Sierra Corporate Filings Detail Papyrus Acquisition

Sierra’s form 10-K filing has some extra details on the acquisition that was announced late last year. Check out the details below:

During the year, the Company completed several acquisitions. The
companies acquired include The Pixellite Group (“Pixellite”), Software
Inspiration Limited (“Inspiration”), Papyrus Design Group, Inc. (“Papyrus”),
Arion Software, Inc. (“Arion”), and Green Thumb Software, Inc. (“Green Thumb”).
These companies were instrumental in broadening the Company’s product line.
Each transaction was accounted for as a pooling-of-interests. A total of
2,293,493 shares of Sierra Common Stock were issued in these transactions. The
historical financial statements of the Company have been restated for the
Pixellite, Inspiration, and Papyrus mergers. The financial statements have not
been restated for the Arion and Green Thumb mergers as these companies did not
impact the Company’s operations significantly.

…

Adventure titles increased from 32% to 38% of net sales, or $28.7
million, due principally to the strength of the Company’s hit title
Phantasmagoria which sold over 600,000 copies worldwide during fiscal 1996.
Simulation and sports titles increased $4.3 million due principally to the
strength of the Company’s car racing products acquired in the Papyrus merger.
However, simulation/sports titles decreased from 33% to 23% of net sales due in
part to the fact that the Company did not release any new titles in its Aces
series of simulation games. Lastly, sales of productivity titles increased $6.8
million due to the Company’s entrance into the home productivity market via the
acquisitions of Pixellite, Green Thumb and Arion resulting in increased sales of
Print Artist, Land Designer and the Master Cook series.

…

On May 31, 1995 the Company merged with Pixellite, a developer of personal
printing software, in exchange for 245,779 shares of Sierra’s common stock.
On June 20, 1995 the Company also merged with Inspiration, a developer of
strategy games, in exchange for 730,352 shares of Sierra’s common stock. On
November 30, 1995 the Company merged with Papyrus, developers of NASCAR
Racing and Indy Car Racing, in exchange for 1,169,404 shares of Sierra’s
common stock.

These mergers have been accounted for as poolings-of-interests. The
pooling-of-interests method of accounting is intended to present as a single
interest two or more common shareholders’ interests which were previously
independent; accordingly, the historical financial statements for the periods
prior to the mergers are restated as though the companies had been combined.

The following summarizes amounts previously reported by Sierra prior to the
transaction for the years ended March 31, 1995 and 1994 (in thousands, except
per share data):

REVENUES:
         Sierra............................................................         $   83,440              $   62,745
         Pixellite, Inspiration and Papyrus  ..............................             14,439                  10,356
                                                                                    ----------              ----------
         Combined .........................................................         $   97,879              $   73,101
                                                                                    ==========              ==========
   NET INCOME (LOSS)
         Sierra............................................................         $   11,938              $   (8,676)
         Pixellite, Inspiration and Papyrus ...............................              1,054                     804
                                                                                    ----------              ----------
         Combined .........................................................         $   12,992              $   (7,872)
                                                                                    ==========              ==========
   PRIMARY NET INCOME (LOSS) PER SHARE:
         Sierra ...........................................................         $     0.74              $    (0.59)
         Pixellite, Inspiration and Papyrus ...............................              (0.04)                   0.13
                                                                                    ----------              ----------
         Combined .........................................................         $     0.70              $    (0.46)
                                                                                    ==========              ==========
   FULLY DILUTED NET INCOME (LOSS) PER SHARE:
         Sierra ...........................................................         $     0.71              $   (0.59)
         Pixellite, Inspiration and Papyrus................................              (0.03)                  0.13
                                                                                    ----------              ---------
         Combined .........................................................         $     0.68              $   (0.46)
                                                                                    ==========              =========

All fees and expenses related to the Pixellite, Inspiration, Papyrus, Green
Thumb and Arion mergers have been expensed as required under the
pooling-of-interests accounting method. Such fees and expenses approximated
$2.3 million and include legal, accounting and finders fees.

…

The Company has reserved 6,170,000 shares of common stock for issuance under
its 1995 Stock Option and Award Plan and the 1987 Stock Option Plan for
officers, employees, directors, vendors, consultants and independent
contractors. Options granted under these plans may be either incentive stock
options or nonqualified stock options and are granted at the fair market
value of the Company’s common stock at the date of grant. Options vest and
expire under the terms established at the date of grant. The Company also has
218,556 shares reserved for issuance under an option plan it acquired through
its merger with Papyrus. A summary of stock option transactions under all
plans follows:

                                                                                                Range of Price
                                                                          Shares                   Per Share
                                                                       -----------             -----------------
              Options outstanding, April 1, 1993  ................       2,114,768             $0.47   -  $10.13
                  Granted  .......................................         760,838              0.09   -   11.50
                  Exercised  .....................................        (541,108)             0.47   -   10.13
                  Canceled  ......................................        (457,366)             3.86   -   10.13
                                                                         ---------             -----------------
              Options outstanding, March 31, 1994.................       1,877,132              0.09   -   11.50
                  Granted ........................................         963,217              0.09   -   22.00
                  Exercised ......................................        (333,807)             0.47   -   11.50
                  Canceled .......................................        (215,482)             4.59   -   11.88
                                                                         ---------             -----------------
              Options outstanding, March 31, 1995 ................       2,291,060              0.09   -   22.00
                  Granted ........................................         754,613              0.80   -   41.75
                  Exercised ......................................        (616,592)             0.09   -   17.69
                  Canceled .......................................        (229,161)             4.92   -   35.13
                                                                         ---------             -----------------
              Options outstanding, March 31, 1996 ................       2,199,920             $0.09   -  $41.75
                                                                         =========             =================

Of the options outstanding at March 31, 1996, 501,888 options are currently
exercisable at prices ranging from $0.09 to $22.00 per share, and 1,770,873
options remain available for future grants.