COMSHARE INC, S-3, 1995-10-11

COMSHARE INC
S-3, 1995-10-11
PREPACKAGED SOFTWARE

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<PAGE> 1

As filed with the Securities and Exchange Commission on October 11, 1995
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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COMSHARE, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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MICHIGAN 7372 38-1804887
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Code Classification) Identification No.)
</TABLE>

555 BRIARWOOD CIRCLE, ANN ARBOR, MICHIGAN 48108, (313) 994-4800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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KATHRYN A. JEHLE
COMSHARE, INCORPORATED
555 BRIARWOOD CIRCLE, ANN ARBOR, MICHIGAN 48108, (313) 994-4800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:

<TABLE>
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THOMAS S. VAUGHN, ESQ. THOMAS A. BEVILACQUA, ESQ.
DYKEMA GOSSETT PLLC BROBECK, PHLEGER & HARRISON
400 RENAISSANCE CENTER ONE MARKET
DETROIT, MI 48234-1668 SPEAR STREET TOWER
(313) 568-6524 SAN FRANCISCO, CA 94105
(415) 442-0900
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement is declared effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or investment 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
reinvestment plans, please check the following box. / /

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 the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
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CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED PRICE(1) FEE
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Common Stock, $1.00 par value........................ $39,592,800 $13,653
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(1) Estimated solely for the purpose of computing the registration fee.
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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.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. 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 OCTOBER 11, 1995

[COMSHARE, LOGO]

2,160,000 SHARES

COMMON STOCK

Of the 2,160,000 shares of Common Stock offered hereby, 1,125,000 shares
are being sold by Comshare, Incorporated ("Comshare" or the "Company") and
1,035,000 shares are being sold by the Selling Shareholders. The Company will
not receive any of the proceeds from the sale of shares by the Selling
Shareholders. See "Selling Shareholders." The Common Stock trades on the Nasdaq
National Market under the symbol "CSRE." On October 9, 1995, the last reported
sale price for the Common Stock was $18.33, as adjusted to reflect the recently
declared stock split described below. See "Price Range of Common Stock."

The Company's Board of Directors recently declared a three-for-two stock
split. This stock split, to be effective November 22, 1995, is conditioned upon
approval by the Company's shareholders of an increase in the number of
authorized shares of Common Stock on November 18, 1995. All share and per share
information in this Prospectus reflect the stock split. Purchasers of Common
Stock in this Offering will not be entitled to receive shares issued in the
stock split in respect of any shares so purchased.

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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" AT PAGE 7.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS COMPANY(1) SHAREHOLDERS(2)
<S> <C> <C> <C> <C>
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Per Share......................... $ $ $ $
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Total(3).......................... $ $ $ $
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(1) Before deducting expenses payable by the Company estimated at $234,000.

(2) Before deducting expenses payable by the Selling Shareholders estimated at
$216,000.

(3) The Company and the Selling Shareholders have granted the Underwriters a
30-day option to purchase up to an additional 168,750 shares and 155,250
shares of Common Stock, respectively, at the Price to Public shown above
less the Underwriting Discounts and Commissions, solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, Proceeds to Company
and Proceeds to Selling Shareholders will be $ , $ , $ and
$ , respectively. See "Underwriting."

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The Common Stock is offered by the Underwriters as stated herein, subject
to receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of the shares will be made
through the offices of Robertson, Stephens & Company, L.P. ("Robertson, Stephens
& Company"), San Francisco, California, on or about , 1995.

ROBERTSON, STEPHENS & COMPANY
VOLPE, WELTY & COMPANY
THE CHICAGO CORPORATION
The date of this Prospectus is , 1995.
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A DIAGRAM ILLUSTRATES THE PROCESS WHEREBY DATA IS
EXTRACTED FROM VARIOUS DATABASES BY DATA EXTRACTION
TOOLS CONTAINED IN COMSHARE'S PRODUCTS AND DELIVERED TO
THE DESKTOP BY A RANGE OF CLIENT FRONT-ENDS.

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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS OR THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN
THE COMPANY'S COMMON STOCK ON NASDAQ IN ACCORDANCE WITH RULE 10B-6A UNDER THE
EXCHANGE ACT. SEE "UNDERWRITING."

2
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NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO 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, ANY SELLING SHAREHOLDER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES
OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSON IN ANY JURISDICTION WHERE SUCH
AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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TABLE OF CONTENTS

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PAGE
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Available Information................................................................. 3
Incorporation of Certain Documents by Reference....................................... 4
Summary............................................................................... 5
Risk Factors.......................................................................... 7
Use of Proceeds....................................................................... 14
Price Range of Common Stock........................................................... 14
Dividend Policy....................................................................... 14
Capitalization........................................................................ 15
Selected Consolidated Financial Data.................................................. 16
Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................... 17
Business.............................................................................. 29
Management............................................................................ 43
Selling Shareholders.................................................................. 46
Description of Capital Stock.......................................................... 49
Shares Eligible for Future Sale....................................................... 51
Underwriting.......................................................................... 52
Legal Matters......................................................................... 53
Experts............................................................................... 53
Additional Information................................................................ 53
Index to Consolidated Financial Statements............................................ F-1
</TABLE>

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ARTHUR, Commander Budget, Commander OLAP, Commander Execu-View Server,
Commander FDC, Commander NewsAlert and Commander Prism are trademarks of
Comshare. Microsoft is a registered trademark and Windows is a trademark of
Microsoft Corporation. This Prospectus also includes other trademarks of
Comshare and trademarks of companies other than Comshare.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations
thereunder, and in accordance therewith files reports, proxy statements, and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed by the
Company can be inspected and copied at the Commission's Public Reference Section
at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the Regional
Offices of the Commission located at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
The Common Stock of the Company is quoted on the Nasdaq National Market.
Reports, proxy and information statements and other information concerning the
Company may be inspected at the offices of Nasdaq Operations at 1735 K Street,
N.W., Washington, D.C. 20006.

3
<PAGE> 5

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference: (i) the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995, as
filed with the Commission on September 28, 1995, (ii) the Company's Annual
Report on Form 10-K/A for the fiscal year ended June 30, 1995, as filed with the
Commission on October 2, 1995, and (iii) description of the Company's Common
Stock contained in the Prospectus forming a part of the Company's Registration
Statement on Form S-1 (no. 2-29663) (incorporated by reference into the
Company's Registration Statement on Form 10 under the Exchange Act, filed in
October 1969, as amended by Item 4 of the Company's Report on Form 8-K, filed in
January 1973, and Item 5 of the Company's Report on Form 8-K, filed in September
1988).

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, after the date of this Prospectus and prior to the
termination of this Offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement 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 statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents incorporated by reference in this Prospectus. Requests
for such documents should be directed to: Comshare, Incorporated, 555 Briarwood
Circle, Ann Arbor, MI 48108, Attention: Ricia Hughes, telephone (313) 994-4800.
The information relating to the Company contained in this Prospectus does not
purport to be comprehensive and should be read together with the information
contained in the incorporated documents.

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SUMMARY

The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and Consolidated Financial Statements and
Notes thereto, appearing elsewhere in the Prospectus. Unless otherwise noted,
all financial information, share and per share data in this Prospectus have been
adjusted to reflect a three-for-two stock split to be effective on November 22,
1995, conditioned upon approval by the Company's shareholders of an increase in
the number of authorized shares of Common Stock on November 18, 1995.

THE COMPANY

Comshare develops, markets and supports client/server decision support
applications software designed to improve business analysis, planning, reporting
and decision making. The Company's software products enable the enterprise-wide
integration and transformation of data into business-critical information by
leveraging on-line analytical processing ("OLAP") technologies to provide
customers with robust multidimensional analysis capabilities. More specifically,
the Company focuses on delivering complete decision support solutions by
targeting specific industry and functional markets -- currently, executive
information systems ("EIS"), financial reporting and retail decision support --
and by providing implementation, consulting, training and support expertise in
these markets. Such complete decision support solutions permit the easy
implementation and adoption of the Company's software applications throughout an
enterprise, thus enabling end-users to make better and faster decisions.

To succeed in today's environment of intensifying global competition,
organizations must seek new ways of making faster and more informed decisions.
Specific products that have been used to automate decision support activities
include spreadsheets, relational database management systems ("RDBMSs"), data
warehouses, query and reporting tools and analysis modules on transaction
processing-based applications. While each performs specific functions, none
possesses the full range of features which assist an end-user or an organization
to transform data into business-critical information. For example, a business
professional may wish to analyze the profitability of a customer from several
perspectives, or dimensions, such as channel, geography, sales representative,
fiscal period or budget versus actual. However, these traditional technology
approaches to decision support do not readily provide such multidimensional
analysis capability.

Recently, OLAP has emerged as a technology capable of integrating,
organizing and presenting historical, as well as projected, data located
throughout an enterprise on a multidimensional basis. Such solutions permit
multidimensional views of data, providing businesses with the robust calculation
capabilities they require to transform data into information that facilitates
decision making. More specifically, OLAP software enables end-users to rapidly
understand data relationships by permitting the multidimensional analysis of
large amounts of data organized consistent with the end-user's perception of the
business (e.g., sales by region, by channel, by budget versus actual).

Leveraging OLAP technology, the Company's complete decision support
solutions provide specific industry or functional application and customer
service expertise. The Company designs its software products to access data
located in spreadsheets, RDBMSs, data warehouses, legacy systems and other data
repositories so that end-users can extract and analyze data located throughout
the enterprise for more informed decision making. In addition, the Company's
internally developed information visualizers and interfaces to popular front-end
applications enable end-users to quickly manipulate and analyze this data.
Moreover, the Company's products permit quick, enterprise-wide adoption through
their availability on popular client/server platforms (Windows on the client and
Windows NT and OS/2 on the server).

The Company markets its products through a direct sales force in the United
States, Canada, United Kingdom, France, Germany and Australia and has an
extensive agent/distributor network in 34 other countries. The Company has
implemented its client/server and mainframe decision support application
software, and is currently providing maintenance, at more than 3,000 corporate
and public sector customer sites. The Company has customers in the
communications, financial services, health care, retail and transportation
industries, including AT&T Corporation, Chase Manhattan Corporation, Johnson &
Johnson, Inc., NIKE, Inc. and TRW Inc.

The Company was incorporated in Michigan in 1966. Its executive offices are
located at 555 Briarwood Circle, Ann Arbor, Michigan 48108, and its telephone
number is (313) 994-4800.

5
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THE OFFERING

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Common Stock Offered by the Company....................... 1,125,000 shares
Common Stock Offered by the Selling Shareholders.......... 1,035,000 shares
Common Stock to be Outstanding after the Offering......... 9,366,635 shares(1)
Use of Proceeds........................................... To repay bank indebtedness, and
for working capital and general
corporate purposes.
Nasdaq National Market Symbol............................. CSRE
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)

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YEAR ENDED JUNE 30,
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1993 1994 1995
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CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue:
Software licenses........................................... $ 40,397 $ 37,871 $ 49,294
Software maintenance........................................ 43,064 41,625 36,649
Implementation, consulting and other services............... 21,733 17,130 22,415
-------- ------- --------
Total revenue............................................ 105,194 96,626 108,358
Income (loss) from operations................................. (1,271) 1,648 2,485
Net income (loss)............................................. (1,763) 222 5,328
Net income (loss) per common share............................ $ (0.22) $ 0.03 $ 0.63
Weighted average number of common and dilutive common
equivalent shares........................................... 7,978 8,234 8,398
</TABLE>

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JUNE 30, 1995
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ACTUAL AS ADJUSTED(2)
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CONSOLIDATED BALANCE SHEET DATA:
Cash................................................................ $ 1,398 $ 15,163
Total assets........................................................ 79,310 93,075
Long-term debt...................................................... 5,436 --
Total shareholders' equity.......................................... 32,548 51,749
</TABLE>

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(1) Based on the number of shares outstanding as of September 30, 1995. Excludes
828,375 shares of Common Stock issuable upon the exercise of stock options
outstanding as of September 30, 1995, and approximately 9,870 shares
employees have elected to purchase under the Employee Stock Purchase Plan.
(2) Adjusted to reflect the sale of 1,125,000 shares of Common Stock offered by
the Company hereby at the assumed public offering price of $18.33 per share
and the application of the estimated net proceeds therefrom. See "Use of
Proceeds."

Unless otherwise noted, all financial information, share and per share data
in this Prospectus (i) have been adjusted to reflect a three-for-two split of
the Common Stock to be effective on November 22, 1995, conditioned upon approval
by the Company's shareholders of an increase in the number of authorized shares
of Common Stock on November 18, 1995, and (ii) assume no exercise of the
Underwriters' over-allotment option.

6
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RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of Common Stock offered hereby.

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; FUTURE OPERATING RESULTS UNCERTAIN

The Company has experienced and may in the future experience significant
fluctuations in revenues and operating results from quarter to quarter and from
year to year due to a combination of factors, including: demand for the
Company's products and services; the size, timing and recognition of revenue
from significant orders; increased competition; the Company's success in and
expense associated with developing, introducing and shipping new products; new
product introductions and announcements by the Company's competitors; changes in
Company strategy; product life cycles; cancellations of maintenance and support
agreements; software defects; changes in operating expenses; fluctuations in
foreign exchange rates; and economic conditions generally or in specific
industry segments. In addition, revenues and income from operations may
fluctuate due to the mix of products and services sold and the mix of
distribution channels employed. Further, the Company's results of operations
reflect seasonal trends, and the Company's business, results of operations and
financial condition may be affected by such trends in the future. As a result of
all of these factors, there can be no assurance that the Company will remain
profitable on a quarterly or annual basis. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

The Company's future revenues are difficult to predict. This is due in part
to the fact that a significant portion of the Company's revenues in any quarter
is typically derived from non-recurring license fees, and the timing of orders
for the Company's products is subject to delay for a number of reasons,
including factors beyond the Company's control. The Company typically ships its
products shortly after receipt of orders, and, consequently, order backlog at
the beginning of any quarter has in the past represented only a small portion of
that quarter's expected revenues. As a result, license revenues in any quarter
are substantially dependent on orders booked and shipped in that quarter.
Historically, the Company has often recognized a substantial portion of its
software license revenue in the last month of a quarter. The Company believes
that the purchase of its products is relatively discretionary and generally
involves a significant commitment of capital. As a result of these factors, in
the event of any downturn in any potential customer's business or the economy in
general, purchases of the Company's products may be deferred or canceled.

In addition, a significant portion of the Company's annual revenue is
derived from ongoing annual maintenance contracts, including contracts relating
to the Company's mainframe applications still in use. Although mainframe
maintenance revenue is expected to decline in future periods, if such decline
occurs more rapidly than is anticipated, the Company's revenue, profits and cash
flow from operations will be at lower levels than are currently anticipated
which could have a material adverse effect on the Company's business, results of
operations and financial condition.

Further, the Company's expense levels are based, in part, on its
expectations as to future revenue. If revenue is below expectations, results of
operations are likely to be materially adversely affected. Net income may also
be disproportionately affected by a reduction in revenue, because a significant
portion of the Company's expenses do not vary with revenue. The Company may also
choose to reduce prices or increase spending in response to competition or to
pursue new market opportunities, either of which could have a material adverse
effect on the Company's business, results of operations and financial condition.

7
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operating results will be below the expectations of public market analysts and
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. See "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

COMPETITION

The client/server applications software market, including the market for
decision support software, is intensely competitive, highly fragmented and
subject to rapid change and evolving industry standards. Because the Company
offers multiple products, the Company competes with a variety of other companies
depending on the target market for their applications software products. In the
EIS market, the Company competes primarily with Oracle Corporation, which
recently purchased Express software from Information Resources, Inc.;
Information Resources, Inc., which retained rights to Express software for
certain applications; The Dun and Bradstreet Corporation, which purchased Pilot
Software; and certain other software vendors. In the financial reporting
applications market, the Company's principal competitor is Hyperion Software
Corporation, which is generally recognized as the current market leader for
stand-alone financial consolidation applications. In the retail decision support
applications market, the Company competes with traditional EIS providers that do
not have specific merchandise planning applications and with a number of smaller
software providers. The Company also competes with a variety of additional
software companies, third-party professional services organizations that develop
custom software and with internal information technology departments which
develop decision support solutions. Among the Company's current and potential
competitors are also a number of large software companies, including developers
of spreadsheets, RDBMSs, data warehouses, database query and reporting tools and
transaction processing-based applications, that may elect to increase the
decision support capabilities of their current products or that may develop or
acquire products that compete with the Company's products. Increased competition
could result in price reductions, reduced operating margins and loss of market
share, any of which could have a material adverse effect on the Company's
business, results of operations and financial condition. In addition, many of
the Company's current and potential competitors have significantly greater
financial, technical, marketing and other resources than the Company. As a
result, they may be able to respond more quickly to new or emerging technologies
and changes in customer requirements, or to devote greater resources to the
development, promotion and sale of products than can the Company. There can be
no assurance that the Company will be able to compete successfully against
current and future competitors or that competitive pressures faced by the
Company will not materially adversely affect its business, results of operations
and financial condition. See "Business -- Competition."

RELIANCE ON RELATIONSHIPS WITH ARBOR SOFTWARE CORPORATION AND OTHER THIRD
PARTIES

The Company licenses certain software from third parties and incorporates
such software into its products. Generally, these licenses are non-exclusive
worldwide licenses providing for varying royalty payments and expiration dates.
See "Business -- Licensed Technologies" for information concerning the software
the Company licenses from third parties. In particular, the Company is
substantially dependent on Essbase, multidimensional database software developed
by the Arbor Software Corporation ("Arbor") which is incorporated in several of
the Company's major products, and is expected to be incorporated in certain
future products. Because Essbase is the OLAP technology which provides the
critical multidimensional functionality for Commander OLAP and is an integral
component of the Company's ARTHUR product line, loss of the Company's rights to
Essbase, or any change impacting the availability of Essbase, could have a
material adverse effect on the Company's business, results of operations and
financial condition. In addition, if there is any significant change in the
competitiveness of Essbase, the Company could be required to undertake an
expensive and time-consuming revision of its products to operate on competitive
products or technologies, and the Company's business, results of operations and
financial condition could be materially adversely affected.

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In the future, the Company intends to increase the rate at which it
licenses software tools from third parties for incorporation into its products
as part of its strategy to reduce product development risk and time to market
for new products and product enhancements. Incorporating third-party software
into its products subjects the Company to risks that its third-party vendors
will refuse to renew a license, or become unable or unwilling to support and
enhance their products in a manner that satisfies the Company's requirements. If
the Company were unable to renew these licenses, or if its third-party vendors
were to become unable or unwilling to support and enhance their products, the
Company could be required to devote additional resources to the enhancement and
support of these products or to acquire or develop software providing equivalent
capabilities, which could adversely impact the ability of the Company to sell
its current products, cause delays in the development and introduction of new
products and increase the Company's cost of development of such products. The
occurrence of any of the foregoing risks associated with licensing software from
third parties could have a material adverse effect on the Company's business,
results of operations and financial condition. See "Business -- Licensed
Technologies."

RISKS ASSOCIATED WITH RAPID TECHNOLOGICAL CHANGE

The markets for the Company's products are characterized by rapid
technological advances, evolving industry standards, changes in customer
requirements and frequent introductions and enhancements of competitive
products. The Company's success and future financial performance will depend on
its ability to anticipate these changes as they occur and to enhance its
existing products and develop new products in a timely and cost-effective manner
which keeps pace with these changes.

The Company has been required to make several technological and product
transitions in response to changing market conditions. Most recently, these
transitions have included the adaptation of its products from the mainframe to
the client/server environment and the modification of its products to run on the
Windows operating environment. The most recent transition from mainframe-to
client/server-based products required a significant financial investment by the
Company in research and development over a number of years, financed by
operating cash flow and increased bank borrowings. During this transition, the
Company experienced a period of significantly decreased revenue and net income,
including net losses in fiscal 1992 and fiscal 1993, and incurred significant
unusual and restructuring related costs, which included the write-off of the
Company's remaining capitalized software associated with its mainframe-based
products. There can be no assurance that the Company will be able to
successfully accomplish future technological or product transitions, that the
Company will not experience significant delays in developing new products or
enhancements required to accomplish such transitions or that the Company will
have sufficient financial resources available to it to finance such efforts.
There can be no assurance as to the impact that any such transition would have
on the Company's revenue or profitability. In addition, there can be no
assurance that the Company's new products and enhancements will adequately
address the changing needs of the marketplace and achieve market acceptance or
that developments by others will not render the Company's products obsolete or
noncompetitive. As required by SFAS No. 86, "Accounting for the Cost of Computer
Software to be Sold, Leased or Otherwise Marketed," a substantial portion of the
Company's software development costs have been capitalized. Any failure of the
related products to achieve and sustain market acceptance could result in the
write-off of all or part of such capitalized costs. Any such failure or
write-off could have a material adverse effect on the Company's business,
results of operations and financial condition.

The Company has a number of ongoing development projects for the
enhancement of existing products and the introduction of new products. There can
be no assurance that products under development will be completed successfully
or on time or that they will include the features required to achieve market
acceptance. Failure of these new product development projects could have a
material adverse effect on the Company's business, results of operations and
financial condition. See "Business -- Research and Product Development."

9
<PAGE> 11

UNCERTAIN MARKET ACCEPTANCE OF THE COMPANY'S NEW PRODUCT OFFERINGS

The Company's business strategy involves the development and licensing of
client/server decision support applications software designed to address
specific industry or functional markets. Although the Company has been
successful in the past in developing and licensing software applications
designed to address specific industry or functional markets, such as its
financial reporting and retail applications, the Company intends to introduce
additional applications in the Company's current markets and markets not
previously served by the Company. There can be no assurance that the Company's
current or future applications will achieve widespread market acceptance or that
sales of such products will be sufficient to justify the development, marketing
and other expenses associated with such products. Failure of the Company's
products, whether internally developed or acquired, to achieve widespread market
acceptance or the need to rewrite certain products could have a material adverse
effect on the Company's business, results of operations and financial condition.
See "Business -- The Comshare Solution" and "-- Business Strategy."

DEPENDENCE ON SALES TO INSTALLED BASE

A substantial percentage of the Company's licenses of its recently
introduced client/server applications software has been made to customers of the
Company's earlier generation of mainframe-based products. In fiscal 1995, 54% of
the Company's software license revenue was attributable to software licenses
sold to companies that had purchased an earlier generation of the Company's
products. The Company's revenue in future periods will depend in large part on
its continued ability to sell its products to existing customers, as well as to
customers that are not previous users of the Company's products. Failure to
successfully transition the Company's existing base of mainframe customers to
the Company's client/server products, or failure of such products to be adopted
by new customers, could have a material adverse effect on the Company's
business, results of operations and financial condition. See "Business --
Business Strategy" and "-- Products."

INTERNATIONAL OPERATIONS

The Company derived 57%, 55% and 55% of its total revenue from outside
North America in fiscal 1993, 1994 and 1995, respectively, and expects that
revenue generated outside of North America will continue to represent a
significant portion of the Company's total revenue. This international business
is subject to various risks inherent in international activities, including the
impact on the Company's operations of, and the burdens of complying with, a wide
variety of laws, regulations, rules and policies of local foreign governments,
such as those relating to currency controls, hiring and termination of
employees, import restrictions and the protection of propriety rights. There can
be no assurance that the Company will be able to maintain or increase
international market demand for the Company's products. In addition, a
substantial percentage of the Company's international revenue is attributable to
sales by the Company's international distributors and agents. Although no one
distributor or agent accounted for more than 5% of the Company's total revenue
in fiscal 1995, the loss of one or more of such distributors or agents could
have a material adverse effect on the Company's business, results of operations
and financial condition. In addition, the Company intends to develop programs to
increase the dollar level of revenue generated by these distributors and agents.
There can be no assurance that such programs will be successful or that the
Company's will be able to continue to generate sales through distributors and
agents at or above current levels. See "Business -- Business Strategy" and "--
Sales and Marketing."

The Company's international operations also expose the Company to
constantly fluctuating currency rates. Currency fluctuations have in the past
adversely affected, and may in the future adversely affect, the Company's
reported revenue, expenses and shareholders' equity. The Company's international
sales are primarily denominated in foreign currencies. As a result, an increase
in the value of the U.S. dollar relative to foreign currencies may have the
effect of reducing the Company's reported revenue and profits from international
sales denominated in such currencies. If the Company were to increase its prices
in certain markets in response to such fluctuations, its products may be less

10
<PAGE> 12

competitive in those markets. Currency exchange rate fluctuations can also
result in gains and losses from foreign currency exchange transactions. The
Company at various times has entered into forward exchange contracts to hedge
exposures related to foreign currency exchange transactions. Because the Company
only selectively hedges against certain large transactions that present the most
exposure to exchange rate fluctuations, the Company's results of operations will
continue to be impacted by fluctuations in foreign currency exchange rates,
which at times could be material. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 of the Notes to
Consolidated Financial Statements.

The Company also believes that it is exposed to greater risks of software
piracy in international markets because of the weaker protection afforded to
intellectual property in some foreign jurisdictions. Although the Company is not
aware of any significant unauthorized use of its proprietary software to date,
there can be no assurance that it will not experience such unauthorized use in
the future. See "Risk Factors -- Limited Intellectual Property Protection" and
"-- Intellectual Property."

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a significant extent on its ability to
attract and retain key management, sales, consulting and technical personnel.
Competition for such personnel is intense and there can be no assurance that the
Company will be able retain its key managerial, sales, consulting and technical
employees or that it will be able to attract, assimilate or retain such highly
qualified managerial, sales, consulting or technical personnel as may be
required in the future. If the Company is unable to retain its key managerial,
sales, consulting and technical personnel, or attract, assimilate and retain
additional qualified personnel as needed, the Company's business, results of
operations and financial condition could be materially adversely effected.

LIMITED INTELLECTUAL PROPERTY PROTECTION

The Company's success is dependent on its proprietary technology. The
Company does not hold any material patents and seeks to protect its technology
primarily through trademarks, copyrights, employee and third-party
non-disclosure agreements and trade secret laws, which afford only limited
protection. The Company's software products are generally licensed to customers
under license agreements which generally restrict usage to internal operations
and prohibit unauthorized reproduction or transfer to third parties. The laws of
some foreign countries do not protect the Company's proprietary rights to the
same extent as do the laws of the United States. In addition, certain provisions
of the Company's contracts prohibiting unauthorized reproduction may be
unenforceable under the laws of certain foreign countries. There can be no
assurance that the steps taken by the Company to protect its proprietary rights
will be adequate to prevent misappropriation of its technology or development by
others of similar or superior technology. Although the Company believes that its
products and technology do not infringe on any existing proprietary rights of
others, there can be no assurance that third parties will not assert
infringement claims in the future or that any such claims will not require the
Company to enter into license arrangements or result in litigation, regardless
of the merits of such claims. No assurance can be given that any necessary
licenses will be available or that, if available, such licenses can be obtained
on commercially reasonable terms. Should litigation with respect to any such
claims commence, such litigation could be extremely expensive and time consuming
and could have a material adverse effect on the Company's business, results of
operations and financial condition regardless of the outcome of such litigation.
See "Business -- Intellectual Property."

RISK OF SOFTWARE DEFECTS

Software products as internally complex as those offered by the Company
frequently contain errors or defects, especially when first introduced or when
new versions or enhancements are released. Despite extensive product testing by
the Company, the Company has in the past released versions of its products with
defects that were not discovered until after commencement of

11
<PAGE> 13

commercial shipment. Although the Company has not experienced material adverse
effects resulting from any such defects and errors in current commercially
released products 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. Such defects or errors could result in damage to the Company's
reputation, loss of revenues, delay in market acceptance, diversion of
development and consulting resources and an increase in service and warranty
costs, any of which could have a material adverse effect on the Company's
business, results of operations and financial condition. See "Business --
Products" and "-- Research and Product Development."

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, local or foreign laws or ordinances currently in
effect or enacted in the future or of unfavorable judicial decisions. Although
the Company has not experienced any product liability claims with respect to its
software products to date, the sale and support of the Company's products and
the incorporation of products developed by third parties may entail the risk of
such claims. A product liability claim brought against the Company, regardless
of the merits of such claim, could have a material adverse effect upon the
Company's business, results of operations and financial condition.

STOCK PRICE VOLATILITY

The trading price of the Company's Common Stock has been and in the future
could be subject to wide fluctuations in response to quarterly variations in
results of operations, announcements of technological innovations or new
products by the Company or its competitors, the Company reporting results of
operations below the expectations of public market analysts and investors,
changes in earnings estimates by securities analysts, general conditions in the
software, decision support and computer industries and other events or factors.
In addition, the stock market has from time to time experienced extreme price
and volume fluctuations that have particularly affected the market price of the
stock of many high technology companies and that have often been unrelated or
disproportionate to the operating results of these companies. These broad market
fluctuations may adversely affect the market price of the Company's Common
Stock. The trading prices of these companies' stocks are at or near their
historical highs and reflect price/earnings ratios substantially above
historical norms. In particular, the trading price of the Company's Common Stock
in the most recent quarter is at its all-time high and reflects the current
increased price/earnings ratios of high technology companies in general. There
can be no assurance that the trading price of the Common Stock will remain at or
near its current level. See "Price Range of Common Stock."

SHARES ELIGIBLE FOR FUTURE SALES; ADVERSE EFFECT ON MARKET PRICE

Sales of substantial amounts of the Company's Common Stock in the public
market following this Offering could adversely affect the market price of the
Common Stock. Immediately upon completion of this Offering, the Company will
have 9,366,635 shares of Common Stock outstanding, all of which, including the
2,160,000 shares offered hereby, will be freely tradeable without restriction
under the Securities Act, unless they are held by an "affiliate" of the Company
(as that term is defined in Rule 144 under the Securities Act of 1993, as
amended (the "Securities Act"). Of the Company's outstanding shares,
shares are subject to lock-up agreements pursuant to which they may not be sold
or transferred for 90 days after the date of this Prospectus. However,
Robertson, Stephens & Company, in its sole discretion, may release the
shareholders from these lock-up agreements, in whole or in part, at any time and
without notice. No prediction can be made as to the effect, if any, that sales
of any such shares will have on the market price of the Common Stock prevailing
from time to time. See "Selling Shareholders" and "Shares Eligible For Future
Sale."

12
<PAGE> 14

ANTI-TAKEOVER EFFECT OF BYLAWS AND MICHIGAN LAW

The Company's Bylaws contain provisions that could discourage a proxy
contest or make more difficult the acquisition of a substantial block of the
Company's Common Stock. The Company's Board of Directors is authorized to issue
preferred stock and additional shares of Common Stock which, if issued, could
dilute and adversely affect various rights of the holders of Common Stock, and,
in addition, could be used to discourage an unsolicited attempt to acquire
control of the Company. These provisions could limit the price that investors
would be willing to pay in the future for shares of Common Stock and could make
it more difficult for shareholders of the Company to effect certain corporate
actions. See "Description of Common Stock -- Anti-Takeover Effects of the
Company's Bylaws and of Michigan Law."

13
<PAGE> 15

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,125,000 shares of
Common Stock offered by the Company hereby are estimated to be $19,201,000
($22,116,000 if the over-allotment option is exercised in full), assuming a
public offering price of $18.33 per share and after deducting the Underwriting
Discounts and Commissions and estimated offering expenses payable by the
Company.

The Company will use a portion of the net proceeds from the sale of its
Common Stock to repay outstanding bank borrowings. As of September 30, 1995, the
outstanding principal amount owed to the Company's banks under its lines of
credit was approximately $4.6 million. The Company has not yet identified
specific uses for the remainder of the net proceeds. The Company expects to use
such remaining net proceeds for working capital and general corporate purposes.
Net proceeds may also be used to acquire or invest in complementary businesses
or technologies, although the Company is not currently involved in negotiations
with respect to, and has no agreement or understanding regarding, any such
acquisition or investment. Pending such uses, the Company intends to invest the
net proceeds from the Offering in investment grade, short-term, interest-bearing
instruments.

The Company will not receive any proceeds from the sale of shares of Common
Stock by Selling Shareholders. See "Selling Shareholders."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol CSRE. As of September 25, 1995, there were approximately 1,204
holders of record of the Company's Common Stock.

The following table sets forth the high and low per share trading prices of
the Company's Common Stock, as reported on the Nasdaq National Market. All
amounts in the following table have been adjusted to reflect a three-for-two
stock split to be effective on November 22, 1995, conditioned upon approval by
the Company's shareholders of an increase in the number of authorized shares of
Common Stock on November 18, 1995.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL 1993
First Quarter............................................ $ 7.50 $ 4.50
Second Quarter........................................... 9.83 4.83
Third Quarter............................................ 9.50 4.67
Fourth Quarter........................................... 5.17 3.83

FISCAL 1994
First Quarter............................................ $ 7.33 $ 3.83
Second Quarter........................................... 7.83 6.33
Third Quarter............................................ 8.50 6.00
Fourth Quarter........................................... 9.33 6.17

FISCAL 1995
First Quarter............................................ $ 8.50 $ 6.00
Second Quarter........................................... 9.83 7.17
Third Quarter............................................ 11.50 8.83
Fourth Quarter........................................... 14.33 10.00

FISCAL 1996
First Quarter............................................ $21.58 $13.50
</TABLE>

On October 9, 1995, the closing price of the Company's Common Stock was
$18.33, as adjusted to reflect the three-for-two stock split described above.

DIVIDEND POLICY

The Company has not paid cash dividends on its Common Stock since its
incorporation. It is the Company's present policy to retain earnings for use in
the Company's business. Accordingly, the Company does not anticipate that cash
dividends will be paid in the foreseeable future. Certain of the Company's
credit agreements contain covenants which prohibit the payment of dividends on
the Common Stock.

14
<PAGE> 16

CAPITALIZATION

The following table sets forth the capitalization of the Company (i) as of
June 30, 1995, and (ii) as adjusted to give effect to the sale of the 1,125,000
shares of Common Stock offered by the Company at the assumed public offering
price of $18.33 per share and application of the estimated net proceeds thereof.
See "Use of Proceeds." This information should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1995
----------------------
AS
ACTUAL ADJUSTED
------- ---------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt........................................................ $ 5,436 $ --
Shareholders' equity:
Capital stock:
Preferred stock, no par value; 5,000,000 shares authorized, none
issued.......................................................... -- --
Common stock, $1.00 par value; 20,000,000 shares authorized(1);
8,221,234 shares issued and outstanding, actual; 9,346,234
shares issued and outstanding, as adjusted...................... 8,221 9,346
Capital contributed in excess of par................................ 13,199 31,275
Retained earnings................................................... 15,500 15,500
Currency translation adjustments.................................... (3,239) (3,239)
------- -------
33,681 52,882
Less -- Notes receivable............................................ (1,133) (1,133)
------- -------
Total shareholders' equity................................... 32,548 51,749
------- -------
Total capitalization....................................... $37,984 $51,749
======= =======
</TABLE>

- ---------------
(1) Assumes that the Company's shareholders approve an increase in the number of
authorized shares of Common Stock from 10,000,000 to 20,000,000 on November
18, 1995.

15
<PAGE> 17

SELECTED CONSOLIDATED FINANCIAL DATA

The following table summarizes selected consolidated financial data which
should be read in conjunction with the Company's Consolidated Financial
Statements and Notes thereto and with Management's Discussion and Analysis of
Financial Condition and Results of Operations, which are included elsewhere in
this Prospectus. The selected consolidated financial data set forth below as of
June 30, 1993, 1994 and 1995 and for each of the three fiscal years in the
period ended June 30, 1995 have been derived from the Company's consolidated
financial statements, which have been audited by Arthur Andersen LLP,
independent public accountants.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------
1993 1994 1995
-------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue:
Software licenses.................................... $ 40,397 $ 37,871 $ 49,294
Software maintenance................................. 43,064 41,625 36,649
Implementation, consulting and other services........ 21,733 17,130 22,415
-------- -------- --------
Total revenue................................... 105,194 96,626 108,358
-------- -------- --------
Costs and expenses:
Selling and marketing................................ 54,065 46,457 45,283
Cost of revenue and support.......................... 20,528 17,670 24,799
Internal research and product development............ 22,989 19,293 16,180
Internally capitalized software...................... (15,035) (13,193) (11,667)
Software amortization................................ 10,761 12,517 13,250
General and administrative........................... 11,668 9,891(1) 11,663
Unusual charge....................................... -- -- 6,365
Restructuring related costs.......................... 1,489 2,343 --
-------- -------- --------
Total costs and expenses........................ 106,465 94,978 105,873
-------- -------- --------
Income (loss) from operations.......................... (1,271) 1,648 2,485
Other income (expense):
Interest income...................................... 298 79 157
Interest expense..................................... (611) (568) (669)
Exchange gain (loss)................................. 480 (25) 307
-------- -------- --------
Total other income (expense).................... 167 (514) (205)
-------- -------- --------
Income (loss) before taxes............................. (1,104) 1,134 2,280
Provision (benefit) from income taxes.................. 659 912 (3,048)(2)
-------- -------- --------
Net income (loss)...................................... $ (1,763) $ 222 $ 5,328
======== ======== ========
Net income (loss) per common share..................... $ (0.22) $ 0.03 $ 0.63
======== ======== ========
Weighted average number of common and dilutive common
equivalent shares.................................... 7,978 8,234 8,398
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
JUNE 30,
--------------------------------------
1993 1994 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash................................................... $ 2,593 $ 1,774 $ 1,398
Total assets........................................... 92,582 88,944 79,310
Long-term debt......................................... 16,058 15,354 5,436
Total shareholders' equity............................. 26,161 26,506 32,548
</TABLE>

- ---------------
(1) Includes a $1.1 million gain from the sale of undeveloped land.

(2) Includes a $4.1 million tax benefit related to the recognition of prior
years' net operating losses and tax credits as well as tax reserves
released.

16
<PAGE> 18

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

OVERVIEW

Comshare develops, markets and supports client/server decision support
applications software designed to improve business analysis, planning, reporting
and decision making. Since its inception in 1966, the Company has accomplished
several technology and product transitions. Prior to 1992, the Company was
principally involved in the development, marketing and support of
mainframe-based executive information systems. Beginning in 1992, in response to
the market shift away from mainframes to client/server technology, the Company
began to transition its products to the client/server environment. Today, all of
the Company's major products are available for client/server implementations.

The Company's revenue in fiscal 1993, 1994 and 1995 was significantly
impacted by the growth of client/server software license and maintenance revenue
and the decline in mainframe software license and maintenance revenue, which
offset the client/server growth in fiscal 1993 and 1994. As a result of the
release of the Company's new client/server and Windows-based products beginning
in mid-fiscal 1994, client/server software license and maintenance revenue
increased 15.3% and 39.3% in fiscal 1994 and fiscal 1995, respectively.
Mainframe software license and maintenance revenue declined 24.2% and 35.3%, in
fiscal 1994 and fiscal 1995, respectively. During fiscal 1995, for the first
time, the dollar increase in client/server software license and maintenance
revenue exceeded the dollar decline in mainframe software license and
maintenance revenue. The fiscal 1995 increase in client/server software license
and maintenance revenue was driven by increases in client/server software
licenses across all three of the Company's decision support markets.

In connection with the Company's transition to client/server platforms, the
Company significantly downsized its operations and wrote off all of its
capitalized mainframe software. These actions resulted in unusual or
restructuring related costs of $1.5 million, $2.3 million and $6.4 million in
fiscal 1993, 1994 and 1995, respectively. The Company's fiscal 1995 results also
included a $4.1 million tax benefit related to the recognition of prior years'
net operating losses and tax credits as well as tax reserves released.

The Company's products are sold by direct sales organizations in the United
States, Canada, the United Kingdom, France, Germany and Australia and by an
extensive network of agents and distributors covering 34 countries not directly
served by the Company. In fiscal 1995, 55.3% of the Company's revenue was
derived from sales outside of North America.

17
<PAGE> 19

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain
financial data as a percentage of total revenue and the percentage change in the
dollar amounts of certain financial data over the prior year:

<TABLE>
<CAPTION>
PERCENT
INCREASE (DECREASE)
YEAR ENDED JUNE 30, -----------------------
------------------------- 1994 OVER 1995 OVER
1993 1994 1995 1993 1994
----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Software licenses........................... 38.4% 39.2% 45.5% (6.3)% 30.2%
Software maintenance........................ 41.0 43.1 33.8 (3.3) (12.0)
Implementation, consulting and other
services................................. 20.6 17.7 20.7 (21.2) 30.9
----- ----- -----
Total revenue.......................... 100.0 100.0 100.0 (8.1) 12.1
Costs and expenses:
Selling and marketing....................... 51.4 48.1 41.8 (14.1) (2.5)
Cost of revenue and support................. 19.5 18.3 22.9 (13.9) 40.3
Internal research and product development... 21.9 20.0 14.9 (16.1) (16.1)
Internally capitalized software............. (14.3) (13.7) (10.8) (12.3) (11.6)
Software amortization....................... 10.2 13.0 12.2 16.3 5.9
General and administrative.................. 11.1 10.2 10.8 (15.2) 17.9
Unusual charge.............................. -- -- 5.9 -- *
Restructuring related costs................. 1.4 2.4 -- 57.4 *
----- ----- -----
Total costs and expenses............... 101.2 98.3 97.7 (10.8) 11.5
Income (loss) from operations................. (1.2) 1.7 2.3 * 50.8
Other income (expense)........................ 0.2 (0.5) (0.2) * 60.1
----- ----- -----
Income (loss) before taxes.................... (1.0) 1.2 2.1 * 101.1%
Provision (benefit) for income taxes.......... 0.6 1.0 (2.8) 38.4% *
----- ----- -----
Net income (loss)............................. (1.6)% 0.2% 4.9% * *
===== ===== =====
</TABLE>

- ---------------
* Not meaningful.

The following table sets forth, for the periods indicated, certain sources
of software license revenue in dollar amounts and the percentage change in the
dollar amounts of such sources over the prior year:

<TABLE>
<CAPTION>
PERCENT
INCREASE (DECREASE)
YEAR ENDED JUNE 30, ----------------------
----------------------------- 1994 OVER 1995 OVER
1993 1994 1995 1993 1994
------- ------- ------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Software license revenue:
Client/server:
EIS..................................... $13,785 $15,849 $26,748 15.0% 68.8%
Financial Reporting..................... 7,291 7,160 10,047 (1.8) 40.3
Retail Decision Support................. 2,945 5,075 8,506 72.3 67.6
Other................................... -- 220 210 * (4.6)
------- ------- -------
Total Client/Server................... 24,021 28,304 45,511 17.8 60.8
Mainframe.................................. 16,264 9,375 3,783 (42.4) (59.6)
Other...................................... 112 192 -- 71.4 *
------- ------- -------
Total software license revenue........ $40,397 $37,871 $49,294 (6.3) 30.2
======= ======= =======
Software maintenance revenue:
Client/server.............................. $16,526 $18,456 $19,620 11.7 6.3
Mainframe.................................. 25,970 22,639 16,932 (12.8) (25.2)
Other...................................... 568 530 97 (6.7) (81.7)
------- ------- -------
Total software maintenance revenue.... $43,064 $41,625 $36,649 (3.3)% (12.0)%
======= ======= =======
</TABLE>

- ---------------
* Not meaningful.

18
<PAGE> 20

FISCAL 1995 COMPARED WITH FISCAL 1994

REVENUE

The Company's revenue consists of software license, software maintenance
and implementation, consulting and other service revenue. Software license
revenue is recognized once the customer contract has been executed and the
product has been shipped; software maintenance revenue is recognized over the
term of the maintenance contract; and implementation, consulting and other
service revenue is recognized as services are performed.

Total revenue for fiscal 1995 increased 12.1% to $108.4 million from $96.6
million in fiscal 1994. This revenue growth was primarily due to the increase in
client/server software license revenue, reflecting the release of the Company's
new products during the past 18 months.

Software License Revenue. Total software license revenue in fiscal 1995
increased 30.2% to $49.3 million, or 45.5% of total revenue, from $37.9 million,
or 39.2% of total revenue in fiscal 1994. Software license revenue from
client/server products in fiscal 1995 increased 60.8% to $45.5 million, or 92.3%
of total software license revenue, from $28.3 million, or 74.7% of total
software license revenue in fiscal 1994. Software license revenue from the
Company's mainframe products in fiscal 1995 decreased 59.6% to $3.8 million, or
7.7% of total software license revenue, from $9.4 million, or 24.8% of total
software license revenue in fiscal 1994. Software license revenue from mainframe
products is expected to continue to decline as the Company continues to
emphasize its client/server products.

Software license revenue increased in all three decision support market
areas. In the EIS market, software license revenue in fiscal 1995 increased
25.7% to $29.8 million, or 60.4% of total software license revenue, from $23.7
million, or 62.5% of total software license revenue in fiscal 1994. Software
license revenue for the Company's client/server EIS products in fiscal 1995
increased 68.8% to $26.8 million, or 54.3% of total software license revenue,
from $15.8 million, or 41.9% of total software license revenue in fiscal 1994,
principally due to the March 1994 release of Commander OLAP. This increase in
EIS client/server software license revenue was partially offset by declines in
EIS mainframe software license revenue. Software license revenue for the
Company's client/server financial reporting products in fiscal 1995 increased
40.3% to $10.0 million, or 20.4% of total software license revenue, from $7.2
million, or 18.9% of total software license revenue in fiscal 1994, principally
due to the release of Windows versions of Commander FDC and Commander Budget. In
the retail decision support applications market area, software license revenue
in fiscal 1995 increased 40.9% to $9.1 million, or 18.5% of total software
license revenue, from $6.5 million, or 17.1% of total software license revenue
in fiscal 1994. Software license revenue for the Company's client/server retail
decision support products in fiscal 1995 increased 67.6% to $8.5 million, or
17.3% of total software license revenue, from $5.1 million, or 13.4% of total
software license revenue in fiscal 1994, principally as a result of new
client/server releases of ARTHUR Planning and ARTHUR Plan Monitor.

Software Maintenance Revenue. Software maintenance revenue in fiscal 1995
decreased 12.0% to $36.6 million, or 33.8% of total revenue, from $41.6 million,
or 43.1% of total revenue in fiscal 1994. The decrease was primarily due to the
decline in software maintenance revenue from mainframe products. Mainframe
software maintenance revenue in fiscal 1995 decreased 25.2% to $16.9 million, or
46.2% of total software maintenance revenue, from $22.6 million, or 54.4% of
total software maintenance revenue in fiscal 1994. The decrease was principally
due to the conversion of certain agents to distributors, the impact of
maintenance cancellations and price discounts on multi-year agreements.
Client/server software maintenance revenue in fiscal 1995 increased 6.3% to
$19.6 million, or 53.5% of total software maintenance revenue, from $18.5
million, or 44.3% of total software maintenance revenue in fiscal 1994. The
increase was due to the growth in client/server software licenses, partially
offset by the conversion of certain agents to distributors. The conversion of
certain agents to distributors in fiscal 1994 impacted the comparability of
software maintenance revenue in fiscal 1995 and fiscal 1994. When an agent
converts to a distributor, sales are made directly to the distributor rather
than the end-user, and the distributor assumes the obligation of providing
maintenance. In addition, the revenue from distributors is recognized net of
fees (which fees are approximately the

19
<PAGE> 21

same as agent fees, but unlike agent fees, are not recorded as selling
expenses), and revenue from agents is recognized before deducting their fees. As
a result, the conversion of agents to distributors reduced reported software
maintenance revenue in fiscal 1995, without a material impact on operating
profits. In addition, in fiscal 1994, software maintenance revenue benefited
from the nonrecurring release of approximately $1.6 million of deferred software
maintenance revenue related to the conversion of the Company's Belgium and
Holland offices to an independent agency and to the conversion of certain of the
Company's agents to distributors. Included in fiscal 1994 operating expenses was
approximately $0.9 million of costs associated with the recording of this
software maintenance revenue.

Implementation, Consulting and Other Service Revenue. Implementation,
consulting and other service revenue in fiscal 1995 increased 30.9% to $22.4
million, or 20.7% of total revenue, from $17.1 million, or 17.7% of total
revenue in fiscal 1994. The increase in client/server software license revenue
during the fiscal period in all three decision support market areas created
increased demand for implementation, consulting and other services.

COSTS AND EXPENSES

Total operating expenses, excluding restructuring and unusual charges, in
fiscal 1995 increased 7.4% to $99.5 million, with an operating profit margin of
8.2%, compared with $92.6 million, with an operating profit margin of 4.1% in
fiscal 1994.

Selling and Marketing Expense. The Company's selling and marketing expense
primarily includes employee costs, travel costs, agent fees, facilities expenses
and advertising. Selling and marketing expense in fiscal 1995 decreased 2.5% to
$45.3 million, or 41.8% of total revenue, from $46.5 million, or 48.1% of total
revenue in fiscal 1994. The decrease was principally due to a $5.4 million
reduction in agent fees as a result of the conversion of certain agents to
distributors. Partially offsetting this decline was a $3.8 million increase in
direct selling and marketing expenses during fiscal 1995 to support the
increased revenue base.

Cost of Revenue and Support Expense. Cost of revenue and support includes
direct costs of producing software, royalty expense for licensed technologies,
customer support costs and costs related to service revenue. Cost of revenue and
support in fiscal 1995 increased 40.3% to $24.8 million, or 22.9% of total
revenue, from $17.7 million, or 18.3% of total revenue in fiscal 1994. The
increase is primarily attributed to royalty fees related to the use of Arbor's
multidimensional database software, Essbase, in certain of the Company's
products and to personnel and outside contract costs associated with the growth
in implementation, consulting and other services.

Internal Research and Product Development; Internally Capitalized Software;
Software Amortization Expense. Internal research and product development expense
primarily includes employee costs, facilities expenses and computer hardware and
software costs. Internal research and product development expense in fiscal 1995
decreased 16.1% to $16.2 million, or 14.9% of total revenue, from $19.3 million,
or 20.0% of total revenue in fiscal 1994. The decrease was primarily
attributable to staff reductions made at the end of 1994. These reductions
principally reflected the Company's change in development strategy to include
the increased utilization of technology developed by third parties, which the
Company believes shortens development cycles, minimizes investment in software
tools and accelerates time to market. The decrease in internal research and
product development costs resulted in lower internally capitalized software in
fiscal 1995 of $11.7 million, or 10.8% of total revenue, compared with $13.2
million, or 13.7% of total revenue, in fiscal 1994. Software amortization
expense increased 5.9% to $13.2 million in the current year, or 12.2% of total
revenue, from $12.5 million, or 13.0% of total revenue in fiscal 1994. The
increase in software amortization expense was a result of new client/server
product enhancements released during the previous year. The Company expects
software amortization expense to exceed internally capitalized software in
fiscal 1996, but does not expect net software amortization expense in fiscal
1996 to be materially different from net software amortization expense in the
fiscal 1995.

20
<PAGE> 22

General and Administrative Expense. General and administrative expense
primarily includes employee costs, facilities expenses and professional fees.
General and administrative expense in fiscal 1995 increased 17.9% to $11.7
million, or 10.8% of total revenue, from $9.9 million, or 10.2% of total revenue
in fiscal 1994. General and administrative expense, after excluding the $1.1
million gain on the sale of undeveloped land which was included in general and
administrative expense in fiscal 1994, increased 6.4% in fiscal 1995, as
compared with the prior year. This increase in general and administrative
expenses principally related to employee costs, including relocation, travel and
incentives.

Unusual Charge. An unusual charge of $6.4 million was recorded in fiscal
1995 due to the write-off of capitalized software associated with the Company's
mainframe products. The write-off was the result of the Company's 1996 product
plans to focus primarily on client/server decision support applications software
and the decreased industry emphasis on mainframe decision support software
products. In addition, the Company recently implemented a marketing strategy to
migrate its existing clients using mature mainframe products to its new
client/server products. The above factors will reduce the future revenue from
mainframe software, which prompted the Company to write off the remainder of its
capitalized mainframe software.

INTEREST EXPENSE

Interest expense in fiscal 1995 increased 17.8% to $0.7 million, from $0.6
million in fiscal 1994. The increase was primarily due to the loan origination
fees associated with amending and restating a domestic credit agreement with the
Company's banks. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

BENEFIT FOR INCOME TAXES

The benefit from income taxes was $3.0 million in fiscal 1995, as compared
with an income tax provision of $0.9 million for fiscal 1994. The income tax
benefit included the release of tax valuation reserves of $2.5 million related
to tax credits, attributable to the significant improvement in the Company's
profitability in fiscal 1995, which allowed for the realization of a significant
portion of these credits. In addition, settlements with tax authorities
regarding certain outstanding issues allowed the Company to release tax reserves
of $1.6 million previously established against these exposures. The net tax
assets remaining are projected by the Company to be substantially utilized by
fiscal 1997, well before expiration. A comparative analysis of the factors
influencing the effective income tax rate is presented in Note 8 of Notes to
Consolidated Financial Statements.

FOREIGN CURRENCY

In fiscal 1995, 55.3% of Comshare's total revenue was from outside North
America. Most of the Company's international revenue is denominated in foreign
currencies. Foreign currency fluctuations in fiscal 1995 impacted operating
income as currency fluctuations on revenue denominated in a foreign currency
were offset by expenses denominated in foreign currency. Overall, total revenue
and total expenses would have been approximately $3.6 million and $3.3 million
lower, respectively, with an estimated net $0.3 million negative impact on
pre-tax profit for fiscal 1995, at comparable exchange rates.

The Company recognizes currency transaction gains and losses in the period
of occurrence. As currency rates are constantly changing, these gains and losses
can, at times, fluctuate greatly. The Company had an exchange gain of $0.3
million in fiscal 1995, attributable to the strengthening of the Deutsche mark
and French franc against the British pound. At various times, the Company
denominates borrowings in foreign currencies and enters into forward exchange
contracts to hedge exposures related to foreign currency transactions. In
general, the Company uses forward exchange contracts selectively to hedge
against certain large transactions that present the most exposure to exchange
rate

21
<PAGE> 23

fluctuations. The Company had two forward contracts totaling $2.2 million
outstanding at June 30, 1995.

FISCAL 1994 COMPARED WITH FISCAL 1993

REVENUE

Total revenue for fiscal 1994 decreased 8.1% to $96.6 million from $105.2
million in fiscal 1993. The decrease was principally due to both the decline in
revenue from mainframe sources and the weakening of foreign currencies against
the U.S. dollar in fiscal 1994. Overall, total revenue for fiscal 1994 would
have been approximately $5.5 million higher, as compared to fiscal 1993 levels,
at comparable exchange rates.

Software License Revenue. Total software license revenue in fiscal 1994
decreased 6.3% to $37.9 million, or 39.2% of total revenue, compared with $40.4
million, or 38.4% of total revenue in fiscal 1993. Software license revenue from
client/server products in fiscal 1994 increased 17.8% to $28.3 million, or 74.7%
of total software license revenue, from $24.0 million, or 59.5% of total
software license revenue in fiscal 1993. Software license revenue from the
Company's mainframe products in fiscal 1994 decreased 42.4% to $9.4 million, or
24.8% of total software license revenue, from $16.3 million, or 40.3% of total
software license revenue in fiscal 1993. The Company believes that this decline
was due to the industry slowdown in sales of mainframe computer software as
customers migrated to new generation client/server operating systems from their
traditional mainframe operating systems.

In the EIS market, software license revenue in fiscal 1994 decreased 17.7%
to $23.7 million, or 62.5% of total software license revenue, from $28.8
million, or 71.3% of total software license revenue in fiscal 1993, primarily
due to the decline in mainframe software license revenue partially offset by the
revenue resulting from the March 1994 release of the Company's Commander OLAP
product. Software license revenue from financial reporting applications remained
essentially unchanged in fiscal 1994 at $7.3 million, compared with the prior
year. Retail decision support software license revenue in fiscal 1994 increased
54.8% to $6.5 million, or 17.1% of total software license revenue, from $4.2
million, or 10.4% of total software license revenue in fiscal 1993, principally
as a result of the international release of a new Windows version of ARTHUR
Planning.

Software Maintenance Revenue. Total software maintenance revenue in fiscal
1994 decreased 3.3% to $41.6 million, or 43.1% of total revenue, from $43.1
million, or 41.0% of total revenues in fiscal 1993. Mainframe software
maintenance revenue in fiscal 1994 decreased 12.8% to $22.6 million, or 54.4% of
total software maintenance revenue, from $26.0 million, or 60.3% of total
software maintenance revenue in fiscal 1993. Partially offsetting the decline
was the increase in software maintenance revenue from client/server products,
which in fiscal 1994 increased 11.7% to $18.5 million, or 44.3% of total
software maintenance revenue, from $16.5 million, or 38.4% of total software
maintenance revenue in fiscal 1993.

During fiscal 1994, software maintenance revenue benefited from the release
of approximately $1.6 million of deferred revenue related to the conversion of
the Company's Belgium and Holland offices to an independent agent and to the
conversion of certain of the Company's agents to distributors. Included in
operating expenses was approximately $0.9 million of costs associated with the
recording of the maintenance revenue.

Implementation, Consulting and Other Service Revenue. Implementation,
consulting and other service revenue in fiscal 1994 decreased 21.2% to $17.1
million, or 17.7% of total revenue, from $21.7 million, or 20.6% of total
revenue in fiscal 1993. The decrease in implementation, consulting and other
service revenue was partially due to the decline in mainframe software license
revenue and increased competition from small implementation and consulting
service companies, as well as to management changes in France in the second
quarter.

22
<PAGE> 24

COSTS AND EXPENSES

Total costs and expenses for fiscal 1994 and fiscal 1993 included $2.3
million and $1.5 million, respectively, of restructuring related costs.
Excluding the restructuring related costs, total costs and expenses in fiscal
1994 decreased 11.8% to $92.6 million from $105.0 million in fiscal 1993. The
weakening of foreign currencies against the U.S. dollar in fiscal 1994 caused
$4.8 million of the decline in total costs and expenses from fiscal 1993 levels.
The remaining $6.4 million of the decline was primarily the result of cost
containment actions taken by the Company at the end of fiscal 1993, most of
which related to personnel reductions implemented in connection with the
restructuring.

Selling and Marketing Expense. Selling and marketing expense in fiscal 1994
decreased 14.1% to $46.5 million, or 48.1% of total revenue, from $54.1 million,
or 51.4% of total revenue in fiscal 1993. The decrease was principally due to
cost containment actions taken by the Company at the end of fiscal 1993.

Cost of Revenue and Support Expense. Cost of revenue and support decreased
13.9% to $17.7 million, or 18.3% of total revenue in fiscal 1994, from $20.5
million or 19.5% of total revenue in fiscal 1993. The decline was principally
caused by lower costs associated with the $4.6 million decline in
implementation, consulting and other service revenue. This was partially offset
by the inclusion of $1.0 million of royalty expense in fiscal 1994 for products
licensed from others for use in the Company's product offerings. The increase in
royalty expense was principally due to the initiation in March 1994 of sales of
products which incorporated Essbase, multidimensional database software licensed
from Arbor.

Internal Research and Product Development; Internally Capitalized Software;
Software Amortization Expense. Internal research and product development expense
decreased 16.1% to $19.3 million, or 20.0% of total revenue in fiscal 1994,
compared with $23.0 million, or 21.9% of total revenue in fiscal 1993. The
decrease was principally due to cost containment actions. The decrease in
internal research and product development expense resulted in lower internally
capitalized software in fiscal 1994 of $13.2 million, or 13.7% of total revenue,
compared with $15.0 million, or 14.3% of total revenue in fiscal 1993. Software
amortization expense in fiscal 1994 increased 16.3% to $12.5, or 13.0% of total
revenue, from $10.8 million, or 10.2% of total revenue in fiscal 1993. The
increase was primarily due to several products that were commercially released
during the fourth quarter of fiscal 1993 and the first quarter of fiscal 1994.

General and Administrative Expense. General and administrative expense
decreased 15.2% to $9.9 million, or 10.2% of total revenue in fiscal 1994, from
$11.7 million, or 11.1% of total revenue in fiscal 1993. The decrease was
primarily attributable to the $1.1 million gain on the sale of undeveloped land
in the second quarter of fiscal 1994 included in general and administrative
expense.

Restructuring Related Costs. Restructuring related costs were $2.3 million
in fiscal 1994 and represented provisions for management actions or plans in
connection with restructuring, primarily related to staff reductions. For the
period ended June 30, 1994, the restructuring related costs included staff
reductions of approximately 50 employees. Restructuring related costs for fiscal
1993 were $1.5 million and also related to management actions or plans in
connection with restructuring, primarily related to staff reductions.

INTEREST EXPENSE

Interest expense was $0.6 million in fiscal 1994, essentially unchanged
from fiscal 1993. Reduced loan balances were partly offset by higher interest
rates and a reduction in the amount of interest capitalized as part of
capitalized computer software. The banks with which the Company has its domestic
credit agreement reduced the interest rate on the Company's borrowings,
effective November 1, 1993, from prime plus 3% to prime plus 1%. Interest
expense was capitalized as required under accounting principles and included in
capitalized computer software.

23
<PAGE> 25

PROVISION FOR INCOME TAXES

The effective income tax rate for fiscal 1994 was 80%. The provision for
fiscal 1994 resulted from a combination of factors including losses occurring in
certain countries where no tax benefit could be provided, partially offset by
the reversal of taxes previously provided. For fiscal year 1993, there was a
provision for income taxes on a loss, rather than a tax benefit as would usually
be expected, primarily caused by losses occurring in certain countries where no
tax benefit could be provided while profits occurred in countries where a tax
provision was required. A detailed comparative analysis of the numerous factors
influencing the effective income tax rate is presented in Note 8 of Notes to
Consolidated Financial Statements.

FOREIGN CURRENCY

In fiscal 1994, 55.3% of the Company's total revenue was from outside North
America. Most of the Company's international revenue is denominated in foreign
currencies. Foreign currency fluctuations in fiscal 1994 impacted operating
income as currency fluctuations on revenue denominated in a foreign currency
were only partially offset by expenses denominated in foreign currency. Overall,
total revenue and total expenses would have been $5.5 million and $4.8 million
higher, respectively, with an estimated net $0.7 million positive impact on
pre-tax profit for fiscal 1994, at comparable exchange rates.

The Company recognizes currency transaction gains and losses in the period
of occurrence. As currency rates are constantly changing, these gains and losses
can, at times, fluctuate greatly. Exchange losses were $25,000 in fiscal 1994
compared with exchange gains of $0.5 million in fiscal 1993. The unusually high
currency gain in fiscal 1993 was principally due to the United Kingdom's
withdrawal from the European Exchange Rate Mechanism. At June 30, 1994, the
Company did not have any forward contracts.

24
<PAGE> 26

QUARTERLY RESULTS OF OPERATIONS

The following table presents the Company's unaudited quarterly results of
operations for fiscal 1994 and 1995. This unaudited quarterly information has
been prepared on the same basis as the audited annual Consolidated Financial
Statements and, in management's opinion, includes all necessary adjustments
(consisting only of normal recurring adjustments, except as otherwise noted
below) to present fairly the unaudited quarterly results when read in
conjunction with the Company's audited Consolidated Financial Statements and
Notes thereto appearing elsewhere in this Prospectus. The results of operations
in any quarter are not necessarily indicative of future fiscal period results.

<TABLE>
<CAPTION>
THREE MONTHS ENDED,
------------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1993 1993 1994 1994 1994 1994 1995 1995
--------- -------- -------- -------- --------- -------- -------- --------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Software licenses............. $ 7,833 $ 9,793 $ 9,188 $11,057 $10,006 $13,018 $12,705 $13,565
Software maintenance.......... 11,052 9,915 10,194 10,464 8,972 9,237 8,895 9,545
Implementation, consulting and
other services.............. 4,845 4,071 3,820 4,394 5,180 5,401 6,104 5,730
------- ------- ------- ------- ------- ------- ------- -------
Total revenue............... 23,730 23,779 23,202 25,915 24,158 27,656 27,704 28,840
------- ------- ------- ------- ------- ------- ------- -------
Costs and expenses:
Selling and marketing......... 11,033 11,860 11,387 12,177 10,232 11,514 11,375 12,162
Cost of revenue and support... 4,262 4,159 4,224 5,025 5,382 5,979 6,959 6,479
Internal research and product
development................. 5,223 4,676 4,683 4,711 4,070 4,031 3,884 4,195
Internally capitalized
software.................... (3,512) (3,285) (3,056) (3,340) (3,079) (2,940) (2,845) (2,803)
Software amortization......... 3,008 2,912 3,075 3,522 3,385 3,262 3,415 3,188
General and administrative.... 2,719 1,756 (1) 2,696 2,720 2,750 2,964 3,088 2,861
Unusual charge................ -- -- -- -- -- -- -- 6,365
Restructuring related costs... -- -- -- 2,343 -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total costs and expenses.... 22,733 22,078 23,009 27,158 22,740 24,810 25,876 32,447
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from operations... 997 1,701 193 (1,243) 1,418 2,846 1,828 (3,607)
Other income (expense):
Net interest income
(expense)................... (112) (115) (81) (181) (166) (175) (126) (45)
Exchange gain (loss).......... 42 (180) 107 6 (37) (6) 216 134
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before taxes...... 927 1,406 219 (1,418) 1,215 2,665 1,918 (3,518)
Provision (benefit) for income
taxes......................... 270 354 125 163 464 984 714 (5,210)(2)
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)............... $ 657 $ 1,052 $ 94 ($1,581) $ 751 $ 1,681 $ 1,204 $ 1,692
======= ======= ======= ======= ======= ======= ======= =======
Net income (loss) per common
share......................... $ 0.08 $ 0.13 $ 0.01 $ (0.20) $ 0.09 $ 0.20 $ 0.14 $ 0.20
======= ======= ======= ======= ======= ======= ======= =======
Weighted average number of
common and dilutive common
equivalent shares............. 8,052 8,212 8,271 8,020 8,235 8,325 8,472 8,526
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

- ---------------
(1) Includes a $1.1 million gain from the sale of undeveloped land.

(2) Includes a $4.1 million tax benefit related to the recognition of prior
years' net operating losses and tax credits as well as tax reserves
released.

25
<PAGE> 27

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

<TABLE>
<CAPTION>
THREE MONTHS ENDED,
---------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1993 1993 1994 1994 1994 1994 1995 1995
--------- -------- -------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Software licenses.................. 33.0% 41.2% 39.6% 42.6% 41.5% 47.1% 45.9% 47.0%
Software maintenance............... 46.6 41.7 43.9 40.4 37.1 33.4 32.1 33.1
Implementation, consulting and
other services................... 20.4 17.1 16.5 17.0 21.4 19.5 22.0 19.9
----- ----- ----- ----- ----- ----- ----- -----
Total revenue.................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- ----- ----- ----- -----
Costs and expenses:
Selling and marketing.............. 46.5 49.9 49.1 47.0 42.4 41.6 41.1 42.2
Cost of revenue and support........ 18.0 17.5 18.2 19.4 22.3 21.6 25.1 22.5
Internal research and product
development...................... 22.0 19.7 20.2 18.2 16.8 14.6 14.0 14.5
Internally capitalized software.... (14.8) (13.8) (13.2) (12.9) (12.8) (10.6) (10.3) (9.7)
Software amortization.............. 12.7 12.2 13.3 13.6 14.0 11.8 12.3 11.0
General and administrative......... 11.4 7.4 11.6 10.5 11.4 10.7 11.2 9.9
Unusual charges.................... -- -- -- -- -- -- -- 22.1
Restructuring related costs........ -- -- -- 9.0 -- -- -- --
----- ----- ----- ----- ----- ----- ----- -----
Total costs and expenses......... 95.8 92.9 99.2 104.8 94.1 89.7 93.4 112.5
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) from operations........ 4.2 7.2 0.8 (4.8) 5.9 10.3 6.6 (12.5)
Other income (expense)
Net interest income (expense)...... (0.5) (0.5) (0.4) (0.7) (0.7) (0.6) (0.5) (0.2)
Exchange gain (loss)............... 0.2 (0.8) 0.5 0.0 (0.2) (0.0) 0.8 0.5
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) before taxes........... 3.9 5.9 0.9 (5.5) 5.0 9.7 6.9 (12.2)
Provision (benefit) for income
taxes.............................. 1.1 1.5 0.5 0.6 1.9 3.6 2.6 (18.1)
----- ----- ----- ----- ----- ----- ----- -----
Net income (loss).................... 2.8% 4.4% 0.4% (6.1)% 3.1% 6.1% 4.3% 5.9%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>

The software industry is generally characterized by seasonal trends. Such
trends may cause higher revenues in the Company's last fiscal quarter as a
result of efforts to exceed sales quotas, and in the second fiscal quarter as
many customers complete annual budgetary cycles. In addition, lower revenues in
the first fiscal quarter may be principally due to the impact of slower sales
during the summer months, particularly in Europe.

In general, over the quarterly periods indicated, the decrease in selling
and marketing expense in absolute dollar amounts and as a percentage of total
revenue is primarily due to the reduction in agent fees as a result of the
conversion of certain agents to distributors. The increase in cost of revenue
and support in absolute dollar amounts and as a percentage of total revenue is
primarily due to an increase in royalty expense due to increased sales of
products that incorporate Arbor's multidimensional database software, Essbase,
and to an increase in personnel and outside contract costs associated with the
growth in implementation, consulting and other services. The decrease in
internal research and product development in absolute dollar amounts and as a
percentage of total revenue is primarily due to a reduction in research and
development staff as the Company made a strategic change to more actively seek
third-party technology.

26
<PAGE> 28

financial condition may be affected by such trends in the future. As a result of
all of these factors, there can be no assurance that the Company will remain
profitable on a quarterly or annual basis.

The Company's future revenues are difficult to predict. This is due in part
to the fact that a significant portion of the Company's revenues in any quarter
are typically derived from non-recurring license fees, and the timing of orders
for the Company's products is subject to delay for a number of reasons,
including factors beyond the Company's control. The Company typically ships its
products shortly after receipt of orders, and, consequently, order backlog at
the beginning of any quarter has in the past represented only a small portion of
that quarter's expected revenues. As a result, license revenues in any quarter
are substantially dependent on orders booked and shipped in that quarter.
Historically, the Company has often recognized a substantial portion of its
software license revenue in the last month of a quarter. The Company believes
that the purchase of its products is relatively discretionary and generally
involves a significant commitment of capital. As a result of these factors, in
the event of any downturn in any potential customer's business or the economy in
general, purchases of the Company's products may be deferred or canceled.

Further, the Company's expense levels are based, in part, on its
expectations as to future revenues. If revenues are below expectations, results
of operations are likely to be materially adversely affected. Net income may
also be disproportionately affected by a reduction in revenues, because a
significant portion of the Company's expenses do not vary with revenues. The
Company may also choose to reduce prices or increase spending in response to
competition or to pursue new market opportunities, either of which could have a
material adverse effect on the Company's business, results of operations and
financial condition.

Because of these factors, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and that
such comparisons should not be relied upon as indications of future performance.
Further, the Company has in recent periods experienced significant percentage
growth in client/server license revenues, but such rate of growth is not
necessarily indicative of future performance. In addition, it is possible that
in some future quarter the Company's operating results will be below the
expectations of public market analysts and 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. See "Selected Consolidated
Financial Data" and "Risk Factors -- Fluctuations in Quarterly Operating
Results; Future Operating Results Uncertain."

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1995, cash was $1.4 million and available borrowings under the
Company's lines of credit were $12.2 million, as compared to cash of $1.8
million and available borrowings under the Company's lines of credit of $1.6
million at June 30, 1994.

Net cash provided by operating activities was $23.3 million in fiscal 1995,
up $9.7 million over the prior year. Pretax profit, excluding the non-cash
write-off of software, was $8.6 million in fiscal 1995, contributing $7.5
million of the increase. Due to prior year net operating losses and tax credits,
only $0.6 million of taxes were paid in fiscal 1995. As a result, most of the
positive cash flow in fiscal 1995 was generated from operating profits. The $2.7
million reduction in accounts receivable balances during fiscal 1995,
attributable to improved collections, also contributed to the increased cash
flow.

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<PAGE> 29

Net cash used in investing activities was $14.1 million in fiscal 1995, up
$1.7 million over the prior year, primarily due to the one-time benefit in
fiscal 1994 from the proceeds of the sale of undeveloped land. Additions to
capitalized computer software declined in dollar amount during fiscal 1995
primarily due to the decrease in internal product development spending.

The Company used the net cash from operating activities to fund its
investing activities and reduce long-term debt by approximately $10.0 million
during fiscal 1995.

At June 30, 1995, the Company did not have any material capital expenditure
commitments. In fiscal 1996, property and equipment purchases and additions to
internally developed software are expected to continue at levels similar to
those of fiscal 1995 and fiscal 1994.

Working capital as of June 30, 1995 was a negative $2.2 million, compared
with a negative $0.5 million from the same period last year. The decrease of
$1.7 million was primarily due to the $2.7 million reduction in accounts
receivable, mentioned above, offset by the $1.0 million reduction in deferred
revenue which is included in current liabilities. Deferred revenue as of June
30, 1995 and 1994 was $18.6 million and $19.6 million, respectively. Deferred
revenue principally relates to prepaid maintenance contracts.

Total assets were $79.3 million at June 30, 1995, as compared with total
assets of $88.9 million at June 30, 1994. The primary contributing factor to the
decrease was the write-off of $6.4 million of capitalized software associated
with the Company's mainframe products.

On October 31, 1994 the Company entered into a $14.0 million amended and
restated, domestic credit agreement with its banks which matures on October 31,
1997. The amended and restated credit agreement contains covenants regarding
among other things, working capital, leverage, net worth and payment of
dividends. Under the terms of the agreement, the Company is prohibited from
paying dividends on the Common Stock. Permitted borrowings under the credit
agreement are based on a percentage of worldwide eligible accounts receivable.
At June 30, 1995, permitted borrowings under the agreement totaled $14.0
million, of which $3.5 million was outstanding. At June 30, 1995, interest was
at the bank's prime rate (8.75% at June 30, 1995) plus 1% until July 1, 1995, at
which time it changed to the Eurodollar rate plus applicable margin, which
varies between 1 1/2% and 2 1/2%. In the first quarter of fiscal 1996, the banks
agreed to release all security interests in the assets of the Company previously
granted to the banks.

In addition, certain of the Company's subsidiaries have local currency
credit agreements or overdraft facilities with banks totaling $3.7 million, of
which $1.9 million was outstanding at June 30, 1995. These credit agreements
expire on October 1, 1997. The interest rates generally vary with the banks'
base rate. Most of such borrowings are guaranteed by the Company.

The Company expects to use a portion of the net proceeds from this Offering
to pay outstanding bank borrowings. The Company expects to use the remaining net
proceeds from this Offering for working capital and general corporate purposes.
Pending such uses, the Company intends to invest the net proceeds from the
Offering in investment grade, short-term, interest bearing instruments.

The Company believes that the combination of the proceeds from this
Offering, present cash balances, future operating cash flows, and credit
facilities will be sufficient to meet the Company's currently anticipated cash
requirements for at least the next 12 months.

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<PAGE> 30

BUSINESS

BACKGROUND

To succeed in today's environment of intensifying global competition,
organizations must seek new ways of making faster and more informed decisions. A
key element of decision making is the analysis of enterprise-wide historical and
projected data. Such analyses, including profitability analysis, budgeting,
trend analysis and financial consolidations, often are computation-intensive and
iterative in nature. For example, a business professional may wish to analyze
the profitability of a customer from several perspectives, or dimensions,
including channel, geography, sales representative, fiscal period or budget
versus actual. Often initial analyses lead to additional questions, resulting in
significant follow-on or scenario analyses, such as the calculation of projected
customer profitability under different pricing scenarios or economic conditions.

Business and Technology Trends

The pace and complexity of business decision making has increasingly become
a greater challenge for organizations. In order to improve their
competitiveness, many organizations have implemented business process
reengineering initiatives. Decision making authority has generally become more
distributed throughout all levels of an organization, creating a need by more
people to access information used for making critical business decisions.
Consequently, management information systems ("MIS") groups and end-users have
invested in a wide variety of information systems to collect, access and analyze
business data. These end-users, who are increasingly involved in system purchase
decisions, demand easy-to-use solutions that can be implemented quickly and that
address their specific business problems.

The development of open systems and client/server architectures has further
enabled the distribution of decision making by allowing end-users to share
common databases, business rules and graphical user interfaces ("GUIs"). These
technologies have also increased the availability of data and improved the
environment for automated decision support. In addition, these open systems and
client/server architectures permit the integration of multiple hardware and
software products, giving organizations the flexibility they require to
implement available technologies. Specific products that have been used to
automate decision support activities include: spreadsheets, databases, data
warehouses, query and reporting tools and analysis modules on transaction
processing-based applications. While each performs specific functions, none
possesses the full range of features which assist an end-user or an organization
in transforming data into business-critical information.

Available Technologies

Spreadsheets are a widespread and popular approach to planning and
analysis. However, spreadsheets are two-dimensional in nature, and therefore are
not well-suited for planning and analysis requiring multidimensional views of
data. In addition, spreadsheets frequently require rekeying

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<PAGE> 31

significant amounts of data, thereby increasing the risk of error, and are
cumbersome to change as organizations' structures evolve.

Relational database management systems ("RDBMSs") have been widely used as
storage repositories for high-volume, historical transaction information.
Businesses typically employ multiple RDBMSs, with each often designed for a
specific function. Accordingly, the limited ability to integrate and update data
from multiple relational databases ultimately restricts planning, analysis and
reporting.

Data warehouses have emerged as an approach to complement RDBMSs by acting
as central repositories for data loaded from various databases. However,
end-users often have read-only access to the data and may be unfamiliar with the
syntax necessary to extract this information from the databases. Consequently,
the assistance of MIS personnel is often necessary for the end-user to further
analyze and process business data.

Database query and reporting tools have been developed to make it easier to
access and view the contents of RDBMSs and data warehouses. These tools are
well-suited for viewing historical data and performing simple analytical
functions, but they (i) generally have limited ability to handle complex
hierarchies and analytical functions, and (ii) may be slow-performing and lead
to errors in cross-dimensional analysis. As a result, the Company believes that
organizations require more powerful software for accessing and analyzing RDBMS
data and warehouse data.

General ledgers, manufacturing resource planning, human resource management
and other transaction processing-based applications provide repositories of
information for specific corporate functions. While these applications often
have add-on analysis modules for particular functional areas, these modules are
generally incapable of integrating data from throughout the enterprise and have
limited planning, analysis and reporting capabilities. Typically, these systems
only generate pre-programmed reports. Consequently, decision-making end-users
cannot easily perform follow-on analyses.

The availability of these technologies and the growing need for better and
faster decisions have increased demand for decision support solutions. End-users
seek easy-to-use decision support applications that provide solutions tailored
to specific industry or functional needs and can answer end-user's business
questions through robust multidimensional analytical capabilities. Further,
these applications must build on the organization's existing computing
infrastructure and integrate data located throughout the enterprise so that
existing and projected data can be transformed into useful information upon
which decisions can be based.

THE COMSHARE SOLUTION

Complete Decision Support Solutions. The Company provides its customers
with complete decision support solutions, either through customizable or
packaged applications. The Company's software products address the full range of
a customer's information access and analysis needs, from data

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<PAGE> 32

extraction to end-user desktop access. Packaged applications are designed to
satisfy the specific decision support needs of an industry, such as merchandise
planning for the retail industry, or a function, such as financial consolidation
or budgeting. The Company then supports these applications through
implementation, consulting, training and support offered by the Company's team
of industry and application specialists.

Enterprise-Wide Integration of Data. The Company's decision support
solutions extract and integrate data that reside in a variety of spreadsheets,
RBDMSs, data warehouses, legacy systems and other data repositories. The
Company's decision support applications include data extraction tools which
leverage existing data sources, permitting quick and cost-effective
implementation of the Company's solutions. This integration of data in a common
database permits end-users throughout an enterprise to access and manipulate
information, enabling better and faster decision making.

On-Line Analytical Processing Capability. The Company leverages OLAP
technology in certain of its software products and is currently utilizing
Arbor's multidimensional database software, Essbase, to enable end-users to
rapidly access information, calculate data relationships and analyze large
amounts of data organized in multiple dimensions. More specifically, OLAP
software allows end-users to quickly understand data relationships by permitting
the multidimensional analysis of large amounts of data organized consistent with
the end-user's perception of the business (e.g. sales by region, by channel, by
budget versus actual).

Ease-of-Use. Comshare's software products provide information to end-users'
desktops by permitting database query, browsing and analysis through an
easy-to-use information visualizer, Commander Execu-View Server ("Execu-View"),
which provides data manipulation and viewing capability through simple
mouse-based operations; Briefing Book, a series of pre-formatted reports; or
through popular front-end applications, such as Microsoft Excel or Lotus 1-2-3.
The Company is also beta testing an information visualizer designed specifically
for Windows '95 which will combine and enhance the functionality of Execu-View
and Briefing Book. Such easy-to-use front-ends enable end-users to make quicker
decisions by allowing more intuitive access, manipulation and analysis of data.
By eliminating the need for end-users to become familiar with a new front-end,
query or programming language, Comshare's software products also lead to quick
adoption throughout the organization.

Client/Server Implementation. All of the Company's new products are
client/server-based. Most products perform computation-intensive functions on
the server, and only requested data is transmitted to the client over the
network. Consequently, information is processed faster, and end-users are able
to access data and make decisions more efficiently. In addition, the Company's
software products are available on popular client/server platforms, including
Windows on the client and Windows NT and OS/2 on the server. The availability of
the Company's products on these popular platforms allows for quick
implementation without costly hardware upgrades.

BUSINESS STRATEGY

The Company's objective is to be the leading provider of client/server
decision support applications software in its target markets. The Company's
strategy includes the following key elements:

Focus on Application-Specific Solutions. The Company seeks to differentiate
itself from its competitors by providing customizable and packaged applications
for specific industry or functional needs. With end-users requesting
decision-making solutions with increasingly sophisticated and specific
analytical capabilities, the Company plans to offer an expanded range of
application-specific products beyond the packaged applications currently offered
for financial reporting and retail decision support. The new applications
include a planning application designed for the consumer packaged goods industry
and an inventory allocation application targeting the retail industry.

Maintain Technology Leadership. The Company plans to maintain technology
leadership by continuing to develop new client/server software solutions that
are differentiated by application-specific functions and innovative internally
developed technology. For instance, the Company plans to

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<PAGE> 33

make its new Detect and Alert technology available for use with all of its major
products. The Company also plans to release a new information visualizer which
enhances and combines Execu-View and Briefing Book.

Leverage Third-Party Technologies. The Company actively seeks third-party
software tools offering the latest technological advances for inclusion in the
Company's product offerings. The Company believes the use of third-party tools
allows it to focus product development efforts on differentiating applications,
developing innovative technology and offering products which include the most
advanced technologies available, while reducing product development risk and
time to market.

Leverage Current Customer Base. The Company has implemented its
client/server and mainframe decision support applications software, and is
currently providing maintenance, at more than 3,000 corporate and public sector
customer sites. The Company seeks to leverage its current customer base to
generate additional revenue opportunities. Since the Company's products can be
used on an enterprise-wide basis, the Company targets further deployment of its
products at existing customer sites through sales of additional or new products,
the extension of its products into other departments and functional areas and
sales of client/server applications to customers converting from mainframe
systems. The Company also intends to expand its sales force so as to more fully
capitalize on existing and new customer sales opportunities and improve customer
service.

Leverage Global Organization. The Company seeks to expand its international
customer base by leveraging its established direct and indirect sales
distribution organizations currently located in 40 countries. By utilizing its
extensive worldwide sales network, the Company plans to address global demand
for decision support applications software and to provide the implementation,
consulting, training and support services its international customers require.
The Company plans to develop programs in conjunction with its international
agents and distributors to increase market penetration in key markets and more
fully offer its applications on a worldwide basis.

Provide Superior Customer Service and Support. The Company seeks to
differentiate itself from its competitors through its industry and application
expertise, enabling it to offer superior implementation, consulting, training
and support. Because end-users seek complete decision support solutions tailored
to their specific industry or functional needs, superior implementation,
consulting, training and support are essential for customer satisfaction and are
key components of the Company's solutions. The Company intends to leverage
customer satisfaction to increase sales at existing customer locations.

PRODUCTS

The Company's software applications are targeted at three decision support
markets: EIS, financial reporting and retail decision support. Software license
fees for the Company's decision support software applications vary widely
depending upon the product, platform and number of users supported. Add-on
features and products are available for additional fees. The initial amount paid
by customers purchasing decision support applications typically covers the
software license fee and product maintenance for the first 12 to 15 months of
the license. Customers may continue product maintenance thereafter for an annual
fee ranging from 15 to 20% of the software license fee. For fiscal 1995, the
software license fee for a typical EIS, financial reporting and retail decision
support application (including add-ons, but excluding maintenance) averaged
approximately $110,000, $82,000 and $115,000, respectively.

EXECUTIVE INFORMATION SYSTEMS (EIS)

Comshare was among the first software companies to successfully introduce
EIS products to the market. Today, Comshare is an industry leader in the EIS
market, based upon reports prepared by International Data Corporation, an
independent market research company, which ranks EIS software companies based
upon revenues.

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<PAGE> 34

Within the EIS market, Comshare offers decision support applications
designed to provide information to a wide range of business users. Typical
applications include customer and product profitability, sales analysis,
business unit profitability analysis and critical success factor and key
performance indicator reporting. The Company designs its EIS applications so
that they may be customized by the Company's consultants, third parties or the
customers themselves to meet specific customer requirements.

Comshare's flagship EIS product for client/server systems, Commander OLAP,
is a suite of software which delivers customizable enterprise-wide business
planning, analysis, reporting and decision-making capabilities. Commander OLAP
capitalizes on the increased use of multidimensional analysis by business
professionals to solve business problems. Using multidimensional analysis,
business professionals view information in a manner which is consistent with
their perception of the underlying business. For example, for a business
organized along geographic lines and product lines, a business professional is
able to view this data across multiple time periods. Commander OLAP facilitates
these and other multidimensional analyses by permitting end-users to structure
business data across the multiple dimensions of importance to these users.

Commander OLAP consists of data extraction tools, a multidimensional
database, enhanced server technology, agent technology and a variety of GUIs.
Its data extraction tools collect data from multiple, disparate data sources,
including spreadsheets, RBDMSs, data warehouses, legacy systems and other data
repositories. Commander OLAP is also able to incorporate non-database data,
including text, voice annotation, video clips and personalized information
presented on graphical user interfaces. The software contains a powerful data
extraction tool which collects, integrates, summarizes and filters such data. A
key component of Commander OLAP is Arbor's multidimensional database software,
Essbase. Essbase is a comprehensive on-line analytical processing solution that
stores and summarizes data, and supports concurrent multi-user read-write for
multidimensional analysis. Comshare enhances Essbase with Commander Server, its
internally developed technology, that increases the speed of
computation-intensive functions, such as sorting and ad hoc calculations, by
processing the calculations on the server. Ad hoc calculations can be defined by
end-users as they work with data at their desktops and results can be stored and
used for further analysis. For example, an end-user may want to calculate a
budget variance, using budget and actual data existing in the database. The
end-user could then drill down to analyze the underlying detail or perform
follow-on analyses using these budget variance calculations, such as sorting the
variances by size.

---------------------------------------------------------------------------
A DIAGRAM DEPICTING THE COMMANDER OLAP APPLICATION ILLUSTRATES HOW DATA IS
EXTRACTED FROM DATABASES BY DATA EXTRACTION TOOLS INTO COMMANDER OLAP, AND
THEN TRANSPORTED TO THE DESKTOP THROUGH VARIOUS FRONT-ENDS.
---------------------------------------------------------------------------

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Commander OLAP is enhanced by internally developed Detect and Alert
software which automates personal monitoring of internal and external (Dow Jones
and Reuters) databases to reduce data overload and optimize the end-user's time.
Detect and Alert is comprised of rule-based software agents that detect problems
and exceptions and alert the end-user to them. The agents are programmed by the
end-user to monitor targeted databases for changes, trends and other patterns
that fall within detection rules established by the end-user. These changes,
trends and patterns trigger alerts that are immediately sent to the end-user by
Commander NewsAlert, an easy-to-read electronic newspaper format. Detect and
Alert allows the end-user to easily identify the data that triggered a specific
alert, without having to generate complicated queries to review such data.
Rather than spending their time performing routine surveillance of databases,
end-users are free to analyze data for critical decision making.

Commander OLAP provides concise current information to the end-user's
desktop through one of the following front-ends: Execu-View, Comshare's
information visualizer; Briefing Book, a series of pre-formatted reports;
Microsoft Excel; or Lotus 1-2-3. The end-user's selection of the appropriate
front-end is based on the user's requirements for ease-of-use versus
functionality. Execu-View provides the end-user with direct access to detailed
data. By pointing and clicking, end-users are able to easily and quickly query
the information, drill down for more detail, change dimensions and extract data
for further analysis. These capabilities ensure that all of the data contained
in the database are equally available for inspection, rotation and side-by-side
comparison. Briefing Book provides the user with quick and easy access to
business information through pre-formatted reports, while Microsoft Excel and
Lotus 1-2-3 provide end-users with the spreadsheet capability with which they
are familiar. For an example illustrating how a Comshare customer has used
Commander OLAP, see "Business -- Customers."

Comshare also sells and supports System W and IFPS decision support
software for use on mainframe computers. Customers use System W and IFPS for
applications similar to those performed through Commander OLAP, although the
multidimensional database resides on the mainframe, rather than on the server.
Because market demand has shifted towards client/server technology, these
mainframe-related portions of Comshare's EIS business have declined
significantly in recent years. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

FINANCIAL REPORTING APPLICATIONS

Comshare offers a suite of decision support consolidation, financial
reporting and budgeting applications targeted at the financial departments of
organizations. Comshare's principal financial reporting applications are
Commander FDC and Commander Budget, complementary products that, when used
together, share a single database to facilitate integration of historical and
budgetary financial data located throughout the enterprise for management
reporting.

Commander FDC collects and consolidates financial data from different
general ledgers within a multi-division or multi-location company and produces
consolidated financial reports for management and statutory reporting. Commander
FDC has built-in controls to ensure data accuracy and security features to
support its multi-user capabilities. The product also performs currency
translation, handles intercompany eliminations and account reclassifications and
is readily adaptable to the changing reporting needs of the end-user. For an
example illustrating how a Comshare customer has used Commander FDC, see
"Business -- Customers."

Commander Budget is a distributed budgeting system which allows managers
throughout an organization to prepare budgets using Microsoft Excel or Lotus
1-2-3 front-ends and enables an organization's central financial group to
consolidate the budgets. Commander Budget shares the same basic architecture of
Commander FDC, offering similar capabilities such as currency translation,
security and multi-user functionality.

Commander FDC and Commander Budget consist of data extraction tools, a
central database and a choice of GUIs. Similar to Commander OLAP, their data
extraction tools collect, integrate,

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<PAGE> 36

summarize and filter data from multiple, disparate data sources. Commander FDC
and Commander Budget, when used together, share a Btrieve database that permits
the integration of consolidated historical and budgetary financial data, giving
the end-user the option of a fully-integrated financial management system.
Commander FDC and Commander Budget provide end-users with a choice of
front-ends. Both are offered with Microsoft Excel, and Commander Budget is also
offered with Lotus 1-2-3. Customers may separately purchase Execu-View Finance,
which is Execu-View sold under the Company's financial reporting product line.
Execu-View Finance allows users point-and-click access to interactively browse,
report, graph and analyze information generated by Commander FDC and Commander
Budget. Comshare also offers Commander Prism, a multidimensional database that
resides on the end-user's desktop and provides analytical and report writing
capabilities.

---------------------------------------------------------------------------
A DIAGRAM DEPICTING THE COMMANDER FDC AND COMMANDER BUDGET APPLICATIONS
ILLUSTRATES HOW DATA IS COLLECTED FROM GENERAL LEDGERS AND SPREADSHEETS,
TRANSFERRED TO A SHARED APPLICATION DATABASE, PROCESSED IN THE FDC/BUDGET
SERVER AND THEN DELIVERED TO THE DESKTOP BY A RANGE OF CLIENT FRONT-ENDS.
---------------------------------------------------------------------------

RETAIL DECISION SUPPORT APPLICATIONS

Comshare's ARTHUR product line is a suite of retail decision support
software that enables retailers to plan merchandise purchases to control
inventory levels, tailor their purchases to consumer preferences and market
trends and track and analyze actual sales performance. Comshare designs its
ARTHUR products to improve the productivity and profitability of its retail
customers and to serve as a strategic planning tool for retailers by allowing
them to test merchandise plans and identify market opportunities, changing sales
trends or problems.

ARTHUR Planning is a suite of software offering retailers a packaged
application which enables them to create detailed merchandise plans, analyze
information and test merchandise strategies before placing orders and committing
resources. The product also helps buyers match merchandise assortments to their
customers' requirements and the characteristics of their stores. ARTHUR Planning
can be used by smaller retailers on a desktop platform or larger retailers using
ARTHUR Plan Monitor as the data repository. For an example illustrating how a
Comshare customer has used ARTHUR Planning, see "Business -- Customers."

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<PAGE> 37

ARTHUR Plan Monitor is server-based and has Arbor's Essbase as its core. It
may be used in conjunction with ARTHUR Planning for larger retail applications,
as described above, or as the database for multidimensional sales reporting and
tracking.

Comshare also offers ARTHUR Performance Tracking, which is mainframe-based.
Both ARTHUR Plan Monitor and ARTHUR Performance Tracking, in combination with
ARTHURView, report weekly sales information across the retailer's product lines
and geographic regions in various levels of detail. They provide up-to-date
merchandise performance information, giving retailers the opportunity to change
merchandise plans in response to consumer preferences and market trends.
Comshare's Detect and Alert software is also offered in connection with ARTHUR
products, so variances and trends can automatically and more easily be
identified. ARTHUR Performance Tracking has an architecture similar to Commander
OLAP, except that the multidimensional database is mainframe-based.

These products deliver vital information to the end-user through
ARTHURView, which is Execu-View sold under the ARTHUR brand name, or Briefing
Book, a series of pre-formatted reports, which may be distributed throughout a
retailing organization.

---------------------------------------------------------------------------
A DIAGRAM DEPICTING THE ARTHUR PLANNING APPLICATION ILLUSTRATES HOW DATA
IS EXTRACTED FROM INTERNAL DATABASES WITH ARTHUR PLANNING'S DATA
EXTRACTION TOOLS, TRANSPORTED TO A MULTIDIMENSIONAL DATABASE, PROCESSED IN
THE ARTHUR PLANNING SERVER AND DELIVERED TO THE DESKTOP BY VARIOUS CLIENT
FRONT-ENDS.
-----------------------------------------------------------------------------

IMPLEMENTATION, CONSULTING, TRAINING, SUPPORT AND MAINTENANCE

The Company offers implementation, consulting, training, pre-sales and
post-sales technical support and maintenance to complement its product
offerings. Comshare supports its product offerings with customer support from
its teams of industry and functional decision support specialists and its
worldwide agent/distributor network. Support for Comshare's products starts
before the sale, with Comshare providing its customers with pre-sales technical
support services. Implementation and consulting services are offered in all
three of the Company's decision support software markets, and are organized by
industry and/or functional decision support expertise. These services include
application design and modification, installation assistance, implementation and
troubleshooting support. Comshare also offers training at customer sites, at its
local sales offices and at its central training centers in Ann Arbor, Michigan
and London, England.

The Company's maintenance customers receive product enhancements and
updates, bug fixing and unlimited customer telephone helpline support and access
to Comshare's CompuServe forum.

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Beginning 12 to 15 months following the sale, maintenance customers pay an
annual maintenance fee, which is typically 15 to 20 percent of the license fee.

CUSTOMERS

Comshare has implemented its client/server and mainframe decision support
applications software, and is currently providing maintenance, at more than
3,000 corporate and public sector customer sites in 40 countries. Comshare's
diversified customer base includes many Fortune 1000 and Financial Times 1000
industrial companies as well as large and mid-sized companies in the
communications, financial services, health care, retail and transportation
industries, and many governmental and other public sector organizations. The
following table includes a representative sample of Comshare customers who
purchased over $50,000 in software licenses from Comshare in fiscal 1995:

<TABLE>
<CAPTION>
EXECUTIVE INFORMATION FINANCIAL REPORTING RETAIL DECISION
SYSTEMS (EIS) APPLICATIONS SUPPORT APPLICATIONS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
AlliedSignal Inc. Alberto-Culver USA, Inc. Boscov's Department
AMP Incorporated Barclays Bank PLC Stores Inc.
AT&T Corporation Cargill, Inc. C&J Clark America Inc.
The Bear Stearns Franklin Resources, Inc. Coach Leatherware Co., Inc.
Companies Inc. Hartmarx Corporation CompUSA Inc.
British Gas PLC Insignia Financial Group, Inc. Country Road Clothing
Bristol-Myers Squibb Co. Interprovincial Pipe Line Inc. Pty. Ltd.
Canadian Coast Guard Kerr McGee Chemical Co. Dylex Limited
Chase Manhattan Corporation Lee Company Foot Action USA
CIBA Vision Corp., a subsidiary Nestle France S.A. Gantos, Inc.
of CIBA-Geigy Ltd. Paging Network, Inc. ISSC Corporation
Columbia Gas System Pegasus Gold Inc. (Eckerd Drugs)
Service Corp. Progress Software Corporation J. Crew Group, Inc.
Internal Revenue Service Bank of America National Trust Jockey International, Inc.
Johnson & Johnson, Inc. & Savings Assn. Kaufhalle AG
Lenox, Inc. Skadden, Arps, Slate, Neiman Marcus Group
Liz Claiborne, Inc. Meagher & Flom NIKE, Inc.
Old Kent Financial Corp. Starbucks Corporation Oshman's Sporting
The Reader's Digest Time Warner, Inc. Goods, Inc.
Association, Inc. Toshiba America, Inc. Service Merchandise Co.,
Roadway Package System, Inc. Toyota Motor Corporation Inc.
Rohm & Haas Co. Tropicana Products, Inc. Sportmart Inc.
Shell Oil Company Watts Regulator Co. Sterling Inc.
Textron Inc. Victoria's Secret Stores
TRW Inc.
U.S. Bancorp
Wells Fargo Bank, N.A.
</TABLE>

No customer has accounted for more than 5% of the Company's total revenues
in any of its three most recent fiscal years.

The following examples illustrate how organizations use Comshare's decision
support software to make business decisions. These examples have been derived
from printed case studies prepared by the Company based on information provided
by its customers.

EIS. A major world-wide manufacturer is using Commander OLAP to collect and
access data relating to its aerospace, automotive and engineered materials
sectors. Prior to implementing Commander OLAP, reports needed by the aerospace
sector's senior management were unavailable until data from dozens of division
executives at remote sites had been collected, consolidated and summarized.
Other important information was unavailable because it had never been collected
at the

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<PAGE> 39

divisional level. The manufacturer contacted Comshare to enable the aerospace
sector's senior management to get immediate desktop access to critical business
information. Within three months of developing a prototype, Comshare installed
the first EIS at the aerospace sector's headquarters. After a month of training
sessions, Comshare's EIS was rolled out to the desktops of more than 150 people
at 15 different aerospace sector sites. Within 18 months, the aerospace sector's
150-user EIS had become a 500-user system spanning all three sectors of the
manufacturer's operations. With Commander OLAP, the manufacturer's key managers
are now able to obtain within seconds at their desktops such information as the
top ten customers by business unit; net sales and income by customer and product
line; and unit sales by foreign versus domestic or military versus commercial.

Financial Reporting. A leading manufacturer of lawn mowers and snow blowers
is using Comshare's Commander FDC to collect and consolidate financial data.
Prior to implementing Commander FDC, the manufacturer's financial staff created
reports by rekeying data into spreadsheets, printing out dozens of documents and
distributing them in thick report packages. This process took time and
introduced a greater chance of error. After implementing Commander FDC, the
manufacturer is now able to track data from 175 units, consolidate it by
division and on an enterprise-wide basis and then break down the manufacturer's
eight divisions by product line, geographical location and, in some cases,
distribution channel. Each month, the manufacturer does three different
consolidations. Information is reported in a variety of different ways: actual,
prior year, plan, current projection and prior projection. Information provided
by the manufacturer indicates that Commander FDC has enabled the manufacturer to
reduce the time required to close its books from eight to four days and has
helped it to distribute its financial reports two weeks earlier.

Retail Decision Support. A full-line department store chain is using ARTHUR
Planning to develop detailed merchandise plans that handle such details as
average stock, turnover, sales and gross margin calculations. Prior to
implementing ARTHUR Planning, planners would create merchandise plans based upon
guidelines developed by the chief executive officer and the director of
merchandise planning. However, because each plan and subsequent revisions had to
be sent to the mainframe and loaded into another program for processing, it
would be the next day, at the earliest, before the planner could review the
impact of those revisions on the plan. With the implementation of ARTHUR
Planning, data captured through bar code scanning at the point of sale at 52
stores in seven states is transmitted to a server and transferred into ARTHUR
Planning. The data can then be manipulated on line by buyers and planners to
create merchandise plans. Since these plans then become part of the database,
plan changes can be directly entered into the system and, in a matter of
minutes, the planner has a revised plan. This retailer has found that ARTHUR
Planning has reduced planning time and allows planners to test more
merchandising strategies before resources are committed. In addition, ARTHUR
Planning has helped this retailer to more quickly create numerous bottom-up
divisional merchandise plans which conform to overall company-wide merchandise
planning goals.

SALES AND MARKETING

Comshare products and services are sold on a worldwide basis by a direct
sales operation and by an extensive worldwide agent/distributor network. Both of
these complementary distribution channels leverage the Company's extensive
industry and application expertise and offer pre-sales and post-sales technical
customer support.

The Company sells and markets its software products and services in the
United States, Canada, United Kingdom, France, Germany and Australia through a
direct sales organization. Direct sales operations are organized geographically,
and within a geographic region, are organized generally by industry or
functional decision support expertise.

The sales cycle begins with the generation of sales leads through seminars,
trade journals and trade shows. After a lead is qualified, the Company's sales
force analyzes the potential customer's decision support needs and makes a
presentation to the potential customer. After obtaining a preliminary
commitment, the Company often develops customized demonstrations to illustrate
how

38
<PAGE> 40

the Company's products will satisfy a customer's specific needs. The negotiation
of a contract concludes the sales cycle, which varies in length from customer to
customer, but typically requires three to six months or more.

The Company has an extensive agent/distributor network covering 34
countries not directly served by the Company. The Company has selected
established software application vendors or systems integration firms to act as
agents and distributors to market, implement and support Comshare products in
their respective geographic areas. Comshare derived 17% of its total revenue in
fiscal 1995 from the Company's agent/distributor network.

RESEARCH AND PRODUCT DEVELOPMENT

The Company's product development strategy is to expand the range of its
application-specific products, develop new client/server software differentiated
by innovative internally developed technology and incorporate third-party tools
offering the latest technological advances into its products. The Company has
increasingly incorporated third-party tools into its products to focus its
product development efforts on applications, while reducing product development
risk and time to market. The Company has approximately 150 product development
specialists, organized by EIS, financial reporting or retail decision support
application expertise, who are charged with implementing the Company's product
development strategy. Located in Ann Arbor, Michigan and Leicester, England,
these specialists develop new products and product enhancements by considering
customer suggestions, competitive offerings, technology trends and market
opportunities.

The Company is developing a planning application focused on the consumer
packaged goods industry which enables marketing and sales managers to both plan
for changes in consumer demand and to optimize pricing, promotions and
inventory. Based on the ARTHUR Planning technology, this new product will allow
consumer packaged goods manufacturers to better plan product sales and margins.

The Company is also developing a new application, ARTHUR Allocation,
targeting the retail industry. ARTHUR Allocation will enable a retailer to
improve sales and margins by quickly and easily determining which stores should
receive merchandise shipped to the retailer's warehouses.

The Company plans to offer its Detect and Alert technology with its
financial reporting products. Detect and Alert enables end-users to identify
variances, trends and values that fall within detection rules established by the
end-user. The Company is also developing enhanced versions of Commander FDC and
Commander Budget which tightly integrate Commander Prism, a multidimensional
database residing on the desktop, for more efficient analysis and reporting.

The Company is developing a new information visualizer which combines and
enhances the functionality of Execu-View and Briefing Book and is designed
specifically for the Windows '95 and Windows NT operating systems. The new
visualizer will be available with Commander OLAP and certain of the Company's
ARTHUR products. The new visualizer will allow the end-user to perform
cross-dimensional analysis and has built-in capabilities for data ranking and
for basic alert functions. It also offers predominantly script-free application
development, allowing MIS professionals to more quickly build and change
applications.

There can be no assurance that products under development will be completed
successfully or on time, or that they will include the features required to
achieve market acceptance. Failure of these new product development projects
could have a material adverse effect on the Company's business, results of
operation and financial condition.

39
<PAGE> 41

There can be no assurance that the Company will be able to successfully
accomplish future technological or product transitions, that the Company will
not experience significant delays in developing new products or enhancements
required to accomplish such transitions or that the Company will have sufficient
financial resources available to it to finance such efforts. There can be no
assurance as to the impact that any such transition would have on the Company's
revenue or profitability. In addition, there can be no assurance that the
Company's new products and enhancements will adequately address the changing
needs of the marketplace and achieve market acceptance or that developments by
others will not render the Company's products obsolete or noncompetitive. Any
such failure could have a material adverse effect on the Company's business,
results of operations and financial condition. See "Risk Factors -- Risks
Associated With Rapid Technological Change."

INTELLECTUAL PROPERTY

Comshare distributes its software products under software license
agreements which generally grant customers a non-exclusive, non-transferable
license to use the Company's products. The Company considers its software
products to be valuable and unique assets and actively attempts to protect them
contractually by generally restricting usage to internal operations, and
prohibiting the unauthorized reproduction or transfer to third parties. The
Company also believes that the nature of its customers and the provision of
continuing maintenance and support services reduce the risk of unauthorized
reproduction.

In addition, the Company relies on copyright protection and trade secret
laws to protect proprietary information. The laws of some foreign countries do
not protect the Company's proprietary rights to the same extent as do the laws
of the United States. In addition, certain provisions of the Company's contracts
prohibiting unauthorized reproduction may be unenforceable under the laws of
certain foreign countries. There can be no assurance that the steps taken by the
Company to protect its proprietary rights will be adequate to prevent
misappropriation of its technology or development by others of similar or
superior technology. Although the Company believes that its products and
technology do not infringe on any existing proprietary rights of others, there
can be no assurance that third parties will not assert infringement claims in
the future or that any such claims will not require the Company to enter into
license arrangements or result in litigation, regardless of the merits of such
claims. No assurance can be given that any necessary licenses will be available
or that, if available, such licenses can be obtained on commercially reasonable
terms. Should litigation with respect to any such claims commence, such
litigation could be extremely expensive and time-consuming and could have a
material adverse effect on the Company's business, results of operations and
financial condition regardless of the outcome of such litigation. See "Risk
Factors -- Limited Intellectual Property Protection."

LICENSED TECHNOLOGIES

The Company licenses certain software programs and tools from third parties
and incorporates them into the Company's products. Generally, these licenses are
non-exclusive worldwide licenses providing for varying royalty payments and
expiration dates. The Company believes that the inclusion of third-party
software programs and tools in its products reduces product development risk and
time to market.

Examples of third-party software tools that the Company incorporates into
its products include Arbor's Essbase, Btrieve Technology, Inc.'s Btrieve
database, Microsoft Excel and Strategic Mapping, Inc.'s Atlas View SDK. The
Company is substantially dependent upon Essbase, which is an integral part of
the Company's Commander OLAP, ARTHUR Planning and Plan Monitor products and
certain planned new products. The Company's worldwide license for Essbase
expires December 31, 2001. The license may also be terminated in the event of an
uncured material breach.

Because Essbase is the OLAP technology which provides the critical
multidimensional functionality for Commander OLAP and is an integral component
of the Company's ARTHUR product line, loss

40
<PAGE> 42

of the Company's rights to Essbase, or any change impacting the availability of
Essbase, could have a material adverse effect on the Company's business, results
of operations and financial condition. In addition, if there is any significant
change in the competitiveness of Essbase, the Company could be required to
undertake an expensive and time-consuming revision of its products to operate on
the competitive product or technology and the Company's business, results of
operations and financial condition could be materially adversely affected.

In the future, the Company intends to increase the rate at which it
licenses software tools from third parties for incorporation into its products,
as part of its strategy to reduce product development risk and time to market
for new products and product enhancements. Incorporating third-party software
into its products subjects the Company to risks that its third-party vendors
will refuse to renew a license, or become unable or unwilling to support and
enhance their products in a manner that satisfies the Company's requirements. If
the Company were unable to renew these licenses, or if its third party vendors
were to become unable or unwilling to support and enhance their products, the
Company could be required to devote additional resources to the enhancement and
support of these products or to acquire or develop software providing equivalent
capabilities, which could adversely impact the ability of the Company to sell
its current products, cause delays in the development and introduction of new
products and increase the Company's cost of development of such products. The
occurrence of any of the foregoing risks associated with licensing software from
third parties could have a material adverse effect on the Company's business,
results of operations and financial condition. See "Risk Factors -- Reliance on
Relationships with Arbor Software Corporation and Other Third Parties."

COMPETITION

The markets for Comshare's software products are highly competitive and
characterized by continued change and rapid technological advancements. In
general, the Company competes on the basis of: (1) software application utility,
which includes the extent to which its product offerings meet specific end-user
markets and needs; (2) functionality, which includes the breadth and depth of
features and functions and ease-of-use; (3) service and support, which includes
the range and quality of technical support, training and consulting services;
(4) vendor reputation; (5) product architecture, which includes distributed
computing capability, and ease of customization and integration with other
applications; and (6) product pricing in relation to performance. The Company
believes it competes favorably with respect to these factors.

41
<PAGE> 43

competition could result in price reductions, reduced operating margins and loss
of market share, any of which could have a material adverse effect on the
Company's business, results of operations and financial condition. In addition,
many of the Company's current and potential competitors have significantly
greater financial, technical, marketing and other resources than the Company. As
a result, they may be able to respond more quickly to new or emerging
technologies and changes in customer requirements, or to devote greater
resources to the development, promotion and sale of products than can the
Company. There can be no assurance that the Company will be able to compete
successfully against current and future competitors or that competitive
pressures faced by the Company will not materially adversely affect its
business, results of operations and financial condition. See "Risk Factors --
Competition."

EMPLOYEES

Comshare had 686 full-time employees at June 30, 1995, including 262 in
sales and marketing, 146 in research and product development, 145 in consulting
and implementation services and 133 in customer support and administration. None
of the Company's employees is represented by a labor union. The Company has
experienced no work stoppages and believes that its relations with employees are
good.

FACILITIES

The Company's headquarters is located in Ann Arbor, Michigan in a leased
facility consisting of approximately 61,200 square feet. This lease expires on
February 28, 2005. The Company also leases a 52,100 square feet facility in
London, England under a lease that expires on December 9, 2007. This facility is
used for administration, sales, marketing and implementation services. In
addition, the Company leases sales offices in 25 major cities in the United
States, Europe and Australia and maintains a product development facility in
Leicester, England.

LEGAL PROCEEDINGS

The Company is not a party to any litigation that, in the opinion of
management, could reasonably be expected to have a material adverse impact on
the Company's business, results of operations or financial condition.

42
<PAGE> 44

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The names, ages and positions of the executive officers and directors of
the Company, assuming the election of all directors nominated for election to
the Board of Directors at the Annual Meeting of Shareholders to be held on
November 18, 1995, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- --- --------------------------------------------------
<S> <C> <C>
T. Wallace Wrathall.............. 58 President, Chief Executive Officer and Director
Stephen R. Fluin................. 41 Vice President, European Operations
Dennis G. Ganster................ 44 Senior Vice President and Chief Technology Officer
Kathryn A. Jehle................. 43 Senior Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary
Dion T. O'Leary.................. 51 Vice President, Agents and Distributors
Charles J. Palmer................ 50 Vice President, North American EIS Sales
Steven J. Tonissen............... 46 Senior Vice President, Marketing
Donald J. Walker................. 55 Senior Vice President
Richard L. Crandall.............. 52 Chairman of the Board of Directors
Geoffrey B. Bloom................ 53 Director Nominee
Daniel T. Carroll................ 69 Director
Stanley R. Day................... 70 Director
W. John Driscoll................. 66 Director
Alan G. Merten................... 53 Director
George R. Mrkonic................ 42 Director Nominee
John F. Rockart.................. 64 Director
</TABLE>

Mr. Wrathall assumed the position of President and Chief Executive Officer
of the Company in April 1994, after having served as the Company's Chief
Financial Officer for 18 years and as a Senior Vice President since 1988.

Mr. Fluin was named Vice President, European Operations of the Company in
November 1994, after having served as the Company's Director of United Kingdom
Sales for over seven years. Mr. Fluin has been with the Company in various
positions since 1978.

Mr. Ganster was named Senior Vice President in July 1994 after having
served as Vice President and Chief Technology Officer since April 1993. He had
previously served as the Company's Vice President of Product Management from
July 1988 to April 1993, and has been with the Company in various positions
since 1972.

Ms. Jehle was named Senior Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary in May 1994. Ms. Jehle served as Chief
Financial Officer of Pharmavene, Inc., a pharmaceutical company, from June 1993
to May 1994; and as Vice President of AMF Bowling Centers, Inc. from May 1990 to
June 1993. Ms. Jehle was previously employed by the Company from 1981 through
1987, most recently as Vice President and Treasurer.

Mr. O'Leary was named Vice President, Agents and Distributors of the
Company in November 1994 after having served as the Company's Director of Agents
and Distributors for over ten years. Mr. O'Leary has been with the Company in
various positions since 1971.

Mr. Palmer was named an Executive of the Company in October 1995 and has
served as Vice President, North American EIS Sales, of the Company since July
1994. He previously served as Vice

43
<PAGE> 45

President, Eastern Region North American Sales, from July 1993 to July 1994,
after having served as Vice President, U.S. Sales, from July 1990 to July 1993.
Mr. Palmer has been with the Company in various positions since 1976.

Mr. Tonissen was named Senior Vice President, Marketing of the Company in
June 1995. Prior to joining the Company, Mr. Tonissen served as a principal in
The Spectrum Group, a management and information system consulting organization,
from December 1992 until June 1995; Sales Director of ONTOS, an object-oriented
database company, from December 1991 to December 1992; Managing Director of the
Telon Division of Pansophic Systems, a computer software and service company,
which was later acquired by Computer Associates, from June 1991 to December
1991; and as Director of Marketing of the same division of Pansophic from
January 1990 to June 1991.

Mr. Walker has been a Senior Vice President of the Company since July 1988
and has been with the Company in various positions since 1974.

Mr. Crandall was named Chairman of the Board of the Company in April 1994,
after having served as President and Chief Executive Officer of the Company
since 1970. Mr. Crandall also serves as a director of Computer Task Group, Inc.

Mr. Bloom is the President and Chief Executive Officer, Wolverine World
Wide, Inc, a manufacturer and seller of footwear. Mr. Bloom assumed such
position in 1993, after serving as Chief Operating Officer of such company from
1987 to 1993.

Mr. Carroll is the Chairman and President of The Carroll Group, Inc., a
management consulting company. He also serves as a director of the following
corporations: A.M. Castle & Co., American Woodmark Corporation, Aon Corporation,
DeSoto, Inc., Diebold, Inc., Michigan National Corporation, Oshkosh Truck
Corporation, UDC Homes, Inc., Wolverine World Wide, Inc. and Woodhead
Industries, Inc.

Mr. Day is the retired Chairman of the Board, Champion Enterprises, Inc., a
manufacturer of manufactured homes and mid-sized buses.

Mr. Driscoll is the retired President, Rock Island Company, a private
investment company. He also serves as a director of the following corporations:
The John Nuveen Company, MIP Properties, Inc., The St. Paul Companies, Inc.,
Northern States Power Company and Weyerhaeuser Company.

Mr. Merten is the Dean, Johnson Graduate School of Management, Cornell
University. He also serves as a director of Tompkins County Trust Company,
American Capital Bond Fund, Inc., American Capital Convertible Securities, Inc.
and American Capital Income Trust and as a trustee of the Common Sense Trust.

Mr. Mrkonic is the Vice Chairman and President, Borders Group, Inc., an
operator of book and music stores. He assumed his current position in December
1994 and has been a director of Borders Group, Inc. since August 1994. Mr.
Mrkonic served as Executive Vice President, Specialty Retailing Group of K-Mart
Corporation, a general merchandise retailer, from November 1990 to November
1994. He was President of Eyelab, Inc., an optical goods retailer, from 1987 to
1990. Mr. Mrkonic is also a director of The Sports Authority, Inc., OfficeMax,
Inc. and Champion Enterprises, Inc.

Mr. Rockart is a Director and Senior Lecturer at the Center for Information
Systems Research, Massachusetts Institute of Technology. He also serves as a
director of Keane, Inc. and Renaissance Solutions, Inc.

44
<PAGE> 46

STOCK OWNERSHIP OF MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of September 30, 1995, and
as adjusted to reflect the sale by the Selling Shareholders of the shares of
Common Stock offered by this Prospectus (assuming no exercise of the
Underwriters' over allotment option), by all directors and executive officers of
the Company as a group.

<TABLE>
<CAPTION>
SHARES TO BE
SHARES BENEFICIALLY BENEFICIALLY OWNED
OWNED PRIOR TO THE AFTER THE
OFFERING(1) SHARES TO BE OFFERING(1)
------------------------ SOLD IN THE --------------------
NAME NUMBER PERCENT(2) OFFERING(3) NUMBER PERCENT
- ------------------------------- --------- ---------- --------------- ------- -------
<S> <C> <C> <C> <C> <C>
All executive officers and
directors as a group (16
persons)(4).................. 1,358,538 16.2% 567,040 791,498 8.5%
</TABLE>

- ---------------
(1) To the best of the Company's knowledge, based on information reported by
such directors and officers or contained in the Company's shareholder
records. Unless otherwise indicated by any additional information included
in the footnotes to the table, the beneficial owners are presumed to have
sole voting and investment power with respect to all shares shown.

(2) The total number of shares of Common Stock deemed outstanding prior to this
Offering was 8,241,635 as of September 30, 1995. The number of shares of
Common Stock deemed outstanding after this Offering includes the additional
1,125,000 shares being offered by the Company in this Offering, and assumes
no exercise of the Underwriters' over-allotment option.

(3) The Selling Shareholders include Messrs. Crandall, Driscoll and certain
trusts of which Mr. Driscoll serves as a trustee. For a description of the
shares of Common Stock to be sold in the Offering by Messrs. Crandall,
Driscoll and the trusts of which Mr. Driscoll serves as a trustee, see
"Selling Shareholders." No other executive officer or director is
participating in this Offering as a Selling Shareholder.

(4) Includes 168,749 shares which certain directors and executive officers have,
or within 60 days of September 30, 1995 will have, the right to acquire
pursuant to the presently exercisable portion of options granted under the
Company's 1988 Stock Option Plan; 593,209 shares, referred to in Note (5)
under "Selling Shareholders," as to which beneficial ownership is
disclaimed; 11,153 shares that have been allocated to the accounts of
members of the group under the Company's Employee Stock Ownership Plan; and
36,000 shares referred to in Note (2) under "Selling Shareholders" owned by
the minor son of a director of the Company, as to which beneficial ownership
is disclaimed.

45
<PAGE> 47

SELLING SHAREHOLDERS

All of the Selling Shareholders, other than Richard L. Crandall, are
descendants (and their spouses) of Frederick Weyerhaeuser, trusts for the
benefit of such persons, a corporation owned by such persons and trusts or a
foundation affiliated with such persons (the "Weyerhaeuser Family"). W. John
Driscoll, who has served as a director of the Company since 1970, and his
spouse, are members of the Weyerhaeuser Family and are Selling Shareholders. At
September 30, 1995, the members of the Weyerhaeuser Family, including the
Selling Shareholders, beneficially owned 1,452,819 shares, or 17.6%, of the
Common Stock. Following the Offering, the members of the Weyerhaeuser Family,
including the Selling Shareholders, will beneficially own 456,298 shares, or
4.9%, of the Common Stock. At September 30, 1995, the only member of the
Weyerhaeuser Family beneficially owning more than 1% of the Common Stock was
Rock Island Company, which beneficially owned 511,407 shares, or 6.2%, of the
Common Stock. The information pertaining to Rock Island Company is based on a
Schedule 13D Report, dated July 3, 1995. Following the Offering, no member of
the Weyerhaeuser Family will beneficially own more than 1% of the Common Stock.
Richard L. Crandall, Chairman of the Board of the Company, is also a Selling
Shareholder. At September 30, 1995, Mr. Crandall beneficially owned 209,809
shares, or 2.5%, of the Common Stock. Following the Offering, Mr. Crandall will
beneficially own 171,330 shares, or 1.8%, of the Common Stock.

The following table sets forth the name of each Selling Shareholder for
whose account shares of Common Stock are offered by this Prospectus, the number
of shares of Common Stock currently held for the account of such Selling
Shareholder, the number of shares of Common Stock being sold for the account of
such Selling Shareholder in the Offering (assuming no exercise of the
Underwriters' over-allotment option) and the number of shares of Common Stock
that will be held for the account of such Selling Shareholder following the
Offering (assuming no exercise of the Underwriters' over-allotment option).

<TABLE>
<CAPTION>
SHARES HELD FOR SHARES TO BE HELD
ACCOUNT PRIOR SHARES TO BE SOLD FOR ACCOUNT AFTER
NAME TO OFFERING IN THE OFFERING THE OFFERING
- -------------------------------------------------- --------------- ----------------- -----------------
<S> <C> <C> <C>
Rock Island Company(1)............................ 511,407 444,040 67,367
Richard L. Crandall(2)............................ 209,809 38,479 171,330
Elizabeth S. Driscoll............................. 68,085 59,116 8,969
Rev. Trust of Rudolph W. Driscoll, Jr.(3)......... 47,187 40,971 6,216
Frederick K. Weyerhaeuser Trust of 1939 fbo Vivian
W. Piaseki(4)................................... 44,775 38,877 5,898
Elizabeth C. Driscoll............................. 42,504 36,905 5,599
John B. Driscoll.................................. 42,504 36,905 5,599
Margaret L. Driscoll.............................. 42,504 36,905 5,599
William L. Driscoll............................... 42,504 36,905 5,599
Stewardship Foundation............................ 31,692 27,517 4,175
W. John Driscoll(5)............................... 26,250 11,250 15,000
Rudolph W. Driscoll............................... 22,500 19,536 2,964
Charles L. Weyerhaeuser........................... 22,500 19,536 2,964
F. T. Weyerhaeuser(6)............................. 22,500 19,536 2,964
Trust U/W of F. Weyerhaeuser
fbo V. Rasmussen(7)............................. 22,500 19,536 2,964
1966 Rev. Trust #2 of Sarah-Maud W.
Sivertsen(8).................................... 11,700 10,159 1,541
1966 Rev. Trust #3 of Sarah-Maud W.
Sivertsen(9).................................... 11,700 10,159 1,541
1966 Rev. Trust #4 of Sarah-Maud W.
Sivertsen(10)................................... 11,700 10,159 1,541
Trust for Elise B. Rosenberry(11)................. 10,800 9,377 1,423
Trust for Lucy Rosenberry(12)..................... 10,800 9,377 1,423
Trust for Walter S. Rosenberry III(13)............ 10,800 9,377 1,423
Trust U/W of J.P. Weyerhaeuser Jr. fbo Elizabeth
W. Meadowcroft(14).............................. 10,605 9,208 1,397
</TABLE>

46
<PAGE> 48

<TABLE>
<CAPTION>
SHARES HELD FOR SHARES TO BE HELD
ACCOUNT PRIOR SHARES TO BE SOLD FOR ACCOUNT AFTER
NAME TO OFFERING IN THE OFFERING THE OFFERING
- -------------------------------------------------- --------------- ----------------- -----------------
<S> <C> <C> <C>
Trust U/W of J.P. Weyerhaeuser Jr.
fbo George H. Weyerhaeuser(15).................. 10,605 9,208 1,397
Trust U/W of J.P. Weyerhaeuser Jr.
fbo Anna W. Pascoe(16).......................... 10,605 9,208 1,397
Spec. Power of Appointment Trust U/W of J.P.
Weyerhaeuser III(17)............................ 10,605 9,208 1,397
Vivian W. Piasecki................................ 9,682 8,407 1,275
Julie C. Titcomb.................................. 8,145 7,072 1,073
Rev. Trust of William T. Weyerhaeuser(18)......... 7,068 6,137 931
Rev. Trust of Bruce L. Titcomb(19)................ 4,500 3,907 593
1985 Trust for Christopher B. Titcomb(20)......... 4,002 3,475 527
1985 Trust for Daniel O. Titcomb(21).............. 4,002 3,475 527
1985 Trust for Robert C. Titcomb(22).............. 4,002 3,475 527
Kirsten B. Driscoll............................... 3,750 3,256 494
Catherine C. Titcomb(23).......................... 2,499 2,170 329
Daniel L. Titcomb(23)............................. 2,499 2,170 329
Daniel C. Titcomb(24)............................. 2,437 2,116 321
Trust for Stephen T. Titcomb created
4-25-61(25)..................................... 2,100 1,823 277
Madeline O. Titcomb(23)........................... 2,062 1,790 272
Peter C. Titcomb.................................. 1,545 1,341 204
Edward R. Titcomb Insurance Trust
fbo Bruce L. Titcomb(26)........................ 1,125 977 148
Edward R. Titcomb Insurance Trust
fbo Daniel C. Titcomb(27)....................... 1,125 977 148
Edward R. Titcomb Insurance Trust fbo Frederick W.
Titcomb(28)..................................... 1,125 977 148
</TABLE>

- ---------------
(1) The information pertaining to Rock Island Company is based on a Schedule
13D Report, dated July 3, 1995, which was filed by Rock Island Company with
the Securities and Exchange Commission. The Schedule 13D Report reflects
that Rock Island Company has the sole power to vote or direct the vote and
sole power to dispose or direct the disposition of 511,407 shares.

(2) Includes 37,500 shares which Mr. Crandall has, or within 60 days of
September 30, 1995 will have, the right to acquire pursuant to the
presently exercisable portion of options granted under the Company's 1988
Stock Option Plan and 2,632 shares which have been allocated to his account
under the Company's Employee Stock Ownership Plan. Mr. Crandall disclaims
beneficial ownership of 36,000 shares reflected in the table which are
owned by his minor son.

(3) Rudolph W. Driscoll, Jr. has voting and investment power over the shares in
this revocable trust, but has delegated voting power over the shares in the
trust to W. John Driscoll.

(4) The trustees of the Frederick K. Weyerhaeuser Trust of 1939 fbo Vivian W.
Piasecki are Walter S. Rosenberry and John P. Weyerhaeuser IV, who share
voting and investment power over the shares in the trust.

(5) W. John Driscoll beneficially owns 623,919 shares of Common Stock, which
includes an aggregate of 84,387 shares owned by five trusts. Mr. Driscoll
is a co-trustee of the four trusts described in Notes (8), (9), (10) and
(25) under "Selling Shareholders" and is the sole trustee of a fifth trust
described in Note (3) under "Selling Shareholders". This number also
includes 511,407 shares owned by Rock Island Company, a private investment
company, all of the capital stock of which is owned by members of the
Weyerhaeuser Family, as well as 1,875 shares which Mr. Driscoll has, or
within 60 days of September 30, 1995 will have, the right to acquire
pursuant to the presently exercisable portion of options granted under the
Company's Directors Stock Option Plan. Mr. Driscoll is a director of, and
owns 0.8721% of the stock of, Rock Island Company. Mr. Driscoll shares
voting and investment power with respect to the shares owned by the four
trusts of which he is the co-trustee and the shares owned by Rock Island
Company; however, except as to 4,459 of the shares owned by Rock Island
Company, he disclaims beneficial ownership of such shares. Mr. Driscoll has
voting power, but no investment power, with respect to the trust of which
he is the sole trustee. All of the shares of Common Stock described in this
note are included in the shares owned by various members of the
Weyerhaeuser Family. The information in the table pertaining to W. John
Driscoll is based on a Schedule 13G Report, dated July 3, 1995, which was
filed by W. John Driscoll with the Securities and Exchange Commission. The
Schedule 13G Report reflects that W. John Driscoll has sole voting power
with respect to 26,250 shares, shared voting power with respect to 84,387
shares, sole dispositive power with respect to 26,250 shares, and shared
dispositive power with respect to 37,200 shares.

47
<PAGE> 49

(6) F.T. Weyerhaeuser is a co-trustee of the six trusts described in Notes (8),
(9), (10), (14), (15) and (16) under "Selling Shareholders."

(7) The trustees of the Trust U/W of F. Weyerhaeuser fbo V. Rasmussen are
Frederick W. Titcomb and George H. Weyerhaeuser, who share voting and
investment power over the shares in the trust.

(8) The trustees of the 1966 Rev. Trust #2 of Sarah-Maud W. Sivertsen are W.
John Driscoll, Edward R. Titcomb and F. T. Weyerhaeuser, who share voting
and investment power over the shares in the trust.

(9) The trustees of the 1966 Rev. Trust #3 of Sarah-Maud W. Sivertsen are W.
John Driscoll, Edward R. Titcomb and F. T. Weyerhaeuser, who share voting
and investment power over the shares in the trust.

(10) The trustees of the 1966 Rev. Trust #4 of Sarah-Maud W. Sivertsen are W.
John Driscoll, Edward R. Titcomb and F. T. Weyerhaeuser, who share voting
and investment power over the shares in the trust.

(11) The trustees of the Trust for Elise B. Rosenberry are Edward R. Titcomb and
Lynn W. Day, who share voting and investment power over the shares in the
trust.

(12) The trustees of the Trust for Lucy Rosenberry are Edward R. Titcomb and
Lynn W. Day, who share voting and investment power over the shares in the
trust.

(13) The trustees of the Trust for Walter Rosenberry III are Edward R. Titcomb
and Lynn W. Day, who share voting and investment power over the shares in
the trust.

(14) The trustees of the Trust U/W of J. P. Weyerhaeuser Jr. fbo Elizabeth W.
Meadowcroft are Walter S. Rosenberry III, F.T. Weyerhaeuser and William T.
Weyerhaeuser, who share voting and investment power over the shares in the
trust.

(15) The trustees of the Trust U/W of J. P. Weyerhaeuser Jr. fbo George H.
Weyerhaeuser are Walter S. Rosenberry III, F.T. Weyerhaeuser and William T.
Weyerhaeuser, who share voting and investment power over the shares in the
trust.

(16) The trustees of the Trust U/W of J. P. Weyerhaeuser Jr. fbo Anna W. Pascoe
are Walter S. Rosenberry, F.T. Weyerhaeuser and William T. Weyerhaeuser,
who share voting and investment power over the shares in the trust.

(17) The trustees of the Special Power of Appointment Trust U/W of J. P.
Weyerhaeuser III are George H. Weyerhaeuser and William T. Weyerhaeuser,
who share voting and investment power over the shares in the trust.

(18) The trustee of the Revocable Trust of William T. Weyerhaeuser is Gail T.
Weyerhaeuser who has voting and investment power over the shares in the
trust.

(19) The trustee of the Revocable Trust of Bruce L. Titcomb is Kathleen Y.
Titcomb who has voting and investment power over the shares in the trust.

(20) The trustees of the 1985 Trust for Christopher B. Titcomb are Daniel C.
Titcomb and John W. Titcomb Jr., who share voting and investment power over
the shares in the trust.

(21) The trustees of the 1985 Trust for Daniel O. Titcomb are Daniel C. Titcomb
and John W. Titcomb Jr., who share voting and investment power over the
shares in the trust.

(22) The trustees of the 1985 Trust for Robert C. Titcomb are Daniel C. Titcomb
and John W. Titcomb Jr., who share voting and investment power over the
shares in the trust.

(23) These shares are held in custodial accounts under a Uniform Transfer to
Minors Act, with Judith L. Titcomb, as custodian, having voting and
investment power over these shares.

(24) Daniel C. Titcomb is a co-trustee of the three trusts described in Notes
(20), (21) and (22) under "Selling Shareholders."

(25) The trustees of the 1985 Trust for Stephen T. Titcomb created 4-25-61 are
W. John Driscoll and George H. Weyerhaeuser, who share voting and
investment power over the shares in the trust.

(26) The trustees of the Edward R. Titcomb Insurance Trust fbo Bruce L. Titcomb
are Frederick W. Davis II, George H. Weyerhaeuser and William T.
Weyerhaeuser, who share voting and investment power over the shares in the
trust.

(27) The trustees of the Edward R. Titcomb Insurance Trust fbo Daniel C. Titcomb
are Frederick W. Davis II, George H. Weyerhaeuser and William T.
Weyerhaeuser, who share voting and investment power over the shares in the
trust.

(28) The trustees of the Edward R. Titcomb Insurance Trust fbo Frederick W.
Titcomb are Frederick W. Davis II, George H. Weyerhaeuser and William T.
Weyerhaeuser, who share voting and investment power over the shares in the
trust.

48
<PAGE> 50

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 10,000,000 shares
of Common Stock, $1.00 par value, and 5,000,000 shares of Preferred Stock, no
par value. The Company's Board of Directors has approved an increase in the
number of authorized shares of Common Stock from 10,000,000 to 20,000,000
shares, which increase will be voted upon by the Company's shareholders at the
1995 Annual Meeting of Shareholders to be held November 18, 1995.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share for each share
held of record on all matters submitted to a vote of shareholders. Subject to
preferences that may be applicable to the holders of outstanding shares of
Preferred Stock, if any, the holders of Common Stock are entitled to receive
such lawful dividends as may be declared by the Board of Directors. In the event
of a liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or involuntary, and subject to the rights of the holders of
outstanding shares of Preferred Stock, if any, the holders of shares of Common
Stock shall be entitled to receive pro rata all of the remaining assets of the
Company available for distribution to its shareholders. The Common Stock has no
preemptive, redemption, conversion or subscription rights. All outstanding
shares of Common Stock are fully paid and non-assessable, and the shares of
Common Stock to be issued pursuant to this Offering will be fully paid and
non-assessable.

PREFERRED STOCK

The Board of Directors is authorized from time to time to issue shares of
Preferred Stock in one or more series and with such relative rights, powers,
preferences, limitations and restrictions as the Board of Directors may
determine, without the vote of holders of its Common Stock or Preferred Stock,
if any. Such shares may be convertible into Common Stock and may be superior to
the Common Stock in the payment of dividends, liquidation, voting and other
rights, preferences and privileges. The issuance of Preferred Stock could
adversely affect the holders of Common Stock. For example, the issuance of
Preferred Stock could be used in certain circumstances to render more difficult
or discourage a merger, tender offer or proxy contest or a removal of incumbent
management. Preferred Stock may be issued with voting and conversion rights that
could adversely affect the voting power and other rights of the holders of
Common Stock. The Company has no present plans to issue any shares of Preferred
Stock.

ANTI-TAKEOVER EFFECTS OF THE COMPANY'S BYLAWS AND OF MICHIGAN LAW

BYLAWS

The Company's Bylaws contain certain provisions that could discourage
potential takeover attempts and make more difficult attempts by shareholders to
change the Company's management. The Company's Bylaws provide that nominations
for directors may not be made by shareholders at any annual or special meeting
thereof unless the shareholder intending to make a nomination notifies the
Company of his intentions a specified number of days in advance of the meeting
and furnishes to the Company certain information regarding himself and the
intended nominee. The Company's Bylaws also require advance notice of any
proposal to be brought by a shareholder before any annual or special meeting of
shareholders and require that the shareholder provide certain information to the
Company regarding such shareholder, the proposal and any material interest such
shareholder may have in the proposal.

MICHIGAN LAW

The Michigan Business Corporation Act (the "MBCA") contains certain
provisions that may impede the acquisition of significant stock ownership in the
Company unless approved by the Company's Board of Directors. Chapter 7B of the
MBCA provides that "control shares" of the

49
<PAGE> 51

Company acquired in a control share acquisition have no voting rights except as
granted by the shareholders of the Company. Control shares are shares that, when
added to shares previously owned by a shareholder, increases such shareholder's
ownership of voting stock to 20% or more, 33 1/3% or more or a majority of the
outstanding voting power of the Company. Chapter 7A of the MBCA provides that
business combinations between a Michigan corporation which elects to be subject
to Chapter 7A and a beneficial owner of 10% or more of the voting power of such
corporation generally require the approval of 90% of the votes of each class of
stock entitled to be cast, and at least 2/3 of the votes of each class of stock
entitled to be cast other than shares owned by such 10% owner, unless the
corporation's board of directors approves the transaction prior to the time the
10% owner becomes such or the transaction satisfies certain fairness standards,
certain other conditions are met and the 10% owner has been such for at least
five years. The Company is subject to Chapter 7B of the MBCA. The Company is not
currently subject to Chapter 7A of the MBCA, but the Company's Board of
Directors may elect at any time to be subject to all or part of Chapter 7A, with
respect to specifically identified or unidentified 10% owners, by adopting a
resolution to that effect.

LIMITATION OF LIABILITY

The Company's Articles of Incorporation provide that no director of the
Company shall be personally liable to the Company or to its shareholders for
monetary damages for breach of fiduciary duty as a director, except that such
provisions do not eliminate or limit liability (i) for any breach of the
director's duty of loyalty to the Company or its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, (iii) under Section 551(1) of the MBCA dealing with liability
for unauthorized distributions and loans to insiders or (iv) for any transaction
from which the director derived an improper personal benefit.

A principal effect of these provisions is to limit or eliminate the
potential liability of the Company's directors for monetary damages arising from
breaches of their duty of care, unless the breach involves one of the four
exceptions described in (i) through (iv) above. These provisions may also shield
directors from liability under federal and state securities laws.

The Company's Articles of Incorporation and Bylaws further provide for the
indemnification of the Company's directors and officers to the fullest extent
permitted by Michigan law, including circumstances in which indemnification is
otherwise discretionary.

STOCK TRANSFER AGENT

The transfer agent for the Common Stock is KeyCorp Shareholder Services,
Inc.

50
<PAGE> 52

SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of this Offering, the Company will have 9,366,635 shares
of Common Stock outstanding, all of which, including the 2,160,000 shares
offered hereby, will be freely tradeable in the public market without
restriction under the Securities Act unless they are held by an "affiliate" of
the Company (as that term is defined in Rule 144 under the Securities Act). Of
the Company's outstanding shares, shares are subject to lock-up
agreements pursuant to which they may not be sold or transferred for 90 days
after the date of this Prospectus. However, Robertson, Stephens & Company, in
its sole discretion, may release the shareholders from these lock-up agreements,
in whole or in part, at any time and without notice.

The Company also maintains two stock option plans, the 1988 Stock Option
Plan and the 1994 Directors Stock Option Plan, and an Employee Stock Purchase
Plan and an Executive Stock Purchase Program. As of September 30, 1995, there
were an aggregate of approximately 838,245 shares of Common Stock subject to
outstanding options or purchase rights under these plans. The Company has filed
registration statements on Form S-8 under the Securities Act to register all
shares of Common Stock issuable under the 1988 Stock Option Plan, the 1994
Directors Stock Option Plan, the Employee Stock Purchase Plan and the Executive
Stock Purchase Plan. Shares covered by those registration statements are
eligible for resale in the public market, subject to Rule 144 limitations
applicable to affiliates and to the lock-up agreements described above, if
applicable.

No prediction can be made as to the effect, if any, that market sales or
the availability for sale of such shares will have on the market price of the
Common Stock prevailing from time to time. Nevertheless, sales of substantial
numbers of shares in the public market could adversely affect the market price
of the Common Stock and could impair the Company's ability to raise capital
through a sale of its equity securities.

51
<PAGE> 53

UNDERWRITING

The Underwriters named below, acting through their representative,
Robertson, Stephens & Company, L.P., Volpe, Welty & Company and The Chicago
Corporation (the "Representatives"), have severally agreed, subject to the terms
and conditions of the Underwriting Agreement, to purchase from the Company and
the Selling Shareholders the number of shares of Common Stock set forth opposite
their respective names below. The Underwriters are committed to purchase and pay
for all such shares if any are purchased.

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------------------------------ ---------
<S> <C>
Robertson, Stephens & Company, L.P. ..............................
Volpe, Welty & Company............................................
The Chicago Corporation...........................................

---------
Total..................................................... 2,160,000
=========
</TABLE>

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession of not more than $ per share, of which $
may be reallowed to other dealers. After the Offering, the public offering
price, concession and reallowance to dealers may be reduced by the
Representatives. No such reduction shall change the amount of proceeds to be
received by the Company as set forth on the cover page of this Prospectus.

The Company and the Selling Shareholders have granted to the Underwriters
an option, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to 324,000 additional shares of Common Stock at the
same price per share as the Company and the Selling Shareholders receive for the
2,160,000 shares that the Underwriters have agreed to purchase. To the extent
that the Underwriters exercise such option, each of the Underwriters will have a
firm commitment to purchase approximately the same percentage of such additional
shares that the number of shares of Common Stock to be purchased by it shown in
the above table represents as a percentage of the 2,160,000 shares offered
hereby. If purchased, such additional shares will be sold by the Underwriters on
the same terms as those on which the 2,160,000 shares are being sold.

The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company and the Selling Shareholders against certain civil
liabilities, including liabilities under the Securities Act.

Each executive officer and director of the Company listed in the table
under "Management" and each Selling Shareholder has agreed, during the period
ending 90 days after the date of this Prospectus, not to directly or indirectly
offer, sell, contract to sell, make subject to any purchase option, grant a
security interest in or otherwise dispose of an aggregate of shares
of Common Stock without the prior written consent of Robertson, Stephens &
Company, L.P. The Company has also

52
<PAGE> 54

agreed not to offer, sell, contract to sell or otherwise dispose of any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or any options or warrants to purchase Common
Stock other than shares or options issued under the Company's stock and option
plans until 90 days after the effective date of this Registration Statement,
except with the prior written consent of Robertson, Stephens & Company, L.P.
Consent to earlier sale of such shares may be granted by Robertson, Stephens &
Company, L.P. in its discretion.

The Underwriters do not intend to confirm sales to any account over which
they have discretionary authority.

In general, the rules of the Commission will prohibit the Underwriters from
making a market in the Company's Common Stock during the "cooling off" period
immediately preceding the commencement of sales in the offering. The Commission
has, however, adopted exemptions from these rules that permit passive market
making under certain conditions. These rules permit an underwriter to continue
to make a market subject to the conditions, among others, that its bid not
exceed the highest bid by a market maker not connected with the Offering and
that its net purchases on any one trading day not exceed prescribed limits.
Pursuant to these exemptions, certain Underwriters, selling group members (if
any) or their respective affiliates intend to engage in passive market making in
the Company's Common Stock during the cooling off period.

LEGAL MATTERS

The validity of the shares offered hereby will be passed upon for the
Company by Dykema Gossett PLLC, Detroit, Michigan. Janet L. Neary, a member of
Dykema Gossett PLLC, serves as the Company's Secretary. Certain legal matters
will be passed upon for the Underwriters by Brobeck, Phleger & Harrison, San
Francisco, California.

EXPERTS

The consolidated balance sheets as of June 30, 1994 and 1995, and the
consolidated statements of operations, shareholders' equity and cash flows of
the Company for each of the three years in the period ended June 30, 1995, and
the related financial statement schedule included in or incorporated by
reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated by their reports with respect thereto, and are included in or
incorporated by reference herein in reliance on the authority of said firm as
experts in accounting and auditing. Reference is made to said report, which
includes an explanatory paragraph with respect to the change in the method of
accounting for income taxes as explained in Note 8 to the consolidated financial
statements.

ADDITIONAL INFORMATION

This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not necessarily
complete, and each such statement is qualified in its entirety by reference to
the copy of such document filed with the Commission. The Registration Statement,
including the exhibits thereto, may be inspected at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies of all or any part thereof may be obtained from such
office upon payment of the prescribed fees.

53
<PAGE> 55

COMSHARE, INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants............................................. F-2
Consolidated Statement of Operations for the Fiscal Years Ended
June 30, 1993, 1994 and 1995....................................................... F-3
Consolidated Balance Sheet as of June 30, 1994 and 1995.............................. F-4
Consolidated Statement of Cash Flows for the Fiscal Years Ended
June 30, 1993, 1994 and 1995....................................................... F-6
Consolidated Statement of Shareholders' Equity for the Fiscal Years Ended
June 30, 1993, 1994 and 1995....................................................... F-7
Notes to Consolidated Financial Statements........................................... F-8
</TABLE>

F-1
<PAGE> 56

After the stock split discussed in Note 12 to Comshare, Incorporated's
Consolidated Financial Statements is effected, we expect to be in a position to
render the following audit report.

ARTHUR ANDERSEN LLP

Detroit, Michigan,
July 27, 1995

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Comshare, Incorporated:

We have audited the accompanying consolidated balance sheet of COMSHARE,
INCORPORATED (a Michigan corporation) and subsidiaries as of June 30, 1994 and
1995, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended June 30,
1995. 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 Comshare, Incorporated and
subsidiaries as of June 30, 1994 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1995 in conformity with generally accepted accounting principles.

As explained in Note 8 to the financial statements, effective July 1, 1992, the
Company changed its method of accounting for income taxes.

F-2
<PAGE> 57

COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands)

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------
1993 1994 1995
-------- ------- --------
<S> <C> <C> <C>
REVENUE
Software licenses............................................ $ 40,397 $37,871 $ 49,294
Software maintenance......................................... 43,064 41,625 36,649
Implementation, consulting and other services................ 21,733 17,130 22,415
-------- ------- --------
TOTAL REVENUE.................................................. 105,194 96,626 108,358
COSTS AND EXPENSES
Selling and marketing........................................ 54,065 46,457 45,283
Cost of revenue and support.................................. 20,528 17,670 24,799
Internal research and product development.................... 22,989 19,293 16,180
Internally capitalized software.............................. (15,035) (13,193) (11,667)
Software amortization........................................ 10,761 12,517 13,250
General and administrative................................... 11,668 9,891 11,663
Unusual charge............................................... -- -- 6,365
Restructuring related costs.................................. 1,489 2,343 --
-------- ------- --------
TOTAL COSTS AND EXPENSES....................................... 106,465 94,978 105,873
-------- ------- --------
INCOME (LOSS) FROM OPERATIONS.................................. (1,271) 1,648 2,485
OTHER INCOME (EXPENSE)
Interest income.............................................. 298 79 157
Interest expense............................................. (611) (568) (669)
Exchange gain (loss)......................................... 480 (25) 307
-------- ------- --------
TOTAL OTHER INCOME (EXPENSE)................................... 167 (514) (205)
-------- ------- --------
INCOME (LOSS) BEFORE TAXES..................................... (1,104) 1,134 2,280
Provision (benefit) for income taxes........................... 659 912 (3,048)
-------- ------- --------
NET INCOME (LOSS).............................................. $ (1,763) $ 222 $ 5,328
======== ======= ========
NET INCOME (LOSS) PER COMMON SHARE............................. $ (0.22) $ 0.03 $ 0.63
======== ======= ========
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE COMMON
EQUIVALENT SHARES............................................ 7,978 8,234 8,398
======== ======= ========
</TABLE>

The accompanying notes are an integral part of this statement.

F-3
<PAGE> 58

COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEET
(dollars in thousands)

<TABLE>
<CAPTION>
JUNE 30,
------------------
1994 1995
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash.................................................................... $ 1,774 $ 1,398
Accounts receivable, less allowance for doubtful accounts of $1,161 in
1994 and $887 in 1995................................................ 30,846 29,531
Deferred income taxes................................................... 1,487 783
Prepaid expenses........................................................ 4,012 4,098
------- -------
Total current assets................................................. 38,119 35,810
PROPERTY AND EQUIPMENT, at cost
Computers and other equipment........................................... 24,278 24,023
Leasehold improvements.................................................. 4,258 3,053
------- -------
28,536 27,076
Less -- Accumulated depreciation........................................ 24,338 23,663
------- -------
Property and equipment, net.......................................... 4,198 3,413
COMPUTER SOFTWARE, net of accumulated amortization of $50,114 as of June
30, 1994 and $70,308 as of June 30, 1995................................ 40,236 32,676
GOODWILL, net of accumulated amortization of $1,437 in 1994 and
$1,751 in 1995.......................................................... 2,033 2,246
OTHER ASSETS.............................................................. 4,358 5,165
------- -------
$88,944 $79,310
======= =======
</TABLE>

The accompanying notes are an integral part of this statement.

F-4
<PAGE> 59

COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEET
(dollars in thousands)

<TABLE>
<CAPTION>
JUNE 30,
------------------
1994 1995
------- -------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable........................................................... $ 29 $ --
Accounts payable........................................................ 10,608 11,342
Accrued liabilities
Payroll.............................................................. 4,910 3,467
Taxes, other than income taxes....................................... 1,399 1,486
Other................................................................ 1,364 1,465
------- -------
Total accrued liabilities.......................................... 7,673 6,418
Income taxes............................................................ 641 1,602
Deferred revenue........................................................ 19,617 18,599
------- -------
Total current liabilities.......................................... 38,568 37,961
LONG-TERM DEBT............................................................ 15,354 5,436
DEFERRED INCOME TAXES..................................................... 5,511 275
OTHER LIABILITIES......................................................... 3,005 3,090
SHAREHOLDERS' EQUITY
Capital stock:
Preferred stock, no par value; authorized 5,000,000 shares; none
issued.............................................................. -- --
Common stock, $1.00 par value; authorized 20,000,000 shares;
outstanding 8,036,716 shares in 1994 and 8,221,234 shares in 1995... 8,037 8,221
Capital contributed in excess of par.................................... 11,982 13,199
Retained earnings....................................................... 10,190 15,500
Currency translation adjustments........................................ (3,504) (3,239)
------- -------
26,705 33,681
Less -- Notes receivable................................................ 199 1,133
------- -------
Total shareholders' equity......................................... 26,506 32,548
------- -------
$88,944 $79,310
======= =======
</TABLE>

The accompanying notes are an integral part of this statement.

F-5
<PAGE> 60

COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
NET INCOME (LOSS)............................................. $ (1,763) $ 222 $ 5,328
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization............................... 15,491 15,893 15,873
Write-off of capitalized software........................... -- -- 6,365
Gain on sale of undeveloped land............................ -- (1,102) --
Provision for losses on accounts receivable................. 586 140 (119)
Loss on sale of property and equipment...................... 71 3 28
Changes in operating assets and liabilities:
Accounts receivable...................................... 4,601 585 2,675
Prepaid expenses......................................... 1,142 929 77
Other assets............................................. 1,122 35 --
Accounts payable......................................... (2,716) (1,083) (469)
Accrued liabilities...................................... (2,927) 853 (337)
Deferred revenue......................................... (396) (3,875) (1,489)
Deferred income taxes.................................... 528 732 (4,645)
Other liabilities........................................ 607 301 42
-------- -------- --------
Net cash provided by operating activities.............. 16,346 13,633 23,329
INVESTING ACTIVITIES
Additions to computer software.............................. (15,811) (13,187) (11,667)
Payments for property and equipment......................... (1,645) (1,199) (1,207)
Proceeds from sale of undeveloped land...................... -- 3,376 --
Other....................................................... (235) (1,382) (1,227)
-------- -------- --------
Net cash used in investing activities.................. (17,691) (12,392) (14,101)
FINANCING ACTIVITIES
Net repayments under notes payable.......................... (590) (40) (33)
Net borrowings (repayments) under long-term debt............ 768 (2,046) (10,044)
Stock options exercised..................................... 358 74 248
Other....................................................... -- (42) 202
-------- -------- --------
Net cash provided by (used in) financing activities.... 536 (2,054) (9,627)
EFFECT OF EXCHANGE RATE CHANGES............................... (408) (6) 23
-------- -------- --------
NET DECREASE IN CASH.......................................... (1,217) (819) (376)
-------- -------- --------
BALANCE AT BEGINNING OF YEAR.................................. 3,810 2,593 1,774
-------- -------- --------
BALANCE AT END OF YEAR........................................ $ 2,593 $ 1,774 $ 1,398
======== ======== ========
Supplemental disclosures:
Cash paid for interest...................................... $ 540 $ 624 $ 690
======== ======== ========
Cash paid for income taxes.................................. $ 1,113 $ 481 $ 558
======== ======== ========
</TABLE>

The accompanying notes are an integral part of this statement.

F-6
<PAGE> 61

COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(dollars in thousands)

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
COMMON STOCK
Balance beginning of year...................................... $ 7,930 $ 8,019 $ 8,037
Employee Stock Purchase Plan................................... -- -- 22
1994 Executive Stock Purchase Program.......................... -- -- 104
Retirement of shares........................................... (27) -- (2)
Stock options exercised........................................ 116 18 60
------- ------- -------
Balance end of year............................................ 8,019 8,037 8,221
------- ------- -------
CAPITAL CONTRIBUTED IN EXCESS OF PAR
Balance beginning of year...................................... 11,557 11,926 11,982
Employee Stock Purchase Plan................................... -- -- 155
1994 Executive Stock Purchase Program.......................... -- -- 855
Retirement of shares........................................... (41) -- (3)
Stock options exercised........................................ 397 54 210
Tax benefits related to stock options.......................... 13 2 --
------- ------- -------
Balance end of year............................................ 11,926 11,982 13,199
------- ------- -------
RETAINED EARNINGS
Balance beginning of year...................................... 11,831 9,968 10,190
Net income (loss).............................................. (1,763) 222 5,328
Retirement of shares........................................... (100) -- (18)
------- ------- -------
Balance end of year............................................ 9,968 10,190 15,500
------- ------- -------
CURRENCY TRANSLATION ADJUSTMENTS
Balance beginning of year...................................... (1,165) (3,553) (3,504)
Translation adjustments........................................ (2,388) 49 265
------- ------- -------
Balance end of year............................................ (3,553) (3,504) (3,239)
------- ------- -------
LESS -- NOTES RECEIVABLE
Balance beginning of year...................................... 199 199 199
1994 Executive Stock Purchase Program.......................... -- -- 934
------- ------- -------
Balance end of year............................................ 199 199 1,133
------- ------- -------
Total shareholders' equity.................................. $26,161 $26,506 $32,548
======= ======= =======
</TABLE>

The accompanying notes are an integral part of this statement.

F-7
<PAGE> 62

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the Company and its subsidiaries, all of which are wholly owned.
All material intercompany accounts and transactions have been eliminated.

REVENUE. The Company's revenue consists of software license fees, software
maintenance service fees and implementation, consulting and other service fees.
Software license revenue, including sales to distributors, is recognized when a
customer contract is fully executed and the software has been shipped. Software
maintenance revenue, whether bundled with product license or priced separately,
is recorded as deferred revenue on the balance sheet when invoiced and is
recognized over the term of the maintenance contract. Implementation, consulting
and other services revenue is recognized as the services are performed.

EXPENSE CLASSIFICATION. Selling and marketing expense includes advertising
and agency fees. Cost of revenue and support includes personnel and other costs
related to produce the implementation and consulting services revenue, customer
support costs, direct cost of producing software and royalty expense for
products licensed from others for use in the Company's product offerings.

FOREIGN CURRENCY TRANSLATION. All assets and liabilities of the Company's
foreign operations are translated at current exchange rates and revenue and
expenses are translated at monthly exchange rates. Resulting translation
adjustments are reflected as a separate component of shareholders' equity.
Foreign currency transaction gains and losses are included in net income.

The Company at various times has entered into forward exchange contracts to
hedge exposures related to foreign currency transactions. The Company does not
use any other types of derivatives to hedge such exposures nor does it speculate
in foreign currency. The Company only uses forward exchange contracts to hedge
against large selective transactions that present the most exposure to exchange
rate fluctuations. The Company entered into a forward contract on September 9,
1994 where it purchased a $1,500,000 contract for British pounds with a maturity
date of September 29, 1995. The Company also entered into a forward contract on
June 30, 1995 where it sold a $750,000 contract for Canadian dollars with a
maturity date of August 31, 1995. The carrying value of these contracts
approximates the fair market value.

Statement of Financial Accounting Standards No. 119 "Disclosure about
Derivative Financial Instruments and Fair Value of Financial Instruments"
requires additional disclosures regarding the nature of derivatives held. This
statement is required to be adopted by the Company during its fiscal year ended
June 30, 1996.

CASH. Cash includes investments in highly liquid investments with
maturities of three months or less at the time of acquisition.

INTERNAL RESEARCH AND PRODUCT DEVELOPMENT. Internal research and product
development includes all such expense before computer software capitalization
and amortization.

COMPUTER SOFTWARE. The costs of developing and purchasing new software
products and enhancements to existing software products are capitalized after
technological feasibility is established. These costs include capitalized
interest of $906,000, $814,000, and $681,000 in fiscal 1993, 1994 and 1995,
respectively. The capitalized development costs are amortized over their
estimated service lives which are generally a rolling three years in 1993, 1994
and 1995. The policy is reevaluated and adjusted as necessary at the end of each
accounting period. On an ongoing basis, management reviews the valuation and
amortization of capitalized development costs. As part of this review, the
Company considers the value of future cash flows attributable to the capitalized
development costs in evaluating potential impairment of the asset. In addition
to the internally capitalized software, the Company

F-8
<PAGE> 63

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

expended $776,000 on purchased software during the year ended June 30, 1993.
There were no expenditures for purchased software for the years ended June 30,
1994 and 1995.

DEPRECIATION. The cost of depreciable assets is charged to operations on a
straight-line basis. Principal service lives for computers and other equipment
are three to five years. Leasehold improvements are amortized over the expected
life of the asset or term of the lease, whichever is shorter.

GOODWILL. Goodwill represents the unamortized cost in excess of fair value
of net assets acquired and is amortized on a straight-line basis over forty
years. On an ongoing basis, management reviews the valuation and amortization of
goodwill. As part of this review, the Company considers the value of future cash
flows attributable to the acquired operations in evaluating potential impairment
of goodwill.

OTHER ASSETS. Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. This statement is required to be adopted by
the Company during its fiscal year ended June 30, 1997. Although a detailed
analysis has not been performed, the Company believes there would be no material
impact on its financial statements, if this statement was adopted as of June 30,
1995.

EARNINGS PER SHARE. Earnings per share of common stock is based on the
daily weighted average number of shares of common stock outstanding considering
the dilutive effect of outstanding stock options when appropriate and reflects
the three-for-two stock split. See Note 12 for information regarding the stock
split.

RECLASSIFICATIONS. For the year ended June 30, 1995, the Company changed
its presentation of cash flows from operating activities from the direct method
to the indirect method.

Certain amounts in the 1993 and 1994 financial statements have been
reclassified to conform with 1995 presentation.

2. RESTRUCTURING AND UNUSUAL CHARGES

During the years ended June 30, 1993 and 1994, the Company made provisions
totaling $1,489,000, and $2,343,000, respectively, for management actions or
plans in connection primarily with staff reductions related to its
restructuring. For the year ended June 30, 1994, the restructuring charges
include staff reductions of approximately 50 employees; estimated savings of
$4,000,000 was achieved in fiscal 1995. At June 30, 1995, $554,000 remains to be
paid for contractual obligations related to restructuring actions taken during
1994.

During the year ended June 30, 1995, the Company recorded an unusual charge
of $6,365,000. This charge related to the write-off of capitalized software
associated with its mature mainframe products. The write-off of capitalized
software associated with the Company's mainframe products is the result of
current industry trends and reflects the Company's strategic product plan to
focus on desktop and client/server software products.

F-9
<PAGE> 64

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. BORROWINGS

Borrowing components are as follows (in thousands):

<TABLE>
<CAPTION>
1994 1995
------- ------
<S> <C> <C>
Lines of credit............................................. $15,354 $5,436
Notes payable............................................... 29 --
------- ------
Total outstanding.................................... 15,383 5,436
Less current portion........................................ 29 --
------- ------
$15,354 $5,436
======= ======
</TABLE>

On October 31, 1994 the Company entered into a $14,000,000 amended and
restated domestic credit agreement with its banks which matures on October 31,
1997. The amended and restated credit agreement contains covenants regarding
among other things, working capital, leverage, net worth and payment of
dividends. Under the terms of the agreement, the Company is not permitted to pay
dividends. Permitted borrowings under the credit agreement are based on a
percentage of worldwide eligible accounts receivable and worldwide borrowings.
At June 30, 1995, the permitted borrowings available under the agreement were
$14,000,000, of which $3,500,000 was outstanding. Interest was at the bank's
prime rate (8.75% at June 30, 1995) plus 1% and has been reduced effective July
1, 1995, upon the Company's meeting certain financial criteria, to the
Eurodollar rate plus applicable margin, which varies between 1 1/2% and 2 1/2%.
Subsequent to year end, the banks agreed to release all security interests in
the assets of the Company previously granted to the banks.

Separately, certain of the Company's subsidiaries entered into local
currency credit agreements or overdraft facilities in various currencies with
banks totaling $3,664,000. At June 30, 1995, the Company has outstanding
borrowings of $1,256,000 in British pounds and $680,000 in German marks. The
credit agreements expire on October 1, 1997. The interest rates generally vary
with the banks' base rate. Most of such borrowings are guaranteed by the
Company.

4. SHAREHOLDERS' EQUITY

The Board of Directors has the authority to issue up to 5,000,000 shares of
no par value preferred stock. The shares can be issued in one or more series
with full, limited or no voting powers and with such special rights,
qualifications, limitations and restrictions as may be adopted by the Board of
Directors.

The Company's senior executives are encouraged to own Comshare common
stock. To facilitate such ownership, the shareholders approved the 1994
Executive Stock Purchase Program which enables such executives to purchase
Comshare common stock at then current market prices directly from the Company
via a promissory note. The promissory note cannot exceed the executive's base
annual salary and is secured by the related common stock issued by the Company.
The promissory note matures four years from the date of issuance. Interest is at
the prime rate plus 1% and may be deferred until the promissory note matures. A
total of 300,000 shares of the Company's common stock has been reserved for
issuance under the 1994 Executive Stock Purchase Program. For the year ended
June 30, 1995, a total of 104,044 shares at prices ranging from $8.67 to $12.33
were issued in exchange for notes totaling $934,000.

5. STOCK OPTIONS

The Company has two stock option plans, the 1988 Stock Option Plan (the
"1988 Plan") and the 1994 Directors Stock Option Plan (the "Directors Plan")
which was adopted in November, 1994.

F-10
<PAGE> 65

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's 1988 Plan provides for the grant of both incentive stock
options and non-qualified options to officers and key employees. Options under
the 1988 Plan are granted at 100% of market price on date of grant, are
exercisable at the rate of 25% per year after one year from the date of grant
and have a term of five years. The Board of Directors may, at its discretion,
grant stock appreciation rights in connection with the grant of options, but to
date has not elected to do so.

Effective June 25, 1993, the Company offered current option holders except
for the Company's senior executive officers, the opportunity to exchange
outstanding options, for an equal number of options of the Company's common
stock, at the current market price of $4.08. All eligible option holders
accepted this offer and the Company canceled the previous options and granted
new options representing 467,640 shares of common stock under the Company's 1988
Plan. The new options vest over four years effective from the new date of grant.

Effective August 13, 1993 and September 23, 1993, the Company offered the
senior executives the opportunity to exchange certain outstanding options, for
an equal number of options of the Company's common stock, at the current market
price of $6.00 and $6.17, respectively. The executive option holders accepted
this offer and the Company canceled certain of the previous options and granted
new options representing 201,000 shares of common stock under the Company's 1988
Plan. The new options vest over four years effective from the new date of grant.

The 1988 Stock Option Plan was amended in November, 1994 to increase the
number of shares of common stock authorized for grant from 900,000 shares to
1,275,000.

As of June 30, 1995, the Company has reserved 1,192,928 shares of common
stock for the exercise of employee stock options.

Stock option activity for the 1988 Plan is summarized below:

<TABLE>
<CAPTION>
NUMBER PRICE
OF SHARES PER SHARE
--------- ---------------------
<S> <C> <C> <C> <C>
Outstanding at June 30, 1992...................... 1,305,765 $ 3.83 to $14.67
Granted........................................... 529,140 4.09 to 7.00
Exercised......................................... (115,500) 3.83 to 4.83
Canceled.......................................... (533,265) 4.83 to 13.92
--------
Outstanding at June 30, 1993...................... 1,186,140 4.09 to 14.67
Granted........................................... 352,500 6.00 to 9.17
Exercised......................................... (17,625) 4.09 to 4.09
Canceled.......................................... (713,247) 4.09 to 14.67
--------
Outstanding at June 30, 1994...................... 807,768 4.09 to 11.17
Granted........................................... 216,000 7.33 to 13.00
Exercised......................................... (60,697) 4.09 to 4.09
Canceled.......................................... (197,546) 4.09 to 11.17
--------
Outstanding at June 30, 1995...................... 765,525 $ 4.09 to $13.00
========
Exercisable at June 30, 1995...................... 182,775
========
</TABLE>

The 1994 Directors Stock Option plan was approved by the shareholders in
November, 1994. The Directors Plan provides for the issuance of options to
purchase up to 150,000 shares of the Company's common stock to nonemployee
directors of the Company. Options under the Directors Plan are granted at 100%
of the market price on the date of grant, are exercisable at a rate of 25% per
year after one year from the date of grant and have a term of five years. In
November, 1994, a total of 52,500

F-11
<PAGE> 66

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

options were granted, with each of the Company's seven outside directors
receiving 7,500 options at $8.33. None of the options was exercisable as of June
30, 1995.

6. EMPLOYEE STOCK PURCHASE PLAN

The Employee Stock Purchase Plan was approved by the shareholders in
November, 1994. A total of 300,000 shares of the Company's common stock have
been reserved for issuance under the Employee Stock Purchase Plan. The Employee
Stock Purchase Plan allows participating employees to purchase through payroll
deductions shares of the Company's common stock at 85% of the fair market value
at July 1 and January 1. Substantially all full time employees are eligible to
participate in the Employee Stock Purchase Plan. During the year ended June 30,
1995, 21,834 shares were issued at $8.07 per share under the Employee Stock
Purchase Plan.

7. BENEFIT PLANS

The Company has profit sharing and employee stock ownership plans covering
substantially all United States employees. The profit sharing plan provides for
a minimum annual contribution of 2% of an employee's salary, and both plans
require the Company to make matching contributions based on employee 401(k)
contributions. The Company also has a deferred compensation plan for United
States officers for the payment of benefits which would not otherwise be
eligible under its tax-qualified retirement plans. The Company contributions,
other than the above, are discretionary and are determined by the Board of
Directors. The total contributions were $1,129,000 in 1993, $1,007,000 in 1994
and $1,224,000 in 1995.

A subsidiary in the United Kingdom maintains, through a trustee, a defined
benefit pension plan for substantially all of its employees hired before January
1, 1994 and a defined contribution plan for employees hired January 1, 1994 or
later. The defined contribution plan provides that employees contribute a
minimum of 5% of their pensionable salary with the Company contributing 5%. The
benefits of the defined pension plan, which are pay related, are integrated with
and supplement the benefits called for under the applicable laws of the United
Kingdom.

The components of pension expense are as follows (in thousands):

<TABLE>
<CAPTION>
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Service cost for benefits earned during the year................. $ 485 $ 501 $ 540
Interest cost on projected benefit obligation.................... 962 1,111 1,292
Actual return on assets.......................................... (4,916) (1,347) (1,347)
Net amortization and deferral.................................... 3,770 261 101
---- ---- ----
Net pension expense.............................................. $ 301 $ 526 $ 586
==== ==== ====
</TABLE>

F-12
<PAGE> 67

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The funded status of the pension plan is as follows (in thousands):

<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits......................................................... $11,801 $14,705
Non-vested benefits..................................................... 41 29
------- -------
Accumulated benefit obligation....................................... 11,842 14,734
Effects of salary progression........................................... 1,241 1,664
------- -------
13,083 16,398
Plan assets at fair value................................................. 13,997 15,103
------- -------
Plan assets under (over) projected benefit obligation..................... $ (914) $ 1,295
======= =======
Amounts not recognized in balance sheet:
Unamortized transition obligation....................................... $ 748 $ 702
Unamortized net (gain) loss............................................. (81) 2,888
------- -------
$ 667 $ 3,590
======= =======
</TABLE>

The actuarial present value of the projected benefit obligations was
determined using a weighted average discount rate of 9.0% and an annual rate of
increase in future compensation of 7.0% for fiscal years 1993 and 1994
calculations; for the fiscal year 1995 a weighted average discount rate of 8.5%
and an annual rate of increase in future compensation of 6.5% was used to
project the benefit obligation. The long term weighted average rate of return on
assets used was 12%, 10% and 8.5% for 1993, 1994 and 1995, respectively.

The Company provides defined retirement benefits to the employees of the
other foreign subsidiaries through various contribution plans. The amount
charged to expense for these benefits was $269,000 in fiscal 1993, $201,000 in
fiscal 1994 and $142,000 in fiscal 1995.

8. INCOME TAXES

During 1993, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". The statement
requires a change in the method of financial accounting and reporting for income
taxes from the deferral method to an asset and liability approach. The adoption
of this standard had no material effect on income. A summary of income (loss)
before provision (benefit) for income taxes and components of the provision
(benefit) for income taxes for the years ended June 30 is as follows (in
thousands):

<TABLE>
<CAPTION>
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Income (loss) before provision (benefit) for income taxes:
Domestic....................................................... $(1,884) $(2,270) $ 486
Foreign........................................................ 780 3,404 1,794
------- ------- -------
$(1,104) $ 1,134 $ 2,280
======= ======= =======
Domestic provision (benefit) for income taxes:
Current........................................................ $ 229 $ (230) $ (15)
Deferred....................................................... (678) (205) (2,773)
Foreign provision (benefit) for income taxes:
Current........................................................ (99) 281 1,499
Deferred....................................................... 1,207 1,066 (1,759)
------- ------- -------
Provision (benefit) for income taxes............................. $ 659 $ 912 $(3,048)
======= ======= =======
</TABLE>

F-13
<PAGE> 68

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The differences between the United States Federal statutory income tax
provision (benefit) and the consolidated income tax provision (benefit) for the
years ended June 30 are summarized as follows (in thousands):

<TABLE>
<CAPTION>
1993 1994 1995
----- ---- -------
<S> <C> <C> <C>
Federal statutory provision (benefit)................................ $(375) $386 $ 775
Non-deductible meals and entertainment............................... 44 83 109
State income taxes, net of federal tax benefit....................... 27 41 67
Increase in valuation reserve due to domestic and foreign losses
without tax benefit and tax credits................................ 499 882 42
Recognition of tax credits........................................... -- -- (2,500)
Tax reserves provided (released)..................................... -- 65 (1,600)
Tax rate differences................................................. 343 189 (51)
FAS 109 adjustment................................................... 131 -- --
Tax credits generated................................................ -- (665) --
Other, net........................................................... (10) (69) 110
----- ---- -------
Actual income tax provision (benefit)................................ $ 659 $912 $(3,048)
===== ==== =======
</TABLE>

Deferred income taxes represent temporary differences in the recognition of
certain items for income tax and financial reporting purposes. The components of
the net deferred income tax liability (asset) as of June 30 are summarized as
follows (in thousands):

<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Deferred income tax liabilities:
Research and development................................................ $ 7,005 $ 3,714
Remittance of foreign earnings.......................................... 1,151 --
Employee benefits....................................................... 535 727
Other................................................................... 208 190
------- -------
8,899 4,631
Deferred income tax assets:
Tax credits excluding foreign........................................... (1,428) (1,534)
Foreign tax credit...................................................... (1,160) (68)
Depreciation and amortization........................................... (1,196) (1,075)
Net operating loss...................................................... (2,708) (493)
Deferred revenue........................................................ (997) (474)
Employee benefits....................................................... (680) (640)
Other................................................................... (1,044) (1,224)
------- -------
(9,213) (5,508)
Valuation allowance....................................................... 4,338 369
------- -------
(4,875) (5,139)
------- -------
Net deferred income tax liability (asset)................................. $ 4,024 $ (508)
======= =======
</TABLE>

At June 30, 1995, for income tax purposes, the Company and certain of its
foreign subsidiaries had available net operating loss carryforwards of
approximately $493,000. If not used, these net operating loss carryforwards, as
well as the Company's general business tax credits, will expire between 1998 and
2009.

F-14
<PAGE> 69

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Income taxes have been provided on all undistributed earnings of foreign
subsidiaries which are expected to be remitted to the Company.

9. LEASES

The Company leases most of its office space and certain of its equipment.
Initial lease terms vary in length; several of the leases contain renewal
options. Future minimum lease payments under noncancellable operating leases are
as follows (in thousands):

<TABLE>
<S> <C>
Fiscal Year ending June 30,
1996................................................................ $ 5,130
1997................................................................ 4,309
1998................................................................ 3,513
1999................................................................ 2,722
2000................................................................ 2,642
After 2000.......................................................... 18,955
-------
$37,271
=======
</TABLE>

During 1988, the Company purchased its London sales and administrative
office building; it was also sold in 1988 along with leasehold improvements and
leased back. The gain on the sale was deferred. During 1992, the Company
consolidated this facility with its former London computer center. The Company
has thus reduced the deferred gain on the sale by $1,135,000 to provide for the
estimated costs until the lease obligations are assumed by a new tenant.

Total rental expense was $8,451,000 in fiscal 1993, $7,231,000 in fiscal
1994 and $7,252,000 in fiscal 1995.

F-15
<PAGE> 70

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. GEOGRAPHIC OPERATIONS AND SEGMENT INFORMATION

The following table summarizes selected financial information of the
Company's operations by geographic location (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Revenue:
North America............................................... $ 45,596 $ 43,222 $ 48,478
International............................................... 59,598 53,404 59,880
-------- -------- --------
Total revenue............................................ $105,194 $ 96,626 $108,358
======== ======== ========
Operating income:
North America............................................... $ 10,118 $ 10,082 $ 15,205
International............................................... 12,163 13,938 15,392
-------- -------- --------
Total operating income................................... 22,281 24,020 30,597
Unallocated expenses, net..................................... (23,385) (22,886) (28,317)
-------- -------- --------
Income (loss) before taxes.................................... $ (1,104) $ 1,134 $ 2,280
======== ======== ========
Identifiable assets:
North America............................................... $ 25,582 $ 21,356 $ 16,672
International............................................... 27,849 27,352 29,962
-------- -------- --------
Total identifiable assets................................ 53,431 48,708 46,634
Computer software............................................. 39,151 40,236 32,676
-------- -------- --------
Total assets.................................................. $ 92,582 $ 88,944 $ 79,310
======== ======== ========
</TABLE>

Unallocated expenses consist of general corporate expenses, internal
research and product development expenses, interest expense and interest income.
In fiscal 1995, unallocated expenses include $6,365,000 of unusual charges
related to the write-off of capitalized software associated with the Company's
mature mainframe products.

The presentation of information on a geographical basis requires the use of
estimation techniques and does not take into account the extent to which
Comshare's marketing and management skills are inter-dependent.

The Company operates in one business segment: the development and marketing
of computer software and related services.

No customer accounted for more than 5% of total revenues in the fiscal
years ended June 30, 1993, 1994 and 1995.

F-16
<PAGE> 71

COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. QUARTERLY FINANCIAL DATA

Summarized quarterly financial data is as follows (unaudited):

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1994
Revenue................................................. $23,730 $23,779 $23,202 $25,915
Income (loss) from operations........................... 997 1,701 193 (1,243)
Net income (loss)....................................... 657 1,052 94 (1,581)
Net income (loss) per share............................. .08 .13 .01 (.20)
1995
Revenue................................................. $24,158 $27,656 $27,704 $28,840
Income (loss) from operations........................... 1,418 2,846 1,828 (3,607)
Net income.............................................. 751 1,680 1,205 1,692
Net income per share.................................... .09 .20 .14 .20
</TABLE>

During the quarter ended December 31, 1993, the Company concluded an
agreement to sell undeveloped land that it owned. This resulted in a gain of
approximately $1,100,000.

During the quarter ended June 30, 1994 the Company made provisions totaling
$2,343,000 for management actions or plans primarily in connection with staff
reductions related to restructuring.

During the quarter ended June 30, 1995, the Company wrote-off $6,365,000 of
capitalized mainframe computer software.

The fourth quarter ended June 30, 1995 also included a $4,100,000 tax
benefit related to the recognition of prior years net operating losses and tax
credits as well as tax reserves released.

12. SUBSEQUENT EVENT (UNAUDITED)

On October 9, 1995, the Board of Directors declared a three-for-two stock
split of the Company's common stock which was effective November 22, 1995, after
the shareholders approved an increase in the authorized shares of common stock
to 20,000,000 shares. Capital contributed in excess of par has been charged and
common stock has been credited for the par value of the additional shares as a
result of the split. All references in the Consolidated Financial Statements and
accompanying notes have also been adjusted to reflect this split.

F-17
<PAGE> 72

A diagram depicting four front-ends illustrates how the end-user views data
delivered by the Company's decision support applications software. The four
captions illustrating these front-ends read as follows:

- EXECUTIVE INFORMATION SYSTEMS
(EIS): Commander OLAP is a suite of software
which delivers customizable enterprise-wide
business planning, analysis, reporting and
decision-making capabilities.

- FINANCIAL REPORTING APPLICATIONS: Commander
FDC and Commander Budget are complementary
products that, when used together, share a
single database to facilitate integration of
historic and budgetary financial data from
throughout the enterprise for management
reporting.

- RETAIL DECISION SUPPORT APPLICATIONS: ARTHUR
Planning helps retailers plan their
merchandise purchases to control inventory
levels, track and analyze actual sales
performance and tailor purchases to consumer
preferences and market trends.

- NEWSALERT: Detect and Alert is a technology
that automatically delivers personalized
alerts to users' desktops in an
individualized electronic newspaper.
<PAGE> 73

[Comshare Logo]
<PAGE> 74

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following statement sets forth the estimated amounts of expenses to be
borne by the Company in connection with the distribution of the Common Stock
offered hereby:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............... * $ 13,653
NASDAQ fees....................................................... * 4,460
Printing expenses................................................. * 90,000
Accounting fees and expenses...................................... * 100,000
Legal fees and expenses........................................... * 175,000
Blue sky fees and expenses........................................ * 10,000
Miscellaneous expenses............................................ * 56,887
--------
Total expenses.................................................... * $450,000**
========
</TABLE>

- ---------------
* Estimated.

** The Selling Shareholders are bearing their pro rata share of expenses
relating to the Offering.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Sections 561 through 571 of the Michigan Business Corporation Act (the
"MBCA") govern the indemnification of officers, directors and other persons. In
this regard, the MBCA provides for indemnification of directors and officers
acting in good faith and in a manner they reasonably believe to be in, or not
opposed to, the best interest of the corporation or its shareholders (and, with
respect to a criminal proceeding, if they have no reasonable cause to believe
their conduct to be unlawful). Such indemnification may be made against (a)
expenses (including attorney's fees), judgments, penalties, fines and amounts
paid in settlement, which were actually and reasonably incurred in connection
with any threatened, pending or completed action, suit or proceeding (other than
an action by, or in the right of, the corporation) arising out of a position
with the corporation (or with some other entity at the corporation's request),
and (b) expenses (including attorney's fees) and amounts paid in settlement
actually and reasonably incurred in connection with a threatened, pending or
completed action or suit by, or in the right of, the corporation, unless the
director or officer is found liable to the corporation and an appropriate court
does not determine that he or she is nevertheless fairly and reasonably entitled
to indemnification. The MBCA requires indemnification for expenses to the extent
that a director or officer is successful in defending against any such action,
suit or proceeding, and otherwise requires in general that the indemnification
provided for in (a) and (b) above be made only on a determination by a majority
vote of a quorum of the board of directors comprised of members who were not
parties to or threatened to be made parties to such action. In certain
circumstances, the MBCA further permits advances to cover such expenses before a
final determination that indemnification is permissible, upon receipt of (i) a
written affirmation by the director or officer of his good faith belief that he
has met the applicable standard of conduct set forth in the MBCA, and (ii) a
written undertaking by or on behalf of the director or officer to repay such
amounts unless it shall ultimately be determined that he is entitled to
indemnification and a determination that the facts then known to those making
the advance would not preclude indemnification.

The MBCA permits a corporation to purchase insurance on behalf of its
directors and officers against liabilities arising out of their positions with
the corporation, whether or not such liabilities would be within the
indemnification provisions of the MBCA.

Indemnification under the MBCA is not exclusive of other rights to
indemnification to which a person may be entitled under a corporation's articles
of incorporation or bylaws, or under contract executed by such corporation.
Article X of the Company's Articles of Incorporation provides for the

II-1
<PAGE> 75

indemnification of directors and officers of the Company and authorizes the
Board to extend such indemnity to others to the full extent permitted by the
aforesaid sections of the MBCA. Subject to the exceptions recited in the
following sentence, the Company's Articles of Incorporation provide that no
director shall be personally liable to the Company or its shareholders for
damages for breach of his or her duty as a director. Such exculpatory language
does not, however, eliminate or limit the liability of a director for (a) breach
of the duty of loyalty, (b) acts or omissions that are not in good faith or
involve intentional misconduct or a knowing violation of law, (c) certain other
violations of the MBCA, (d) responsibility in respect of any transaction from
which the director has derived an improper personal benefit, or (e) an act or
omission occurring before the date that Article X became effective.

The Articles of Incorporation of the Company provide that the Company shall
indemnify its directors and officers ("indemnitees") against all expenses,
judgments, penalties, fines, and amounts paid or to be paid in settlement, which
were reasonably incurred by the indemnitee while acting in his or her capacity
as a director or officer. The Articles of Incorporation also authorize the
Company to purchase and maintain directors' and officers' liability insurance.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to officers and directors pursuant to the foregoing provisions,
the Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

ITEM 16. EXHIBITS

A list of exhibits included as part of this Registration Statement is set
forth in the Exhibit Index which immediately precedes such exhibits and is
incorporated herein by reference.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes:

1. That for purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
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.

2. That insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.

3. That for purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance on 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 Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective and, that for the purpose of
determining any liability under the Securities Act, each 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.

II-2
<PAGE> 76

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of 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 the City of Ann Arbor, State of Michigan on October 11, 1995.

Comshare, Incorporated

By: /s/ KATHRYN A. JEHLE

----------------------------------
Kathryn A. Jehle
Senior Vice President
Chief Financial Officer
Treasurer and Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on October 11, 1995.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<S> <C>
* President, Chief Executive
- --------------------------------------------- Officer, and a Director
T. Wallace Wrathall (Principal Executive Officer)
/s/ KATHRYN A. JEHLE Senior Vice President,
- --------------------------------------------- Chief Financial Officer,
Kathryn A. Jehle Treasurer and Assistant Secretary
(Principal Financial Officer)
* Director of Finance,
- --------------------------------------------- Chief Accounting Officer,
R. Michael Mahoney (Principal Accounting Officer)
* Chairman of the Board
- ---------------------------------------------
Richard L. Crandall
* Director
- ---------------------------------------------
Claude H. Allard
* Director
- ---------------------------------------------
Daniel T. Carroll
* Director
- ---------------------------------------------
Stanley R. Day
* Director
- ---------------------------------------------
W. John Driscoll
* Director
- ---------------------------------------------
Alan G. Merten
* Director
- ---------------------------------------------
John F. Rockart
* Director
- ---------------------------------------------
Brian Sullivan
*By: /s/ KATHRYN A. JEHLE
---------------------------------------
Kathryn A. Jehle
Attorney-in-fact
</TABLE>

II-3
<PAGE> 77

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION OF EXHIBITS NO.
- ------- ----------------------------------------------------------------------------- ----
<S> <C> <C>
1 Underwriting Agreement*......................................................
5 Opinion of Dykema Gossett PLLC*..............................................
23(a) Consent of Arthur Andersen LLP...............................................
23(b) Consent of Dykema Gossett PLLC* (included in Exhibit 5)......................
23(c) Consent of Geoffrey B. Bloom*................................................
23(d) Consent of George R. Mrkonic.................................................
24(a) Power of Attorney of T. Wallace Wrathall.....................................
24(b) Power of Attorney of Richard L. Crandall.....................................
24(c) Power of Attorney of Claude H. Allard........................................
24(d) Power of Attorney of Daniel T. Carroll.......................................
24(e) Power of Attorney of Stanley R. Day..........................................
24(f) Power of Attorney of W. John Driscoll........................................
24(g) Power of Attorney of Alan G. Merten..........................................
24(h) Power of Attorney of John F. Rockart.........................................
24(i) Power of Attorney of Brian Sullivan..........................................
24(j) Power of Attorney of R. Michael Mahoney......................................
99(a) Affidavit of Comshare, Incorporated..........................................
</TABLE>

- ---------------
* To be filed by amendment.

<PAGE> 1

EXHIBIT 23(A)

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports dated July 27, 1995 and to all references to our Firm included in or
made a part of this prospectus.

ARTHUR ANDERSEN LLP

October 9, 1995

<PAGE> 1

Exhibit 23(d)

CONSENT TO BE NAMED
IN REGISTRATION STATEMENT

I, George R. Mrkonic, hereby consent to be named as a director
nominee in the "Management" section of the Registration Statement on Form S-3
to be filed by Comshare, Incorporated.

/s/ GEORGE R. MRKONIC
---------------------
George R. Mrkonic

<PAGE> 1

Exhibit 24(a)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned
constitutes and appoints Kathryn A. Jehle, and R. Michael Mahoney, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution, and resubstitution for him and in his name, place and stead, in
any and all capacities, to sign a certain Registration Statement on Form S-3 to
be filed by Comshare, Incorporated, any registration statement filed pursuant
to Rule 462(b) of the Securities Act of 1933, as amended, for registering
additional shares of Comshare, Incorporated's Common Stock comprising the same
offering for which the Form S-3 will be filed, and any and all amendments
thereto, and to file the same with the Securities and Exchange Commission,
granting unto such attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that such attorneys-in-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.

Dated: October 10, 1995 /s/ T. WALLACE WRATHALL
-----------------------
T. WALLACE WRATHALL, President
Chief Executive Officer
and a Director

<PAGE> 1

Exhibit 24(b)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned
constitutes and appoints T. Wallace Wrathall, Kathryn A. Jehle, and R. Michael
Mahoney, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution, and resubstitution for him and in his name,
place and stead, in any and all capacities, to sign a certain Registration
Statement on Form S-3 to be filed by Comshare, Incorporated, any registration
statement filed pursuant to Rule 462(b) of the Securities Act of 1933, as
amended, for registering additional shares of Comshare, Incorporated's Common
Stock comprising the same offering for which the Form S-3 will be filed, and
any and all amendments thereto, and to file the same with the Securities and
Exchange Commission, granting unto such attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that such attorneys-in-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.

Dated: October 6, 1995 /s/ RICHARD L. CRANDALL
-----------------------
RICHARD L. CRANDALL,
Chairman of the Board

<PAGE> 1

Exhibit 24(c)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

Dated: October 9, 1995 /s/ CLAUDE H. ALLARD
--------------------
CLAUDE H. ALLARD, Director

<PAGE> 1

Exhibit 24(d)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

Dated: October 9, 1995 /s/ DANIEL T. CARROLL
---------------------
DANIEL T. CARROLL, Director

<PAGE> 1

Exhibit 24(e)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

Dated: October 6, 1995 /s/ STANLEY R. DAY
------------------
STANLEY R. DAY, Director

<PAGE> 1

Exhibit 24(f)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

Dated: October 9, 1995 /s/ W. JOHN DRISCOLL
---------------------
W. JOHN DRISCOLL, Director

<PAGE> 1

Exhibit 24(g)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

Dated: October 8, 1995 /s/ ALAN G. MERTEN
-------------------
ALAN G. MERTEN, Director

<PAGE> 1

Exhibit 24(h)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

Dated: October 8, 1995 /s/ JOHN F. ROCKART
-------------------
JOHN F. ROCKART, Director

<PAGE> 1

Exhibit 24(i)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned
constitutes and appoints T. Wallace Wrathall, Kathryn A. Jehle, and R.
Michael Mahoney, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, and resubstitution for him and in his
name, place and stead, in any and all capacities, to sign a certain
Registration Statement on Form S-3 to be filed by Comshare, Incorporated, any
registration statement filed pursuant to Rule 462(b) of the Securities Act of
1933, as amended, for registering additional shares of Comshare, Incorporated's
Common Stock comprising the same offering for which the Form S-3 will be filed,
and any and all amendments thereto, and to file the same with the Securities
and Exchange Commission, granting unto such attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that such attorneys-in-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.

Dated: October 9, 1995 /s/ BRIAN SULLIVAN
----------------------
BRIAN SULLIVAN, Director

<PAGE> 1

Exhibit 24(j)

COMSHARE, INCORPORATED

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned
constitutes and appoints T. Wallace Wrathall and Kathryn A. Jehle, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution, and resubstitution for him and in his name, place and stead, in
any and all capacities, to sign a certain Registration Statement on Form S-3 to
be filed by Comshare, Incorporated, any registration statement filed pursuant
to Rule 462(b) of the Securities Act of 1933, as amended, for registering
additional shares of Comshare, Incorporated's Common Stock comprising the same
offering for which the Form S-3 will be filed, and any and all amendments
thereto, and to file the same with the Securities and Exchange Commission,
granting unto such attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that such attorneys-in-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.

Dated: October 9, 1995 /s/ R. MICHAEL MAHONEY
------------------------
R. MICHAEL MAHONEY, Director
of Finance and Chief
Accounting Officer

<PAGE> 1

Exhibit 99(a)

AFFIDAVIT OF
COMSHARE, INCORPORATED

Comshare, Incorporated hereby avers that it has obtained the verbal consent of
Geoffrey Bloom to serve as a director of Comshare and to be named as a director
nominee of the Company in the Company's Form S-3 Registration Statement to be
filed on or about October 11, 1995. The Company is not filing a consent signed
by Mr. Bloom pursuant to Rule 438 of Regulation C because Mr. Bloom is out of
the country. Consequently, the filing of Mr. Bloom's consent is impracticable
and would impose an undue hardship on the Company.

COMSHARE, INCORPORATED

/s/ KATHRYN A. JEHLE
--------------------
By: Kathryn A. Jehle,
Senior Vice President,
Chief Financial Officer,
Treasurer and Assistant
Secretary