SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the Year Ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

Commission File Number: 0-20059

ARDENT SOFTWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 04-2818132
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

50 WASHINGTON STREET
WESTBORO, MASSACHUSETTS 01581-1021
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
TELEPHONE NUMBER: (508) 366-3888

Securities registered pursuant to Section 12(b) of the Act:
None

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

Title of Class
Common Stock, $.01 par value

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 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. [X]

As of February 14, 1998, there were outstanding 14,219,606 shares of the
registrant's common stock, $.01 par value. As of that date, the aggregate market
value of voting stock held by non-affiliates of the registrant was approximately
$152,860,765.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders are incorporated by reference into Part III.
2

This Form 10-K, future filings of the registrant, press releases of the
registrant, and oral statements made with the approval of an authorized
executive officer of the Registrant may contain forward looking statements. In
connection therewith, please see the cautionary statements and risk factors
contained in Item 1, "Business -- Cautionary Statement" and "Business -- Risk
Factors", which identify important factors which could cause actual results to
differ materially from those in any such forward-looking statements.

PART I

ITEM 1. GENERAL

Ardent Software, Inc. (formerly VMARK Software, Inc.) and its subsidiaries
("Ardent" or the "Company") is a data management software company. The Company
designs, develops, markets, sells and supports software that enables businesses
to maximize the information value of their data by giving them greater control
over ever-changing application complexity. Ardent's products are used for
developing, deploying, and maintaining business applications and data warehouse
solutions. Principal products include UniVerse and UniData, both extended
relational database management systems (RDBMS); DataStage, a software product
that simplifies data mart and data warehouse development management and
administration; and the O2 System, an object database management system (ODBMS)
for building and deploying complex applications. Ardent products are available
worldwide and are complemented by a variety of services including technical
support, consulting, and education.

BUSINESS STRATEGY

Ardent was founded in the mid-1980's to develop and market extended
relational database management systems, providing a means for thousands of
business software applications, originally developed on certain proprietary
systems, to be migrated with minimal re-coding to open systems running on the
Unix platform. In February, 1998, the Company merged with Unidata, Inc., a
relational database, object database, and software tools developer and marketer.
The driving force for this merger was to leverage the combined strengths of two
technology product leaders in the extended relational database marketplace, and
to further the Company's entry into the data warehousing and object database
technology sectors.

Ardent is structured around three product-focused business units:
Relational Technology and Tools; DataWarehouse; and Object Technology. The
Company maintains 68 sales/distribution offices in 52 countries around the
world. In addition to direct sales, Ardent has established more than 1,000 Value
Added Resellers (VAR's) that market the various Ardent products as part of their
vertical market business solutions.

The Company's strategy is to provide cost-effective and comprehensive
software and services for developing, deploying, and maintaining business
applications and data warehouses. Ardent's focus is to support and expand its
existing customer and reseller base while expanding its presence in the object
database and data warehouse markets.

Key features of Ardent strategy are:

- - Improved Developer and User Productivity -- The Company promotes increased
productivity of developers and users by offering products and services that
make it easier to manage today's most complex business applications.

- - Open Systems and Portability -- Ardent's products are designed to operate
uniformly across a broad range of computer systems, including PCs,
workstations, and servers, ensuring that customers do not bear unnecessary
costs for application re-deployment or user retraining.

- - Client/Server, 3-Tier and N-Tier Technologies -- Ardent's solutions are
designed to take advantage of current and future trends in computing network
architectures, preparing the company and its customers for distributed
computing solutions.

- - Worldwide Distribution -- Ardent sells its products and services worldwide to
a broad range of customer segments through multiple channels, including more
than 1,000 VAR's who provide packaged application

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solutions for numerous vertical markets; Systems Integrators who utilize
Ardent products and services when building solutions for their customers; a
worldwide direct sales force; distributors in key markets throughout the
world; and numerous strategic Original Equipment Manufacturer (OEM)
agreements.

- - International Presence -- Ardent maintains principal engineering and sales
subsidiaries in three strategic regions, the United Kingdom, France, and Asia
Pacific. Additionally, the Company has established subsidiary operations in
emerging growth markets, including Spain, New Zealand, South America, Russia,
Germany, and Canada.

- - Recurring Revenue -- The Company's distribution and pricing strategies for its
products are intended to generate recurring revenue. The sale of a development
license generally leads to follow-on sales as applications are deployed and
expanded. The Company also receives maintenance fees and charges for
consulting assignments and training courses.

- - Worldwide Customer Service -- Ardent offers installation assistance, telephone
and on-line support, consulting services, and training both at worldwide
Ardent locations and on-site at VAR and customer locations.

PRODUCTS

Ardent, following its merger with Unidata, possesses a broadened portfolio
that puts the Company in a strong position to serve the current and
ever-changing needs of its growing customer base. The Company's three business
units collectively provide effective data management solutions that help
customers simplify their complex data management issues.

Relational Technology & Tools Products

The traditional portion of Ardent's business is represented by its
Relational Technology & Tools business unit. This collection of software
technologies has long enabled customers to manage the most complex business data
in applications customized to a broad range of vertical industries. Products
sold through this business unit include:

UniVerse and UniData extended relational database management systems
(RDBMS) -- Each product is built on a powerful architecture that provides the
inherent capabilities developers need to produce, enhance and deploy high
performance business applications in open systems environments across UNIX and
NT platforms. Complete with ancillary products and toolsets, UniVerse and
UniData are some of the leading technologies for high volume transaction
processing requirements involving complex data structures and relationships.

RedBack -- A comprehensive solution for building and delivering scalable,
transactional applications for the Internet and corporate intranets, RedBack
lowers web technology barriers and makes it easier to integrate web-based
systems with existing data and applications.

wIntegrate -- A Graphical User Interface (GUI) development tool for
bringing the power of a Windows interface to character-based applications.

System Builder -- A powerful application development tool that allows
developers to migrate applications to graphical user interfaces (GUI) and
muti-tier deployment architectures, while preserving their original application
investment.

ESL -- An integrated toolset for building OS/2 and Windows GUI applications
with mainframe data sources. ESL features an integrated development environment
with a full set of visual tools, a debugger, compiler and a non-procedural,
event-driven language.

In addition to these products, the Relational Technology & Tools business
unit offers a variety of middleware products, a COBOL migration solution, and a
set of data analysis and reporting tools.

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Data Warehouse Products

The rapid accumulation of data in operational systems has created the need
to manage the movement of data into a database optimized for business analysis,
called a data warehouse or data mart depending upon its scope. Ardent's data
warehouse products simplify the complexities of the entire data warehouse life
cycle.

DataStage -- DataStage is a comprehensive solution for the fast, easy
creation and maintenance of data marts and data warehouses. DataStage is an
integrated, simple-to-use system that provides the tools for the customer to
build and manage these vital data stores. As a result, users have access to the
data they need to make faster, smarter business decisions. DataStage addresses
what has historically been the most difficult and time-consuming portion of a
data mart or data warehouse implementation. Using a simple, point-and-click
interface, the user can easily extract, cleanse, transform, and integrate data
from operation systems, archives, and third-party data sources. The result is a
cost-effective, usable data mart or warehouse which is up and running quickly
and which can easily adapt to change. DataStage offers support for a wide
variety of data sources, including popular databases such as Oracle, Microsoft
SQL Server, UniVerse, Sybase, Informix, and others, as well as legacy databases,
thus minimizing incompatibility issues.

Object Technology Products

In light of the growth of the Internet and the phenomena of the Java
programming language, object database technology is fast becoming the solution
of choice among leading-edge application developers seeking to model today's
most complex business environments. A proven technology and the leading object
database in use throughout Europe, the O2 System is one of the leading database
products for complex application developments.

O2 Object Database System -- An open, standard environment that enables
object developers to build high performance database applications. O2 fits
within existing computing environments, is database independent, and makes
object development simpler because it is compatible with both the Java and C++
object data models. Surrounding the O2 System is a complete set of application
development tools and language bindings tailored to the evolving needs of
today's application developers. O2 also provides interfaces to other databases,
the Web and CORBA.

SERVICES

In addition to its three product-focused business units, Ardent provides
customers worldwide with a full spectrum of services. These services include
Technical Support for customers purchasing maintenance contracts on Ardent's
software products; Education Services for customers learning how to use and work
with Ardent's products; and Consulting Services to assist customers with
implementing solutions based on Ardent's technologies.

SALES AND MARKETING

Ardent sells its products and services throughout the world to a broad
range of customer markets and through multiple channels, including the
following:

- - More than 1,000 VAR's which provide packaged application solutions for
targeted vertical markets.

- - Systems Integrators which utilize Ardent products and services when building
solutions for their customers.

- - Direct distributors and value-added OEM distributor agreements which sell
Ardent products as an integral part of their commercial offerings.

- - A worldwide, direct sales force.

In the United States, the Company's sales and support staff are located at
its Westboro, Massachusetts headquarters; Arlington, Texas; Bellevue,
Washington; Bridgewater, New Jersey; Cary, North Carolina; Columbus, Ohio;
Denver, Colorado; Irvine, California; Palo Alto, California; Princeton, New
Jersey; Rosemont, Illinois; and Tampa, Florida.

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Internationally, the Company has seven wholly owned international
subsidiaries located in the United Kingdom, France, Spain, Canada, Germany,
South Africa, and the Asia Pacific territory which includes Australia, Japan and
Russia.

The Company also has exclusive distributors in Argentina, Brazil, and
Ecuador which, in turn, maintain a distributor sales channel. Revenue derived
from outside the United States was approximately 38%, 40%, and 29% of total
revenue in 1997, 1996, and 1995 respectively. The Company intends to continue
making investments in international activities.

Ardent implements a variety of marketing programs to assist in the sale of
its products and services, including advertising and public relations campaigns,
regional seminars, reseller and end-user group meetings, and cooperative
programs. In addition, the Company participates in various computer industry and
vertical market trade shows, and provides catalogs, visual aids, newsletters,
and product sales literature, both in printed form and on the world wide web.

CUSTOMERS

Ardent's products are used by end-users in a broad range of industries.
Over 2,000,000 users employed Ardent products. A sampling of its customers
include:

Aetna John Deere
Anheuser-Busch Kaiser Permanente
Bankers Trust Lucent Technologies
Cabletron Motorola
Chase Manhattan Corporation New York City Library
Eurotunnel Sears, Roebuck &
France Telecom Company
Fujitsu Lab Sony Corporation
GE Aerospace Stanford University
Hyatt International Travelers Insurance
Hewlett Packard U.S. Sprint
IBM Wells Fargo
Xerox

PRODUCT DEVELOPMENT

The Company believes that continuing enhancements of its products and the
development of new products will be required in order to maintain its
competitive position.

In 1997, the Company began shipping commercially UniVerse version 9.4.1;
UniData version 4.1; UniData 3.3/NT; RedBack version 2.0; wIntegrate version
3.0; System Builder 3.1; O2 version 5.0; DataStage version 2.2 and DataStage
version 3.0/NT.

Throughout the year, the Company invested in the further development of
these existing products and established new technology sharing relationships to
begin work on new products. The Company's development efforts are focused on
enhancing the features of and adding new functionality to all of its products.

In 1997, 1996, and 1995, the Company's expenses relating to product
development were $7,180,000, $8,875,000, and $10,111,000 respectively. The
Company has experienced little turnover in its product development personnel and
believes that the experience, stability, and depth of its product development
staff are important factors in the Company's success.

COMPETITION

The computer software and service industry is intensely and increasingly
competitive. Because of the breadth of its overall product offering, Ardent
competes with many companies offering alternative solutions. Many of these firms
have greater financial, marketing and technical resources than Ardent. They may
be able to adapt more quickly to new or emerging technologies and standards or
changes in customer requirements, or they may be able to devote greater
resources to the promotion and sale of their products than can Ardent.

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The Company competes with other providers of database management products
and services for resellers. The Company's resellers in turn compete with the
vendors of other computer software and service providers.

EMPLOYEES

As of December 31, 1997, the Company had a total of 316 employees
worldwide, consisting of 187 in sales, support and marketing, 72 in engineering,
and 57 in finance and administration. The Company has experienced no work
stoppages and believes its relations with its employees are good.

PROPRIETARY RIGHTS AND LICENSES

The Company depends upon a combination of copyrights and restrictions on
access to its trade secrets to protect its proprietary rights. The Company
distributes its products under software license agreements which grant customers
a perpetual, non-exclusive license to the Company's products and contain terms
and conditions prohibiting the unauthorized reproduction or transfer of the
Company's products. Generally, the Company's products are furnished to customers
only in object code form. In the limited cases where the Company makes its
source codes available to third parties, it does so only under an obligation of
confidentiality. In addition, the Company generally enters into confidentiality
agreements with management and programming staff and limits access to and
distribution of its proprietary information.

While the Company has not registered any of its copyrights, it generally
includes copyright notices in its software. Despite these precautions, it may be
possible for unauthorized third parties to copy aspects of the Company's
products or to obtain information that the Company regards as proprietary.

The Company believes that, due to the rapid pace of innovation within the
software industry, factors such as the technological and creative skills of its
personnel and ongoing reliable product maintenance and support are more
important in establishing and maintaining a leadership position within the
industry than are the various legal protections of its technology. In addition,
the Company believes its policy of not furnishing updates, enhancements and
other continuing product support to unauthorized users of its software products
substantially reduces the risk of unauthorized reproduction.

All trademarks and registered trademarks used herein are the property of
their respective owners.

CAUTIONARY STATEMENT

When used anywhere in the Form 10-K and in future filings by the Company
with the Securities and Exchange Commission, in the Company's press releases and
in oral statements made with the approval of an authorized executive officer of
the Company, the words or phrases "will likely result", "are expected to", "will
continue", "is anticipated", "estimated", "project", or "outlook" or similar
expressions (including confirmations by an authorized executive officer of the
Company or any such expressions made by a third party with respect to the
Company) are intended to identify "forward-looking statements," which speak only
as of the date made. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements. The Company wishes to advise readers that the
various risk factors described below in this Form 10-K could cause the Company's
actual results for future periods to differ materially from any opinions or
statements expressed with respect to future periods in any current statements.
The Company specifically declines any obligation to publicly release the result
of any revisions which may be made to any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.

RISK FACTORS

Information with respect to risk factors is located in Item 7,
"Management's Discussion of Financial Condition and Results of Operations" under
the caption "Factors Affecting Future Results".

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ITEM 2. PROPERTIES

The Company's principal administrative, marketing, product development, and
support facilities are located in Westboro, Massachusetts, where the Company
occupies approximately 90,000 square feet of office space under a lease that
expires in 2014. The Company also leases office space for its twenty US and
foreign sales and support offices and one foreign product development office.
The terms of these leases generally range from one to five years. The Company
believes the current space is adequate for its current needs and that additional
space will be available as needed.

ITEM 3. LEGAL PROCEEDINGS

LITIGATION

The Company is a defendant, together with certain of its officers, in two
actions initially filed in October 1995 in the U.S. District Court for the
District of Massachusetts. Those actions have been consolidated through the
filing of a Consolidated Amended Complaint (the "Complaint"). The plaintiffs
allege in the Complaint that the Company and certain of its officers, during
July through October 1995, made certain untrue statements and failed to disclose
certain information regarding the Company's prospective financial performance in
violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder and that such statements and omissions artificially inflated the
market prices of the Company's stock. The plaintiffs purport to bring the
actions on behalf of certain classes of stockholders and seek damages in
unspecified amounts. The Company has denied the allegations in its answer to the
Complaint. The discovery stage of the proceeding is now substantially complete
and the Company has filed a motion for summary judgement which is expected to be
heard within the next several months. Company management believes that the
actions are without merit and plans to continue to oppose them vigorously.

The Company is a defendant in two actions filed against Unidata, prior to
its merger with the Company, one in May, 1996 in the U.S. District Court for the
Western District of Washington and one filed in September, 1996, in the U.S.
District Court for the District of Colorado. The plaintiffs allege in both suits
that Unidata authorized usage of certain Unidata products for distribution and
assert claims for fraud, breach of contract, unfair competition, RICO
violations, and trademark and copyright infringement. Unidata denied the
allegations in its answers to the complaint and the proceedings for each case
are currently in the arbitration stage. Company management believes that the
actions are without merit and plans to continue to oppose them vigorously.

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

No matters were submitted to a vote of the Company's stockholders during
the fourth quarter of the year ended December 31, 1997.

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PART II

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

Common stock of Ardent Software, Inc. is traded on the NASDAQ Stock Market
under the symbol "ARDT" (formerly "VMRK"). The table below presents the high and
low prices for Ardent Software, Inc. common stock for the periods indicated. The
prices reflect interdealer prices, without retail mark-ups, mark-downs or
commissions, and may not necessarily represent actual transactions.

1997 HIGH LOW
---- ------- ------
First Quarter................................ $ 7.875 $ 5.75
Second Quarter............................... 8.625 5.875
Third Quarter................................ 10.875 7.75
Fourth Quarter............................... 11.75 6.625

1996 HIGH LOW
---- ------- ------
First Quarter................................ $ 9.875 $ 6.50
Second Quarter............................... 12.625 7.00
Third Quarter................................ 11.125 6.50
Fourth Quarter............................... 10.00 5.50

The Company has not paid cash dividends on its common stock and does not
intend to do so in the foreseeable future. The Company presently intends to
retain its earnings to finance future growth of its business. Cash dividends are
subject to restriction under the Company's line of credit agreement. As of
December 31, 1997, there were approximately 305 shareholders of record and
approximately 4,000 beneficial owners of the Company's common stock.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

1997 1996 1995 1994 1993
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue:
Software.................................................. $31,494 $35,149 $37,365 $40,867 $39,486
Services and other........................................ 26,060 34,117 30,999 24,585 17,717
------- ------- ------- ------- -------
Total revenue........................................... 57,554 69,266 68,364 65,452 57,203
------- ------- ------- ------- -------
Costs and expenses:
Cost of software.......................................... 3,961 4,745 5,040 4,989 4,335
Cost of services and other................................ 12,678 18,552 16,539 11,870 9,710
Selling and marketing..................................... 23,219 26,929 26,082 23,885 22,332
Product development....................................... 7,180 8,875 10,111 10,605 10,211
General and administrative................................ 5,237 7,351 7,908 6,801 7,345
Merger integration, exit and restructuring costs.......... -- 4,322 6,882 1,700 4,800
Litigation................................................ -- -- 499 650 --
Purchased research and development........................ -- -- -- 2,750 --
------- ------- ------- ------- -------
Total costs and expenses................................ 52,275 70,774 73,061 63,250 58,733
------- ------- ------- ------- -------
Income (loss) from operations............................... 5,279 (1,508) (4,697) 2,202 (1,530)
------- ------- ------- ------- -------
Other income (expense):
Other income (net)........................................ 930 472 664 626 432
Interest expense.......................................... (1,025) (869) (990) (105) (20)
Loss on investment in joint venture....................... -- (176) -- -- --
------- ------- ------- ------- -------
Total other income (expense)............................ (95) (573) (326) 521 412
Income (loss) before provision for income taxes,
extraordinary items and change in accounting.............. 5,184 (2,081) (5,023) 2,723 (1,118)
Provision (credit) for income taxes......................... 1,800 560 (1,133) 2,944 1,080
------- ------- ------- ------- -------
Income (loss) before extraordinary items and change in
accounting................................................ 3,384 (2,641) (3,890) (221) (2,198)
Extraordinary item -- loss from disposal of assets acquired
in a pooling of interests, net of tax benefit............. -- (4,734) -- -- --
Change in accounting........................................ -- -- -- -- 650
------- ------- ------- ------- -------
Net income (loss)........................................... $ 3,384 $(7,375) $(3,890) $ (221) $(1,548)
======= ======= ======= ======= =======
Basic net income (loss) per common share:
Before extraordinary item or change in accounting......... $ 0.41 $ (0.33) $ (0.49) $ (0.03) $ (0.29)
Net income (loss)......................................... $ 0.41 $ (0.91) $ (0.49) $ (0.03) $ (0.21)
Diluted net income (loss) per common share:
Before extraordinary item or change in accounting......... $ 0.40 $ (0.33) $ (0.49) $ (0.03) $ (0.29)
Net income (loss)......................................... $ 0.40 $ (0.91) $ (0.49) $ (0.03) $ (0.21)
Basic weighted average number of common shares
outstanding............................................... 8,199 8,096 8,013 7,824 7,515
======= ======= ======= ======= =======
Diluted weighted average number of common and common
equivalent shares outstanding............................. 8,531 8,096 8,013 7,824 7,515
======= ======= ======= ======= =======

1997 1996 1995 1994 1993
------- ------- ------- ------- -------

CONSOLIDATED BALANCE SHEET DATA:
Cash and equivalents........................................ $23,224 $14,733 $12,267 $16,017 $16,649
Working capital............................................. 21,492 14,282 17,566 22,668 19,233
Total assets................................................ 57,646 59,977 63,353 65,482 47,422
Long term debt, less current portion........................ 8,798 9,015 9,227 9,438 2
Stockholders' equity........................................ 33,531 28,831 37,167 39,338 33,701

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

The following table sets forth certain items from the Company's
Consolidated Statement of Operations as a percentage of total revenue and the
percentage change in dollar amounts of such items.

YEAR ENDED DECEMBER 31 PERIOD-TO-PERIOD CHANGE
----------------------- ------------------------------
1997 1996 1995 1997 VS. 1996 1996 VS. 1995
----- ----- ----- ------------- -------------

Revenue:
Software.................................. 54.7% 50.7% 54.7% (10.4)% (5.9)%
Services and other........................ 45.3 49.3 45.3 (23.6) 10.1
----- ----- ----- ------ ------
Total revenue........................... 100.0 100.0 100.0 (16.9) 1.3
----- ----- ----- ------ ------
Costs and expenses:
Costs of software......................... 6.9% 6.9% 7.4% (16.5)% (5.9)%
Costs of services and other............... 22.0 26.8 24.2 (31.7) 12.2
Selling and marketing..................... 40.3 38.9 38.2 (13.8) 3.2
Product development....................... 12.5 12.8 14.8 (19.1) (12.2)
General and administrative................ 9.1 10.6 11.6 (28.8) (7.0)
Merger integration, restructuring costs... -- 6.2 10.1 (100.0) (37.2)
Litigation costs.......................... -- -- .7 * *
----- ----- ----- ------ ------
Total costs and expenses................ 90.8 102.2 107.0 (26.1) (3.1)
----- ----- ----- ------ ------
Income (loss) from operations............... 9.2% (2.2)% (7.0)% 450.1% 67.9%
===== ===== ===== ====== ======

* Not meaningful

The Company's revenue is derived from the licensing of software and the
delivery of related services. These services include consulting, training and
product maintenance. The Company generally licenses its software for use on
individual computers. Customers may elect to contract with the Company for
product maintenance, which includes product and documentation enhancements, as
well as telephone support for product problem resolution, by paying annual or
quarterly fees or paying fees based upon usage of such maintenance services.

1997 COMPARED TO 1996

The Company's total revenue decreased 17% to $57,554,000 in 1997 from
$69,266,000 in 1996. The overall decline in total revenue is primarily due to
the Company having exited certain non-strategic and unprofitable businesses in
the fourth quarter of 1996, including the Object Studio product line and related
services. This decrease is also the result of the decline in the value of
overseas revenue due to the strengthening of the US dollar in 1997 as
approximately 38% of total revenue for 1997 and 40% of revenue for 1996 was
contributed from foreign operations.

Software license revenue decreased 10% to $31,494,000 in 1997 from
$35,149,000 in 1996. This decrease is primarily due to the elimination of sales
of the Object Studio product line, as noted above. This decline was partially
offset by the impact of revenue associated with the Company's data warehouse
product, DataStage, which was released in late January, 1997. Software revenue
increased to approximately 55% of total revenue in fiscal year 1997 from 51% in
1996.

Services and other revenue declined 24% to $26,060,000 in 1997 from
$34,117,000 in 1996. This decrease is due to the elimination of Object Studio
related consulting and maintenance services, which represented approximately 50%
of consulting revenue and 12% of maintenance revenue in fiscal year 1996. The
Company also disposed of its third-party education business in 1996 which had
represented approximately 45% of the Company's training revenue. This decline
was partially offset by the revenue associated with DataStage consulting
projects, as well as the increase in maintenance revenue consistent with the
growth of the Company's installed license base.

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both 1997 and 1996. The dollar decrease in costs of software for 1997 compared
to 1996 is a result of the write-off of certain intangible assets in connection
with the restructuring and extraordinary charges recorded in December 1996, the
decline in license revenue and the expiration of certain royalty contracts in
late 1997.

Costs of services and other, which consist of personnel-related costs,
outside consulting fees, facilities and other costs associated with the delivery
of consulting, training and maintenance revenues, decreased 32% to $12,678,000
in 1997 from $18,552,000 in 1996 due to the elimination of Object Studio related
consulting and maintenance costs. As a percent of service and other revenue the
costs of these services decreased to 49% in 1997 from 54% in 1996. The profit
margin associated with services and other revenue increased approximately 5% in
1997 due to a change in the sales mix. A higher percentage of services and other
revenue in 1997 is comprised of customer maintenance support revenue which
typically has a higher profit margin than revenue derived from training and
consulting services.

Selling and marketing expenses, which consist primarily of sales
organization costs, marketing program expenses, advertising and salespersons
salaries and commissions, decreased 14% to $23,219,000 in 1997 from $26,929,000
in 1996. As a percent of total revenue, sales and marketing costs increased 1%
to 40% of revenue in 1997 from 39% of revenue in 1996. The increase in sales and
marketing costs as a percentage of revenue is a result of the increase in
DataStage marketing and program activities throughout 1997 and the increase in
the data warehouse sales force. These increases were offset by savings
associated with the elimination of Object Studio marketing activities.

Product development expenses, which consist principally of costs of
development staff and facility-related costs, decreased 19% to $7,180,000 in
1997 from $8,875,000 in 1996. As a percent of total revenue, product development
expenses decreased 1% to 12% of revenue in 1997 from 13% in 1996. The relative
flat level of spending as a percentage of revenue in 1997 over 1996 is due to
the cost savings associated with the elimination of development efforts
previously dedicated to the Object Studio product offset by an increase in
spending on data warehouse product development.

General and administrative expenses, which consist of the costs of finance,
legal, human resources, information systems and administrative functions,
decreased 29% to $5,237,000 in 1997 from $7,351,000 in 1996. As a percent of
total revenue, general and administrative costs decreased 2% to 9% in 1997 from
11% in 1996. This decrease in expense is primarily due to the decrease in the
bad debt provision, as well as the elimination of the administrative costs
associated with the Company's German subsidiary, which is currently inactive as
it had previously sold Object Studio products and services.

Other expenses decreased by 83% during 1997 when compared to 1996. This
decrease is due principally to interest income earned on the increasing levels
of cash and equivalents throughout 1997. Also, in 1996 the Company recorded a
loss on investment of joint venture of $176,000. There was no gain or loss
recognized from the investment in the joint venture in 1997.

The Company recorded a $1,800,000 tax provision in 1997 on income before
tax of $5,184,000 representing an effective rate of approximately 35%. The 1997
tax provision was a result of earnings generated from worldwide operations
partially offset by the reduction of the valuation allowance associated with the
Company's net operating losses due to the utilization of foreign net loss
carryforwards which had been fully reserved for in prior years. Future effective
tax rates will be dependent on a number of factors including but not limited to
geographical mix of earnings. Total deferred tax assets, net of liabilities,
amount to $8,557,000 against which the Company has provided a valuation
allowance of $5,247,000 at December 31, 1997. Realization of the Company's net
deferred tax assets is dependent upon the Company generating sufficient taxable
income in future years in appropriate tax jurisdictions to obtain benefit from
the reversal of temporary differences and from net operating loss carryforwards.

1996 COMPARED TO 1995

The Company's total revenue increased 1% to $69,266,000 in 1996 from
$68,364,000 in 1995. Software license revenue decreased 6% to $35,149,000 in
1996 from $37,365,000 in 1995. The overall decline in license revenue resulted
from decreased sales of the Hyperstar middleware product, the ESL integrated
development

11
12

tool and the UniVerse database management software. The decline in sales of the
UniVerse product can be attributed to delays in new UniVerse orders as customers
awaited the release of UniVerse 9.0, which was released for general availability
in the middle of the fourth quarter of 1996. Sales of UniVerse licenses for the
fourth quarter of 1996 exceeded sales for the second and third quarters of 1996.

Services and other revenue increased 10% to $34,117,000 in 1996 from
$30,999,000 in 1995. All the major elements of services and other revenue
increased in 1996 versus 1995 with training revenue increasing 34% to
$5,821,000, consulting revenue increasing 10% to $10,496,000 and maintenance
revenue increasing 5% to $17,351,000 in 1996. The increase in training revenue
for 1996 came solely as a result of an increase in the training associated with
Ardent products such as UniVerse. The Company undertook, in 1996, a strategy of
aggressively selling appropriate training and education courses associated with
the sale of new Ardent licenses. Consulting revenue increased as the Company was
engaged to perform several large consulting contracts during 1996. These
contracts were some of the largest in the Company's history and the revenue was
recognized ratably over the length of the contracts in 1996. Maintenance revenue
increased consistent with the expansion of the Company's installed base.

Costs of software, which consist of amortization of technology licenses and
capitalized software, product royalties, product documentation, packaging, media
and production costs decreased 6% to $4,745,000 in 1996 from $5,040,000 in 1995.
As a percentage of license revenue, costs of software remained consistent at 13%
for both 1996 and 1995. The dollar decrease in costs of software for 1996
compared to 1995 is a result of lower royalty costs due to a decrease in license
sales as well as the full amortization of previously capitalized software and
purchased technology.

Costs of services and other, which consist of personnel-related costs,
outside consulting fees, facilities and other costs associated with the delivery
of consulting, training and maintenance revenues, increased 12% to $18,552,000
in 1996 from $16,539,000 in 1995. As a percent of service and other revenue the
costs of these services increased to 54% in 1996 from 53% in 1995; causing a 1%
decrease in the gross margin realized from service revenue in 1996. The dollar
increase in the costs of services and other is due directly to the increase in
the level of services and other revenue recognized in 1996. The costs of
services and other is variable over a twelve month period and should increase or
decrease consistently with the services and other revenue. The 1% loss of gross
margin in 1996 versus 1995 is attributed to the larger increases in consulting
and training revenue as compared to maintenance revenue. Consulting and training
revenue historically have a lower gross margin than maintenance revenue.

Sales and marketing expenses which consist primarily of sales organization
costs, marketing program expenses, advertising and salespersons salaries and
commissions, increased 3% to $26,929,000 in 1996 from $26,082,000 in 1995. As a
percent of total revenue, sales and marketing costs increased 1% to 39% of
revenue in 1996 from 38% of revenue in 1995. The increase in sales and marketing
costs is a result of increased investment in the North American sales force in
the latter part of 1996, additional marketing spending associated with the
Company's release 9.0 of UniVerse and beta release of DataStage and continued
investment in its international operations. This increased spending occurred in
the second half of 1996 while the revenue impact from these products and related
promotions is expected to occur in the future.

Product development expenses, which consist principally of costs of
development staff and facility-related costs, decreased 12% to $8,875,000 in
1996 from $10,111,000 in 1995. As a percent of total revenue, product
development expenses decreased 2% to 13% of revenue in 1996 from 15% in 1995.
The Company experienced this reduction in 1996 due to economies of scale
associated with the merger with Easel Corporation, headcount reductions in
connection with the second quarter restructuring and the establishment of a
joint venture in connection with future development efforts associated with the
Object Studio product line.

General and administrative expenses, which consist of the costs of finance,
legal, human resources, information systems and administrative functions
decreased 7% to $7,351,000 in 1996 from $7,908,000 in 1995. As a percent of
total revenue, general and administrative costs decreased 1% to 11% in 1996 from
12% in 1995. The dollar decrease in expenses is due to a reduction in headcount
associated with these functions in 1996 and a reduction in the bad debt
provision recorded in 1996 compared to 1995.

12
13

In 1996, the Company recorded non-recurring charges of $4,322,000. These
charges related to two separate restructurings undertaken by the Company in May
and December 1996. In May, the Company recorded a $2,125,000 restructuring
charge associated with the downsizing of the ObjectStudio product line and
associated development efforts. The charge included approximately $1,900,000 in
employee severance and benefits, $153,000 for the write-off of capitalized
software and $72,000 for facility abandonment. In December the Company recorded
a $2,197,000 restructuring charge associated with further staff reductions
throughout all areas of the Company, as well as the write-off of certain
intangible assets associated with discontinued product lines. The charge
included approximately $1,591,000 in employee severance and $606,000 in
intangible asset write-offs.

Other expenses increased by 76% during 1996 when compared to 1995. This
increase is due principally to the Company's share in the loss of the joint
venture, which amounted to $176,000 in 1996.

The Company recorded a $560,000 tax provision in 1996 on a loss before tax
of $2,081,000. The 1995 effective tax rate was 23%. The 1996 tax provision was a
result of earnings generated from operations in certain international
jurisdictions, partially offset by the benefit of timing differences occurring
in the United States and was also impacted by certain non-deductible costs
associated with funding of the joint venture. In addition, benefit of losses
generated by certain foreign subsidiaries was not recognized due to uncertainty
regarding realization. Future effective tax rates will be dependent on a number
of factors including but not limited to geographical mix of earnings. Total net
deferred tax assets amount to $10,813,000 against which the Company has provided
a valuation allowance $5,444,000 at December 31, 1996. Realization of the
Company's net deferred tax assets is dependent upon the Company generating
sufficient taxable income in future years in appropriate tax jurisdictions to
obtain benefit from the reversal of temporary differences and from net operating
loss carryforwards.

In December 1996, as part of the Company's ongoing efforts to direct the
business towards growth areas, management, at the direction of the Board of
Directors, undertook a review of all existing businesses, including those
acquired through the merger with Easel. Following this review, in December 1996,
management recommended and the Board of Directors approved a comprehensive plan
to exit certain businesses. In general, these businesses represented portions of
the business with minimal profitability and lower future growth prospects. Among
the product lines and businesses to be discontinued or abandoned were certain
product lines of business present at the date of the merger with Easel. Because
these dispositions were not contemplated at the date of the merger and are
therefore outside of the normal course of business, they have been presented as
an extraordinary item in accordance with APB16. The extraordinary item
aggregated $5,918,000 before tax, with a related tax benefit of $1,184,000. See
Note 10 to the consolidated financial statements for further discussion.

INFLATION

Certain of the Company's expenses increase with general inflation in the
economy. However, the Company does not believe that its results of operations
have been, or will be, adversely affected by inflation.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations to date primarily through sales of
equity securities and positive cash flow from operations. As of December 31,
1997, the Company had $23,224,000 in cash and equivalents and $21,492,000 in
working capital. The Company has a working capital line of credit with a bank
under which the Company may borrow, on an unsecured basis, the lesser of up to
80% of domestic eligible accounts receivable and 70-80% of foreign eligible
accounts receivable or $10,000,000, conditioned upon meeting certain financial
covenants, including maintaining specified levels of quarterly earnings,
tangible net worth, working capital and liquidity. The line of credit also
limits the Company's ability to pay dividends. As of December 31, 1997, there
were no borrowings outstanding on the line.

Accounts receivable, net of the allowance for doubtful accounts, decreased
from $14,860,000 at December 31, 1996 to $9,823,000 at December 31, 1997. The
allowance for doubtful accounts decreased to $1,530,000 at December 31, 1997
from $1,864,000 at December 31, 1996. Throughout 1997, the Company

13
14

improved its receivable cash collections and generated $11,257,000 in cash from
operations. The Company used $2,224,000 in investing activities in 1997. The
Company's significant cash investments in 1997 consisted of expenditures for
capitalized software of $1,158,000 and expenditures made on the cash surrender
value of officers' life insurance of $707,000. Current liabilities decreased
from $22,131,000 as of December 31, 1996 to $15,317,000 as of December 31, 1997.
The decrease is attributable to the Company's pay down on the line of credit in
1997 of $1,462,000, as well as the decrease in accrued restructuring costs of
$4,478,000 which were also paid out in 1997. Long-term liabilities decreased
slightly year over year as payments were made on capital lease obligations.

The Company hedges its exposure to foreign currency fluctuations through
foreign exchange forward contracts. As of December 31, 1997, the Company had
foreign exchange forward contracts outstanding used to hedge foreign exchange
exposure on intercompany balances of certain of its international subsidiaries.
These contracts are comprised of contracts to sell foreign currency aggregating
$5,236,000 of notional amount (principally British pounds and French francs).
These contracts are short-term in duration (typically 90 days) and have limited
market risk, since decreases or increases in the unrealized gain or loss on any
position is generally fully offset by corresponding increases or decreases in
gains and losses on the intercompany balances being hedged. Credit risk is
limited to the risk that counterparties to these contracts fail to deliver at
maturity. The Company deals only with reputable financial institutions in
entering into these contracts and therefore believes that credit risk is
insignificant. Currency forward contracts are used only to hedge identified
foreign currency commitments and are never held for speculative purposes. The
gains and losses associated with currency rate changes on these contracts, net
of the corresponding gains and losses on the hedged intercompany accounts, are
recorded as a component of other income/expense in the period the change occurs.
Foreign exchange gains or losses were not material in any period presented.

The Company believes that its available cash and anticipated cash generated
from operations will be sufficient to finance the Company's operations and meet
its foreseeable cash requirements, including expected capital expenditures, at
least through 1997 and for the foreseeable future. These sources can be
augmented by short-term borrowings under the credit facility, which currently
has availability of $5,830,000.

During the year, the Company transferred its rights to certain accounts
receivable to a finance company in exchange for cash payments from the finance
company. Receivables sold under these arrangements aggregated $7,150,000 in
1997.

The Company, together with a third-party leasing company, offers a leasing
program available to current and potential customers. Under the program,
customers are able to purchase Ardent products through operating and capital
leases with a third party lessor. All sales under this program are subject to
the Company's normal revenue recognition policies and are made without recourse
to the Company. Sales under the program in the year ended December 31, 1997
totaled approximately $1,536,000.

As part of the merger with Unidata, Inc. in February, 1998, the Company
estimates to incur nonrecurring costs of approximately $14,800,000. This
estimate includes $3,900,000 for financial advisor, legal and accounting fees
related to the merger and $10,900,000 for costs associated with the combining
operations of the two companies including estimated cash expenditures of
$5,500,000 for severance and benefits, $2,000,000 for closure of facilities and
$3,400,000 for non-cash charges for the write-off of redundant assets. The non-
recurring cost is an estimate only, although it is not likely that material
additional costs will be incurred.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, "Reporting Comprehensive Income" (SFAS 130) and SFAS No. 131,
"Disclosure About Segments of an Enterprise and Related Information" (SFAS 131).
SFAS 130 requires the presentation of an additional primary financial statement
in the format prescribed by the standard. SFAS 131 requires disclosure about the
Company's operations on a disaggregated basis consistent with management's
internal reporting structure. The Company will adopt these standards in the
first quarter of fiscal year 1998.

14
15

In October 1997, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 97-2, "Software Revenue Recognition." The
Company intends to adopt this pronouncement in the first quarter of fiscal year
1998 and does not expect it to have a material affect on the revenue recognition
practices of the Company.

YEAR 2000

The Company has conducted a review of its computer systems to identify
those areas that could be affected by the "Year 2000" issue. The Company
presently believes, with modification to the existing software, the "Year 2000"
problem will not pose significant operational problems and costs to complete
this process are not anticipated to be material to its financial position or
results of operations in any given year.

FACTORS AFFECTING FUTURE RESULTS

The Company operates in a rapidly changing environment that involves a
number of risks, many of which are beyond the Company's control. The following
discussion highlights some of these risks.

The Company's future operating results may vary substantially from period
to period. The timing and amount of the Company's license fee revenues are
subject to a number of factors that make estimation of revenues and operating
results prior to the end of the quarter extremely uncertain. Quarterly
fluctuations may be caused by several factors including but not limited to
timing of customer orders, adjustments of delivery schedules to accommodate
customer or regulatory requirements, timing and level of international sales,
mix of products sold, and timing of level of expenditures for sales, marketing
and new product development. The Company generally ships its products upon
receipt of orders and maintains no significant backlog. The Company has
experienced a pattern of recording 60 percent to 80 percent of its quarterly
revenues in the third month of the quarter, with a concentration of such
revenues in the last two weeks of that third month. The Company's operating
expenses are based on projected annual and quarterly revenue levels and a
substantial portion of the Company's costs and expenses, including costs of
personnel and facilities, cannot be easily reduced. As a result, if projected
revenues are not achieved in the expected time frame, the Company's results of
operations for that quarter would be adversely affected. Accordingly, the
results of any one period may not be indicative of the operating results for
future periods.

The market price of the Company's common stock is highly volatile. Failure
to achieve revenue, earnings, and other operating and financial results as
forecasted or anticipated by analysts could result in an immediate adverse
effect on the market price of the Company's stock.

Technological developments, customer requirements and industry standards
change frequently in the computer software database market. As a result, the
Company's success will depend upon our ability to enhance current products and
to develop or acquire new products which meet customer needs and comply with
industry standards. The possibility exists that the Company's products will be
rendered obsolete by technological advances, or that the Company will not be
able to develop and market the products required to continue to be competitive.
Certain of the Company's planned products are in various stages of development.
It is possible that such products will prove not to be commercially viable or
that we will experience operational problems with such products after commercial
introduction that could delay or defeat the ability of such products to generate
revenue. The products that the Company intends to devote substantial resources
in the foreseeable future are object oriented database products and data
warehousing and datamart products. There is no assurance that products in either
of these two areas will be commercially successful. In particular, object
technology requires customers to make a substantial investment in retraining
application programmers. Several companies have failed in attempts to introduce
object technology and there is no assurance that such technology will gain
widespread customer acceptance. The Company has experienced product delays and
undetected errors or bugs in certain products in the past and may experience
such problems in the future. The Company's success will also depend on the
ability of its products to interoperate and perform well with existing and
future industry-standard leading application software products intended to be
used in connection with relational database management systems.

15
16

Approximately 38% of the Company's total revenue in fiscal 1997 was
attributable to international sales made through international subsidiaries.
Because a substantial portion of the Company's total revenue is derived from
such international operations, which are conducted in foreign currencies,
changes in the value of those currencies relative to the United States dollar
may affect the Company's results of operations and financial position. The
Company engages in certain currency-hedging transactions intended to reduce the
effect of fluctuations of foreign currency exchange rates on the Company's
results of operations. However, there can be no assurance that such hedging
transactions will materially reduce the effect of fluctuations on such results.
If, for any reason, exchange or price controls or other restrictions on the
conversion of foreign currencies were imposed, the Company's business could be
adversely affected. Other potential risks inherent in the Company's
international business generally include longer payment cycles, greater
difficulties in accounts receivable collection and the burdens of complying with
a wide variety of foreign laws and regulations.

The market for application development software is intensely competitive.
The Company competes with many companies offering alternative solutions to the
needs addressed by the Company's products. Many of these competitors may have
greater financial, marketing, or technical resources than the Company and may be
able to adapt more quickly to new or emerging technologies and standards or
changes in customer requirements or to devote greater resources to the promotion
and sale of their products than the Company.

The Company's business is led by a number of key, highly skilled technical,
managerial and marketing personnel, the loss of which could adversely affect the
Company. Competition of such personnel in the software industry is intense. The
success of the Company depends in large part on the ability to hire and retain
such personnel.

The Company cannot guarantee that the merger with Unidata, Inc.,
consummated on February 10, 1998, will be efficient, effective and timely enough
to achieve the anticipated benefits of the merger. Integrating the two companies
successfully will require the timely combination of management, sales and
marketing research and development teams that are in different geographic
locations. Integration of the companies also will require the combination of
complex software technology, product lines and software development plans.

James T. Dresher owns beneficially approximately 21% of the outstanding
common stock of the Company. Such concentration of ownership gives Mr. Dresher
substantial power to affect the outcome of the election of directors and other
matters requiring stockholder vote and, in addition, may have the effect of
delaying or preventing a change in control of the Company.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's consolidated financial statements and the related independent
auditor's report are presented in the following pages. The consolidated
financial statements filed in this Item 8 are as follows:

PAGE
----

Independent Auditors' Report................................ 17
Consolidated Balance Sheets as of December 31, 1997 and
1996...................................................... 18
Consolidated Statements of Operations for each of the three
years in the period ended December 31, 1997............... 19
Consolidated Statements of Stockholders' Equity for each of
the three years in the period ended December 31, 1997..... 20
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1997............... 21
Notes to Consolidated Financial Statements.................. 22
Selected Quarterly Financial Data (unaudited)............... 35

16
17

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Ardent Software, Inc. :

We have audited the consolidated balance sheets of Ardent Software, Inc.
(formerly VMARK Software, Inc.) and its subsidiaries (the Company) as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 1997. Our audits also included the financial
statement schedule listed in the Index at Item 14. These financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule 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, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31,
1997 and 1996, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

Deloitte & Touche LLP

Boston, Massachusetts
January 23, 1998

17
18

ARDENT SOFTWARE, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
----------------------
1997 1996
--------- ---------
(IN THOUSANDS, EXCEPT
SHARE DATA)

ASSETS
Current assets:
Cash and equivalents...................................... $ 23,224 $ 14,733
Accounts receivable (less allowance for doubtful accounts,
$1,530 in 1997 and $1,864 in 1996)...................... 9,823 14,860
Income tax receivable..................................... 322 1,103
Prepaid expenses and other current assets................. 2,963 4,309
Deferred income taxes..................................... 477 1,320
Assets held for sale...................................... -- 420
-------- --------
Total current assets.................................... 36,809 36,745
-------- --------
Property and equipment:
Building under capital lease.............................. 9,689 9,689
Computer equipment........................................ 6,906 7,040
Office furnishings and fixtures........................... 3,207 3,187
Leasehold improvements.................................... 1,295 1,239
-------- --------
Total................................................... 21,097 21,155
Less accumulated depreciation and amortization............ 8,923 6,950
-------- --------
Property and equipment -- net............................. 12,174 14,205
-------- --------
Other long-term assets:
Intangible assets -- net.................................. 3,502 3,667
Deferred income taxes..................................... 2,827 3,717
Other long-term assets.................................... 2,334 1,643
-------- --------
Total other long-term assets............................ 8,663 9,027
-------- --------
Total....................................................... $ 57,646 $ 59,977
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit............................................ $ -- $ 1,462
Current portion of capital lease obligation............... 216 211
Accounts payable.......................................... 1,956 2,779
Accrued compensation...................................... 2,357 2,021
Accrued expenses.......................................... 4,077 4,374
Accrued restructuring costs............................... 1,068 5,546
Deferred revenue.......................................... 5,643 5,738
-------- --------
Total current liabilities............................... 15,317 22,131
-------- --------
Long-term liabilities:
Capital lease obligation.................................. 8,798 9,015
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, authorized 10,000,000
shares; issued none
Common stock, $.01 par value, authorized 25,000,000
shares; issued and outstanding 8,596,905 in 1997 and
8,380,474 in 1996....................................... 85 83
Additional paid-in capital................................ 47,767 46,297
Accumulated deficit....................................... (11,200) (14,584)
Cumulative translation adjustment......................... (79) 105
Treasury stock at cost, 280,082 shares.................... (2,956) (2,956)
Unearned compensation..................................... (86) (114)
-------- --------
Total stockholders' equity.............................. 33,531 28,831
-------- --------
Total....................................................... $ 57,646 $ 59,977
======== ========

See notes to consolidated financial statements.

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19

ARDENT SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)

Revenue:
Software.................................................. $31,494 $35,149 $37,365
Services and other........................................ 26,060 34,117 30,999
------- ------- -------
Total revenue........................................... 57,554 69,266 68,364
------- ------- -------
Costs and expenses:
Cost of software.......................................... 3,961 4,745 5,040
Cost of services and other................................ 12,678 18,552 16,539
Selling and marketing..................................... 23,219 26,929 26,082
Product development....................................... 7,180 8,875 10,111
General and administrative................................ 5,237 7,351 7,908
Merger integration, exit and restructuring costs.......... -- 4,322 6,882
Litigation costs.......................................... -- -- 499
------- ------- -------
Total costs and expenses................................ 52,275 70,774 73,061
------- ------- -------
Income (loss) from operations............................... 5,279 (1,508) (4,697)
------- ------- -------
Other expense:
Other income (net)........................................ 930 472 664
Interest expense.......................................... (1,025) (869) (990)
Loss on investment in joint venture....................... -- (176) --
------- ------- -------
Total other expense..................................... (95) (573) (326)
Income (loss) before provision for income taxes and
extraordinary item........................................ 5,184 (2,081) (5,023)
Provision for (benefit from) income taxes................... 1,800 560 (1,133)
------- ------- -------
Income (loss) before extraordinary item..................... 3,384 (2,641) (3,890)
Extraordinary loss from disposal of assets acquired in a
pooling of interests, net of tax benefit of $1,184........ -- (4,734) --
------- ------- -------
Net income (loss)........................................... $ 3,384 $(7,375) $(3,890)
======= ======= =======
Basic income (loss) per common share:
Before extraordinary item................................. $ 0.41 $ (0.33) $ (0.49)
Net income (loss)......................................... $ 0.41 $ (0.91) $ (0.49)
======= ======= =======
Diluted income (loss) per common share:
Before extraordinary item................................. $ 0.40 $ (0.33) $ (0.49)
Net income (loss)......................................... $ 0.40 $ (0.91) $ (0.49)
======= ======= =======
Shares for basic computation................................ 8,199 8,096 8,013
Shares for diluted computation.............................. 8,531 8,096 8,013
======= ======= =======

See notes to consolidated financial statements.

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20

ARDENT SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

COMMON STOCK ADDITIONAL CUMULATIVE
------------------ PAID-IN ACCUMULATED TRANSLATION TREASURY UNEARNED
SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT STOCK COMPENSATION TOTAL
--------- ------ ---------- ----------- ----------- -------- ------------ -------
(IN THOUSANDS, EXCEPT SHARE DATA)

Balance, January 1, 1995.... 7,893,255 $78 $42,719 $ (3,319) $(140) $ -- $ -- $39,338
Issuance of stock for
cash...................... 214,217 3 1,423 1,426
Repurchase and retirement of
common stock.............. (3,777) (59) (59)
Tax benefit arising from
early disposition of stock
options................... 300 300
Net loss.................... (3,890) (3,890)
Translation adjustment...... 52 52
--------- --- ------- -------- ----- ------- ----- -------
Balance, December 31,
1995...................... 8,103,695 81 44,383 (7,209) (88) -- -- 37,167
Issuance of stock for
cash...................... 276,779 2 1,582 1,584
Unearned compensation....... 140 (114) 26
Repurchase of common stock
(280,082 shares).......... (2,956) (2,956)
Tax benefit arising from
early disposition of stock
options................... 192 192
Net loss.................... (7,375) (7,375)
Translation adjustment...... 193 193
--------- --- ------- -------- ----- ------- ----- -------
Balance, December 31,
1996...................... 8,380,474 83 46,297 (14,584) 105 (2,956) (114) 28,831
Issuance of stock for
cash...................... 216,431 2 1,324 1,326
Unearned compensation....... 28 28
Tax benefit arising from
early disposition of stock
options................... 146 146
Net income.................. 3,384 3,384
Translation adjustment...... (184) (184)
--------- --- ------- -------- ----- ------- ----- -------
Balance, December 31,
1997...................... 8,596,905 $85 $47,767 $(11,200) $ (79) $(2,956) $ (86) $33,531
========= === ======= ======== ===== ======= ===== =======

See notes to consolidated financial statements.

20
21

ARDENT SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)

Cash flows from operating activities:
Net income (loss)........................................... $ 3,384 $(7,375) $(3,890)
Adjustments to reconcile net income (loss) to cash provided
by operating activities (net of acquisitions):
Depreciation and amortization............................. 2,233 2,873 2,681
Amortization of intangible assets......................... 1,620 2,801 4,333
Equity in loss of joint venture........................... -- 176 --
Deferred income taxes..................................... 1,703 16 (1,494)
Stock compensation........................................ 28 26 --
Writedown of assets in connection with exit of
businesses.............................................. -- 3,059 --
Increase (decrease) in cash from:
Accounts receivable....................................... 4,347 590 4
Other current assets...................................... 1,930 576 (1,259)
Current liabilities....................................... (3,988) 4,490 2,084
------- ------- -------
Cash provided by operating activities................... 11,257 7,232 2,459
------- ------- -------
Cash flows from investing activities:
Expenditures for property and equipment -- net............ (359) (1,820) (3,141)
Expenditures for intangible assets........................ -- (163) (2,250)
Capitalized software costs................................ (1,158) (1,658) (418)
Increase in cash surrender value of officers' life
insurance and deposits and other........................ (707) (115) (461)
------- ------- -------
Cash used in investing activities....................... (2,224) (3,756) (6,270)
------- ------- -------
Cash flows from financing activities:
Sale of common stock...................................... 1,326 1,584 1,426
Repurchase of common stock................................ -- (2,956) (59)
Repayments of note payable................................ -- (587) --
Borrowing (repayments) under line of credit............... (1,462) 1,462 (1,250)
Repayments of capital lease and other obligations......... (212) (240) (165)
------- ------- -------
Cash used in financing activities......................... (348) (737) (48)
------- ------- -------
Effect of exchange rate changes on cash..................... (194) (273) 109
------- ------- -------
Increase (decrease) in cash and equivalents................. 8,491 2,466 (3,750)
Cash and equivalents, beginning of year..................... 14,733 12,267 16,017
------- ------- -------
Cash and equivalents, end of year........................... $23,224 $14,733 $12,267
======= ======= =======

See notes to consolidated financial statements

21
22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business -- Ardent Software, Inc., formerly VMARK Software,
Inc. (see Note 12), and subsidiaries (the Company) designs, develops, markets,
sells and supports software for developing, deploying, and maintaining business
applications and data warehousing solutions. The Company also provides a
comprehensive range of services, including customer maintenance support,
training, on-site assistance and consulting. The Company has operations in the
United States, Canada, Europe, Australia, and Africa. Selling and marketing
activities are conducted through direct selling efforts, value-added resellers,
and distributors throughout the world. Research and development efforts are
conducted in the United States and the United Kingdom.

Use of Estimates -- The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires, out of
necessity, the use of estimates to determine the appropriate carrying value of
certain assets and liabilities. Each of these estimates requires the Company to
assess past history and to estimate probable outcomes in the future. Actual
results could differ from these estimates.

Basis of Presentation -- The consolidated financial statements include the
accounts of the Company and its subsidiaries, all of which are wholly owned. All
significant intercompany balances and transactions have been eliminated.

Foreign Currency Translation -- The functional currency of foreign
operations is deemed to be the local country's currency. Assets and liabilities
of operations outside the United States are translated into United States
dollars using current exchange rates at the balance sheet date. Results of
operations are translated at average exchange rates prevailing during each
period. Translation adjustments are accumulated as a separate component of
stockholders' equity.

Revenue Recognition -- Revenue from the sale of software licenses is
recognized upon shipment of the product provided that no significant obligations
remain and collection of the receivables is considered probable. Insignificant
vendor and post-contract support obligations, if any, are accrued upon shipment.
Revenue from customer maintenance support agreements is deferred and recognized
ratably over the term of the agreements. Revenue from training and consulting is
recognized as the related services are performed.

Concentration of Credit Risk -- The Company sells its products to various
companies in several industries. The Company performs on-going credit
evaluations of its customers and maintains allowances for potential credit
losses, and such losses have been within management's expectations. The Company
generally requires no collateral from its customers.

Software Development Costs -- Certain software development costs for
products and product enhancements are capitalized after technological
feasibility has been established. Such costs are included in intangible assets
and are amortized over two years using the straight-line method. Related
accumulated amortization was

22
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
approximately $352,000 and $119,000 at December 31, 1997 and 1996, respectively.
Research and development costs and software development costs incurred before
technological feasibility has been established are expensed as incurred.

Property and Equipment -- Purchased property and equipment is recorded at
cost. Leased equipment is recorded at the present value of the minimum lease
payments required during the lease period. Depreciation and amortization are
provided on the straight-line method over the estimated useful lives of the
related assets (three to eleven years) or over the terms of the related leases
(three to twenty years) whichever is shorter. Capitalized cost of the leased
assets was $9,689,000 and related accumulated amortization was $1,493,000 and
$1,008,000 at December 31, 1997 and 1996, respectively.

Intangible Assets -- Intangible assets, other than capitalized software
development costs, are principally comprised of purchased technology and
goodwill and are recorded at cost. Amortization expense is recorded to costs of
software and other depending on the use of the related intangible asset.
Amortization expense is provided on a straight-line method over the estimated
life of the asset (two to five years). The Company periodically reviews the
carrying value of intangible assets in relation to expectations of nondiscounted
future cash flows attributable to each asset. A permanent impairment in the
value of an intangible asset is recognized in operating results in the period
the impairment occurs. Accumulated amortization was $9,145,000 and $7,590,000 at
December 31, 1997 and 1996, respectively.

Cash Equivalents -- The Company considers all short-term, highly liquid
investments, purchased with a remaining maturity of three months or less, to be
cash equivalents.

Supplemental cash flow information is as follows ( in thousands):

YEAR ENDED DECEMBER 31,
--------------------------
1997 1996 1995
------ ------ ------

Cash paid for income taxes.............................. $ 136 $ 386 $2,906
Cash refunds of income taxes............................ 1,913 3,406 --
Cash paid for interest.................................. 1,025 869 896
Transfer of accounts receivable as consideration for
purchase acquisition.................................. -- -- 1,000

Income Taxes -- Deferred taxes are provided to reflect temporary
differences in the basis between book and tax assets and liabilities. Deferred
tax assets and liabilities are measured using currently enacted tax rates (see
Note 5).

Income (Loss) Per Common Share -- In the fourth quarter of 1997, the
Company adopted Statement of Financial Accounting Standards No. 128, Earnings
Per Share (SFAS 128). Prior to the fourth quarter of 1997, the Company computed
income (loss) per common share using the methods outlined in Accounting
Principles Board Opinion No. 15, Earnings Per Share, and its interpretations.
Previously reported income (loss) per common share for years prior to 1997 did
not differ from that computed using SFAS 128.

Basic income (loss) per common share is computed using the weighted average
number of common shares outstanding during each year. Diluted income (loss) per
common share reflects the effect of the Company's outstanding options (using the
treasury stock method), except where such items would be antidilutive.

23
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
A reconciliation between shares used for the computation of basic income
(loss) per common share and diluted is as follows (in thousands):

1997 1996 1995
------ ------ ------

Shares for basic computation............................ 8,199 8,096 8,013
Effect of dilutive stock options........................ 332 -- --
------ ------ ------
Shares for diluted computation.......................... 8,531 8,096 8,013
====== ====== ======

Fair Value of Financial Instruments -- Financial instruments held or used
by the Company include cash and its equivalents, accounts receivable, accounts
payable, capital lease obligations and foreign currency forward contracts. The
fair values of these instruments, which could change if market conditions
change, are based on management's estimates. With the exception of forward
contracts, management believes that the carrying value of these instruments
approximates fair value. The unrealized gain on foreign exchange contracts at
December 31, 1997 was approximately $107,000. At December 31, 1996 there was an
unrealized loss on foreign exchange contracts of approximately $306,000.

Stock-Based Compensation -- Compensation cost associated with awards of
stock or options to employees is measured using the intrinsic value method. Tax
benefits associated with early exercise of stock options are generally recorded
as increases to additional paid-in capital.

New Accounting Pronouncements -- In October 1997, the American Institute of
Certified Public Accountants released Statement of Position No. 97-2, Software
Revenue Recognition (SOP 97-2), which the Company will be required to adopt in
1998. Adoption of the provisions of SOP 97-2 will not result in significant
changes to the Company's historical revenue recognition practices and,
accordingly, is not expected to have a material impact on financial position,
results of operations or cash flows of the Company.

In June 1997, the Financial Accounting Standards Board (FASB) released
Statement of Financial Accounting Standards No. 131, Disclosures about Segments
of an Enterprise and Related Information (SFAS 131), which the Company will be
required to adopt in 1998. SFAS 131 will require the Company to provide
information about the segments of its business based upon discrete components of
its businesses. In addition, SFAS 131 requires that such information be provided
in greater detail than currently required. The Company is currently evaluating
its lines of business to determine reportable segments, but has not yet
completed such evaluation.

In June 1997, the FASB released Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income," (SFAS 130) which the Company will be
required to adopt in 1998. SFAS 130 requires that the Company provide a
prominent display of the components of items of other comprehensive income. The
only item that the Company currently records as other comprehensive income is
the change in cumulative translation adjustment resulting from changes in
exchange rates and the effect of those changes upon translation of the financial
statements of the Company's foreign operations. Adoption of SFAS 130 will not
have an effect on reported consolidated results of operations or financial
position.

Changes in Presentation -- Certain prior year amounts have been
reclassified to conform to the current year presentation.

2. MERGERS AND ACQUISITIONS

Merger with Unidata, Inc. (Unaudited)

On February 10, 1998, the Company merged with Unidata, Inc. (see Note 11).

24
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. MERGERS AND ACQUISITIONS -- (CONTINUED)
Merger with Easel Corporation

On June 14, 1995, the Company merged with Easel Corporation (Easel). In
connection with the merger, the Company issued approximately 1,500,000 shares of
common stock to Easel shareholders in exchange for substantially all of their
interest in Easel. The merger was accounted for as a pooling-of-interests.

In connection with the merger, the Company recorded one-time charges
aggregating $6,882,000, reflecting costs of integrating the operations of the
two companies, as well as the costs of personnel termination (for which a
specific plan was in place), facilities closures, and legal, accounting and
investment banking fees associated with the transaction. All related costs were
completely paid by the end of 1996.

ACQUISITIONS

During the last three years, the Company has made the following
acquisitions, all of which were accounted for as purchases and the results of
operations included with those of the Company from the date of acquisition
(amounts in thousands):

LIABILITIES TOTAL
COMPANY ACQUIRED CASH PAID ASSUMED CONSIDERATION
---------------- --------- ----------- -------------

FT Technology Institute (January 1996)..... $ 360 $ -- $ 360
VMARK Canada (September 1995).............. 1,329 171 1,500
Edgetech S.A. (January 1995)............... 1,500 -- 1,500

FT Technology Institute -- FT Technology Institute operates as an education
and service training business based in Sydney, Australia. The purchase price was
allocated between property and equipment and goodwill based upon an independent
appraisal. In December 1996, the Company decided to withdraw from this line of
business. The writedown of the remaining net book value of related assets and
employee termination costs are included in the results of operations in 1996 as
a component of costs and expenses. See Note 9.

VMARK Canada -- VMARK Canada previously operated as an independent
distributor for the Company. Of the total cash included in consideration for the
purchase, $750,000 was paid at closing and the remainder was payable in the form
of a note which was paid in February 1996. The purchase price was allocated
between property and equipment and intangible assets based upon an independent
appraisal.

Edgetech S.A. -- Edgetech S.A. previously operated as an independent
distributor for the Company. Of the total cash consideration shown above,
$500,000 was paid at closing and the remainder was payable in the form of a
note. In March 1995, the Company transferred an account receivable to the
sellers in full satisfaction of amounts due. The Company guaranteed collection
of the receivable, which has since been repaid, and paid interest to the sellers
aggregating $71,600. The purchase price was allocated between property and
equipment and intangible assets based upon an independent appraisal.

Pro Forma Results of Operations -- The results of operations of the
acquired entities were not significant to the Company. Accordingly, pro forma
information has not been presented.

Other Purchases -- During 1995, the Company purchased completed software
tools and technology from outside vendors totaling $480,000.

3. FINANCING AND LEASING ARRANGEMENTS

Leasing Arrangements

The Company has a twenty-year capital lease on its principal operating
facility which commenced in November 1994. The Company leases other office
facilities, motor vehicles and certain office furnishings under noncancelable
operating lease agreements expiring on various dates through December 2002.
Total rent

25
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. FINANCING AND LEASING ARRANGEMENTS -- (CONTINUED)
expense under all operating leases for the years ended December 31, 1997, 1996
and 1995 approximated $1,556,000, $1,832,000 and $2,665,000, respectively.

At December 31, 1997, future minimum payments under operating and capital
leases are due as follows (in thousands):

OPERATING LEASES CAPITAL LEASE
---------------- -------------

1998.............................................. $1,328 $ 982
1999.............................................. 863 982
2000.............................................. 552 982
2001.............................................. 392 982
2002.............................................. 38 982
Thereafter........................................ -- 12,147
------ -------
$3,173 17,057
======
Less amount representing interest................. (8,043)
-------
9,014
Amounts due within one year....................... 216
-------
Long-term debt.................................... $ 8,798
=======

Line of Credit

The Company has an unsecured working capital line of credit with a bank
under which the Company may borrow up to the lesser of 80% of domestic and
70-80% of foreign eligible accounts receivable or $10,000,000. The agreement
limits the Company's ability to pay dividends and, among other things, requires
the Company to maintain specified minimum levels of tangible net worth and
working capital and limits the ratio of debt to tangible net worth. Interest on
outstanding borrowings under the facility is at the bank's prime rate (8.5% and
8.25% at December 31, 1997 and 1996, respectively). At December 31, 1997 there
were no borrowings outstanding under the line of credit facility; as of that
date $5,830,000 was available to the Company under the line of credit.

Receivables Financing Arrangements

As part of the Company's working capital management, certain accounts
receivable are periodically factored to financial institutions. Such factoring
arrangements are treated as sales in accordance with SFAS 125, since the Company
relinquishes control and all rights over the accounts are transferred to the
factor. Receivables sold under these arrangements aggregated $7,150,000 in 1997.
These sales are typically done on a limited recourse basis, and any potential
losses are evaluated at the time the asset is sold. To date, no losses on
factored receivables have been incurred, other than the fee charged to the
Company by the factor.

The Company, together with a third-party leasing company, offers a leasing
program to current and potential customers. Under the program, customers are
able to purchase Ardent products through operating and capital leases with a
third party lessor. All sales under this program are subject to the Company's
normal revenue recognition policies and are made without recourse to the
Company. Sales under the program in the year ended December 31, 1997 totaled
approximately $1,536,000.

4. STOCKHOLDERS' EQUITY

Preferred Stock -- The Board of Directors is authorized to designate one or
more series of preferred stock and to establish the voting, dividend,
liquidation and other rights and preferences of the shares of each series, and
to provide for the issuance of shares of any series. The Board of Directors has
designated 15,000 shares of

26
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. STOCKHOLDERS' EQUITY -- (CONTINUED)
$0.01 par value preferred stock as Series A Junior Preferred Stock. At December
31, 1997, no shares of preferred stock were outstanding.

Preferred Share Purchase Rights -- On June 6, 1996, the Company's Board of
Directors declared a dividend of one purchase right (a "Right") for every
outstanding share of the Company's common stock. The Rights were distributed on
June 12, 1996 to holders of record as of that date. Each Right entitles the
holder to purchase from the Company one one-thousandth of a share of Series A
Junior Preferred Stock at a price of $75, subject to adjustments in certain
events. The Rights will be exercisable only if a person or group acquires 15% or
more of the outstanding shares of the Company's common stock or announces a
tender offer, the consummation of which would result in such person or group
owning 30% or more of the Company's common stock. If a person or group (other
than the Company and its affiliates) acquires 15% or more of the Company's
outstanding common stock, each Right (other than Rights held by such person or
group) will entitle the holder to receive shares of Common Stock, or in certain
circumstances, cash, property, or other securities of the Company, having a
market value of two times the exercise price of the Right. In addition if the
Company were acquired in a merger or other business combination, or if more than
50% of its assets or earning power were sold, each holder of a Right would be
entitled to exercise such Right and thereby receive common stock of the
acquiring company with a market value of two times the exercise price of the
Right. Furthermore, at any time after a person or group acquires more than 15%
of the outstanding stock, but prior to the acquisition of 50% of such stock, the
Board of Directors may, at its option, exchange all or a part of the Rights at
an exchange ratio of one share of Common Stock for each Right. The Company will
be entitled to redeem the Rights at $.01 per Right, subject to adjustment in
certain events, at any time on or prior to the tenth day after public
announcement that a 15% or greater position has been acquired by any person or
group. The Rights expire on June 12, 2006.

1986 Stock Option Plan -- The Company's 1986 Stock Option Plan (the 1986
Plan) provides for the issuance of up to an aggregate 2,916,000 shares of common
stock upon the exercise of incentive stock options (ISOs) and non-qualified
stock options (NSOs) granted to key employees and consultants of the Company and
its subsidiaries. The exercise price for ISOs must be at least equal to the fair
market value of the underlying shares of common stock at the time of grant, and
the exercise price of NSOs may be at any price established by the Board of
Directors. The term of each option may not exceed ten years. Options are
exercisable either in full immediately, or in installments, as the Board of
Directors may determine at the time it grants such options. In general, the
shares acquired by exercising the options vest ratably over four to five years
from the date the options first become exercisable. As of December 31, 1997,
there were 404,456 options available for grant under the 1986 Plan. On October
7, 1997 the Board of Directors adopted and on February 10, 1998 the stockholders
approved an increase to the total number of shares issuable under the 1986 Plan
to 4,500,000.

1991 Director Stock Option Plan -- The 1991 Director Stock Option Plan (the
Director Plan) provides for the grant of non-qualified stock options to
non-employee directors of the Company for the purchase of up to an aggregate of
350,000 shares of common stock. Under the Director Plan, each non-employee
director is entitled to receive, when first elected to serve as a director, an
option to purchase 15,000 shares. In addition, each non-employee director is
entitled to receive on January 31 of each year an option to purchase 5,000
shares (10,000 shares for years after 1998). The exercise price of the options
may not be less than fair market value on the date of grant. Options may only be
exercised with respect to vested shares. As of December 31, 1997, there were
154,302 options available for grant under the Director Plan.

1995 Non-Statutory Stock Option Plan -- The Company's 1995 Non-Statutory
Stock Option Plan (the 1995 Plan), provides for the grant of non-qualified stock
options to key employees (other than executive officers, who are not eligible to
participate) and consultants of the Company for the purchase of up to an
aggregate of 3,750,000 shares of common stock. The exercise price of the options
may be at any price established by the Board of Directors which administers the
1995 Plan. The term of each option may not

27
28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. STOCKHOLDERS' EQUITY -- (CONTINUED)
exceed ten years. Options are exercisable over periods determined at the
discretion of the Board of Directors and are generally subject to vesting on a
monthly basis over four to five years. As of December 31, 1997, there were
2,575,769 options available for grant under the 1995 Plan.

The following is a summary of activity for all of the Company's option
plans:

WEIGHTED AVERAGE
EXERCISE PRICE
SHARES PER SHARE
--------- ----------------

Outstanding at January 1, 1995....................... 1,408,260 $10.82
Granted............................................ 903,881 8.99
Exercised.......................................... (157,095) 3.94
Canceled........................................... (270,664) 14.59
--------- ------
Outstanding at December 31, 1995..................... 1,884,382 9.61
Granted............................................ 1,484,317 8.33
Exercised.......................................... (118,983) 4.49
Canceled........................................... (775,359) 12.04
--------- ------
Outstanding at December 31, 1996..................... 2,474,357 8.14
Granted............................................ 950,950 6.77
Exercised.......................................... (143,971) 6.30
Canceled........................................... (768,486) 8.50
--------- ------
Outstanding at December 31, 1997..................... 2,512,850 $ 7.54
========= ======

The following table sets forth information regarding options outstanding at
December 31, 1997:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE AND/OR
--------------------------------------------------- SHARES TRANSFERRABLE
NUMBER WEIGHTED AVERAGE ------------------------------
RANGE OF OF REMAINING CONTRACTUAL WEIGHTED AVERAGE NUMBER WEIGHTED AVERAGE
EXERCISE PRICES SHARES LIFE (YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- --------------- --------- --------------------- ---------------- ----------- ----------------

$ .16 - $ 2.50............. 98,104 4.4 $ 1.94 98,104 $ 1.94
4.90 - 6.88............. 916,915 8.8 6.41 233,563 6.33
7.00 - 8.75............. 1,102,612 8.4 7.66 424,383 7.71
9.12 - 11.00............. 301,199 7.9 10.22 124,181 10.13
12.00 - 14.88............. 64,990 6.5 12.60 46,109 12.65
16.00 - 17.88............. 27,711 6.7 16.51 21,206 16.61
20.59 - 23.50............. 1,319 2.8 22.86 1,053 22.98
--------- -------
2,512,850 8.3 $ 7.54 948,599 $ 7.59
========= =======

At December 31, 1996 and 1995, respectively, 648,702 and 1,299,200 options
were exercisable or the related shares were transferable.

As described in Note 1, the Company uses the intrinsic value method to
measure compensation expense associated with grants of stock options to
employees. Had the Company used the fair value method to measure compensation,
the Company's net income (loss) and income (loss) per share would have been
$921,000 or $0.11 per share in 1997, $(9,462,000) or $(1.17) per share in 1996
and $(4,317,000) or $(0.54) per share in 1995.

The fair value of each stock option is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions in 1997, 1996 and 1995: expected lives of .5 to 6 years, expected
volatility of 46.9% in 1997 and 64.9% in 1996 and 1995, a dividend yield of 0%
and a risk-free interest rate of 5% in 1997 and 6.10% in 1996 and 1995. The
weighted average fair value of options granted and awarded in 1997, 1996 and
1995 was $3.41, $5.33 and $6.09, respectively.

The option pricing model used was designed to value readily tradable stock
options with relatively short lives. The options granted to employees are not
tradable and have contractual lives of ten years. However,

28
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. STOCKHOLDERS' EQUITY -- (CONTINUED)
management believes that the assumptions used and the model applied to value the
awards yields a reasonable estimate of the fair value of the grants made under
the circumstances.

During 1996, a total of 80,000 options were granted to certain officers of
the Company at exercise prices which were an aggregate of $140,000 lower than
the market value at the date of grant. This amount was recorded as unearned
compensation and is being amortized to expense over the five year vesting period
of the options. Related compensation expense was approximately $28,000 and
$26,000 in 1997 and 1996, respectively. The weighted average exercise price of
the options involved is $6.38 per share.

In January 1996, the Company offered non-officer employees holding
incentive stock options with an exercise price greater than $7.75 (the then
current market price) per share, the opportunity to exchange their options for
the equivalent number of non-qualified stock options with an exercise price
equal to fair market value of the common stock. As a result of this offer,
options for approximately 326,107 shares were exchanged.

On January 31, 1998, an additional 25,000 options were granted under the
Directors Plan at an exercise price of $7.00.

Employee Stock Purchase Plan -- The Company's Employee Stock Purchase Plan
(the Purchase Plan) provides for the purchase of Company's common stock at
six-month intervals at 85% of the lower of the fair market value on the first
day or the last day of each six-month period. The Company issued 72,460, 157,590
and 58,580 shares in 1997, 1996 and 1995, respectively, under the Purchase Plan.
At December 31, 1997, 134,633 shares were reserved for future issuance's under
the Purchase Plan. The pro forma disclosures presented above include
compensation expense related to the Purchase Plan of $74,000, $446,000 and
$168,000 in 1997, 1996 and 1995, respectively. On September 30, 1997 the Board
of Directors adopted and on February 10, 1998 the shareholders approved an
increase of 200,000 to shares issuable under the Purchase Plan.

5. INCOME TAXES

The components of income (loss) before income taxes and extraordinary item
was comprised of the following (in thousands):

YEAR ENDED DECEMBER 31,
----------------------------
1997 1996 1995
------ ------- -------

Domestic.............................................. $3,940 $ (611) $(3,783)
Foreign............................................... 1,244 (1,470) (1,240)
------ ------- -------
$5,184 $(2,081) $(5,023)
====== ======= =======

The components of the provision (benefit) for income taxes consists of the
following (in thousands):

YEAR ENDED DECEMBER 31,
---------------------------
1997 1996 1995
------ ------ -------

Current:
Federal.............................................. $ 107 $ (295) $ --
State................................................ 70 (55) --
Foreign.............................................. (94) (259) 361
------ ------ -------
Total.............................................. 83 (609) 361
------ ------ -------
Deferred:
Federal.............................................. 1,159 824 (770)
State................................................ 176 154 (88)
Foreign.............................................. 382 191 (636)
------ ------ -------
Total.............................................. 1,717 1,169 (1,494)
------ ------ -------
Total.......................................... $1,800 560 $(1,133)
====== ====== =======

29
30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES -- (CONTINUED)
Significant components of the Company's deferred income tax assets and
liabilities were as follows at December 31 (in thousands):

1997 1996
------- -------

Current assets:
Accounts receivable....................................... $ 394 $ 404
Accrued expenses and other................................ 83 916
------- -------
Total current assets.................................... $ 477 $ 1,320
======= =======
Long-term assets and liabilities:
Property and equipment.................................... (159) $ 80
Intangible assets......................................... 498 385
Capitalized software costs................................ (511) --
Net operating loss carryforwards - U.S.................... 5,460 5,725
Net operating loss carryforwards - foreign................ 1,720 2,071
Tax credit carryforwards - U.S............................ 967 967
Other - foreign........................................... 99 (67)
Valuation allowance....................................... (5,247) (5,444)
------- -------
Total net long-term assets.............................. $ 2,827 $ 3,717
======= =======

The valuation allowance for deferred tax assets as of December 31, 1996,
was $5,444,000. The net change in the total valuation allowance for the year
ended December 31, 1997, was a decrease of $197,000 principally due to the
realization in 1997 of previously reserved tax benefits of foreign loss
carryforwards. A valuation allowance of $5,247,000 remains at December 31, 1997,
and is primarily attributable to loss and credit carryforwards.

At December 31, 1997, the Company has federal net operating loss
carryforwards of approximately $15,000,000, and federal tax credit carryforwards
of approximately $967,000, that all expire through 2010. Due to the "change in
ownership" provisions of the Internal Revenue Code of 1986, the availability of
net operating loss and tax credit carryforwards to offset future federal taxable
income is subject to cumulative annual limitations. Restrictions on net
operating loss carryforwards expire at a rate of approximately $1,800,000 per
year. As of December 31, 1997, $4,900,000 of limited net operating loss
carryforwards were not subject to restrictions of future usage. Foreign tax loss
carryforwards of $4,600,000 are available for use in reducing future taxable
income in certain foreign jurisdictions.

The difference between the provision (benefit) for income taxes and the
amount computed by applying the federal statutory income tax rate of 35% to
income (loss) before provision (benefit) for income taxes is explained below:

YEAR ENDED
DECEMBER 31,
--------------------
1997 1996 1995
---- ---- ----

Statutory tax rate.......................................... 35% (35)% (35)%
State taxes, net of federal benefit......................... 3 (4) (4)
Surtax exemption............................................ (1) 1 1
Nondeductible charges and other............................. 1 35 12
Foreign income taxes........................................ 1 4 3
Change in valuation allowance............................... (4) -- --
Foreign net operating losses for which no benefit is
recognized................................................ -- 26 --
--- --- ---
Effective tax rate.......................................... 35% 27% (23)%
=== === ===

30
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. SEGMENT INFORMATION

The Company operates in one industry segment consisting of the development,
marketing and support of software for the development and execution of
commercial applications for industry standard operating systems. Geographic
segment information was as follows (in thousands):

YEAR ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------

Revenue:
United States (including export sales).................... $35,942 $41,651 $48,780
Other North America....................................... 1,029 1,444 578
United Kingdom............................................ 5,937 5,517 6,602
France.................................................... 7,310 6,257 --
Germany................................................... 28 7,198 5,814
Asia Pacific, primarily Australia......................... 5,851 5,939 5,147
South Africa.............................................. 1,457 1,260 1,365
Other..................................................... -- -- 78
------- ------- -------
Total revenue........................................... $57,554 $69,266 $68,364
======= ======= =======
Merger integration, exit and restructuring costs:
United States............................................. $ -- $ 3,471 $ 5,561
Other North America....................................... -- -- --
United Kingdom............................................ -- 9 998
France.................................................... -- 268 --
Germany................................................... -- -- 323
Asia Pacific, primarily Australia......................... -- 574 --
South Africa.............................................. -- -- --
Other..................................................... -- -- --
------- ------- -------
Total merger integration, exit and restructuring
costs................................................. $ -- $ 4,322 $ 6,882
======= ======= =======
Operating income (loss):
United States............................................. $ 4,354 $ 138 $(3,483)
Other North America....................................... 155 (183) 256
United Kingdom............................................ 2 (459) (1,998)
France.................................................... 362 (321) --
Germany................................................... 28 107 43
Asia Pacific, primarily Australia......................... 215 (719) 287
South Africa.............................................. 171 5 207
Other..................................................... (8) (76) (9)
------- ------- -------
Total operating income (loss)........................... $ 5,279 $(1,508) $(4,697)
======= ======= =======
Identifiable assets:
United States............................................. $54,562 $48,216 $58,050
Other North America....................................... 369 763 611
United Kingdom............................................ 3,940 4,435 2,545
France.................................................... 3,488 4,249 --
Germany................................................... 19 2,563 12
Asia Pacific, primarily Australia......................... 2,815 2,564 945
South Africa.............................................. 1,008 1,316 588
Other..................................................... 4 5 --
Eliminations.............................................. (8,559) (4,134) 602
------- ------- -------
Total identifiable assets............................... $57,646 $59,977 $63,353
======= ======= =======

Export sales from the United States did not exceed ten percent of revenue
for any year presented.

31
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. LITIGATION

The Company is a defendant, together with certain of its officers, in two
actions initially filed in October 1995 in the U.S. District Court for the
District of Massachusetts. Those actions have been consolidated through the
filing of a Consolidated Amended Complaint (the "Complaint"). The plaintiffs
allege in the Complaint that the Company and certain of its officers, during
July through October 1995, made certain untrue statements and failed to disclose
certain information regarding the Company's prospective financial performance in
violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder and that such statements and omissions artificially inflated the
market prices of the Company's stock. The plaintiffs purport to bring the
actions on behalf of certain classes of stockholders and seek damages in
unspecified amounts. The Company has denied the allegations in its answer to the
Complaint. The discovery stage of the proceeding is now substantially complete
and the Company has filed a motion for summary judgement which is expected to be
heard within the next several months. Based upon its review to date, management
of the Company believes that the actions are without merit and plans to oppose
them vigorously.

During 1995, the Company recorded approximately $499,000 in settlement
costs. Approximately $300,000 in costs were recorded relating to the settlement
and payout of two potential lawsuits involving Easel at the time of merger with
the Company. Approximately $199,000 was recorded due to the additional
settlement costs incurred in 1995 based on a court rendered decision in a 1994
suit settlement.

8. RETIREMENT PLANS

The Company provides certain supplemental requirement benefits to its
executive officers, which it has funded through life insurance policies in a
"split dollar" arrangement. The executive officers are allowed to borrow against
the excess cash surrender value in the policy over and above the Company's
cumulative paid in premiums. Upon termination of a policy or the death of the
insured executive, the Company will receive proceeds equal to the amount of the
cumulative premium paid by the Company. The Company may borrow against its share
of the accumulated cash surrender value in the respective policies at any time.
The Company accounts for these policies as a defined contribution plan and
expenses premiums on the policies as incurred, which represents the compensation
element of the plan. In addition, since the Company controls its share of the
cash surrender value of the policies at all times, it accounts for any changes
in cash surrender value in accordance with the guidance provided in Financial
Accounting Standards Board Technical Bulletin No. 85-4, "Accounting for
Purchases of Life Insurance." Accordingly, increases or decreases in cash
surrender value are recognized each period and the asset recorded on the
Company's books represents the lesser of the Company's share of cash surrender
value or the cumulative premiums paid on the policies. This amount is included
in other long-term assets and was $2,016,000 and $1,356,000 at December 31, 1997
and 1996, respectively. Total premiums in 1997, 1996, and 1995 were
approximately $659,000, $466,000, and $420,000, respectively.

The Company has a 401(k) retirement and savings plan (the Plan) covering
substantially all domestic employees. The Plan allows each participant to
contribute up to 15% of his or her base wage up to an amount not to exceed an
annual statutory maximum. Through December 31, 1995, the Company matched
contributions in an amount equal to 25% of the contributions of each participant
in excess of 2% of such participant's annual compensation up to 4% of such
participant's annual compensation. Effective January 1, 1996, the Company
increased its matching contribution to 50% of the contributions of each
participant in excess of 2% of such participant's annual compensation, up to 4%
of such participant's annual compensation. The Company made matching
contributions to the Plan of approximately $253,000, $315,000, and $125,000 in
1997, 1996, and 1995, respectively.

9. RESTRUCTURING COSTS

The 1996 results include a $2,125,000 restructuring charge associated with
the downsizing of Object Studio-related activities. The charge was recorded
pursuant to a formal plan adopted and announced in May 1996. The charge included
approximately $1,900,000 in employee severance and benefits, $153,000 for

32
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. RESTRUCTURING COSTS -- (CONTINUED)
the write off of capitalized software and $72,000 related to abandonment of
facilities. Fifty employees were terminated in this restructuring. As of
December 31, 1997, approximately $98,000 in employee severance and benefits were
unpaid.

The 1996 results also include a $2,197,000 charge associated with a
restructuring and reduction in staff from all areas of the Company. Management
approved the restructuring plan late in fiscal year 1996 with the intent to
bring costs in line with revenues. The charge included $1,591,000 in employee
severance and benefits and $606,000 for the write-off of intangible assets. This
intangible asset write-off related to the impairment of the remaining net book
value of technology purchased in 1992, the development of which ceased with the
release of UniVerse 9.0. Thirty-four employees were terminated in this
restructuring. As of December 31, 1997, approximately $9,000 in employee
severance and benefits were unpaid.

10. EXTRAORDINARY ITEM

Among the product lines and businesses to be discontinued or abandoned were
certain products or lines of business present at the date of the merger with
Easel. Because these dispositions were not contemplated at the date of the
merger and are therefore outside of the normal course of business, they have
been presented as an extraordinary item.

The components of the extraordinary item recorded in 1996 consist of the
following (in thousands):

Net loss on disposition of ASG.............................. $ 537
Object Studio:
Asset writedown........................................... 1,845
Facilities closure........................................ 1,419
Severance related costs................................... 417
Expected costs and funding for joint venture.............. 1,700
-------
Pre-tax extraordinary item.................................. 5,918
Tax benefit................................................. (1,184)
-------
Extraordinary loss.......................................... $ 4,734
=======

The Company's US education business, ASG, was sold to a third party for
$420,000. The net loss reflected above represents the writedown of the assets of
ASG to net realizable value. The amount received for ASG is included in assets
held for sale on the consolidated balance sheet as of December 31, 1996.

In October, 1996, the Company entered into a joint venture with one of its
resellers (the "Other Party") to develop and support the ObjectStudio product
suite. This joint venture was formed to allow the Company to reduce its ongoing
cash cost of continued development of ObjectStudio. The Company's investment
consisted of certain product rights. The Company's share of the venture's loss
for the quarter ended December 31, 1996 is included as a component of other
income and expense.

Despite the formation of the joint venture, profitability related to the
ObjectStudio product line continued to be below expectation. In addition,
certain actions by competitors in the ObjectStudio marketplace led the Company
to conclude that it was not in the best interest of the Company to continue to
support this product

33
34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. EXTRAORDINARY ITEM -- (CONTINUED)
line and that the Company would be best served by focusing its resources on
product lines with more favorable prospects. Accordingly, the Company decided to
exit the ObjectStudio product line.

To facilitate exit from the ObjectStudio product line, in December 1996 the
Company entered into certain agreements which effectively transferred all of the
Company's rights to the product to the Other Party. The Other Party also agreed
to take over the operations of the Company's German subsidiary (devoted to
ObjectStudio) and to assume all of the Company's obligations related to
ObjectStudio in exchange for a one time payment of $300,000. In addition, the
Company agreed to maintain its funding commitment to the joint venture for 1997,
aggregating $1,400,000, and accepted a significant reduction in its rights in
the venture. Because the Company had committed to pay the one time payment and
1997 funding, such costs were considered to be exit costs and were accrued at
December 31, 1996.

As a result of the plan to exit the ObjectStudio business, forty employees
were terminated and such costs were accrued at December 31, 1996. The Company
also incurred costs for facility abandonment related to the German subsidiary
which was also charged to the extraordinary item.

In 1997, the Company recorded no revenue or expenses associated with
ObjectStudio activity or the joint venture. In addition, the Company has paid
substantially all amounts described above and the dissolution of the joint
venture commenced in 1997, in line with the Company's expectations in 1996. At
December 31, 1997, approximately $961,000 in facilities costs remain unpaid.

11. EVENTS SUBSEQUENT TO THE DATE OF THE INDEPENDENT AUDITOR'S REPORT
(UNAUDITED)

Merger with Unidata, Inc. -- On February 10, 1998, following approval by
the Company's stockholders, the Company consummated a merger with Unidata, Inc.
("Unidata"), a relational database, object database and software tools developer
and marketer. Such merger is expected to be accounted for as a pooling of
interests, and accordingly, once financial statements for periods including the
date of consummation are prepared, the results of operations of the Company and
Unidata, Inc. will be retroactively combined for all periods presented.

In connection with the merger, the Company issued approximately 5,750,000
shares of common stock for all outstanding common stock of Unidata. In addition,
options outstanding under Unidata's stock option plans were converted into
options to acquire the Company's common stock at prices adjusted to reflect the
conversion rate between the two stocks.

Following the merger, the Company changed its name to Ardent Software, Inc.

Summarized pro forma statement of operations data for the Company combined
with Unidata for the fiscal years ended 1997, 1996, and 1995 are as follows (in
thousands):

FISCAL YEAR ENDED
-------------------------------
1997 1996 1995
-------- -------- -------

Revenue............................................ $106,666 $110,499 $92,721
Income (loss) from operations...................... 6,668 (4,079) (3,019)
Net income (loss).................................. 2,825 (9,993) (2,626)
Net income (loss) per share:
Basic............................................ $ 0.20 $ (0.75) $ (0.20)
Diluted.......................................... $ 0.20 $ (0.75) $ (0.20)
Basic weighted average shares outstanding.......... 13,856 13,243 13,063
Diluted weighted average shares outstanding........ 14,188 13,243 13,063

Unidata is a defendant in two actions filed, one in May, 1996 in the U.S.
District Court for the Western District of Washington and one filed in
September, 1996, in the U.S. District Court for the District of Colorado. The
plaintiffs allege in both suits that Unidata authorized usage of certain Unidata
products for

34
35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. EVENTS SUBSEQUENT TO THE DATE OF THE INDEPENDENT AUDITOR'S REPORT
(UNAUDITED) -- (CONTINUED)
distribution and assert claims for fraud, breach of contract, unfair
competition, RICO violations, and trademark and copyright infringement. Unidata
has denied the allegations in its answers to the complaint and the proceedings
for each case are currently in the arbitration stage. Based upon reviews to
date, management of Unidata believes that the actions are without merit and
intends to oppose them vigorously.

12. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED -- IN THOUSANDS)

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------

1997
Revenue................................... $13,721 $15,040 $13,770 $15,023
Income from operations.................... 593 1,110 1,379 2,197
Net income................................ 305 651 864 1,564
Basic net income per common share......... .04 .08 .11 .19
Diluted net income per common share....... .04 .08 .10 .18
1996
Revenue................................... $17,736 $17,958 $16,688 $16,884
Income (loss) from operations............. 970 (531) 316 (2,263)
Net income (loss)......................... 559 (725) 131 (7,340)
Basic net income (loss) per common
share................................... .07 (.09) .02 (.91)
Diluted net income (loss) per common
share................................... .07 (.09) .02 (.91)

Income (loss) per share has been restated in accordance with SFAS 128. See
Note 1 -- Income (Loss) Per Common Share.

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 with respect to Directors may be found under the caption
"Election of Directors" appearing in the Company's definitive Proxy Statement
for the 1998 Annual Meeting of Stockholders. Such information is incorporated
herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information set forth under the captions "Executive Officer
Compensation" and "Director Compensation" appearing in the Company's definitive
proxy statement for the 1998 Annual Meeting of Stockholders is incorporated
herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information set forth under the captions "Principal Stockholders" and
"Stock Ownership of Directors and Executive Officers" appearing in the Company's
definitive proxy statement for the 1998 Annual Meeting of Stockholders is
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not applicable.

35
36

PART IV

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

(1) Financial Statements

The following financial statements are filed as part of this Annual Report:
Independent Auditors Report.
Consolidated Balance Sheets as of December 31, 1997 and 1996.
Consolidated Statements of Operations for the years ended December 31,
1997, 1996 and 1995.
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995.
Notes to Consolidated Financial Statements.

Supplemental Financial Data not covered by the Independent Auditors Report:
Selected Quarterly Financial Data

(2) Financial Statement Schedule

Schedule II -- Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.

(3) Exhibits

Documents listed below, except for documents incorporated herein by
reference, are being filed as exhibits herewith. Pursuant to Rule 12b-32 of the
General Rules and Regulations promulgated by the Commission under the Securities
Exchange Act of 1934, certain exhibits re incorporated herein by reference.

2.1 Agreement and Plan of Merger and Reorganization dated as of
October 7, 1997 between VMARK and Unidata.(9)

2.2 Amendment to Agreement and Plan of Merger and Reorganization
dated as of November 7, 1997 between VMARK and Unidata.(9)

2.3 Certificate of Merger dated February 10, 1998 between VMARK
and Unidata.

3.2 Second Restated Certificate of Incorporation of the
Company.(1)

3.3 By-laws of the Company, as amended and restated effective as
of March 17, 1992.(1)

3.3a Amendment to By-laws effective February 10, 1994.(3)

3.3b Amendment to By-laws effective February 10, 1998.

3.4 Certificate of Designations, Rights, Preferences and
Privileges of Series A Junior Preferred Stock.(7)

4.1 Rights Agreement dated as of June 12, 1996 between the
Company and State Street Bank and Trust Company, as Rights
Agent.(7)

4.2 First Amendment to Rights Agreement dated as of September
30, 1997 between the Company, as Rights Agent.(9)

10.1a 1986 Stock Option Plan, as amended and restated.(2)

10.1d Amendment to 1986 Stock Option Plan effective January 28,
1997.(10)

10.2 1991 Director Stock Option Plan, as amended and restated.(2)

10.2b Amendment to 1991 Director Stock Option Plan effective
January 31, 1995. (10)

10.2c Amendment to 1991 Director Stock Option Plan effective July
29, 1996.(10)

10.6 Restated Registration Rights Agreement dated as of April 10,
1992 between the Company and certain of its stockholders.(1)

10.11a Lease dated as of May 5, 1994 between the Company and 50
Washington Street Associated Limited Partnership(4)

10.18a Employee Stock Purchase Plan, as amended and restated.(2)

10.23 Split Dollar Life Insurance Agreement between the Company
and James K. Walsh dated as of October 12, 1993.(3)

10.27 Split Dollar Life Insurance Agreement between the Company
and Jason E. Silvia dated as of April 27, 1994.(6)

36
37

10.28 Asset Purchase Agreement between the Company and Constellation Software, Inc. dated
February 15, 1994.(5)
10.31 1995 Non-Statutory Stock Option Plan, as amended and effected January 1, 1996.(10)
10.32 Split Dollar Life Insurance Agreement between the Company and Charles F. Kane dated as of
December 15, 1995.(10)
10.33 Split Dollar Life Insurance Agreement between the Company and Peter L. Fiore dated as of
September 15, 1996.(10)
10.34 Split Dollar Life Insurance Agreement between the Company and Peter Gyenes dated as of
June 15, 1996.(10)
10.35 Loan and Security Agreement dated as of May 3, 1996 by and between Silicon Valley Bank
and Company.(10)
10.36 Amended and Restated Promissory Note -- Revolving Line of Credit loans by the Company to
Silicon Valley Bank, dated May 3, 1996.(10)
10.38 Second Loan Modification Agreement to the Loan and Security Agreement (dated May 3, 1996)
and the First Amendment to the Amended and Restated Promissory Note (dated May 3, 1996)
dated September 9, 1997 by and between Silicon Valley Bank and the Company.(9)
10.39 Split Dollar Life Insurance Agreement between the Company and James D. Foy dated as of
April 15, 1997.(9)
10.40 Registration Rights Agreement dated February 10, 1998 between the Company and James T.
Dresher.(11)
10.41 Registration Rights Agreement dated December 1, 1995 between Massachusetts Mutual Life
Insurance Company and certain affiliates and the Company.
10.42 Distribution Agreement dated November, 1995 among System Builder Software Ltd., SB Tech
Pty. Ltd., Desmond Miller and the Company.
10.43 Shareholder Agreement dated November 14, 1995 among certain Shareholders of the Company
and the Company.
21.1 Subsidiaries of Ardent.
23 Independent Auditors' Consent.
27.1 Financial Data Schedule.

- ---------------
(1) Incorporated by reference to the respective exhibit filed with the
Company's Registration Statement on Form S- 1, File No. 33-46533, initially
filed on March 19, 1992.

(2) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form S-8, File No. 333-00218, filed on January 5,
1996.

(3) Incorporated by reference to the exhibit filed with the Company's Form 10-K
dated March 28, 1994.

(4) Incorporated by reference to the exhibit filed with the Company's Form 8-K
dated May 19, 1994.

(5) Incorporated by reference to the exhibit filed with the Company's Form 8-K
dated March 1, 1994.

(6) Incorporated by reference to the exhibit with the Company's Form 8-K dated
March 29, 1996.

(7) Incorporated by reference to the respective exhibit of the Company's
Registration Statement on Form 8-A dated July 17, 1996, File No. 000-20059,
filed on July 29, 1996.

(8) Incorporated by reference to the exhibit filed with the Company's Form 10-K
dated March 28, 1996.

(9) Incorporated by reference to the exhibit filed with the Company's Form 10-Q
dated November 12, 1997.

(10) Incorporated by reference to the exhibit filed with the Company's Form 10-K
dated March 31, 1997.

(11) Incorporated by reference to the exhibit filed with the Company's Form 10-Q
dated February 12, 1998.

(4) Reports on Form 8-K

No reports on Form 8-K were filed by the Company during the fourth quarter
of the year ended December 31, 1997.

37
38

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 28th day of
March, 1998.
ARDENT SOFTWARE, INC.

By: /s/ PETER GYENES
---------------------------------
Peter Gyenes
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements 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 and on the dates indicated.

SIGNATURE TITLE DATE
------------------------------- ----------------------------------------------- --------------

/s/ PETER GYENES Chairman of the Board and Chief Executive
------------------------------ Officer (Principal Executive Officer)
Peter Gyenes

/s/ CHARLES F. KANE Vice President, Finance, and Chief Financial
------------------------------ Officer (Principal Finance and Accounting
Charles F. Kane Officer)

/s/ MARTIN HART Director
------------------------------
Martin Hart

/s/ ROBERT G. CLAUSSEN Director
------------------------------
Robert G. Claussen

/s/ ROBERT MORRILL Director
------------------------------
Robert Morrill

/s/ JAMES DRESHER Director
------------------------------
James Dresher

/s/ DAVID BRUNEL President, Director and Chief Operating Officer
------------------------------
David Brunel

SCHEDULE 11

ARDENT SOFTWARE, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS

BALANCE AT CHARGED TO BALANCE
BEGINNING OF COSTS AND AT END OF
YEAR EXPENSES DEDUCTIONS YEAR
------------ ---------- ----------- ----------

Allowance for doubtful accounts receivable:
For the Year Ended December 31, 1997....... $1,864,000 $ 238,000 $ (572,000) $1,530,000
========== ========== =========== ==========
For the Year Ended December 31, 1996....... $1,891,000 $1,286,000 $(1,313,000) $1,864,000
========== ========== =========== ==========
For the Year Ended December 31, 1995....... $ 828,000 $1,849,000 786,000) $1,891,000
========== ========== =========== ==========