<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
ROSS SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------------
<TABLE>
<S> <C> <C>
CALIFORNIA 94-2170198
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
</TABLE>
555 TWIN DOLPHIN DRIVE
REDWOOD CITY, CA 94065
(415) 593-2500
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------------------
DENNIS V. VOHS
CHIEF EXECUTIVE OFFICER
ROSS SYSTEMS, INC.
555 TWIN DOLPHIN DRIVE
REDWOOD CITY, CA 94065
(415) 593-2500
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
---------------------------
Copies to:
STEVEN L. BERSON, ESQ.
WILSON, SONSINI, GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(415) 493-9300
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time as the Registrant may decide.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Title of Each Class of Proposed Maximum Offering Proposed Maximum
Securities to be Registered Amount to be Registered Price Per Share (1) Aggregate Offering Price (1)
- ----------------------------------------------------------------------------------------------------------------
Common Stock, no par value 400,000 shares $6.25 $2,500,000.00
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C>
Title of Each Class of
Securities to be Registered Amount of Registration Fee
- ---------------------------------------------------------------------------------------
Common Stock, no par value $863.00
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457. Based on the last reported sale price on June 12,
1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
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 the registration or qualification under the securities
laws of any such State.
SUBJECT TO COMPLETION
DATED JUNE 14, 1996
400,000 SHARES
ROSS SYSTEMS, INC.
COMMON STOCK
Ross Systems, Inc. (the "Company") may from time to time offer up to an
aggregate of 400,000 shares of its Common Stock (the "Securities"). The
Securities offered pursuant to this Prospectus may be issued at prices and on
terms to be determined at the time of sale. The accompanying Prospectus
Supplement sets forth with regard to the Securities in respect of which this
Prospectus is being delivered the number of shares and the terms of the
offering thereof.
The Company may sell Securities to or through underwriters or directly to
other purchasers or through agents. The accompanying Prospectus Supplement sets
forth the names of any underwriters or agents involved in the sale of the
Securities in respect of which this Prospectus is being delivered, the number of
shares, as applicable, if any, to be purchased by the underwriters and the
compensation, if any, of such underwriters or agents.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June 14, 1996.
<PAGE> 3
AVAILABLE INFORMATION
As used in this Prospectus, unless the context otherwise requires, the
terms "Ross Systems" and the "Company" mean Ross Systems, Inc. and its
subsidiaries. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports and proxy information filed
with the Commission pursuant to the informational requirements of the Exchange
Act may be inspected and copied at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following regional offices of the Commission: New York Regional Office,
75 Park Place, 14th Floor, New York, New York 10007; and Chicago Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
The Company also has filed with the Commission a Registration Statement
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, copies of which may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
the fees prescribed by the Commission. Statements contained in this Prospectus
as to the contents of any contract or any other document filed, or incorporated
by reference, as an exhibit to the Registration Statement, are qualified in all
respects by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents, previously filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference,
except as superseded or modified herein:
Annual Report on Form 10-K for the fiscal year ended June 30, 1995 (the
"Form 10-K Report").
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 (the
"September 30, 1995 Form 10-Q Report").
Quarterly Report on Form 10-Q for the quarter ended December 31, 1995 (the
"December 31, 1995 Form 10-Q Report").
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1996 (the
"March 31, 1996 Form 10-Q/A Report").
Current Report on Form 8-K dated October 25, 1995 (the "October 25, 1995
Form 8-K Report").
Current Report on Form 8-K dated January 2, 1996 (the "January 2, 1996 Form
8-K Report").
Current Report on Form 8-K dated January 26, 1996 (the "January 26, 1996
Form 8-K Report").
Current Report on Form 8-K dated February 13, 1996 (the "February 13, 1996
Form 8-K Report").
Current Report on Form 8-K dated February 28, 1996 (the "February 28, 1996
Form 8-K Report").
Current Report on Form 8-K dated April 23, 1996 (the "April 23, 1996 Form
8-K Report").
Current Report on Form 8-K dated May 13, 1996 (the "May 13, 1996 Form 8-K
Report").
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and shall be part hereof from the date of filing of such
document. Any statement contained in any document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained
2
<PAGE> 4
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference in this Prospectus modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any document described above (other than exhibits). Requests
for such copies should be directed to Ross Systems, Inc. at its principal
offices located at 555 Twin Dolphin Drive, Redwood City, California 94065,
telephone (415) 593-2500, attention: Corporate Secretary.
RISK FACTORS
An investment in the shares being offered by this Prospectus involves a
high degree of risk. The following factors, in addition to those discussed
elsewhere in this Prospectus, should be carefully considered in evaluating the
Company and its business prospects before purchasing shares offered by this
Prospectus. This Prospectus contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth in the following risk factors and
elsewhere in this Prospectus.
Revenue Declines and Operating Losses. The Company's total revenues
declined in the second, third and fourth quarters of fiscal 1994, in the first,
third and fourth quarters of fiscal 1995 and in the first and second quarters of
fiscal 1996, as compared to the same quarters in the prior years. Software
product license revenues in those eight quarters declined by 66%, 37%, 15%, 6%,
34%, 14%, 29% and 15%, respectively, from the same quarters in the prior years.
The Company believes that a number of factors contributed to these declines.
During the second and third quarters of fiscal 1994, software product license
revenues were negatively impacted by customer concerns related to a patent
infringement lawsuit against the Company. At the end of the third quarter, the
Company settled the patent infringement litigation and received a worldwide
license under the patent. In addition, the Company believes that software
product license revenues during the past three fiscal years have been negatively
impacted by lengthening sales cycles, which the Company attributes to lengthened
customer product evaluations and to the Company's transition to open
systems/client-server/open database environments, and by the weak European
economy and changes in key European management in fiscal 1994. The Company also
believes that software product license revenues in 1994 were negatively affected
by customer concerns regarding the Company's financial condition and in fiscal
1995 by the potential outcome of the Company's arbitration litigation. See "Risk
Factors -- Litigation."
For the fiscal year ended June 30, 1994, the Company incurred an operating
loss of approximately $16.2 million before restructuring charges. The Company
also experienced an operating loss of $15.5 million for the fiscal year ended
June 30, 1995 and an operating loss of $3.1 million for the nine months ended
March 31, 1996. There can be no assurance that the Company will return to
profitability or that, if profitability is achieved, it will be maintained.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Results of Operations -- Revenues" in the Company's
Form 10-K Report and March 31, 1996 Form 10-Q/A Report.
Fluctuations in Operating Results. The Company has experienced significant
quarterly fluctuations in operating results and anticipates that such
fluctuations may occur in the future. See quarterly financial information
contained in the Form 10-Q Reports and in Note 14 to the Consolidated Financial
Statements in the Form 10-K Report. Quarterly revenues depend on the volume and
timing of orders received during the quarter, which are difficult to forecast.
The Company generally ships orders as received and, as a result, typically has
little or no backlog. Historically, the Company has often realized a substantial
portion of its software product license revenues in the last two weeks of a
quarter. Due to the Company's relatively low cost of incremental software
product license revenues, any shortfall or delay in software product license
revenues has an immediate and substantial impact on profitability in the
quarter. The Company has experienced lengthening sales cycles, which have
further impacted its quarterly results. Operating results may also
3
<PAGE> 5
fluctuate due to factors such as the demand for the Company's products, the size
and timing of customer orders, the introduction of new products and product
enhancements by the Company or its competitors, changes in the proportion of
revenues attributable to software product licenses versus consulting and other
services, changes in the level of operating expenses, and competitive conditions
in the industry. Many of the factors that could result in quarterly fluctuations
are not within the Company's control. Fluctuations in operating results may
result in volatility in the price of the Company's Common Stock. In fiscal 1996
to the date hereof, the market prices of the Common Stock have ranged from a
high of $8.125 to a low of $2.1875.
Litigation. The Company has recently settled two significant lawsuits. The
first suit, filed on December 30, 1992, in the Superior Court for Santa Clara
County, California, by Argonaut Information Systems of California, Inc.
("Argonaut"), from which the Company purchased rights to certain software
products in 1989, alleged that the Company was contractually required to pay
certain "earn-out" amounts based upon profitability of those products.
Argonaut's final claim was for approximately $8.5 million, plus interest, costs
and attorneys' fees, in addition to approximately $5 million previously paid.
This claim was submitted to binding arbitration. The arbitrator's decision
awarded the plaintiff amounts in addition to those previously paid of
approximately $3.5 million, plus interest, costs and attorneys' fees of
approximately $1.2 million. Argonaut and the Company each asserted additional
claims in connection with the same contract. These additional claims were not
submitted to arbitration and on June 30, 1995, the parties agreed to a complete
settlement of all claims. Under the terms of the settlement, the final amount
determined to be owing pursuant to the arbitration award was paid $1 million
upon signing and the balance in nine equal installments of principal (plus
interest at 12%) and, in addition, the Company issued shares of its Common Stock
to Argonaut with an estimated value of $808,000. Accordingly, the Company
recorded expense of $4,975,000 during the quarter ended March 31, 1995, and
recorded $255,000 of acquired computer technology during the quarter ended June
30, 1995, which represent the additional judgment, legal costs, accrued interest
and amounts payable under the settlement agreement. In exchange for the cash
payments and the issuance of the Common Stock, both parties dismissed their
lawsuits with prejudice, and the Company received a non-exclusive, worldwide,
royalty-free license to certain additional Argonaut technology. On February 1,
1996, the Company made the final payment to Argonaut required under the
settlement agreement.
The second suit, captioned Barrett et al. v. Ross Systems was filed on
January 3, 1994 as a securities class action in the U.S. District Court for the
Northern District of California. The suit named the Company and six of its
current and former officers and directors as defendants. On July 21, 1994, the
Court dismissed the complaint, allowing leave to amend certain of the claims.
Plaintiffs subsequently filed an amended complaint on August 29, 1994. The
Company and the other defendants filed motions to dismiss certain allegations of
the amended complaint. On December 5, 1994, the Court granted these motions in
part, dismissing certain allegations of the amended complaint and allowing
plaintiffs to proceed with other allegations. The remaining allegations claimed
that the Company's financial statements improperly included revenue from certain
software product licenses in violation of SFAS 5, SFAS 48 and SOP 91-1; that the
Company improperly capitalized software development costs and failed to write
down capitalized software costs to net realizable values in a timely manner;
that defendants failed to disclose certain unspecified problems in software
developed by the Company; and that the Company issued forecasts that it knew at
the time to have no reasonable basis. The Company denied these allegations.
In October 1995, the parties reached a definitive agreement for settlement
of this matter. The agreement required the Company to contribute (i) 500,000
shares of its Common Stock or (ii) shares of its Common Stock with a market
value of $3 million, whichever is greater. In addition, the Company's insurance
carrier agreed to make a cash payment of $2.8 million toward the settlement,
$680,000 of which otherwise would have been paid to the Company under an
existing legal expense reimbursement agreement. Accordingly, the Company made a
related accrual of $3,680,000 in fiscal 1995. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Results of
Operations -- Litigation Settlements and Expenses" in the Form 10-K Report. The
settlement does not constitute an admission of liability by the Company. The
Company and the other former defendants deny each and every claim and contention
alleged in the lawsuit. The settlement agreement was approved by the court on
December 13, 1995. In January 1996, the Company issued 308,351 shares of Common
Stock with a market value of $900,000 as part of its
4
<PAGE> 6
contribution to the settlement. On or before July 12, 1996, the Company will
issue (i) 350,000 additional shares of Common Stock or (ii) additional shares of
Common Stock with a market value of $2,100,000, whichever is greater, as the
remainder of its contribution to this settlement.
Liquidity and Capital Resources. In fiscal 1995 and the nine months ended
March 31, 1996, the Company used $10.3 million and $11.5 million, respectively,
in cash for operations and for investments in capitalized software, property and
equipment. At March 31, 1996, the Company had $3.3 million of cash and cash
equivalents and total borrowings of $8.8 million against a $10 million revolving
credit facility established in October 1994. Borrowings under the revolving
credit facility are collateralized by substantially all of the assets of the
Company and availability is based on eligible accounts receivable, as determined
in the lender's sole discretion. Principally as a result of net losses during
fiscal 1996 and payments of approximately $5.6 million associated with the
settlement of two significant lawsuits, the Company has determined that it
requires additional debt or equity capital to finance continuing operations.
Accordingly, on December 29, 1995, the Company entered into a Subscription
Agreement with a foreign institutional investor pursuant to which the investor
purchased 500,000 shares of the Company's Series A Preferred Stock for an
aggregate purchase price of $2 million. In connection with this transaction, the
investor granted the Company options (the "Options") to require the investor to
purchase shares of the Company's Preferred Stock with an aggregate value of $4
million during the period from and including July 1, 1996 through and including
December 30, 1998. The Company has created and reserved 500,000 shares of its
Series B Preferred Stock and 500,000 shares of its Series C Preferred Stock for
issuance and sale to the investor upon exercise of the Options. In addition, the
Company granted the investor a warrant (the "Warrant") to purchase 400,000
shares of the Company's Common Stock at an exercise price of $5.576 per share
during the period from and including July 1, 1997 through and including December
29, 2000. Under certain circumstances, the holders of the Series A, B and C
Preferred Stock may require the Company to redeem their shares at par plus
dividends accrued at 2% per annum from their original issue. On January 2, 1996,
the Company received net cash from the investor of $1,870,000, after payment of
placement agent fees and other related offering expenses. The Company has used
the proceeds from this transaction to satisfy vendor obligations and to increase
working capital. See the January 2, 1996 Form 8-K Report. On or about January
26, 1996, the Company was advised by the National Association of Securities
Dealers, Inc. (the "NASD") that it would be required to obtain shareholder
approval before exercising the Options because of the possibility that the
number of shares issued upon conversion of the Series A, B and C Preferred Stock
(if converted at a price below the conversion price of the Series A Preferred
Stock on the date of issuance) could exceed 20% of the Common Stock outstanding
on the date of issuance of the Series A Preferred Stock, thus triggering the
shareholder approval requirement set forth in Part III, Section 6(i)(1)(d) of
Schedule D to the By-Laws of the NASD. Accordingly, the Company has reached an
agreement with the investor to amend the terms of the agreement to limit the
number of shares of common stock issuable thereunder to be less than 20% of the
shares of common stock outstanding on December 29, 1995.
In addition, on February 23, 1996, the Company closed a private placement
of shares of its Series D Preferred Stock (the "Series D") to a small number of
institutional investors (the "Transaction"). The Series D Preferred Stock
accrues dividends at 6% per annum which are payable in kind. The net proceeds to
the Company from the transaction was $4,575,000, after payment of placement
agent fees and other related offering expenses. The Series D Preferred Stock is
convertible into shares of the Company's Common Stock at a conversion price
equal to the lower of (i) the average of the closing bid prices for the Common
Stock for the five trading days (the "Market Price") prior to February 13, 1996
or (ii) 82% of the Market Price prior to the date on which the Series D
Preferred Stock is converted into Common Stock. The Series D Preferred Stock
must be converted into Common Stock no later than February 23, 1997. Under the
NASD By-Laws, shareholder approval is required prior to the issuance of
securities in connection with a private placement which could result in the sale
or issuance by the Company "of common stock (or securities convertible into or
exercisable for common stock) equal to 20% or more of the common stock or 20% or
more of the voting power outstanding before the issuance for less than the
greater of book or market value of the stock" (Part III, Section 6(i)(1)(d) of
Schedule D to the NASD By-Laws). In cases where "the delay in securing
shareholder approval would seriously jeopardize the financial viability of the
enterprise" (Part III, Section 6(i)(1)(e)),
5
<PAGE> 7
the NASD By-Laws further provide for an exception to the shareholder approval
requirement upon application to the NASD. The Company applied for and received
such an exception from the NASD, which was conditional upon the Audit Committee
of the Board of Directors of the Company approving the exception and the
notification of shareholders of the Company's election not to seek their
approval of the Transaction. As required by Part III, Section 6(i)(1)(d) of
Schedule D to the NASD By-Laws, the Transaction was closed ten days after the
mailing of notification to the shareholders. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" in the March 31, 1996 Form 10-Q/A Report and the February 28,
1996 Form 8-K Report.
International Sales. The Company derived approximately 40% and 39% of its
total revenues from international sales in fiscal 1995 and the first nine months
of fiscal 1996, respectively, and expects that such sales will continue to
generate a significant percentage of total revenues. The Company experienced an
increase in total European revenues of 24% in fiscal 1995 as compared to fiscal
1994 and a decrease of 10% in the first nine months of fiscal 1996 as compared
to the same period of the prior year. The fiscal 1995 increase was primarily a
result of improved execution by the Company's new European management team. The
decrease for the first nine months of fiscal 1996 was primarily due to
prospective customer concerns regarding the Company's financial condition. To
date, the Company has not sought to hedge the risks associated with currency
fluctuations, but may engage in such transactions in the future in order to
reduce its exposure to currency fluctuations. The Company is also subject to
other risks associated with international operations, including tariff
regulations, unexpected changes in regulatory requirements, longer accounts
receivable payment cycles, potentially adverse tax consequences, economic and
political instability, restrictions on repatriation of earnings, and the burdens
of complying with a wide variety of foreign laws. There can be no assurance that
such factors will not have a material adverse effect on the Company's future
international sales and, consequently, on the Company's business, financial
condition and results of operations. See "Business -- Marketing and Sales" in
the Form 10-K Report and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations" in the Form 10-K
Report and the March 31, 1996 Form 10-Q /A Report.
Rapid Technological Change; Product Transitions. The market for the
Company's products is characterized by ongoing technological developments,
evolving industry standards and rapid changes in customer requirements. As a
result, the Company's prospects depend upon its ability to continue to enhance
its existing products, develop and introduce in a timely manner new products
that take advantage of technological advances, and respond to new customer
requirements. There can be no assurance that the Company will be successful in
developing and marketing enhancements to its existing products or new products
incorporating new technology on a timely basis, or that its new products will
adequately address the changing needs of its markets. If the Company is unable
to develop and introduce new products, or enhancements to existing products, in
a timely manner in response to changing market conditions or customer
requirements, the Company's business and results of operations will be
materially and adversely affected. In addition, given the Company's recent
resource constraints, it has restricted its product development efforts to a
relatively small number of key projects. From time to time, the Company or its
competitors may announce new products, capabilities or technologies that have
the potential to replace or shorten the life cycles of the Company's existing
products. There can be no assurance that announcements of currently planned or
other new products will not cause customers to defer purchasing existing Company
products. The Company has in the past experienced delays in software development
and there can be no assurance that the Company will not experience further
delays in connection with its current or future product development activities.
Delays or difficulties associated with new product introductions or product
enhancements could have a material adverse effect on the Company's business,
financial condition and results of operations. Software products as complex as
those offered by the Company may contain undetected errors when first introduced
or as new versions are released. There can be no assurance that errors will not
be found in new products after commencement of commercial shipments, resulting
in a loss of or delay in market acceptance. See "Business -- Competition" in the
Form 10-K Report.
Competition. The business applications software market is intensely
competitive. Due to the breadth of the Company's product line, it competes with
a broad range of applications software companies whose
6
<PAGE> 8
products operate with Digital Equipment Corporation ("DEC"), Hewlett-Packard
Company ("HP") and International Business Machines Corporation ("IBM") RS/6000
computers. The Company's primary competitors include the following: business
application software providers which offer products on multiple platforms, such
as Oracle, Peoplesoft and SAP; business application software providers that have
ported their software from the IBM mainframe environment to operate with DEC, HP
or IBM RS/6000 computers, such as Dun and Bradstreet Software; and business
applications software providers in vertical markets that offer products that
compete with the Company's process manufacturing products, such as Datalogix
International, Inc. and Marcam Corporation. In the human resource market, the
Company competes with various business applications software providers,
including Peoplesoft. Additionally, the Company faces competition from
third-party business application processing providers operating on minicomputers
such as the IBM AS/400. Many of the Company's competitors have substantially
greater financial, technical, marketing and sales resources than the Company.
See "Business -- Competition" in the Form 10-K Report.
Dependence on and Relationship with DEC, HP and IBM. A significant portion
of the Company's total revenues are derived from business application software
products and related services for users of DEC, HP and IBM computers. The
Company's business therefore depends to a large extent on the success of DEC, HP
and IBM computers in the commercial marketplace. The Company's business would be
materially and adversely affected if DEC's, HP's or IBM's share of the
commercial market declined or if their installed customer base in this market
eroded. The Company considers its close relationships with DEC, HP and IBM in
marketing, sales and software product development activities to be strategic to
the Company's business. The Company would be materially and adversely affected
if DEC, HP or IBM decided to terminate or significantly reduce its cooperation
with the Company in these activities, or to market products competitive with the
Company's products. See "Business -- Marketing and Sales" in the Form 10-K
Report.
Key Employees. The Company's success depends on a number of its key
employees, most of whom are not subject to employment contracts. The loss of the
services of these key employees could have a material adverse effect on the
Company. The Company believes that its future success will also depend in large
part on its ability to attract and retain highly-skilled technical, managerial
and marketing personnel. Competition for such personnel in the software industry
is intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. See "Business -- Employees" in the Form
10-K Report.
Dependence on Proprietary Technology; Risk of Technology Litigation. The
Company's success is dependent upon its proprietary technology and products. The
Company regards its software as proprietary and, to date, has relied principally
upon copyrights, trademarks, trade secrets and contractual restrictions to
protect its proprietary technology. The Company currently has no patents. The
Company generally enters into confidentiality agreements with employees and
confidentiality and license agreements with its distributors, customers and
potential customers, and limits access to and distribution of the source code to
its software and other proprietary information. Under some circumstances, the
Company grants licenses that give limited access to the source code of the
Company's products which increases the likelihood of misappropriation or misuse
of the Company's technology. Accordingly, despite precautions taken by the
Company, it may be possible for unauthorized third parties to copy certain
portions of the Company's technology or to obtain and use information that the
Company regards as proprietary. There can be no assurance that the steps taken
by the Company will be adequate to prevent misappropriation of its technology or
to provide an adequate remedy in the event of a breach by others. In addition,
the laws of some foreign countries do not protect the Company's proprietary
rights to the same extent as do the laws of the United States.
There has been substantial industry litigation regarding intellectual
property rights of technology companies. Although the Company is not aware of
any infringement by its products of any patents or proprietary rights of others,
patent protection for software is still a developing area of law. The Company
has, in the past, been subject to litigation related to alleged infringement by
the Company of a third party's rights, which resulted not only in the Company
incurring significant legal fees and settlement costs but also in a substantial
diversion of management attention and a loss of software product license
revenues due to prospective customer concerns related to such litigation. In the
future, the Company may be subject to additional litigation to defend the
Company against claimed infringement of the rights of others or to determine the
scope and validity of the proprietary rights of others. Any such litigation
could be costly and
7
<PAGE> 9
cause diversion of management's attention, either of which could have a material
adverse affect on the Company's business, results of operations and financial
condition. Adverse determinations in such litigation could result in the loss of
the Company's proprietary rights, subject the Company to significant
liabilities, require the Company to seek licenses from third parties or prevent
the Company from manufacturing or selling its products, any one of which could
have a material adverse effect on the Company's business, financial condition
and results of operations. Furthermore, there can be no assurance that any
necessary licenses will be available on reasonable terms, or at all. See
"Business -- Proprietary Rights and Licenses" in the Form 10-K Report.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of securities hereby for
working capital and general corporate purposes. Pending such uses, the Company
intends to invest the net proceeds in investment grade, interest-bearing
securities.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through one or more underwriters or
directly to other purchasers or through agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or from purchasers of Securities for whom
they may act as agents in form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company will be described, in the applicable
Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
The Company may grant underwriters who participate in the distribution of
Common Stock an option to purchase additional Common Stock shares to cover
over-allotments, if any.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the applicable Prospectus Supplement.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon by
Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California.
EXPERTS
The Consolidated Financial Statements of the Company at June 30, 1994 and
1995 and for each of the three years in the period ended June 30, 1995, have
been incorporated by reference in this Prospectus and Registration Statement in
reliance upon the three-year report of KPMG Peat Marwick LLP, independent
auditors, incorporated by reference in this Prospectus and Registration
Statement, and upon the authority of said firm as experts in accounting and
auditing.
8
<PAGE> 10
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered. All of the amounts
shown are estimates except the Securities and Exchange Commission registration
fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.................. $ 863
Printing and engraving expenses...................................... 600
Legal fees and expenses.............................................. 4,500
Accounting fees and expenses......................................... 4,000
Miscellaneous expenses............................................... 2,037
-------
Total........................................................... $12,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Fourth Article of the Registrant's Restated Articles of Incorporation
provides for the indemnification of directors to the fullest extent permissible
under California law.
Article VI of the Registrant's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation if
such person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.
ITEM 16. EXHIBITS
<TABLE>
<C> <S> <C>
4.2 * Articles of Incorporation of Registrant, as amended
4.3 ** By-Laws of Registrant, as amended
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1)
24.1 Power of Attorney (included at page II-3)
27.1 Financial Data Schedule
</TABLE>
- ---------------
* Incorporated by reference to the exhibit filed with Registrant's December
31, 1995 Form 10-Q Report, as amended by the exhibits filed by the
Registrant's Current Report on Form 8-K dated February 13, 1996.
** Incorporated by reference to the exhibit filed with Registrant's Annual
Report on Form 10-K filed September 27, 1993.
II-1
<PAGE> 11
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange 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 of controlling persons 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.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually, or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that subparagraphs (i) and (ii) above do not apply
if the information required to be included in a post-effective amendment by
those subparagraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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 intial bona fide offering thereof.
3. That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of Prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.
4. That, for purposes of determining any liability under the
Securities Act of 1933, 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.
5. 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 Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
6. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
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 Redwood City, State of California, on this
14th day of June, 1996.
ROSS SYSTEMS, INC.
/s/ Dennis V. Vohs
Dennis V. Vohs
Chairman of the Board and Chief
Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Dennis V. Vohs and James A. Watts,
Jr. and each of them acting individually, as attorneys-in-fact for the
undersigned, each with full power of substitution for the undersigned in any and
all capacitates, to sign any and all amendments to this Registration Statement
on Form S-3 and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
certifying and confirming our signatures as they may be signed by our said
attorneys to any and all amendments of the Registration Statement on Form S-3.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the date signed by the Company:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------------------------- --------------
<S> <C> <C>
/s/ Dennis V. Vohs Chairman of the Board and Chief Executive June 14, 1996
(Dennis V. Vohs) Officer (Principal Executive Officer)
/s/ James A. Watts, Jr. Vice President, Finance and Administration, June 14, 1996
(James A. Watts, Jr.) Chief Financial Officer (Principal Financial
and Accounting Officer) and Secretary
/s/ Mario M. Rosati Director June 14, 1996
(Mario M. Rosati)
/s/ Bruce J. Ryan Director June 14, 1996
(Bruce J. Ryan)
/s/ J. Patrick Tinley President and Chief Operating Officer June 14, 1996
(J. Patrick Tinley)
/s/ A. David Tory Director June 14, 1996
(A. David Tory)
</TABLE>
II-3
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBITS PAGE
- -------- ------------
<C> <S> <C>
4.2 Restated Articles of Incorporation of Registrant......................... (A)
4.3 By-Laws of Registrant.................................................... (B)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation....
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors...................
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(included in Exhibit 5.1)................................................
24.2 Power of Attorney (included at page II-3)................................
27.1 Financial Data Schedule..................................................
</TABLE>
- ---------------
(A) Incorporated by reference to the exhibit filed with Registrant's December
31, 1995 Form 10-Q Report, as amended by the exhibits filed by the
Registrant's Current Report on Form 8-K dated February 13, 1996.
(B) Incorporated by reference to the exhibit filed with Registrant's Annual
Report on Form 10-K filed September 27, 1993.
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF WILSON SONSINI GOODRICH & ROSATI]
June 14, 1996
Ross Systems, Inc.
555 Twin Dolphin Drive
Redwood City, California 94065
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 of Ross Systems,
Inc. (the "Company") filed with the Securities and Exchange Commission (the
"Registration Statement") on the date hereof, in connection with the
registration under the Securities Act of 1933, as amended, of a shelf offering
of 400,000 shares of the Company's Common Stock (the "Shares"), all of which
are authorized but heretofore unissued.
It is our opinion that the Shares have been duly reserved for issuance and,
upon issuance of the Shares by the Company, the Shares will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendment thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Ross Systems, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-3 of Ross Systems, Inc. of our report dated August 18, 1995, except as to
Note 7, which is as of October 11, 1995, relating to the consolidated balance
sheets of Ross Systems, Inc. and subsidiaries as of June 30, 1995 and 1994, and
the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the years in the three-year period ended June 30, 1995,
and the related schedule, which report appears in the June 30, 1995, annual
report on Form 10-K of Ross Systems, Inc., and to the reference to our firm
under the heading "Experts" in the Prospectus.
Our report contains an explanatory paragraph regarding the fact that the
Company is a defendant in a securities class action lawsuit.
/s/ KPMG PEAT MARWICK LLP
-----------------------------
KPMG Peat Marwick LLP
San Jose, California
June 11, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the March
31, 1996 financial statements for the 9 month period ended March 31, 1996
and is qualified in its entirety by reference to such March 31, 1996
Form 10-Q/A filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 3,253
<SECURITIES> 0
<RECEIVABLES> 21,916
<ALLOWANCES> 2,232
<INVENTORY> 0
<CURRENT-ASSETS> 25,495
<PP&E> 17,283
<DEPRECIATION> 13,142
<TOTAL-ASSETS> 52,530
<CURRENT-LIABILITIES> 36,617
<BONDS> 0
0
5,122
<COMMON> 59,930
<OTHER-SE> (49,220)
<TOTAL-LIABILITY-AND-EQUITY> 52,530
<SALES> 48,605
<TOTAL-REVENUES> 48,605
<CGS> 18,904
<TOTAL-COSTS> 34,921
<OTHER-EXPENSES> 15,284
<LOSS-PROVISION> 352
<INTEREST-EXPENSE> 984
<INCOME-PRETAX> (2,936)
<INCOME-TAX> 140
<INCOME-CONTINUING> (3,076)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,076)
<EPS-PRIMARY> (0.21)
<EPS-DILUTED> (0.21)
</TABLE>
