MAPICS INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

FOR THE TRANSITION PERIOD FROM ____________ TO ____________

COMMISSION FILE NUMBER: 000-18674

MAPICS, INC.
(Exact name of registrant as specified in its charter)

MASSACHUSETTS 04-2711580
(State or other (I.R.S. Employer
jurisdiction of incorporation) Identification No.)

5775-D GLENRIDGE DRIVE
ATLANTA, GEORGIA 30328
(Address of principal executive offices)
(404) 705-3000
(Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $.01 PAR VALUE
(Title of class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of
the registrant (assuming, for purposes of this calculation, without conceding,
that all executive officers and directors are "affiliates") was $203,563,415 at
December 1, 1997, based on the closing sale price of $11.00 per share for the
Common Stock on such date on the Nasdaq National Market.
The number of shares of the registrant's Common Stock outstanding at
December 1, 1997 was 18,532,638.

DOCUMENTS INCORPORATED BY REFERENCE

Specifically identified portions of the Proxy Statement for the 1998 Annual
Meeting of Stockholders to be held on February 3, 1998 are incorporated by
reference in Part III.
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MAPICS, INC.

ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997

TABLE OF CONTENTS

ITEM PAGE
NUMBER NUMBER
- ------ ------

PART I

1. Business.................................................... 1

2. Properties.................................................. 9

3. Legal Proceedings........................................... 9

4. Submission of Matters to a Vote of Security Holders......... 9

4(A) Executive Officers of the Registrant........................ 9

PART II

5. Market for the Registrant's Common Equity and Related
Stockholder Matters......................................... 11

6. Selected Financial Data..................................... 11

7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 13

7(A) Quantitative and Qualitative Disclosures about Market
Risk........................................................ 27

8. Financial Statements and Supplementary Data................. 27

9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 56

PART III

10. Directors and Executive Officers of the Registrant.......... 56

11. Executive Compensation...................................... 56

12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 56

13. Certain Relationships and Related Transactions.............. 56

PART IV

14. Exhibits, Financial Statement Schedules and Reports on Form
8-K......................................................... 57

Signatures.................................................. 64

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PART I

ITEM 1. BUSINESS.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this document, the 1997 MAPICS Annual
Report and in documents incorporated by reference herein, including matters
discussed under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations," may constitute forward-looking statements
for purposes of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, and as such may involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of MAPICS, Inc. ("MAPICS" or the "Company") to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking statements. The words "expect," "anticipate,"
"intend," "plan," "believe," "seek," "estimate," and similar expressions are
intended to identify such forward-looking statements. The Company's actual
results may differ materially from the results anticipated in these
forward-looking statements due to a variety of factors, including without
limitation those discussed in "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Factors Affecting Future Performance."
All written or oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by these cautionary statements.

GENERAL

MAPICS is a Massachusetts corporation formerly known as Marcam Corporation.
Incorporated in Massachusetts in 1980, the Company was organized as a consulting
company to help manufacturers improve manufacturing efficiency through
implementation and customization of International Business Machine Corporation's
("IBM") manufacturing software. Over time, the Company developed a number of
software applications, further described below, to address the needs of
continuous flow process manufacturing companies.

In February 1993, Marcam Corporation acquired from IBM the exclusive
worldwide marketing rights to the MAPICS(R) software product line for 25 years.
The MAPICS(R) product line addresses the software needs of discrete and
batch-process manufacturers. Marcam Corporation also acquired the option to
purchase the MAPICS(R) product line and certain related intellectual property
rights. In September 1995, Marcam Corporation exercised its option and acquired
from IBM all of the outstanding stock of the company which owned the MAPICS(R)
product line. Through its MAPICS(R), PRISM(R), Protean(TM) and Avantis(TM)
software product lines, the Company offered comprehensive business planning and
control solutions to the production, logistics, asset management and financial
requirements of manufacturing companies worldwide.

On July 25, 1997, the Company transferred substantially all of the
business, assets and liabilities relating to its PRISM(R), Protean(TM) and
Avantis(TM) product lines, which are designed for and marketed to continuous
flow process manufacturing companies, and $39.0 million in cash to a newly
formed, wholly owned subsidiary, Marcam Solutions, Inc. ("Marcam Solutions"). On
July 29, 1997, the Company distributed to its stockholders, in a tax-free
distribution (the "Distribution"), all of the stock of Marcam Solutions, and the
Company thereafter continued the operations related to the MAPICS(R) product
line, which is designed for and marketed to discrete and batch-process
manufacturing companies. In connection with the Distribution, the Company
changed its name from Marcam Corporation to MAPICS, Inc. The separation into two
independent publicly traded companies was designed to enable each company to
better focus on its core markets, to better serve existing customers and to
finance its business. For information regarding certain financing transactions
related to the Distribution and a description of certain agreements between
MAPICS and Marcam Solutions providing for the separation of the product lines
and governing ongoing relationships between the two companies, see "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "-- Factors Affecting Future
Performance -- Relationship with Marcam Solutions" and "-- Notes 8 and 15 of
Notes to Combined Financial Statements set forth in "Item 8. Financial
Statements and Supplementary Data."

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MAPICS is a leading provider of enterprise resource planning ("ERP")
software applications for discrete and batch-process manufacturing enterprises
worldwide. The Company's products provide an integrated and function-rich ERP
solution with the breadth and depth of applications to manage an entire
manufacturing enterprise. Approximately 5,700 customer sites presently use
MAPICS(R) applications, which the Company believes represents one of the largest
installed user bases in the ERP industry. The Company's customer base consists
primarily of mid-size ($20 million to $500 million in annual revenues)
manufacturers and divisions, sites and subsidiaries of large companies,
including Bristol-Myers Squibb Company, Colgate-Palmolive Company, Eaton
Corporation, General Electric Company, Honda Motor Co., Ltd., International Game
Technology, Peg Perego Pines SPA, Shiseido Cosmetics (America) Ltd. and Sub-Zero
Freezer Co., Inc.

INDUSTRY BACKGROUND

Manufacturers face increasingly intense global competitive pressures, more
demanding vendor-customer relationships and rapidly changing market
requirements. Intensifying global competition requires immediate and effective
communication with customers and suppliers of both discrete and batch-process
manufacturers. Discrete manufacturers produce products by assembling or
machining component parts or sub-assemblies into finished products.
Batch-process manufacturers typically produce a specific quantity of products on
an order or "batch" basis in which a batch moves through a series of operations
in discontinuous mode with work-in-process often building up at process points
(e.g., pharmaceutical and computer chip manufacturers). Customers of discrete
and batch-process manufacturers increasingly demand products which meet custom
("make-to-order") requirements. These manufacturers are also utilizing new
manufacturing methods such as rate-based manufacturing and just-in-time
inventory replenishment. In addition, manufacturers are increasingly required to
manage broadening product portfolios, multinational distribution, reduced
product development and delivery cycles, lower inventory levels, and more
complex manufacturing strategies. These requirements often involve global
sourcing and assembly from a network of internal and outsourced manufacturers
and suppliers which, in turn, require more streamlined organizations, more
efficient business processes, more effective information flow and communication,
and a seamless integration of the entire extended enterprise.

Effective information technology systems, capable of generating and
disseminating critical information throughout an organization and its extended
enterprise, can be a strategic resource for pursuing competitive advantage,
allowing an organization to respond more rapidly to changing market and customer
needs. Organizations rely on ERP systems to manage and integrate resources
across the enterprise including component procurement, inventory management,
manufacturing control, sales management, distribution, transportation, finance
and other functions. The emergence of new computer and communications
technologies, the requirements for addressing Year 2000 system issues and new
developments in electronic commerce are creating demand for a new generation of
ERP applications that offer solutions with expanded functionality which can be
implemented faster, with less risk and lower cost, and which are designed to
accommodate future changes to the manufacturing processes.

Mid-size manufacturers are focused on balancing their needs for
functionality from their ERP systems against budgetary constraints. The IBM
AS/400 system, which the Company believes is the leading platform used by
mid-size manufacturers, is increasingly being used as a server for client/server
networks and offers an attractive platform alternative for many companies
implementing ERP solutions because of its low cost of ownership, flexibility,
scalability and maintainability. According to industry sources, the total
worldwide market for ERP systems on all hardware systems was approximately $5.5
billion in 1996 and will grow at least 20% in 1997. IBM has reported that more
than 450,000 AS/400 systems have been shipped since 1988. In addition, according
to industry sources, more than 60,000 IBM AS/400 systems were shipped during
1996.

In order to compete effectively in their market today and in the future,
mid-size manufacturers require the benefits of ERP solutions that are affordable
and can be implemented quickly, with minimal disruption to business, and that
can be maintained with a limited information technology staff. ERP systems must
provide sufficient depth of functionality and flexibility to enable
manufacturers to respond to varying customer needs and must offer scalability
for growth in operations. Mid-size manufacturers prefer fully integrated ERP

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solutions covering all aspects of managing the business enterprise as opposed to
specialized solutions which are costly to integrate and maintain and are
difficult to synchronize when changes are made in software solutions developed
by multiple vendors.

THE MAPICS SOLUTION AND STRATEGY

The Company is a leading provider of ERP software applications for discrete
and batch-process manufacturing enterprises worldwide. The Company's approach to
addressing this market and maintaining its leading position in this market
includes the following:

Integrated Product Line with Broad and Deep Functionality. The MAPICS(R)
XA product line, which runs on the AS/400 system, currently consists of over 40
integrated application modules which offer the breadth and depth of functions
required to manage a complex manufacturing enterprise. The MAPICS(R) products,
initial versions of which were introduced over 19 years ago, reflect the
Company's comprehensive understanding of manufacturing processes across a wide
range of industries worldwide. The Company offers a suite of fully integrated
application modules which has expanded from the original 19 modules (many of
which have been substantially enhanced and rewritten) to over 40 application
modules during the past four years. These new modules and product enhancements
were developed in response to emerging customer needs and include, among others,
Customer Order Management, International Financial Management and Electronic
Commerce. Additionally, all of the current versions of MAPICS(R) developed
products are Year 2000 compliant, and the Company's development process is
Information Technology Association of America ("ITAA") 2000 certified. The
Company intends to continue to offer new functionality required by both new and
existing customers. The Company uses the feedback it receives from its customers
and affiliates to develop the functionality needed by certain segments of the
manufacturing industries. In addition to its own development efforts, the
Company utilizes independent software developers known as Solution Partners that
assist in the development of new applications for the Company. By continuing to
offer new functionality, the Company intends to expand its base of existing
customers and add new customers.

Customers Able to Migrate to New Technologies Gradually. The Company
continually enhances its product offerings to meet the specific needs of
customers and offers customers the opportunity to gradually migrate to new
technologies, one user at a time if desired, while protecting their existing
investments in both hardware and software. As new features and functions are
added, existing functionality is generally preserved. MAPICS(R) XA utilizes the
technology often sought by manufacturers, such as client/server computing, and
to a certain extent object-oriented technology and data warehousing.

Local Implementation and Support Services. The primary channel for selling
and supporting MAPICS(R) products is a network of more than 80 affiliates which
sells, implements, services and supports MAPICS(R) products in more than 70
countries, throughout the world. These affiliates offer customers experienced
local contacts to implement and customize MAPICS(R) products rapidly and
cost-effectively and also offer customers the necessary level of support to
permit them to maintain limited information technology staffs. These affiliates
are also able to customize applications for customers. Affiliates typically have
extensive knowledge of the manufacturing industry in their geographic region and
are able to establish and maintain cooperative relationships with MAPICS
customers. While these activities generate significant revenues for the
affiliates, the affiliate distribution channel provides the Company with an
attractive variable cost structure for sales and marketing. The Company has
consolidated its distribution channel, reducing significantly the number of
affiliates in place at the time the MAPICS business was acquired in 1993, while
retaining its current affiliates because of their ability to sell and market
MAPICS(R) products, product knowledge, quality of customer support,
implementation capacity and financial stability. The Company continues to
enhance its affiliate distribution channel by providing new training programs
and intends to assist affiliates with recruiting efforts and improving
communications.

High Quality Product Support. The Company is dedicated to providing high
quality support for its products through its employee support staff and through
its affiliates. The Company's development laboratory and primary customer
support center were among the first in the ERP packaged software industry to be
ISO 9001 registered, and they remain among the few which have achieved this
status. In an Advanced Manufacturing Research's survey of ERP customer
satisfaction (the "AMR Survey"), MAPICS(R) products

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received the highest overall score (nearly one-third higher than the next
competitor) based on 15 different factors, including functionality, value,
implementation results, quality of support, service and maintenance and
knowledge of sales force.

Leverage of Large Installed Customer Base. Opportunities for recurring
revenues from the Company's approximately 5,700 existing customers include
continued licensing of existing modules, licensing of additional modules,
implementation of MAPICS(R) products at additional sites, upgrades to larger
processors or additional users and migrations to new technologies.

Growth in International Markets. The Company intends to continue to expand
its market presence throughout the world. During 1995, the Company introduced
its International Financial Management ("IFM") suite of modules, which are
designed to meet the requirements of international enterprises with customers
and production facilities in multiple countries. To address specific needs in
local markets, MAPICS(R) modules are translated and localized, supporting the
local language, currency, taxation and accounting requirements. Since the
Company introduced IFM in 1995, eight translated and localized versions of IFM
have been delivered, extending the product's functionality for more countries.
Currently, the most commonly installed MAPICS(R) XA application modules are
available in English, Chinese, French, German, Japanese, Portuguese and Spanish.

PRODUCTS

The MAPICS(R) I application system, the first comprehensive manufacturing
resource planning system, was introduced in 1978 by IBM. In 1984, IBM introduced
the enhanced MAPICS(R) II application, which was designed to run on IBM's System
36 and 38 computers. In 1989, IBM introduced MAPICS(R)/DB to run on IBM's AS/400
system. In 1993, the Company acquired from IBM the exclusive marketing rights to
the MAPICS(R) product line and retained approximately 150 former IBM employees
to continue the development and support of the MAPICS(R) products.

Following the acquisition of the MAPICS(R) business, the Company undertook
to improve the overall functionality of the MAPICS(R) products, and in 1994, the
Company introduced MAPICS(R) Extended Advantage (XA). Overall, since the
acquisition of the marketing rights in 1993, the Company has expanded the number
of software modules from 19 to over 40 and has substantially enhanced and
rewritten many of the original modules.

The Company's principal software product line, MAPICS(R) XA, provides a
comprehensive and integrated ERP solution for manufacturing enterprises. The
MAPICS(R) XA product line has been designed to support, within a single site or
multiple sites, varied production and operational processes. The MAPICS(R)
products provide the flexibility to expand to additional sites and processes as
a manufacturer's business evolves. The MAPICS(R) XA product line consists of
application modules, which can be combined and integrated to meet the evolving
and specific needs of the Company's customers.

The Company's MAPICS(R) XA software application modules integrate
feature-rich applications in the following key application areas:

Engineering and Cost Management Applications assist in the development of
data which describe the materials, processes and facilities required to estimate
costs and produce manufactured items. The Company's four software modules in
this area include:

Engineering Data Management PDMPlus
Estimating and Quote Management Product Data Management

Market and Demand Management Applications provide for the configuration and
entry of customer orders and the control of these orders through pricing,
picking, shipping and invoicing. Also included is the analysis of the demand
sources (e.g., customers, sales territories and geographies) of all orders. The
Company's four software modules in this area include:

Customer Order Management Market Monitoring and Analysis
Sales Analysis Knowledge-Based Configurator

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Plant Operations and Logistics Management Applications support the
procurement and tracking of material, the launch and control of manufacturing
activity and the management of plant maintenance. The Company's 14 software
modules in this area include:

Inventory Management Approvals
Repetitive Production Management Entity Management
Intersite Logistics-Single Site Preventive Maintenance
Intersite Logistics-Multiple Work Order Management
Site
Purchasing MRO Inventory
Production Control and Costing Maintenance Imaging
Production Monitoring and Maintenance EIS
Control

Production Resource Planning Applications project the demand for materials,
personnel and equipment based on forecasts and assist in preparing the master
schedule to produce items ordered by customers. The Company's five software
modules in this area include:

Forecasting Master Production Schedule
Material Requirements Planning Planning
Finite Capacity Planning and Capacity Requirements Planning
Scheduling

Financial Management and Measurements Applications provide financial and
managerial accounting functions and tracks historical performance of key
management measurements and contracts. The Company's 12 software modules in this
area include:

International Financial Accounting Management
Management
Accounts Payable Accounts Payable
Accounts Receivable Accounts Receivable
General Ledger Financial Analysis
Contract Accounting General Ledger
Executive Information System Fixed Assets
Manufacturing Performance Payroll USA
Analysis

Cross Applications Solution Applications provide common services (e.g.,
security control, data retrieval, report development and data transmission) for
all application modules. The Company's five software modules in this area
include:

Cross Application Support Electronic Commerce
Power Vision Visual Workplace
Information WorkPlace

The MAPICS(R) XA product line is compatible with the needs of mid-size
manufacturers throughout the world. The Company's most commonly purchased
products have been translated from English into at least six languages, support
local currency transactions and can be implemented and utilized in multisite,
multinational divisions of large, diverse enterprises.

When it first licenses its software, the Company typically receives both an
initial license fee and a periodic license fee. The periodic license fee, which
is typically paid annually in advance thereafter, entitles the customer to
continue using the software and to receive certain support services. If a
customer does not renew its periodic license, it is no longer entitled to use
the Company's software. The typical initial license fee for a new MAPICS(R)
system ranges between $100,000 and $600,000, depending upon the number and type
of modules licensed, the size of the processor or the number of users. The
typical periodic license fee is based on a percentage of the then current amount
of the applicable initial license fee.

The MAPICS(R) XA product line offers a Graphical User Interface ("GUI"),
which allows the user to choose between the lower cost character-based screens
or a Microsoft Windows(R)-based look and feel. The current versions of
MAPICS(R)/DB and MAPICS(R)XA products, as developed by MAPICS(R) have been
converted to be Year 2000 compliant and the MAPICS(R) development processes are
ITAA 2000 certified. The

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Year 2000 compliant version of the products are available to MAPICS customers
who are paying periodic license fees.

PRODUCT DEVELOPMENT

Since the Company acquired the exclusive marketing rights to the MAPICS(R)
products from IBM in 1993, it has released a number of new products and product
enhancements to the MAPICS(R)/DB and MAPICS(R) XA product lines. Ongoing product
development efforts are focused on addressing the needs of the Company's
customer base, in part as a result of feedback from its local affiliates, and on
further broadening and deepening the functionality of MAPICS(R) products.
Release 4 of MAPICS(R) XA, scheduled for delivery in December 1997, contains six
new application modules and major enhancements to 17 existing modules. These
additional modules, which are aimed at expanding supply chain functionality,
include: multiple-site revisions level capability for all basic records (e.g.,
items, bills of materials and routings); simultaneous planning of material
between inter-dependent plant sites and a new communications process to speed
communications of these dependencies; client/server browser capabilities to
improve corporate wide communications of purchasing data; and, consolidated
pick, pack and ship functions for customer orders. Release 5 of MAPICS(R) XA,
scheduled for delivery in the third quarter of fiscal 1998, is planned to
contain Euro-dollar support, a major expansion of client/server browsers
capabilities and other additional modules. Additionally, development is
currently being conducted by the Company to make MAPICS(R) products available in
a Java development environment which can be ported to run on multiple platforms,
including the IBM AS/400 and those running Microsoft's NT Server. To date, the
Company has developed a prototype product that runs its PDMPlus application on
Microsoft's NT server platforms. The Company intends to employ the technology
underlying the prototype product to duplicate the MAPICS(R) functions on
Microsoft's NT server platforms. These research efforts have been undertaken so
that the Company may, in the future, offer its customers a choice of platforms
on which to run MAPICS(R) products. Development direction is established by
senior management with guidance from the marketing staff and affiliates. The
development team is responsible for design and design verification, coding,
quality assurance, documentation and language conversion of new enhancements,
products and releases. The Company's development processes are certified for
compliance with ISO 9001 and are also ITAA 2000 certified. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Factors Affecting Future Performance -- New Products and
Technological Change."

In addition to internal development efforts, the Company has developed
several of the Company's software modules in collaboration with third party
Solution Partners. Solution Partners are generally expected to maintain
development quality and procedures commensurate with those utilized in the
Company's internal development laboratory. As a result of working closely with
its Solution Partners, the Company believes that most of its software modules
attain consistent quality, implementation and support standards and that most
modules developed by Solution Partners are virtually indistinguishable from
those developed by the Company's internal development team. The Solution
Partners are generally paid royalties by the Company when the Company receives
license fees from customers for Solution Partner-developed modules.

CUSTOMERS

With an installed user base of approximately 5,700 customer sites, the
Company believes that MAPICS(R) products have been licensed to more customer
sites worldwide than any other ERP software solution in the industry. The
Company's primary customers are mid-size discrete and batch-process
manufacturers, consisting of independent companies and divisions, sites and
subsidiaries of larger companies with annual revenues between $20 million and
$500 million. Mid-size manufacturers generally seek software solutions that will
address and help manage product specifications, customer demand, inventory
availability, labor and equipment resources and advanced manufacturing
techniques which require just-in-time inventory replenishment. The Company
believes that it meets the practical business requirements of mid-size
manufacturers by offering modular technology choices which can be implemented
gradually and which are fully supported and serviced by local affiliates. The
Company's products assist customers in meeting their internal goals of
maintaining

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operational flexibility, responding to market changes, increasing revenue and
market share and minimizing cost, waste and disruption.

None of the Company's customers accounted for more than 10% of total
revenues in fiscal 1997. The Company does not believe that its backlog at any
particular point in time is indicative of future sales.

The Company's installed base includes divisions, sites and subsidiaries of
the following enterprises:

ABB Asea Brown Boveri (Holding) Ltd. Matsushita Electronic Industrial Co., Ltd.
Bayer Corporation Michelin Corporation
Bristol-Myers Squibb Company Michigan Bulb Company Inc., Ltd.
Colgate-Palmolive Company Pall Corporation
Coltec Industries Inc. Peg Perego Pines SPA
Eaton Corporation Philips Electronics N.V.
Emerson Electric Co. Shiseido Cosmetics (America) Ltd.
Figgie International, Inc. Sub-Zero Freezer Co., Inc.
General Electric Company, P.L.C. Syntex Corp.
Giddings and Lewis, Inc. Thomas Lighting Inc.
Goodyear Tire & Rubber Company Volvo Corporation
Honda Motor Co., Ltd. Westinghouse Electric Corporation
International Game Technology York International
Kerry Ingredients UK Ltd.

MARKETING AND SALES

The Company markets its products through a network of more than 80
affiliates in over 70 countries throughout North America, Europe, Africa, the
Middle East, the Asia Pacific region and Latin America, which implements,
services and supports the Company's products throughout the world. The use of
local affiliates provides the Company with strong market access and penetration.
Affiliates provide sales, consulting, implementation and other services directly
to the Company's customer base on a local basis. The Company does not own any
interest in any of its affiliates. Each affiliate has the right to market
MAPICS(R) products within a specific geographic territory, and in return,
affiliates are generally not permitted to represent competitive ERP systems. The
Company's sales management team has emphasized consolidation of smaller
affiliates into larger organizations, eliminated overlapping territories and
developed a higher level of sales skills.

The affiliate distribution channel provides significant leverage to the
Company. Most importantly, the affiliates provide a variable cost channel
because they generally receive a sales commission only when the Company receives
its license fees. Moreover, the affiliate channel continually provides the
Company with local input and feedback regarding customer concerns and
requirements, industry trends and competitive products, thus enabling the
Company to respond to and anticipate the future product needs of its customer
base and to incorporate such knowledge into its product development efforts.

The Company historically has had excellent relations with its affiliates.
The Company believes these strong relations are attributable to a number of
factors, including the significant revenues which the affiliates receive
directly from the Company in the form of commissions, as well as from
consulting, implementation and other services rendered to users of MAPICS(R)
products and from IBM for sales of AS/400 hardware. In addition, the affiliates
have generally made significant investments in developing MAPICS knowledge
within their organizations.

CUSTOMER SUPPORT AND SERVICE

The Company believes that providing a high level of customer service and
technical support is necessary to achieve rapid product implementation which, in
turn, is essential to long-term customer satisfaction and continued revenue
growth. Accordingly, the Company is committed to maintaining a high-quality,
knowledge-

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able affiliate channel supported by the Company's internal service and support
staff. The Company's customer service and support activities can be grouped into
two key areas, as follows:

Implementation consulting, education and applications integration
services. These services are provided on a project consulting basis directly by
the Company's affiliates. The Company does not record revenue related to these
services. Implementation consulting services are provided on-site to assist
customers in the installation and use of the Company's products whether entire
systems are implemented or individual modules are installed to augment existing
applications. The Company has developed educational materials and instructions
for use by affiliates in customer classroom environments.

Installed product maintenance. The Company maintains a central telephone
response and assistance program. In North America, this program is available 24
hours a day, seven days a week to customers that pay periodic license fees,
which the Company recognizes as services revenue. Customers receive assistance
in operational issues and resolving possible code errors. A standardized
telephone support management system is used by all support centers to log
telephone calls, trace problems or inquiries, identify qualified support
personnel to assist customers, follow the inquiry through to a successful
resolution and measure support performance. In the AMR Survey, support for the
MAPICS(R) products was rated the highest in the industry.

The Company presently maintains three support centers: Atlanta, Georgia,
which services North and South America; Eindhoven, Netherlands, which services
Europe, the Middle East and Africa; and Kuala Lumpur, Malaysia, which services
the Asia Pacific region.

PROPRIETARY RIGHTS AND TECHNOLOGY

The Company's success and ability to compete is heavily dependent upon its
proprietary technology, including its software. To protect its proprietary
technology, the Company relies on a combination of copyright, trademark and
trade secret laws and license and non-disclosure agreements, which may afford
only limited protection. In addition, effective copyright protection may be
unavailable or limited in certain foreign countries.

The Company's software is protected as a copyrighted work. In addition,
some of the Company's source code for its software is protected by trade secret.
The Company generally provides its products to customers under a non-exclusive
license which is renewable upon payment of annual license fees. It also
generally enters into confidentiality or license agreements with third parties
and controls access to and distribution of its software, documentation and other
proprietary information. The Company presently has no patents or patent
applications pending. The Company relies upon license agreements with Solution
Partners to allow the Company to use technologies developed by or for the
Solution Partners on terms that are favorable to the Company. The Company also
relies on the knowledge, skills and experience of its employees, frequent
product enhancements, and the timeliness and quality of its support services.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Factors Affecting Future Performance -- Uncertain
Protection of Proprietary Technology."

COMPETITION

The market for ERP software within the mid-size manufacturing industry is
highly competitive, changes rapidly and is affected to a significant degree by
new product introductions and other market activities of industry participants.
The Company's products and related services are primarily targeted at the market
for business applications software for use with the IBM AS/400. The Company's
current and prospective competitors offer a variety of products which address
this and similar markets. The Company's primary competition comes from a large
number of independent software vendors and other sources, including Baan N.V.,
Computer Associates, Inc., Intentia AB, JBA Holdings Plc, J.D. Edwards and
Company, Inc., Oracle Corporation, SAP AG and System Software Associates, Inc.
Of the Company's primary competitors, the products of Intentia are currently
designed solely for use with the IBM AS/400, and the products of JBA Holdings
Plc, J.D. Edwards and System Software Associates are currently designed for use
primarily with the IBM AS/400. The Company also experiences some competition
from vendors of specialized applications. See

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"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Factors Affecting Future Performance -- Competition."

The principal competitive factors in the market for ERP software and
services include product functionality, price, quality, performance,
reliability, ease-of-use, cost-effectiveness, size of installed base,
technology, service, vendor reputation and financial stability. The Company
believes that its products currently compete favorably on the foregoing bases,
although in certain instances it may be at a competitive disadvantage against
companies with greater financial, marketing, service, support and technological
resources and greater name recognition. The Company believes its competitive
strengths include its extensive mid-size manufacturing industry expertise, its
dedicated affiliate channel, broad and deep functionality of its products and
proven customer satisfaction.

To be successful in the future, the Company must continue to respond
promptly and effectively to its customers' needs, to the challenges of
technological change and to its competitors' innovations by continually
enhancing its own product offerings and introducing new products. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Factors Affecting Future Performance -- New Products and
Technological Change."

EMPLOYEES

As of September 30, 1997, the Company employed approximately 280 employees.
None of the Company's employees is represented by a labor union. The Company has
experienced no work stoppages and believes that its employee relations are good.

ITEM 2. PROPERTIES.

The Company's principal administrative, marketing, product development and
support facilities are located in Atlanta, Georgia, where the Company leases
approximately 66,000 square feet under agreements that expire in 2001 and 2002.
The Company has other office leases for its North American, European and Asian
Pacific sales and service facilities. The Company believes that its facilities
are adequate for its current needs.

ITEM 3. LEGAL PROCEEDINGS.

The Company is subject to legal proceedings and claims which arise in the
normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe the outcome of any of
these legal matters will have a material adverse effect on the Company's
business, financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The information required by this item is incorporated by reference to Part
II, Item 4 of the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997.

ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT.

Richard C. Cook, age 50, was elected as the Company's President and Chief
Executive Officer and was elected as a director of the Company in August 1997.
From July 1996 to August 1997, Mr. Cook served as Marcam Corporation's Senior
Vice President and General Manager, MAPICS Business Group. From October 1994 to
July 1996, he served as Marcam Corporation's Vice President and General Manager,
MAPICS Business Group. Mr. Cook served as the President, Chief Executive Officer
and Chairman of the Board of Mapics, Inc., the company that developed and
supported the MAPICS(R) product line, from February 1993 to September 1994. Mr.
Cook was employed by IBM as Director of its Atlanta Software Development
Laboratory from March 1990 to February 1993 and as Director of its Corporate
Computer Integrated Manufacturing Project Office from March 1988 to April 1990.

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William J. Gilmour, age 42, has served as the Company's Vice President of
Finance and Chief Financial Officer since August 1997. From October 1994 to July
1997, Mr. Gilmour served as Controller of Marcam Corporation's MAPICS Business
Group. From February 1993 to September 1994, Mr. Gilmour served as Controller of
Mapics, Inc. From November 1991 to January 1993, Mr. Gilmour served as
Controller of Marcam Canada Corporation, an indirect subsidiary of Marcam
Corporation. Mr. Gilmour obtained his Chartered Accountant designation from the
Canadian Institute of Chartered Accountants.

Thomas F. Aery, age 52, has served as the Company's Vice President of
Worldwide Customer Support since August 1997. From October 1994 to July 1997, he
served as Marcam Corporation's Vice President of Worldwide Customer Support,
MAPICS Business Group. From May 1993 to September 1994, Mr. Aery served as
Director of Worldwide Customer Support of Mapics, Inc. Prior to joining Marcam
Corporation, Mr. Aery was employed by IBM as Worldwide Product Manager, MAPICS.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

COMMON STOCK PRICE

Prior to July 29, 1997, the date of the Distribution, the Company's Common
Stock was traded on the Nasdaq National Market under the trading symbol "MCAM."
Following the Distribution, the Company's Common Stock is traded on the Nasdaq
National Market under the trading symbol "MAPX". The following table sets forth
the quarterly high and low last sale prices per share of the Common Stock as
reported by The Nasdaq Stock Market for the latest two full fiscal years.

FISCAL YEAR ENDED SEPTEMBER 30, 1997 HIGH LOW
------------------------------------ -------- -------

First Quarter............................................... $13 $11 1/8
Second Quarter.............................................. $17 1/4 $12 1/2
Third Quarter............................................... $14 1/2 $ 9 1/8
Fourth Quarter.............................................. $14 1/16 $ 9 3/4
- -------------------------------------------------------------------------------------------
Fourth Quarter (under the symbol "MCAM") for the period from
July 1, 1997 to July 29, 1997............................... $14 1/16 $12
Fourth Quarter (under the symbol "MAPX") for the period from
July 30, 1997 to September 30, 1997......................... $14 $ 9 3/4
- -------------------------------------------------------------------------------------------

FISCAL YEAR ENDED SEPTEMBER 30, 1996 HIGH LOW
------------------------------------------------------------ -------- -------

First Quarter............................................... $20 3/4 $12 5/8
Second Quarter.............................................. $17 $11 1/4
Third Quarter............................................... $14 1/2 $ 9 1/2
Fourth Quarter.............................................. $13 3/4 $10 3/4

HOLDERS

As of December 1, 1997, there were approximately 566 record holders of the
Common Stock, and the Company estimates that there were approximately 4,500
beneficial owners of the Common Stock.

DIVIDEND POLICY

The Company has never paid any cash dividends on its Common Stock. The
Company currently intends to retain future earnings to fund future development
and growth and the operation of its business and therefore does not anticipate
paying any cash dividends in the foreseeable future. Covenants in the Company's
revolving credit facility currently prohibit the payment of cash dividends. Any
future determination to pay cash dividends will be at the discretion of the
Board of Directors and will depend upon the Company's results of operations,
financial condition, capital requirements and such other factors as the Board of
Directors deems relevant. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and Note 8 of Notes to Combined Financial Statements set forth in
"Item 8. Financial Statements and Supplementary Data."

RECENT SALES OF UNREGISTERED SECURITIES

Not applicable.

ITEM 6. SELECTED FINANCIAL DATA.

The following table sets forth selected combined financial data of the
Company as of and for the years ended September 30, 1997, 1996, 1995 and 1994.
No selected combined financial data have been presented for fiscal 1993 because
separate records were not then maintained for the MAPICS business. The selected

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combined financial data as of September 30, 1997, 1996 and 1995 and for each of
the years in the four year period ended September 30, 1997, have been derived
from the Company's combined financial statements which have been audited by
Coopers & Lybrand L.L.P., independent public accountants, as indicated in their
reports. The selected combined financial data as of September 30, 1994 have been
derived from the Company's unaudited combined financial statements which, in the
opinion of management of the Company, have been prepared on the same basis as
the audited combined financial statements and include all adjustments,
consisting only of normal recurring accruals, necessary for a fair presentation
of the Company's financial position as of such date. The data should be read in
conjunction with "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Item 8. Financial Statements and
Supplementary Data" elsewhere herein.

FISCAL YEAR ENDED SEPTEMBER 30,
-------------------------------------
1997 1996 1995 1994
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues:
License................................................. $56,368 $45,341 $42,745 $33,410
Services................................................ 39,036 32,261 26,553 19,373
------- ------- ------- -------
Total revenues.................................. 95,404 77,602 69,298 52,783
------- ------- ------- -------
Operating expenses:
Cost of license revenues................................ 9,816 6,913 5,689 3,280
Cost of services revenues............................... 11,838 9,499 7,567 5,428
Selling and marketing................................... 31,905 27,851 24,780 17,765
Product development..................................... 10,259 6,398 7,432 6,692
General and administrative.............................. 8,256 5,965 5,384 4,810
------- ------- ------- -------
Total operating expenses........................ 72,074 56,626 50,852 37,975
------- ------- ------- -------
Income from operations.................................... 23,330 20,976 18,446 14,808
Other:
Interest income......................................... 45 -- -- --
Interest expense........................................ (263) -- -- --
------- ------- ------- -------
Income before income tax expense (benefit)................ 23,112 20,796 18,446 14,808
Income tax expense (benefit)(A)........................... (6,004) 8,076 7,112 4,641
------- ------- ------- -------
Net income................................................ $29,116 $12,900 $11,334 $10,167
======= ======= ======= =======
Pro forma net income per common share (B)................. $ 1.47 $ .70
======= =======
Pro forma weighted average number of common and common
equivalent shares outstanding (B)....................... 19,811 18,518
======= =======

AS OF SEPTEMBER 30,
---------------------------------------
1997 1996 1995 1994
-------- -------- ------- -------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 5,562 $ 378 $ 226 $ 107
Working capital deficit (C)........................... (12,413) (13,945) (8,527) (2,040)
Total assets.......................................... 76,970 45,405 41,226 36,392
Long-term liabilities................................. -- 884 196 493
Divisional equity..................................... -- 9,193 11,492 17,091
Stockholders' equity.................................. 24,707 -- -- --

- ---------------

(A) Pursuant to a tax sharing agreement between the Company and Marcam
Solutions, MAPICS became entitled to utilize certain favorable income tax
attributes (principally net operating loss carryforwards and tax credits)
of Marcam Corporation immediately following the Distribution. As a result,
the

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Company recognized an income tax benefit of $14.9 million during the fourth
quarter of fiscal 1997. Prior to the Distribution, Marcam Corporation did
not reflect a benefit corresponding to these favorable income tax
attributes in its consolidated financial statements because Marcam
Corporation's management believed it was more likely than not such benefits
would not be realized due to Marcam Corporation's history of operating
losses.
(B) See Note 2 of Notes to Combined Financial Statements contained in "Item 8.
Financial Statements and Supplementary Data" for information concerning the
computation of pro forma net income per common share.
(C) Includes $25,134, $18,563, $15,206 and $9,740 of deferred revenues as of
September 30, 1997, 1996, 1995 and 1994, respectively.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

As used herein, the terms "fiscal 1997," "fiscal 1996" and "fiscal 1995"
refer to the Company's fiscal years ended September 30, 1997, 1996, and 1995,
respectively.

OVERVIEW

The combined financial statements of MAPICS and other financial information
included herein have been prepared using Marcam Corporation's historical basis
in the assets, liabilities and historical results of operations of the business
related to the MAPICS(R) product line through the date of the Distribution.
Certain expenses presented in the combined financial statements and other
financial information included herein have been allocated based on management's
estimates of the cost of services provided to MAPICS by Marcam Corporation. The
Company's management believes that these allocations are reasonable. The
combined financial statements and other financial information included herein,
however, may not necessarily reflect the combined financial position, results of
operations and cash flows of MAPICS had it operated as a separate entity during
the periods presented, or what they may be in the future. See "-- Factors
Affecting Future Performance -- Limited History as a Stand-Alone Public Company;
Limited Relevance of Certain Historical Financial Information" and Notes to
Combined Financial Statements contained in "Item 8. Financial Statements and
Supplementary Data." Following the Distribution, the combined financial
statements of MAPICS and other financial information included herein consist
solely of the separate consolidated financial statements of MAPICS, Inc. and its
wholly owned subsidiaries and do not correspond to the historical consolidated
financial statements of Marcam Corporation. See Notes to Combined Financial
Statements contained in "Item 8. Financial Statements and Supplementary Data."

The Company generates revenues primarily from licensing its software. When
it first licenses its software, the Company typically receives both an initial
license fee and a periodic license fee. The periodic license fee, which is
typically paid annually in advance thereafter, entitles the customer to continue
using the software and to receive certain support services. If a customer does
not renew its periodic license, it is no longer entitled to use the Company's
software. The Company believes this licensing arrangement provides a source of
recurring revenues from its installed base of customers and enables customers to
take advantage of new releases and enhancements of its software. Initial license
fees are recorded as license revenues and typically recognized upon delivery of
the software. Periodic license fees are recorded as services revenues and
recognized ratably over the term of the periodic license agreement.

The Company's cost structure is designed so that a significant portion of
its costs vary in direct relation to license revenues, particularly its selling
and marketing expenses and cost of license revenues. MAPICS(R) products are sold
primarily through the Company's network of independent local affiliates, with
support from the Company's sales management. The Company's single largest
expense is commissions paid to these affiliates, which are based on the revenues
they generate from licensing MAPICS(R) products. The Company currently expects
that as its affiliates generate more license revenues for the Company, selling
and marketing expenses will decrease as a percentage of total revenues because
of the relatively fixed cost of the Company's direct selling and marketing
activities. The affiliates, rather than the Company, provide the Company's
customers with consulting and implementation services relating to the MAPICS(R)
products. As a result, the

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Company neither generates revenues from providing consulting and implementation
services nor bears the fixed costs inherent in maintaining a services business.

In Japan and certain Eastern European countries, the Company utilizes
resellers rather than affiliates to distribute the MAPICS(R) products, and the
Company records as license revenue the net royalties received from the resellers
without any corresponding commission expenses. From fiscal 1995 to fiscal 1997,
net royalties received from such resellers decreased from 6.1% to 1.3% of total
license revenues of the Company. The Company's strategy has been to replace
these resellers with affiliates to provide the Company with a more direct
relationship with its customers. This shift generally has resulted in an
increase in selling and marketing expense as a percentage of total revenues and
a decrease in the operating margin percentage. The Company believes that the
proportion of reseller sales to total license revenues will remain relatively
constant for the foreseeable future.

Cost of license revenues consists primarily of royalties paid to Solution
Partners with respect to products licensed by the Company and amortization of
computer software costs. The Company expects that cost of license revenues will
vary based on the mix of products licensed during the applicable period between
Company-developed products and Solution Partner-developed products.

The Company licenses from its Solution Partners complementary software
products which have been integrated into the MAPICS(R) product line. When the
Company licenses a Solution Partner product to a customer, the Company pays a
royalty to the Solution Partner. As a result, a significant portion of its cost
of license revenues varies in direct relation to license revenues based on
Solution Partners' products. Through its Solution Partner arrangements, the
Company has been able to enhance the functionality of its existing products and
introduce new products utilizing this variable cost approach to expand its
product offerings. During the past four fiscal years, the mix of products
licensed by the Company has included increasing percentages of Solution Partner
products, which has resulted in both increasing revenues and royalty costs.

Computer software costs include purchased software, in-house software
development costs and the costs incurred to translate software into various
foreign languages. Amortization of purchased software commences when the
software is placed in service and is computed using the straight-line method
over the estimated useful life of the software, generally five years.
Amortization of computer software development and translation costs commences
upon general release of the product to customers and is computed on a product-
by-product basis using the greater of the amount determined using (a) the ratio
that current period gross revenues bear to the total of current and anticipated
future gross revenues or (b) the straight-line method over the estimated
economic life of the product, generally five years. Software is subject to rapid
technological obsolescence, and as a result, future amortization periods for
computer software costs could be shortened to reflect changes in technology in
the future. In fiscal 1997, the Company shortened the estimated useful life of
its 1997 and future computer software translation costs from five years to two
years. This change in estimate decreased net income and pro forma net income per
share for the year ended September 30, 1997 by approximately $446,000 or $.02
per share, respectively.

As of September 30, 1997, the Company's balance sheet reflected
approximately 4 1/2 years of accumulated capitalized software development costs
because the Company did not begin capitalizing software until the acquisition of
the exclusive marketing and licensing rights to the MAPICS(R) products in
February 1993. Consequently, the Company currently expects amortization of these
costs to continue to increase through fiscal 1998, when five years of software
development costs will have been capitalized.

The Company believes that its internal business systems, primarily its
computer systems, and its software products will process date information
accurately and without interruption when required to process dates in the year
1999 and beyond. The Company has not been required to expend significant
resources to address the Year 2000 issue with regard to its internal business
systems or its software products.

In fiscal 1996, the Company reduced its level of spending on product
development activities other than those to translate products into new languages
("core product development") because, at the time, Marcam Corporation
anticipated that the MAPICS(R) products would use certain technologies being
developed in connection with its Protean(TM) product line. Subsequently, the
Company determined that such a development

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strategy was not consistent with the demands of its target market and commenced
a revised development strategy which will allow future platform independence.
The Company anticipates continuing its efforts to develop, in a Java development
environment, additional versions of certain of its applications to run on
Microsoft's NT server platform and on the AS/400. The Company does not believe
that such additional versions will materially affect results of operations or
liquidity. The Company currently anticipates that core product development
expenditures will increase as a percentage of revenues to levels more consistent
with those of fiscal 1994 and fiscal 1995. Because the costs of establishing
technological feasibility of computer software products are charged to product
development expense as they are incurred, the Company's operating results may be
affected adversely by significant changes in the level of product development
investments.

In the United States and Canada, the Company provides support services
(primarily via telephone) to its customers. Elsewhere, the Company engages local
affiliates to provide varying degrees of support services for a fee. For certain
Solution Partner-developed products, the Solution Partners provide varying
levels of support for a fee. The costs of the Company's direct support services
and the fees paid to affiliates and Solution Partners for providing support
services are recorded as cost of services revenues.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
of total revenues represented by certain line items in the Company's combined
statements of operations.

FISCAL YEARS ENDED
SEPTEMBER 30,
-----------------------
1997 1996 1995
----- ----- -----

Revenues:
License................................................... 59.1% 58.4% 61.7%
Services.................................................. 40.9 41.6 38.3
----- ----- -----
Total revenues.................................... 100.0 100.0 100.0
----- ----- -----
Operating expenses:
Cost of license revenues.................................. 10.3 8.9 8.2
Cost of services revenues................................. 12.4 12.2 10.9
Selling and marketing..................................... 33.4 35.9 35.8
Product development....................................... 10.8 8.3 10.7
General and administrative................................ 8.6 7.7 7.8
----- ----- -----
Total operating expenses.......................... 75.5 73.0 73.4
----- ----- -----
Income from operations...................................... 24.5 27.0 26.6
Other:
Interest income........................................... -- -- --
Interest expense.......................................... (0.3) -- --
----- ----- -----
Income before income tax expense (benefit).................. 24.2 27.0 26.6
Income tax expense (benefit)................................ (6.3) 10.4 10.3
----- ----- -----
Net income.................................................. 30.5% 16.6% 16.3%
===== ===== =====

FISCAL 1997 COMPARED TO FISCAL 1996

Revenues. Total revenues increased 22.9% to $95.4 million in fiscal 1997
from $77.6 million in fiscal 1996. License revenues increased 24.3% to $56.4
million in fiscal 1997 from $45.3 million in fiscal 1996. This increase resulted
primarily from an increase in license sales to new customers and, to a lesser
extent, an increase in license sales to existing customers for new sites,
upgraded systems and additional modules, primarily in North America. Services
revenues increased 21.0% to $39.0 million in fiscal 1997 from $32.3 million in
fiscal 1996, principally due to the increase in the Company's installed customer
base.

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Cost of License Revenues. Cost of license revenues increased 42.0% to $9.8
million in fiscal 1997 from $6.9 million in fiscal 1996. These costs increased
as a percentage of license revenues to 17.4% in fiscal 1997 from 15.2% in fiscal
1996 . These increases were primarily due to: (i) increased royalty costs as the
volume of Solution Partner products licensed by the Company increased in fiscal
1997; (ii) increased amortization of capitalized software development costs
which resulted from the increased capitalized software asset; and (iii)
increased amortization of capitalized software translation costs resulting from
a change in estimate of useful life which increased amortization expense by
approximately $446,000 in fiscal 1997. The Company believes the trend of
increasing costs of license revenues will continue in fiscal 1998.

Cost of Services Revenues. Cost of services revenues consists primarily of
personnel costs related to the ongoing maintenance and support of the MAPICS(R)
products, fees paid to affiliates outside the United States and Canada to
provide certain support services in those regions and the fees paid to Solution
Partners to provide similar services with respect to their products. Cost of
services revenues increased 24.6% to $11.8 million in fiscal 1997 from $9.5
million in fiscal 1996, primarily as a result of the increased fees paid to
affiliates and Solution Partners for providing support services. As a percentage
of services revenues, these costs increased to 30.3% in fiscal 1997 from 29.4%
in fiscal 1996. This increase resulted primarily from increased fees paid to
Solution Partners and affiliates for support services in fiscal 1997.

Selling and Marketing. Selling and marketing, expenses consist primarily
of commissions paid to the Company's independent affiliates, compensation for
the Company's sales and marketing personnel and direct costs associated with the
Company's marketing campaigns. Selling and marketing expenses increased 14.6% to
$31.9 million in fiscal 1997 from $27.9 million in fiscal 1996. This increase
was due primarily to increased commissions earned by affiliates on increased
license revenues. As a percentage of total revenues, selling and marketing
expenses decreased to 33.4% in fiscal 1997 from 35.9% in fiscal 1996. This
decrease resulted primarily from the Company's direct selling and marketing
costs being relatively fixed in nature.

Product Development. Product development expenses consist primarily of
compensation for software engineering personnel and independent contractors
retained to assist with the Company's product development efforts. The Company
charges all costs of establishing technological feasibility of computer software
products to product development expense as they are incurred. From the time of
establishing technological feasibility through general release of the product,
computer software development and translation costs are capitalized and
thereafter amortized to cost of license revenues.

Overall, product development expenses increased 60.3% to $10.3 million in
fiscal 1997 from $6.4 million in fiscal 1996 and increased as a percentage of
total revenues to 10.8% in fiscal 1997 from 8.3% in fiscal 1996. These increases
resulted primarily from an increase in core development spending and a decrease
in the percentage of costs qualifying for capitalization in fiscal 1997. See
"-- Overview" and "Item 1. Business -- Product Development."

Gross core development expenditures increased 39.4% to $12.6 million in
fiscal 1997 from $9.1 million in fiscal 1996. This increase was primarily due to
increased development expenditures as a result of the Company's change in
product development strategy. See "-- Overview" and "Item 1. Business -- Product
Development." The amounts of core development expenditures capitalized in fiscal
1997 and fiscal 1996 were $2.5 million and $2.9 million, respectively,
representing 19.6% and 31.9% of gross core development expenditures during those
periods, respectively. The amount of development expenditures capitalized in
fiscal 1997 decreased because a higher proportion of development expenditures
was related to the establishment of technological feasibility of the products
under the Company's revised development strategy. Gross translation expenditures
decreased 16.5% to $3.1 million in fiscal 1997 from $3.7 million in fiscal 1996.
Translation expenditures are typically project related, and the timing of these
expenditures is subject to change from period to period. The amounts of
translation expenditures capitalized in fiscal 1997 and fiscal 1996 were $3.0
million and $3.5 million, respectively, representing 96.2% and 93.6%,
respectively, of gross translation expenditures during those periods.

General and Administrative. General and administrative expenses consist
primarily of compensation for executive, financial, legal and administrative
personnel, outside professional and service fees and provisions for bad debts.
General and administrative expenses increased 38.4% to $8.3 in fiscal 1997 from
$6.0 million in

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fiscal 1996, due primarily to increases in facilities and personnel costs in the
Europe, Middle East and Africa region ("EMEA"). General and administrative
expenses represented 8.6% of total revenues in fiscal 1997 as compared to 7.7%
in fiscal 1996.

Income Tax Expense (Benefit). The Company recorded an income tax benefit
of $6.0 million during fiscal 1997 compared to income tax expense of $8.1
million during fiscal 1996. Historically, the operations represented by MAPICS
have been included in the consolidated United States federal and certain state
and foreign income tax returns filed by Marcam Corporation. For financial
reporting purposes, income tax expense has been reflected on a separate return
basis for all periods presented in the combined financial statements through the
Distribution.

Pursuant to a tax sharing agreement between Marcam Corporation and Marcam
Solutions (See Note 15 of Notes to Combined Financial Statements contained in
"Item 8. Financial Statements and Supplementary Data."), the Company became
entitled to utilize certain favorable tax attributes (principally net operating
loss carryforwards and tax credits) of Marcam Corporation immediately following
the Distribution. As a result, the Company recognized an income tax benefit of
$14.9 million during the fourth quarter of fiscal 1997. See "-- Liquidity and
Capital Resources." Prior to the Distribution, Marcam Corporation did not
reflect a benefit corresponding to these favorable tax attributes in its
consolidated financial statements because Marcam Corporation's management
believed it was more likely than not such benefits would not be realized due to
Marcam Corporation's history of operating losses.

The income tax benefit of $6.0 million for fiscal 1997 reflects income tax
expense of $8.9 million offset by the income tax benefit of $14.9 million.
Excluding the income tax benefit, the effective tax rate in fiscal 1997 was
38.5% which differs from the statutory federal rate of 35.0% principally due to
the impact of state income taxes. The effective tax rate of 38.5% in fiscal 1996
differs from the statutory federal rate of 35.0% principally due to the impact
of state income taxes.

FISCAL 1996 COMPARED TO FISCAL 1995

Revenues. Total revenues increased 12.0% to $77.6 million in fiscal 1996
from $69.3 million in fiscal 1995. License revenues increased 6.1% to $45.3
million in fiscal 1996 from $42.7 million in fiscal 1995. This increase resulted
primarily from an increase of license sales to new and existing customers for
new sites, upgraded systems and additional modules, particularly outside the
United States and Canada. This increase was primarily attributable to the
availability of French, German, Spanish and Portuguese translations of Release 2
of MAPICS(R) XA. Services revenues increased 21.5% to $32.3 million in fiscal
1996 from $26.6 million in fiscal 1995, principally due to the increase in the
Company's installed customer base and revenues from optional support services
offered in EMEA to customers who had licensed MAPICS(R) products from IBM
without support services.

Cost of License Revenues. Cost of license revenues increased 21.5% to $6.9
million from $5.7 million in fiscal 1995 and represented 15.2% and 13.3% of
license revenues in fiscal 1996 and fiscal 1995, respectively. This increase was
primarily due to increased royalty costs as the volume of Solution Partner
products licensed by the Company increased from fiscal 1995 to fiscal 1996 and
increased amortization of capitalized software development and translation costs
which resulted from the increased capitalized software asset.

Cost of Services Revenues. Cost of services revenues increased 25.5% to
$9.5 million from $7.6 million in fiscal 1995 and represented 29.4% and 28.5% of
services revenues in fiscal 1996 and fiscal 1995, respectively. This increase
was primarily due to increases in staff and other costs in fiscal 1996 to
support the growing base of customers in EMEA.

Selling and Marketing. Selling and marketing expenses increased 12.4% to
$27.9 million in fiscal 1996 from $24.8 million in fiscal 1995 and represented
35.9% and 35.8% of total revenues in fiscal 1996 and fiscal 1995, respectively.
The increase in these expenses resulted primarily from increased commissions
earned by affiliates on increased revenues. As a percentage of total revenues,
these expenses remained relatively constant as a result of changes in the mix of
revenues from affiliates and resellers. See "Overview."

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Product Development. Overall, product development expenses decreased 13.9%
to $6.4 million from $7.4 million in fiscal 1995 and represented 8.3% and 10.7%
of total revenues in fiscal 1996 and fiscal 1995, respectively. These decreases
resulted primarily from lower core development expenditures in fiscal 1996. See
"-- Overview" and "Item 1. Business -- Product Development."

Gross core development expenditures decreased 9.9% to $9.1 million for
fiscal 1996 from $10.0 million for fiscal 1995. This decrease was due primarily
to the change in the Company's development strategy. See "Overview." The amounts
of core development expenditures capitalized for fiscal 1996 and fiscal 1995
were $2.9 million and $2.8 million, respectively, representing 31.9% and 28.2%
of gross core development expenditures during those periods. Gross translation
expenditures increased 27.6% to $3.7 million for fiscal 1996 from $2.9 million
for fiscal 1995. The amounts of translation costs capitalized for fiscal 1996
and fiscal 1995 were $3.5 million and $2.7 million, respectively, representing
93.6% and 92.4% of gross translation expenditures during those periods.

General and Administrative. General and administrative expenses increased
10.8% to $6.0 million from $5.4 million in fiscal 1995 and represented 7.7% and
7.8% of total revenues in fiscal 1996 and fiscal 1995, respectively. The overall
increase was primarily due to expansion of staff and facilities in EMEA.

Income Tax Expense (Benefit). Income tax expense represented 38.5% and
38.6% of income before income tax for fiscal years 1996 and 1995, respectively.
The effective tax rates for both periods exceeded the statutory federal rate
largely due to the impact of state income taxes, partially offset by research
and experimentation credits.

LIQUIDITY AND CAPITAL RESOURCES

MAPICS has funded its operations and capital expenditures primarily through
cash generated from operations. Historically, MAPICS has remitted its excess
cash from operations to Marcam Corporation. During fiscal 1997, 1996 and 1995,
MAPICS transferred net cash to Marcam Corporation of $6.6 million, $15.2 million
and $16.5 million, respectively. As of September 30, 1997, the Company had $5.6
million in cash and a working capital deficit of $12.4 million. Excluding $25.1
million of deferred revenues, which are included in current liabilities, the
Company had working capital of $12.7 million as of September 30, 1997.

Cash provided by operations was $27.7 million, $23.3 million and $22.7
million for fiscal 1997, 1996 and 1995, respectively. During fiscal 1997,
working capital changes included a $6.6 million increase in deferred revenues as
a result of growth in services revenues, the deferral of license revenue related
to a significant fourth quarter license agreement and an $8.7 million increase
in accrued expenses due to increased affiliate commissions, product royalties
and employee bonuses payable. Those increases were offset partially by a $10.7
million increase in accounts receivable and a $1.8 million increase in prepaid
expenses and other current assets. During fiscal 1996, working capital was
principally affected by an increase in deferred revenues as a result of growth
in services revenues.

Cash used for investing activities was $8.4 million, $8.0 million and $6.1
million for fiscal 1997, 1996 and 1995, respectively. During fiscal 1997 and
fiscal 1996, the Company used cash for investing activities related to computer
software development and translation and purchases of computer software and
property and equipment.

Cash used for financing activities includes net cash transferred to Marcam
Corporation, as discussed above, during fiscal 1997, 1996 and 1995.
Additionally, during fiscal 1997, the Company had several significant financing
activities which were directly or indirectly related to the Distribution, as
discussed in the following paragraphs.

On July 25, 1997, the Company borrowed $64.0 million (the "Debt Financing")
from a bank to finance the $39.0 million cash transfer to Marcam Solutions and
to repay Marcam Corporation's $25.0 million 9.82% Subordinated Notes due 2001
(the "Subordinated Notes"). The indebtedness incurred in the Debt Financing had
an interest rate of 9.0%. In connection with the Debt Financing, Marcam
Corporation's $20.0 million revolving credit facility was terminated.

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In August 1997, the Company executed a senior secured term loan and
revolving credit facility to repay a portion of the borrowings from the Debt
Financing and for general corporate purposes. Substantially all of the Company's
assets are pledged as collateral for obligations under the credit facility. The
credit facility contains covenants which, among other things, require the
Company to maintain certain financial ratios and impose certain limitations or
prohibitions on the Company with respect to the occurrence of indebtedness,
liens and capital leases; the payment of dividends on and the redemption or
repurchase of capital stock of the Company; investments and acquisitions; the
merger or consolidation of the Company with any person or entity; and the
disposition of any of the Company's properties or assets.

During August 1997, the Company completed an underwritten public offering
of 6.9 million shares of its Common Stock (the "Offering") raising net proceeds
of approximately $56.0 million, after deducting offering costs of approximately
$6.1 million. The net proceeds of the Offering along with borrowings of $6.4
million under the term loan credit facility described above and working capital
of $1.6 million were used to repay the $64.0 million of indebtedness from the
Debt Financing. As of September 30, 1997, the Company repaid the principal of
the term loan and interest thereon of $254,000. Upon repayment of the borrowings
outstanding under the term loan, no additional amounts are available for future
borrowings under the term loan facility.

Additional borrowings of up to $15 million, subject to certain limitations,
are available to the Company under the revolving credit facility. Availability
of revolving credit loans and the rate of interest thereof vary depending upon
the Company's ability to maintain certain financial ratios. Outstanding loans
under the revolving credit facility mature on June 30, 2000. No amount was
outstanding under the revolving credit facility as of September 30, 1997. The
Company is required to pay a quarterly commitment fee for unused portions of the
revolving credit facility.

Pursuant to a tax sharing agreement between Marcam Corporation and Marcam
Solutions, MAPICS became entitled to utilize certain favorable income tax
attributes (principally net operating loss carryforwards and tax credits) of
Marcam Corporation immediately following the Distribution. The Company believes
that the utilization of these favorable income tax attributes will result in
cash savings from the reduction of income taxes payable in future periods as
these favorable income tax attributes are utilized. At September 30, 1997, the
Company had approximately $28.8 million of net operating loss carryforwards, and
approximately $2.8 million of research and experimentation and other credit
carryforwards. Such carryforwards expire between 1998 and 2012. The utilization
of net operating loss carryforwards will be limited on an annual basis due to a
change in ownership of Marcam Corporation during fiscal 1996. The Company does
not believe that this limitation will have a significant impact on its ability
to utilize the net operating loss carryforwards prior to their expiration.

Pursuant to the same tax sharing agreement, Marcam Solutions is generally
responsible for certain state, local and foreign taxes for periods ended on or
before the Distribution, and the Company is responsible for all other taxes for
such periods. In addition, the Company is generally liable for any taxes arising
out of the Distribution. Income taxes arising out of the Distribution,
principally foreign income taxes, currently expected to approximate $1.1
million, were provided for in the fourth quarter of fiscal 1997. See Notes 9 and
15 of Notes to Combined Financial Statements contained in "Item 8. Financial
Statements and Supplementary Data."

As of September 30, 1997, the Company did not have any material commitments
for capital expenditures.

On December 15, 1997, the Company's Board of Directors authorized a plan,
subject to certain limitations, to repurchase up to 1.8 million shares of Common
Stock from time to time in the open market or directly from shareholders at
prevailing market prices that management deems appropriate. In connection with
effecting the plan, the covenant under the credit facility which restricted the
repurchase of MAPICS capital stock was amended to permit the Company to
repurchase shares of its capital stock, subject to certain limitations.

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The Company believes that cash flows from operations and available
borrowings under the revolving credit facility will be sufficient to meet the
Company's working capital and capital expenditure needs at least until the end
of fiscal 1998.

INFLATION

To date, the Company believes inflation has not had a material impact on
the Company's operations.

NEW ACCOUNTING STANDARDS

During fiscal 1997, the Company adopted the disclosure-only alternative of
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," which requires the Company to elect either expense
recognition under SFAS No. 123 or its disclosure-only alternative for stock-
based employee compensation. Accordingly, the adoption of SFAS No. 123 had no
effect on the Company's financial position or results of operations, and the
Company has disclosed the pro forma net income and pro forma net income per
share using the fair-value based method of SFAS No. 123 for fiscal 1997 and
fiscal 1996, in Note 11 of Notes to Combined Financial Statements contained in
"Item 8. Financial Statements and Supplementary Data."

In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share," which is effective for periods ending after
December 15, 1997. SFAS No. 128 will require the Company to present basic and
diluted earnings per share ("EPS"). Basic EPS, which replaces primary EPS,
excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Diluted EPS is computed similarly to fully
diluted EPS under existing rules. SFAS No. 128 requires restatement of all prior
period earnings per share data presented. The Company adopted SFAS No. 128 as of
October 1, 1997; however, had the Company adopted SFAS No. 128 in fiscal 1997,
basic pro forma EPS would have been $1.79 and $0.82 for fiscal 1997 and fiscal
1996, respectively, and diluted pro forma EPS would have been $1.47 and $0.70
for fiscal 1997 and fiscal 1996, respectively.

In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information
about Capital Structure," which is effective for periods ending after December
15, 1997. SFAS No. 129 establishes standards for disclosing information about an
entity's capital structure. The adoption of SFAS 129 is not expected to have a
material impact on the Company's disclosures.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which is effective for periods beginning after December 15, 1997. SFAS
No. 130 requires businesses to disclose comprehensive income and its components
in their general-purpose financial statements, with reclassification of
comparative (earlier period) financial statements. The adoption of SFAS 130 is
not expected to have a material impact on the Company's disclosures.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which is effective for periods beginning
after December 15, 1997. SFAS No. 131 redefines how operating segments are
determined and requires disclosure of certain financial and descriptive
information about a company's operating segments. The adoption of SFAS No. 131
is not expected to have a material impact on the Company's disclosures.

In October 1997, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 97-2 "Software Revenue Recognition." SOP
97-2 provides guidance on applying generally accepted accounting principles in
recognizing revenue on software transactions and supersedes SOP 91-1. SOP 97-2
is effective for transactions entered into in fiscal years beginning after
December 15, 1997. The adoption of SOP 97-2 is not expected to have a material
impact on the Company's financial position, results of operations or
disclosures.

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FACTORS AFFECTING FUTURE PERFORMANCE

Variability in Quarterly Operating Results; Seasonality. The Company has
experienced fluctuations in its quarterly operating results and anticipates that
such fluctuations will continue and may intensify. The Company's quarterly
operating results are affected by a number of factors that could materially and
adversely affect revenues and profitability, including the size and timing of
license transactions; the demand for the Company's products; the proportion of
revenues attributable to license fees versus services fees; the proportion of
Solution Partner-developed products versus internally-developed products
licensed; changes in the level of operating expenses; the potential for delay or
deferral of customer purchases of the Company's software; the timing of the
introduction or market acceptance of new or enhanced products offered by the
Company or its competitors; the ability of the Company's affiliate distribution
channel to service additional sales; the competitive conditions in the industry;
and the general economic and political conditions and other factors affecting
capital expenditures by customers. The purchase of the Company's products and
services may involve a significant commitment of capital and other resources by
its customers with the attendant delays frequently associated with large capital
expenditures and authorization procedures within an organization. Accordingly,
the sales cycles for the Company's products and services are subject to a number
of significant risks over which the Company has little or no control, including
customers' budgetary constraints and internal authorization procedures. License
revenues in any quarter are substantially dependent on orders booked and shipped
in that quarter.

The Company's quarterly operating results are subject to certain seasonal
fluctuations. The Company believes that its first quarter (ending December 31)
revenues generally are positively affected by calendar year-end capital
expenditures by certain customers and by calendar year-end incentives provided
by IBM to resellers of its hardware, which include many of the Company's
distribution affiliates. In the Company's fourth quarter (ending September 30),
revenues are positively affected by the incentives provided pursuant to the
Company's sales compensation plans. These factors have historically resulted in
increased license revenues during such quarters. In addition, the Company's
revenues occur predominantly in the third month of each quarter and tend to be
concentrated in the latter half of that third month. Accordingly, the Company's
quarterly operating results are difficult to predict, and delays in product
delivery or in closings of sales near the end of a quarter could cause quarterly
revenues and, to a greater degree, net income to fall substantially short of
anticipated levels. Net income is affected because the Company establishes its
spending levels on the basis of its expected future operating margins. These
seasonal factors are likely to continue to affect quarter-to-quarter
comparisons.

Due to the foregoing factors, it is possible that the Company's operating
results could fail to meet the expectations of securities analysts or investors.
In such event, or in the event that adverse conditions in the manufacturing or
ERP marketplace prevail or are perceived to prevail, the price of the Company's
Common Stock would likely be materially adversely affected.

Reliance on Third Party Distribution Channel. The Company markets, sells
and supports its products primarily through a network of more than 80
distribution affiliates and as a result maintains a limited direct sales force.
The Company relies on its affiliates for sales, product implementation,
customization and customer support services. There can be no assurance that the
affiliates will continue to provide the level and quality of service required to
meet the needs of the Company's customers or that the Company will be able to
maintain effective long-term relationships with its affiliates. If the Company
is unable to maintain effective, long-term relationships with the affiliates, or
if the affiliates fail to meet the needs of the Company's customers, the
Company's business would be adversely affected. From time to time certain of the
Company's competitors have established, and may continue to seek to establish, a
comparable distribution channel, in part by attempting to attract the Company's
own affiliates. The Company's agreements with its affiliates are generally
terminable by either party and do not impose specific obligations on the part of
the affiliates. Further, there can be no assurance that the affiliates will not
otherwise reduce or discontinue their relationships with or support of the
Company and its products. See "Item 1. Business -- Marketing and Sales."

Competition. The market for business software within the mid-size
manufacturing industry is highly competitive, changes rapidly and is to a
significant degree affected by new product introductions and other

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market activities of industry participants. The Company's products and related
services are primarily targeted at the market for business applications software
for use with the IBM AS/400. The Company's current and prospective competitors
offer a variety of products which address this and similar markets. The
Company's primary competition comes from a large number of independent software
vendors and other sources including Baan N.V., Computer Associates, Inc.,
Intentia AB, JBA Holdings Plc, J.D. Edwards & Company, Inc., Oracle Corporation,
SAP AG, and System Software Associates, Inc. Of the Company's primary
competitors, the products of Intentia are currently designed solely for use with
the IBM AS/400, and the products of JBA Holdings Plc, J.D. Edwards and System
Software Associates are currently designed for use primarily with the IBM
AS/400. The Company also experiences some competition from vendors of
specialized applications.

Certain of the Company's competitors have significantly greater financial,
marketing, service, support and technical resources and greater name recognition
than the Company. To be successful in the future, the Company must continue to
respond promptly and effectively to the challenges of technological change and
its competitors' innovations. The Company's competitors may be able to respond
more quickly to new or emerging technologies or changes in customer requirements
or devote greater resources to the development, promotion and sale of their
products than the Company. The Company also expects to face additional
competition as other established and emerging companies enter the market for
business software for use with the AS/400 and as new products and technologies
are introduced. In addition, current and potential competitors may make
acquisitions or establish alliances among themselves or with third parties,
thereby increasing the ability of their products to address the needs of the
Company's prospective customers. Accordingly, it is possible that new
competitors or alliances among current and new competitors may emerge and
rapidly gain significant market share, resulting in price or fee rate
reductions, fewer customer orders and reduced gross margin, any one of which
could have a material adverse effect on the Company's business, financial
condition and results of operations. There can be no assurance that the Company
will be able to compete successfully with existing or new competitors or that
competition will not have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, because the Company
relies on a network of distribution affiliates for implementation and other
support of its products, there can be no assurance that these affiliates will
maintain sufficiently high quality standards so that the Company's reputation
and competitive position will not be adversely affected. See "Item 1.
Business -- Marketing and Sales" and "-- Competition."

Dependence on Key Personnel; Ability to Attract and Retain Skilled
Personnel. The Company's future performance depends to a significant extent
upon the continued service of a number of senior management and key technical
personnel. The Company does not maintain key-person life insurance on any of its
key employees. None of the Company's employees is bound by an employment
agreement. The loss of the services of one or more key employees could have a
material adverse effect on the Company. The Company's future financial results
also will depend in large part upon its ability to attract on a timely basis and
retain highly skilled technical, managerial and marketing personnel and the
ability of its officers and key employees to manage growth successfully and to
continue successful development of new products and enhancements to existing
products. Competition for such personnel is intense and is likely to intensify
further as companies compete to hire personnel, particularly to address Year
2000 issues. The Company competes in the market for such personnel against
numerous companies, including larger, more established companies with
significantly greater financial resources than the Company. The Company has at
times experienced and continues to experience difficulty recruiting qualified
personnel, and there can be no assurance that the Company will not continue to
experience such difficulties in the future. If the Company is unable to hire and
retain qualified personnel in the future, such inability could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Item 1. Business -- Employees" and "Item 4(A). Executive
Officers of the Registrant."

New Products and Technological Change. The market for the Company's ERP
software products is characterized by rapid technological advances, evolving
industry standards in computer hardware and software technology, changes in
customer requirements and frequent new product introductions and enhancements.
The Company's future success will depend upon its ability to continue to enhance
its MAPICS(R) products and to develop and introduce new products that keep pace
with technological developments, satisfy increasingly

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sophisticated customer requirements and achieve market acceptance. In
particular, the Company must continue to anticipate and respond adequately to
advances in standard business applications software and client/server solutions,
as well as object-oriented technology. There can be no assurance that the
Company will be successful in developing and marketing, on a timely and
cost-effective basis, functioning product enhancements or new products that
respond to technological advances by its competitors or that its new products
will achieve market acceptance. See "Item 1. Business -- Product Development."

As a result of the complexities inherent in the functionality and
performance demanded by ERP software customers, major new products and product
enhancements can require long development and testing periods. In addition, ERP
software programs as complex as those offered by the Company may contain errors
which are discovered only after the products and new releases have been
installed and used by customers despite testing by the Company. There can be no
assurance that undetected errors will not impair the market acceptance of these
products or adversely affect the Company's operating results. Problems
encountered by customers installing and implementing the Company's new product
releases or with product performance, including product functionality, product
response time and programs errors, could also materially adversely affect the
Company's operating results.

Dependence on External Development Resources. Several of the Company's
application modules were developed in collaboration with third party Solution
Partners, and the Company expects to continue to rely on Solution Partners for
the development of additional application modules. Generally, Solution Partners
continue to own the rights to, and maintain, the technology underlying the
modules and license, on an exclusive basis, the technology to the Company. Under
the terms of such agreements, the Company is obligated to pay a royalty to a
Solution Partner for sales of the Solution Partner-developed application
modules. In the event the Company fails to pay the required royalty when due,
such agreement may be terminated. The termination of such an agreement with a
Solution Partner could adversely affect the Company's business, financial
condition and results of operations. There can be no assurance that Solution
Partners will be available to develop application modules for the Company in the
future or will complete application modules for the Company on a timely basis,
within acceptable guidelines, or at all. The Company's success depends in part
on its continued ability to license application modules from Solution Partners,
and there can be no assurance that the Company will be able to obtain such
licenses on terms acceptable to the Company or at all. Although the Company is
entitled to obtain a non-exclusive license to the source code for an application
module in the event the Solution Partner fails to maintain or update the
application module, goes out of business or otherwise breaches the terms of the
license agreement, the Company may not be able to maintain or upgrade the
application module adequately or on a timely basis. The failure of the Company
to adequately or on a timely basis maintain or upgrade the application module
could adversely affect the Company's business, financial condition and results
of operations. See "Item 1. Business -- Product Development."

Dependence on IBM's AS/400. Substantially all of the Company's revenues
have been derived from products designed to operate primarily on IBM's AS/400
series of computers. Therefore, the Company's future revenues from initial
license fees and periodic license fees will be primarily derived from and
dependent upon the continued widespread use of the AS/400 and the continued
support of the AS/400 by IBM. While the Company believes that customers will
continue to use, and IBM will continue to support, the AS/400, there can be no
assurance of such continued use or support, and the loss of either would have a
material adverse effect on the Company's operating results. The Company will be
required and intends to continue to devote significant resources to supporting
its installed base of AS/400 customers. Although the Company believes it has an
advantage in assisting its installed AS/400 base in converting to independent
platforms, there is no assurance that these customers will continue to use
MAPICS(R) products if they implement such independent platforms. If there should
be a rapid shift away from the current widespread use of the AS/400 operating
system, the Company would be required to expend substantial capital resources to
develop new software and would be likely to experience delays or losses in
customer orders; as a result, its business would be materially adversely
affected. In addition, to retain its AS/400 customers, the Company may be
required to adapt its MAPICS(R) products to any changes made in the AS/400
operating system in the future. The Company's inability to adapt to future
changes in the AS/400 operating system, or delays in doing so, could

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have a material adverse effect on the Company's business, financial condition
and results of operations. See "Item 1. Business -- Industry Background."

Limited History as a Stand-Alone Public Company; Limited Relevance of
Certain Historical Financial Information. The Company has operated as a
stand-alone company only since the Distribution on July 29, 1997. Except for
Richard C. Cook, the Company's senior executive officers have had limited or no
prior management experience as senior executives in a public company. While the
Company continues to receive certain services from Marcam Solutions following
the Distribution, there can be no assurance that the Company's operating results
will not be adversely affected as a result of the reduction of general service
assistance from Marcam Solutions. In anticipation of being established as a
stand-alone entity, the Company reviewed its business and operations and
implemented certain organizational changes. However, there can be no assurance
that these changes or that the separation from Marcam Solutions will not have an
adverse impact on the Company's business, financial condition and results of
operations.

The financial information included herein may not necessarily reflect the
results of operations, financial position and cash flows of the Company in the
future or what the results of operations, financial position and cash flows
would have been had MAPICS been a separate, stand-alone entity during the
periods presented, because certain allocations were made in preparing such
financial data. This is particularly true with regard to allocations of
corporate overhead. The financial information included herein does not reflect
the many significant changes that have occurred in the funding and operations of
the Company as a result of the Distribution and the Offering. In addition, the
combined financial statements of the Company include certain assets,
liabilities, revenues and expenses which were not historically recorded at the
entity level of, but are associated with, the Company. See "Item 1.
Business -- General" and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Overview."

Management of Potential Growth. The Company's business has grown rapidly
in the last four years, with total revenues increasing to $95.4 million in
fiscal 1997 from $52.8 million in fiscal 1994. This recent growth has placed,
and may continue to place, strain on the Company's management and systems.
Accordingly, the Company's future operating results will depend, in part, on the
ability of its officers and other key employees to continue to implement and
improve its operational and financial control systems and to effectively expand,
train and manage its employee base. The Company's growth is also dependent upon
its distribution affiliates' ability to implement the Company's products in
response to the projected demands of the Company's customer base. There can be
no assurance that the Company or its affiliates will be able to manage any
future expansion successfully, and any inability to do so would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Relationship with Marcam Solutions. The Company has entered into certain
agreements with Marcam Solutions which govern certain aspects of the parties'
relationship on an ongoing basis that may be material to the conduct of the
Company's business, including the provision of certain administrative services
and indemnification obligations related to the Distribution. These agreements
would have a material adverse effect on the Company's business, financial
condition and results of operations if such agreements result in significant
liabilities to the Company. Further, because prior to the Distribution the
business currently conducted by Marcam Solutions was conducted through Marcam
Corporation, MAPICS may be liable for the liabilities of Marcam Solutions if
Marcam Solutions for any reason is unable to satisfy such liabilities. See Note
15 of Notes to Combined Financial Statements contained in "Item 8. Financial
Statements and Supplementary Data."

Dependence on Worldwide Manufacturing Industry. The Company's business
depends substantially upon the capital expenditures of mid-size manufacturers,
which expenditures depend in part upon the demand for such manufacturers'
products. A recession or other adverse events affecting the worldwide
manufacturing industry served by the Company could affect such demand, forcing
manufacturers in the Company's target market to curtail or postpone capital
expenditures on business information systems. Any such change in the amount or
timing of capital expenditures in its target market could have a material
adverse effect on the Company's business, financial condition and results of
operations.

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Uncertain Protection of Proprietary Technology. The Company's success is
heavily dependent upon protection of its proprietary software. The Company
relies on a combination of copyright, trademark and trade secret laws and
license and non-disclosure agreements to establish and protect its proprietary
rights in its products. The Company enters into confidentiality and/or license
agreements with its employees, distributors, customers and potential customers
and limits access to and distribution of its software, documentation and other
proprietary information. There can be no assurance, however, that despite these
precautions, an unauthorized third party will not copy or reverse-engineer
certain portions of the Company's products or obtain and use information that
the Company regards as proprietary. In addition, the laws of some foreign
countries do not protect the Company's proprietary rights to the same extent as
do the laws of the United States. There can be no assurance that the mechanisms
used by the Company to protect its software will be adequate or that the
Company's competitors will not independently develop software products that are
substantially equivalent or superior to the Company's software products.

In the future, the Company may receive notices claiming that it is
infringing upon the proprietary rights of third parties, and there can be no
assurance that the Company will not become the subject of infringement claims or
legal proceedings by third parties with respect to current or future products.
In addition, the Company may initiate claims or litigation against third parties
for infringement of the Company's proprietary rights or to establish the
validity of the Company's proprietary rights. Any such claim could be time
consuming, result in costly litigation, cause product shipment delays or force
the Company to enter into royalty or license agreements rather than dispute the
merits of such claims. Moreover, an adverse outcome in litigation or similar
adversarial proceedings could subject the Company to significant liabilities to
third parties, require the expenditure of significant resources to develop
non-infringing technology, require disputed rights to be licensed from others or
require the Company to cease the marketing or use of certain products, any of
which could have a material adverse effect on the Company's business, financial
condition and results of operations. To the extent the Company desires or is
required to obtain licenses to proprietary rights of others, there can be no
assurance that any such licenses will be made available on terms acceptable to
the Company, if at all. Claims against the Company, with or without merit, as
well as claims initiated by the Company against third parties, can be time
consuming and expensive to defend, prosecute or resolve. See "Item 1.
Business -- Proprietary Rights and Technology."

Risks of Product Liability. The Company's products are generally used to
manage data critical to large organizations. As a result, the sale and support
of products by the Company may entail the risk of product liability claims.
While 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 that such limitations of liability provisions
may not be effective under the laws of all jurisdictions. In addition, the
Company is insured for product liability protection against claims for personal
injury or damage to property, as well as for the customers losses for which the
Company is liable, although such insurance may not be sufficient to cover all
claims in the event the limitation of liability provisions contained in the
Company's license agreements are not effective. Although the Company has not
experienced any significant product liability claims to date, there can be no
assurance that the Company will not be subject to such claims in the future. A
successful product liability claim brought against the Company could have a
material adverse effect on the Company's business, financial condition and
results of operations. Moreover, defending such a suit, regardless of its
merits, could entail substantial expense and require the time and attention of
key management personnel, either of which could have a material adverse effect
on the Company's business, financial condition and results of operations.

Risks Associated with International Operations and Currency
Fluctuations. A material portion of the Company's business comes from outside
the United States, and the Company believes that its continued growth and
profitability will require expansion of its sales in international markets. To
successfully expand international sales, the Company has utilized, and will
continue to utilize, substantial resources to enlarge existing foreign
operations, establish additional foreign operations and hire additional
personnel. International expansion of the Company's operations has required, and
will continue to require, the Company to translate and localize its application
modules. To the extent the Company is unable to expand its international
operations or translate and localize its application modules in a timely manner,
it is likely to adversely impact

25
28

the Company's operating results. In addition, even if international operations
are successfully expanded, there can be no assurance that the Company will be
able to maintain or increase international market presence or demand for its
products.

Risks inherent in the Company's international business activities include
imposition of government controls, restrictions on the export of critical
technology, political and economic instability (including fluctuations in
foreign currency exchange rates), trade restrictions, difficulties in staffing
international offices, difficulty in collecting or inability to collect license
fees and longer accounts receivable payment collection cycles in certain
countries, burdens of complying with a wide variety of foreign laws and
regulations, management of an organization spread over various countries,
unexpected changes in regulatory requirements and overlap of different tax
structures. In addition, effective copyright, trademark and trade secret
protection may not be available in every foreign country in which the Company
sells its products. As a result of the continued expansion of the Company's
international operations, the fluctuations in the value of foreign currencies in
which the Company conducts its business may cause currency transaction gains and
losses. To date, currency transaction gains and losses have not been material.
However, due to the number of foreign currencies involved, the constantly
changing currency exposures and volatility of currency exchange rates, the
Company cannot predict the effect of exchange rate fluctuations upon future
operating results. The Company's business, financial condition and results of
operations could be materially adversely affected by any of these factors.

Anti-Takeover Provisions; Rights Plan; Issuance of Preferred Stock. The
Company's Restated Articles of Organization and Amended and Restated By-laws
contain provisions that may make it more difficult for a third party to acquire,
or discourage acquisition bids for, or discourage changes in management of, the
Company. These provisions could limit the price that certain investors might be
willing to pay in the future for shares of the Company's Common Stock. Also, the
Company has adopted a Stockholder Rights Plan pursuant to which the Company has
distributed to its stockholders rights to purchase shares of junior
participating preferred stock (the "Rights Plan"). Upon certain triggering
events, such rights become exercisable to purchase the Company's Common Stock at
a price substantially discounted from the then applicable market price of the
Company's Common Stock. The Rights Plan could generally discourage a merger or
tender offer involving the securities of the Company that is not approved by the
Company's Board of Directors by increasing the cost of effecting any such
transaction and, accordingly, could have an adverse impact on stockholders who
might want to vote in favor of such merger or participate in such tender offer.
In addition, shares of the Company's Preferred Stock have been issued in the
past and may be issued in the future without further stockholder approval and
upon such terms and conditions, and having such rights, privileges and
preferences, as the Board of Directors may determine. The rights of the holders
of Common Stock are subject to, and may be adversely affected by, the rights of
the holders of Preferred Stock currently outstanding and will be subject to, and
may be adversely affected by, the rights of any holders of Preferred Stock that
may be issued in the future. The issuance of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company. The Company has no
present plans to issue any additional shares of Preferred Stock. The Company's
Board of Directors is divided into three classes, each of which serves for a
staggered three-year term. Such staggered Board may make it more difficult for a
third party to gain control of the Company's Board of Directors. The Amended and
Restated By-laws impose various procedural and other requirements that could
make it more difficult for stockholders to effect certain corporate actions.

Shares Eligible for Future Sale; Registration Rights. Sales of substantial
numbers of shares of Common Stock, or the prospect of such sales, could
adversely affect the market price of the Common Stock and the Company's ability
to raise needed capital in the capital markets at a time and price favorable to
the Company. As of December 1, 1997, the Company had a total of 18,532,638
shares of Common Stock outstanding, a substantial majority of which are freely
tradeable without restriction under the Securities Act of 1933, as amended (the
"Securities Act"). Of these outstanding shares, 20,373 shares are subject to
lock-up agreements with the representatives of the underwriters of the Offering
which expire on January 26, 1998 (the

26
29

"Lock-Up Agreements"). Such agreements provide that the representatives may, in
their sole discretion and at any time without notice, release all or a portion
of the shares subject to these Lock-Up Agreements.

As of December 1, 1997, the Company had options to purchase an aggregate of
3,468,285 shares outstanding under its existing stock option plans and had an
additional 881,056 shares of Common Stock reserved for issuance pursuant to
these plans. Any shares of Common Stock issued upon the exercise of such
outstanding options or any options granted in the future will be, upon issuance,
freely tradeable in the public market, except for shares subject to Lock-Up
Agreements and shares held by affiliates of the Company. Of the outstanding
options, 1,488,016 shares issuable upon exercise of such options are exercisable
on or before January 26, 1998, and of these shares of Common Stock, 147,019
shares are subject to Lock-Up Agreements. The Company also has in effect a
registration statement under the Securities Act covering the sale of 526,309
shares of Common Stock issuable upon the exercise of warrants exercisable at a
price of $6.5041 per share. These shares of Common Stock are not subject to
Lock-Up Agreements.

The holders of the Company's Convertible Preferred Stock currently
convertible into 3,250,00 shares of Common Stock and the holders of warrants
currently exercisable for 1,000,000 shares of Common Stock at an exercise price
of $11.53 per share are entitled to certain demand registration rights with
respect to such shares of Common Stock commencing on or after July 23, 1998 and
are also entitled to piggy-back registration rights. If the Company were
required to include in a Company-initiated registration shares held by such
holders pursuant to the exercise of their piggyback registration rights, such
sale might have an adverse effect on the Company's ability to raise needed
capital in the capital markets at a time and price favorable to the Company. In
addition, 2,250,000 shares of Common Stock underlying the Convertible Preferred
Stock and warrants currently are eligible for sale in the public market subject
to the conditions of Securities and Exchange Commission Rule 144, and the
remaining 2,000,000 shares of Common Stock underlying the Convertible Preferred
Stock and warrants become eligible for sale subject to the conditions of Rule
144 on July 23, 1998. Of the 4,250,000 shares underlying the Convertible
Preferred Stock and warrants, 4,000,000 are subject to Lock-Up Agreements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following is a list of the Combined Financial Statements and
Supplementary Data appearing herein:

PAGE
----

Report of Independent Accountants........................... 28
Combined Balance Sheets as of September 30, 1997 and 1996... 29
Combined Statements of Operations for the years ended
September 30, 1997, 1996 and 1995......................... 30
Combined Statements of Equity for the years ended September
30, 1997, 1996 and 1995................................... 31
Combined Statements of Cash Flows for the years ended
September 30, 1997, 1996 and 1995......................... 32
Notes to Combined Financial Statements...................... 33
Supplemental Financial Information.......................... 55

27
30

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of MAPICS, Inc.:

We have audited the accompanying combined balance sheets of MAPICS, Inc.
and Subsidiaries as of September 30, 1997 and 1996 and the related combined
statements of operations, equity, and cash flows for each of the three years in
the period ended September 30, 1997. These financial statements are the
responsibility of MAPICS, Inc.'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 combined financial position of MAPICS, Inc. and
Subsidiaries as of September 30, 1997 and 1996 and the combined results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1997, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Atlanta, Georgia
October 30, 1997

28
31

MAPICS, INC. AND SUBSIDIARIES

COMBINED BALANCE SHEETS

SEPTEMBER 30,
--------------------------
1997 1996
----------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)

ASSETS
Current assets:
Cash and cash equivalents................................. $ 5,562 $ 378
Accounts receivable, net of allowances of $1,702 in 1997
and $1,240 in 1996 (Note 3)............................ 30,364 20,518
Prepaid expenses and other current assets................. 2,583 487
Deferred income taxes, net (Note 9)....................... 1,341 --
-------- --------
Total current assets.............................. 39,850 21,383
Property and equipment, net (Note 4)...................... 3,562 2,992
Computer software costs, net (Note 5)..................... 16,615 15,705
Other intangible assets, net (Notes 6 and 14)............. 4,809 5,325
Deferred income taxes, net (Note 9)....................... 12,134 --
-------- --------
Total assets...................................... $ 76,970 $ 45,405
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable.......................................... $ 6,955 $ 5,308
Accrued expenses and other current liabilities (Note 7)... 20,174 11,457
Deferred revenues......................................... 25,134 18,563
-------- --------
Total current liabilities......................... 52,263 35,328
Deferred income taxes, net (Note 9)....................... -- 884
-------- --------
Total liabilities................................. 52,263 36,212
--------
Commitments and contingencies (Notes 10 and 15)
Divisional equity (Note 2).................................. 9,193
--------
Stockholders' equity (Note 11):
Preferred stock, $1.00 par value; 1,000 shares authorized
Series D convertible preferred stock, 225 shares issued
and outstanding (liquidation preference of $16,955)... 225
Series E convertible preferred stock, 100 shares issued
and outstanding (liquidation preference of $7,536).... 100
Common stock, $.01 par value; 50,000 authorized; 18,499
shares issued and outstanding.......................... 185
Additional paid-in capital................................ 56,887
Accumulated deficit....................................... (32,690)
--------
Total stockholders' equity........................ 24,707
--------
Total liabilities and equity...................... $ 76,970 $ 45,405
======== ========

The accompanying notes are an integral part of the combined financial
statements.

29
32

MAPICS, INC. AND SUBSIDIARIES

COMBINED STATEMENTS OF OPERATIONS

YEARS ENDED SEPTEMBER 30,
-------------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)

Revenues:
License................................................... $56,368 $45,341 $42,745
Services.................................................. 39,036 32,261 26,553
------- ------- -------
Total revenues.................................... 95,404 77,602 69,298
------- ------- -------
Operating expenses:
Cost of license revenues.................................. 9,816 6,913 5,689
Cost of services revenues................................. 11,838 9,499 7,567
Selling and marketing..................................... 31,905 27,851 24,780
Product development....................................... 10,259 6,398 7,432
General and administrative................................ 8,256 5,965 5,384
------- ------- -------
Total operating expenses.......................... 72,074 56,626 50,852
------- ------- -------
Income from operations...................................... 23,330 20,976 18,446
Other:
Interest income........................................... 45 -- --
Interest expense.......................................... (263) -- --
------- ------- -------
Income before income tax expense (benefit).................. 23,112 20,976 18,446
Income tax expense (benefit) (Note 9)....................... (6,004) 8,076 7,112
------- ------- -------
Net income.................................................. $29,116 $12,900 $11,334
======= ======= =======
Pro forma net income per common share (Note 2).............. $ 1.47 $ 0.70
======= =======
Pro forma weighted average number of common and common
equivalent shares outstanding (Note 2).................... 19,811 18,518
======= =======

The accompanying notes are an integral part of the combined financial
statements.

30
33

MAPICS, INC. AND SUBSIDIARIES

COMBINED STATEMENTS OF EQUITY

SERIES D AND E
CONVERTIBLE RETAINED
PREFERRED STOCK COMMON STOCK ADDITIONAL EARNINGS
-------------------- -------------------- PAID-IN NET (ACCUMULATED TOTAL
SHARES PAR VALUE SHARES PAR VALUE CAPITAL TRANSFERS DEFICIT) EQUITY
-------- --------- -------- --------- ---------- --------- ------------ --------
(IN THOUSANDS)

Balance as of September 30,
1994........................... $ 9,727 $ 7,364 $ 17,091
Net transfers to Marcam
Corporation.................. (16,933) (16,933)
Net income..................... 11,334 11,334
-------- -------- --------
Balance as of September 30,
1995........................... (7,206) 18,698 11,492
Net transfers to Marcam
Corporation.................. (15,199) (15,199)
Net income..................... 12,900 12,900
-------- -------- --------
Balance as of September 30,
1996........................... (22,405) 31,598 9,193
Net transfers to Marcam
Corporation.................. (6,999) (6,999)
Transfer of cash to Marcam
Solutions.................... (39,000) (39,000)
Assumption of Marcam
Corporation's subordinated
notes........................ (25,000) (25,000)
Assumption of Marcam
Corporation's capital
stock........................ 325 $ 325 11,547 $ 115 93,404 (93,404) 440
Net income..................... 8,444 8,444
-------- -------- -------- -------- -------- -------- --------
Balance as of July 29, 1997...... 325 325 11,547 115 -- (53,362) (52,922)
Issuance of common stock, net
of costs..................... 6,900 69 $ 55,892 55,961
Exercise of common stock
options...................... 52 1 451 452
Cumulative tax benefit
associated with exercise of
common stock options......... 544 544
Net income..................... 20,672 20,672
-------- -------- -------- -------- -------- -------- -------- --------
Balance as of September 30,
1997........................... 325 $ 325 18,499 $ 185 $ 56,887 $ -- $(32,690) $ 24,707
======== ======== ======== ======== ======== ======== ======== ========

The accompanying notes are an integral part of the combined financial
statements.

31
34

MAPICS, INC. AND SUBSIDIARIES

COMBINED STATEMENTS OF CASH FLOWS

YEARS ENDED SEPTEMBER 30,
--------------------------------
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)

Cash flows from operating activities:
Net income................................................ $ 29,116 $ 12,900 $ 11,334
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 1,394 954 709
Amortization........................................... 5,708 3,788 3,248
Provision for bad debts................................ 956 399 939
Deferred income taxes.................................. (13,815) 688 737
Changes in operating assets and liabilities:
Accounts receivable.................................. (10,732) (501) (5,302)
Prepaid expenses and other current assets............ (1,818) (118) 239
Accounts payable..................................... 1,647 1,071 383
Accrued expenses and other current liabilities....... 8,717 784 4,988
Deferred revenues.................................... 6,571 3,357 5,466
-------- -------- --------
Net cash provided by operating activities......... 27,744 23,322 22,741
-------- -------- --------
Cash flows from investing activities:
Purchases of property and equipment....................... (1,964) (1,613) (623)
Additions to computer software costs...................... (5,450) (6,358) (5,516)
Purchase of computer software............................. (1,000) -- --
-------- -------- --------
Net cash used for investing activities............ (8,414) (7,971) (6,139)
-------- -------- --------
Cash flows from financing activities:
Net transfers to Marcam Corporation....................... (6,559) (15,199) (16,483)
Cash transferred to Marcam Solutions in connection with
the Distribution....................................... (39,000) -- --
Principal repayment on subordinated notes assumed from
Marcam Corporation..................................... (25,000) -- --
Principal borrowings on notes payable..................... 64,000 -- --
Principal repayments on notes payable..................... (64,000) -- --
Proceeds from issuance of common stock.................... 62,100 -- --
Costs associated with issuance of common stock............ (6,139) -- --
Proceeds from common stock option exercises............... 452 -- --
-------- -------- --------
Net cash used for financing activities............ (14,146) (15,199) (16,483)
-------- -------- --------
Net increase in cash and cash equivalents................... 5,184 152 119
Cash and cash equivalents at beginning of year.............. 378 226 107
-------- -------- --------
Cash and cash equivalents at end of year.................... $ 5,562 $ 378 $ 226
======== ======== ========

The accompanying notes are an integral part of the combined financial
statements.

32
35

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS

(1) BUSINESS AND BASIS OF PRESENTATION

(a) Reporting Entity

MAPICS, Inc. ("MAPICS" or the "Company") is a Massachusetts corporation
formerly known as Marcam Corporation. Incorporated in Massachusetts in 1980, the
Company was organized as a consulting company to help manufacturers improve
manufacturing efficiency through implementation and customization of
International Business Machines Corporation's ("IBM") manufacturing software.
Over time, Marcam Corporation developed a number of software applications,
further described below, to address the needs of continuous flow process
manufacturing companies.

In February 1993, the Company acquired from IBM the exclusive worldwide
marketing rights to the MAPICS(R) product line, which addresses the software
needs of discrete and batch-process manufacturers, for 25 years. Marcam also
acquired from IBM the option to purchase the MAPICS(R) product line and certain
related intellectual property rights. In September 1995, the Company exercised
its option and acquired from IBM all of the outstanding stock of the company
that owned the MAPICS(R) product line. Through its acquisition of the MAPICS(R)
product line and together with its PRISM(R), Protean(TM), and Avantis(TM)
software product lines, the Company offered comprehensive business planning and
control solutions to the production, logistics, asset management and financial
requirements of manufacturing companies worldwide.

In April 1997, the Company's Board of Directors authorized management of
the Company to proceed with the separation of Marcam Corporation into two
publicly traded corporations. The separation was designed with the intent to
enable each company to better focus on its core markets, to better serve its
existing customers and to finance its business.

On July 25, 1997, the Company transferred substantially all of the
business, assets and liabilities relating to its PRISM(R), Protean(TM) and
Avantis(TM) product lines, which address the needs of continuous flow process
manufacturers, and $39.0 million in cash to a newly formed wholly owned
subsidiary, Marcam Solutions, Inc. ("Marcam Solutions"). The Company borrowed
$64.0 million from a bank (the "Debt Financing") to finance the $39.0 million
cash transfer to Marcam Solutions and to repay Marcam Corporation's $25.0
million 9.82% Subordinated Notes due 2001 (the "Subordinated Notes"). The
accompanying combined financial statements of MAPICS reflect the assumption and
repayment of the Subordinated Notes, excluding the prepayment penalty and
accrued interest which were recorded by Marcam Solutions. The indebtedness
incurred in the Debt Financing had an interest rate of 9.0%.

On July 29, 1997, the Company spun off to its stockholders, in a tax-free
distribution (the "Distribution"), all of the shares of common stock of Marcam
Solutions. In connection with the Distribution, Marcam Corporation changed its
name to MAPICS, Inc. and thereafter continues the operations related to the
MAPICS(R) product line.

Although the common stock of Marcam Solutions was distributed to the
Company's stockholders, the Distribution was recorded for accounting purposes as
a disposal by Marcam Solutions of the MAPICS business, due to the relative
significance of the PRISM(R), Protean(TM) and Avantis(TM) product lines.

During August 1997, the Company executed a senior secured term loan and
revolving credit facility to repay a portion of the borrowings from the Debt
Financing and for general corporate purposes (See Note 8).

During August 1997, the Company completed an underwritten public offering
of 6.9 million shares of its common stock (the "Offering") raising net proceeds
of approximately $56.0 million, after deducting offering costs of approximately
$6.1 million. The net proceeds of the Offering along with borrowings of $6.4
million under the term loan credit facility described above and working capital
of $1.6 million were used to repay the $64.0 million of indebtedness from the
Debt Financing.

33
36

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Prior to the Distribution, Marcam Corporation and Marcam Solutions entered
into various agreements providing for the separation of the product lines and
governing various ongoing relationships between the two companies, including a
distribution agreement, a general services agreement and a tax sharing agreement
(See Note 15).

(b) Basis of Presentation

The accompanying combined financial statements of MAPICS have been prepared
using Marcam Corporation's historical basis in the assets and liabilities and
historical results of operations of the business related to the MAPICS(R)
product lines through the Distribution. These combined financial statements
generally reflect the financial position, results of operations, and cash flows
of MAPICS as if it were a separate entity for the periods presented through the
Distribution. Certain costs and expenses presented in these combined financial
statements have been allocated based on management's estimates of the cost of
services provided to MAPICS by Marcam Corporation. Management believes these
allocations are reasonable. However, the financial information included herein
may not necessarily reflect the combined financial position, results of
operations and cash flows of MAPICS in the future, or what they would have been
had MAPICS been a separate entity during the periods presented.

The combined financial statements of MAPICS for reporting periods after the
Distribution consist solely of the separate consolidated financial statements of
MAPICS, Inc. and its wholly owned subsidiaries and do not correspond to the
historical consolidated financial statements of Marcam Corporation. All
significant intercompany accounts and transactions have been eliminated.

The Company operates on a fiscal year ending September 30th. As used
herein, the terms "fiscal 1997," "fiscal 1996," and "fiscal 1995" refer to the
Company's fiscal years ended September 30, 1997, 1996 and 1995, respectively.

(c) Nature of the Business

The Company is a leading provider of enterprise resource planning ("ERP")
software applications for manufacturing enterprises worldwide. The Company's
products provide an integrated and function-rich ERP solution with the breadth
and depth of applications to manage an entire manufacturing enterprise. The
MAPICS(R) XA product line currently consists of over 40 integrated application
modules in the areas of Engineering and Cost Management, Market and Demand
Management, Plant Operations and Logistics Management, Production Resource
Planning, Financial Management and Measurements and Cross Applications
Solutions. The Company also provides services to customers in the form of
product support. The Company's primary geographic markets include North America;
the Europe, Middle East and Africa region ("EMEA"); Latin America and Asia
Pacific.

(2) SIGNIFICANT ACCOUNTING POLICIES

(a) Use of Estimates by Management

The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. The most significant
estimates included in these combined financial statements are the valuation of
accounts receivable, capitalized software, intangible assets, deferred income
taxes and the allocation of corporate expenses from Marcam Corporation. Actual
results may differ from estimates.

34
37

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(b) Cash and Cash Equivalents

The Company considers all highly liquid debt instruments (primarily United
States government agency obligations and commercial paper) purchased with
maturities of three months or less to be cash equivalents.

(c) Financial Instruments and Concentrations of Credit Risk

Substantially all cash and cash equivalents are on deposit with three
financial institutions. For those cash equivalents, the carrying amount is a
reasonable estimate of fair value. As of September 30, 1997 and 1996, cash and
cash equivalents included $1,867,000 and $-0-, respectively, denominated in
foreign currencies.

In addition to cash and cash equivalents, financial instruments which
potentially expose the Company to concentrations of credit risk consist
primarily of accounts receivable. The Company provides credit, in the normal
course of business, to various types and sizes of manufacturers located
throughout the world. As a result, management believes that concentration of
credit risk with respect to trade accounts receivable is not significant.

(d) Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated using
the straight-line method based upon the following estimated useful lives:

Furniture and fixtures 4 years
Computer equipment 4 years
Shorter of lease term or useful life
Leasehold improvements of asset

(e) Computer Software Costs

The Company charges all costs of establishing technological feasibility of
computer software products to product development expense as they are incurred.
From the time of establishing technological feasibility through general release
of the product, computer software development costs are capitalized and
thereafter reported at the lower of unamortized cost or net realizable value.
Computer software costs include purchased software, in-house software
development costs and costs incurred to translate software into various foreign
languages. Amortization of purchased software commences when the software is
placed in service and is computed using the straight-line method over the
estimated useful life of the software, generally five years. Amortization of
computer software development and translation costs commences upon general
release of the product to customers and is computed on a product-by-product
basis using the greater of the amount determined using (a) the ratio that
current period gross revenues bear to the total of current and anticipated
future gross revenues or (b) the straight-line method over the estimated
economic life of the product, generally five years. The Company evaluates the
realizability of capitalized software costs based on expected revenues from the
related product over the remaining product life. Where future revenues are not
expected to cover the related unamortized computer software costs, the Company
either accelerates amortization or expenses the remaining unamortized amounts.

Amortization of computer software costs is included in cost of license
revenues in the combined statements of operations. Software is subject to rapid
technological obsolescence and, as a result, future amortization periods for
computer software costs could be shortened to reflect changes in technology.
Amortization of computer software costs during fiscal 1997, 1996 and 1995 was
approximately $5,192,000, $3,148,000 and $2,448,000, respectively. In fiscal
1997, the Company shortened the estimated useful life of its 1997 and future
computer software translation costs from five years to two years. This change in
estimate decreased net income and pro forma net income per common share for the
year ended September 30, 1997 by approximately $446,000 and $.02 per share,
respectively.

35
38

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(f) Other Intangible Assets

Other intangible assets represent certain intangible assets which resulted
from the acquisition of the MAPICS business in 1993. These intangible assets are
being amortized to cost of license revenues using the straight-line method over
the estimated lives of the intangible assets. The installed customer base and
affiliate network is being amortized over fifteen years; trade names, trademarks
and goodwill are being amortized over ten years. At each balance sheet date, a
determination is made by management to ascertain whether the intangible assets
have been impaired based on several criteria, including but not limited to,
sales trends, undiscounted operating cash flows and other operating factors.

(g) Divisional Equity

Divisional equity includes the accumulated retained earnings of the MAPICS
business, net transfers from MAPICS to Marcam Corporation and current period
income for the periods presented through the Distribution (See Note 14). For
financial reporting purposes, the combined financial statements of MAPICS
reflect the assumption of Marcam Corporation's capital structure as of the
Distribution and reflect the capital structure of MAPICS for all subsequent
reporting periods (See Note 11). For reporting periods after the Distribution,
MAPICS reports stockholders' equity and the activity in the stockholders' equity
accounts in its combined financial statements.

(h) Revenue Recognition

The Company recognizes revenue from software licensing in accordance with
the guidance provided by Statement of Position ("SOP") 91-1, "Software Revenue
Recognition." The Company recognizes revenues from the licensing of its software
upon the signing of license agreements, delivery of the software and
determination that collection of the related receivable is probable. Under the
terms of the Company's license agreements, the customer is responsible for
installation and training. At the time the Company recognizes revenues from the
licensing of software, no significant vendor obligations remain, and the costs
of insignificant obligations, if any, are accrued. Revenues from the licensing
of products through third-party affiliates are included in license revenues, and
related commissions are included in selling and marketing expenses.

The Company recognizes services revenues from its periodic license fees
ratably over the terms of the periodic license agreements. The periodic license
fee, which is typically payable annually in advance, entitles the customer to
continue using the software and to receive certain support services.

(i) Advertising Costs

The Company expenses advertising costs as incurred. Advertising expenses
are immaterial for all periods presented.

(j) Allocated Costs

Expenses have been allocated based on a variety of methods depending on the
nature of the expense. Such allocation methods include proportional MAPICS
product revenues to total Marcam Corporation revenues, headcount equivalents and
management estimates. These amounts approximate management's estimates of Marcam
Corporation's corporate costs to support the MAPICS-related operations. An
allocation of corporate marketing expenses, corporate product development
expenses, and corporate administrative functions (including data services,
employee benefits, legal, insurance, accounting and other corporate overhead)
has been included in the selling and marketing, product development and general
and administrative operating expenses in the combined statements of operations.

36
39

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(k) Income Taxes

The Company accounts for income taxes using the asset and liability method.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates applied to taxable income. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is provided for deferred
tax assets when management believes it is more likely than not that the assets,
or a portion thereof, will not be realized.

Historically, the operations represented by MAPICS have been included in
the consolidated United States federal and certain state and foreign income tax
returns filed by Marcam Corporation. For financial reporting purposes, income
tax expense in the combined financial statements has been calculated on a
separate-return basis for all periods presented through the Distribution. Income
taxes paid by MAPICS to Marcam Corporation have been included in the
determination of divisional equity for the periods presented through the
Distribution (See Note 14). After the Distribution, MAPICS is responsible for
any tax obligations arising from its operations and will file separate income
tax returns.

Pursuant to a tax sharing agreement between the Company and Marcam
Solutions (See Note 15), MAPICS became entitled to utilize certain favorable
income tax attributes (principally net operating loss carryforwards and tax
credits) of Marcam Corporation immediately following the Distribution (See Note
9).

(l) Pro forma Net Income per Common Share

Pro forma net income per common share presented in the combined statements
of operations for the years ended September 30, 1997 and 1996, was calculated
using the capital structure of Marcam Corporation for periods prior to the
Distribution and the capital structure of MAPICS following the Distribution,
including the weighted average number of common and common share equivalents,
giving effect to the Distribution on a pro-forma basis for all periods presented
through the Distribution.

The calculation of pro forma weighted average number of common and common
equivalent shares outstanding includes (i) the weighted average number of common
shares outstanding (12,654,000 and 11,384,000 shares, for the years ended
September 30, 1997 and 1996, respectively), (ii) the weighted average number of
common equivalent shares from the assumed exercise of dilutive stock options,
warrants and convertible preferred stock (3,572,000 and 2,801,000 shares for the
years ended September 30, 1997 and 1996, respectively), and (iii) the number of
shares of common stock from the Offering, the proceeds from which were deemed to
be used to pay the capital contribution of $39,000,000 to Marcam Solutions,
based on the offering price of $9.00 per share on a pro-rata basis through the
Distribution (3,585,000 and 4,333,000 shares for the years ended September 30,
1997 and 1996, respectively). Pro forma fully diluted net income per share does
not differ materially from reported pro forma primary net income per share.

(m) Stock-Based Compensation

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" and related Interpretations in accounting for its
stock option plans and employee stock purchase plan. Accordingly, no
compensation cost has been recognized for its stock option plans and employee
stock purchase plan.

During fiscal 1997, the Company adopted the disclosure-only alternative of
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," which requires the Company to elect either expense
recognition under SFAS No. 123 or its disclosure-only alternative for stock-
based employee compensation. Accordingly, the adoption of SFAS No. 123 had no
effect on the Company's financial position or results of operations, and the
Company has disclosed the pro forma net income and pro

37
40

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

forma net income per share using the fair-value based method for fiscal 1997 and
fiscal 1996, in Note 11 "Capital Stock -- Stock-Based Compensation Plans."

(n) Foreign Currency Translation

The majority of the Company's revenues from foreign operations are
denominated in local currencies. The functional currency for each of the
Company's foreign operations is generally its local currency. Assets and
liabilities of foreign operations are translated into United States dollars at
period-end rates of exchange. Revenues and expenses are translated into United
States dollars at the average rates for the periods. The resultant translation
gains and losses are immaterial for all periods presented. Foreign currency
transaction gains and losses and the effects of exchange rate changes on cash
are immaterial for all periods presented.

(o) Recently Issued Accounting Pronouncements

In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share," which is effective for periods ending after
December 15, 1997. SFAS No. 128 will require the Company to present basic and
diluted earnings per share ("EPS"). Basic EPS, which replaces primary EPS,
excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Diluted EPS is computed similarly to fully
diluted EPS under existing rules. SFAS No. 128 requires restatement of all prior
period earnings per share data presented. The Company will adopt SFAS No. 128 as
of October 1, 1997; however, had the Company adopted SFAS No. 128 during fiscal
1997, basic pro forma EPS would have been $1.79 and $0.82 for the years ended
September 30, 1997 and 1996, respectively, and diluted pro forma EPS would have
been $1.47 and $0.70 for the years ended September 30, 1997 and 1996,
respectively.

In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information
about Capital Structure," which is effective for periods ending after December
15, 1997. SFAS No. 129 establishes standards for disclosing information about an
entity's capital structure. The adoption of SFAS 129 is not expected to have a
material impact on the Company's disclosures.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which is effective for periods beginning after December 15, 1997. SFAS
No. 130 requires businesses to disclose comprehensive income and its components
in their general-purpose financial statements, with reclassification of
comparative (earlier period) financial statements. The adoption of SFAS 130 is
not expected to have a material impact on the Company's disclosures.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which is effective for periods beginning
after December 15, 1997. SFAS No. 131 redefines how operating segments are
determined and requires disclosure of certain financial and descriptive
information about a company's operating segments. The adoption of SFAS 131 is
not expected to have a material impact on the Company's disclosures.

In October 1997, the American Institute of Certified Public Accountants
issued SOP 97-2 "Software Revenue Recognition." SOP 97-2 provides guidance on
applying generally accepted accounting principles in recognizing revenue on
software transactions and supersedes SOP 91-1. SOP 97-2 is effective for
transactions entered into in fiscal years beginning after December 15, 1997. The
adoption of SOP 97-2 is not expected to have a material impact on the Company's
financial position, results of operations or disclosures.

38
41

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(p) Reclassifications

Certain amounts in the prior years' combined financial statements have been
reclassified to conform to the 1997 presentation.

(3) ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company provides reserves for customer receivable balances that are
considered potentially uncollectible. The allowance for doubtful accounts was
$1,702,000, $1,240,000 and $1,626,000 at September 30, 1997, 1996 and 1995,
respectively. The provision charged to bad debt expense, which is included in
general and administrative expenses, was $956,000, $399,000 and $939,000 for the
years ended September 30, 1997, 1996 and 1995, respectively. Write-offs against
the allowance for doubtful accounts were $494,000, $785,000 and $46,000 for the
years ended September 30, 1997, 1996 and 1995, respectively.

(4) PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

SEPTEMBER 30,
-----------------
1997 1996
------- -------
(IN THOUSANDS)

Furniture and fixtures...................................... $ 235 $ 106
Computer equipment.......................................... 6,900 5,285
Leasehold improvements...................................... 49 25
------- -------
7,184 5,416
Accumulated depreciation and amortization................... (3,622) (2,424)
------- -------
$ 3,562 $ 2,992
======= =======

The combined financial statements reflect a disposal of fully depreciated
property and equipment in the amount of $196,000 during the year ended September
30, 1997.

(5) COMPUTER SOFTWARE COSTS

Computer software costs consist of the following:

SEPTEMBER 30,
-----------------
1997 1996
------- -------
(IN THOUSANDS)

Computer software development costs......................... $15,313 $13,185
Accumulated amortization.................................... (6,411) (3,771)
------- -------
8,902 9,414
------- -------
Computer software translation costs......................... 11,396 8,422
Accumulated amortization.................................... (4,683) (2,131)
------- -------
6,713 6,291
------- -------
Purchased software costs.................................... 1,000 --
Accumulated amortization.................................... -- --
------- -------
1,000 --
------- -------
$16,615 $15,705
======= =======

The combined financial statements reflect a reclassification of $348,000
from capitalized computer software to other assets during the year ended
September 30, 1997.

39
42

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(6) OTHER INTANGIBLE ASSETS

Other intangible assets consist of the following:

SEPTEMBER 30,
-----------------
1997 1996
------- -------
(IN THOUSANDS)

Installed customer base and affiliate network............... $ 6,034 $ 6,034
Trade names and trademarks.................................. 1,712 1,712
Goodwill.................................................... 286 286
------- -------
8,032 8,032
Accumulated amortization.................................... (3,223) (2,707)
------- -------
$ 4,809 $ 5,325
======= =======

(7) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

SEPTEMBER 30,
-----------------
1997 1996
------- -------
(IN THOUSANDS)

Accrued commissions and royalties........................... $12,836 $ 5,556
Accrued payroll and related expenses........................ 3,995 1,642
Accrued income taxes payable................................ 2,880 --
Other....................................................... 463 4,259
------- -------
$20,174 $11,457
======= =======

Accrued payroll and related expenses include $536,000 and $282,000 for
compensated absences as of September 30, 1997 and 1996, respectively.

(8) BORROWING ARRANGEMENT

(a) Debt Financing

On July 25, 1997, the Company borrowed $64.0 million from a bank to finance
the $39.0 million cash transfer to Marcam Solutions and to repay Marcam
Corporation's $25.0 million 9.82% Subordinated Notes due 2001. The indebtedness
incurred in the Debt Financing had an interest rate of 9.0% and was payable on
August 4, 1997. For financial reporting purposes, the combined financial
statements of MAPICS reflect the assumption and repayment of the Subordinated
Notes, excluding the prepayment penalty and accrued interest which were recorded
by Marcam Solutions.

(b) Term Loan and Revolving Credit Facility

In August 1997, the Company executed a senior secured term loan and
revolving credit facility (the "Credit Facility") to repay a portion of the
borrowings from the Debt Financing and for general corporate purposes.
Substantially all of the Company's assets are pledged as collateral for
obligations under the Credit Facility. The Credit Facility contains covenants
which, among other things, require that the Company maintain certain financial
ratios and impose certain limitations or prohibitions on the Company with
respect to the occurrence of indebtedness, liens, capital leases; the payment of
dividends on and the redemption or repurchase of capital stock of the Company;
investments and acquisitions; the merger or consolidation of the company with
any person or entity; and the disposition of any of the Company's properties or
assets.

40
43

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In August 1997, the Company borrowed $6.4 million under the term loan
facility to repay a portion of the amounts borrowed in the Debt Financing which
were not repaid with the net proceeds from the Offering. The principal of this
term loan was repaid with interest thereon of $254,000 as of September 30, 1997.
Upon repayment of the borrowings outstanding under the term loan in September
1997, no additional amounts are available for future borrowings under the term
loan facility.

Additional borrowings, subject to certain limitations, are available to the
Company under the $15.0 million revolving credit facility. Availability of
revolving credit loans and the rate of interest thereon vary depending upon the
Company's ability to maintain certain financial ratios. Outstanding loans under
the revolving credit facility mature on June 30, 2000. Although the full amount
of the $15.0 million revolving credit facility was available to the Company as
of September 30, 1997, no amount was outstanding. The Company is required to pay
a quarterly commitment fee for unused portions of the revolving credit facility.
Commitment fees are included in interest expense.

(9) INCOME TAXES

The components of income tax expense (benefit) are as follows:

YEARS ENDED SEPTEMBER 30,
-----------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)

Federal:
Current............................................. $ 5,009 $ 5,547 $ 4,743
Deferred............................................ (13,402) 610 653
------- ------- -------
(8,393) 6,157 5,396
------- ------- -------
State:
Current............................................. 1,062 1,415 1,398
Deferred............................................ (413) 78 84
------- ------- -------
649 1,493 1,482
------- ------- -------
Foreign:
Current............................................. 1,740 426 234
Deferred............................................ -- -- --
------- ------- -------
1,740 426 234
------- ------- -------
$(6,004) $ 8,076 $ 7,112
======= ======= =======

41
44

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The components of income from domestic and foreign operations before income
tax expense (benefit) are as follows:

YEARS ENDED SEPTEMBER 30,
-----------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)

Domestic.............................................. $22,636 $20,766 $18,137
Foreign............................................... 476 210 309
------- ------- -------
$23,112 $20,976 $18,446
======= ======= =======

The effective income tax rates of (25.6%), 38.5% and 38.6% for the years
ended September 30, 1997, 1996 and 1995, respectively, differ from the expected
income tax expense for those periods calculated by applying the federal
statutory rate of 35.0% to income before income tax expense (benefit) for the
years ended September 30, 1997, 1996 and 1995 as follows:

YEARS ENDED SEPTEMBER 30,
-----------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)

Expected income tax expense at domestic federal
statutory rate................................... $ 8,089 $ 7,342 $ 6,456
Benefit associated with the recognition of certain
Marcam Corporation tax attributes................ (14,872) -- --
State income taxes, net of federal income tax
benefit.......................................... 422 998 992
Research and experimentation credits................ -- (413) (423)
Other............................................... 357 149 87
------- ------- -------
$(6,004) $ 8,076 $ 7,112
======= ======= =======

The Company recorded an income tax benefit of $6.0 million during fiscal
1997 compared to income tax expense of $8.1 million and $7.1 million during
fiscal 1996 and 1995, respectively. Historically, the operations represented by
MAPICS have been included in the consolidated United States federal and certain
state and foreign income tax returns filed by Marcam Corporation. For financial
reporting purposes, income tax expense has been calculated on a separate return
basis for all periods presented in the combined financial statements through the
Distribution.

Pursuant to a tax sharing agreement between Marcam Corporation and Marcam
Solutions (See Note 15), MAPICS became entitled to utilize certain favorable
income tax attributes (principally net operating loss carryforwards and tax
credits) of Marcam Corporation immediately following the Distribution. As a
result, the Company recognized an income tax benefit of $14.9 million during the
fourth quarter of fiscal 1997. Prior to the Distribution, Marcam Corporation did
not reflect a benefit corresponding to these favorable income tax attributes in
its consolidated financial statements because Marcam Corporation's management
believed it was more likely than not such benefits would not be realized due to
Marcam Corporation's history of operating losses.

The income tax benefit of $6.0 million for fiscal 1997 reflects income tax
expense of $8.9 million offset by the income tax benefit of $14.9 million.
Excluding the income tax benefit, the effective tax rate in fiscal 1997 was
38.5% which differs from the statutory federal rate of 35.0% principally due to
the impact of state and foreign income taxes. The effective tax rates of 38.4%
and 38.6% in fiscal 1996 and 1995, respectively, differ from the statutory
federal rate of 35.0% principally due to the impact of state income taxes,
offset by research and experimentation credits.

42
45

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Temporary differences between the financial statement carrying amounts and
tax bases of assets and liabilities that give rise to significant portions of
the net deferred income tax assets (liabilities) at September 30, 1997 and 1996
relate to the following:

SEPTEMBER 30,
-----------------
1997 1996
------- -------
(IN THOUSANDS)

Deferred tax assets:
Net operating loss carryforwards.......................... $10,345 $ --
Tax credits............................................... 2,801 --
Intangible assets......................................... 1,341 --
Reserves and accruals..................................... 1,298 131
Allowance for doubtful accounts........................... 655 229
Deferred revenues......................................... 386 411
Property and equipment.................................... -- 136
------- -------
Total deferred tax assets......................... 16,826 907
------- -------
Deferred tax liabilities:
Computer software costs................................... (1,852) (1,034)
Property and equipment.................................... (886) --
Intangible assets......................................... -- (737)
Other..................................................... (613) (20)
------- -------
Total deferred tax liabilities......................... (3,351) (1,791)
------- -------
Net deferred tax assets (liabilities).................. $13,475 $ (884)
======= =======

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some or all of the deferred tax assets
will not be realized. As a result of its evaluation, deferred tax assets have
been recorded at the amount management believes more likely than not will be
realized.

At September 30, 1997, the Company had approximately $28.8 million of net
operating loss carryforwards, and approximately $2.8 million of research and
experimentation and other credit carryforwards. Such carryforwards expire
between 1998 and 2012. The utilization of net operating loss carryforwards will
be limited on an annual basis due to a change in ownership of Marcam Corporation
during fiscal 1996. Management does not believe that this limitation will have a
significant impact on its ability to utilize the net operating loss
carryforwards prior to their expiration.

(10) COMMITMENTS AND CONTINGENCIES

(a) Lease Commitments

The Company leases certain office space and equipment under operating
leases. Certain leases contain renewal options and generally provide that the
Company shall pay for insurance, taxes and maintenance. Total rental expense
under all operating lease agreements was $1,308,000, $1,133,000 and $1,033,000
for the years

43
46

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

ended September 30, 1997, 1996 and 1995, respectively. Future minimum lease
payments under noncancelable operating leases having initial or remaining lease
terms longer than one year are as follows:

YEARS ENDING
SEPTEMBER 30:
- ------------------------------------------------------------ (IN THOUSANDS)

1998...................................................... $1,009
1999...................................................... 348
2000...................................................... 170
2001...................................................... 119
2002...................................................... 68
Years subsequent to 2002.................................. 8
------
Total.................................................. $1,722
======

During October 1997, the Company exercised its option to renew a certain
office lease that would have expired in the second quarter of fiscal 1998. The
renewed office lease expires in the second quarter of fiscal 2001, after which
time, the Company has the option to renew the lease for an additional term of
two years. Future minimum lease payments related to this renewed office lease
are $495,000, $742,000, $742,000, and $247,000 for the years ending September
30, 1998, 1999, 2000, and 2001, respectively. The future minimum lease payments
under this renewed office lease are not included in the amounts presented in the
table above.

(b) Litigation

The Company is subject to legal proceedings and claims that arise in the
normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe the outcome of any of
these legal matters will have a material adverse effect on the financial
position or results of operations of the Company.

The Company will be indemnified for future claims arising from Marcam
Solutions' Prism(R), Protean(TM) and Avantis(TM) product lines and related
activities in accordance with the agreements entered into with Marcam Solutions
as described in Note 15.

(11) CAPITAL STOCK

For financial reporting purposes, the combined financial statements of
MAPICS reflect the assumption of Marcam Corporation's capital structure as of
the Distribution and reflect the capital structure of MAPICS for all subsequent
reporting periods. The holders of MAPICS capital stock following the
Distribution have the same rights, preferences and privileges with respect to
such capital stock as had the holders of Marcam Corporation's capital stock as
of the date of the Distribution.

Following the authorization of an additional 20,000,000 common shares in
fiscal 1997, the Company's authorized capital stock consists of 50,000,000
shares of common stock, par value $.01 per share (the "Common Stock") and
1,000,000 shares of preferred stock, par value $1.00 per share (the "Preferred
Stock").

The Company has never paid any cash dividends on its Common Stock. The
Company currently intends to retain future earnings to fund future development
and growth and the operations of its business, and therefore does not anticipate
paying any cash dividends in the foreseeable future. Covenants in the Credit
Facility prohibit the payment of cash dividends (See Note 8).

(a) Preferred Stock

Of the 1,000,000 authorized shares of Preferred Stock, one share has been
designated as Series A Preferred Stock, one share has been designated as Series
B Preferred Stock, one share has been designated as

44
47

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Series C Preferred Stock, 225,000 shares have been designated as Series D
Convertible Preferred Stock, 100,000 shares have been designated as Series E
Convertible Preferred Stock and 30,000 shares have been designated as Series F
Junior Participating Preferred Stock. As of September 30, 1997, there were
outstanding 225,000 shares of Series D Convertible Preferred Stock and 100,000
shares of Series E Convertible Preferred Stock. For certain information
regarding the Series F Junior Participating Preferred Stock, see "Stockholder
Rights Plan."

Each share of Series D Convertible Preferred Stock and Series E Convertible
Preferred Stock ("the Convertible Preferred Stock") is convertible at any time
at the option of the holder into 10 shares of Common Stock, subject to
adjustment in the event of certain reorganizations or reclassifications of the
Company's capital stock. The holders of Convertible Preferred Stock are
generally entitled to vote on an as converted basis and are entitled to receive
dividends at the same rate as dividends are paid with respect to Common Stock.
If at any time after September 30, 1998, for a period of not less than 30
consecutive trading days, the market value of the Common Stock exceeds $40 per
share, the Company may elect that all then outstanding shares of Series D
Convertible Preferred Stock be mandatorily converted into shares of Common
Stock. Likewise, if at any time after July 23, 1999, for a period of not less
than 30 consecutive trading days, the market value of the Common Stock exceeds
$40 per share, the Company may elect that all then outstanding shares of Series
E Convertible Preferred Stock be mandatorily converted into shares of Common
Stock. In connection with the Distribution, the Common Stock price per share for
Company election of mandatory conversion privileges was adjusted to $30.14.

Upon any event of liquidation or dissolution of the Company, holders of
Convertible Preferred Stock are entitled to receive, before any distribution is
made upon stock ranking junior to the Convertible Preferred Stock, the greater
of (i) $100 per share plus an amount per share equal to any dividends declared
but unpaid thereon or (ii) such amounts per share as would have been payable had
each share been converted to Common Stock. In connection with the Distribution,
the liquidation preference of $100 per share was adjusted to $75.355.

(b) Warrants

In May 1994, in connection with the issuance and sale of the Subordinated
Notes, the Company issued warrants to purchase an aggregate of 383,333 shares of
Common Stock, as adjusted from time to time (the "Sub Debt Warrants"). The Sub
Debt Warrants were originally exercisable at any time during the period
commencing June 30, 1994 and ending April 30, 2001, at an exercise price of
$8.93 per share, as adjusted from time to time. In connection with the
Distribution, the Sub Debt Warrants were adjusted such that the exercise price
was decreased to $6.5041 per share and the number of underlying shares was
increased to 526,309 on a basis intended to preserve the spread value of the Sub
Debt Warrants.

In July 1996, in connection with the issuance and sale of the Series E
Convertible Preferred Stock, the Company issued and sold warrants to purchase an
aggregate of 1,000,000 shares of Common Stock, as adjusted from time to time
("GA Warrants"). The GA Warrants were originally exercisable at any time during
the period commencing July 23, 1996 and ending July 23, 2003, at an exercise
price of $15.36 per share, as adjusted from time to time. In connection with the
Distribution, the GA Warrants were adjusted such that the exercise price was
decreased to $11.53 per share on a basis intended to preserve the spread value
of the GA Warrants.

(c) Stockholder Rights Plan

In December 1996, the Company's Board of Directors adopted a Stockholder
Rights Plan and declared a dividend of (i) one preferred stock purchase right (a
"Right") for each outstanding share of Common Stock, and (ii) for each
outstanding share of Convertible Preferred Stock, a number of Rights equal to
the number of shares of Common Stock issuable upon conversion of such
Convertible Preferred Stock, to stockholders of record at the close of business
on December 16, 1996. Each Right entitles holders to purchase one one-

45
48

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

thousandth of a share (a "Unit") of Series F Junior Participating Preferred
Stock, par value $1.00, at an exercise price of $60 per Unit, subject to
adjustment. The Rights become exercisable for Common Stock only under certain
circumstances and in the event of particular events relating to a change in
control of the Company. The Company under certain circumstances pursuant to the
Stockholder Rights Plan may redeem the Rights. The Rights expire on December 16,
2006, unless earlier redeemed or exchanged. The Rights have certain
anti-takeover effects, in that they would cause substantial dilution to a person
or group that attempts to acquire a significant interest in the Company on terms
not approved by the Board of Directors.

(d) Stock-Based Compensation Plans

At September 30, 1997, the Company maintains three stock option plans and
an employee stock purchase plan, which are described below.

As of the Distribution, options to purchase an aggregate of 2,601,561
shares of Common Stock (the "Stock Options") were held by current and former
employees and directors of the Company under the stock option plans. In
connection with the Distribution, the per share exercise price of each Stock
Options was adjusted to give effect to the Distribution based on the relative
fair market values of the underlying the MAPICS Common Stock and the common
stock of Marcam Solutions after the Distribution so as to preserve the spread
value of the existing Stock Options. For this purpose, the fair market value of
a share of each such common stock was the average of the closing sales prices
per share of each common stock on the NASDAQ national market for each of the
five consecutive trading days beginning on the first day following the date of
the Distribution. Each Stock Option continues to be subject to the same terms
and conditions that applied prior to the Distribution, except that vesting is
based on service with MAPICS, Marcam Solutions or both.

The 1987 Plan. The Marcam Corporation 1987 Stock Plan (the "1987 Plan"),
as amended, provided that the Board of Directors might grant incentive stock
options ("ISO") to employees and non-qualified stock options and stock awards to
officers, employees, and consultants to purchase up to 1,750,000 shares of
Common Stock. In general, the exercise price specified in the agreement relating
to each ISO granted under the 1987 Plan was required to be not less than the
fair market value of the Common Stock at of the date of grant. Subject to
certain provisions, stock options granted under the 1987 Plan were fully
exercisable on the date of grant or became exercisable thereafter in
installments specified by the Board of Directors. The stock options granted
under the 1987 Plan expire on dates specified by the Board of Directors not to
exceed a period of ten years from the date of grant. As of September 30, 1997,
1,018,336 options were outstanding under the 1987 Stock Plan of which 784,383
options were exercisable.

Under the 1987 Plan, 10,000 and 110,000 restricted stock awards were issued
to various individuals during fiscal 1995 and fiscal 1994, respectively. These
restricted stock awards generally become 50% vested in 4 1/2 years and 100%
vested in 5 1/2 years. However, during fiscal 1997, the Board of Directors
lifted the restrictions on 45,000 of the restricted stock awards. During fiscal
1997 and 1996, 10,000 and 45,000, respectively, of the restricted stock awards
were canceled. As of September 30, 1997, 20,000 restricted stock awards were
outstanding under the 1987 Stock Plan.

The 1987 Plan expired on December 31, 1996, after which no options or
awards may be granted under this plan.

The Directors Plan. The Marcam Corporation 1991 Non-Employee Director
Stock Option Plan (the "Directors Plan"), as amended, provides for the issuance
of non-qualified stock options to purchase up to 210,000 shares of Common Stock
only to eligible members of the Board of Directors who are neither employees nor
officers of the Company. In general, the exercise price specified in the
agreement relating to each non-qualified stock option granted under the
Directors Plan is required to be the fair market value of the Common Stock at
the date of grant. Subject to certain provisions, stock options granted under
the Directors Plan become exercisable in various increments over a period of one
to four years, provided that the optionee

46
49

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

has continuously served as a member of the Board of Directors through such
vesting date. The stock options granted under the Directors Plan expire on the
date that is ten years from the date of grant. As of September 30, 1997, 158,000
options were outstanding under the Directors Plan of which 27,800 options were
exercisable.

The 1994 Plan. The Marcam Corporation 1994 Stock Plan (the "1994 Plan"),
as amended, provides that the Board of Directors may grant ISO's to employees
and non-qualified stock options and stock awards to officers, employees and
consultants to purchase up to 3,250,000 shares of Common Stock, including an
additional 1,250,000 shares authorized during fiscal 1997. In general, the
exercise price specified in the agreement relating to each ISO granted under the
1994 Plan was required to be not less than the fair market value of the Common
Stock as of the date of grant. Non-qualified stock options were required to be
granted with an exercise price not less than the minimum legal consideration
required under applicable state law. Subject to certain provisions, stock
options granted under the 1994 Plan were fully exercisable on the date of grant
or became exercisable thereafter in installments specified by the Board of
Directors. The stock options granted under the 1994 Plan expire on dates
specified by the Board of Directors not to exceed a period of ten years from the
date of grant. As of September 30, 1997, 2,260,800 options were outstanding
under the 1994 Plan of which 466,701 options were exercisable.

Under the 1994 Plan, -0-, 6,000 and 30,000 restricted stock awards were
issued to various individuals during fiscal 1997, 1996 and 1995, respectively.
These restricted stock awards generally become 50% vested in 4 1/2 years and
100% vested in 5 1/2 years. However, during fiscal 1997, the Board of Directors
lifted the restrictions on 16,000 of the restricted stock awards. As of
September 30, 1997, 20,000 restricted stock awards were outstanding under the
1994 Plan. The 1994 Plan expires on September 30, 2004.

The 1990 Plan. Under the 1990 Employee Stock Purchase Plan (the "1990
Plan,") the Company is authorized to issue up to 600,000 shares of Common Stock
to its full-time employees, nearly all of whom are eligible to participate.
Under the 1990 Plan, the Company sold 81,246 shares, 86,440 shares and 100,638
shares to employees in fiscal 1997, 1996 and 1995, respectively. At September
30, 1997, 116,157 shares remain available for issuance under the 1990 Plan.

Under the terms of the 1990 Plan, employees, excluding those owning 5% or
more of the Common Stock, can choose every six months to have up to 10% of their
base and bonus earnings withheld to purchase Common Stock, subject to certain
limitations. The purchase price of the Common Stock is 85 percent of the lower
of its beginning-of-period or end-of-period market price. Options granted under
the 1990 Plan are referred as "look-back" options.

Additional Stock Option Grants. During prior fiscal years, the Board of
Directors authorized the issuance of options to purchase 25,260 shares of Common
Stock, which were granted outside of the existing stock option plans. As of
September 30, 1997, all of these options were outstanding and exercisable.

All options granted under the stock option plans, as well as those granted
outside of the stock option plans, were granted during the periods presented at
exercise prices not less than the fair market value of the Common Stock at the
date of grant.

The Company applies APB Opinion No. 25 and related Interpretations in
accounting for its stock option plans and employee stock purchase plan and has
adopted the disclosure-only provisions of SFAS No. 123. Accordingly, no
compensation cost has been recognized in the combined statements of operations
for its stock-based compensation plans. Had compensation cost for the Company's
stock-based compensation plans been determined based on the fair value at the
grant dates for awards under those plans consistent with the method prescribed
in SFAS No. 123, the Company's net income and pro forma net income per common
share would have been reduced by approximately $886,000 or $0.04 per share in
fiscal 1997 and $186,000 or $0.01 per share in fiscal 1996. The pro forma
effects of SFAS No. 123 on net income for fiscal 1997 and 1996 are not
representative of the effects on reported net income for future years.

47
50

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The fair value of each option granted under the stock option plans is
estimated as $5.56 and $7.87 in fiscal 1997 and 1996, respectively, on the date
of grant using the Black-Scholes option-pricing model with the following
weighted average assumptions: dividend yield of 0 percent; expected volatility
of 55 percent; risk-free interest rates of 5.99% and 5.77% in fiscal 1997 and
1996, respectively and an expected life of five years.

The fair value of each look-back option granted under the employee stock
purchase plan is estimated as $4.37 and $3.70 in fiscal 1997 and 1996,
respectively, with the following weighted average assumptions: dividend yield of
0 percent ; expected volatility of 55 percent; risk-free interest rates of 5.54%
and 5.36% in fiscal 1997 and 1996, respectively and an expected life of six
months.

For the purpose of calculating pro forma expense under SFAS No. 123 related
to the Company's stock option plans and employee stock purchase plan for fiscal
1997 and 1996, only those options granted under the plans to directors,
officers, employees and consultants of MAPICS were considered.

The table presented below reflects the activity and historical prices of
the Stock Options for the periods from September 30, 1994 through July 29, 1997,
the date of the Distribution. As of July 29, 1997, in connection with the
Distribution, the exercise prices of Stock Options were adjusted as previously
described in this Note. The table reflects the activity and adjusted prices of
the Stock Options for the period from July 30, 1997 through September 30, 1997:

NUMBER OF SHARES WEIGHTED AVERAGE
UNDER OPTIONS EXERCISE PRICE($)
---------------- -----------------

Balance as of September 30, 1994....................... 1,436,081 16.23
Granted.............................................. 577,289 10.47
Exercised............................................ (11,395) 9.48
Canceled/expired..................................... (64,040) 15.44
---------
Balance as of September 30, 1995....................... 1,937,935 14.58
Granted.............................................. 739,704 14.32
Exercised............................................ (112,789) 5.17
Canceled/expired..................................... (455,371) 13.23
---------
Balance as of September 30, 1996....................... 2,109,479 15.28
Granted.............................................. 783,870 12.50
Exercised............................................ (43,803) 8.80
Canceled/expired..................................... (247,985) 13.37
---------
Balance as of July 29, 1997............................ 2,601,561 14.74 (A)
Granted.............................................. 984,424 10.07
Exercised............................................ (52,034) 8.59
Canceled/expired..................................... (71,555) 9.67
---------
Balance as of September 30, 1997....................... 3,462,396 10.83
=========

- ---------------

(A) The weighted average exercise price of the Stock Options outstanding as of
July 29, 1997 was $11.04, as adjusted in connection with the Distribution.

48
51

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes information about the Stock Options
outstanding at September 30, 1997:

OPTIONS OUTSTANDING
---------------------------------- OPTIONS EXERCISABLE
WEIGHTED --------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF CONTRACTUAL EXERCISE EXERCISE
EXERCISE PRICES NUMBER LIFE PRICE NUMBER PRICE
- ------------------ --------- ----------- -------- --------- --------

$ 0.75 - 1.13 2,500 1.8 $ 0.90 2,500 $ 0.90
6.57 - 8.96 777,155 7.5 8.13 328,504 7.82
9.01 - 11.45 1,984,832 8.8 10.20 338,431 10.23
12.20 - 14.83 226,213 5.4 13.61 175,013 13.72
15.02 - 17.46 468,796 4.9 16.74 456,796 16.73
19.80 - 21.96 2,900 3.8 21.29 2,900 21.29
--------- ---------
3,462,396 1,304,144
========= =========

(12) EMPLOYEE BENEFIT PLANS

(a) Retirement Plan

The Company has a defined contribution 401(k) retirement plan covering
substantially all of its employees in the United States. Under this plan,
eligible employees may contribute a portion of their salary until retirement and
the Company matches a portion of the employees' contributions. Total expenses
incurred by the Company under this plan were $185,000, $110,000 and $77,000 for
the years ended September 30, 1997, 1996 and 1995, respectively.

(b) Group Medical Plan

The Company has a group medical self-insurance plan covering certain of its
employees. The Company employs a third-party administrator to manage this plan.
Under terms of this plan, both the Company and eligible employees are required
to make contributions to this plan. The administrator reviews all claims filed
and authorizes the payment of benefits. The Company has stop-loss insurance
coverage on all individual claims exceeding $125,000. The Company expenses
medical claims as they are incurred and recognizes a liability for claims
incurred but not reported. As of September 30, 1997 and 1996, the Company has
accrued $500,000 and $383,000, respectively, as a liability for costs incurred
under this plan.

49
52

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(13) GEOGRAPHIC INFORMATION

The Company markets its products primarily to manufacturing enterprises
worldwide. Revenues are grouped into three main geographic segments: United
States, EMEA and All Other. Financial data by geographic segment are as follows:

UNITED
STATES EMEA ALL OTHER ELIMINATION TOTAL
------- ------- --------- ----------- -------
(IN THOUSANDS)

YEAR ENDED SEPTEMBER 30, 1997:
Net sales to unaffiliated customers..... $73,109 $18,632 $3,663 $ -- $95,404
Transfers between geographic areas...... 1,540 -- -- (1,540) --
------- ------- ------ ------- -------
Total revenues.......................... 74,649 18,632 3,663 (1,540) 95,404
------- ------- ------ ------- -------
Net income.............................. 27,113 1,978 444 (419) 29,116
Identifiable assets..................... 66,721 7,933 2,316 -- 76,970

YEAR ENDED SEPTEMBER 30, 1996:
Net sales to unaffiliated customers..... $56,546 $14,311 $6,745 $ -- $77,602
Transfers between geographic areas...... 1,816 -- -- (1,816) --
------- ------- ------ ------- -------
Total revenues.......................... 58,362 14,311 6,745 (1,816) 77,602
------- ------- ------ ------- -------
Net income.............................. 10,058 2,197 938 (293) 12,900
Identifiable assets..................... 37,876 4,789 2,740 -- 45,405

YEAR ENDED SEPTEMBER 30, 1995:
Net sales to unaffiliated customers..... $50,934 $10,419 $7,945 $ -- $69,298
Transfers between geographic areas...... 1,538 -- -- (1,538) --
------- ------- ------ ------- -------
Total revenues.......................... 52,472 10,419 7,945 (1,538) 69,298
------- ------- ------ ------- -------
Net income.............................. 9,669 458 2,623 (1,416) 11,334
Identifiable assets..................... 34,765 4,841 1,620 -- 41,226

Transfers between geographic areas are eliminated in the combined financial
statements.

(14) RELATIONSHIP WITH MARCAM CORPORATION

Allocations from Marcam Corporation of corporate marketing expenses,
corporate product development expenses, and corporate administrative functions
(including data services, employee benefits, legal, insurance, accounting and
other corporate overhead) have been included in the selling and marketing,
product development, and general and administrative expense categories in the
combined statements of operations of MAPICS for all periods presented through
the Distribution. After the Distribution, the statements of operations consist
solely of those operating expenses directly incurred by MAPICS.

The amounts allocated to MAPICS in each of the periods presented are as
follows:

PERIOD FROM YEARS ENDED
OCTOBER 1, 1996 SEPTEMBER 30,
THROUGH JULY 29, ---------------
1997 1996 1995
---------------- ------ ------
(IN THOUSANDS)

Selling and marketing.................................. $ 219 $ 213 $ 223
Product development.................................... -- 239 221
General and administrative............................. 2,030 2,412 2,030
------- ------ ------
$2,249 $2,864 $2,474
======= ====== ======

50
53

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Net transfers to Marcam Corporation, included in divisional equity for
periods presented through the Distribution, include net cash transfers to Marcam
Corporation, amounts due to Marcam Corporation for services and other charges
and income taxes paid by MAPICS to Marcam Corporation. No interest has been
charged to MAPICS related to these transactions or to any debt held by Marcam
Corporation. The activity in the net transfers to Marcam Corporation account,
included in divisional equity, is summarized below:

PERIOD FROM YEARS ENDED
OCTOBER 1, 1996 SEPTEMBER 30,
THROUGH JULY 29, -------------------
1997 1996 1995
---------------- -------- --------
(IN THOUSANDS)

Marcam services and other corporate charges........ $ 2,249 $ 2,864 $ 2,474
Domestic and foreign income taxes.................. 7,075 8,076 7,112
Non-cash purchase accounting adjustments........... -- -- (450)
Cash transfers, net................................ (15,883) (26,139) (26,069)
-------- -------- --------
Net transfers to Marcam Corporation................ $ (6,559) $(15,199) $(16,933)
======== ======== ========

In February 1993, the Company acquired from IBM the exclusive worldwide
marketing rights to the MAPICS(R) product line for 25 years. Marcam Corporation
also acquired from IBM the option to purchase the MAPICS(R) product line and
certain related intellectual property rights. As part of the acquisition of the
marketing rights, the Company expensed $5,568,000 of in-process research and
development costs and recorded $10,699,000 of intangible assets acquired. These
intangible assets are reflected in the combined financial statements of the
Company (See Note 6.).

In September 1995, the Company acquired all of the outstanding stock of the
company that owned the MAPICS(R) product line. As part of the acquisition,
Marcam Corporation recorded certain non-cash balance sheet adjustments, which
have been reflected in the combined financial statements of MAPICS. The
adjustments consist of the following:

(IN THOUSANDS)

Reduction of net computer software costs.................... $ 1,050
Reduction of payables....................................... (1,500)
-------
Net adjustment.............................................. $ (450)
=======

(15) RELATIONSHIP AND AGREEMENTS WITH MARCAM SOLUTIONS

(a) Relationship with Marcam Solutions

The Company has entered into three agreements with Marcam Solutions which
govern certain aspects of the parties' relationship on an ongoing basis that may
be material to the conduct of the Company's business, including provision of
certain administrative services and indemnification obligations related to the
Distribution. These agreements would have a material adverse effect on the
Company's business, financial conditions and results of operations if such
agreements result in significant liabilities to the Company. Further, because
prior to the Distribution the business to be conducted by Marcam Solutions was
conducted through Marcam Corporation, MAPICS may be liable for the liabilities
of Marcam Solutions if Marcam Solutions for any reason is unable to satisfy such
liabilities.

(b) Distribution Agreement

Prior to the completion of the Distribution, the Company and Marcam
Solutions entered into a Distribution Agreement. Pursuant to the Distribution
Agreement, subject to limited exceptions, the two companies are required to
indemnify each other and each other's directors, officers, employees, agents and
representatives for liabilities under federal or state securities laws that are
a result of the offering and the

51
54

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Distribution. The Distribution Agreement also provides that each party thereto
will indemnify the other party thereto and its directors, officers, employees,
agents and representatives for liabilities that may be incurred by the
indemnified party relating to, resulting from or arising out of (i) the
business, operations or assets conducted or owned or formerly conducted or owned
by the indemnifying party and its subsidiaries, or (ii) the failure by the
indemnifying party to comply with any other agreements executed in connection
with the Distribution or the Offering. The ancillary agreements executed in
connection with the Distribution included a General Services Agreement and a Tax
Sharing Agreement, discussed below.

(c) General Services Agreement

The General Services Agreement provides that Marcam Solutions and the
Company will provide to each other from time to time, upon request, certain
routine and ordinary corporate services, including financial, accounting,
administrative, tax, and legal services, if required. For these services, the
party providing such services will be reimbursed for its costs, including the
pro rata costs of its employees performing such services and allocable overhead,
on a per diem basis. Management believes that the expected charges in accordance
with this agreement are fair and reasonable.

Following the Distribution, as the Company and Marcam Solutions effected
the separation of the financial, accounting, administrative, tax, and legal
functions, each company reimbursed the other for certain costs incurred and paid
to third parties on behalf of the other company. As of September 30, 1997, the
Company owed Marcam Solutions a net amount of $104,800 for settlements related
to these transactions and services provided under the General Services
Agreement.

(d) Tax Sharing Agreement

Prior to completion of the Distribution, the Company and Marcam Solutions
entered into a Tax Sharing Agreement that defines the parties' rights and
obligations with respect to certain tax liabilities and refunds of taxes
relating to Marcam Corporation's business for periods ending on or prior to the
date of the Distribution. In general, pursuant to the Tax Sharing Agreement,
Marcam Solutions shall be responsible for certain state, local and foreign taxes
for periods ending on or before the Distribution (and shall be entitled to
refunds with respect to such taxes), and the Company shall be responsible for
all other taxes for such periods (and shall be entitled to refunds with respect
to such taxes). In addition, under the Tax Sharing Agreement, the Company shall
be liable for any taxes arising out of the Distribution. As of September 30,
1997, the Company estimates that it is responsible for approximately $1.1
million in taxes arising from the Distribution. This amount was included in
income tax expense (benefit) during the fourth quarter of fiscal 1997. The Tax
Sharing Agreement further provides for cooperation with respect to certain tax
matters, the exchange of information and the retention of records.

(16) RELATED PARTY TRANSACTIONS

The Company has a number of marketing and product development relationships
with IBM in the normal course of business. IBM has purchased licenses for
MAPICS(R) products for internal use, as well as for marketing purposes. The
Company has purchased certain services, equipment and software licenses from
IBM.

In fiscal 1996 and fiscal 1995, IBM was considered a related party of the
Company due to its significant ownership interest in the Company. However, as of
September 1996, IBM had substantially reduced its ownership interest in the
Company and, therefore, is not considered a related party in fiscal 1997.
Accordingly, no disclosures related to transactions with IBM have been made for
fiscal 1997.

Under various agreements with the Company and its representatives, IBM
markets MAPICS(R) products in cooperation with the Company and its subsidiaries
or representatives in Japan and certain Eastern European

52
55

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

countries. In each case, the Company or its representative pays IBM a fee for
marketing MAPICS(R) products when a sale is made with IBM's assistance. The fee
is calculated as a percentage of the license fees received by the Company and
varies based on the agreement's specific territories. The Company paid IBM
aggregate fees of $-0- and $198,000 during fiscal 1996 and 1995, respectively.

The Company recorded royalties from IBM relating to sales of MAPICS
products of approximately $604,000 and $2,614,000 during fiscal 1996 and 1995,
respectively.

The Company also licenses products and provides services to IBM. During
fiscal 1996 and 1995, the Company recognized an aggregate of approximately
$409,000 and $185,000, respectively, from licensing products and providing
services to IBM. IBM also sells products and provides services, including
distribution and translation services, to the Company in the ordinary course of
business.

Total revenues derived from transactions with IBM were $1,013,000 and
$2,799,000 during fiscal 1996 and 1995, respectively.

(17) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Net transfers to Marcam Corporation includes income taxes paid by MAPICS to
Marcam Corporation for the periods presented through the Distribution (See Note
14). No interest was charged to MAPICS related to the net cash transfers to
Marcam Corporation or to any debt held by Marcam Corporation for the periods
presented through the Distribution. Domestic and foreign income taxes included
in net transfers to Marcam Corporation for the period from October 1, 1997
through the Distribution and for fiscal 1996 and 1995 were approximately
$7,075,000, $8,076,000 and $7,112,000, respectively.

Cash paid by MAPICS for interest was $254,000, $-0- and $-0- for fiscal
1997, 1996 and 1995, respectively.

Non-cash investing and financing activities for the years ended September
30, 1997, 1996 and 1995 are summarized below:

YEARS ENDED SEPTEMBER 30,
---------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)

Assumption of Marcam Corporation's capital stock.......... $ 440 $ -- $ --
======= ======= =======
Assumption of Marcam Corporation's subordinated notes..... $25,000 $ -- $ --
======= ======= =======

For financial reporting purposes, the combined financial statements of
MAPICS reflect the assumption of Marcam Corporation's capital structure as of
the Distribution and reflect the capital structure of MAPICS for all subsequent
reporting periods. As of the Distribution, the Company had outstanding Common
Stock with a par value of $115,000 and outstanding Preferred Stock with a par
value of $325,000 (capital stock of $440,000 in the aggregate).

For financial reporting purposes, the combined financial statements of
MAPICS reflect the assumption of Marcam Corporation's Subordinated Notes, which
were repaid by MAPICS in connection with the Distribution.

YEARS ENDED SEPTEMBER 30,
---------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)

Cumulative tax benefit associated with the exercise of
common stock options.................................... $ 544 $ -- $ --
======= ======= =======

53
56

MAPICS, INC. AND SUBSIDIARIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The Company is entitled to an income tax deduction related to Common Stock
purchased through the exercise of non-qualified stock options and through the
exercise of incentive stock options which are sold within one year of exercise.
The income tax benefit of the deduction is not reflected in the combined
financial statements of operations but is reflected as an increase in additional
paid-in capital.

The cumulative tax benefit associated with the exercise of common stock
options recognized by MAPICS in fiscal 1997 reflects the aggregate historical
tax benefit not recognized by Marcam Corporation during the periods from October
1, 1993 through the Distribution. In future periods, the tax benefit associated
with the exercise of common stock options will relate only to MAPICS common
stock options exercised in the then current reporting period.

54
57

SUPPLEMENTAL FINANCIAL INFORMATION

The following quarterly information is unaudited and, in the opinion of
management, includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the operating results for each quarter:

(A) FIRST (A) SECOND (A) THIRD (A) FOURTH FISCAL
QUARTER QUARTER QUARTER QUARTER YEAR
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)

FISCAL 1997:
Total revenues.............. $23,379 $20,786 $21,997 $29,242 $95,404
Income before income tax
expense (benefit)........ 5,793 4,779 4,861 7,679 23,112
Net income.................. 3,563 2,938 2,990 (B)19,625 29,116
FISCAL 1996:
Total revenues.............. $18,623 $17,221 $18,128 $23,630 $77,602
Income before income tax
expense (benefit)........ 5,037 4,846 4,594 6,499 20,976
Net income.................. 3,098 2,980 2,826 3,996 12,900

- ---------------

(A) The Company has experienced fluctuations in its quarterly operating results
and anticipates that such fluctuations will continue and may intensify.
Furthermore, the Company's quarterly operating results are subject to
certain seasonal fluctuations. The Company believes that its first quarter
(ending December 31) revenues are positively affected by calendar year-end
capital expenditures by certain customers and calendar year-end incentives
provided by IBM to resellers of its hardware, which may include many of the
Company's distribution affiliates. In the Company's fourth quarter (ending
September 30), revenues are positively affected by the incentives provided
pursuant to the Company's sales compensation plans. These seasonal factors
are likely to continue to affect quarter-to-quarter comparisons.

(B) Pursuant to a tax sharing agreement between the Company and Marcam
Solutions (See Note 15), MAPICS became entitled to utilize certain
favorable income tax attributes (principally net operating loss
carryforwards and tax credits) of Marcam Corporation immediately following
the Distribution. As a result, MAPICS recognized an income tax benefit of
$14.9 million during the fourth quarter of fiscal 1997. Prior to the
Distribution, Marcam Corporation did not reflect a benefit corresponding to
these favorable income tax attributes in its consolidated financial
statements because Marcam Corporation's management believed it was more
likely than not such benefits would not be realized due to Marcam
Corporation's history of operating losses. Net income for the fourth
quarter of fiscal 1997 reflects this income tax benefit of $14.9 million.

55
58

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information relating to the directors of the Company will be set forth
under the captions "Proposal 2 -- Election of Directors -- Nominees" and
"Proposal 2 -- Election of Directors -- Information Regarding Nominees and
Continuing Directors" in the Company's Proxy Statement for its 1998 Annual
Meeting of Stockholders to be held on February 3, 1998 (the "1998 Proxy
Statement"). Such information is incorporated herein by reference. Pursuant to
Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) to
Form 10-K, information relating to the executive officers of the Company is set
forth in Part I, Item 4(A) of this report under the caption "Executive Officers
of the Registrant." Information regarding compliance with Section 16(a) of the
Securities Exchange Act of 1934, as amended, by directors and executive officers
of the Company and beneficial owners of more than 10% of the Company's Common
Stock will be set forth under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" in the 1998 Proxy Statement. Such information is
incorporated herein by reference. The 1998 Proxy Statement will be filed with
the Securities and Exchange Commission within 120 days after September 30, 1997.

ITEM 11. EXECUTIVE COMPENSATION.

Information relating to executive compensation will be set forth under the
captions "Proposal 2 -- Election of Directors -- Director Compensation" and
"-- Executive Compensation" in the 1998 Proxy Statement. Such information is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information regarding ownership of the Company's Common Stock by certain
persons will be set forth under the caption "Stock Ownership" in the 1998 Proxy
Statement. Such information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information regarding certain relationships and transactions between the
Company and certain non-employee directors of the Company will be set forth
under the captions "Proposal 2 -- Election of Directors -- Director
Compensation" and "-- Compensation Committee Interlocks and Insider
Participation" in the 1998 Proxy Statement. Such information is incorporated
herein by reference.

56
59

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(A) 1. COMBINED FINANCIAL STATEMENTS

The following combined financial statements of MAPICS, Inc. and
Subsidiaries are set forth in Item 8 hereof:

PAGE
----

Report of Independent Accountants................. 28

Combined Balance Sheets as of September 30, 1997
and 1996........................................... 29

Combined Statements of Operations for the years
ended September 30, 1997, 1996, and 1995........... 30

Combined Statements of Equity for the years ended
September 30, 1997, 1996 and 1995.................. 31

Combined Statements of Cash Flows for the years
ended September 30, 1997, 1996, and 1995........... 32

Notes to Combined Financial Statements............ 33

Supplemental Financial Information................ 55

2. COMBINED FINANCIAL STATEMENT SCHEDULES

All schedules to the combined financial statements are omitted as they are
not required under the related instructions or are inapplicable, or because the
required information is included in the combined financial statements or related
notes thereto.

3. EXHIBITS

The following exhibits either (i) are filed herewith or (ii) have
previously been filed with the Securities and Exchange Commission and are
incorporated herein by reference to such prior filings. Previously filed
registration statements or reports which are incorporated herein by reference
are identified in the column captioned "SEC Document Reference." The Company
will furnish any exhibit upon request to Martin D. Avallone, General Counsel of
the Company, 5775-D Glenridge Drive, Atlanta, Georgia 30328. There is a charge
of $.50 per page to cover expenses of copying and mailing.

EXHIBIT
NO. DESCRIPTION SEC DOCUMENT REFERENCE
- ------- ----------- ----------------------

3.1 Restated Articles of Organization 333-33865
as amended of the Registrant Exhibit 4.1
3.2 By-laws, as amended and restated, 333-33865
of the Registrant Exhibit 4.2
3.3 Certificate of Vote of Directors 0-18674
Establishing a Series or a Class Exhibit 3.1 to Current Report on
of Stock of the Registrant Form 8-K Dated June 18, 1993
3.4 Certificate of Vote of Directors 0-18674
Establishing a Series or a Class Exhibit 3.4 to Annual Report on
of Stock of the Registrant Form 10-K for the fiscal year
ended September 30, 1993
4.1 Specimen certificate representing 33-35666
the Common Stock Exhibit 4.4

57
60

EXHIBIT
NO. DESCRIPTION SEC DOCUMENT REFERENCE
- ------- ----------- ----------------------

4.2 Certificate of Vote of Directors 0-18674
Establishing a Series of a Class Exhibit 4 to Current Report on
of Stock for the Series D Form 8-K Dated September 29, 1995
Convertible Preferred Stock of
Marcam Corporation
4.3 Certificate of Vote of Directors 0-18674
Establishing a Series of a Class Exhibit 4 to Current Report on
of Stock for the Series E Form 8-K Dated July 23, 1996
Convertible Preferred Stock of
Marcam Corporation
4.4 Rights Agreement, dated as of 0-18674
December 3, 1996, between Marcam Exhibit 4 to Current Report on
Corporation and The First National Form 8-K Dated December 3, 1996
Bank of Boston, which includes as
Exhibit A the form of Certificate
of Vote of Directors Establishing
a Series of a Class of Stock, as
Exhibit B the Form of Rights
Certificate, and as Exhibit C the
Summary of Rights to Purchase
Preferred Stock
10.1* 1990 Employee Stock Purchase Plan, 0-18674
as amended and restated Exhibit 10.21 to Annual Report on,
Form 10-K for the fiscal year
ended September 30, 1991
10.2* Deferred Compensation Plan for 0-18674
Non-Employee Directors, as amended Exhibit 10.22 to Annual Report on
and restated Form 10-K for the fiscal year
ended September 30, 1991
10.3 Stock Purchase Agreement dated as 0-18674
of September 29, 1995 by and among Exhibit 2.1 to Current Report on
Marcam Corporation, International Form 8-K Dated September 29, 1995
Business Machines Corporation,
Edison Venture Fund, L.P., Richard
C. Cook, Paul A. Margolis, John
Campbell and Mapics, Inc.
10.4 Stock Exchange Agreement dated as 0-18674
of April 9, 1991 by and among the Exhibits 2.2, 4.1 to Current
Registrant Marcam Canada Holding Report on Form 8-K Dated April 9,
Corporation and William A. Shaw, 1991
Linda Pia Shaw, Randy Reeve,
Denise Reeve, John P. Williamson,
and Sheila Kathleen Williamson
10.5 Form of Stock Purchase Agreements 33-35666
entered into by the Registrant Exhibit 10.5
with Messrs. Margolis, Stoner,
Ebling and certain other persons
10.6 Lease by and between the 33-35666
Registrant and Dominic J. Exhibit 10.7
Saraceno, as amended, dated June
13, 1988

58
61

EXHIBIT
NO. DESCRIPTION SEC DOCUMENT REFERENCE
- ------- ----------- ----------------------

10.7 Form of Indemnity Agreements 33-35666
entered into by the Registrant Exhibit 10.9
with Messrs. Margolis,
10.8 Letter Agreement dated as of 33-35666
January 31, 1989 by and between Exhibit 10.15
the Registrant and Paul A.
Margolis
10.9 Second and Third Amendments, each 0-18674
dated as of August 29, 1990, to Exhibit 10.17 to Annual Report on
Lease by and between Registrant Form 10-K for the fiscal year
and Dominic J. Saraceno, as ended September 30, 1990
amended, dated June 13, 1988
10.10 Fourth Amendment, dated June 30, 0-18674
1992 to Lease by and between Exhibit 10.19 to Annual Report on
Registrant and Dominic J. Form 10-K for the fiscal year
Saraceno, as amended, dated June ended September 30, 1992
13, 1988
10.11 Fifth Amendment, dated May 10, 0-18674
1993 to Lease by and between Exhibit 10.27 to Annual Report on
Registrant and Dominic J. Form 10-K for the fiscal year
Saraceno, as amended, dated June ended September 30, 1993 as
13, 1988 amended.
10.12 Complementary Marketing Agreement 0-18674
dated as of December 26, 1990 by Exhibit 10.27 to Annual Report on
and between the Registrant and Form 10-K for the fiscal year
International Business Machines ended September 30, 1993 as
Corporation amended
10.13 Note and Warrant Purchase 0-18674
Agreement entered into by Marcam Exhibit 10.1 to Quarterly Report
Corporation and each of The on Form 10-Q dated May 12, 1994 as
Northwestern Mutual Life Insurance amended by Form 10-Q/A dated
Company, John Hancock Mutual Life October 6, 1994
Insurance Company and John Hancock
Life Insurance Company of America
dated as of May 12, 1994
10.14 Amendment Agreement dated as of 0-18674
August 19, 1994 by and among the Exhibit 10.1 to Quarterly Report
Registrant, The Northwestern on Form 10-Q dated August 22, 1994
Mutual Life Insurance Company,
John Hancock Mutual Life Insurance
Company and John Hancock Life
Insurance Company of America
10.15 Amendment Agreement dated as of 0-18674
July 29, 1995 by and among the Exhibit 10.36 to Annual Report of
Registrant, The Northwestern Form 10-K for the fiscal year
Mutual Life Insurance Company, ended September 30, 1994 as
John Hancock Mutual Life Insurance amended
Company and John Hancock Life
Insurance Company of America

59
62

EXHIBIT
NO. DESCRIPTION SEC DOCUMENT REFERENCE
- ------- ----------- ----------------------

10.16 Loan and Security Agreement dated 0-18674
as of August 29, 1995 by and Exhibit 10.37 to Annual Report of
between Greyrock Business Credit, Form 10-K for the fiscal year
a division of Greyrock Capital ended September 30, 1994 as
Group, Inc., and the Registrant. amended
10.17 Amendment Agreement dated as of 33-90670
September 29, 1995 by and among Exhibit 10.4
the Registrant, The Northwestern
Mutual Life Insurance Company,
John Hancock Mutual Life Insurance
Company and John Hancock Life
Insurance Company of America and
Barnett & CO.
10.18 Amendment Agreement dated as of 0-18674
November 14, 1995 by and among the Exhibit 10.31 to Annual Report on
Registrant, The Northwestern Form 10-K for the fiscal year
Mutual Life Insurance Company, ended September 30, 1995 as
John Hancock Mutual Life Insurance amended
Company and John Hancock Insurance
Company of America and Barnett &
Co
10.19** Marcam/NEC Distribution Agreement 0-18674
between Marcam World Trade Exhibit 10.33 to Annual Report on
Corporation and NEC Corporation Form 10-K for the fiscal year
dated as of March 31, 1995 ended September 30, 1995 as
amended
10.20** Marcam/NEC Technology Transfer and 0-18674
License Agreement by and between Exhibit 10.34 to Annual Report on
the Registrant and NEC Corporation Form 10-K for the fiscal year
dated as of March 31, 1995 ended September 30, 1995 as
amended
10.21 Amendment Agreement dated as of 0-18674
December 15, 1995 by and among the Exhibit 10.38 to Annual Report on
Registrant, The Northwestern Form 10-K for the fiscal year
Mutual Life Insurance Company, ended September 30, 1995 as
John Hancock Mutual Life Insurance amended
Company, John Hancock Life
Insurance Company of America and
Barnett & Co.
10.22 Letter dated March 29, 1996 to 0-18674
Northwestern Mutual Life Insurance Exhibit 10.1 to Quarterly Report
Company, John Hancock Life on Form 10-Q dated May 14, 1996
Insurance Company of America and
Barnett & Co. from Marcam
Corporation

60
63

EXHIBIT
NO. DESCRIPTION SEC DOCUMENT REFERENCE
- ------- ----------- ----------------------

10.23 Amendment dated as of March 30, 0-18674
1996 to Loan and Security Exhibit 10.2 to Quarterly Report
Agreement dated as of August 29, on Form 10-Q dated May 14, 1996
1995 by and between Greyrock
Business Credit, a division of
Greyrock Capital Group, and the
Registrant
10.24 Letter Agreement dated May 3, 1996 0-18674
by and between Marcam Corporation Exhibit 10.3 to Quarterly Report
and Paul A. Margolis on Form 10-Q dated May 14, 1996
10.25 Amendment and Waiver Agreement 0-18674
dated as of July 16, 1996 by and Exhibit 10.1 to Quarterly Report
among the Registrant, The on Form 10-Q dated August 14, 1996
Northwestern Mutual Life Insurance
Company, John Hancock Mutual Life
Insurance Company, John Hancock
Life Insurance Company of America
and Barnett & Co.
10.26 Amendment dated July 23, 1996 to 0-18674
Loan and Security Agreement by and Exhibit 10.2 to Quarterly Report
between Greyrock Business Credit, on Form 10-Q dated August 14, 1996
a division of Greyrock Capital
Group, and the Registrant
10.27 Amendment dated December 16, 1996 0-18674
to Loan and Security Agreement by Exhibit 10.35 to Annual Report on
and between Greyrock Business Form 10-K for the fiscal year
Credit, a division of Greyrock ended September 30, 1996
Capital Group, and the Registrant
10.28 Amendment dated December 16, 1996 0-18674
to Loan and Security Agreement by Exhibit 10.36 to Annual Report on
and between Greyrock Business Form 10-K for the fiscal year
Credit, a division of Greyrock ended September 30, 1996
Capital Group and the Registrant
10.29 Amendment Agreement dated as of 0-18674
December 23, 1996 by and among the Exhibit 10.37 to Annual Report on
Registrant, The Northwestern Form 10-K for the fiscal year
Mutual Life Insurance Company, ended September 30, 1996
John Hancock Mutual Life Insurance
Company, John Hancock Life
Insurance Company of America and
Barnett & Co.
10.30 Convertible Preferred Stock 0-18674
Purchase Agreement dated September Exhibit 10.2 to Current Report on
20, 1995 by and among Marcam Form 8-K Dated September 29, 1995
Corporation, General Atlantic
Partners 21, L.P. GAP Coinvestment
Partners, L.P. and The
Northwestern Mutual Life Insurance
Company

61
64

EXHIBIT
NO. DESCRIPTION SEC DOCUMENT REFERENCE
- ------- ----------- ----------------------

10.31 Convertible Preferred Stock and 0-18674 Exhibit 10.1 to Current
Warrant Purchase Agreement dated Report on Form 8-K Dated July 23,
July 19, 1996 among Marcam 1996
Corporation, General Atlantic
Partners 32, L.P. and GAP
Coinvestments Partners, L.P.,
including the form of Marcam
Corporation Common Stock Purchase
Warrants
10.32 Amended and Restated Registration 0-18674
Rights Agreement dated July 23, Exhibit 10.2 to Current Report on
1996 by and among Marcam Form 8-K Dated July 23, 1996
Corporation, General Atlantic
Partners 21, L.P., General
Atlantic Partners 32, L.P., GAP
Coinvestments Partners, L.P. and
The Northwestern Mutual Life
Insurance Company
10.33 Distribution Agreement between 0-22841, Exhibit 2 to Amendment
Marcam Solutions, Inc. and Marcam No. 1 to Registration Statement on
Corporation Form 10 of Marcam Solutions, Inc.
Dated July 22, 1997
10.34 Tax Sharing Agreement between 0-22841, Exhibit 10.2 to Amendment
Marcam Solutions, Inc. and Marcam No. 1 to Registration Statement on
Corporation Form 10 of Marcam Solutions, Inc.
Dated July 22, 1997
10.35 General Services Agreement between 0-22841, Exhibit 10.1 to Amendment
Marcam Solutions, Inc. and Marcam No. 1 to Registration Statement on
Corporation Form 10 of Marcam Solutions, Inc.
Dated July 22, 1997
10.36 Revolving Credit and Term Loan 0-18674
Agreement dated as of August 4, Exhibit 10.1 to Current Report on
1997 among MAPICS, Inc., Form 8-K Dated August 12, 1997
BankBoston, N.A. and the other
lending institutions set forth on
Schedule I thereto, and
BankBoston, N.A. as agent
10.36 Security Agreement dated August 4, Exhibit 10.2 to Current Report on
1997 between MAPICS, Inc. and Form 8-K Dated August 12, 1997
BankBoston N.A. as agent
10.36 Revolving Credit Note in the 0-18674
principal amount of $15,000,000 Exhibit 10.3 to Current Report on
dated August 4, 1997 Form 8-K Dated August 12, 1997
10.36 Term Note in the principal amount 0-18674
of $15,000,000 dated August 4, Exhibit 10.4 to Current Report on
1997 Form 8-K Dated August 12, 1997
10.37* 1994 Stock Plan, as amended and 333-02158, Exhibit 4.4
restated
10.38* 1987 Stock Plan, as amended and 0-18674, Exhibit 10.33 to Annual
restated Report on Form 10-K for the fiscal
year ended September 30, 1996.

62
65

EXHIBIT
NO. DESCRIPTION SEC DOCUMENT REFERENCE
- ------- ----------- ----------------------

10.39* 1991 Non-Employee Director Stock 0-18674, Exhibit 10.34 to Annual
Option Plan, as amended and Report on Form 10-K for the fiscal
restated year ended September 30, 1996

10.40*+ Memoranda regarding Compensation
Plans for fiscal year 1997 from
MAPICS to each of Messrs. Cook,
Aery and Gilmour

11+ Statement re Computation of
Earnings Per Share

21+ Subsidiaries of the Registrant

23+ Consent of Coopers & Lybrand
L.L.P.

27+ Financial Data Schedule (for SEC
use only)

- ---------------

* Compensatory management plan.
** Confidential treatment granted.
+ Filed herewith.

(B) REPORTS ON FORM 8-K

Marcam Corporation filed a Current Report on Form 8-K with the Securities
and Exchange Commission dated July 15, 1997, which reported pursuant to Item 5
certain updated financial information concerning MAPICS.

Marcam Corporation filed a Current Report on Form 8-K with the Securities
and Exchange Commission dated July 23, 1997, which reported pursuant to Item 5 a
press release filed by Marcam Corporation on July 22, 1997 regarding earnings
for the fiscal quarter ended June 30, 1997.

MAPICS, Inc. filed a Current Report on Form 8-K with the Securities and
Exchange Commission dated August 8, 1997, which reported pursuant to Item 5 that
on August 4, 1997, MAPICS entered into a secured revolving credit and term loan
facility in the aggregate amount of $30 million with BankBoston, N.A., as agent
for certain other participating lenders.

MAPICS filed a Current Report on Form 8-K with the Securities and Exchange
Commission dated August 12, 1997, which reported (i) pursuant to Item 2 that on
July 29, 1997, Marcam Corporation spun off in a tax free distribution the
portion of its business relating to its PRISM(R), Protean(TM) and Avantis(TM)
product lines and (ii) pursuant to Item 7 certain unaudited pro forma
consolidated financial statements of Marcam Solutions and certain unaudited pro
forma combined financial statement of MAPICS.

(C) See Item 14(a)(3) above.

(D) See Item 14(a)(2) above.

63
66

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on December 15, 1997.

MAPICS, INC.

By: /s/ RICHARD C. COOK
------------------------------------
Richard C. Cook
President and Chief Executive
Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated on December 15, 1997

SIGNATURE TITLE
--------- -----

/s/ RICHARD C. COOK President, Chief Executive Officer and
- ----------------------------------------------------- Director
Richard C. Cook

/s/ GEORGE A. CHAMBERLAIN 3d Director
- -----------------------------------------------------
George A. Chamberlain 3d

/s/ WILLIAM E. FORD Director
- -----------------------------------------------------
William E. Ford

/s/ ROGER HEINEN, JR. Director
- -----------------------------------------------------
Roger Heinen, Jr.

/s/ EDWARD J. KFOURY Director
- -----------------------------------------------------
Edward J. Kfoury

/s/ H. MITCHELL WATSON, JR. Director
- -----------------------------------------------------
H. Mitchell Watson, Jr.

/s/ WILLIAM J. GILMOUR Vice President of Finance and Chief Financial
- ----------------------------------------------------- and Accounting Officer
William J. Gilmour

64
67

[MAPICS LOGO]

2680-10K-98
68

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------------

EXHIBITS

TO

ANNUAL REPORT

ON

FORM 10-K

FOR THE FISCAL YEAR ENDED

SEPTEMBER 30, 1997

---------------------

MAPICS, INC.

================================================================================

69

EXHIBIT INDEX

The following exhibits either (i) are filed herewith or (ii) have
previously been filed with the Securities and Exchange Commission and are
incorporated herein by reference to such prior filings. Previously filed
registration statements or reports, which are incorporated herein by reference,
are identified in the column captioned "SEC Document Reference assigned"
thereto.

EXHIBIT PAGE
NO. DESCRIPTION SEC DOCUMENT REFERENCE NO. HEREOF
- ------- ----------- ---------------------- ----------

3.1 Restated Articles of Organization as 333-33865
amended of the Registrant Exhibit 4.1
3.2 By-laws, as amended and restated, of 333-33865
the Registrant Exhibit 4.2
3.3 Certificate of Vote of Directors 0-18674
Establishing a Series or a Class of Exhibit 3.1 to Current Report on
Stock of the Registrant Form 8-K Dated June 18, 1993
3.4 Certificate of Vote of Directors 0-18674
Establishing a Series or a Class of Exhibit 3.4 to Annual Report on Form
Stock of the Registrant 10-K for the fiscal year ended
September 30, 1993
4.1 Specimen certificate representing 33-35666
the Common Stock Exhibit 4.4
4.2 Certificate of Vote of Directors 0-18674
Establishing a Series of a Class of Exhibit 4 to Current Report on Form
Stock for the Series D Convertible 8-K Dated September 29, 1995
Preferred Stock of Marcam
Corporation
4.3 Certificate of Vote of Directors 0-18674
Establishing a Series of a Class of Exhibit 4 to Current Report on Form
Stock for the Series E Convertible 8-K Dated July 23, 1996
Preferred Stock of Marcam
Corporation
4.4 Rights Agreement, dated as of 0-18674
December 3, 1996, between Marcam Exhibit 4 to Current Report on Form
Corporation and The First National 8-K Dated December 3, 1996
Bank of Boston, which includes as
Exhibit A the form of Certificate of
Vote of Directors Establishing a
Series of a Class of Stock, as
Exhibit B the Form of Rights
Certificate, and as Exhibit C the
Summary of Rights to Purchase
Preferred Stock
10.1* 1990 Employee Stock Purchase Plan, 0-18674
as amended and restated Exhibit 10.21 to Annual Report on,
Form 10-K for the fiscal year ended
September 30, 1991
10.2* Deferred Compensation Plan for Non- 0-18674
Employee Directors, as amended and Exhibit 10.22 to Annual Report on
restated Form 10-K for the fiscal year ended
September 30, 1991

E-2
70

EXHIBIT PAGE
NO. DESCRIPTION SEC DOCUMENT REFERENCE NO. HEREOF
- ------- ----------- ---------------------- ----------

10.3 Stock Purchase Agreement dated as of 0-18674
September 29, 1995 by and among Exhibit 2.1 to Current Report on
Marcam Corporation, International Form 8-K Dated September 29, 1995
Business Machines Corporation,
Edison Venture Fund, L.P., Richard
C. Cook, Paul A. Margolis, John
Campbell and Mapics, Inc.
10.4 Stock Exchange Agreement dated as of 0-18674
April 9, 1991 by and among the Exhibits 2.2, 4.1 to Current Report
Registrant Marcam Canada Holding on Form 8-K Dated April 9, 1991
Corporation and William A. Shaw,
Linda Pia Shaw, Randy Reeve, Denise
Reeve, John P. Williamson, and
Sheila Kathleen Williamson
10.5 Form of Stock Purchase Agreements 33-35666
entered into by the Registrant with Exhibit 10.5
Messrs. Margolis, Stoner, Ebling and
certain other persons
10.6 Lease by and between the Registrant 33-35666
and Dominic J. Saraceno, as amended, Exhibit 10.7
dated June 13, 1988
10.7 Form of Indemnity Agreements entered 33-35666
into by the Registrant with Messrs. Exhibit 10.9
Margolis,
10.8 Letter Agreement dated as of January 33-35666
31, 1989 by and between the Exhibit 10.15
Registrant and Paul A. Margolis
10.9 Second and Third Amendments, each 0-18674
dated as of August 29, 1990, to Exhibit 10.17 to Annual Report on
Lease by and between Registrant and Form 10-K for the fiscal year ended
Dominic J. Saraceno, as amended, September 30, 1990
dated June 13, 1988
10.10 Fourth Amendment, dated June 30, 0-18674
1992 to Lease by and between Exhibit 10.19 to Annual Report on
Registrant and Dominic J. Saraceno, Form 10-K for the fiscal year ended
as amended, dated June 13, 1988 September 30, 1992
10.11 Fifth Amendment, dated May 10, 1993 0-18674
to Lease by and between Registrant Exhibit 10.27 to Annual Report on
and Dominic J. Saraceno, as amended, Form 10-K for the fiscal year ended
dated June 13, 1988 September 30, 1993 as amended
10.12 Complementary Marketing Agreement 0-18674
dated as of December 26, 1990 by and Exhibit 10.27 to Annual Report on
between the Registrant and Form 10-K for the fiscal year ended
International Business Machines September 30, 1993 as amended
Corporation

E-3
71

EXHIBIT PAGE
NO. DESCRIPTION SEC DOCUMENT REFERENCE NO. HEREOF
- ------- ----------- ---------------------- ----------

10.13 Note and Warrant Purchase Agreement 0-18674
entered into by Marcam Corporation Exhibit 10.1 to Quarterly Report on
and each of The Northwestern Mutual Form 10-Q dated May 12, 1994 as
Life Insurance Company, John Hancock amended by Form 10-Q/A dated October
Mutual Life Insurance Company and 6, 1994
John Hancock Life Insurance Company
of America dated as of May 12, 1994
10.14 Amendment Agreement dated as of 0-18674
August 19, 1994 by and among the Exhibit 10.1 to Quarterly Report on
Registrant, The Northwestern Mutual Form 10-Q dated August 22, 1994
Life Insurance Company, John Hancock
Mutual Life Insurance Company and
John Hancock Life Insurance Company
of America
10.15 Amendment Agreement dated as of July 0-18674
29, 1995 by and among the Exhibit 10.36 to Annual Report of
Registrant, The Northwestern Mutual Form 10-K for the fiscal year ended
Life Insurance Company, John Hancock September 30, 1994 as amended
Mutual Life Insurance Company and
John Hancock Life Insurance Company
of America
10.16 Loan and Security Agreement dated as 0-18674
of August 29, 1995 by and between Exhibit 10.37 to Annual Report of
Greyrock Business Credit, a division Form 10-K for the fiscal year ended
of Greyrock Capital Group, Inc., and September 30, 1994 as amended
the Registrant
10.17 Amendment Agreement dated as of 33-90670
September 29, 1995 by and among the Exhibit 10.4
Registrant, The Northwestern Mutual
Life Insurance Company, John Hancock
Mutual Life Insurance Company and
John Hancock Life Insurance Company
of America and Barnett & Co.
10.18 Amendment Agreement dated as of 0-18674
November 14, 1995 by and among the Exhibit 10.31 to Annual Report on
Registrant, The Northwestern Mutual Form 10-K for the fiscal year ended
Life Insurance Company, John Hancock September 30, 1995 as amended
Mutual Life Insurance Company and
John Hancock Insurance Company of
America and Barnett & Co.
10.19** Marcam/NEC Distribution Agreement 0-18674
between Marcam World Trade Exhibit 10.33 to Annual Report on
Corporation and NEC Corporation Form 10-K for the fiscal year ended
dated as of March 31, 1995 September 30, 1995 as amended
10.20** Marcam/NEC Technology Transfer and 0-18674
License Agreement by and between the Exhibit 10.34 to Annual Report on
Registrant and NEC Corporation dated Form 10-K for the fiscal year ended
as of March 31, 1995 September 30, 1995 as amended

E-4
72

EXHIBIT PAGE
NO. DESCRIPTION SEC DOCUMENT REFERENCE NO. HEREOF
- ------- ----------- ---------------------- ----------

10.21 Amendment Agreement dated as of 0-18674
December 15, 1995 by and among the Exhibit 10.38 to Annual Report on
Registrant, The Northwestern Mutual Form 10-K for the fiscal year ended
Life Insurance Company, John Hancock September 30, 1995 as amended
Mutual Life Insurance Company, John
Hancock Life Insurance Company of
America and Barnett & Co.
10.22 Letter dated March 29, 1996 to 0-18674
Northwestern Mutual Life Insurance Exhibit 10.1 to Quarterly Report on
Company, John Hancock Life Insurance Form 10-Q dated May 14, 1996
Company of America and Barnett & Co.
from Marcam Corporation
10.23 Amendment dated as of March 30, 1996 0-18674
to Loan and Security Agreement dated Exhibit 10.2 to Quarterly Report on
as of August 29, 1995 by and between Form 10-Q dated May 14, 1996
Greyrock Business Credit, a division
of Greyrock Capital Group, and the
Registrant
10.24 Letter Agreement dated May 3, 1996 0-18674
by and between Marcam Corporation Exhibit 10.3 to Quarterly Report on
and Paul A. Margolis Form 10-Q dated May 14, 1996
10.25 Amendment and Waiver Agreement dated 0-18674
as of July 16, 1996 by and among the Exhibit 10.1 to Quarterly Report on
Registrant, The Northwestern Mutual Form 10-Q dated August 14, 1996
Life Insurance Company, John Hancock
Mutual Life Insurance Company, John
Hancock Life Insurance Company of
America and Barnett & Co.
10.26 Amendment dated July 23, 1996 to 0-18674
Loan and Security Agreement by and Exhibit 10.2 to Quarterly Report on
between Greyrock Business Credit, a Form 10-Q dated August 14, 1996
division of Greyrock Capital Group,
and the Registrant
10.27 Amendment dated December 16, 1996 to 0-18674
Loan and Security Agreement by and Exhibit 10.35 to Annual Report on
between Greyrock Business Credit, a Form 10-K for the fiscal year ended
division of Greyrock Capital Group, September 30, 1996
and the Registrant
10.28 Amendment dated December 16, 1996 to 0-18674
Loan and Security Agreement by and Exhibit 10.36 to Annual Report on
between Greyrock Business Credit, a Form 10-K for the fiscal year ended
division of Greyrock Capital Group September 30, 1996
and the Registrant

E-5
73

EXHIBIT PAGE
NO. DESCRIPTION SEC DOCUMENT REFERENCE NO. HEREOF
- ------- ----------- ---------------------- ----------

10.29 Amendment Agreement dated as of 0-18674
December 23, 1996 by and among the Exhibit 10.37 to Annual Report on
Registrant, The Northwestern Mutual Form 10-K for the fiscal year ended
Life Insurance Company, John Hancock September 30, 1996
Mutual Life Insurance Company, John
Hancock Life Insurance Company of
America and Barnett & Co.
10.30 Convertible Preferred Stock Purchase 0-18674
Agreement dated September 20, 1995 Exhibit 10.2 to Current Report on
by and among Marcam Corporation, Form 8-K Dated September 29, 1995
General Atlantic Partners 21, L.P.
GAP Coinvestment Partners, L.P. and
The Northwestern Mutual Life
Insurance Company
10.31 Convertible Preferred Stock and 0-18674
Warrant Purchase Agreement dated Exhibit 10.1 to Current Report on
July 19, 1996 among Marcam Form 8-K Dated July 23, 1996
Corporation, General Atlantic
Partners 32, L.P. and GAP
Coinvestments Partners, L.P.,
including the form of Marcam
Corporation Common Stock Purchase
Warrants
10.32 Amended and Restated Registration 0-18674
Rights Agreement dated July 23, 1996 Exhibit 10.2 to Current Report on
by and among Marcam Corporation, Form 8-K Dated July 23, 1996
General Atlantic Partners 21, L.P.,
General Atlantic Partners 32, L.P.,
GAP Coinvestments Partners, L.P. and
The Northwestern Mutual Life
Insurance Company
10.33 Distribution Agreement between 0-22841, Exhibit 2 to Amendment No.
Marcam Solutions, Inc. and Marcam 1 to Registration Statement on Form
Corporation 10 of Marcam Solutions, Inc. Dated
July 22, 1997
10.34 Tax Sharing Agreement between Marcam 0-22841, Exhibit 10.2 to Amendment
Solutions, Inc. and Marcam No. 1 to Registration Statement on
Corporation Form 10 of Marcam Solutions, Inc.
Dated July 22, 1997
10.35 General Services Agreement between 0-22841, Exhibit 10.1 to Amendment
Marcam Solutions, Inc. and Marcam No. 1 to Registration Statement on
Corporation Form 10 of Marcam Solutions, Inc.
Dated July 22, 1997
10.36 Revolving Credit and Term Loan 0-18674
Agreement dated as of August 4, 1997 Exhibit 10.1 to Current Report on
among MAPICS, Inc., BankBoston, N.A. Form 8-K Dated August 12, 1997
and the other lending institutions
set forth on Schedule I thereto, and
BankBoston, N.A. as agent

E-6
74

EXHIBIT PAGE
NO. DESCRIPTION SEC DOCUMENT REFERENCE NO. HEREOF
- ------- ----------- ---------------------- ----------

10.36 Security Agreement dated August 4, Exhibit 10.2 to Current Report on
1997 between MAPICS, Inc. and Form 8-K Dated August 12, 1997
BankBoston, N.A. as agent
10.36 Revolving Credit Note in the 0-18674
principal amount of $15,000,000 Exhibit 10.3 to Current Report on
dated August 4, 1997 Form 8-K Dated August 12, 1997
10.36 Term Note in the principal amount of 0-18674
$15,000,000 dated August 4, 1997 Exhibit 10.4 to Current Report on
Form 8-K Dated August 12, 1997
10.37* 1994 Stock Plan, as amended and 333-02158, Exhibit 4.4
restated
10.38* 1987 Stock Plan, as amended and 0-18674, Exhibit 10.33 to Annual
restated Report on Form 10-K for the fiscal
year ended September 30, 1996
10.39* 1991 Non-Employee Director Stock 0-18674, Exhibit 10.34 to Annual
Option Plan, as amended and restated Report on Form 10-K for the fiscal
year ended September 30, 1996
10.40*+ Memoranda regarding Compensation
Plans for fiscal year 1997 from
MAPICS to each of Messrs. Cook, Aery
and Gilmour 80
11+ Statement re Computation of Earnings
Per Share 90
21+ Subsidiaries of the Registrant 91
23+ Consent of Coopers & Lybrand L.L.P. 92
27+ Financial Data Schedule (for SEC use
only)

- ---------------

* Compensatory management plan.
** Confidential treatment granted.
+ Filed herewith.

E-7