can be no assurance
that others will not develop technologies that are similar or superior to the
Company's technology or design around the patents owned by the Company. See"--
Risks Associated with Litigation and Related Costs."
Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary.
10
<PAGE> 13
Policing unauthorized use of the Company's products is difficult, and while the
Company is unable to determine the extent to which piracy of its software
products exists, software piracy can be expected to be a persistent problem. In
addition, the laws of some foreign countries do not protect the Company's
proprietary rights as fully as do the laws of the United States. There can be no
assurance that the Company's means of protecting its proprietary rights in the
United States or abroad will be adequate or that competitors will not
independently develop similar technology. The Company has entered into source
code escrow agreements with a number of its customers and indirect channel
partners requiring release of source code under certain conditions. Such
agreements provide that such parties will have a limited, non-exclusive right to
use such code in the event that there is a bankruptcy proceeding by or against
the Company, if the Company ceases to do business or if the Company fails to
meet its contractual obligations. The provision of source code may increase the
likelihood of misappropriation by third parties.
The Company expects that software developers will increasingly be
subject to infringement claims, particularly patent claims, as the number of
products and competitors in the Company's industry segment grows and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time consuming to defend, result in
costly litigation, divert management's attention and resources, cause product
shipment delays or require the Company to enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may not be
available on terms acceptable to the Company, if at all. In the event of a
successful claim of product infringement against the Company and failure or
inability of the Company to license the infringed or similar technology, the
Company's business, operating results and financial condition would be
materially adversely affected. The Company is engaged currently in litigation
with Gentia Software concerning the enforcement and validity of the `724 patent.
In addition, Gentia Software has filed two requests for reexamination of the'724
patent by the U.S. Patent and Trademark Office, both of which have been granted.
The reexamination proceedings are currently pending. See "--Risks Associated
with Litigation and Related Costs."
The Company relies upon certain software that it licenses from third
parties, including software that is integrated with the Company's internally
developed software and used in the Company's products to perform key functions.
There can be no assurance that these third-party software licenses will continue
to be available to the Company on commercially reasonable terms. The loss of, or
inability to maintain, any such software licenses could result in shipment
delays or reductions until equivalent software could be developed, identified,
licensed and integrated, which would materially adversely affect the Company's
business, operating results and financial condition. In addition, there can be
no assurance that third parties will not claim infringement by the Company with
respect to the Company's products or enhancements thereto.
Year 2000 Compliance. Many currently installed computer systems and
software products are coded to accept only two digit entries in the date code
field. These date code fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, in less
than two years, computer systems and/or software used by many companies may need
to be upgraded to comply with such "Year 2000" requirements. Management does not
believe that the functioning of Arbor Essbase is materially affected by dates
containing the year 2000 or subsequent years. This is due to the fact that Arbor
Essbase does not store date information as a data type in its database and does
not perform date calculations. However, the Company could be adversely impacted
by Year 2000 issues in its internal computer systems, as well as by Year
2000issues faced by customers, resellers and service providers. For example,
customer allocations of financial resources to deal with this issue may reduce
their ability to purchase products such as Arbor Essbase and related products
and services. This reallocation of financial resources could have an adverse
effect on the Company's business, operating results and financial condition.
Significant uncertainty exists in the software industry concerning the potential
effects associated with such compliance. Although the Company believes its
software products are Year 2000 compliant, there can be no assurance that the
Company's software products contain all necessary software routines and programs
necessary for the accurate calculation, display, storage and manipulation of
data involving dates. If any of the Company's licensees experience Year
2000problems, such licensee could assert claims for damages against the Company.
Any such litigation could result in substantial costs and diversion of the
Company's resources even if ultimately decided in favor of the Company. The
occurrence of any of the foregoing could have a material adverse effect on the
Company's business, operating results or financial condition.
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<PAGE> 14
Product Liability. The Company's license agreements with its customers
typically contain provisions designed to limit the Company's exposure to
potential product liability claims. It is possible, however, that the limitation
of liability provisions contained in the Company's license agreements may not be
effective as a result of federal, state or local laws or ordinances enacted in
the future or judicial decisions. Although the Company has not experienced any
material product liability claims to date, the sale and support of Arbor Essbase
by the Company may entail the risk of such claims. A successful product
liability claim brought against the Company could have a material adverse effect
upon the Company's business, operating results and financial condition. See "--
Year 2000 Compliance."
Subordination. The Notes, as described in the Company's Current Report
on Form 8-K dated March 5, 1998, as filed with the Commission on March 17, 1998
(the "Notes"), are unsecured and subordinated in right of payment in full to all
existing and future Senior Indebtedness (as defined) of the Company. As a result
of such subordination, in the event of bankruptcy, liquidation or reorganization
of the Company or upon acceleration of the Notes due to an Event of Default (as
defined) under the Indenture and in certain other events, the assets of the
Company will be available to pay obligations on the Notes only after all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness, and there may not be sufficient assets remaining
to pay amounts due on any or all of the Notes then outstanding. The Notes also
are effectively subordinated to the liabilities, including trade payables, of
any subsidiary of the Company. The Indenture does not prohibit or limit the
incurrence of Senior Indebtedness or the incurrence of other indebtedness and
other liabilities by the Company or any subsidiary of the Company, and the
incurrence of additional indebtedness and other liabilities by the Company or
any subsidiary of the Company could adversely affect the Company's ability to
pay its obligations on the Notes. As of March 31, 1998, the Company had an
insignificant amount of indebtedness outstanding that would have constituted
Senior Indebtedness. The Company anticipates that from time to time it will
incur additional indebtedness, including Senior Indebtedness, and that it will,
and subsidiaries of the Company may, from time to time incur other additional
indebtedness and liabilities. See "Description of Notes --Subordination of
Notes" in the Company's definitive proxy statement included in the Form S-4
filed with the Commission on June 18, 1998, as amended.
Limitations on Redemption of Notes upon Fundamental Change. Upon a
Fundamental Change (as defined), each holder of Notes will have certain rights,
at the holder's option, to require the Company to redeem all or a portion of
such holder's Notes. If a Fundamental Change were to occur, there can be no
assurance that the Company would have sufficient funds to pay the redemption
price for all Notes tendered by the holders thereof. In addition, the terms of
the Company's existing credit facility provide that a Fundamental Change would
constitute an event of default thereunder. Any future credit agreements or other
agreements relating to other indebtedness (including other Senior
Indebtedness)to which the Company becomes a party may contain similar
restrictions and provisions, including restrictions and provisions that prohibit
the Company from purchasing or redeeming any Notes. In the event a Fundamental
Change occurs at a time when the Company is prohibited from purchasing or
redeeming Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent to repay such
borrowings, the Company would remain prohibited from purchasing or redeeming
Notes. In such case, the Company's failure to redeem tendered Notes would
constitute an Event of Default under the Indenture and may constitute a default
under the terms of other indebtedness that the Company may enter into from time
to time. In such circumstances, the subordination provisions in the Indenture
would likely restrict payments to the holders of Notes. The term "Fundamental
Change" is limited to certain specified transactions and may not include other
events that might adversely affect the financial condition of the Company, nor
would the requirement that the Company offer to repurchase the Notes upon a
Fundamental Change necessarily afford holders of the Notes protection in the
event of a highly leveraged transaction, reorganization, merger or similar
transaction involving the Company. See "Description of Notes -- Redemption at
Option of the Holder" in the Company's definitive proxy statement included in
the Form S-4 filed with the Commission on June 18, 1998, as amended.
Absence of Public Market for the Notes and Restrictions on Resale. The
Notes were issued in March 1998 to a small number of institutional buyers. Prior
to such issuance there has been no trading market for the Notes. The Notes
issued in the initial private placement were designated for trading on the
PORTAL Market. Notes sold pursuant to this Prospectus will not remain eligible
for trading on the PORTAL Market. Accordingly, there can be
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<PAGE> 15
no assurance that any market for the Notes will develop or, if one does develop,
that it will be maintained. If an active market for the Notes fails to develop
or be sustained, the trading price of such Notes could be materially adversely
affected. If a public trading market develops for the Notes future trading
prices of the Notes will depend upon many factors, including among other,
prevailing interest rates and the market price of the shares of Common Stock of
the Company. See "Description of Notes -- Registration Rights of the
Noteholders" and "-- Plan of Distribution" in the Company's definitive proxy
statement included in the Form S-4 filed with the Commission on June 18, 1998,
as amended.
Rating of Notes. The Company believes it is likely that one or more
rating agencies may rate the Notes. There can be no assurance as to whether any
such agency or agencies will rate the Notes or, if they do, what rating or
ratings they will assign to the Notes. If one or more rating agencies assign the
Notes a rating lower than that expected by investors, such event would likely
have a material adverse effect on the market price of the Notes and the
Company's Common Stock.
Possible Price Volatility of Notes and Common Stock. The market prices
for securities of technology companies have been highly volatile. The market
price of the Notes and the shares of Common Stock into which the Notes are
convertible may be significantly affected by factors such as actual or
anticipated fluctuations in the Company's operating results, relationships with
indirect channel partners, announcements relating to the Company's current
litigation with Gentia Software or other disputes with indirect channel
partners, customers or others, announcements of technological innovations, new
products or new contracts by the Company or its competitors, developments with
respect to patents, copyrights or proprietary rights, conditions and trends in
the software industry, adoption of new accounting standards by the software
industry, changes in financial estimates by securities analysts, general market
conditions, and other factors. In addition, the stock market has experienced
extreme price and volume fluctuations that have particularly affected the market
price for many high technology companies and that have often been unrelated to
the operating performance of these companies. The Company's stock price has
been, and is likely to continue to be, highly volatile. The market price
(closing sale price)of the Company's Common Stock has fluctuated substantially
in recent periods. These broad market fluctuations may adversely affect the
market price of the Notes and the Common Stock into which the Notes are
convertible, and there can be no assurance that the market price of the Notes
and the Common Stock into which the Notes are convertible will not decline below
the levels prevailing at the time of this offering. In the past, following
periods of volatility in the market price of a particular company's securities,
securities class action litigation has often been brought against that company.
Such litigation, if brought against the Company, could result in substantial
costs and a diversion of management's attention and resources.
Effect of Certain Charter Provisions; Certificate of Incorporation,
Bylaws, and Delaware Law. Certain provisions of the Company's Restated
Certificate of Incorporation and Bylaws and certain provisions of Delaware law
could delay or make difficult a merger, tender offer or proxy contest involving
the Company. The authorized but unissued capital stock of the Company
includes 5,000,000 shares of preferred stock. The Board of Directors is
authorized to provide for the issuance of such preferred stock in one or more
series and to fix the designations, preferences, powers and relative,
participating, optional or other rights and restrictions thereof. Accordingly,
the Company may in the future issue a series of preferred stock, without further
stockholder approval, that will have preference over the Common Stock with
respect to the payment of dividends and upon liquidation, dissolution or
winding-up of the Company. See "Description of Capital Stock -- Preferred
Stock." Further, Section 203 of the General Corporation Law of the State of
Delaware (as amended from time to time, the "DGCL"), which is applicable to the
Company, prohibits certain business combinations with certain stockholders for a
period of three years after they acquire 15% or more of the outstanding voting
stock of a corporation. Any of the foregoing could adversely affect holders of
the Company's Common Stock or discourage or make difficult any attempt to obtain
control of the Company. See "Description of Capital Stock -- Antitakeover
Provisions of the Certificate of Incorporation, Bylaws and Delaware Law" in the
Company's definitive proxy statement included in the Form S-4 filed with the
Commission on June 18, 1998, as amended.
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<PAGE> 16
USE OF PROCEEDS
The Company will not receive any of the proceeds from sales of the
Shares by the Selling Stockholders.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common
Stock and does not anticipate paying cash dividends in the foreseeable future.
In addition, the Company's credit facility restricts the Company's ability to
pay cash dividends.
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<PAGE> 17
SELLING STOCKHOLDERS
The following table sets forth certain information, as of July 31, 1998,
with respect to the number of shares of Common Stock owned by the Selling
Stockholders and as adjusted to give effect to the sale of the Shares offered
hereby. The Shares are being registered to permit public secondary trading of
the Shares, and the Selling Stockholders may offer the Shares for resale from
time to time. See "Plan of Distribution."
The Shares being offered by the Selling Stockholders were acquired from
the Company in the Company's acquisition of AppSource Corporation, a Florida
corporation, ("AppSource"), pursuant to the Agreement and Plan of Merger and
Reorganization dated December 16, 1997, whereby AS Acquisitions Corporation, a
Delaware corporation and a wholly-owned subsidiary of the Company, was merged
with and into AppSource, and all outstanding shares of capital stock of
AppSource were converted into cash and/or shares of Common Stock of the Company.
The Common Stock was issued pursuant to the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof. Each of the
Selling Stockholders represented to the Company that it was acquiring the Shares
for investment and with no present intention of distributing the Shares.
The Company has filed with the Commission, under the Securities Act, a
Registration Statement on Form S-3, of which this Prospectus forms a part, with
respect to the resale of the Shares from time to time on the Nasdaq National
Market or in privately-negotiated transactions. The Company has agreed to use
commercially reasonable efforts to keep such Registration Statement effective
for the lesser of until December 16, 1998 or until all Shares have been sold.
The Shares offered by this Prospectus may be offered from time to time
by the Selling Stockholders named below:
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Prior to Offering After the Offering
-------------------------- --------------------------
Number of Number of Shares Number of
Name and Address of Selling Stockholder Shares Percent(1) Being Offered Shares Percent(1)
- --------------------------------------- ----------- ---------- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Marc D. Batchelor 8,268 * 1,654 6,614 *
1894 Branchwater Trail,
Orlando, FL 32825
Roger A. Boutilier 182 * 37 145 *
7429 Betty St
Winter Park, FL 32792
Daley Family Ltd. 35,534 * 7,107 28,427 *
4751 Rosewood Dr.
Orlando, FL 32806
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Prior to Offering After the Offering
-------------------------- --------------------------
Number of Number of Shares Number of
Name and Address of Selling Stockholder Shares Percent(1) Being Offered Shares Percent(1)
- --------------------------------------- ----------- ---------- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
James Dixon 12,004 * 2,401 9,603 *
956 Stonecreek Ct
Longwood, FL 32779
Chris Dziekan 1,200 * 240 960 *
774 Spring Island Way
Orlando, FL 32828
Adrian J. Marshall 16,806 * 3,362 13,444 *
13037 Mulberry Park Dr. #521
Orlando, FL 32821
Douglas A. Moran 10,084 * 2,017 8,067 *
5055 Canoni Place
Cocoa, FL 32927
Todd A. Vanhoozier 182 * 37 145 *
3355 Mission Lake Dr. #393
Orlando, FL 32817
====== ==== ====== ====== ======
TOTAL 84,260 * 16,855 67,405 *
</TABLE>
- ----------
* Less than 1%
1 Based upon shares of Common Stock outstanding on July 31, 1998. This
Registration Statement shall also cover any additional shares of Common
Stock which become issuable in connection with the shares registered for
sale hereby by reason of any stock dividend, stock split, recapitalization
or other similar transaction effected without the receipt of consideration
which results in an increase in the number of the Company's outstanding
shares of Common Stock.
16
<PAGE> 19
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, $0.001 par value, and 5,000,000 shares of Preferred
Stock, $0.001 par value.
COMMON STOCK
As of July 6, 1998, there were 11,489,842 shares of Common Stock
outstanding that were held of record by approximately 260 stockholders. The
holders of Common Stock are entitled to one vote per share on all matters to be
voted upon by the stockholders. Subject to preferences that may be applicable to
any outstanding Preferred Stock, the holders of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared from time to time by
the Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of the liquidation, dissolution, or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
Preferred Stock, if any, then outstanding. The Common Stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are fully paid and nonassessable, and the shares of Common Stock
to be issued upon completion of this offering will be fully paid and
nonassessable.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes 5,000,000 shares
of Preferred Stock. The Board of Directors has the authority to issue the
Preferred Stock in one or more series and to fix the rights, preferences,
privileges, and restrictions thereof, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences, and the number of shares constituting any series or the
designation of such series, without further vote or action by the stockholders.
The issuance of Preferred Stock may have the effect of delaying, deferring, or
preventing a change in control of the Company without further action by the
stockholders and may adversely affect the voting and other rights of the holders
of Common Stock. The issuance of Preferred Stock with voting and conversion
rights may adversely affect the voting power of the holders of Common Stock,
including the loss of voting control to others. At present, the Company has no
plans to issue any of the Preferred Stock.
ANTITAKEOVER PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE
LAW
Certificate of Incorporation and Bylaws
The Certificate of Incorporation provides that all stockholder actions
must be effected at a duly called meeting and not by a consent in writing. In
addition, the Company's Amended and Restated Bylaws will not permit the
stockholders of the Company to call a special meeting of stockholders. These
provisions of the Certificate of Incorporation and Bylaws could discourage
potential acquisition proposals and could delay or prevent a change in control
of the Company. These provisions are intended to enhance the likelihood of
continuity and stability in the composition of the Board of Directors and in the
policies formulated by the Board of Directors and to discourage certain types of
transactions that may involve an actual or threatened change of control of the
Company. These provisions are designed to reduce the vulnerability of the
Company to an unsolicited acquisition proposal. The provisions also are intended
to discourage certain tactics that may be used in proxy fights. However, such
provisions could have the effect of discouraging others from making tender
offers for the Company's shares and, as a consequence, they also may inhibit
fluctuations in the market price of the Company's shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect of
preventing changes in the management of the Company. See "Risk Factors--Effect
of Certain Charter Provisions; Certificate of Incorporation, Bylaws, and
Delaware Law."
Delaware Antitakeover Statute
The Company is subject to Section 203 of the Delaware General
Corporation Law ("Section 203"), which, subject to certain exceptions, prohibits
a Delaware corporation from engaging in any business combination with any
interested stockholder for a period of three years following the date that such
stockholder became an interested stockholder, unless: (i) prior to such date,
the board of directors of the corporation approved either the business
17
<PAGE> 20
combination or the transaction that resulted in the stockholder becoming an
interested stockholder; (ii) upon consummation of the transaction that resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (x) by persons
who are directors and also officers and (y) by employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer,
or (iii) on or subsequent to such date, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least 66
2/3% of the outstanding voting stock that is not owned by the interested
stockholder.
Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge, or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges, or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
REGISTRATION RIGHTS
As of May 31, 1998, the holders of 731,326 shares of Common Stock
(assuming no exercise of options outstanding) (the "Registrable Securities")
were entitled to certain rights with respect to the registration of such shares
under the Securities Act. Under the terms of the agreements between the Company
and the holders of such Registrable Securities, if the Company proposed to
register any of its securities under the Securities Act, either for its own
account or, for certain such holders, for the account of other security holders
exercising registration rights, such holders are entitled to notice of such
registration and are entitled to include shares of such Common Stock therein.
Additionally, certain of such holders are also entitled to certain demand
registration rights pursuant to which they may require the Company to file a
registration statement under the Securities Act at its expense with respect to
their shares of Common Stock, and the Company is required to use its reasonable
efforts to effect such registration. Further, certain such holders may require
the Company to file additional registration statements on Form S-3. All of these
registration rights are subject to certain conditions and limitations, including
the right of the underwriters of an offering to limit the number of shares
included in such registration.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Boston
EquiServe, L.P.
18
<PAGE> 21
PLAN OF DISTRIBUTION
The Company will receive no proceeds from this offering. The Shares
offered hereby may be sold by the Selling Stockholders from time to time in
transactions in the over-the-counter market, on the Nasdaq National Market, in
privately negotiated transactions, or by 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 prevailing market prices or at negotiated prices. The
Selling Stockholders 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 Stockholders
and/or the purchasers of the Shares for whom such broker-dealers may act as
agents or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
under certain circumstances be deemed to be "underwriters" within the meaning of
the Securities Act, and any commissions received by them and any profit realized
on the resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholders may
agree to indemnify such broker-dealers against certain liabilities, including
liabilities under Securities Act.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholders (and, if it acts as agent for
the purchase of such Shares, from such purchaser). Broker-dealers may agree with
the Selling Stockholders to sell a specified number of Shares at a stipulated
price per share, and, to the extent such a broker-dealer is unable to do so
acting as agent for the Selling Stockholders, to purchase as principal any
unsold Shares. Brokers-dealers who acquire Shares as principal may thereafter
resell such Shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, on the Nasdaq National Market, in privately negotiated
transactions, or by 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, and in
connection with such resales may pay to or receive from the purchasers of such
Shares commissions computed as described above.
Under applicable rules and regulations under the 1934 Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the 1934 Act and the rules and regulations
thereunder, including, without limitation, Rules 10b-6 and 10b-7, which
provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholders.
The Selling Stockholders will pay all commissions and other expenses
associated with the sale of Shares by it. The Shares offered hereby are being
registered pursuant to contractual obligations of the Company, and the Company
has agreed to bear certain expenses in connection with the registration and sale
of the Shares being offered by the Selling Stockholders. The Company has not
made any underwriting arrangements with respect to the sale of Shares offered
hereby.
19
<PAGE> 22
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP,
Menlo Park, California.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Arbor Software Corporation for
the year ended March 31, 1998 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
20
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The fees and expenses incurred by the Registrant in connection with the
offering are payable by the Registrant and, other than filing fees, are
estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.................. $ 180
Legal Fees and Expenses.............................................. 25,000
Accounting Fees and Expenses......................................... 10,000
Miscellaneous........................................................ 39,820
------
Total............................................................ $75,000
======
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
SubSection (a) of Section 145 of the General Corporation Law of the
State of Delaware (the "DGCL") empowers a corporation to indemnify any person
who was or is a party or who is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
SubSection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful on the merits or
otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; that
indemnification provided for by Section 145 shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators; and that the corporation is
empowered to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the corporation against any
liability asserted against him and incurred by him in any such capacity, or
21
<PAGE> 24
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under Section 145.
The Registrant also provides liability insurance for its directors and
officers which provides for coverage against loss from claims made against
directors and officers in their capacity as such, including liabilities under
the Securities Act of 1933, as amended.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
Article IX of the Registrant's Restated Certificate of Incorporation limits the
liability of directors to the fullest extent permitted by Section 102(b)(7).
ITEM 16. EXHIBITS.
The exhibits listed in the Exhibit Index as filed as part of this
Registration Statement.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1+ Registration Rights Agreement dated July 31, 1998, by and among the
Registrant and the Selling Stockholders
4.2 Specimen Common Stock Certificate(1)
5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
10.1 Registration Rights Agreement (see exhibit 4.1)
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
(included in the opinion filed as Exhibit 5.1)
24 Power of Attorney (included on page II-4)
27.1 Financial Data Schedule(2)
</TABLE>
-------------------
+ Incorporated by reference to such exhibit as filed in the Registrant's
Form 8-K, dated July 31, 1998, filed with the Commission on August 10,
1998.
(1) Incorporated by reference to such exhibit as filed in the Registrant's
Registration Statement on Form S-1, filed November 6, 1995 (File No.
33-97098), as amended.
(2) Incorporated by reference to such exhibit as filed in the Registrant's
Form 10-K for the fiscal year ended March 31, 1998.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or event arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b), if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) of this Section
do not apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
22
<PAGE> 25
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 the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Sunnyvale, State of California, on the 18th day of August,
1998.
ARBOR SOFTWARE CORPORATION
By: /s/ John M. Dillon
--------------------------------------
John M. Dillon
President and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby severally constitutes and appoints John M. Dillon, his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities to sign any and 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 attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that each said attorneys-if-fact
and agents or any of them or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ John M. Dillon President, Chief Executive August 18, 1998
- -------------------------- Officer, and Director
John M. Dillon
/s/ Stephen V. Imbler Senior Vice President and August 18, 1998
- -------------------------- Chief Financial Officer
Stephen V. Imbler
/s/ James A. Dorrian Director August 18, 1998
- --------------------------
James A. Dorrian
/s/ Mark W. Perry Director August 18, 1998
- --------------------------
Mark W. Perry
/s/ Jeffrey R. Rodek Director August 18, 1998
- --------------------------
Jeffrey R. Rodek
/s/ Ann L. Winblad Director August 18, 1998
- --------------------------
Ann L. Winblad
</TABLE>
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1+ Registration Rights Agreement dated July 31, 1998, by and among the
Registrant and the Selling Stockholders
4.2 Specimen Common Stock Certificate(1)
5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
10.1 Registration Rights Agreement (see exhibit 4.1)
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
(included in the opinion filed as Exhibit 5.1)
24 Power of Attorney (included on page II-4)
27.1 Financial Data Schedule(2)
</TABLE>
-------------------
+ Incorporated by reference to such exhibit as filed in the Registrant's
Form 8-K, dated July 31, 1998, filed with the Commission on August 10,
1998.
(1) Incorporated by reference to such exhibit as filed in the Registrant's
Registration Statement on Form S-1, filed November 6, 1995 (File No.
33-97098), as amended.
(2) Incorporated by reference to such exhibit as filed in the Registrant's
Form 10-K for the fiscal year ended March 31, 1998.
<PAGE> 1
Exhibit 5.1
August ____, 1998
Arbor Software Corporation
1344 Crossman Avenue
Sunnyvale, California 94089
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 (File No.
333-_________) originally filed by Arbor Software Corporation (the "Company")
with the Securities and Exchange Commission (the "Commission") on August 14,
1998, as thereafter amended or supplemented (the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of up to 16,855 shares of the Company's Common Stock (the "Shares") previously
issued to certain of the shareholders (the "Stockholders") of AppSource
Corporation, a Florida corporation ("AppSource"), in connection with the merger
of a wholly owned subsidiary of the Company with and into AppSource. As your
counsel in connection with the filing of the Registration Statement, we have
examined the proceedings taken and are familiar with the proceedings proposed to
be taken by you in connection with the sale and issuance of the Shares.
It is our opinion that the Shares being sold by the Stockholders have been
validly issued, are non-assessable and, to our knowledge, are fully paid. Our
opinion with respect to the shares being sold by the stockholders of the Company
being fully paid is based solely upon your written representations to us with
respect to the consideration received for such Shares.
We consent to the use of this opinion as an exhibit to said Registration
Statement and further consent to the use of our name wherever appearing in said
Registration Statement, including the prospectus constituting a part thereof,
and in any amendment or supplement thereto.
Very truly yours,
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
April 23 1998, except as to Note 12 which is as of May 25, 1998, appearing on
page 31 of Arbor Software Corporation's Annual Report on Form 10-K for the year
ended March 31, 1998. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
San Jose, California
August 14, 1998
