<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
SEPTEMBER 19, 1997
----------------------------------------------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
PEREGRINE SYSTEMS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-2222209 95-3773312
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
12670 HIGH BLUFF DRIVE
SAN DIEGO, CALIFORNIA 19203
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 481-5000
NOT APPLICABLE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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<PAGE>
The undersigned Registrant hereby amends the following items, financial
statements, exhibits, or other portions of its Current Report on Form 8-K,
originally filed with the Securities and Exchange Commission on October 2, 1997
(the "Form 8-K"), as set forth in the pages attached hereto.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS FOR UNITED SOFTWARE, INC.
On August 29, 1997, the Company's Board of Directors approved the
acquisition of Apsylog S.A., a French corporation ("Apsylog"),
based in Paris, France, through the acquisition of all of the
outstanding shares of United Software, Inc., a Delaware
corporation ("United") and the parent corporation of Apsylog.
The acquisition, which was completed September 19, 1997, was
pursuant to an Agreement and Plan of Reorganization dated
effective as of August 29, 1997 (the "Reorganization Agreement")
among the Company, French Acquisition Corporation, a wholly owned
subsidiary of the Company formed for the purpose of effecting the
acquisition (the "Acquisition"), United and certain stockholders
of United.
The purpose of this amended Form 8-K is to file required
financial statements relating to the acquisition, including
required pro-forma financial information. The following
financial statements relating to the Acquisition are attached
hereto:
FINANCIAL STATEMENT INDEX PAGE
------------------------- ----
Report of Independent Public Accountants. . . . . . . . F-1
Consolidated Balance Sheets of United Software,
Inc. as of December 31, 1995, December 31,
1996, and June 30, 1997 (unaudited). . . . . . . . F-2
Consolidated Statements of Operations of United
Software, Inc. for the years ended December 31,
1995 and 1996 and for the six months ended
June 30, 1996 and 1997 (unaudited) . . . . . . . . F-3
Consolidated Statements of Stockholders' Deficit of
United Software, Inc. for the years ended
December 31, 1995 and 1996 and for the six
months ended June 30, 1997 (unaudited) . . . . . . F-4
Consolidated Statements of Cash Flows of United
Software, Inc. for the years ended December 31,
1995 and 1996 and for the six months ended
June 30, 1996 and 1997 (unaudited) . . . . . . . . F-5
Notes to the Consolidated Financial Statements. . . . . F-6
-2-
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma combined financial statements
are attached hereto:
PRO FORMA FINANCIAL STATEMENTS PAGE
------------------------------ ----
Pro Forma Combined Financial Information. . . . . . . . F-14
Unaudited Pro Forma Combined Balance Sheet. . . . . . . F-15
Unaudited Pro Forma Statement of Operations
for the three months ended June 30, 1997 . . . F-16
Unaudited Pro Forma Statement of Operations
for the year ended March 31, 1997. . . . . . . F-17
Notes to the Unaudited Pro Forma Combined
Financial Information. . . . . . . . . . . . . F-18
(c) EXHIBITS.
2.1++ Agreement and Plan of Reorganization, dated effective as
of August 29, 1997, among Peregrine Systems, Inc.,
French Acquisition Corporation, United Software, Inc.,
and certain stockholders of United Software, Inc., and
related exhibits. The disclosure schedule of United
Software, Inc. to the Agreement and Plan of
Reorganization, which cites to certain factual matters
as exceptions to the contractual representations of
United Software, Inc. and certain of its stockholders,
has been omitted. The Company agrees to supplementally
furnish a copy of such disclosure schedule to the
Commission upon request.
23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants
99.1++ Press release of Peregrine Systems, Inc.
- --------------------------
++ Previously filed.
Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to the
Agreement and Plan of Reorganization have been omitted. The Registrant
hereby agrees to furnish such schedules upon request of the Securities and
Exchange Commission.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 30, 1997
PEREGRINE SYSTEMS, INC.
By: /s/ DAVID A. FARLEY
-----------------------------
David A. Farley,
Vice President, Finance,
Chief Financial Officer
-4-
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To United Software, Inc.:
We have audited the accompanying consolidated balance sheets of United Software,
Inc. (a Delaware corporation) and subsidiaries as of December 31, 1995 and 1996
and the related consolidated statements of operations, stockholders' deficit and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United Software, Inc. and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
San Diego, California
/s/ Arthur Andersen LLP
-----------------------------
September 19, 1997
ARTHUR ANDERSEN LLP
F-1
<PAGE>
UNITED SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1995 1996 1997
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 168 $ 1,114 $ 896
Accounts receivable, net of allowance for doubtful accounts of
$70, $45 and $97, respectively . . . . . . . . . . . . . . . . . 2,352 3,297 4,030
Other current assets . . . . . . . . . . . . . . . . . . . . . . 290 370 258
------- ------- -------
Total current assets . . . . . . . . . . . . . . . . . . . . 2,810 4,781 5,184
Property and equipment, net. . . . . . . . . . . . . . . . . . . 240 322 348
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 94 875 887
------- ------- -------
$ 3,144 $ 5,978 $ 6,419
------- ------- -------
------- ------- -------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Bank line of credit. . . . . . . . . . . . . . . . . . . . . . . $ 439 $ 675 $ 1,486
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 933 1,854 1,701
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 1,957 5,702 3,993
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . 92 1,033 2,315
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,218 1,329
------- ------- -------
Total current liabilities. . . . . . . . . . . . . . . . . . 3,421 10,482 10,824
------- ------- -------
Commitments and Contingencies
Stockholders' Deficit:
Series A, preferred stock. . . . . . . . . . . . . . . . . . . . 2,182 2,589 2,974
Series B, preferred stock. . . . . . . . . . . . . . . . . . . . -- -- 1,455
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . (2,429) (7,141) (8,878)
Cumulative translation adjustment. . . . . . . . . . . . . . . . (30) 48 44
------- ------- -------
Total stockholders' deficit. . . . . . . . . . . . . . . . . (277) (4,504) (4,405)
------- ------- -------
$ 3,144 $ 5,978 $ 6,419
------- ------- -------
------- ------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE>
UNITED SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
1995 1996 1996 1997
--------- ---------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C>
Revenues:
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,422 $ 4,168 $ 1,875 $ 2,672
Maintenance and services . . . . . . . . . . . . . . . . . . . . 1,537 2,300 1,232 1,807
--------- ---------- --------- ---------
Total revenues. . . . . . . . . . . . . . . . . . . . . . . . 6,959 6,468 3,107 4,479
--------- ---------- --------- ---------
Costs and Expenses:
Cost of licenses . . . . . . . . . . . . . . . . . . . . . . . . 909 1,179 475 605
Cost of maintenance and services . . . . . . . . . . . . . . . . 1,417 2,334 1,165 1,349
Sales and marketing. . . . . . . . . . . . . . . . . . . . . . . 2,289 2,961 1,317 1,616
Research and development . . . . . . . . . . . . . . . . . . . . 2,706 3,001 1,165 1,529
General and administrative . . . . . . . . . . . . . . . . . . . 1,569 2,030 903 1,107
--------- ---------- --------- ---------
Total costs and expenses. . . . . . . . . . . . . . . . . . . 8,890 11,505 5,025 6,206
--------- ---------- --------- ---------
Operating loss. . . . . . . . . . . . . . . . . . . . . . . . (1,931) (5,037) (1,918) (1,727)
Interest income (expense). . . . . . . . . . . . . . . . . . . . . 132 (17) (7) (61)
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 342 233 51
--------- ---------- --------- ---------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,603) $ (4,712) $ (1,692) $ (1,737)
--------- ---------- --------- ---------
--------- ---------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
UNITED SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(in thousands)
<TABLE>
<CAPTION>
NO. OF SERIES A NO. OF SERIES B
PREFERRED SERIES A PREFERRED SERIES B
SHARES PREFERRED SHARES PREFERRED COMMON
OUTSTANDING STOCK OUTSTANDING STOCK STOCK
--------------- --------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 . . . . . . . 2,000 $ 1,500 -- $ -- $ --
Net Loss . . . . . . . . . . . . . . . . -- -- -- -- --
Issuance of Series A
Preferred Stock. . . . . . . . . . . . 909 682 -- -- --
Equity adjustment from foreign
currency translation . . . . . . . . . -- -- -- -- --
------- ------- ------- ------- -------
Balance, December 31, 1995 . . . . . . . 2,909 2,182 -- -- --
Net Loss . . . . . . . . . . . . . . . . -- -- -- -- --
Issuance of Series A
Preferred Stock. . . . . . . . . . . . 543 407 -- -- --
Equity adjustment from foreign
currency translation . . . . . . . . . -- -- -- -- --
------- ------- ------- ------- -------
Balance, December 31, 1996 . . . . . . . 3,452 2,589 -- -- --
Net Loss (Unaudited) . . . . . . . . . . -- -- -- -- --
Issuance of Series A
Preferred Stock (Unaudited). . . . . . 514 385 -- -- --
Issuance of Series B
Preferred Stock (Unaudited). . . . . . -- -- 2,010 1,455 --
Equity adjustment from
foreign currency
translation (Unaudited). . . . . . . . -- -- -- -- --
------- ------- ------- ------- -------
Balance, June 30, 1997
(Unaudited). . . . . . . . . . . . . . 3,966 $ 2,974 2,010 $ 1,455 $ --
------- ------- ------- ------- -------
------- ------- ------- ------- -------
<CAPTION>
CUMULATIVE TOTAL
ACCUMULATED TRANSLATION STOCKHOLDERS
DEFICIT ADJUSTMENT DEFICIT
------------ ------------ -------------
<S> <C> <C> <C>
Balance, December 31, 1994 . . . . . . . $ (826) $ -- $ 674
Net Loss . . . . . . . . . . . . . . . . (1,603) -- (1,603)
Issuance of Series A
Preferred Stock. . . . . . . . . . . . -- -- 682
Equity adjustment from foreign
currency translation . . . . . . . . . -- (30) (30)
-------- -------- --------
Balance, December 31, 1995 . . . . . . . (2,429) (30) (277)
Net Loss . . . . . . . . . . . . . . . . (4,712) -- (4,712)
Issuance of Series A
Preferred Stock. . . . . . . . . . . . -- -- 407
Equity adjustment from foreign
currency translation . . . . . . . . . -- 78 78
-------- -------- --------
Balance, December 31, 1996 . . . . . . . (7,141) 48 (4,504)
Net Loss (Unaudited) . . . . . . . . . . (1,737) -- (1,737)
Issuance of Series A
Preferred Stock (Unaudited). . . . . . -- -- 385
Issuance of Series B
Preferred Stock (Unaudited). . . . . . -- -- 1,455
Equity adjustment from
foreign currency
translation (Unaudited). . . . . . . . -- (4) (4)
-------- -------- --------
Balance, June 30, 1997
(Unaudited). . . . . . . . . . . . . . $ (8,878) $ 44 $ (4,405)
-------- -------- --------
-------- -------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
UNITED SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- -------------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,603) $(4,712) $(1,692) $(1,737)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 65 81 38 47
Increase (decrease) in cash resulting from changes in:
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . 186 (945) (235) (733)
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . 359 (80) (353) 112
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22) (59) (10) (12)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . (114) 921 905 (153)
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 463 4,255 645 (2,219)
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . 76 941 54 1,282
---------- ---------- ---------- ----------
Net cash provided by (used in) operating activities . . . . . . . (590) 402 (648) (3,413)
---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchases of property and equipment. . . . . . . . . . . . . . . . . (222) (163) (52) (73)
Cash paid for goodwill . . . . . . . . . . . . . . . . . . . . . . . -- (212) (212) --
---------- ---------- ---------- ----------
Net cash (used in) investing activities . . . . . . . . . . . . . (222) (375) (264) (73)
---------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds (repayments) from bank line of credit, net. . . . . . . . . 164 236 (79) 811
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . (64) 198 385 621
Issuance of preferred stock. . . . . . . . . . . . . . . . . . . . . 682 407 407 1,840
---------- ---------- ---------- ----------
Net cash provided by financing activities . . . . . . . . . . . . 782 841 713 3,272
---------- ---------- ---------- ----------
Effect of exchange rate changes on cash. . . . . . . . . . . . . . . . (30) 78 31 (4)
---------- ---------- ---------- ----------
Net increase (decrease) in cash. . . . . . . . . . . . . . . . . . . . (60) 946 (168) (218)
Cash, beginning of year. . . . . . . . . . . . . . . . . . . . . . . . 228 168 168 1,114
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Cash, end of year. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 168 $ 1,114 $ -- $ 896
---------- ---------- ---------- ----------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ 17 $ 7 $ 61
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Supplemental Disclosure of Non Cash Investing and Financing Activities:
Issuance of note payable in connection with acquisition. . . . . . . $ -- $ 510 $ 510 $ --
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
UNITED SOFTWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION RELATING TO THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1997 IS UNAUDITED)
1. COMPANY OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
On May 30, 1997, Apsylog S.A., a French corporation organized under the laws of
the Republic of France, became a majority-owned subsidiary of United Software,
Inc., a Delaware corporation. United Software, Inc. is a worldwide leader in IT
Asset Management software and services. Apsylog Asset Manager is a
comprehensive decision support software solution that manages the entire IT
asset lifecycle, from asset acquisition, through asset deployment and tracking,
to asset retirement. Designed to meet the requirements of some of the world's
most sophisticated users of information technology, Asset Manager combines
procurement, asset tracking, and help desk modules into a powerful enterprise
information resource. The company sells its software and services in both
Europe and the United States through both a direct and indirect sales force.
Pursuant to an Agreement and Plan of Reorganization dated effective as of
August 29, 1997, on September 19, 1997, the Company completed the sale of all of
its outstanding capital stock to Peregrine Systems, Inc. ("Peregrine"). See
Note 10.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements have been prepared in accordance with U.S.
Generally Accepted Accounting Principles and include the accounts of United
Software, Inc. and its wholly owned subsidiaries (collectively, "the Company").
All significant intercompany accounts and transactions have been eliminated.
INTERIM FINANCIAL INFORMATION (UNAUDITED)
The unaudited interim balance sheet as of June 30, 1997 and the statements of
operations and cash flows and related notes for the six months ended June 30,
1997 and 1996 have been prepared on the same basis as the audited financial
statements and, in the opinion of management, include all adjustments,
consisting of only normal recurring adjustments, necessary for a fair
presentation of the financial position and results of operations in accordance
with generally accepted accounting principles. Results for the interim periods
are not necessarily indicative of results to be expected for the full fiscal
year.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-6
<PAGE>
REVENUE RECOGNITION
The Company generates revenues from licensing the rights to use its software
products primarily to end users. The Company also generates revenues from
post-contract support (maintenance), consulting and training services
performed for customers who license its products.
Revenues from software license agreements are recognized currently, provided
that all of the following conditions are met: a legally binding agreement has
been signed, the software has been delivered, there are no material
uncertainties regarding customer acceptance, collection of the resulting
receivable is deemed probable, and no other significant vendor obligations
exist. Revenues from maintenance services are recognized ratably over the term
of the maintenance period, generally one year. Maintenance revenues which are
bundled with license agreements are unbundled using vendor specific objective
evidence. Consulting revenues are primarily related to implementation services
performed on a time and material basis under separate service agreements for the
installation of the Company's software products. Revenues from consulting and
training services are recognized as the respective services are performed.
Cost of license revenues consist primarily of amounts to be paid to third-party
vendors, product media, manuals, packaging materials, personnel and related
shipping costs. Cost of maintenance and service revenues consists primarily of
salaries, benefits, and allocated overhead costs incurred in providing telephone
support, consulting services, and training to customers.
BUSINESS RISK AND CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of
credit risk principally consist of trade receivables. The Company performs
ongoing credit evaluations of its customers financial condition. Management
believes that the concentration of credit risk with respect to trade receivables
is further mitigated as the Company's customer base consists primarily of large
companies. The Company maintains reserves for credit losses and such losses
historically have been within management expectations.
A significant portion of the Company's revenues are from its Apsylog Asset
Manager product and related services. Any factor adversely affecting the
pricing of, demand for or market acceptance of, the Apsylog Asset Manager
product could have a material adverse affect on the Company's business,
financial condition and results of operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of certain of the Company's financial instruments, including
accounts receivable, accounts payable and accrued expenses approximates fair
value due to their short maturities. Based on borrowing rates currently
available to the Company for loans with similar terms, the carrying value of its
term debt and borrowings under the Company's line of credit approximates fair
value.
FOREIGN CURRENCY RISK
The Company conducts business principally in French francs. As a result, the
Company is subject to the risk of foreign currency fluctuations. To date, the
Company has not experienced any material losses as a result of foreign currency
fluctuations.
F-7
<PAGE>
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
provided using the straight-line method over estimated useful lives, generally
three to five years for furniture and equipment. Amortization of leasehold
improvements is provided using the straight-line method over the lesser of the
useful lives of the assets or the terms of the related leases.
Maintenance and repairs are charged to operations as incurred. When assets are
sold, or otherwise disposed of, the cost and related accumulated depreciation
are removed from the accounts and any gain or loss is included in operations for
the applicable period.
GOODWILL
The excess of acquisition cost over the fair value of net assets of businesses
acquired (goodwill) is being amortized using the straight-line method, generally
over five years.
CAPITALIZED COMPUTER SOFTWARE
In accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed", software development costs are capitalized from the time the
product's technological feasibility has been established until the product is
released for sale to the general public. During the two years ended
December 31, 1995 and 1996 and the six months ended June 30, 1997 no software
development costs were capitalized as the costs incurred between achieving
technological feasibility and product release were minimal. Research and
development costs, including the design of product enhancements, are expensed as
incurred.
FOREIGN CURRENCY TRANSLATION
The functional currency of the Company is the French franc. Assets and
liabilities of the Company's foreign operations are translated into United
States dollars at the exchange rate in effect at the balance sheet date, and
revenue and expenses are translated at the average exchange rate for the
period. Translation gains or losses of the Company's foreign subsidiaries are
not included in operations but are reported as a separate component of
stockholders' deficit. Gains and losses on transactions in denominations
other than the functional currency of the Company's foreign operations, while
not significant in amount, are included in the results of operations. The
Company does not enter into foreign exchange transactions to hedge its
balance sheet exposures or intercompany balances against movements in foreign
exchange rates.
INCOME TAXES
Deferred taxes are provided utilizing the liability method as prescribed by SFAS
No. 109, "Accounting for Income Taxes," whereby deferred tax assets are
recognized for deductible temporary differences and operating loss
carryforwards, and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized.
F-8
<PAGE>
2. BALANCE SHEET COMPONENTS
Other current assets consist of the following (in thousands):
DECEMBER 31, DECEMBER 31, JUNE 30,
1995 1996 1997
------------ ------------- -------------
(unaudited)
Inventory................. $197 $177 $136
Prepaid and other......... 93 193 122
---- ---- ----
$290 $370 $258
---- ---- ----
---- ---- ----
Property and equipment consist of the following (in thousands):
DECEMBER 31, DECEMBER 31, JUNE 30,
1995 1996 1997
------------ ------------- -------------
(unaudited)
Furniture and Equipment... $328 $435 $487
Leasehold improvements.... 1 57 78
---- ---- ----
329 492 565
Accumulated depreciation.. (89) (170) (217)
---- ---- ----
$240 $322 $348
---- ---- ----
---- ---- ----
Other assets consist of the following (in thousands):
DECEMBER 31, DECEMBER 31, JUNE 30,
1995 1996 1997
------------ ------------- -------------
(unaudited)
Goodwill, net............. $ 9 $731 $753
Other long-term assets.... 85 144 134
---- ---- ----
$94 $875 $887
---- ---- ----
---- ---- ----
Accrued expenses consist of the following (in thousands):
DECEMBER 31, DECEMBER 31, JUNE 30,
1995 1996 1997
------------ ------------- -------------
(unaudited)
Salaries and benefits..... $ 242 $ 370 $ 254
Legal and professional.... -- 77 77
Foreign taxes............. 733 1,295 1,311
Other..................... 982 3,960 2,351
------ ------ ------
$1,957 $5,702 $3,993
------ ------ ------
------ ------ ------
3. SALE OF SUBSIDIARIES
Subsequent to June 30, 1997, the Company sold the operations of its SMI and
Apsydoc subsidiaries. These subsidiaries were engaged in software related
services and hardware distribution. These companies were sold to their
respective management. The sales of these companies did not result in any
significant gains or losses. The assets of these companies have been included
in the June 30, 1997 balance sheet at their respective net realizable values.
Additionally, as part of the acquisition of the Company by Peregrine (see
Note 10), the management of its Netform and Apsynet subsidiaries are in the
process of negotiating the acquisition of these units from Peregrine.
Accordingly, net assets of these companies have been stated at their anticipated
net realizable value as of June 30, 1997.
F-9
<PAGE>
The operations of SMI, Apsydoc, Apsynet and Netform were not significant either
individually or collectively during the years ended December 31, 1995 and 1996
or during the six months ended June 30, 1997 and 1996.
4. DEBT
LINE OF CREDIT
The Company has a demand line of credit with a bank which provides for maximum
borrowings of 7 million French francs ($1,180,339 U.S. Dollars). The maximum
commitment is based on 100 percent of available accounts receivable and are
secured by commercial notes. Borrowings under the agreement bear interest at
the bank's French federal funds rate (6.3% at June 30, 1997) plus 3.25 percent
and are collateralized by trade receivables. At June 30, 1997, the Company had
exceeded its borrowing limit.
The Company's U.S. subsidiary had a demand line of credit with a bank for up to
$80,000 in support of trade accounts receivable. These advances bear interest
at prime plus 3 percent. These borrowings are secured by U.S. accounts
receivable. At June 30, 1997 the line was inactive. As of December 31, 1995
and 1996 and June 30, 1997, there was $80,000, $0, and $0 outstanding,
respectively.
NOTES PAYABLE
During 1993, Apsylog S.A. entered into agreements totaling 11,000,000 French
Francs ($2,059,926) with the French Government Export and Export Insurance
Administrator for the development of export products. These funds are to be
spent only for the development of export related products and are due upon a
change in control of the Company. These advances do not bear interest and are
to be repaid before 2001. At December 31, 1995 and 1996 and at June 30, 1997,
the following were outstanding $0, $708,000 and $819,000, respectively.
Additionally, during January 1996, the Company acquired the operations of
another company for approximately $1,000,000, of which approximately 50% was
paid at closing. The Company has allocated this purchase price to the net
assets acquired based on fair market value. The Company is obligated to pay the
remaining balance should the other company be acquired. Accordingly, the unpaid
balance of approximately $510,000 has been recorded as non-interest bearing
notes payable in the accompanying financial statements as of December 31, 1996
and June 30, 1997. The operations of this company were not significant in the
year ended December 31, 1996 or during the six months ended June 30, 1997.
5. INCOME TAXES
The Company has incurred losses since its inception. Net operating loss
carryforwards for foreign income tax purposes as of December 31, 1996 were
approximately $3,600,000. Net operating loss carryforwards for U.S. federal
income tax purposes as of December 31, 1996 were approximately $1,500,000. All
operating loss carryforwards are subject to certain limitations. In accordance
with SFAS 109, the Company has recorded a full valuation allowance against its
deferred tax asset since the Company cannot currently demonstrate that it is
more likely than not that its deferred tax asset will be realizable in future
periods.
6. COMMITMENTS AND CONTINGENCIES
The Company leases certain buildings and equipment under noncancellable
operating lease agreements. The leases generally require the Company to pay
all executory costs such as taxes, insurance, and maintenance related to the
assets. Certain of the leases contain provisions for periodic rate
escalations to reflect cost-of-living increases. Rent expense for such
leases totaled approximately $524,000 and $521,000 in 1995 and 1996, and
F-10
<PAGE>
$280,000 and $293,000 for the six months ended June 30, 1996 and 1997,
respectively. Future minimum lease payments for operating leases at June 30,
1997 are as follows (in thousands):
OPERATING
LEASES
---------
July 1, 1997 - December 31, 1997. . . . $ 75
1998. . . . . . . . . . . . . . . . . . 121
1999. . . . . . . . . . . . . . . . . . 66
2000. . . . . . . . . . . . . . . . . . 2
Thereafter. . . . . . . . . . . . . . . --
----
Total minimum lease payments . . . . $264
----
----
The Company is involved in various legal proceedings and claims arising in the
ordinary course of business, none of which, in the opinion of management, is
expected to have a material adverse effect on the Company's consolidated
financial position or results of operations.
7. STOCKHOLDERS' DEFICIT
On May 30, 1997, Apsylog S.A. was reorganized to become a majority-owned
subsidiary of United Software, Inc., a Delaware corporation. In connection
therewith, substantially all of the shares of common stock of Apsylog were
exchanged for a similar number of Preferred A shares of United Software.
Additionally, 3,078,983 common shares of Apsylog S.A. are subject to put/call
arrangements at a similar exchange rate. Accordingly, the common stock of
Apsylog S.A. is considered Preferred A shares of United Software, Inc. for all
periods presented.
United Software, Inc. has no operations apart from holding its investment in
Apsylog S.A.
In connection with the reincorporation of Apsylog discussed above, United
Software established the following capital structure:
Common Stock: 15,000,000 authorized of which 1,000,000 have been reserved for
issuance under the Company's 1997 Stock plan. There are no outstanding common
shares at June 30, 1997.
PREFERRED STOCK
In connection with reincorporation, 10,000,000 shares of preferred stock have
been authorized of which two series, A and B, have been designated.
Series A
3,966,084 shares of preferred stock have been designated Series A. These shares
are junior to Series B in liquidation and carry a $.075 annual non-cumulative
dividend. The common shares outstanding are considered Series A Preferred for
all periods presented. These shares are convertible into an equal number of
common shares at the option of the holder or upon the occurrence of an initial
public offering or upon a change of control.
Series B
2,009,530 shares have been designated Series B preferred stock. These shares
have a liquidation preference before Series A and carry an annual non-cumulative
dividend rate of $.075 per share. These shares are
F-11
<PAGE>
convertible at the option of the holder into an equal number of common shares.
The conversion is mandatory upon the occurrence of an initial public offering or
upon a change of control.
The remaining 4,024,386 preferred shares are undesignated.
STOCK OPTIONS
During July 1997, the Company established the 1997 United Software, Inc. Stock
Plan. The Company has reserved 1,000,000 shares of common stock for grant under
this plan. This plan provides for the grant of options or stock at a current
price as determined by the Company's Board of Directors. Option and stock
grants generally vest over four years.
There have been no grants of stock options through June 30, 1997. See Note 10.
8. PROFIT SHARING PLAN
The Company maintains a profit sharing plan covering substantially all employees
in France. This plan provides for payments to employees by the attainment of
certain revenue and income targets. During the year ended December 31, 1995 and
during the six-month periods ended June 30, 1996 and 1997 the Company did not
reach the revenue and income targets and therefore made no payments during the
respective periods. However, for the year ended December 31, 1996, the Company
provided $111,674.
9. GEOGRAPHIC OPERATIONS
The Company operates exclusively in the computer software industry. A summary
of the Company's operations by geographic area is presented below (in
thousands):
UNITED STATES EUROPE CONSOLIDATED
Year ended December 31, 1995
Revenues. . . . . . . . . . . . . $ 273 $6,686 $6,959
Operating (loss). . . . . . . . . (290) (1,641) (1,931)
Identifiable assets . . . . . . . 65 3,079 3,144
Year ended December 31, 1996
Revenues. . . . . . . . . . . . . $ 636 $5,832 $6,468
Operating (loss). . . . . . . . . (681) (4,356) (5,037)
Identifiable assets . . . . . . . 1,147 4,831 5,978
Six months ended June 30, 1996
Revenues. . . . . . . . . . . . . $ 38 $3,069 $3,107
Operating (loss). . . . . . . . . (387) (1,531) (1,918)
Identifiable assets . . . . . . . 640 3,670 4,310
Six months ended June 30, 1997
Revenues. . . . . . . . . . . . . $ 464 $4,015 $4,479
Operating (loss). . . . . . . . . (492) (1,235) (1,727)
Identifiable assets . . . . . . . 1,658 4,761 6,419
10. SUBSEQUENT EVENTS
In July 1997, the Company granted 511,858 options at $0.075 per share and stock
grants for 1,563,708 shares at $0.075 per share, all of which vested 100% at the
date of grant. Accordingly, the Company will take a charge in the relevant
period for the fair value of the grants.
F-12
<PAGE>
On August 29, 1997 the Company's Board of Directors approved, and pursuant to an
Agreement and Plan of Reorganization dated effective as of August 29, 1997, on
September 19, 1997, the Company completed the sale of all of its outstanding
equity interest, including outstanding options, to Peregrine for 1,916,213
shares of Peregrine common stock valued at approximately $30,506,000.
F-13
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial information and
explanatory notes give effect to the acquisition of United Software, Inc. by
Peregrine Systems, Inc. pursuant to an Agreement and Plan of Reorganization
dated effective as of August 29, 1997 and are based on the estimates and
assumptions set forth in the notes to such statements. This pro forma
information has been prepared utilizing the historical financial statements of
Peregrine and United Software and should be read in conjunction with the
historical statements and notes thereto included elsewhere herein.
The unaudited pro forma combined balance sheet assumes that the acquisition
occurred on April 1, 1997 and is accounted for under the purchase method. The
pro forma combined statement of operations for the year ended March 31, 1997 and
the three months ended June 30, 1997 assumes the acquisition was consummated at
the beginning of such periods, April 1, 1996 and April 1, 1997, respectively.
The pro forma statement of operations does not purport to be indicative of the
operating results which would have been achieved had the acquisition been
consummated on the above dates and should not be construed as representative of
future operating results. The allocation of the purchase price in the
accompanying pro forma statements is based on management's preliminary estimates
and is subject to revision based on further studies and valuations.
F-14
<PAGE>
PRO FORMA COMBINED BALANCE SHEET
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
JUNE 30, 1997
<TABLE>
<CAPTION>
PEREGRINE UNITED
SYSTEMS, SOFTWARE, PRO FORMA PRO
INC. INC. ADJUSTMENTS FORMA
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents. . . . . . . . . $17,394 $ 896 $ (198)(F) $18,092
Accounts receivable, net of allowance
for doubtful accounts of $350 and $97,
respectively . . . . . . . . . . . . . . 10,265 4,030 (864)(F) 13,431
Financed receivables . . . . . . . . . . . 977 -- -- 977
Deferred tax assets. . . . . . . . . . . . 975 -- -- 975
Other current assets . . . . . . . . . . . 1,058 258 (258)(F) 1,058
---------- ---------- ---------- ----------
Total current assets . . . . . . . . . . 30,669 5,184 (1,320) 34,533
Property and equipment, net. . . . . . . . 4,391 348 (37)(F) 4,702
Goodwill, net. . . . . . . . . . . . . . . -- -- 3,650 (B),(C) 3,650
Other assets . . . . . . . . . . . . . . . 483 887 (887)(F) 483
---------- ---------- ---------- ----------
$35,543 $ 6,419 $1,406 $43,368
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Bank line of credit. . . . . . . . . . . . $ -- $ 1,486 $ -- $ 1,486
Accounts payable . . . . . . . . . . . . . 694 1,701 (552)(F) 1,843
Accrued expenses . . . . . . . . . . . . . 5,907 3,993 2,111 (A),(F) 12,011
Deferred revenue . . . . . . . . . . . . . 8,929 2,315 (97)(F) 11,147
Current portion of long-term debt. . . . . 226 1,329 -- 1,555
Current portion of capital lease obligation 256 -- -- 256
Total current liabilities. . . . . . . . 16,012 10,824 1,462 28,298
Deferred Revenue, net of current portion . 3,080 -- -- 3,080
---------- ---------- ---------- ----------
Total Liabilities. . . . . . . . . . . . 19,092 10,824 1,462 31,378
---------- ---------- ---------- ----------
Commitments and Contingencies:
Stockholders' Equity (Deficit):
Preferred Stock, $.001 par value, 5,000
shares authorized, no shares issued
or outstanding. . . . . . . . . . . . -- 4,429 (4,429)(D) --
Common stock, $.001 par value, 50,000
shares authorized, 15,216 and 17,132
shares issued and outstanding,
respectively. . . . . . . . . . . . . 15 -- 2 (A) 17
Additional paid-in-capital . . . . . . . . 33,205 -- 30,504 (A) 63,709
Accumulated deficit. . . . . . . . . . . . (14,390) (8,878) (26,089)(B),(D),(E) (49,357)
Unearned portion of deferred compensation. (1,680) -- -- (1,680)
Cumulative transition adjustment . . . . . (437) 44 (44)(D) (437)
Treasury stock, at cost. . . . . . . . . . (262) -- -- (262)
---------- ---------- ---------- ----------
Total stockholders' equity (deficit) . . 16,451 (4,405) (56) 11,990
---------- ---------- ---------- ----------
$35,543 $6,419 $1,406 $43,368
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
F-15
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(ALL AMOUNTS IN THOUSANDS, EXCEPT NET INCOME PER SHARE DATA)
(UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
PEREGRINE UNITED
SYSTEMS, SOFTWARE, PRO FORMA PRO
INC. INC. ADJUSTMENTS FORMA
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Licenses . . . . . . . . . . . . . . . . . $ 6,328 $ 909 $ -- $ 7,237
Maintenance and services . . . . . . . . . 4,687 385 -- 5,072
---------- ---------- ---------- ----------
Total revenues . . . . . . . . . . . . . 11,015 1,294 -- 12,309
---------- ---------- ---------- ----------
Costs and Expenses
Cost of licenses . . . . . . . . . . . . . 59 178 -- 237
Cost of maintenance and services . . . . . 1,781 396 2,177
Sales and marketing. . . . . . . . . . . . 4,317 521 -- 4,838
Research and development . . . . . . . . . 1,644 453 192 (E) 2,289
General and administrative . . . . . . . . 1,143 326 -- 1,469
---------- ---------- ---------- ----------
Total costs and expenses . . . . . . . . 8,944 1,874 192 11,010
---------- ---------- ---------- ----------
Operating income (loss). . . . . . . . . . 2,071 (580) (192) 1,299
Interest income (expense) and other, net . 178 (21) -- 157
Income from continuing operations before
income taxes . . . . . . . . . . . . . . 2,249 (601) (192) 1,456
Income tax expense . . . . . . . . . . . . 832 -- -- 832
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income (loss). . . . . . . . . . . . . $ 1,417 $ (601) $ (192) $ 624
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per share . . . . . . . . . . . $ 0.08 $ 0.03
---------- ----------
---------- ----------
Weighted average common and common
equivalent shares outstanding. . . . . . 17,567 19,483
---------- ----------
---------- ----------
</TABLE>
F-16
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(ALL AMOUNTS IN THOUSANDS, EXCEPT NET INCOME PER SHARE DATA)
FOR THE YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
PEREGRINE UNITED
SYSTEMS, SOFTWARE, PRO FORMA PRO
INC. INC ADJUSTMENTS FORMA
--------- --------- ----------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Licenses . . . . . . . . . . . . . . . . . $20,472 $ 4,168 $ -- $24,640
Maintenance and services . . . . . . . . . 14,563 2,300 -- 16,863
---------- ---------- ---------- ----------
Total revenues . . . . . . . . . . . . . 35,035 6,468 -- 41,503
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of licenses . . . . . . . . . . . . . 215 1,179 -- 1,394
Cost of maintenance and services . . . . . 4,661 2,334 6,995
Sales and marketing. . . . . . . . . . . . 15,778 2,961 -- 18,739
Research and development . . . . . . . . . 5,877 3,001 768 (E) 9,646
General and administrative . . . . . . . . 3,816 2,030 -- 5,846
---------- ---------- ---------- ----------
Total costs and expenses . . . . . . . . 30,347 11,505 768 42,620
---------- ---------- ---------- ----------
Operating income (loss). . . . . . . . . . 4,688 (5,037) (768) (1,117)
Interest income (expense) and other, net . (478) 325 -- (153)
Income from continuing operations before
income taxes . . . . . . . . . . . . . . 4,210 (4,712) (768) (1,270)
Income tax benefit . . . . . . . . . . . . 1,592 -- -- 1,592
---------- ---------- ---------- ----------
Net income (loss). . . . . . . . . . . . . $ 5,802 $(4,712) $ (768) $ 322
---------- ---------- ---------- ----------
Net income per share . . . . . . . . . . . $ 0.39 $ 0.02
---------- ----------
Weighted average common and common
equivalent shares outstanding. . . . . . 14,964 16,880
---------- ----------
---------- ----------
</TABLE>
F-17
<PAGE>
NOTES AND MANAGEMENT ASSUMPTIONS TO THE UNAUDITED
PRO FORMA COMBINED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
The unaudited pro forma combined financial statements of Peregrine have
been prepared based on the historical financial statements of Peregrine for
the year ended March 31, 1997 and the three months ended June 30, 1997, and
for United Software for the year ended December 31, 1996 and the three
months ended March 31, 1997, considering the effects of the acquisition
under the purchase method. The pro forma balance sheet of Peregrine at
June 30, 1997 has been prepared as if the acquisition had been consummated
at April 1, 1997. The pro forma statement of operations for the year ended
March 31, 1997 and for the three months ended June 30, 1997 has been
prepared as if the acquisition had been consummated on April 1, 1996 and
April 1, 1997, respectively.
In management's opinion, all material adjustments necessary to reflect the
effects of the acquisition have been made. The unaudited pro forma
combined financial statements are not necessarily indicative of the actual
financial position at June 30, 1997, or what the actual results of
operations of Peregrine would have been assuming the acquisition had been
completed as of April 1, 1996 or April 1, 1997, nor are they indicative of
the financial position or results of operations for future periods. The
pro forma combined financial statements should be read in conjunction with
the historical financial statements and notes thereto of Peregrine and
United Software.
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS
(A) The purchase price for the completion of the United Software
acquisition was determined by combining the value of Peregrine common
stock issued to United Software stockholders (1,916,213 common shares
valued at $15.92 per share), the net liability position of United
Software and the estimated transactions costs for the acquisition.
The purchase price for the completion of the United Software
acquisition is summarized below (in thousands):
Common stock $30,506
Estimated transaction costs 3,500
Assumption of net liabilities 4,611
-------
$38,617
-------
-------
(B) Allocation of the purchase price for the completion of the United
Software acquisition was determined as follows (in thousands):
Acquired in-process technology $34,775
Goodwill 3,842
-------
$38,617
-------
-------
(C) Amortization of the goodwill for United Software will be on the
straight-line method over five years and is included in depreciation
and amortization expense.
(D) Elimination of United Software stockholders' equity amounts.
(E) The pro forma combined statement of operations excludes the charge of
$34.8 million for acquired research and development, which arose from
the acquisition. These charges will be included in the Company's
consolidated financial statements for the three-month period ending
September 30, 1997.
F-18
<PAGE>
(F) The pro forma combined balance sheet excludes the assets and
liabilities of the subsidiaries of United Software which were sold
during the period from January 1, 1997 through the date of acquisition
and which are to be sold subsequent to the acquisition.
The purchase price for the United Software acquisition was allocated to the
tangible and intangible assets of United Software based on the fair
market values of those assets. The evaluation of the underlying technology
acquired considered the inherent difficulties and uncertainties in
completing the development, and thereby achieving technological feasibility,
and the risks related to the viability of and potential changes in future
target markets.
F-19
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
-------------------------------- ----
2.1++ Agreement and Plan of Reorganization, dated effective
as of August 29, 1997, among Peregrine Systems, Inc.,
French Acquisition Corporation, United Software, Inc.,
and certain stockholders of United Software, Inc., and
related exhibits. The disclosure schedule of United
Software, Inc. to the Agreement and Plan of Reorganization,
which cites to certain factual matters as exceptions to the
contractual representations of United Software, Inc. and
certain of its stockholders, has been omitted. The Company
agrees to supplementally furnish a copy of such disclosure
schedule to the Commission upon request.
23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants.
99.1++ Press release of Peregrine Systems, Inc.
- ----------------------
++ Previously filed.
F-20
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated September 19, 1997 covering the financial statements of
United Software, Inc. included in this Form 8-K/A, into the Company's previously
filed Registration Statement File No. 333-37105.
Arthur Andersen LLP
San Diego, California
September 19, 1997
