Edgar Filing: EPICOR SOFTWARE CORP

Year ended December 31

Restated

Form S-4 for Epicor Software Corporation

As filed with the Securities and Exchange Commission on April 14, 2004

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

Under

The Securities Act of 1933

EPICOR SOFTWARE CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware

7372

33-0277592

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial Classification Code Number)

(I.R.S. Employer

Identification Number)

195 Technology Drive

Irvine, California 92618-2402

(949) 585-4000

After April 19, 2004:

18200 Von Karman Avenue

Suite 1000

Irvine, California 92612

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

L. George Klaus

Chairman of the Board, President and

Chief Executive Officer

Epicor Software Corporation

195 Technology Drive

Irvine, California 92618-2402

(949) 585-4000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Larry W. Sonsini

Andreas F. Kemi

Scott V. Simpson

Katharine A. Martin

Steve L. Camahort

Bradley L. Finkelstein

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, CA 94304

(650) 493-9300

Interim Chief Executive Officer

Scala Business Solutions N.V.

Prinsengracht 739-741

1017 JX Amsterdam

The Netherlands

+31 20 427-4361

Ann Beth Bejgrowicz

Skadden, Arps, Slate, Meagher &
Flom (UK) LLP

40 Bank Street

Canary Wharf

London, E14 5DS, England

+44 20 7519-7000

Approximate date of commencement of proposed sale of the securities to the public: Upon completion of the exchange offer described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

CALCULATION OF REGISTRATION FEE


Title of Each Class of Securities to be Registered	Amount to be Registered		Proposed Maximum Aggregate Offering Price			Amount of Registration Fee

Common Stock, par value $0.001 per share⁽¹⁾	4,430,877	⁽²⁾	$	51,516,655.85	⁽³⁾	$	6,527.16

(1)

The shares of common stock being registered hereby will be accompanied by the Registrant’s Series A Junior Participating preferred stock purchase rights. Until the occurrence of certain prescribed events, such rights will not be exercisable, will be evidenced by the certificates representing the Registrant’s common stock, and will attach to and trade only together with the common stock.

(2)

Based upon the maximum number of shares of common stock, par value $0.001 per share, and associated preferred stock purchase rights, of the Registrant that may be issued in connection with the exchange offer described herein. This Registration Statement shall also cover any additional shares of common stock and associated preferred stock purchase rights of the Registrant that become issuable by reason of any stock dividend, stock split, recapitalization or any other similar transaction effected without Registrant’s receipt of consideration that results in an increase in the number of shares of common stock and accompanying preferred stock purchase rights of the Registrant outstanding.

(3)

Pursuant to paragraphs (c), (f)(1) and (f)(3) of Rule 457 and estimated solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price equals, (i) the product of (A) $3.91, the United States dollar equivalent of the average of the high and low sales prices per ordinary share, nominal value of EUR 0.45 per share, of Scala Business Solutions N.V., as reported on the Official Segment of the stock market of Euronext Amsterdam N.V. on April 2, 2004, multiplied by (B) 24,684,550, representing the number of ordinary shares of Scala outstanding on March 31, 2004 (including 1,532,225 ordinary shares of Scala issuable upon exercise of options outstanding); less (ii) the amount of cash to be paid by the Registrant in exchange for ordinary shares of Scala or approximately $44,999,934.65.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.

The information in this prospectus may be changed. Epicor may not sell these securities until the registration statement filed with the United States Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or country where the offer or sale is not permitted.

Subject to Completion, dated April 14, 2004

PROSPECTUS

Epicor Software Corporation is offering to exchange cash and shares of Epicor common stock for all outstanding ordinary shares of Scala Business Solutions N.V.

The exchange offer period will commence at , Central European Time, on , 2004 and will, unless extended, expire at 3:00 p.m., Central European Time, on , 2004. You may not withdraw any shares once tendered into the exchange offer, except that if we extend the exchange offer period, you may withdraw shares tendered during the original exchange offer period, at any time prior to the expiration of the extended exchange offer period.

On November 13, 2003, Pacific Standard Time (and November 14, 2003, Central European Time), we entered into an agreement with Scala called the merger protocol, to acquire all of the outstanding ordinary shares of Scala. The merger protocol was amended and restated on April 14, 2004. The managing board and the supervisory board of Scala have each unanimously recommended that Scala shareholders tender their shares into the exchange offer as the managing and supervisory boards believe that the consideration is fair to, and in the best interests of, Scala, its shareholders and all other stakeholders.

We are offering to exchange for each Scala ordinary share that is validly tendered and not properly withdrawn:

•

0.1795 shares of Epicor common stock (and accompanying preferred stock purchase rights); and

•

$1.8230 in cash, subject to adjustment as described in more detail in this prospectus.

Our obligation to complete the exchange offer is subject to a number of conditions, including, among other things, a requirement that the total number of Scala ordinary shares tendered into the exchange offer constitutes at least 95% of the outstanding Scala ordinary shares. We describe these conditions in the section of this prospectus entitled “The Merger Protocol—Conditions to Epicor’s Obligation to Declare the Exchange Offer Unconditional.”

Scala will hold an extraordinary general meeting of shareholders on , 2004 at , Central European Time, at in Amsterdam, the Netherlands, for purposes of discussion of the exchange offer, as required by section 9q of the 1995 Decree on the Supervision of the Securities Trade (Netherlands) (Besluit toezicht effectenverkeer 1995), as amended from time to time.

Epicor common stock is listed on the Nasdaq National Market under the trading symbol “EPIC.” On , 2004, the closing price of Epicor common stock was $ per share. Scala ordinary shares are listed on the Official Segment of the stock market of Euronext Amsterdam N.V., or Euronext Amsterdam, under the trading symbol “SCALA.”

On , 2004 the noon buying rate in New York City for cable transfers in Euros as certified for customs purposes by the Federal Reserve Bank of New York was $ per Euro.

The section entitled “ Risk Factors” beginning on page 26 of this prospectus contains a description of risks that you should consider in deciding whether to tender Scala ordinary shares into the exchange offer.

This prospectus is not a “prospectus” as referred to in article 3 paragraph 2 sub b of the 1995 Act on the Supervision of the Securities Trade (Netherlands) (Wet toezicht effectenverkeer 1995). The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten), or the AFM, has granted Epicor a dispensation from the requirement pursuant to article 3 paragraph 1 of the aforementioned Act.

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of Epicor common stock to be issued in the exchange offer or determined whether this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus is dated , 2004.

TABLE OF CONTENTS


		Page
QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER		1
Summary		6
The Exchange Offer and the Merger Protocol		6
Parties to the Exchange Offer		6
Adjustment of the Cash Portion of the Exchange Offer Price		7
Structure of the Exchange Offer		8
Recommendation of Each of the Scala Boards		8
Reasons for the Exchange Offer		8
Opinion of Scala Financial Advisor Regarding the Exchange Offer		8
Members of the Scala Managing and Supervisory Boards Have Interests in the Exchange Offer		9
Scala’s Boards Following the Exchange Offer		9
Scala Meeting of Shareholders		9
What is Needed to Complete the Exchange Offer		10
Required Regulatory Approvals to Complete the Exchange Offer		11
Procedure for Tendering		11
Withdrawal Rights		11
Exchange of Scala Ordinary Shares; Delivery of Shares of Epicor Common Stock and Cash		11
Scala is Prohibited from Considering Other Offers		12
Epicor and Scala May Terminate the Merger Protocol		12
Epicor or Scala May Be Required to Pay a Termination Fee or Break Up Fee		12
The Exchange Offer is Taxable for United States Federal Income Tax Purposes for U.S. Holders and May be Taxable for Netherlands Income Tax Purposes for Dutch Individuals		13
Extension and Waiver of Conditions to the Exchange Offer		13
Subsequent Offer Period		14
Accounting Treatment of the Exchange Offer		14
Epicor Will List Shares of Epicor Common Stock on the Nasdaq National Market		15


		Page
Scala Shareholders Appraisal Rights		15
SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF EPICOR		16
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SCALA		18
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA		21
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA		22
COMPARATIVE PER SHARE MARKET PRICE DATA AND DIVIDENDS		23
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION		25
RISK FACTORS		26
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS		40
Unaudited Pro Forma Condensed Combined Balance Sheet		41
Unaudited Pro Forma Condensed Combined Statement of Operations		42
Notes to Unaudited Pro Forma Condensed Combined Financial Information		43
Accounting Treatment of the Acquisition		45
Certain Material U.S. Federal Tax Consequences to Scala Shareholders		45
Certain Material Dutch Tax Consequences to Scala Shareholders		47
THE EXCHANGE OFFER		51
Background of the Offer		51
Epicor’s Reasons for the Exchange Offer		55
Scala’s Reasons for the Exchange Offer		56
Opinion of Scala’s Financial Advisor		59
Description of the Exchange Offer		63
Purpose of the Exchange Offer		63
The Exchange Offer		63
No Fractional Shares		64
Structure of the Exchange Offer		64
Conditions to the Exchange Offer		65
Timing of the Exchange Offer		65
Extension and Waiver of Conditions in the Exchange Offer		65
Subsequent Offer Period		66

TABLE OF CONTENTS

(continued)


		Page
Procedure for Tendering		67
Exchange of Scala Ordinary Shares; Delivery of Consideration		67
Withdrawal Rights		68
Regulatory Filings and Approvals Required to Complete the Exchange Offer		68
Scala Appraisal Rights		68
Post-Closing Restructuring		69
Buy-out Procedure		69
Post-Closing Legal Merger		70
Other Post-Closing Actions		71
Restrictions on Sales of Shares of Epicor Common Stock Received in the Exchange Offer		71
Listing of Epicor Common Stock Issued in the Exchange Offer on the Nasdaq National Market . .		71
Delisting of Scala Ordinary Shares after the Exchange Offer		72
THE MERGER PROTOCOL		73
The Exchange Offer		73
Regulatory Filings and Dutch Offering Memorandum; Antitrust Matters		73
Approval and Recommendations of Each of the Scala Boards		74
Scala Fairness Opinion		74
Satisfaction of the Conditions to the Commencement of the Exchange Offer		74
Conditions to Epicor’s Obligation to Declare the Exchange Offer Unconditional		75
Due Diligence and the Provision of Information		76
Conduct of Business and Other Actions of Scala and Epicor		77
Composition and Other Matters Regarding the Boards of Scala and Epicor		78
Strategy, Management and Organization		78
Scala Prohibited from Soliciting Other Offers		79
Treatment of Scala Share Options		79
Market Stand Still with Respect to Scala Ordinary Shares		80
Termination of the Merger Protocol		80


		Page
Payment of Termination and Break-Up Fees		80
Conditions to the Commencement of the Tender Period		81
THE TENDER AGREEMENTS		82
SCALA EXTRAORDINARY GENERAL MEETING		83
SCALA BUSINESS DESCRIPTION		84
Introduction		84
Products		84
Services		86
Competition		86
Marketing, Sales and Distribution		87
Customers		88
Product Development and Quality Assurance		88
Intellectual Property		89
Production		90
Employees		90
Properties		90
Material Legal Proceedings		90
SCALA MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		92
Overview		92
Identification of Reportable Segments		92
Sources of Revenue		92
Costs of Revenue		92
Revenue Mix		92
Operating Expenses		93
Internal Controls; Financial Reporting; Disclosure Issues		93
Foreign Exchange Risk		95
2002 Restatements		95
2003 Restructuring Program		97
Microsoft Strategic Relationship		97
Critical Accounting Policies		97
Revenue Recognition		97
Allowance for Doubtful Accounts		98
Foreign Currency Translation		99
Net Income/(Loss) per Ordinary Share		99
Share Based Compensation		99
Impairment of Intangible and Tangible Fixed Assets other Than Goodwill		99
Deferred Income Taxes		99
Results of Operations		100
Total Revenues		100

TABLE OF CONTENTS

(continued)


		Page
License Revenue		100
Maintenance Revenue		101
Consulting Revenue		101
Other Revenue		101
Cost of Revenues		101
Cost of License Revenue		101
Cost of Maintenance Revenue		102
Cost of Consulting Revenue		102
Amortization of Intangible Assets and Capitalized Software Development Costs		102
Operating Expenses		102
Sales and Marketing Expenses		102
Research and Development Expenses		103
General and Administrative Expenses		103
Operating Income		103
Other Income and Expenses		104
Income Tax Provision		104
Liquidity and Capital Resources		104
Payments due by Period		105
Qualitative and Quantitative Disclosure about Market Risk		105
New Accounting Pronouncements		106
EXECUTIVE OFFICERS AND DIRECTORS OF SCALA		108
Interests of Scala Management and Members of Scala Boards in the Exchange Offer		109
Employment Arrangements		109
Epicor Board Membership Andreas F. Kemi		109
Additional Payments to Members of the Supervisory Board		109
Indemnification of Members of the Supervisory Board		109
Scala Equity Compensation Plans		109
Ownership of Scala Ordinary Shares		110
BENEFICIAL OWNERSHIP		111
SCALA EQUITY COMPENSATION PLANS		113


		Page
COMPARISON OF RIGHTS OF HOLDERS OF EPICOR COMMON STOCK AND SCALA ORDINARY SHARES		115
Authorized Capital Stock		115
Issuance of Stock		115
Preemptive Rights		116
Size of the Board of Directors		116
Classes of Directors		116
Filling Vacancies on the Board and Removal of Directors		116
Nomination of Directors for Election		117
Cumulative Voting		118
Ability to Call Special Meetings of Stockholders		118
Limitations on Business Transacted at Special Meetings of Shareholders		118
Submission of Stockholder Proposals		119
Voting Rights and Quorum		119
Stockholder Action Without a Meeting		120
Dividend Rights		120
Liquidation Preference		121
Conversion		121
Indemnification of Directors and Officers		122
Charter Amendments		123
Stockholder Rights Plan		123
Shareholder Suits		124
Conflict-of-Interest Transactions		125
LEGAL MATTERS		126
EXPERTS		126
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE		127

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1
Annex A—Amended and Restated Merger Protocol		A-1
Annex B—Form of Tender Agreement		B-1
Annex C—Opinion of Scala Financial Advisor		C-1
Annex D—Unofficial English Language Translation of Section 2:92a of the Dutch Civil Code		D-1

iii

This prospectus incorporates important business and financial information about Epicor from documents that Epicor has filed with the United States Securities and Exchange Commission (SEC) but that have not been included in or delivered with this prospectus. For a listing of documents incorporated by reference into this prospectus, please see the section entitled “Incorporation of Certain Information by Reference” beginning on page 127 of this prospectus.

Copies of the reports, proxy and information statements and other information filed by Epicor with the Securities and Exchange Commission may be inspected and copied at the Public Reference Room maintained by the Securities and Exchange Commission at:

450 Fifth Street, N.W.

Washington, D.C. 20549

You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a Website that contains reports, proxy and information statements and other information regarding Epicor. The address of the Securities and Exchange Commission web site is http://www.sec.gov.

Epicor will provide you with copies of this information relating to Epicor, without charge, upon written or oral request to:

Epicor Software Corporation

195 Technology Drive

Irvine, California 92618-2402

Attention: Valerie Brodie, Vice President, Investor Relations

Telephone Number: (949) 585-4293

After April 19, 2004:

Epicor Software Corporation

18200 Von Karman Avenue

Suite 1000

Irvine, California 92612

Attention: Valerie Brodie, Vice President, Investor Relations

Telephone Number: (949) 585-4293

In addition, you may obtain copies of this information by making a request through Epicor’s investor relations website, http://www.epicor.com/company/investor/, or by sending an e-mail to vbrodie@epicor.com.

QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER

Q:	*What are Epicor and Scala proposing? (see page 63)*

A:	We have entered into an agreement with Scala called the merger protocol pursuant to which we are making this exchange offer to acquire all of the outstanding Scala ordinary shares. A copy of the amended and restated merger protocol is attached to this prospectus as Annex A.

Q:	*What would I receive in exchange for my Scala ordinary shares? (see page 63)*

A:	In the exchange offer, we are offering to exchange for each Scala ordinary share:

•

0.1795 shares of Epicor common stock (and accompanying preferred stock purchase rights); and

•

$1.8230 in cash, subject to adjustment as described in more detail below.

Q:	*Under what circumstances is the cash portion of the exchange offer consideration subject to adjustment? (see page 63)*

If the product of the average closing stock price on the Nasdaq National Market for shares of Epicor common stock during the 10 trading day period ending two full trading days prior to the expiration of the exchange offer and 0.1795 is less than $1.8327, the cash portion of the exchange offer consideration will be increased by the amount by which such product is less than $1.8327, up to a maximum of $0.3665.

Q:	*How can I find out the final amount I will receive in the exchange offer? (see page 63)*

We will publish the final exchange ratio in a press release, an advertisement in the Daily Official List (Officiële Prijscourant) of Euronext Amsterdam and in one or more daily newspapers with nation-wide distribution in the Netherlands immediately after the close of the Nasdaq trading day that is two full Nasdaq trading days prior to the expiration of the exchange offer. We will also file a current report on Form 8-K with the SEC containing the final exchange ratio on the Nasdaq trading day that is one full Nasdaq trading day prior to the expiration of the exchange offer. You can also direct your questions to your bank or broker with whom you hold your Scala ordinary shares.

You may also call ( ) - toll free in the United States or ( ) - outside the United States to obtain the final exchange ratio starting at the close of the Nasdaq trading day that is two full Nasdaq trading days prior to the expiration of the exchange offer. These telephone numbers will also be available throughout the period in which the exchange offer remains open to provide callers with the exchange ratio on each day during the exchange offer as if the exchange ratio had been determined on that date.

Q:	*How long will it take to complete the exchange offer? (see page 65)*

The exchange offer is scheduled to commence at on , 2004 and, unless extended, is scheduled to expire at 3:00 p.m., Central European Time, on , 2004. Subject to the satisfaction or waiver of the offer conditions contained in the merger protocol, we will declare the offer unconditional within five Euronext Amsterdam trading days after the exchange offer expires. When we declare the offer unconditional, our obligation to accept and pay for all shares tendered becomes irrevocable. We will pay for the Scala ordinary shares tendered into the exchange offer on the settlement date, which is no later than three Euronext Amsterdam trading days after the offer is declared unconditional.

Q:	*Do the Scala managing and supervisory boards support the exchange offer? (see page 56)*

A:	Yes. The Scala managing and supervisory boards each unanimously support the exchange offer and recommend that you tender your Scala ordinary shares into the exchange offer.

Q:	*Will Scala hold a meeting of shareholders to discuss the exchange offer?*

Yes. In compliance with section 9q of the 1995 Decree on the Supervision of the Securities Trade (Netherlands), Scala will hold an extraordinary general meeting of shareholders on , 2004 at , Central European Time, at in Amsterdam, the Netherlands that will be convened in accordance with Scala’s articles of association.

The agenda for the Scala extraordinary general meeting of shareholders will include the following matters:

•

opening;

•

discussion of the exchange offer in accordance with section 9q of the 1995 Decree on the Supervision of the Securities Trade (Netherlands);

•

resignation of the current members of the Scala supervisory board, conditional upon the exchange offer being declared unconditional and effective upon the settlement date of the exchange offer and discharge for the performance by the current members of the Scala supervisory board of their duties as members of the Scala supervisory board for the period from May 15, 2003 through the date of the Scala extraordinary general meeting of shareholders;

•

appointment of L. George Klaus as the sole member of the Scala supervisory board, conditional upon the exchange offer being declared unconditional and effective upon the settlement date of the exchange offer;

•

appointment of Richard Borg, John Brims, Mark Duffell, John Ireland, Andreas F. Kemi and Michael Piraino as members of the Scala managing board, conditional upon the exchange offer being declared unconditional and effective upon the settlement date of the exchange offer; and

•

closing.

Q:	*Have any Scala shareholders agreed to tender their shares into the exchange offer? (see page 82)*

Yes. Some shareholders of Scala have agreed to tender their Scala ordinary shares into the exchange offer and have entered into tender agreements with us. These shareholders are individual directors of Scala on the managing and supervisory boards who hold 294,542 Scala ordinary shares and options to purchase 277,200 Scala ordinary shares, representing in the aggregate approximately 0.25% of the outstanding Scala ordinary shares as of March 31, 2004.

Pursuant to the tender agreements, these shareholders and holders of share options have agreed that until the exchange offer is declared unconditional or the merger protocol is terminated, they will not transfer or otherwise dispose of their Scala ordinary shares or discuss, negotiate, or make any offer or agreement relating to their Scala ordinary shares with anyone other than Epicor. A copy of this form of tender agreement is attached to this prospectus as Annex B.

Q:	*Does Epicor currently own any Scala ordinary shares?*

A:	No. As of the date of this prospectus, other than the right to acquire the Scala ordinary shares covered by the tender agreements from members of the Scala managing and supervisory boards, Epicor does not beneficially own any Scala ordinary shares.

Q:	*What percentage of Epicor common stock will Scala shareholders own after the exchange offer?*

If Epicor acquires all of the outstanding Scala ordinary shares pursuant to the exchange offer, former shareholders of Scala would in aggregate own approximately 9.25% of the outstanding shares of Epicor common stock, based upon 47,443,000 shares of Epicor common stock and 24,449,000 Scala ordinary shares (including share options exercisable for Scala ordinary shares) outstanding on December 31, 2003 and not taking into account stock options, warrants or convertible securities of Epicor, but assuming conversion of the outstanding Series C and Series D convertible preferred stock of Epicor into common stock.

Q:	*How can I learn about the exchange offer?*

You can learn about the exchange offer by reading this prospectus and the Dutch offering memorandum (biedingsbericht), which will be made publicly available by Epicor in the Netherlands. Under the Dutch securities laws, we are required to make an offering memorandum publicly available in the Netherlands that contains information about Epicor and Scala and the terms of the offer. Copies of this prospectus and the Dutch offering memorandum are available, free of charge, from ABN AMRO Bank N.V. and from Scala upon request.

Q:	*How do I participate in the exchange offer? (see page 67)*

You are urged to read this entire prospectus and the Dutch offering memorandum carefully, and to consider how the exchange offer affects you. Then, if you wish to tender your Scala ordinary shares, you should contact the bank or broker who administers your Scala ordinary shares and instruct it to tender your Scala ordinary shares into the exchange offer. Your bank or broker will then notify ABN AMRO Bank N.V., our paying and exchange agent, on or prior to the expiration of the exchange offer of the number of Scala ordinary shares tendered by its respective clients that it has in its administration and bind itself in writing to deliver these shares by completing and returning the application form to ABN AMRO Bank N.V.

Please read this prospectus carefully for more information about the procedures for tendering your shares, the possible adjustment to the cash portion of the exchange offer consideration, timing of the exchange offer and your rights to withdraw your Scala ordinary shares from the exchange offer during any extension of the exchange offer period.

Q:	*Do I have to pay any brokerage fees or commissions?*

A:	If you tender your Scala ordinary shares in the exchange offer, you will not incur any brokerage fees or commissions in connection with your tender or settlement.

Q:	*Are there any conditions to Epicor’s acceptance of the Scala ordinary shares tendered into the exchange offer? (see page 74)*

Yes. There are a number of conditions that need to be satisfied or waived before Epicor will accept the Scala ordinary shares tendered into the exchange offer, including, among other things, a requirement that the total number of shares tendered into the exchange offer constitutes at least 95% of the outstanding Scala ordinary shares. If less than 80% of the outstanding Scala ordinary shares are tendered into the exchange offer, Epicor can only waive this condition with the agreement of Scala. Please read this prospectus carefully for more information regarding Epicor’s obligation to accept Scala ordinary shares tendered into the exchange offer.

Q:	*What happens to my Scala share options? (see page 78)*

If you hold options to purchase Scala ordinary shares, you will receive at least 14 calendar days notice prior to the expiration of the exchange offer from Scala and/or the trustee of the Scala Share Option Scheme. Unless prohibited by a specific country’s laws or otherwise agreed, you will generally be entitled, within 14 calendar days of such notice and subject to certain limitations, to exercise all of your Scala share options (whether or not they are vested) conditional upon the exchange offer being declared unconditional. Any Scala share options under the Scala Share Option Scheme that are not conditionally exercised as described above will terminate and cease to exist. Upon exercise of your share options, you may, at your election, also tender into the exchange offer the Scala ordinary shares you receive pursuant to the option exercise by contacting Scala in accordance with the instructions that you receive from Scala. If you do not tender into the exchange offer the Scala ordinary shares you received upon the exercise of your share options, you will continue to own your Scala ordinary shares. Please see the question below for more details regarding what happens if you choose not to tender your ordinary shares into the exchange offer.

Q:	*What happens if the exchange offer is completed and I have not tendered my Scala ordinary shares? (see page 78)*

You will continue to own your Scala ordinary shares. After the completion of the exchange offer, we intend to, among other things, de-list the Scala ordinary shares from Euronext Amsterdam, such that there will no longer be a public market for Scala ordinary shares. We can only commence such a delisting procedure once we have obtained 95% or more of the issued and outstanding Scala ordinary shares. After the completion of the exchange offer, the value of your Scala ordinary shares may decline and you may be unable to sell your Scala ordinary shares readily or at all after the completion of the exchange offer.

In addition, we intend to effectuate a corporate restructuring of Scala, which we refer to as the post-closing restructuring, in order to acquire the remaining Scala ordinary shares. The post-closing restructuring may include, without limitation:

•

the commencement of a “buy-out procedure” by us of Scala shareholders, which is permitted under Dutch law only if we own 95% or more of the outstanding Scala ordinary shares;

•

the sale and transfer by Scala, or any of its subsidiaries, to us, or any of our affiliates, of all or a portion of the assets of Scala (including capital stock of a group company) or its subsidiaries;

•

the transfer of employees from Scala or a Scala group company to us or any of our affiliates, and the transfer of employees from us or any of our affiliates to Scala or any Scala subsidiary;

•

the merger of a Scala group company into Scala or us or any of our affiliates;

•

the effectuation by Scala and one or more of our Dutch subsidiaries of a legal merger within the meaning of Section 2:309 of the Dutch Civil Code, as described in the section entitled “The Exchange Offer — Post-Closing Legal Merger”;

•

the amendment of the articles of association of Scala, for instance, in order to make them more in accordance with the articles of association and by-laws customarily used for Epicor and its affiliates;

•

the transformation of Scala into a private company with limited liability (which we can only effectuate once the Scala ordinary shares have been de-listed from Euronext Amsterdam); or

•

any one or more combinations of the foregoing actions.

Under Dutch law, once we have declared the exchange offer unconditional we are prohibited for a period of three years from the availability of the offer documentation from acquiring any Scala ordinary shares not tendered into the exchange offer on terms that are more favorable than the exchange offer consideration, except for regular market purchases of Scala ordinary shares on Euronext Amsterdam or the acquisition of Scala ordinary shares pursuant to the “buy-out procedure.”

Q:	*Is Epicor’s financial condition relevant to my decision to tender my Scala ordinary shares into the exchange offer?*

Yes. Since Scala ordinary shares accepted in the exchange offer will be partially exchanged for shares of Epicor common stock, you should consider Epicor’s financial condition before you decide to tender your Scala ordinary shares into the exchange offer. In considering Epicor’s financial condition, you should review carefully the information in this prospectus and the documents incorporated by reference into this prospectus because they contain detailed business, financial and other information about Epicor.

Q:	*Who can help answer my questions?*

A:	If you have any questions about the exchange offer or on how to tender your Scala ordinary shares, you should contact your bank or broker.

Copies of this prospectus and the Dutch offering memorandum are available at:

ABN AMRO Bank N.V.

Department Equity Capital Markets HQ 7006

Gustav Mahlerlaan 10

1082 PP Amsterdam

tel.: +31 20 383 6707

fax: +31 20 628 0004

email: prospectus@nl.abnamro.com

and

Scala Business Solutions N.V.

Prinsengracht 739-741

1017 JX Amsterdam

tel. :+31 20 427 4361

fax:+31 20 423 3100

email: epicoroffer@scala.net

SUMMARY

The following is a summary of the information contained in this prospectus. This summary may not contain all of the information about the exchange offer that is important to you. For a more complete description of the exchange offer, we encourage you to read carefully this entire prospectus, including the attached annexes. In addition, we encourage you to read the information incorporated by reference into this prospectus, which includes important business and financial information about Epicor. You may obtain the information incorporated by reference into this prospectus without charge by following the instructions in the section entitled “Incorporation of Certain Information by Reference” beginning on page 127 of this prospectus.

The Exchange Offer and the Merger Protocol (see pages 51 and 73)

Epicor and Scala have agreed to the exchange offer under the terms of an agreement called the merger protocol. The merger protocol was entered into on November 13, 2003, Pacific Standard Time (and November 14, 2003, Central European Time), and amended and restated on April 14, 2004. A copy of the amended and restated merger protocol is attached to this prospectus as Annex A and is described in this prospectus. Upon the terms and subject to the conditions to the exchange offer described in the merger protocol, we will offer to exchange for each Scala ordinary share that is validly tendered and not properly withdrawn, 0.1795 shares of Epicor common stock (and accompanying preferred stock purchase rights) and $1.8230 in cash, subject to adjustment as described more fully in this prospectus.

Parties to the Exchange Offer

Epicor Software Corporation

195 Technology Drive

Irvine, California 92618-2402

(949) 585-4293

We are relocating our headquarters on April 19, 2004 to:

18200 Von Karman Avenue

Suite 1000

Irvine, California 92612

Epicor designs, develops, markets and supports enterprise and eBusiness software solutions for use by mid-sized companies as well as divisions and subsidiaries of larger corporations worldwide. Epicor’s business solutions are focused on the midmarket, which generally includes companies between $10 million and $500 million in annual revenues. Epicor’s solutions are designed to help companies focus on their customers, suppliers, partners, and employees, through enterprise-wide management of resources and information. Epicor believes this collaborative focus differentiates Epicor from conventional enterprise resource planning (ERP) vendors, whose primary focus is improving internal business processes and efficiencies. By automating and integrating information and critical business processes across their entire value chain, midmarket companies can improve not just their bottom line, but also their top line, allowing them to compete more effectively in today’s increasingly global economy.

Epicor’s products integrate back office applications for manufacturing, distribution and accounting with front office applications for sales, marketing and customer service and support. Epicor also provides integrated eCommerce capabilities that allow companies to leverage the power of the Internet to allow their organization to further extend beyond the traditional “four walls” of their enterprise, and further integrate their operations with their customers, suppliers and partners.

Epicor’s software products incorporate a significant number of features localized to address international market opportunities, including support for multiple languages, multiple currencies and accounting for value-added taxation (VAT) and goods and services taxation (GST).

Epicor offers consulting, training and support services to supplement the use of its software products by its customers. Midmarket companies require cost effective systems that have broad functionality, yet are rapidly implemented, easily adapted and highly configurable to their unique business requirements.

Epicor was incorporated in Delaware in November 1987 under the name Platinum Holdings Corporation. In September 1992, it changed its name to Platinum Software Corporation. In April 1999, Epicor changed its name to Epicor Software Corporation.

Scala Business Solutions N.V.

Prinsengracht 739-741

1017 JX Amsterdam

The Netherlands

Telephone Number: +31 20 427 4361

Scala designs, develops, markets and supports collaborative enterprise resource planning (ERP) software that is used by the small- and medium-size divisions and subsidiaries of large multinational corporations, as well as by independent stand-alone companies, in developed and emerging markets. Scala’s solutions enable these companies to manage resources and information throughout their enterprise through integrating back-office applications for manufacturing, distribution and accounting with front-office applications for sales, marketing and customer service and support, helping them increase their business efficiency and productivity.

Scala provides companies with an open, flexible, easy-to-deploy and cost effective ERP system. Scala’s solutions are based on a web services platform and utilize Microsoft^® technologies. Scala designs its products to be compatible with current and emerging industry standards, and customizes its products to meet the individual needs of its customers worldwide. Approximately half of Scala’s customers are mid-sized companies and subsidiaries or divisions of large multinational corporations, with the remaining half being smaller, local companies.

Scala’s software and services support local currencies and accounting regulations, are available in more than 30 languages, and are used by customers in over 140 countries. Scala’s local presence and its multi-language and multi-currency software, together with local know-how and expertise gained from over 25 years of working with multinational corporations and their subsidiaries and divisions across a wide variety of industries, allow Scala to serve customers who do business globally. Scala’s software and services also enable its customers to integrate all of their ERP systems in multiple locations throughout the world, whether in a subsidiary, division or headquarters, and whether they are Scala systems or other vendors’ systems.

Scala is a public company with limited liability incorporated under the laws of the Netherlands. Scala was founded in Sweden in 1978 under the name Beslutsmodeller. In 1996, the company renamed itself Scala, and in 1997 Scala Business Solutions N.V. was incorporated in the Netherlands. Scala has been listed on Euronext Amsterdam since July 16, 1998.

Adjustment of the Cash Portion of the Exchange Offer Price (see page 63)

If the product of the average closing price on the Nasdaq National Market for shares of Epicor common stock during the 10 trading day period ending two full trading days prior to the expiration of the exchange offer and 0.1795 is less than $1.8327, the cash portion of the exchange offer consideration will be increased by the amount by which such product is less than $1.8327, up to a maximum of $0.3665.

containing the final exchange ratio on the Nasdaq trading day that is one full Nasdaq trading day prior to the expiration of the exchange offer. You may also contact your bank or broker who administers your Scala shares to find out the final exchange ratio.

Structure of the Exchange Offer (see page 64)

We reserve the right to assign our right to delivery of the Scala ordinary shares tendered into the exchange offer to our subsidiary, Epicor Software Nederland B.V., or any other of our subsidiaries, if and when we declare the exchange offer unconditional. If we decide to assign our right to delivery, we will announce this decision through an advertisement in one or more daily newspapers with nation-wide distribution in the Netherlands and in the Daily Official List of Euronext Amsterdam. Scala shareholders who tender their Scala shares into the exchange offer will be deemed to have been validly notified of this assignment in accordance with Dutch law by way of these advertisements if and when published by Epicor.

Recommendation of Each of the Scala Boards (see page 74)

The Scala managing and supervisory boards have each unanimously approved the merger protocol and the exchange offer based on their determination that the consideration payable in the exchange offer is fair to and in the best interests of Scala, its shareholders and all other stakeholders and recommend that Scala shareholders tender their shares into the exchange offer.

Reasons for the Exchange Offer

Scala (see page 56). Scala’s reasons for recommending the exchange offer and a number of factors considered by the Scala managing and supervisory boards in determining whether to recommend the exchange offer are described in the section entitled “The Exchange Offer—Scala’s Reasons for the Exchange Offer” in this prospectus.

Epicor (see page 55). Epicor’s reasons for entering into the merger protocol and a number of factors considered by Epicor’s board of directors in determining whether to enter into the merger protocol and acquire Scala are described in the section entitled “The Exchange Offer—Epicor’s Reasons for the Exchange Offer” in this prospectus.

Opinion of Scala Financial Advisor Regarding the Exchange Offer (see page 59)

The supervisory and managing boards of Scala have received a written opinion, dated December 11, 2003, from Fortis Bank (Nederland) N.V., to the effect that, as of the date of the opinion and based on and subject to the matters described in the opinion, the aggregate consideration to be offered to holders of Scala ordinary shares in the exchange offer was fair, from a financial point of view, to such shareholders.

The full text of Fortis Bank’s opinion is attached to this prospectus as Annex C, and we urge you to read this opinion in its entirety. Fortis Bank’s opinion is addressed only to the Scala managing and supervisory boards and does not constitute a recommendation to any holder of Scala ordinary shares regarding whether that shareholder should tender Scala ordinary shares into the exchange offer.

Members of the Scala Managing and Supervisory Boards Have Interests in the Exchange Offer (see page 109)

When you consider the Scala managing and supervisory boards’ recommendation that shareholders tender their Scala ordinary shares into the exchange offer, you should be aware that some members of the Scala managing and supervisory boards may have interests in the exchange offer that may be different from, or in addition to, those of Scala’s shareholders generally. These interests include employment arrangements with Epicor, bonus payments, appointment to Epicor’s board of directors, indemnification arrangements and accelerated vesting of Scala share options. These interests are described in more detail in the section entitled “Executive Officers and Directors of Scala—Interests of Scala Management and Members of Scala Boards in the Exchange Offer” in this prospectus.

Scala’s Boards Following the Exchange Offer (see page 78)

All current members of the Scala supervisory board will resign conditional on the exchange offer being declared unconditional and effective as of the settlement date of the exchange offer. Upon resignation, each resigning supervisory board member will receive an additional full annual payment of EUR 25,000 and Jan-Erik Lundberg, as the chairman of the supervisory board, will receive an additional full annual payment of EUR 50,000 as compensation for loss of office.

As of the settlement date of the exchange offer, L. George Klaus shall be appointed as the sole member of the Scala supervisory board.

All current members of the Scala managing board will continue to serve on the Scala managing board. If the exchange offer is declared unconditional, Richard Borg, John Brims, Mark Duffell, John Ireland, Andreas Kemi and Michael Piraino will be appointed as members of the Scala managing board as of the settlement date of the exchange offer.

In addition, under certain circumstances, upon the purchase by Epicor of Scala ordinary shares representing not less than 51% of the outstanding Scala ordinary shares, Scala will convene an extraordinary general meeting of shareholders for the election of such number of directors to serve on each of the Scala managing and supervisory boards in order to give Epicor proportional representation on each of the boards.

Scala Meeting of Shareholders (see page 83)

Scala will hold an extraordinary general meeting of shareholders on , 2004 at , Central European Time, at in Amsterdam, the Netherlands in accordance with Section 9q of the 1995 Decree on the Supervision of the Securities Trade (Netherlands) and its articles of association.

The agenda for the Scala extraordinary general meeting of shareholders will include the following matters:

•

opening;

•

discussion of the exchange offer in accordance with section 9q of the 1995 Decree on the Supervision of the Securities Trade (Netherlands);

•

resignation of the current members of the Scala supervisory board, conditional upon the exchange offer being declared unconditional and effective upon the settlement date of the exchange offer, and discharge for the performance by the current members of the Scala supervisory board of their duties as members of the Scala supervisory board for the period from May 15, 2003 through the date of the Scala extraordinary general meeting of shareholders;

•

appointment of L. George Klaus as the sole member of the Scala supervisory board, conditional upon the exchange offer being declared unconditional and effective upon the settlement date;

•

closing.

What is Needed to Complete the Exchange Offer (see page 75)

Our obligation to accept Scala ordinary shares tendered for exchange in the exchange offer is subject to the satisfaction of a number of conditions, which may, in some instances, be waived. These conditions are the following:

•

on or before the expiration of the exchange offer, the number of Scala ordinary shares tendered into the exchange offer, together with any other Scala ordinary shares held by us, must represent at least 95% of the outstanding Scala ordinary shares;

•

no third party will have obtained the right to acquire or will have agreed to acquire or take up shares to be issued by Scala or a substantial part of the assets or business of Scala or Scala’s group companies;

•

the managing and supervisory boards of Scala will not have resolved to revoke their unanimous favorable recommendations of the exchange offer;

•

all regulatory approvals necessary for the exchange offer will have been obtained prior to the expiration of the exchange offer period;

•

the exchange offer will not have been rendered impossible or materially adversely affected by any decisions of competent courts or authorities;

•

prior to the expiration of the exchange offer there will have been no material facts or circumstances that were not known to Epicor as of December 12, 2003 (including, but not limited to, national and/or international extraordinary developments in financial, political and/or economic circumstances) and that would have such a very significant impact on the value of the business of Scala that we could not reasonably be expected to declare the exchange offer unconditional;

•

no event will have occurred and be continuing that (i) makes it illegal or otherwise prohibits us from declaring the exchange offer unconditional in accordance with the terms of the merger protocol or from accepting the Scala ordinary shares tendered into the exchange offer, (ii) imposes material limitations on our ability to acquire, hold or exercise full rights of ownership of the Scala ordinary shares tendered into the offer, or (iii) requires divestiture by us or any of our subsidiaries of any Scala ordinary shares or of any part of our business or the business of Scala;

•

Scala will not have breached the merger protocol in a material respect relevant to our determination to declare the exchange offer unconditional;

•

prior to the expiration of the exchange offer period, no notification has been received from the AFM that the Dutch public offer has been made in conflict with Chapter IIa of the 1995 Act on the Supervision of the Securities Trade (Netherlands) in which case the securities institutions pursuant to section 32a of the 1995 Decree on the Supervision of the Securities Trade (Netherlands) would not be allowed to cooperate with the settlement of the exchange offer and Euronext Amsterdam will not have suspended and continued to suspend Scala’s listing on Euronext Amsterdam; and

•

the registration statement on Form S-4, of which this prospectus is a part, to register shares of Epicor’s common stock to be issued in connection with the exchange offer will not be the subject of any stop orders or proceedings seeking a stop order.

If all of the offer conditions are satisfied or waived, we will declare the offer unconditional within five Euronext Amsterdam trading days after the exchange offer expires.

Required Regulatory Approvals to Complete the Exchange Offer (see page 68)

Other than (i) the SEC declaring effective the registration statement on Form S-4, of which this prospectus is a part, (ii) the review by the AFM of the draft Dutch offering memorandum, which shall be completed prior to commencing the exchange offer, (iii) a dispensation by the AFM from the requirement to publish a specified price or exchange ratio in the Dutch offering memorandum, which was granted on December 10, 2003, (iv) a dispensation by the AFM from the requirement to publish a Dutch Bte-prospectus (a prospectus referred to in article 3 paragraph 2 sub b of the 1995 Act on the Supervision of the Securities Trade (Netherlands) that is generally required in connection with the issuance of securities in the Netherlands), which was granted on December 24, 2003, and (v) the dispensations by the AFM from the requirement to publish the Dutch offering memorandum within six weeks after December 12, 2003, which were granted on January 22, 2004 and March 30, 2004, we do not believe that any additional material governmental filings or approvals are required with respect to the exchange offer. However, governmental authorities, and in some cases, private individuals, could challenge the exchange offer at any time.

Procedure for Tendering (see page 67)

Scala shareholders are requested to tender their Scala ordinary shares for acceptance through their bank or broker, that either is an Admitted Institution of Euronext Amsterdam or holds shares through a bank or broker that is an Admitted Institution of Euronext Amsterdam, where their shares are administered, to ABN AMRO Bank N.V., which has been appointed as exchange and paying agent for the exchange offer. Unless the exchange offer is extended in accordance with Dutch law, such shares must have been tendered by no later than the expiration of the exchange offer period, 3:00 p.m., Central European Time, on , 2004.

The Admitted Institutions of Euronext Amsterdam, which includes banks and brokers, may only tender Scala ordinary shares for acceptance to ABN AMRO Bank N.V. in writing by duly completing and signing the application form. By tendering, the Admitted Institutions of Euronext Amsterdam declare that they fully comply with the restrictions outlined in this prospectus and the Dutch offering memorandum, have the Scala ordinary shares in their administration and that they bind themselves to deliver these shares no later than 10:00 a.m., Central European Time, on the settlement date, which will be within three Euronext Amsterdam trading days after the exchange offer is declared unconditional (gestand gedaan).

Withdrawal Rights (see page 68)

Your tender of Scala ordinary shares pursuant to the exchange offer is irrevocable, except in the event that we extend the exchange offer period. If we extend the exchange offer period, you may withdraw Scala ordinary shares tendered into the exchange offer during the original exchange offer period at any time prior to the expiration of the extended exchange offer period by contacting your bank or broker.

Exchange of Scala Ordinary Shares; Delivery of Shares of Epicor Common Stock and Cash (see page 67)

If the terms and conditions of the exchange offer are satisfied or waived and the offer is declared unconditional, we are required to accept for exchange all Scala ordinary shares validly tendered and not properly

withdrawn and to deliver in exchange, shares of Epicor common stock and cash as set forth in the merger protocol. The payment and delivery of Epicor common stock and cash will be effected by us on the settlement date, the date which is at the latest three Euronext Amsterdam trading days after the exchange offer is declared unconditional, through ABN AMRO Bank N.V., our exchange and paying agent.

Scala is Prohibited from Considering Other Offers (see page 79)

Scala has agreed not to solicit, encourage or engage in discussions with other parties regarding the sale of its ordinary shares or a merger, association, acquisition or other similar transaction concerning Scala or its subsidiaries unless the merger protocol has been terminated in accordance with its terms. In addition, Scala may not enter into a transaction with anyone other than Epicor regarding the acquisition of any Scala ordinary shares or any material portion of Scala’s assets unless the merger protocol has been terminated in accordance with its terms.

However, in the event of any unsolicited competing offer that, in terms of the price offered and the proposed strategy, is substantially better for Scala and its shareholders than the exchange offer, nothing in the merger protocol prohibits the members of the Scala managing and supervisory boards from considering or engaging in discussions or negotiations or making recommendations to the shareholders of Scala (and withdrawing their recommendations regarding the exchange offer) regarding such competing offer to the extent necessary to comply with their fiduciary duties and subject to certain conditions.

Epicor and Scala May Terminate the Merger Protocol (see page 80)

We and Scala may agree jointly to terminate the merger protocol at any time. In addition, either we or Scala may terminate the merger protocol if:

•

the conditions for Epicor to accept the Scala ordinary shares tendered into the exchange offer have not been satisfied or waived by August 31, 2004;

•

any applicable law or regulation makes completion of the exchange offer illegal or prohibited; or

•

a final, non-appealable order of a court or other governmental body prohibits the completion of the exchange offer.

We may also terminate the merger protocol if either of the Scala managing board or supervisory board resolves to revoke its unanimous recommendation supporting the exchange offer.

Epicor or Scala May Be Required to Pay a Termination Fee or Break-Up Fee (see page 80)

Pursuant to the merger protocol, if the exchange offer is not consummated due to any breach of obligations under the merger protocol, the party that caused the breach will be required to pay the other party a EUR 3 million termination fee for fixed damages.

In addition, Scala will pay Epicor a break up fee of EUR 1.5 million immediately upon written and documented request to it for the costs incurred by Epicor related to the exchange offer (including internal costs, advisory fees and other out-of-pocket expenses, loss of profits and opportunity costs) if:

•

a public announcement indicating that a third party is preparing, has prepared or made a public offer for the Scala ordinary shares or an indication that a third party has obtained the right to acquire or has agreed to acquire or take up shares to be issued by Scala in an amount of more than 51% of the outstanding Scala ordinary shares or a substantial part of the assets or business of Scala or Scala’s group companies, and such third party transaction has been approved or recommended by Scala’s managing board or supervisory board or submitted for approval by the shareholders of Scala;

•

the merger protocol is terminated, not due to certain breaches by Epicor, at a point in time when less than 95% of the outstanding Scala ordinary shares have been tendered in the exchange offer, because such a transaction with a third party has been announced, has not been withdrawn, is superior in value to the exchange offer and a transaction with such third party is consummated within six months of terminating the merger protocol; or

•

either of the Scala managing board or supervisory board has resolved to revoke its unanimous recommendation in favor of the exchange offer.

However, in the event that Scala is required to pay the EUR 3 million termination fee because the revocation by either of the Scala managing board or supervisory board of its unanimous recommendation supporting the exchange offer constitutes a breach of the merger protocol, the additional EUR 1.5 million reimbursement payment for Epicor’s costs due to such revocation shall be credited against the EUR 3 million payment.

The Exchange Offer is Taxable for United States Federal Income Tax Purposes for U.S. Holders and May be Taxable for Netherlands Income Tax Purposes for Dutch Individuals (see pages 45 and 47)

The receipt of shares of Epicor common stock and cash in exchange for Scala ordinary shares pursuant to the exchange offer will be a taxable transaction for United States federal income tax purposes. Each U.S. holder receiving Epicor common stock and cash will recognize gain or loss equal to the difference between (1) the sum of the fair market value of the Epicor common stock and the cash received in exchange for such shareholder’s shares, and (2) the shareholder’s adjusted tax basis in such Scala ordinary shares. Special rules apply for non-U.S. holders.

The receipt of shares of Epicor common stock and cash in exchange for Scala ordinary shares pursuant to the exchange offer may be a taxable transaction for Dutch private or corporate income tax purposes. If taxable, each Dutch holder receiving Epicor common stock and cash will generally recognize a gain or loss equal to the difference between (1) the sum of the fair market value of the Epicor common stock and the cash received in exchange for such shareholder’s shares, and (2) the book value of the tendered Scala ordinary shares for tax purposes. For certain Dutch holders being private individuals, the exchange offer itself will not be a taxable transaction. However, the offer will indirectly influence the base for a fictitious yield tax, which sets the annual taxable benefit at a fixed percentage of all the assets and liabilities of a Dutch individual, irrespective of the actual income or capital gains. Special rules apply for non-Dutch holders.

Scala shareholders are urged to consult their own tax advisors regarding the United States federal, Dutch, state, local, non-U.S. and non-Dutch, and other tax consequences of the exchange offer in light of their particular circumstances.

Extension and Waiver of Conditions to the Exchange Offer (see page 74)

We may unilaterally waive the condition that the number of Scala ordinary shares tendered into the exchange offer, together with such shares held by us, represent at least 95% of the outstanding Scala ordinary shares on or before the expiration of the exchange offer, provided that the number of Scala ordinary shares tendered into the exchange offer represents at least 80% of the outstanding Scala ordinary shares at the expiration of the exchange offer. If such number of Scala ordinary shares is less than 80%, we may mutually agree with Scala to decrease the number of Scala ordinary shares required to be tendered to satisfy such condition and/or extend the exchange offer period.

certain conditions to the exchange offer relating to receipt of all regulatory approvals or the effectiveness of the registration statement on Form S-4, of which this prospectus is a part, are not satisfied on the expiration of the exchange offer, and one or more other conditions are not satisfied or waived, the date for fulfillment may be unilaterally extended by us for up to 60 days. Other than as provided above with respect to the condition in the above paragraph regarding the percentage of shares tendered into the exchange offer, if any conditions other than the conditions related to the receipt of all regulatory approvals and the effectiveness of the registration statement on Form S-4, of which this prospectus is a part, have not been satisfied or waived then the expiration of the exchange offer may be extended by us with Scala’s consent.

If the exchange offer period is extended, we will make a public announcement to that effect by way of an advertisement to be published in one or more daily newspapers with nation-wide distribution in the Netherlands and in the Daily Official List of Euronext Amsterdam no later than the third Euronext Amsterdam trading day after the previously scheduled expiration date. These announcements shall be made in accordance with section 9o of the 1995 Decree on the Supervision of the Securities Trade (Netherlands) and shall contain the new expiration date of the exchange offer. Scala shareholders are entitled during the extended exchange offer period to withdraw any Scala ordinary shares tendered during the original exchange offer period.

We also have the right to waive certain other conditions to our obligation to accept all validly tendered Scala ordinary shares, including, but not limited to the conditions requiring that:

•

no third party will have obtained the right to acquire or agreed to acquire or take up shares to be issued by Scala or to acquire a substantial part of the assets or business of Scala or Scala’s group companies;

•

the managing and supervisory boards of Scala will not have resolved to revoke their unanimous favorable recommendations of the exchange offer;

•

all regulatory approvals necessary for the exchange offer will have been obtained prior to the expiration of the exchange offer period;

•

Scala will not have breached the merger protocol in a material respect relevant to our determination to declare the exchange offer unconditional; and

•

Scala shall not have breached the merger protocol in a material respect relevant to our acceptance of the Scala ordinary shares tendered into the exchange offer.

We will follow any extension, termination, amendment or delay, as promptly as practicable, with a public announcement in accordance with the publication requirements of the merger protocol and applicable Dutch and United States laws.

Subsequent Offer Period (see page 66)

We expressly reserve the right to have a subsequent offering period of not less than three US business days nor more than 15 Euronext Amsterdam trading days. A subsequent offering period is different from an extension. A subsequent offering period is an additional period of time, following the expiration date of the initial (or extended) exchange offer period, during which stockholders may tender Scala ordinary shares not tendered on or prior to the expiration date of the initial (or extended) exchange offer period. You will not have the right to withdraw any shares of Scala ordinary shares that you tender during a subsequent offering period. We will accept for exchange, and deliver Epicor Common Stock and cash in exchange for, Scala ordinary shares that are validly tendered, within three Euronext Amsterdam trading days after the expiration of any subsequent offering period.

Accounting Treatment of the Exchange Offer (see page 45)

We will account for the exchange offer under the purchase method of accounting for business combinations in accordance with United States generally accepted accounting principles.

Epicor Will List Shares of Epicor Common Stock on the Nasdaq National Market (see page 71)

We expect to prepare and file a notification form for the change in the number of shares outstanding of our common stock with the Nasdaq Stock Market in order to cause the shares of Epicor common stock issuable or required to be reserved for issuance in connection with the exchange offer to be listed on the Nasdaq National Market, effective as of the settlement date.

Scala Shareholders Appraisal Rights (see page 68)

Dutch law does not recognize the concept of appraisal or dissenters’ rights, and, accordingly, Scala shareholders have no appraisal rights for their ordinary shares under Dutch law in connection with the exchange offer. However, Dutch corporate law requires the management of a company and a majority of the shareholders to act in accordance with the “principles of reasonableness and fairness” when dealing with minority shareholders. See the section in this prospectus entitled “The Exchange Offer—Buy-out Procedure” for a discussion of the judicial proceedings under Dutch law relating to the determination of the amount of consideration to be paid to the remaining minority Scala shareholders in a buy-out procedure. See also Annex D attached to this prospectus for the unofficial English translation of Section 2:92a of the Dutch Civil Code in connection with the buy-out procedure.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF EPICOR

The table below presents selected historical consolidated financial data with respect to Epicor as of the dates and for the periods indicated. The historical consolidated statements of operations data presented below for the fiscal years ended December 31, 2003, 2002 and 2001 the historical consolidated balance sheet data as of December 31, 2003 and 2002, have been derived from Epicor’s audited historical consolidated financial statements, which are incorporated by reference into this prospectus. The historical consolidated statements of operations data presented below for the fiscal years ended December 31, 2000 and 1999 and the historical consolidated balance sheet data as of December 31, 2001, 2000 and 1999 have been derived from Epicor’s historical audited consolidated financial statements, which are not incorporated by reference into this prospectus. The historical results are not necessarily indicative of results to be expected for any future period.

It is important for you to read the following selected historical consolidated financial data together with the consolidated financial statements and accompanying notes contained in Epicor’s Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2003 and the financial statements and management’s discussion and analysis of such financial statements included therein, all of which are incorporated by reference into this prospectus.

EPICOR SOFTWARE CORPORATION AND SUBSIDIARIES

Selected Historical Consolidated Financial Data

(in thousands, except per share amounts)


	As of or for the year ended December 31,
	2003		2002			2001			2000			1999
	(5)		(5)			(4)			(3)			(1)(2)
Historical Consolidated Statements of Operations Data:
Total revenues	$	155,422	$	143,467		$	174,492		$	224,155		$	261,965
Net income (loss) applicable to common stockholders	$	9,053	$	(7,264	)	$	(28,730	)	$	(40,735	)	$	(50,633	)
Net income (loss) applicable to common stockholders per share:
Basic	$	0.21	$	(0.17	)	$	(0.69	)	$	(0.98	)	$	(1.25	)
Diluted	$	0.18	$	(0.17	)	$	(0.69	)	$	(0.98	)	$	(1.25	)
Historical Consolidated Balance Sheets Data:
Total assets	$	102,223	$	73,268		$	86,771		$	134,787		$	170,177
Long-term obligations and redeemable preferred stock	$	1,355	$	3,043		$	2,229		$	5,621		$	520
Net stockholders’ equity	$	29,410	$	3,786		$	7,171		$	34,067		$	71,806

(1)

For the year ended December 31, 1999, net loss included restructuring charges of $9,975,000 recorded relative to the Epicor’s restructuring activities, related charges aggregating $7,713,000 recorded in cost of license fees and general and administrative expenses to reflect the write down of certain operating assets, and a litigation charge of $1,800,000.

(2)	For the year ended December 31, 2000, net loss included a charge of $5,337,000 recorded in cost of license fees related to the write-down of capitalized software development costs, provision for doubtful accounts of $18,480,000 and a $2,000,000 litigation charge.

(3)

For the year ended December 31, 2001, net loss included gain from sales of product lines of $11,880,000, provision for doubtful accounts of $10,108,000, restructuring charges of $9,658,000 and a charge of $1,500,000 recorded in cost of revenues, related to the write-down of capitalized development costs and reduction in the carrying value of certain intangible assets. See Notes 1, 5 and 7 of Notes to Consolidated Financial Statements.

(4)

For the year ended December 31, 2002, net loss included restructuring charges of $3,891,000, a $4,288,000 settlement charge, a $600,000 charge included in cost of revenues to write-down certain prepaid software royalties, and a $1,000,000 reduction in general and administrative expenses related to the favorable settlement of international payroll tax issues and a $1,200,000 income tax benefit related to adjustments for certain other international tax issues. See Notes 5, 8, 9 and 14 of Notes to Consolidated Financial Statements.

(5)

For the year ended December 31, 2003, net income included restructuring charges of $937,000, a $1,100,000 reduction in operating expenses related to a decrease in the provision for doubtful accounts and a $241,000 fee paid to the holders of the preferred stock accounted for a beneficial conversion option on the preferred stock. See Notes 5 and 13 of Notes to Consolidated Financial Statements.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SCALA

The table below presents selected historical consolidated financial data with respect to Scala as of the dates and for the periods indicated. The historical consolidated statements of operations data presented below for the fiscal years ended December 31, 2003 and 2002 and the historical consolidated balance sheets data as of December 31, 2003 and 2002 have been derived from Scala’s audited restated historical consolidated financial statements, prepared under U.S. GAAP, which are included elsewhere in this prospectus. The historical consolidated statement of income data presented below for the fiscal years ended December 31, 2001, 2000 and 1999 and the historical consolidated balance sheet data as of December 31, 2001, 2000 and 1999 have been derived from Scala’s unaudited restated historical consolidated financial statements prepared under U.S. GAAP, which do not appear elsewhere in this prospectus. The historical results are not necessarily indicative of results to be expected for any future period.

It is important for you to read the following selected historical consolidated financial data together with the consolidated financial statements and accompanying notes and the section entitled “Scala Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this prospectus.

SCALA BUSINESS SOLUTIONS N.V.

Summary Selected Historical Consolidated Financial Data

(in thousand US$, except share and per share amounts)


				Restated (1)
	2003			2002		2001		2000			1999
						Unaudited		Unaudited			Unaudited
Historical Consolidated Statements of Operations Data:
Total revenue	$	69,105		$	74,835	$	68,213	$	71,204		$	97,337
Income/(loss) before income taxes	$	(6,228	)	$	7,028	$	2,545	$	(30,690	)	$	(30,226	)
Net income/(loss)	$	(10,664	)	$	4,990	$	1,475	$	(36,315	)	$	(30,293	)
Income/(loss) per ordinary share:
Basic:
Net income/(loss)	$	(0.47	)	$	0.22	$	0.06	$	(1.76	)	$	(1.61	)
Diluted:
Net income/(loss)	$	(0.47	)	$	0.21	$	0.06	$	(1.76	)	$	(1.61	)
Shares used in computing income/(loss) per common share:
Basic		22,893,888			22,880,215		22,746,542		20,585,513			18,760,256
Diluted		22,893,888			23,294,494		22,889,946		20,585,513			18,760,256
Historical Consolidated Balance Sheet Data:
Total assets	$	43,285		$	51,037	$	49,829	$	51,099		$	86,499
Total long-term liabilities	$	23		$	192	$	549	$	6,732		$	5,160
Total shareholders’ equity	$	6,244		$	16,513	$	11,668	$	9,550		$	39,760

Had amortization of goodwill and intangible assets been accounted for in accordance with SFAS 142 for all periods presented, the Group net income/(loss) and basic and diluted net income/(loss) per share would have been as follows:
Reported net income/(loss)	$	(10,664	)	$	4,990	$	1,475	$	(36,315	)	$	(30,293	)
Amortization		—			—		245		12,629			15,948
Adjusted net income/(loss)		(10,664	)		4,990		1,720		(23,686	)		(14,345	)
Income/(loss) per ordinary share:
Basic:
Reported net income/(loss)	$	(0.47	)	$	0.22	$	0.06	$	(1.76	)	$	(1.61	)
Amortization		—			—	$	0.02	$	0.61		$	0.85
Adjusted net income/(loss)	$	(0.47	)	$	0.22	$	0.08	$	(1.15	)	$	(0.76	)
Diluted:
Reported net income/(loss)	$	(0.47	)	$	0.21	$	0.06	$	(1.76	)	$	(1.61	)
Amortization		—			—	$	0.02	$	0.61		$	0.85
Adjusted net income/(loss)	$	(0.47	)	$	0.21	$	0.08	$	(1.15	)	$	(0.76	)

(1)	The audited and unaudited income statement and balance sheet data for the years ended December 31, 2002, 2001, 2000 and 1999 have been restated as described in note 2 to Scala’s consolidated financial statements.

RATES OF EXCHANGE

United States Dollar per Euro


	Year ended December 31,
	2003	2002	2001	2000	1999
Year end⁽¹⁾	1.2575	1.0485	0.8901	0.9388	1.0070
Average for the year⁽²⁾	1.1275	0.9495	0.8909	0.9207	1.0588
High	1.2575	1.0485	0.9535	1.0335	1.1812
Low	1.0481	0.8594	0.8425	0.8270	1.0024

(1)	For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in Euros as certified for customs purposes by the Federal Reserve Bank of New York.

(2)	For purposes of this table, average rate means the average of the exchange rates on the last day of each month during a year.

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL DATA

The following selected unaudited pro forma condensed combined financial data were prepared using the purchase method of accounting and were derived from the unaudited pro forma condensed combined financial statements and accompanying notes contained elsewhere in this prospectus, the separate historical financial statements and accompanying notes of Epicor incorporated by reference into this prospectus, and the separate historical consolidated financial statements and accompanying notes of Scala included elsewhere in this prospectus.

The selected unaudited pro forma condensed combined financial data is based on estimates and assumptions which are preliminary. This data is presented for informational purposes only and is not intended to represent or be indicative of the consolidated results of operations or financial condition of Epicor that would have been reported had the exchange offer been completed as of the dates presented, and should not be taken as representative of future consolidated results of operations or financial condition of Epicor.

This selected unaudited pro forma condensed combined financial data should be read in conjunction with the selected historical consolidated financial data and the unaudited pro forma condensed combined consolidated financial statements and accompanying notes contained elsewhere in this prospectus, the separate historical consolidated financial statements and accompanying notes of Epicor incorporated by reference into this prospectus, and the separate historical consolidated financial statements and accompanying notes of Scala included elsewhere in this prospectus. See the section entitled “Incorporation of Certain Information by Reference” beginning on page 127 of this prospectus.

EPICOR AND SCALA

Selected Unaudited Pro Forma Condensed Combined Financial Data

(in millions, except per share amounts)


	Year Ended December 31, 2003
Unaudited Pro Forma Condensed Combined Statement of Operations Data:
Total revenues	$	235.5
Net loss from operations	$	(7.3)
Net loss applicable to common stockholders	$	(9.5)
Net loss per share applicable to common stockholders:
Basic	$	(0.20	)
Diluted	$	(0.20	)
Average number of shares and share equivalents:
Basic		47.5
Diluted		47.5


	As of December 31, 2003
Unaudited Pro Forma Condensed Combined Balance Sheet Data:
Cash and cash equivalents	$	23.2
Working capital deficit	$	(34.1	)
Total assets	$	204.2
Long-term obligations	$	16.4
Total stockholders’ equity	$	76.9

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

The following table presents comparative historical per share data regarding the net income (loss), book value and dividends of each of Epicor and Scala and unaudited combined pro forma per share data after giving effect to the exchange offer as a purchase of Scala by Epicor, assuming the exchange offer had been completed on January 1, 2003. The following data is based on 0.1795 shares of Epicor common stock to be issued in exchange for each Scala ordinary share outstanding in connection with the exchange offer. This data has been derived from and should be read in conjunction with the selected historical consolidated financial data and unaudited pro forma condensed combined financial statements contained elsewhere in this prospectus, the separate historical consolidated financial statements of Epicor and accompanying notes incorporated by reference into this prospectus and the separate historical consolidated financial statements of Scala and accompanying notes included elsewhere in this prospectus. The unaudited pro forma per share data is presented for informational purposes only and is not intended to represent or be indicative of the consolidated results of operations or financial condition of Epicor that would have been reported had the exchange offer been completed as of the date presented, and should not be taken as representative of future consolidated results of operations or financial condition of Epicor.


	As of or For the Year Ended December 31, 2003
	Epicor		Scala			Pro Forma
	Epicor		Scala			Epicor and Scala			Scala Equivalent⁽³⁾
						(Unaudited)
Net income (loss) per share applicable to common stockholders⁽¹⁾:
Basic	$	0.21	$	(0.47	)	$	(0.20	)	$	(0.04	)
Diluted⁽²⁾	$	0.18	$	(0.47	)	$	(0.20	)	$	(0.04	)
Book value per share at period end⁽²⁾	$	0.64	$	0.27		$	1.52		$	0.27
Cash dividends declared per share	$	0.00	$	0.00		$	0.00		$	0.00

(1)

The number of Epicor shares used to calculate unaudited pro forma net income per basic and diluted share was computed by adding 4.1 million shares assumed to be issued in exchange for the issued and outstanding Scala ordinary shares and approximately 257,000 shares assumed issued for Scala in-the-money options to Epicor’s weighted average number of shares outstanding.

(2)

The historical net book value per Epicor share is computed by dividing stockholders’ equity by the number of shares of Epicor common stock outstanding at December 31, 2003 of 46,230,000, which does not include any potentially dilutive preferred stock or stock options outstanding. The historical net book value per Scala share is computed by dividing stockholders’ equity by the number of Scala ordinary shares outstanding at December 31, 2003 of 23,017,000, which does not include any potentially dilutive stock options outstanding. The pro forma net book value per combined company share is computed by dividing the pro forma stockholders’ equity by the pro forma number of shares of Epicor common stock outstanding as of December 31, 2003 of 50,618,000, assuming that the exchange offer had occurred as of that date.

(3)	The Scala equivalent pro forma combined per share amounts are calculated by multiplying Epicor combined pro forma share amounts by the exchange ratio in the merger of 0.1795 shares of Epicor common stock for each Scala ordinary share. The exchange ratio does not include the cash consideration.

COMPARATIVE PER SHARE MARKET PRICE DATA AND DIVIDENDS

Share Prices

Epicor common stock trades on the Nasdaq National Market of the Nasdaq Stock Market under the symbol “EPIC.” Scala ordinary shares trade on the Euronext Amsterdam under the symbol “SCALA.”

The following table shows the high and low sales prices per share of Epicor common stock, as reported on Nasdaq and the high and low sales prices per Scala ordinary share, as reported on Euronext Amsterdam on (1) November 13, 2003, the last full trading day preceding public announcement that Epicor and Scala had entered into the merger protocol and (2) , 2004 the last full trading day for which high and low sales prices were available as of the date of this prospectus. The Scala high and low sales prices have been converted from Euros to US dollars at an exchange rate of on , 2004, the last full trading day for which the exchange rate was available as of the date of this prospectus. The table also includes the equivalent high and low sales prices per Scala ordinary share for (1) and (2) above.


	Epicor Common Stock				Scala Ordinary Shares		Equivalent Price Per Share
	High		Low		High	Low	High	Low
November 13, 2003	$	11.05	$	10.25	$	$	$	$
, 2004	$		$		$	$	$	$

The table below shows the high and low sales prices per Scala ordinary share, as reported on Euronext Amsterdam for each quarter in 2003 and 2002, for the first quarter in 2004 and for the second quarter in 2004 through , 2004. The Scala high and low sales prices have been converted from Euros to US dollars at an exchange rate of on , 2004, the last full trading day for which the exchange rate was available as of the date of this prospectus.


	Scala Ordinary Shares				U.S. Dollar Equivalent
	High		Low		High	Low
2002
First Quarter	€	4.00	€	3.14	$	$
Second Quarter		3.89		2.14
Third Quarter		3.00		1.95
Fourth Quarter		2.94		1.80
2003
First Quarter	€	2.94	€	1.89	$	$
Second Quarter		1.68		1.27
Third Quarter		2.22		1.25
Fourth Quarter		3.13		1.20
2004
First Quarter	€	3.70	€	3.09	$	$
Second Quarter (through , 2004)

The above table shows only historical information on Scala ordinary share prices. This information may not provide meaningful information to Scala shareholders in determining whether to tender their shares into the exchange offer. Scala shareholders are urged to obtain current market quotations for Epicor common stock and

Scala ordinary shares and to review carefully the other information contained in this prospectus or incorporated by reference into this prospectus in considering whether to tender their Scala ordinary shares into the exchange

offer. See the section entitled “Incorporation of Certain Information by Reference” beginning on page 127 of this prospectus.

Dividends

Neither Epicor nor Scala has paid any dividends to date. Both Epicor and Scala intend to retain any earnings for use in their businesses and do not intend to pay dividends for the foreseeable future.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This prospectus and the documents incorporated by reference into this prospectus contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, as well as assumptions, that, if they never materialize or prove incorrect, could cause the results of Epicor and its consolidated subsidiaries, on the one hand, or Scala and its consolidated subsidiaries, on the other, to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any projections of earnings, revenues, synergies, accretion, margins or other financial items; any statements of the plans, strategies and objectives of managing for future operations, including the execution of integration and restructuring plans and the anticipated timing of filings, approvals and closings relating to the acquisition of Scala; any statements concerning the de-listing or “buy-out procedure” under Dutch law or other post-closing restructuring of Scala; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

The risks, uncertainties and assumptions referred to above include retention of customers, continuation of strategic relationships, the actions of competitors, the development of new products, the difficulty of keeping expense growth at modest levels while increasing revenues; the challenges of integration and restructuring associated with the acquisition of Scala or other planned acquisitions and the challenges of achieving anticipated synergies; the possibility that the acquisition of Scala may not close; the assumption of maintaining revenues on a combined company basis following the completion of the exchange offer; and other risks that are described in the section entitled “Risk Factors,” which follows on the next page, and in the documents that are incorporated by reference into this prospectus.

If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, results of Epicor and Scala could differ materially from the expectations in these statements. Epicor and Scala are not under any obligation and do not intend to update their respective forward-looking statements.

RISK FACTORS

Risks Regarding the Exchange Offer

The value of the Epicor common stock that you will receive as partial consideration for your Scala ordinary shares is subject to stock market fluctuation.

As consideration for each Scala ordinary share that you tender into the exchange offer, you will receive (i) 0.1795 shares of Epicor common stock and (ii) $1.8230 in cash, subject to adjustment. The merger protocol affords you partial protection for declines in the value of Epicor common stock after November 12, 2003. The merger protocol provides that if the average closing price of Epicor common stock on Nasdaq during the 10 trading day period that is two full trading days prior to the expiration of the exchange offer is below the closing price on November 12, 2003, you will receive a commensurate increase in the cash component of the consideration to be exchanged for each Scala ordinary share tendered into the exchange offer. However, the additional cash consideration you would receive for declines in the value of Epicor common stock is subject to a maximum of $0.3665 per Scala ordinary share tendered into the exchange offer. Moreover, the trading price of Epicor common stock on the date that you receive Epicor common stock in exchange for your Scala ordinary shares could be less than the average closing price of the Epicor common stock during the relevant 10 trading day period.

The market for Epicor common stock is volatile. Please see the risk factor entitled “The market for Epicor common stock is volatile and fluctuations in operating results, changes in Epicor’s guidance on revenues and earnings estimates and other factors could negatively impact Epicor’s stock price.” Because the market price of Epicor common stock fluctuates, the overall value of the Epicor common stock that you will receive after the exchange offer is completed may be adversely affected by changes in the market price of Epicor common stock. You should obtain recent market quotations for trading prices of Epicor common stock before you tender your Scala ordinary shares into the exchange offer.

Some members of the Scala managing and supervisory boards have interests and arrangements that could have affected their decision to support or approve the exchange offer.

The interests of members of the Scala managing and supervisory boards in the exchange offer and their participation in arrangements that are different from, or are in addition to, those of Scala shareholders generally could have affected their decision to support or approve the exchange offer. These interests include the acceleration of share options held by members of the Scala managing and supervisory boards, the receipt, upon resignation, on the settlement date of the exchange offer by each supervisory board member of an additional full annual payment of EUR 25,000 as compensation for loss of office, the receipt, upon resignation, on the settlement date of the exchange offer by the chairman of the supervisory board of an additional full annual payment of EUR 50,000 as compensation for loss of office and the right to indemnification of the members of the supervisory board as provided in Annex B to the merger protocol. In addition, Sergey Shvedov, Jan Palmquist and Barbara Moorhouse, each a member of the Scala managing board, and Andreas F. Kemi, Scala’s interim Chief Executive Officer and member of the Scala supervisory board, have entered into separate agreements with Scala and Epicor in connection with the merger protocol and the exchange offer. Pursuant to these agreements, each of these individuals is entitled to receive a $25,000 gross cash payment as consideration for their willingness (i) to continue to be employed by Scala under their existing employment agreements for a period of six months following the expiration of the exchange offer in the case of Sergey Shvedov, Jan Palmquist and Andreas F. Kemi, and for a period of five months following the expiration of the exchange offer in the case of Barbara Moorhouse and (ii) to waive all existing “change of control” benefits under their existing employment agreements during such limited employment periods. Furthermore, Epicor has agreed to take all requisite action, effective as of the expiration of the exchange offer, to cause its Board of Directors to be expanded to enable Andreas F. Kemi to be appointed to Epicor’s Board of Directors, effective as of the settlement date of the exchange offer.

Five months after the tender closing date, upon the giving of a twelve-month notice, Barbara Moorhouse will be entitled to receive a lump sum payment equal to the sum of (i) her annual base salary of £150,000, (ii) her annual bonus payment for 2003, not to be less than a guaranteed minimum of £85,000, and (iii) the value of other benefits available to her over a twelve-month period in accordance with the terms of her employment agreement. In addition, Barbara Moorhouse will be entitled to all other salary and benefits payable to her under her employment agreement for the remaining term of her employment and any additional payments for early termination thereof available to her in accordance with the terms of her employment agreement.

As a result, members of the Scala managing and supervisory boards may be more likely to recommend that you tender your Scala ordinary shares than if they did not have these interests. These interests are described in more detail in the section entitled “Executive Officers and Directors of Scala—Interests of Scala Management and Members of Scala Boards in the Exchange Offer.”

We may not be able to successfully complete the exchange offer.

The exchange offer may not be completed unless the number of Scala ordinary shares tendered into the exchange offer, plus any other Scala ordinary shares held by Epicor, represents at least 95% of the outstanding Scala ordinary shares at the expiration of the exchange offer. If the percentage of Scala ordinary shares tendered is at least 80% but less than 95% of the outstanding Scala ordinary shares at the expiration of the exchange offer, Epicor will have the opportunity, but not the obligation, to waive this 95% requirement. If the percentage of Scala ordinary shares tendered is less than 80% at the expiration of the exchange offer, Epicor will have the opportunity to consult with Scala and if Scala agrees, Epicor could decrease the required percentage and/or extend the term of the exchange offer. Notwithstanding these provisions, it is possible that we may fail to complete the exchange offer because an insufficient number of Scala ordinary shares are tendered into the exchange offer.

In addition to the requirement of sufficient Epicor ownership of Scala ordinary shares discussed above, there are other conditions that must be satisfied and/or waived in order for the exchange offer to be completed. Please see the sections entitled “The Merger Protocol—Satisfaction of the Conditions to the Commencement of the Exchange Offer” and “—Conditions to Epicor’s Obligation to Declare the Exchange Offer Unconditional.” If any of these conditions are not satisfied, or waived by the relevant party, as applicable, then we may ultimately terminate the exchange offer. In addition, we may terminate the exchange offer for other reasons. Please see the section entitled “The Merger Protocol—Termination of the Merger Protocol.”

If we terminate the exchange offer, or if the exchange offer is otherwise not completed, Scala’s share price and business could be adversely affected.

If the exchange offer is not completed, Scala may be subject, among others, to the following material risks:

•

the price of Scala ordinary shares may decline to the extent that the current market prices of Scala ordinary shares reflect a market assumption that the exchange offer will be completed; and

•

Scala may not be able to find an equivalent or more attractive partner.

In addition to the above risks, if the exchange offer is not consummated due to any breach of the obligations under the merger protocol, the party that caused the breach will be required to pay the other party a EUR 3 million termination fee for fixed damages.

Scala will be required to pay us a break-up fee of EUR 1.5 million in the event of the following:

•

a public announcement indicating that a third party is preparing, has prepared or made a public offer for the Scala ordinary shares or an indication that a third party has obtained the right to acquire or has agreed to acquire or take up shares to be issued by Scala in an amount of more than 51% of the outstanding Scala ordinary shares, or a substantial part of the assets or business of Scala or Scala’s group companies, and such third party transaction has been approved or recommended by the Scala managing board or supervisory board or submitted for approval by the shareholders of Scala;

•

the merger protocol is terminated, not due to certain breaches by Epicor, at a point in time when less than 95% of the outstanding Scala ordinary shares have been tendered into the exchange offer, because such a transaction with a third party has been announced, has not been withdrawn, is superior in value to the exchange offer and a transaction with such third party is consummated within six months of terminating the merger protocol; or

•

either of the Scala managing board or supervisory board has resolved to revoke its unanimous recommendation in favor of the exchange offer.

See the section entitled “The Merger Protocol—Payment of Termination and Break-up Fees” for the full definition of the types of alternate third party transactions referenced above.

Strategic partner, customer and supplier uncertainty related to the exchange offer could harm the businesses of Epicor and Scala.

Epicor and Scala have numerous strategic relationships and business alliances with other companies to deliver and market their products to customers. As a result of the exchange offer, some of these relationships may change in a manner adverse to the Epicor and/or Scala businesses. In addition, customers of Epicor and Scala, in response to the announcement of the exchange offer or due to ongoing uncertainty about the exchange offer, may delay or defer purchasing decisions or elect to switch to other suppliers. Any delay, deferral or change in purchasing decisions by the customers of Epicor and Scala could seriously harm the businesses of Epicor and/or Scala. Since the announcement of the merger protocol, Epicor and Scala have not experienced any material change in their customers’ purchasing decisions and their strategic relationships and business alliances have not been negatively affected in any material way as a result of the announcement of the exchange offer.

The Epicor common stock issued to Scala shareholders pursuant to the exchange offer will have different rights and preferences than the Scala ordinary shares tendered into the exchange offer.

Scala shareholders who participate in the exchange offer will receive shares of Epicor common stock with rights and preferences that are different from the rights and preferences of the Scala ordinary shares tendered into the exchange offer. The rights and preferences of the Epicor common stock issued pursuant to the exchange offer are governed by Epicor’s certificate of incorporation and the laws of the United States and the State of Delaware and may be different from the rights and preferences under the law of the Netherlands. See the section entitled “Comparison of Rights of Holders of Epicor Common Stock and Scala Ordinary Shares” for a discussion of the different rights associated with Epicor common stock.

The exchange of Scala ordinary shares for Epicor common stock will be a taxable transaction for United States federal income tax purposes and may be a taxable transaction for Netherlands income tax purposes.

The exchange of Scala ordinary shares for Epicor common stock and cash will be a taxable transaction for United States federal income tax purposes. Each U.S. holder will be required to include in taxable income the excess of the fair market value of the Epicor common stock and the cash received in the exchange over such shareholder’s tax basis in the Scala ordinary shares exchanged. Special rules apply to non-U.S. holders. See the section entitled “Certain Material U.S. Federal Tax Consequences to Scala Shareholders” for a further discussion of the United States federal income tax consequences of the exchange offer to Scala shareholders.

The exchange of Scala ordinary shares for Epicor common stock and cash may be a taxable transaction for Dutch private or corporate income tax purposes. A Dutch holder may be required to include in its taxable income the excess of the fair market value of the Epicor common stock and the cash received in the exchange over such shareholder’s tax base in the Scala ordinary shares exchanged. Special rules apply for non-Dutch holders. See the section entitled “Certain Material Dutch Tax Consequences to Scala Shareholders” for a further discussion of the Dutch private or corporate income tax consequences of the exchange offer to Scala shareholders.

Risks Relating to the Combined Company

If we do not successfully integrate Scala with Epicor, a process that may be made more difficult due to geographic challenges, our ability to achieve anticipated revenue and income results for the Scala products may be adversely impacted and the business of Epicor may be disrupted and negatively impacted.

Achieving success as a combined company will depend in part on the integration of the Scala business into Epicor. Integration issues are complex, time-consuming and expensive and, without proper planning and implementation, could significantly disrupt the businesses of both Scala and Epicor. Integration may be especially difficult because the operations and primary markets of Epicor and Scala are geographically disparate. The challenges involved in integrating Scala with Epicor include:

•

Coordinating Scala’s headquarters operations in the Netherlands, as well as its research and development facilities in Moscow, Russia, which are geographically distant from the operations of Epicor’s corporate headquarters and most of Epicor’s subsidiaries in the United States;

•

Coordinating sales and marketing efforts to effectively communicate our capabilities;

•

Combining product offerings;

•

Coordinating and combining international operations, relationships and facilities, which may be subject to additional constraints imposed by local laws and regulations;

•

Coordinating and rationalizing research and development activities to enhance introduction of new products and technologies with reduced cost;

•

Demonstrating to the customers of Scala that the acquisition will not result in adverse changes in client service standards or business focus and helping customers conduct business easily with us;

•

Preserving distribution, marketing or other important relationships of both Epicor and Scala and resolving potential conflicts that may arise;

•

Minimizing the diversion of management attention from ongoing business concerns;

•

Successfully integrating the business cultures of Epicor and Scala, maintaining employee morale and retaining key employees; and

•

Consolidating and rationalizing corporate information technology and administrative infrastructures.

The integration of the Scala business into our business may not be successfully completed in a timely manner, or at all, and we may not realize any of the anticipated benefits of the acquisition to the extent, or in the time frame, anticipated. The failure to integrate the business of Scala successfully into Epicor or to realize any of the anticipated benefits of the exchange offer could seriously hinder our plans for product development and business and market expansion following the acquisition.

Additional improvements to Scala’s internal controls, disclosure policies and central finance functions are required and if these improvements are not completed it could have a material adverse effect on the business, results of operations and financial condition of Scala, and Epicor following completion of the exchange offer, and Epicor’s ability to comply with the Sarbanes-Oxley Act.

In connection with the audit of Scala’s financial statements for each of the years in the two-year period ended December 31, 2003, Scala received a letter on April 13, 2004 from its independent auditors, KPMG Accountants N.V., providing information with respect to the conduct of its audit in accordance with US generally accepted auditing standards. The letter noted that Scala’s independent auditors identified “reportable conditions” which constituted “material weaknesses” (as those terms are defined under standards established by the American Institute of Certified Public Accountants, or AICPA) in Scala’s internal controls, financial reporting and board process controls. For a description of the the AICPA standards for what constitutes a “reportable

condition” and “material weakness” see the section entitled “Scala Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Internal Controls; Financial Reporting; Disclosure Issues.”

Scala’s independent auditors noted that Scala has not been and its not currently an SEC reporting company and has historically not had sufficient dedicated US GAAP financial reporting and accounting resources to operate within an SEC environment, and notwithstanding improvements during the second half of 2003, this continues to be the case. During the first half of 2003, Scala implemented two phases of corporate restructuring. Following these changes and the loss of a number of central finance staff during the first half of 2003, Scala significantly reorganized its financial accounting department. Scala’s independent auditors noted that these changes initially led to deterioration in the financial control environment in central finance and business units. In the second half of 2003, changes to the financial accounting department and the establishment of additional controls reversed the deterioration noted in the first half of the year, and Scala’s independent auditors noted that the internal control environment operating by the end of the year to be a marked improvement on that noted during 2002. Scala’s independent auditors indicated that even in light of such improvement there remains a need for Scala to further enhance its technical accounting and financial reporting resources. In addition, Scala’s independent auditors noted that Scala’s disclosure controls failed to ensure that financial commitments made by the Scala supervisory and managing boards in respect of employee taxes and severance payments were reported on a timely basis to the Scala financial reporting department, thus enabling all appropriate accounting adjustments and disclosures to be made in Scala’s financial statements. For a detailed description of the conditions identified by its independent auditors, see the section entitled “Scala Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Internal Controls; Financial Reporting; Disclosure Issues.”

These material weaknesses, if not addressed, could result in accounting errors and cause future restatements of Scala’s financial statements. In order to address these deficiencies and in light of the ongoing need for compliance with U.S. generally accepted auditing standards as applied by the SEC following the exchange offer, Scala is implementing additional improvements to its financial reporting systems and controls. In addition, we believe that the integration of Scala’s accounting and financial reporting functions with those of Epicor will also help to address some of the identified deficiencies in Scala’s accounting and financial reporting functions. However, the implementation of these new processes, and the integration of the Scala accounting and financial reporting functions with those of Epicor, may not be successfully completed in a timely manner or at all, and unanticipated factors may hinder the effectiveness of these new processes or delay the integration of Epicor and Scala’s control systems. If we fail to adequately address these material weaknesses, it could have a material adverse effect on Scala’s business, results of operations and financial condition, and, following completion of the offer, it could have a material effect on Epicor’s business, results of operations and financial condition. Although following the completion of the exchange offer, Epicor intends to promptly correct these deficiencies, ultimately, if not corrected, these identified material weaknesses could prevent Epicor from releasing its financial information and SEC reports in a timely manner, making the required certifications regarding, and complying with its other obligations with respect to, its financial statements and internal controls under the Sarbanes-Oxley Act.

The quarterly operating results of Epicor following the acquisition are difficult to predict and subject to substantial fluctuation.

Epicor’s quarterly operating results have fluctuated significantly in the past. From the first quarter of 2001 through the year ended December 31, 2003, quarterly operating results have ranged from an operating loss of $22.1 million to an operating income of $3.5 million. During this same time period, Scala’s annual operating results have ranged from an operating loss of $10.7 million in the year ended December 31, 2003 to an operating income of $5.0 million in the year ended December 31, 2002 (restated) and Scala’s quarterly operating results have also fluctuated. Following the acquisition of Scala, Epicor’s operating results may continue to fluctuate in the future as a result of many specific factors that include:

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The demand for the combined company’s products, including reduced demand related to changes in marketing focus for certain products, software market conditions or general economic conditions as they pertain to information technology spending;

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Fluctuations in the length of the combined company’s sales cycles which may vary depending on the complexity of our products as well as the complexity of the customer’s specific software and service needs;

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The size and timing of orders for the combined company’s software products and services, which, because many orders are completed in the final days of each quarter, may be delayed to future quarters;

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The number, timing and significance of new software product announcements, both by Epicor and its competitors;

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Customers’ unexpected postponement or termination of expected system upgrades or replacement due to a variety of factors including economic conditions, changes in information technology strategies or management changes;

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Changes in accounting standards, including software revenue recognition standards; and

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Fluctuations in maintenance renewal rates by existing customers.

In addition, both Epicor and Scala have historically realized a significant portion of their software license revenues in the final month of any quarter, with a concentration of such revenues recorded in the final ten business days of that month. Due to the above factors, among others, Epicor’s revenues following the acquisition of Scala are difficult to forecast.

Epicor bases its expense levels, including operating expenses and hiring plans, in significant part, on its expectations of future revenue. As a result, we expect expense levels following the acquisition of Scala to continue to be relatively fixed in the short term. Our failure to meet revenue expectations following the acquisition of Scala could adversely affect operating results. Further, an unanticipated decline in revenue for a particular quarter may disproportionately affect our operating results in that quarter because the majority of our expenses will be fixed in the short term. As a result, we believe that period-to-period comparisons of our results of operations are not and will not necessarily be meaningful, and you should not rely upon them as an indication of future performance. Due to the foregoing factors, it is likely that, as in past quarters with respect to Epicor and Scala, in some future quarters the combined company’s operating results will be below the expectations of public market analysts and investors. As in those past quarters, such an event would likely have an adverse effect upon the price of Epicor’s common stock.

Epicor’s future results could be harmed by economic, political, geographic, regulatory and other specific risks associated with international operations, including Scala’s operations in China, the Commonwealth of Independent States (CIS) (e.g. Russia, Ukraine, etc.) and Eastern Europe.

The acquisition of Scala would significantly augment Epicor’s international operations. Scala’s core markets include certain locations where Epicor does not currently have a significant presence, including China, the CIS, Eastern Europe and Nordic Europe. During 2003, 29.5% of Epicor’s total revenues were generated by its international operations. Epicor intends to continue to bolster its presence in these markets upon successful completion of the exchange offer. We estimate that following Epicor’s acquisition of Scala, roughly half of Epicor’s total revenues will be generated by international operations. There can be no assurance that Epicor will maintain or expand its international sales. We believe that Epicor’s future growth will be dependent, in part, upon our ability to maintain and increase revenues in Epicor’s and Scala’s existing and emerging international markets, including Asia, Eastern Europe and Latin America. If the revenues generated from international activities, especially in emerging markets, are inadequate to offset the expense of maintaining such international operations, our business, financial condition and results of operations could be materially and adversely affected. The increasingly international reach of Epicor’s businesses could also subject Epicor and its results of operations to unexpected, uncontrollable and rapidly changing economic and political conditions. Specifically, international sales and operations are subject to inherent risks, including:

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Differing intellectual property and labor laws;

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Lack of experience in a particular geographic market;

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Different and changing regulatory requirements in various countries and regions;

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Tariffs and other barriers, including import and export requirements and taxes on subsidiary operations;

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Fluctuating exchange rates and currency controls;

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Difficulties in staffing and managing foreign sales and support operations;

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Longer accounts receivable payment cycles;

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Potentially adverse tax consequences, including repatriation of earnings;

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Development and support of localized and translated products;

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Lack of acceptance of localized products or Epicor in foreign countries;

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Shortage of skilled personnel required for local operations; and

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Perceived or actual public health (e.g. SARS) or terrorist risks which impact a geographic region and business operations therein.

Any one of these factors or a combination of them could materially and adversely affect our future international sales and, consequently, our business, operating results, cash flows and financial condition. A portion of Epicor’s revenues from sales to foreign entities, including foreign governments, has been in the form of foreign currencies, and Epicor does not have any hedging or similar foreign currency contracts. A significant portion of Scala’s revenues and expenses have been in the form of currencies other than the U.S. dollar, and Scala, due to the high volume and generally low value of non-U.S. dollar transactions, does not have any hedging or similar foreign currency contracts. Fluctuations in the value of foreign currencies, however, could adversely impact the profitability of Epicor’s foreign operations following the acquisition of Scala due to the increase in revenues from sales to foreign entities. Please see the risk factor entitled “Foreign currency fluctuations may negatively impact the financial results of the Scala business.”

If the emerging technologies and platforms of Microsoft and others upon which Epicor and Scala build their products do not gain broad market acceptance, or if we fail to develop and introduce in a timely manner new products and services compatible with such emerging technologies, we may not be able to compete effectively and our ability to generate revenues will suffer.

The software products of Epicor and Scala are built and depend upon several underlying and evolving relational database management system platforms such as Microsoft SQL Server, Progress and IBM. To date, the standards and technologies that each of Epicor and Scala has chosen to develop its products upon have proven to be popular and have gained broad industry acceptance. However, the market for software products is subject to ongoing rapid technological developments, quickly evolving industry standards and rapid changes in customer requirements, and there may be existing or future technologies and platforms that achieve industry standard status, which are not compatible with the products of Scala or Epicor. Additionally, because the products of Scala or Epicor are expected to rely significantly upon popular existing user interfaces to third party business applications, we must forecast which user interfaces will be popular in the future. For example, both Epicor and Scala believe that the Internet is transforming the way businesses operate and the software requirements of customers. Specifically, we believe that customers desire business software applications that enable a customer to engage in commerce or service over the Internet. Recently, Epicor has announced its determination to pursue development of several of its primary product lines upon the new Microsoft .NET technology. If we cannot develop such .NET compatible products in time to effectively bring them to market, or if .NET does not become a widely accepted industry standard, our ability to interface with popular third party applications will be negatively impacted and our competitive position and revenues could be adversely affected. Similarly, Scala has recently confirmed its commitment to using a Microsoft .NET technology platform, so our revenues and competitive position could be further adversely affected if Microsoft core technologies are not widely accepted by our customers.

New software technologies could cause us to alter our business model and result in adverse affects on our operating results.

Development of new technologies may also cause us to change how we license or price our products, which may adversely impact our revenues and operating results. Emerging licensing models include hosting as well as subscription-based licensing, in which the licensee essentially rents software for a defined period of time, as opposed to the current perpetual license model. Our future business, operating results and financial condition will depend on our ability to effectively train our sales force to sell an integrated comprehensive set of business software products and recognize and implement emerging industry standards and models, including new pricing and licensing models.

If we fail to respond to emerging industry standards, including licensing models, and end-user requirements, our competitive position and revenues could be adversely affected.

Uncertainties associated with the emerging market for Web-based development tools, application products and consulting and education services could negatively affect our client/server based products and if we fail to respond effectively to evolving requirements of this market, our business, financial condition, results of operations and cash flows will be materially and adversely affected.

Epicor’s development tools, application products and consulting and education services generally help organizations build, customize or deploy solutions that operate in a client/server-computing environment. There can be no assurance that the market for client/server computing will continue to grow, or will not decrease, or that we will be able to respond effectively to the evolving requirements of these markets. Epicor’s proposed acquisition of Scala reflects Epicor’s belief that the environment for application software is continuing to change from client/server to a Web-based environment to facilitate commerce on the Internet. If we fail to respond effectively to evolving requirements of this market, our business, financial condition, results of operations and cash flows will be materially and adversely affected. In addition, to the extent that we build out product development around the product suite of Scala, these products and services may compete to some degree with some of Epicor’s existing tools, applications and services that operate in a client/server-computing environment.

Our increasingly complex software products may contain errors or defects which could result in the rejection of our products and damage to our reputation as well as cause lost revenue, delays in collecting accounts receivable, diverted development resources and increased service costs and warranty claims.

Our software products are made up of increasingly complex computer programs. Software products as complex as the products offered by Epicor and Scala often contain undetected errors or failures (commonly referred to as bugs) when first introduced to the market or as new updates or upgrades of such products are released to the market. Despite testing by Epicor and Scala, and by current and potential customers, prior to general release to the market, our products may still contain material errors after their initial commercial shipment. Such material errors may result in loss of or delay in market acceptance of our products, damage to our reputation, and increased service and warranty costs. Ultimately, such errors could lead to a decline in our revenues. Epicor and Scala have from time to time been notified by some of their customers of errors in their various software products. Although it has not occurred to date at Epicor or Scala, the possibility of being unable to correct such errors in a timely manner could have a material adverse effect on our results of operations and cash flows. In addition, if material technical problems with the current release of the various database and technology platforms on which our products operate, including Progress, IBM, Microsoft SQL or Microsoft .NET, occur, such difficulties could also negatively impact sales of these products, which could in turn have a material adverse effect on our results of operations.

A variety of specific business interruptions could adversely affect our business.

A number of particular types of business interruptions could greatly interfere with our ability to conduct business. For example, a substantial portion of Epicor’s facilities, including our corporate headquarters and other

critical business operations, are located near major earthquake faults. Epicor does not carry earthquake insurance and does not fund for earthquake-related losses. In addition, our computer systems will be susceptible to damage from fire, floods, earthquakes, power loss, telecommunications failures, and similar events. We continue to consider and implement our options and develop contingency plans to avoid and/or minimize potential disruptions to our business services.

Epicor and Scala rely, in part, on third parties to sell their products. Disruptions to these channels would adversely affect our ability to generate revenues from the sale of our products.

Epicor and Scala distribute products through a direct sales force as well as through an indirect distribution channel, which includes value-added resellers (VARs) and other distributors and authorized consultants, consisting primarily of professional firms. During 2003, 16% of Epicor’s software license revenues were generated by VARs and other distributors and 23% of Scala’s software license revenues were generated by VARs. If Epicor’s or Scala’s VARs or authorized consultants cease distributing or recommending Epicor’s or Scala’s products or emphasize competing products, our results of operations could be materially and adversely affected. Historically, Epicor has sold its financial and customer relationship management (CRM) products through direct sales as well as through the indirect distribution channel. However, Epicor is currently creating a distribution channel for certain of its manufacturing product lines not previously widely sold through VARs and other distributors. It is not yet certain that these products can be successfully sold through such a channel and the long term impact of this increase in the distribution channel to our performance is as of yet undetermined as is our ability to generate additional license and services revenue from such a channel. Scala has also increased its utilization of VARs, while continuing to serve its larger multinational clients through its direct sales force. The success of our distributors depends in part upon their ability to attract and maintain qualified sales and consulting personnel. Additionally, Epicor’s VARs may generally terminate their agreements with Epicor upon 30 days notice, though they may effectively terminate the agreements by ceasing to promote or sell our products. Scala’s VARs may terminate their agreements with Scala on varying notice periods, from 30 days to 18 months. If our VARs or other distributors are unable to maintain such qualified personnel or if several of our VARs or other distributors terminate their agreements and we are unable to replace them in a timely fashion, such factors could negatively impact our results of operations. Finally, there can be no assurance that having both a direct sales force and a distribution channel for products will not lead to conflicts between those two sales forces which could adversely impact our ability to close sales transactions or could have a negative impact upon average selling prices, any of which may negatively impact our operating revenues and results of operations.

A significant portion of our future revenue is dependent upon Epicor’s and Scala’s existing installed base of customers continuing to license additional products as well as purchasing consulting services and renewing their annual maintenance and support contracts.

Historically, approximately 50% to 60% of Epicor’s license revenues, 90% of Epicor’s maintenance revenues and a substantial portion of Epicor’s consulting revenues were generated from Epicor’s installed base of customers. Historically, approximately 51% to 56% of Scala’s license revenues and approximately 93% of Scala’s maintenance revenues were generated from Scala’s installed base of customers. Maintenance and support agreements with these customers are traditionally renewed on an annual basis at the customer’s discretion, and there is normally no requirement that a customer so renew or that a customer pay new license fees or service fees following the initial purchase. As a result, if Epicor’s or Scala’s existing customers fail to renew their maintenance and support agreements or fail to purchase new product enhancements or additional services at historical levels, our revenues and results of operations could be materially impacted.

Epicor’s and Scala’s software products incorporate and rely upon third party software products for certain key functionality, and our revenues as well as our ability to develop and introduce new products could be adversely affected by our inability to control or replace these third party products and operations.

The products of Epicor and Scala incorporate and rely upon software products developed by several other third party entities such as Microsoft, IBM and Progress. Specifically, the software products of these companies

are built and depend upon several underlying and evolving relational database management system platforms including Microsoft SQL Server, IBM U2 and Progress OpenEdge. In the event that these third party products were to become unavailable to us or to our customers, either directly from the third party manufacturers or through other resellers of such products, Epicor and Scala could not readily replace these products with substitute products. We cannot provide assurance that these third parties will:

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Remain in business;

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Continue to support the product lines of Epicor and Scala;

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Maintain viable product lines;

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Make their product lines available to us on commercially acceptable terms; or

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Not make their products available to our competitors on more favorable terms.

In the long term (i.e. a year or more), an interruption of supply from these vendors could potentially be overcome through migration to another third party supplier or internal development. However, any interruption in the short term could have a significant detrimental effect on our ability to continue to market and sell those of its products relying on these specific third party products and could have a material adverse effect on our business, results of operation, cash flows and financial condition.

The markets for our products and services and Scala’s products and services are highly competitive. If we are unable to compete effectively with existing or new competitors, our business could be negatively impacted.

The business information systems industry in general and the manufacturing, CRM and financial computer software industries specifically, in which Scala and Epicor compete are very competitive and subject to rapid technological change, evolving standards, frequent product enhancements and introductions and changing customer requirements. Many of Scala’s and Epicor’s current and potential competitors have (1) longer operating histories, (2) significantly greater financial, technical and marketing resources, (3) greater name recognition, (4) larger technical staffs, and (5) a larger installed customer base than either Epicor or Scala individually or combined. A number of companies offer products and services that are similar to those offered by Epicor and Scala and that target the same markets. In addition, any of these competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements (such as commerce on the Internet and Web-based application software), and to devote greater resources to the development, promotion and sale of their products than the combined company. Furthermore, because there are relatively low barriers to entry in the software industry, we expect to face additional competition from other established and emerging companies. Such competitors may develop products and services that compete with those offered by the combined company or may acquire companies, businesses and product lines that compete with the combined company. It also is possible that competitors may create alliances and rapidly acquire significant market share, including in new and emerging markets.

Accordingly, there can be no assurance that current or potential competitors of Epicor and Scala will not develop or acquire products or services comparable or superior to those that the combined company develops, combine or merge to form significant competitors, or adapt more quickly than will the combined company to new technologies, evolving industry trends and changing customer requirements. Competition could cause price reductions, reduced margins or loss of market share for our products and services, any of which could materially and adversely affect our business, operating results and financial condition. There can be no assurance that we will be able to compete successfully against current and future competitors of Epicor and Scala or that the competitive pressures that the combined company may face will not materially adversely affect our business, operating results, cash flows and financial condition.

We may not be able to maintain and expand our product offerings or business if we are not able to retain, hire and integrate sufficiently qualified personnel.

Epicor’s and Scala’s success depends in large part on the continued service of key management personnel. Many of the key employees of the combined company will not be subject to employment agreements. In addition, the competition to attract, retain and motivate qualified technical, sales and software development personnel is intense. For example, Epicor has at times, including during the rise of the dot coms in the mid to late 1990’s, experienced significant attrition and difficulty in recruiting qualified personnel, particularly in software development and customer support. Additionally, the sudden unexpected loss of such technical personnel such as developers can have a negative impact on our ability to develop and introduce new products in a timely and effective manner. There is no assurance that we will retain key personnel or attract other qualified key personnel in the future. The failure to attract or retain such persons could have a material adverse effect on our business, operating results, cash flows and financial condition.

In addition, the successful integration of the Scala and Epicor businesses will depend in part on the retention and continued service of key executive officers and other key employees of Scala. Certain key employees agreed to be employed pursuant to their current employment agreements for a limited time after the completion of the exchange offer. However, the long-term employment of these key employees is not ensured. These or other employees of Scala may experience uncertainty about their future role with Epicor until or after more definite strategies with regard to the integration of the Scala and Epicor businesses are announced or executed. This uncertainty may adversely affect our ability to retain key management, technical, administrative, marketing, sales and customer support personnel.

If third parties infringe upon Epicor’s or Scala’s intellectual property, we may expend significant resources enforcing our rights or suffer competitive injury, which could adversely affect our operating results.

We consider Epicor’s and Scala’s proprietary software and the related intellectual property rights in such products to be among their most valuable assets. We rely on a combination of copyright, trademark and trade secret laws (domestically and internationally), employee and third-party nondisclosure agreements and other industry standard methods for protecting ownership of our proprietary software. However, we cannot assure you that in spite of these precautions, an unauthorized third party will not copy or reverse-engineer certain portions of our products or obtain and use information that we regard as proprietary. From time to time, Epicor takes legal action against third parties whom we believe are infringing upon our intellectual property rights. However, there is no assurance that the mechanisms that we use to protect our intellectual property will be adequate or that our competitors will not independently develop products that will be substantially equivalent or superior to Epicor’s products.

Moreover, we expect that as the number of software products in the United States and worldwide increases and the functionality of these products further overlaps, the number of these types of claims, as well as claims brought by third parties against Epicor or Scala for infringement of intellectual property rights, will increase. Any such claim, with or without merit, could result in costly litigation and require Epicor and Scala to enter into royalty or licensing arrangements. The terms of such royalty or license arrangements, if required, may not be favorable to Epicor or Scala. In addition, in certain cases, Epicor and Scala may provide the source code for some of their application software under licenses to their customers and distributors to enable them to customize the software to meet their particular requirements or translate or localize the products for resale in foreign countries, as the case may be. Although the source code licenses contain confidentiality and nondisclosure provisions, we cannot be certain that such customers or distributors will take adequate precautions to protect the source code or other confidential information. Moreover, regardless of contractual arrangements, the laws of some countries in which Epicor and Scala do business or distribute their products offer varying levels of protection to intellectual property.

Epicor’s and Scala’s operating cash flows are subject to fluctuation, primarily related to their abilities to timely collect accounts receivable and to achieve anticipated revenues and expenses. Negative fluctuations in operating cash flows may require us to seek additional cash sources to fund our working capital requirements. If additional cash sources are not available, our operations could be adversely affected.

From January 1, 2001 through December 31, 2003, Epicor’s quarterly operating cash flows have ranged from negative $7.6 million to positive $7.4 million. From January 1, 2001 through December 31, 2003, Scala’s annual operating cash flows have ranged from negative $1.1 million in the year ended December 31, 2003 to positive $10.1 million in the year ended December 31, 2002 (restated) and Scala’s quarterly operating cash flows have also fluctuated significantly. Epicor’s cash and cash equivalents have increased from $26.8 million at December 31, 2000 to $38.9 million at December 31, 2003. Epicor has however, experienced decreasing revenues and, prior to the first quarter of 2003, continued operating losses. As a result, in the fourth quarter of 2002, Epicor underwent a restructuring of its operations in an effort to reduce its cost structure through a reduction in workforce of approximately 15% and the consolidation of facilities. In the second quarter of 2003, Scala underwent a restructuring to enhance its commercial focus by simplifying the sales organization, reducing costs, centralizing and consolidating management, rationalizing its research and development base and reducing headcount by 10%. If we are not successful in achieving our anticipated revenues and expenses or maintaining a positive cash flow, we may be required to take further actions to reduce our operating expenses, such as additional reductions in work force, and/or seek additional sources of funding.

Since December 31, 1999, Epicor has also experienced fluctuations in the proportion of accounts receivable over 90 days old. These fluctuations have been due to various issues, including product and service quality, deteriorating financial condition of customers during the recent recession, and lack of effectiveness of Epicor’s collection processes. Since December 31, 1999, Scala has also experienced fluctuations in the proportion of accounts receivable over 90 days old. These fluctuations have been due to various issues, including product and service quality and the weak financial condition of certain customers affecting their ability to meet payment obligations in a timely manner. If following the acquisition of Scala, we cannot successfully collect a significant portion of our net accounts receivable, we may be required to seek alternative financing sources, and our business may suffer.

In January 2004, Epicor entered into a two year, $15 million senior revolving credit facility with a financial institution. Quarterly interest payments are to be made on this credit facility, with any principal balance due at maturity, January 2006. The facility bears interest at a variable rate of either the prime rate or LIBOR plus an applicable margin based on Epicor’s leverage ratio, at Epicor’s option. Borrowings under the facility are secured by substantially all of Epicor’s assets. Epicor is required to comply with various financial covenants. Significant financial covenants include:

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Achieving minimum earnings before interest, taxes, depreciation and amortization (EBITDA);

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Achieving minimum funded debt to EBITDA ratios;

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Achieving minimum fixed charge coverage ratios; and

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Maintaining minimum cash balances through maturity.

Additional material covenants under the agreement include limitations on Epicor’s indebtedness, liens on Epicor’s assets, guarantees, investments, dividends, repurchases of securities and certain acquisitions and dispositions of assets by Epicor. To date, no amounts have been borrowed against this revolving credit facility. There can be no assurance that Epicor will be able to continue to meet these covenants.

Scala, through its subsidiaries, has borrowing capacity under short-term bank facilities of $2.7 million, of which $0.9 million was utilized as at December 31, 2003.

The market for Epicor common stock is volatile and fluctuations in operating results, changes in Epicor’s guidance on revenues and earnings estimates and other factors could negatively impact our stock price.

During the three year period ended December 31, 2003, the closing price of Epicor’s common stock has ranged from a low of $0.65 to a high of $13.36. As of March 15, 2003, Epicor had 44,162,441 shares of common stock outstanding as well as 61,735 and 300,000 shares of Series C and D Convertible Preferred Stock outstanding, respectively. The market prices for securities of technology companies, including Epicor’s, have historically been quite volatile. Quarter to quarter variations in operating results, changes in Epicor’s guidance on revenues and earnings estimates, announcements of technological innovations or new products by Epicor or its competitors, announcements of major contract awards, announcements of industry acquisitions by us or our competitors, changes in accounting standards or regulatory requirements as promulgated by the Public Company Accounting Oversight Board (PCAOB), FASB, SEC, NASDAQ or other regulatory entities, changes in management, and other events or factors may have a significant impact on the market price of Epicor’s common stock. In addition, the securities of many technology companies have experienced extreme price and volume fluctuations, which have often been related more to changes in recommendations or financial estimates by securities analysts than to the companies’ actual operating performance. Any of these conditions may adversely affect the market price of Epicor’s common stock.

Epicor may pursue strategic acquisitions, investments, and relationships and may not be able to successfully manage our operations if we fail to successfully integrate such acquired businesses and technologies, which could adversely affect our operating results.

As part of Epicor’s business strategy, we may continue to expand our product offerings to include application software products and services that are complementary to the combined company’s software applications, including in the areas of electronic commerce or commerce over the internet, or may gain access to established customer bases into which we can sell our current products. This strategy has historically, and may in the future involve acquisitions, investments in other businesses that offer complementary products, joint development agreements or technology licensing agreements. The specific risks we commonly encounter in these types of transactions include the following:

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Difficulty in effectively integrating any acquired technologies or software products into our current products and technologies;

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Difficulty in predicting and responding to issues related to product transition such as development, distribution and customer support;

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The possible adverse impact of such acquisitions on existing relationships with third party partners and suppliers of technologies and services;

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The possibility that customers of the acquired company might not accept new ownership and may transition to different technologies or attempt to renegotiate contract terms or relationships, including maintenance or support agreements;

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The possibility that the due diligence process in any such acquisition may not completely identify material issues associated with product quality, product architecture, product development, intellectual property issues, key personnel issues or legal and financial contingencies; and

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Difficulty in integrating acquired operations due to geographical distance, and language and cultural differences.

A failure to successfully integrate acquired businesses or technology for any of these reasons could have a material adverse effect on our results of operations.

Future acquisitions of technologies or companies, which are paid for partially, or entirely through the issuance of stock or stock rights could prove dilutive to Epicor shareholders, including former Scala shareholders.

Consistent with past experience, we expect that the consideration we might pay for any future acquisitions of companies or technologies could include stock, rights to purchase stock, cash or some combination of the foregoing. If we issue stock or rights to purchase stock in connection with future acquisitions, earnings (loss) per share and then-existing holders of Epicor common stock may experience dilution.

Foreign currency fluctuations may negatively impact our financial results

Scala operates throughout the world through international sales subsidiaries and through a network of exclusive third party distributors and non-exclusive dealers. As a result, sales and related expenses are denominated in currencies other than the U.S. dollar. Because our financial results are reported on a consolidated basis in U.S. dollars, our results of operations following the acquisition of Scala may be negatively impacted by fluctuations in the rates of exchange between the U.S. dollar and other currencies. A decrease in the value of European currencies relative to the U.S. dollar would decrease reported U.S. dollar revenue disproportionably to a decrease in reported U.S. dollar costs for the Scala business, as the Scala business generates revenues in these local currencies and will report on a consolidated basis the related revenues and costs in U.S. dollars. We may attempt to limit foreign exchange exposure through operational strategies and by using forward contracts to offset the effects of exchange rate changes on intercompany trade balances. This would require us to estimate the volume of transactions in various currencies. We may not be successful in making these estimates. If these estimates are overstated or understated during periods of currency volatility, the Scala business may experience material currency gains or losses.

If third parties terminate their strategic or business alliances with Scala, our ability to develop, market, sell or support products that use Scala technology may be harmed.

Scala has contracts with some of its suppliers, distributors, customers, licensors and other business partners. Some of these contracts require Scala to obtain the consent of these other parties in connection with the exchange offer. If the respective parties’ consent cannot be obtained, these contracts may be terminated and we may need to locate alternate suppliers or we may suffer a loss of potential future revenue. However, since the announcement of the exchange offer, we have not become aware of any difficulty between Scala and its major suppliers, distributors, customers, licensors or other business partners, individually or in the aggregate, that would have a material impact on its operations.

If proposed regulations pertaining to accounting treatment for employee stock options are enacted, our business practices may be materially altered.

Epicor and Scala have historically compensated and incentivized their employees, including many of their key personnel and new hires, through the issuance of options to acquire capital stock. Epicor currently accounts for the issuance of stock options to employees using the intrinsic value method according to APB Opinion No. 25, “Accounting for Stock Issued to Employees.” If proposals currently under consideration by accounting standards organizations and governmental authorities, which would require expense recognition for stock options, are adopted, the current practices of Epicor and Scala may be changed to reduce the number of stock options granted to employees. Such a change could impact our ability to retain existing employees of Epicor and Scala or to attract qualified new candidates. As a result, we might have to increase cash compensation to these individuals. Such changes could have a negative impact upon our earnings and cash flows.

Because of these and other factors affecting our operating results, past financial performance should not be considered an indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

UNAUDITED PRO FORMA CONDENSED

COMBINED FINANCIAL STATEMENTS

The following Unaudited Pro Forma Condensed Combined Financial Statements (the “Pro Forma Financial Statements”) and explanatory notes give effect to the proposed acquisition of Scala by Epicor. The proposed transaction will be accounted for as a purchase business combination as defined in Statement of Financial Accounting Standards No. 141, “Business Combinations.” The following historical financial information has been derived from, and is qualified by reference to, the consolidated historical financial statements and notes thereto of the companies and should be read in conjunction with those financial statements and notes, which are included or incorporated by reference in this prospectus.

On July 8, 2003, Epicor acquired ROI Systems (“ROI”), Inc. as reported on Epicor’s Form 8-K filed on July 8, 2003. The effect of this acquisition is included in the following unaudited pro forma condensed combined statements of operations (the “Pro Forma Statement of Operations”) for the year ended December 31, 2003 using the purchase method of accounting, assuming that Epicor’s acquisition of ROI occurred on January 1, 2003. For the year ended December 31, 2003, the historical Epicor results shown below include ROI from the date of acquisition, July 8, 2003 and the ROI historical results shown below are for the period January 1, 2003 through July 8, 2003. In connection with this acquisition, ROI incurred a restructuring charge of $1,885,000 in July 2003 for a reduction in force and the closure of certain ROI offices. This restructuring charge is included in the following historical results of ROI for the period January 1, 2003 through July 8, 2003.

The following Pro Forma Statement of Operations for the year ended December 31, 2003 gives effect to the proposed acquisition of Scala by Epicor as if it had occurred on January 1, 2003. The Unaudited Pro Forma Condensed Combined Balance Sheet (the “Pro Forma Balance Sheet”) as of December 31, 2003 gives effect to the proposed acquisition as if it took place on that date. These Pro Forma Financial Statements give effect to the proposed acquisition of Scala by Epicor assuming 100% of Scala ordinary shares are tendered at the proposed exchange ratio of 0.1795 shares of Epicor common stock and $1.8230 in cash for each Scala ordinary share. The Pro Forma Balance Sheet assumes no cash adjustment (as described on page 63) as based on the closing price per share of Epicor common stock as of the date hereof, the cash portion offered per Scala ordinary share would not be increased. If the maximum additional cash of $0.3665 for each Scala ordinary share was to be paid based on the closing price per share of Epicor common stock at the close of the proposed transaction, the effect on the Pro Forma Balance Sheet would be a decrease in cash and an increase in goodwill of approximately $9.0 million.

Under the purchase method of accounting, the estimated purchase price, calculated as described in Note 1 to these Pro Forma Financial Statements, will be allocated to Scala’s tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the closing date of the transaction, with any excess being ascribed to goodwill. A final determination of these fair values, which can not be made prior to the completion of the transaction, will be based on the actual net tangible and intangible assets of Scala that exist of the closing date. As the Pro Forma Financial Statements have been prepared based on preliminary estimates of fair value, amounts allocated to intangible assets with definite lives may change significantly, which could result in a material change in the amount of amortization of intangible assets. Additionally, the Pro Forma Financial Statements do not give effect to any synergies or cost savings which may be realized as a result of the merger, and the impact of ongoing integration activities could cause material differences from the information presented. Therefore, the actual amounts recorded as of the completion of the transaction and thereafter may differ materially from the information presented herein.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of December 31, 2003

(in thousands)


	Historical						Pro Forma Adjustments for Scala			Pro Forma Combined
	Epicor			Scala			Pro Forma Adjustments for Scala			Pro Forma Combined
Assets
Current assets:
Cash and cash equivalents	$	38,881		$	10,185		$	(25,873	)(a,b,d)	$	23,193
Restricted cash		501			—			—			501
Accounts receivable, net		27,134			17,558			—			44,692
Prepaid expenses and other current assets		5,268			6,173			(3,015	)(c,f)		8,426

Total current assets		71,784			33,916			(28,888	)		76,812
Property and equipment, net		3,040			2,005			—			5,045
Software development costs, net		—			1,966			—			1,966
Intangible assets, net		12,847			3,275			33,550	(h)		49,672
Goodwill		10,841			470			55,724	(h)		67,035
Other assets		3,711			1,653			(1,700	)(f)		3,664

Total assets	$	102,223		$	43,285		$	58,686		$	204,194

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,958		$	2,817		$	—		$	8,775
Accrued expenses		26,038			18,173			2,679	(c)		46,890
Current portion of accrued restructuring costs		2,117			—			—			2,117
Deferred revenue		37,345			16,028			(275	)(g)		53,098

Total current liabilities		71,458			37,018			2,404			110,880


Long-term portion of accrued restructuring costs		1,355			—			—			1,355
Long-term portion of debt		—			23			15,000	(d)		15,023

Total long-term liabilities		1,355			23			15,000			16,378

Commitments and contingencies

Stockholders’ equity:
Preferred stock		10,423			—			—			10,423
Common stock		46			11,122			(11,118	)(a,b,e)		50
Additional paid-in capital		252,088			157,656			(110,134	)(a,b,e)		299,610
Statutory non-distributable reserve		—			1,966			(1,966	)(e)		—
Less: treasury stock at cost		(322	)		—			—			(322	)
Less: unamortized stock compensation expense		(5,002	)		—			—			(5,002	)
Accumulated other comprehensive loss		266			(5,214	)		5,214	(e)		266
Accumulated earnings (deficit)		(228,089	)		(159,286	)		159,286	(e)		(228,089	)

Net stockholders’ equity		29,410			6,244			41,282			76,936

Total liabilities and stockholders’ equity	$	102,223		$	43,285		$	58,686		$	204,194

See notes to unaudited pro forma condensed combined financial statements.

Unaudited Pro Forma Condensed Combined Statement of Operations

for the Year Ended December 31, 2003

(in thousands, except per share amounts)


	Historical									Pro Forma Adjustments for ROI			Pro Forma Adjustments for Scala			Pro Forma Combined
	Epicor			ROI			Scala			Pro Forma Adjustments for ROI			Pro Forma Adjustments for Scala			Pro Forma Combined
Revenues:
License fees	$	38,700		$	1,823		$	18,906		$	—		$	—		$	59,429
Consulting		38,821			4,301			15,201			—			—			58,323
Maintenance		75,681			4,858			34,024			—			—			114,563
Other		2,220			—			974			—			—			3,194

Total revenues		155,422			10,982			69,105			—			—			235,509
Cost of revenues		57,630			4,639			26,078			—			(2,547	)(l,m)		85,800
Amortization of intangible assets and capitalized software development costs		7,097			—			2,215			923	(i)		6,514	(i)		16,749

Total cost of revenues		64,727			4,639			28,293			923			3,967			102,549

Gross profit		90,695			6,343			40,812			(923	)		(3,967	)		132,960
Operating expenses:
Sales and marketing		37,537			4,221			8,276			—			1,600	(l,m)		51,634
Research and development		20,058			1,830			12,815			—			(372	)(m)		34,331
General and administrative		20,424			945			26,416			54	(i)		(3,696	)(m,n,o)		44,143
Provision for doubtful accounts		(1,022	)		7			—			—			1,758	(n)		743
Stock based compensation expense		3,336			—			—			—			689	(o)		4,025
Restructuring charges and other		937			1,885			—			—			2,568	(m)		5,390

Total operating expenses		81,270			8,888			47,507			54			2,547			140,266

Income (loss) from operations		9,425			(2,545	)		(6,695	)		(977	)		(6,514	)		(7,306	)
Other income (expense), net		268			15			467			—			(600	)(j)		150

Income (loss) before income taxes		9,693			(2,530	)		(6,228	)		(977	)		(7,114	)		(7,156	)
Income taxes provision (benefit)		399			(27	)		4,436			—			(2,678	)(k)		2,130

Net income (loss)	$	9,294		$	(2,503	)	$	(10,664	)	$	(977	)	$	(4,436	)	$	(9,286	)

Value of beneficial conversion related to preferred stock		241			—			—			—			—			241

Net income (loss) applicable to common stockholders	$	9,053		$	(2,503	)	$	(10,664	)	$	(977	)	$	(4,436	)	$	(9,527	)

Net income (loss) per share applicable to common stockholders:
Basic	$	0.21														$	(0.20	)
Diluted	$	0.18														$	(0.20	)
Weighted average common shares outstanding:
Basic		43,136															47,524
Diluted		49,509															47,524

See notes to unaudited pro forma condensed combined financial statements.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Note 1. Purchase Accounting

The total estimated purchase price of Scala is based on an exchange ratio of 0.1795 Epicor common shares valued at an average price of $10.83 per share based on the average closing price for three days before and after announcement of the transaction, and $1.8230 in cash per Scala ordinary share. As of the date of this prospectus, Scala has approximately 23,016,000 ordinary shares and 1,432,000 in-the-money options outstanding. The estimated purchase price is as follows (in thousands):


Value of securities to be issued	$	47,527
Cash to be paid		44,569
Transaction costs		4,381

Total estimated purchase price	$	96,477

Under the purchase method of accounting, the estimated purchase price will be allocated to Scala’s tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the closing date of the proposed transaction, with any excess being ascribed to goodwill. Management is primarily responsible for determining the fair values of these assets. Management has estimated the fair values of the acquired assets reflected in the Pro Forma Financial Statements based on a number of factors, including preliminary valuations and prior transactions. A final determination of these fair values, which cannot be made prior to the completion of the proposed transaction, will be based on the actual net tangible and intangible assets of Scala that exist on the closing date, and could differ materially from the amounts estimated below (in thousands):


Working capital deficit	$	(443	)
Property, plant and equipment		2,005
Other long-term assets		5,194
Identifiable intangible assets acquired		33,550
Goodwill		56,194
Long-term debt		(23	)

Total	$	96,477

Epicor expects to fund the cash portion of the proposed transaction from its existing cash balances and borrowings under its new credit facility (see note 2).

Note 2. Revolving Credit Facility

In January 2004, Epicor entered into a two year $15 million senior revolving credit facility with a financial institution. To date, no amounts have been borrowed against this revolving credit facility, however Epicor plans to draw down the $15 million in connection with the close and settlement of the proposed Scala acquisition.

Quarterly principal payments are to be made on this credit facility, with any principal balance due at maturity, January 2006. The facility bears interest at a variable rate of either the prime rate or LIBOR plus an applicable margin based on Epicor’s leverage ratio, at Epicor’s option. Borrowings under the facility are secured by substantially all of Epicor’s assets. Epicor is required to comply with various financial covenants. Significant covenants include:

•

Achieving minimum earnings before interest, taxes, depreciation, and amortization (EBITDA)

•

Achieving minimum funded debt to EBITDA ratios

•

Achieving minimum fixed charge coverage ratios

•

Maintaining minimum cash balances through maturity

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Note 3. Unaudited Pro Forma Combined Adjustments

The following adjustments have been reflected in the Pro Forma Financial Statements:

(a) To record cash paid and stock issued for the proposed Scala acquisition of $41,958,000 and 4,131,000 shares, respectively (see Note 1).

(b) To record cash received of $3,696,000 for in-the-money Scala options assumed exercised and cash paid and stock issued by Epicor of $2,611,000 and 257,000 shares, respectively, for in-the-money Scala stock options assumed tendered (see Note 1).

(c) To include $1,702,000 of prepaid transaction costs incurred by Epicor as of December 31,2003 and to accrue estimated additional transaction costs of $2,679,000 in the purchase price (see Note 1).

(d) To record debt incurred to finance acquisition of $15,000,000 (see Note 2).

(e) To eliminate the equity of Scala.

(f) To record a valuation allowance for Scala’s current and long term deferred tax assets of $1,313,000 and $1,700,000, respectively, for which the realization is unlikely given assumptions used by Epicor in calculating deferred tax assets on a consolidated basis.

(g) To adjust to fair value deferred revenues acquired based on Epicor’s estimated selling expense incurred on maintenance.

(h) To record intangible assets including acquired technology of $20,100,000, customer base of $6,750,000, trademark of $5,750,000, third party funded development agreement of $950,000 and goodwill of $56,194,000 and to reflect the elimination of Scala goodwill of $470,000 (see Note 1).

(i) To record amortization on a straight line basis for the year ended December 31, 2003 as follows:


	Scala		Life	ROI		Life
Acquired Technology	$	4,020,000	5 years	$	735,000	5 years
Trademark		1,150,000	5 years		155,000	5 years
Customer Base		964,000	7 years		33,000	7 years
Third party funded development agreement		380,000	2½ years		—	—
Covenant not to compete		—	—		54,000	3 years

Total Amortization	$	6,514,000		$	977,000

(j) To record interest expense of $600,000, based on the current prime rate of 4%, for the year ended December 31, 2003, for debt incurred to finance the acquisition of Scala (see Note 2).

(k) To record a tax adjustment to eliminate the reduction in the deferred tax asset recorded by Scala. A full valuation allowance on the deferred tax asset for Scala is presumed.

(l) To reclass Scala sales commission expense for the year ended December 31, 2003 from cost of revenues to sales and marketing expense to conform to Epicor’s financial statement classifications.

(m) To reclass Scala restructuring expenses incurred for the year ended December 31, 2003 to restructuring charges and other to conform to Epicor’s financial statement classifications.

(n) To reclass Scala provision for doubtful accounts for the year ended December 31, 2003 from general and administrative expenses to provision for doubtful accounts to conform to Epicor’s financial statement classifications.

(o) To reclass Scala stock compensation expense incurred for the year ended December 31, 2003 from general and administrative expenses to stock compensation expense to conform to Epicor’s financial statement classifications.

Accounting Treatment of the Acquisition

In accordance with United States generally accepted accounting principles, Epicor will account for the acquisition of Scala using the purchase method of accounting. Under this method of accounting, Epicor will record the market value (based on an average of the closing prices of Epicor common stock for a range of trading days from three days before and after the November 14, 2003 announcement date) of its common stock issued in connection with the exchange offer, the amount of cash consideration to be paid to holders of Scala ordinary shares and the amount of direct transaction costs associated with the exchange offer as the estimated purchase price of acquiring Scala. Epicor will allocate the estimated purchase price to the net tangible and amortizable intangible assets acquired (including acquired technology, the Scala customer base, the Scala trademark and the Third Party Funded Development Agreement) based on their respective fair values at the date of the completion of the acquisition. Any excess of the estimated purchase price over those fair values will be accounted for as goodwill.

Amortizable intangible assets, currently estimated at $33.6 million, will generally be amortized over useful lives not exceeding 7 years, resulting in an estimated accounting charge for amortization attributable to these items of approximately $6.5 million on an annual basis. Goodwill resulting from the business combination will not be amortized but instead will be tested for impairment at least annually (more frequently if certain indicators are present). The amount of the estimated purchase price allocated to goodwill, which is based on certain assumptions, is estimated to be approximately $56.2 million. If Epicor management should change the assumptions used in the allocation of the purchase price, amounts allocated to intangible assets with definite lives may increase significantly, which could result in a material increase in amortization of intangible assets.

In the event that the management of Epicor determines that the value of goodwill has become impaired, Epicor will incur an accounting charge for the amount of impairment during the fiscal quarter in which the determination is made. The amounts listed in the above paragraph are only preliminary estimates; however, actual amounts may differ from these estimates.

Certain Material U.S. Federal Tax Consequences to Scala Shareholders

The following discussion describes certain material U.S. federal income and estate tax consequences of the acquisition to holders who are beneficial owners of Scala ordinary shares. This discussion is based on current provisions of the U.S. Internal Revenue Code of 1986, as amended (the Code), Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all of which are subject to change, possibly with retroactive effect. For purposes of this discussion U.S. holders are U.S. citizens, individuals resident in the U.S. for U.S. federal income tax purposes, partnerships or corporations created or organized under the laws of the U.S. or any state in the U.S., estates the income of which is subject to U.S. federal income tax regardless of source and any trust if either a U.S. court is able to exercise primary jurisdiction over the trust and one or more U.S. persons have the authority to control the substantial decisions of the trust or the trust properly elects to be treated as a U.S. trust. Non-U.S. holders are holders other than U.S. holders. The tax treatment of persons who hold their Scala ordinary shares through a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) will generally depend upon the status of the partner and the activities of the partnership. This discussion does not consider all aspects of U.S. federal income taxation that may be relevant to particular classes of holders who are subject to special tax treatment under the Code, including holders who acquired their Scala shares pursuant to the exercise of employee stock options or in other compensatory transactions or holders who own or at any time held, directly, indirectly or through attribution, 10% or more of the outstanding Scala shares. In addition, the following discussion does not address the U.S. federal income tax consequences to holders of share options and warrants to purchase Scala ordinary shares.

Each holder should consult the holder’s own tax advisor as to the particular tax consequences of the acquisition to the holder, including the effects of applicable non-U.S. state, local or other tax laws, including tax treaties, and possible changes in the tax laws.

U.S. Holders. The receipt by a U.S. holder of Epicor common stock and cash, or, solely cash, in the case of a buy-out procedure, in exchange for Scala ordinary shares will be a taxable transaction for U.S. federal income tax purposes. For U.S. federal income tax purposes, a U.S. holder will recognize gain or loss equal to the difference between (i) the value of the Epicor common stock and/or cash received in the exchange offer, or, cash received in the buy-out procedure and (ii) the holder’s adjusted tax basis in the Scala ordinary shares transferred in the acquisition offer. Gain or loss must be determined separately for each block of shares (i.e., shares acquired at the same cost in a single transaction) purchased by us from a U.S. holder pursuant to the acquisition. Assuming that a U.S. holder’s Scala ordinary shares are held as capital assets and that Scala was not a “passive foreign investment company” at any time during such holder’s holding period, the gain or loss recognized will be treated as capital gain or loss and will be long-term capital gain or loss if such holder’s holding period for the Scala ordinary shares exceeds one year. The use of capital losses is generally subject to limitation.

Non-U.S. Holders. Non-U.S. holders will generally not be subject to U.S. federal income tax on any gain realized on the receipt of Epicor common stock and/or cash in exchange for Scala ordinary shares in the acquisition. This general rule, however, is subject to several exceptions. For example, the gain would be subject to U.S. federal income tax if:

•

the gain is effectively connected with the conduct by the non-U.S. holder of a U.S. trade or business (in which case the special rules described below apply); or

•

the non-U.S. holder was a citizen or permanent resident of the United States and thus is subject to special rules that apply to expatriates; or

•

the individual non-U.S. holder is present in the United States for 183 days or more during the taxable year and certain other conditions are met.

Likewise, non-U.S. holders will generally not be subject to U.S. federal income tax on any gain realized on the subsequent sale, exchange, or other disposition of Epicor common stock. This general rule, however, is subject to several exceptions, including the exceptions described above and including the rules of the Foreign Investment in Real Property Tax Act (or FIRPTA), which may treat the gain as effectively connected with a U.S. trade or business if we are, or were within five years before the transaction, a “U.S. real property holding corporation” (or USRPHC). In general, we would be a USRPHC if interests in U.S. real estate comprised most of our assets. We do not believe that we are a USRPHC.

Any dividends paid to a non-U.S. holder on Epicor common stock will generally be subject to U.S. withholding tax at a 30 percent rate. The withholding tax might apply at a reduced rate under the terms of an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence. A non-U.S. holder must demonstrate its entitlement to treaty benefits by certifying that it is a qualified resident of a country that has a tax treaty with the United States. A non-U.S. holder can meet this certification requirement by providing a Form W-8BEN or appropriate substitute form to us or our paying agent. If the holder holds Epicor common stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the agent. The holder’s agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries. For payments made to a foreign partnership or other flowthrough entity, the certification requirements generally apply to the partners or other owners rather than to the partnership or other entity, and the partnership or other entity must provide the partners’ or other owners’ documentation to us or our paying agent. Special rules, described below, apply if such dividends are effectively connected with a U.S. trade or business conducted by the non-U.S. holder.

If any gain from the disposition of Scala ordinary shares in the acquisition, dividends on Epicor common stock, or gain from the subsequent sale, exchange or other disposition of Epicor common stock is effectively connected with a U.S. trade or business conducted by the non-U.S. holder, then the dividends or gain will be subject to U.S. federal income tax at the regular graduated rates. If the non-U.S. holder is eligible for the benefits of a tax treaty between the United States and the holder’s country of residence, any “effectively connected”

dividends or gain would probably be subject to U.S. federal income tax only if it is also attributable to a permanent establishment or fixed base maintained by the holder in the United States. Payments of dividends that are effectively connected with a U.S. trade or business, and therefore included in the gross income of a non-U.S. holder, will not be subject to the 30 percent withholding tax. To claim exemption from withholding, the holder must certify its qualification, which can be done by filing a Form W-8ECI. If the non-U.S. holder is a corporation, that portion of its earnings and profits that is effectively connected with its U.S. trade or business would generally be subject to a “branch profits tax.” The branch profits tax rate is generally 30 percent, although an applicable income tax treaty might provide for a lower rate.

The estates of nonresident alien individuals are generally subject to U.S. federal estate tax on property with a U.S. situs. Because Epicor is a U.S. corporation, our common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent. The U.S. federal estate tax liability of the estate of a nonresident alien may be affected by a tax treaty between the United States and the decedent’s country of residence.

Backup Withholding. Under certain circumstances (for example, where a non-U.S. holder of Scala shares receives payment from a U.S. paying agent) U.S. backup withholding may apply to payments made to Scala shareholders, who have tendered and delivered their Scala ordinary shares in the acquisition. Should circumstances warrant the imposition of backup withholding, a non-U.S. holder may supply the withholding agent (via his bank or stockbroker) with a properly executed IRS Form W-8BEN or other versions of Form W-8 as appropriate, certifying that the Scala shareholder is not a U.S. person. Payments to U.S. holders will be subject to backup withholding if an IRS Form W-9 has not been provided to the withholding agent at the time of the payment.

Certain Material Dutch Tax Consequences to Scala Shareholders

The following discussion describes certain material Dutch tax consequences of the acquisition to Dutch holders who are beneficial owners of Scala ordinary shares. This discussion is based on the current provisions of the tax laws of the Netherlands, including the Income Tax Act 2001 (Netherlands), (Wet inkomstenbelasting 2001); the Corporate Income Tax Act 1969 (Netherlands) (Wet op de vennootschapsbelasting 1969); the Dividend Withholding Tax Act (Netherlands) (Wet op de dividendbelasting 1965). These laws are all subject to change, possibly with retroactive effect. A change in these laws may thus invalidate all or part of this discussion. The discussion will not be updated to reflect changes in such laws. This discussion does not consider all aspects of Dutch taxation that may be relevant to particular classes of holders who are subject to special tax treatment under any applicable law. In addition, this discussion does not describe any tax consequences arising under the laws of any state, locality or taxing jurisdiction other than the Netherlands.

This discussion is not intended to be applicable in all respects to all categories of investors and is included for general purposes only. This discussion of certain material Dutch taxes is only intended for the following investors:

•

Individuals, who receive Epicor common stock and/or cash, or, solely cash, in the case of a buy-out procedure, in exchange for Scala ordinary shares, and who (i) are resident or deemed to be resident in the Netherlands or opt to be taxed as a resident of the Netherlands for purposes of the Dutch Income Tax Act 2001 (“Dutch Individuals”); or (ii) are neither resident nor deemed to be resident in the Netherlands nor opt to be taxed as a resident of the Netherlands for purposes of the Dutch Income Tax Act 2001 (“Non-Dutch Individuals”), in all cases excluding:

—

individuals for whom the Scala ordinary shares or Epicor common stock, or any payment connected therewith, may constitute employment income; and

—

individuals who have, directly or indirectly, a substantial interest, or a deemed substantial interest, in Scala or Epicor; and

•

entities (including but not limited to associations, foundations and non-transparent funds for joint account (fondsen voor gemene rekening)), who receive Epicor common stock and/or cash, or, solely cash, in the case of a buy-out procedure, in exchange for Scala ordinary shares, and which are taxable as entities that are resident or deemed to be resident in the Netherlands for purposes of Dutch taxation (“Dutch Entities”), excluding:

—

entities that are not subject to or exempt from Dutch corporate income tax;

—

entities that currently hold Scala ordinary shares or will hold Epicor common stock, the benefits derived from which are exempt under the participation exemption (as laid down in the Dutch Corporate Income Tax 1969; and

—

investment institutions (beleggingsinstellingen) as defined in the Dutch Corporate Income Tax Act 1969; and

—

entities (including but not limited to associations and foundations which are taxable as entities), who receive Epicor common stock and/or cash, or, solely cash, in the case of a buy-out procedure, in exchange for Scala ordinary shares, and which are not resident nor deemed to be resident in the Netherlands for purposes of Dutch taxation (“Non-Dutch Entities”), excluding such entities that may apply for the exemption from dividend withholding tax as laid down in section 4 paragraph 1 and 4a of the Dutch Dividend Withholding Tax Act.

In general, a holder of Scala ordinary shares or Epicor common stock will have a substantial interest in Scala or Epicor if such holder, alone or in the case of individuals, together with his or her partner, whether directly or indirectly, has the ownership of, or certain other rights over, Scala ordinary shares or Epicor common stock representing 5% or more or of Scala’s or Epicor’s total issued and outstanding capital (or the issued and outstanding capital of any class of Scala shares or Epicor stock in Scala or Epicor), or rights to acquire Scala ordinary shares or Epicor common stock, directly or indirectly, whether or not already issued, that represent at any time 5% or more of Scala’s or Epicor’s total issued and outstanding capital (or the issued and outstanding capital of any class of Scala shares or Epicor stock) in Scala or Epicor or the ownership of, or certain rights over certain profit participating certificates that relate to 5% or more of Scala’s or Epicor’s annual profit and/or to 5% or more of Scala’s or Epicor’s liquidation proceeds. In the case of individuals, a holder of Scala ordinary shares or Epicor common stock will also have a substantial interest in Scala or Epicor if certain relatives (including foster children) of that holder, or of his or her partner have a substantial interest in Scala or Epicor. If a holder of Scala ordinary shares or Epicor common stock does not have a substantial interest, a deemed substantial interest will be present if (part of) a substantial interest has been disposed of, or is deemed to have been disposed of, on a non-recognition basis.

Dutch Holders. Any benefits derived or deemed to be derived from the tendered Scala ordinary shares or as a result of the offer acquired Epicor common stock (including any capital gains realized on the disposal thereof) that are held by a Dutch Individual, are generally taxable at the progressive rates of the Dutch Income Tax Act 2001, if: (i) the holder of the Scala ordinary shares or Epicor common stock has an enterprise or an interest in an enterprise, to which enterprise the Scala ordinary shares or Epicor common stock are attributable; or (ii) the holder of the Scala ordinary shares or Epicor common stock is considered to perform activities with respect to the Scala ordinary shares or Epicor common stock that exceed normal asset management (normaal, actief vermogensbeheer). The benefit derived from the tendered Scala ordinary shares as a result of the offer being declared unconditional and its subsequent settlement, is (at maximum), the difference between the offer price and the book value of the tendered Scala ordinary shares for tax purposes. If neither condition (i) nor (ii) above applies, a Dutch individual who holds Scala ordinary shares or acquired as a result of the offer Epicor common stock, will not be directly taxed with Dutch income tax once the offer is declared unconditional and its subsequent settlement. However, a Dutch individual will be subject to a fictitious yield tax, which annual taxable benefit of all the assets and liabilities of a Dutch individual (including but not limited to the Scala ordinary shares or Epicor common stock) is, irrespective of the actual income or capital gains, set at a fixed percentage. This percentage is 4% of the average fair market value of these assets and liabilities at the beginning and at the end of every year (minus a tax-free threshold). The tax rate applicable to the annual taxable benefits so determined is 30%.

Any benefits derived or deemed to be derived from the Scala ordinary shares or as a result of the offer acquired Epicor common stock (including any capital gains realized on the disposal thereof) that are held by a Dutch Entity are generally subject to corporate income tax in its hands. The benefit derived from the tendered Scala ordinary shares as a result of the offer being declared unconditional and its subsequent settlement, is (at a maximum), the difference between the offer price and the book value of the tendered Scala ordinary shares for tax purposes.

A Dutch Individual and/or Dutch Entity may, within certain limitations and provided certain requirements are met, be able to credit (part of) the U.S. withholding taxes on common stock dividends paid by Epicor against their Dutch income tax liability.

Non-Dutch Holders. A holder of the Scala ordinary shares or, as a result of the offer, Epicor common stock, that is a Non-Dutch Individual or a Non-Dutch Entity, will not be subject to Dutch taxation on (deemed) income and capital gains derived from the Scala ordinary shares once the offer is declared unconditional and its subsequent settlement, or on (deemed) income and capital gains realized upon the disposal of Epicor common stock acquired as a result of the offer, provided that such holder of the Scala ordinary shares or Epicor common stock:

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does not have an enterprise, or an interest in an enterprise, which is, in whole or in part carried on through a permanent establishment or permanent representative in the Netherlands to which or to whom such (deemed) income or capital gains are attributable or are deemed attributable;

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is not entitled to a share in the profits of and does not have an interest in an enterprise effectively managed in the Netherlands other than by way of the holding of securities or through an employment contract, to which enterprise such (deemed) income or capital gains are attributable;

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in the case of an individual, does not perform activities in the Netherlands with respect to the Scala ordinary shares or Epicor common stock, that exceed normal asset management (normal, actief vermogensbeheer); and

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in the case of an entity, does not have, directly or indirectly, a substantial interest or a deemed substantial interest as defined in the Dutch Income Tax Act 2001, in Scala or in the event that the entity does have such interest, it forms part of the assets of an enterprise.

If a holder of Scala ordinary shares is not a resident or a deemed resident in the Netherlands, but is a resident in a country that has in effect a double taxation treaty with the Netherlands, such holder may, depending on the terms of and subject to compliance with the procedures for claiming benefits under such double taxation treaty, be eligible for a full or partial exemption from Netherlands taxes (if any) on (deemed) income or capital gains, provided such holder is entitled to the benefits of that treaty.

Other Taxes and Duties. A gift tax liability will arise in the Netherlands with respect to an acquisition of Epicor common stock by way of a gift by a Dutch Individual or a Dutch Entity. An inheritance tax liability will arise in the Netherlands with respect to an acquisition or deemed acquisition of Epicor common stock by way of an inheritance or bequest on the death of a Dutch Individual.

No gift, estate or inheritance tax liability will arise in the Netherlands on a transfer of Epicor common stock by way of gift by a holder thereof who is a Non-Dutch Individual or a Non-Dutch Entity, or on the death of a holder thereof who is a Non-Dutch Individual, provided that:

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such transfer is not construed as an inheritance, a bequest or a gift by or on behalf of a person who, at the time of the gift or his death, is or was a resident or a deemed resident of the Netherlands;

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such holder does not own an enterprise or an interest in an enterprise which is carried on through a permanent establishment or permanent representative in the Netherlands and to which enterprise the Epicor common stock are or were attributable;

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such holder is not entitled to a share in the profits of an enterprise effectively managed in the Netherlands, other than by way of the holding of securities or through an employment contract, to which enterprise the Epicor common stock are or were attributable; and

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such holder does not die while being a resident or a deemed resident of the Netherlands within 180 days after the date of a gift of the Epicor common stock;

For purposes of Dutch gift and inheritance taxes, a Dutch national will be deemed to be resident in the Netherlands if he has been resident in the Netherlands at any time during the ten years preceding the date of the gift or his death. For purposes of Dutch gift taxes, a non-Dutch national will be deemed a resident of the Netherlands if he has been residing in the Netherlands at any time during the 12 months preceding the date of the gift.

No Dutch registration tax, transfer tax, stamp duty or any other similar documentary tax or duty will be payable in the Netherlands by the holders of Scala ordinary shares or Epicor common stock with respect to tendering the Scala ordinary shares into the offer or in connection with owning or disposing of Epicor common stock.

No Netherlands value-added tax will be payable by a holder of Epicor common stock in respect of the payment of dividends on Epicor common stock or the transfer of Scala ordinary shares or Epicor common stock.

A holder of Scala ordinary shares or Epicor common stock will not be treated as a tax resident in the Netherlands only on account of holding Scala ordinary shares or Epicor common stock or the delivery of a Scala ordinary share or a share of Epicor common stock.

Each holder should consult the holder’s own professional tax advisers regarding the particular tax consequences of the acquisition to the holder.

THE EXCHANGE OFFER

The following is a description of the material aspects of the exchange offer, including the merger protocol. While we believe that the following description covers the material terms of the exchange offer, the description may not contain all of the information that is important to you. We encourage you to read carefully this entire prospectus, including the amended and restated merger protocol attached to this prospectus as Annex A, for a more complete understanding of the exchange offer.

Background of the Exchange Offer

During the first six months of 2003, the managing and supervisory boards of Scala engaged in an evaluation of Scala’s business strategy and objectives due to developments in Scala’s business and in the enterprise resource planning software market generally. During the review, the Scala managing and supervisory boards considered various alternative strategies, including several merger and acquisition opportunities involving companies with a similar technology and customer strategies complementary to Scala’s existing business. The Scala managing and supervisory boards considered that such a strategic combination could provide Scala and its shareholders, among other things, with the benefit of meaningful synergies and a larger combined market presence. The Scala managing and supervisory boards frequently held joint meetings to discuss the company’s strategic alternatives throughout this period.

During the joint meeting of the Scala managing and supervisory boards held on July 17, 2003, the boards decided that the Scala managing board should analyze Scala’s strategic options and report back to the supervisory board, which was followed by further discussions among the managing and supervisory boards on July 28, 2003 and August 25, 2003. During the meeting of August 25, 2003, the managing and supervisory boards formed a transaction committee, consisting of supervisory board members Andreas Kemi, Scala’s interim Chief Executive Officer, Jan-Erik Lundberg and Frank Ewald, and managing board member Barbara Moorhouse, Scala’s Chief Financial Officer.

At the end of August 2003, Andreas Kemi had several telephonic meetings with Giles McNamee, a representative of McNamee, Lawrence and Company, a financial intermediary, during which several companies were named and informally discussed as strategic merger candidates. Messrs. Kemi and McNamee discussed Epicor, in particular, as a good strategic fit with Scala because of its relationship with Microsoft, large customer base and geographical strength in the U.S.

On September 4, 2003, Andreas Kemi and Barbara Moorhouse met with Giles McNamee and another representative of McNamee, Lawrence and Company. The representatives of McNamee, Lawrence and Company informed Mr. Kemi and Ms. Moorhouse that they believed Epicor might be interested in exploring a potential transaction with Scala. At the end of the meeting, Mr. Kemi and Ms. Moorhouse authorized Mr. McNamee to approach Epicor in order to pursue a strategic option involving Epicor which could potentially provide value to Scala shareholders.

In early September 2003, Mr. McNamee contacted L. George Klaus, the Chief Executive Officer of Epicor, regarding a possible transaction with Scala. Following this call, also in early September 2003, after completing some initial background research on Scala, Mr. Klaus called Mr. McNamee and arranged for a meeting between Mark Duffell, Executive Vice President of the e Products Group and International Business of Epicor, and representatives of Scala in Europe.

During a telephonic meeting of the Scala managing and supervisory boards held on September 15, 2003, Mr. Kemi discussed several strategic alternatives available to Scala, including a potential transaction involving Epicor. The Scala supervisory board authorized the Scala managing board to continue its discussions and to explore Scala’s strategic options with Epicor and several other third parties.

On September 24, 2003, Mr. Duffell and John Brims, Vice President of Operations for Europe, the Middle East and Asia of Epicor, met with Mr. Kemi and Ms. Moorhouse in London. At that meeting, the possibility of a business combination between Epicor and Scala was discussed and public information was exchanged. The Scala representatives gave a presentation on Scala’s current business, products and Scala’s future strategies. Mr. Duffell gave a presentation on Epicor’s business, products and future strategies. The participants in the meeting also discussed the potential benefits of a business combination between Epicor and Scala. The representatives of Epicor and Scala agreed to more detailed discussions following the signing of a confidentiality agreement. Mr. Duffell and Mr. Kemi executed the confidentiality agreement on behalf of Epicor and Scala, respectively, at the September 24th meeting.

On October 1, 2003, the Scala managing and supervisory boards reviewed the status of Scala’s strategic alternatives during a telephonic meeting. The members of the managing board reported on the progress of discussions with Epicor and other third parties and the status of the selection of Scala’s financial advisor. The supervisory board concluded that it was in the best interest of the company to continue discussions with Epicor and other third parties regarding a possible business combination.

During the first of week of October 2003, Mr. Duffell presented to the executive team of Epicor, including Mr. Klaus, Michael Piraino, Epicor’s Chief Financial Officer and other members of Epicor’s senior management the potential benefits of acquiring Scala. After discussing the potential benefits of acquiring Scala, Epicor’s senior management determined that it would be advisable to continue discussions with Scala about a possible business combination.

On October 10, 2003, Mr. Kemi, Ms. Moorhouse and Mr. Palmquist, Scala’s Chief Operating Officer, met with Epicor’s executive team, including Mr. Klaus, Mr. Duffell and Mr. Piraino, at Epicor’s corporate headquarters in Irvine, California. During that meeting, Mr. Kemi, Ms. Moorhouse and Mr. Palmquist presented to the Epicor executive team a detailed analysis of Scala’s products, business and strategy. Ms. Moorhouse presented the Epicor executive team with information regarding Scala’s financial condition.

At the October 10th meeting, Mr. Klaus and John Hiraoka, Epicor’s Senior Vice President of Marketing and Business Development, also gave detailed presentations regarding Epicor’s products, business and future strategy.

Following the presentations by the Epicor and Scala representatives at the October 10th meeting, both sides also participated in discussions regarding potential synergies to be gained by a business combination focusing on Epicor’s and Scala’s respective targeted markets, targeted geographies and products.

At the end of the October 10th meeting, the representatives of Epicor and Scala agreed to provide each other with additional information and present a proposal for a business combination to their respective boards of directors. The representatives of Epicor and Scala also agreed that following board approval by the respective boards of directors of Epicor and Scala, the Epicor executive team would travel to the Netherlands to make a presentation to the Scala supervisory board regarding Epicor and the proposed business combination.

Also on October 10, 2003, Richard Bosworth, Epicor’s Director of Development, called Sergey Shvedov, Scala’s Chief Technology Officer, to discuss the product offerings of Epicor and Scala. During this conversation, Mr. Bosworth and Mr. Shvedov also discussed the underlying technology and functionality of their respective company’s products and Epicor’s and Scala’s research and development efforts.

On October 23rd and 24th, Mr. Bosworth and Mr. Shvedov had additional conversations by telephone and provided each other with more detail on their respective company’s products and technology. As a result of these conversations and information exchanged, Mr. Bosworth and Mr. Shvedov identified strengths and weakness of each company’s products and the possible synergies created by combining Epicor’s and Scala’s products and research and development efforts.

From October 13, 2003 to October 17, 2003, Mr. Duffell and Ms. Moorhouse held a number of telephonic conferences to coordinate the exchange of information as part of the due diligence process of both companies. During that week, representatives of Epicor and Scala had telephone conversations to analyze and discuss the benefits of combining the companies.

During a joint meeting held on October 16, 2003, the Scala managing and supervisory boards reviewed the status of Scala’s strategic alternatives, and discussed the alternative of Scala’s continued operation on a stand-alone basis. During this meeting, the boards also approved the engagement of Fortis Bank (Nederland) N.V. as Scala’s financial advisor.

Scala representatives used the information provided by Epicor to make a presentation to its supervisory board on October 20, 2003 about the potential benefits of a business combination with Epicor. The Scala supervisory board authorized further negotiations with Epicor and invited Epicor’s executive team to the Netherlands in order to present their merger proposal to the supervisory board.

On October 21, 2003 the board of directors of Epicor held a meeting to discuss the possible business combination with Scala. Mr. Duffell and Mr. Piraino presented the Epicor board with the management team’s assessment on the potential benefits of acquiring Scala. After the presentation and further discussion by the board members and executive officers, the board of directors of Epicor authorized the management of Epicor to continue its negotiations with Scala.

On October 27 and 29, 2003, the Scala managing and supervisory boards held joint telephonic meetings to discuss Scala’s strategic alternatives. Representatives of Fortis attended these meetings. During these telephonic meetings, the members of the boards extensively discussed the merits of, and risks attached to, each of Scala’s strategic alternatives. Also on October 29, 2003, the Scala supervisory board held a separate meeting to further discuss the strategic alternatives available to Scala in the absence of the Scala managing board.

On November 4, 2003, the Scala managing board provided the Scala supervisory board with a recommendation in favor of a transaction with Epicor, subject to satisfactory conclusion of negotiations among the parties with respect to the proposed terms of the transaction.

On November 6, 2003, Mr. Klaus, Mr. Duffell, Mr. Piraino and two representatives from SG Cowen, Epicor’s financial advisors, met with the full Scala managing and supervisory boards and representatives of Fortis in Amsterdam. At the November 6th meeting, Mr. Klaus and Mr. Piraino presented to the Scala managing and supervisory boards the potential benefits of combining Epicor and Scala. In addition, at that meeting, the parties discussed the valuation of Scala, dependent on further review of Scala’s financial position and projections.

The Scala supervisory board members asked to reconvene the meeting later that evening in order to discuss internally Epicor’s potential offer. The Scala managing and supervisory boards convened in separate meetings and in a joint meeting together with representatives of Fortis and De Brauw Blackstone Westbroek, Scala’s Dutch legal counsel, during which the boards extensively discussed a business combination with Epicor and the other strategic alternatives available to Scala. Scala’s legal counsel explained the legal process and required corporate actions to the Scala boards. At the end of the meeting, the Scala managing and supervisory boards authorized the transaction committee to negotiate a merger protocol.

When the November 6th meeting between representatives of Epicor and Scala was reconvened, further discussion and negotiations with respect to the offer price, the pricing mechanism and conditions to the business combination continued. During negotiations that evening, the range of the potential offer price was narrowed and several conditions to completing the business combination were discussed in more detail.

Between November 6 and November 13, 2003, Scala’s transaction committee met by telephone on a daily basis to discuss the progress in the discussions between Scala and Epicor, and the parties’ respective advisors.

From November 10, 2003 to November 13, 2003, certain representatives of Epicor and Scala met in Amsterdam to negotiate in person the terms and conditions of a merger protocol. In addition, Mr. Piraino, Mr. Ireland and outside legal counsel for both companies also participated telephonically in the negotiation of the merger protocol. Outstanding issues were, among other things, price and the pricing mechanism, which included discussions of protection against decreases in Epicor’s stock price for Scala stockholders in light of the share component of the exchange offer.

On November 12, 2003, Epicor’s board of directors held a telephonic meeting to discuss and approve an acquisition of Scala by Epicor. Mr. Piraino and Mr. Duffell, along with members of Wilson Sonsini Goodrich and Rosati, Professional Corporation, Epicor’s outside U.S. legal counsel, and SG Cowen also participated at the board meeting. Representatives of Wilson Sonsini Goodrich & Rosati reviewed with the board their fiduciary duties in considering the proposed offer. The final terms and conditions contained in the merger protocol (that was still subject to Epicor board approval) were presented to the board by Mr. Klaus and Mr. Piraino. After a lengthy discussion regarding the potential benefits of acquiring Scala and the terms and conditions contained in the merger protocol, the board authorized Epicor’s management to proceed with executing the merger protocol, subject to further approval of the board to commence the exchange offer after the due diligence review of Scala was completed.

On November 13, 2003, the Scala managing and supervisory boards held a meeting to discuss and approve an acquisition of Scala by Epicor. In addition to each of the members of the Scala managing and supervisory boards and Scala’s corporate secretary, this meeting was attended by Jesse Martijnse, Scala’s in-house counsel, and representatives of Fortis and De Brauw Blackstone Westbroek. The final terms and conditions contained in the merger protocol (that was still subject to approval of the Scala managing and supervisory boards) were presented to the supervisory board by a representative of De Brauw Blackstone Westbroek. After a lengthy discussion regarding the potential benefits of the proposed transaction and the terms and conditions contained in the merger protocol, the supervisory board authorized the Scala managing board to proceed with executing the merger protocol, subject to further approval by the supervisory board of its recommendation to shareholders of the exchange offer upon receipt of a fairness opinion from Fortis. Epicor and Scala concluded that the expectation was then justified that Scala and Epicor would reach agreement on a business combination to be effected by way of Epicor making a public offer for all Scala shares.

On November 13, 2003, the merger protocol was executed by Mr. Klaus, on behalf of Epicor and Mr. Kemi, on behalf of Scala and a joint press release announcing Epicor’s intention to acquire Scala was released.

Between November 18, 2003 and December 10, 2003, Mr. Hiraoka, Mr. Piraino, Mr. Brims and other representatives of Epicor, met with Mr. Shvedov and Mr. Kemi and other representatives of Scala in Stockholm, Moscow and Budapest, to conduct a due diligence review of Scala’s products, markets, technology, development organization and research and development strategy.

Between November 13, 2003 and December 11, 2003, the Scala transaction committee discussed transaction progress on a regular basis by telephone conference.

Following the completion of the due diligence review of Scala by Epicor, Epicor’s Board of Directors met on December 10, 2003 and determined that the conditions to commencing the exchange offer were met and approved the commencement of the exchange offer.

On December 11, 2003, the Scala supervisory and managing boards held a joint telephonic meeting which, in addition to each of the members of the Scala managing and supervisory boards and Scala’s corporate secretary, was attended by representatives of Fortis and De Brauw Blackstone Westbroek. During the meeting, Fortis delivered its fairness opinion, followed by a discussion thereof. Thereafter, the managing and supervisory board confirmed their recommendation of the exchange offer.

On December 12, 2003, Epicor issued a press release and advertisement announcing the definitive exchange offer price, the conditions for declaring the exchange offer unconditional, and the expected date of the availability of the Dutch offering memorandum.

Following the December 12, 2003 announcement, Epicor and Scala continued to prepare offering materials and engaged in planning for integration of the Epicor and Scala businesses following a successful completion of the exchange offer. On January 23, 2004, Epicor and Scala announced that they had made a preliminary determination, based on Scala’s U.S. shareholdings, that the exchange offer would be exempt from the requirement to file a registration statement under Rule 802 under the Securities Act of 1933, as amended, and the parties were preparing a Dutch offering memorandum that would contain a “Bte-prospectus” referred to in article 3 paragraph 2 sub b of the 1995 Act on the Supervision of the Securities Trade (Netherlands). Epicor and Scala also announced that based on the decision to pursue the offer under the Dutch regulatory process and the fact that the fiscal year 2003 had ended for both companies, the Dutch offering memorandum would include year-end audited financials for 2003 for both Epicor and Scala when completed, and that the AFM had granted Epicor an extension through March 31, 2004 of the Dutch law requirement to publish the Dutch offering memorandum within six weeks of the announcement on December 12, 2003. On March 1, 2004, Epicor and Scala announced that the process of completing and publishing the offer documentation was taking longer than originally expected, but reiterated their firm commitment to the business combination.

On March 31, 2004, Epicor and Scala announced that, based on recent changes in U.S. holdings of Scala shares, they determined that the exemption from U.S. registration requirements in reliance on Rule 802 was not available and that, as a result, Epicor would file a registration statement with the SEC to register the shares to be issued in the exchange offer. Epicor also announced that the AFM had granted an extension through June 11, 2004 for making the Dutch offering memorandum available in the Netherlands. On April 1, 2004, Scala announced its financial results for fiscal year 2003, and that as part of preparation for the planned exchange offer, it had reviewed its historic U.S. GAAP consolidated financial statements and restated its U.S. GAAP consolidated financial statements for 2001 and 2002 as described herein in the section entitled “Scala Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

On April 14, 2004, Epicor and Scala amended and restated the merger protocol to reflect the new timing of the transaction and extended the termination date of the merger protocol to August 31, 2004.

Epicor’s Reasons for the Exchange Offer

Epicor believes that there are a number of potential benefits of the proposed acquisition of Scala, including, among others:

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The strong global organization of the combined company, which will be able to deliver software and services to customers in major developed markets in North America, Western Europe, Australia and New Zealand as well as key emerging markets, such as Central and Eastern Europe, Russia, China and other parts of Asia and Latin America;

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The combined company will be able to offer a range of Microsoft technology-based products that are broader and deeper in functionality and delivered to market faster than either Epicor or Scala could offer independently;

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As a result of the merger, the combined company will have a global infrastructure in place to continually monitor and rapidly respond to customer needs, providing enhanced development, sales, service and support of leading-edge software technology and solutions;

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The combined company will enable Epicor to bolster and diversify its revenues by combining the complementary strengths of Epicor and Scala across markets and product lines;

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Relative to Epicor or Scala independently, the combined company will be better positioned for growth due to an expanded presence in key growing markets, including financial services, consumer packaged goods, professional services automotive, industrial machinery, light engineering, electronics, hospitality, pharmaceuticals and non-profit;

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Relative to Epicor or Scala independently, the combined company will be able to realize greater operational efficiency by putting unused capacity to work and eliminating duplicative expenses, including general and administrative, research and development, facilities, and technical support;

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The two companies have collaborative expertise and share a strategic vision of providing their customers with comprehensive software solutions across business processes; and

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The combined company will present a solid platform and infrastructure for future strategic and tactical acquisitions in a consolidating market.

Scala’s Reasons for the Exchange Offer

After careful consideration, each of the Scala managing and supervisory boards has unanimously approved the merger protocol, determined that the merger protocol and the exchange offer are at a price and on terms that are fair to and in the best interest of Scala, its shareholders and its other stakeholders, and recommends that Scala shareholders accept the exchange offer and tender their shares into the exchange offer. This decision was based upon a number of potential benefits of the transaction that the Scala managing and supervisory boards believe will contribute to the success of the combined company compared to Scala continuing to operate as an independent business, including, among others:

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The Scala managing and supervisory boards’ judgment that the two companies have significant complementary products, services, solutions, geographical strengths and customer bases, and that the combined company will have a significantly stronger presence in key growing vertical industries than Scala would have independently;

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The structure of the transaction may provide significant advantages in increasing the opportunity for:

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effectively utilizing the skills and resources of Epicor’s and Scala’s respective management teams; and

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matching the respective corporate cultures of the two companies while maintaining some of the most important aspects of each culture;

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The Scala managing and supervisory boards’ judgment that important advantages will accrue to the combined company as the largest independent midmarket provider of collaborative enterprise resource planning (ERP), customer relationship management (CRM) and supply chain management (SCM) applications based on Microsoft’s .NET platform and web services, and that in order to achieve and retain this position, a software provider must offer a broad line of such products that meet the needs of a broad range of business users;

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The combined company’s potential to be a market leader as a provider of a more complete product solution of collaborative enterprise resource planning, customer relationship management and supply chain management products in the rapidly-developing and highly competitive business software market by offering a full line of such software and services that can be delivered to market faster than Scala could have done independently;

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The combined company’s potential to be more attractive to its customers from the point of view of its increased size and enhanced financial viability—an especially important perception in a rapidly-consolidating market;

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The combined company’s potential to leverage global presence in sales, support and alliances through Epicor’s strong North American, Australian and UK sales force, Scala’s widespread direct sales force in Europe, the Commonwealth of Independent States (CIS) and Asia, Epicor’s and Scala’s strong complementary service and technical support organizations and developer bases, and the joint company’s extensive global network of VARs;

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The combined company’s potential to achieve cost cutting and other synergies;

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The combined company’s potential to better leverage its product vision and technological leadership for the benefit of the combined company’s customers;

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The potential that Epicor’s larger market capitalization, third-party system integrators and broad suite of collaborative enterprise resource management and customer relationship management products will provide the combined company with resources to grow and gain market share more rapidly than Scala can grow as an independent company in the rapidly-evolving business software market, which has been characterized by the consolidation of smaller, independent providers with larger, integrated competitors; and

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The presence on Epicor’s board of a member of the Scala supervisory board.

In identifying these benefits and evaluating the transaction, the Scala managing and supervisory boards reviewed a number of factors and sources of information, including the following:

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Historical information concerning Scala and Epicor and their respective businesses, financial performance, condition, operations, technology, management and position in the industry, and information and evaluations regarding the two companies’ strengths, weaknesses and prospects, both before and after giving effect to the transaction;

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Based on the stock market closing prices of Scala’s and Epicor’s shares, respectively, on the date prior to the execution of the merger protocol, November 13, 2003, the per share consideration to be paid by Epicor represented a premium of approximately 44%, and a 64% premium on the basis of the four week share price average;

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The opportunity for Scala shareholders and holders of Scala share options to participate in the future growth in value of the combined company as Epicor shareholders following the transaction by virtue of the partial stock consideration for Scala shareholders;

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The liquidity afforded Scala shareholders both as a result of the cash payment and the exchange of their Scala ordinary shares for shares of Epicor common stock, which trade on the Nasdaq National Market in higher volumes than Scala’s historic trading volumes on Euronext Amsterdam;

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The potential effect on shareholder value of Scala continuing as an independent entity, compared to the potential effect of a combination with Epicor in light of the financial condition and prospects of Scala and the current economic climate in general and in Scala’s markets including, but not limited to:

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the other possible strategic alternatives that the Scala managing and supervisory boards examined, including Scala continuing to execute its stand-alone business plan; and

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the potential for increased value in the combined company as compared to either Scala or Epicor alone;

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The opinion of Scala’s financial advisor, Fortis Bank (Nederland) N.V. (which is attached as Annex C to this prospectus and is summarized in the section below entitled “Opinion of Scala’s Financial Advisor”), to the effect that, as of December 11, 2003, and based upon and subject to the factors and assumptions set forth in the opinion, the aggregate consideration to be received by all shareholders of Scala ordinary shares who tender their shares into the exchange offer is fair, from a financial point of view, to the Scala shareholders;

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Current financial market conditions and historical market prices, volatility and trading information for shares of Epicor common stock, the likely market prices and various factors that might affect the market value of shares of Epicor common stock in the future;

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The premium represented by the per share consideration to be paid by Epicor and the premiums paid in other recent transactions that could be viewed as comparable, as well as the negotiations between Scala and Epicor relating to the per share consideration to be paid by Epicor;

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The alternatives available to Scala and the history of contacts with other parties concerning their possible interest in a business combination with Scala; and

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The terms of the merger protocol alone and in comparison to the terms of other transactions, including but not limited to, the conditions to the parties’ obligations to complete the transaction, the details of the “no shop” restrictions on Scala and the scope of Scala’s fiduciary out from these restrictions, the parties’ termination rights and the termination fee that Scala may be required to pay Epicor in certain circumstances.

The Scala managing and supervisory boards also identified and considered a number of risks and uncertainties in its deliberations concerning the transaction, including the following:

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Although the merger protocol provides for an adjustment of the cash portion of the exchange offer price in certain circumstances (see the section entitled, “Description of the Exchange offer” beginning on page 63), the fact that the stock portion of the consideration is based on a fixed number of shares of Epicor common stock means that the aggregate value of the transaction will fluctuate as a result of changes in the market price for shares of Epicor common stock;

•

The fact that pursuant to the merger protocol, Scala is required to obtain Epicor’s consent before it can take a variety of actions between the signing of the merger protocol and the closing of the transaction;

•

The possibility that the transaction may not be consummated, in light of the need to obtain acceptance by at least 95% of Scala’s shareholders, and the effects of the public announcement of the transaction on Scala’s sales, customer relations and operating results, and Scala’s ability to attract and retain key management, marketing and technical personnel;

•

The risk that the internal cultures of Epicor and Scala may not be as compatible as anticipated, which may delay or undermine the integration;

•

The risk that the market value at closing of the shares of Epicor common stock plus cash to be received by Scala shareholders tendering their shares into the exchange offer might be less than the implied value of Scala;

•

The risk that despite the efforts of Epicor, key technical, marketing and management personnel might not choose to remain employed by Epicor following the acquisition;

•

The risk that the potential benefits and synergies sought in the transaction may not be fully realized, if at all;

•

The risk of customer hesitation about the impact of the transaction on Scala’s product design and potential delay or reduction in orders; and

•

Various other risks associated with the business of the combined company and the transaction described in the section entitled “Risk Factors” beginning on page 26 of this prospectus.

The Scala managing and supervisory boards concluded, however, that many of these risks could be managed or mitigated by Scala alone or together with Epicor or were unlikely to have a material impact on the transaction or the combined company, and that, overall, the risks, uncertainties, restrictions and potentially negative factors associated with the transaction were outweighed by the potential benefits of the transaction.

The foregoing discussion of information and factors considered and given weight by the Scala managing and supervisory boards is not intended to be exhaustive. In view of the variety of factors considered in connection with their evaluation of the transaction, the Scala managing and supervisory boards did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations.

Opinion of Scala’s Financial Advisor

Scala engaged Fortis Bank (Nederland) N.V. (“Fortis Bank”) to act as its exclusive financial advisor in connection with a proposed business combination transaction with Epicor. In connection with this engagement, the managing and supervisory boards of Scala requested Fortis Bank to determine whether the consideration to be offered to the holders of Scala’s ordinary shares pursuant to the merger protocol was fair from a financial point of view. On November 13, 2003 and December 11, 2003, the managing and supervisory boards convened in combined meetings (via telephone conference) to review the proposed transaction with Epicor and the terms of the merger protocol and other relevant agreements. During the December 11th meeting, Fortis Bank rendered its opinion that, as of that date, based upon and subject to the various matters set forth in Fortis Bank’s opinion, the aggregate consideration to be offered to the holders of Scala ordinary shares in the exchange offer was fair, from a financial point of view, to the holders of ordinary shares in Scala. No limitations were imposed by the Scala boards upon Fortis Bank regarding the investigations to be made or the procedures to be followed by Fortis Bank in rendering its opinion.

The full text of Fortis Bank’s opinion, which sets forth, among other things, the procedures followed, matters considered, and limitations on the review undertaken in connection with the delivery of this opinion, is attached to this prospectus as Annex C. The summary of Fortis Bank’s opinion set forth in this prospectus is qualified in its entirety by reference to the full text of this opinion which is incorporated herein by reference. Holders of Scala ordinary shares are urged to read Fortis Bank’s opinion carefully and in its entirety.

Fortis Bank’s opinion is addressed to the supervisory board and the managing board of Scala, is directed only to the fairness, from a financial point of view, of the aggregate consideration to be offered to the holders of Scala ordinary shares and does not constitute a recommendation to the shareholders of Scala whether or not to accept the exchange offer. Fortis Bank was not asked to and did not express any opinion as to whether Scala should engage in the transactions contemplated by the merger protocol on terms set forth therein, which were the result of negotiations between Scala and Epicor. Fortis Bank’s opinion does not address the underlying business decision to enter into the merger protocol or the relative merits of the merger protocol as compared to other business strategies that might be available to Scala.

In connection with rendering its opinion, Fortis Bank, among other things considered the following information:

•

publicly available information with respect to Scala and Epicor, including the annual reports of Scala and Epicor with respect to the financial years ended December 31, 2000, 2001 and 2002, respectively, the financial data publicly disclosed by Scala and Epicor, respectively, with respect to the nine month period ended September 30, 2003, and other publicly available information, including other interim reports and press releases;

•

certain internal financial reports and documents relating to the operations of Scala and Epicor;

•

to the extent available, external analyst reports relating to Scala and Epicor;

•

certain publicly available information regarding publicly traded companies with business activities comparable with the Scala and Epicor business activities;

•

certain publicly available information regarding comparable transactions deemed relevant by Fortis Bank;

•

historical share price developments and trading volumes of Scala’s ordinary shares and Epicor’s common stock; and

•

other information and analyses to the extent deemed relevant by Fortis Bank.

In addition, Fortis Bank has conducted discussions with members of Scala’s and Epicor’s senior management concerning their view of their respective businesses and the prospects thereof.

Fortis Bank did not assume any responsibility for independent verification of the accuracy and completeness of any information that was publicly available or that was furnished to it by Scala or Epicor or otherwise

reviewed by Fortis Bank, and relied on such information being complete and accurate in all material respects. Fortis Bank was not requested to make, and did not make, any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Scala or Epicor, nor have any such evaluations or appraisals been provided to Fortis Bank. In relying on the financial analyses and forecasts provided to Fortis Bank, Fortis Bank was advised, and it assumed, that they have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Scala or Epicor to which such analyses or forecasts relate.

The Fortis Bank opinion is necessarily based upon information available to it as of the date of its opinion, and upon financial, economic, market and other conditions as they existed and could be evaluated on the date of the Fortis Bank opinion. Fortis Bank did not express any opinion as to what the value of the Epicor common stock actually will be when issued to holders of Scala ordinary shares as part of the consideration in the exchange offer or the prices at which Epicor common stock will trade at any time.

In arriving at its opinion, Fortis Bank did not perform an independent investigation as to the tax, accounting or legal aspects of the exchange offer.

In preparing its opinion, Fortis Bank performed a variety of financial and comparative analyses. The following is a brief summary of the material valuation, financial and comparative analyses considered by Fortis Bank in connection with the rendering of its opinion. This summary does not purport to be a complete description of the analyses underlying Fortis Bank’s opinion. This summary of the analyses also contains information in tabular format. In order to fully to understand the financial analyses used by Fortis Bank, the tables must be read in conjunction with the related text. The tables alone do not constitute a complete description of the financial analyses summarized therein.

Transaction Summary. Fortis Bank reviewed the principal terms of the merger protocol, noting, among other things, the following:

•

the exchange offer is to be structured as an offer for Scala’s ordinary shares at an expected price per Scala ordinary share tendered pursuant to the tender offer of (i) 0.1795 shares of Epicor common stock and (ii) $1.8230 in cash, provided, that

•

if the product of the average closing price on the Nasdaq National Market of the Epicor common stock during the 10 trading day period that is two full trading days prior to the expiration of the exchange offer and 0.1795 is less than $1.8327, then each Scala ordinary share shall be exchanged for (i) 0.1795 shares of Epicor common stock and (ii) $1.8230 in cash plus the amount by which $1.8327 exceeds such Epicor average closing price multiplied by 0.1795, up to an additional $0.3665.

Comparable Company Analysis. Fortis Bank reviewed selected financial information, ratios, and public market multiples for certain publicly-traded companies that Fortis Bank deemed relevant, with respect to Scala and Epicor, respectively.

For Scala, the selected comparable companies group included Exact Holding N.V., Intentia International AB, The Sage Group plc, Systems Union Group plc, IBS AB, IFS AB, and Unit 4 Agresso N.V. These seven companies are collectively referred to as the Scala comparable companies. Fortis Bank reviewed, among other information, the Scala comparable companies’ ratios, or multiples, of enterprise value (equal to the market capitalization plus total debt, preferred stock and minority interests, if any; less cash, cash equivalents, and financial fixed assets, if any) to calendar year 2003 and calendar year 2004 revenues, to calendar year 2003 and calendar year 2004 earnings before interest, taxes, depreciation and amortization (or EBITDA), to calendar year 2003 and calendar year 2004 earnings before interest and taxes (or EBIT), and the ratio of the share price to calendar year 2003 and calendar year 2004 earnings per share (or EPS). All data for the Scala comparable companies were based on publicly-available information and on market information as of December 10, 2003. Estimated 2003 and 2004 revenues, EBITDA figures, EBIT figures and EPS figures for the Scala comparable companies were based upon estimates from selected research analysts. Fortis Bank compared these ratios to the multiples implied by the Epicor offer based on the value of the offer (based upon the share price of Epicor and the €/$ exchange rate as of November 13, 2003) and management estimates for 2003 and 2004. Applying the

median multiples for the comparable companies to the Scala estimates would result in an implied per share value of Scala ordinary shares ranging from EUR 2.76 to EUR 3.28. The following table summarizes the results of this analysis:

Enterprise
Value/Revenues

Enterprise

Value/EBITDA

Enterprise

Value/EBIT

Price/Earnings

2003E

2004E

2003E

2004E

2003E

2004E

2003E

2004E

High

4.4x

3.7x

18.4x

13.0x

16.1x

17.3x

25.5x

28.0x

Low

0.2x

4.8x

3.3x

9.6x

9.1x

15.4x

12.9x

Average

1.4x

1.3x

10.1x

6.8x

12.8x

12.4x

19.7x

19.5x

Median

1.0x

8.1x

6.7x

12.8x

11.5x

18.9x

Epicor Offer

1.2x

1.1x

n/a

7.6x

n/a

11.3x

n/a

17.9x

For Epicor, the selected comparable companies group included Hyperion Solutions Corporation, Intuit, Inc., Lawson Software, Inc., MAPICS, Inc., Oracle Corporation, and PeopleSoft, Inc. These six companies are collectively referred to as the Epicor comparable companies. Fortis Bank reviewed, among other information, the Epicor comparable companies’ ratios, or multiples, of enterprise value to calendar year 2003 and calendar year 2004 revenues, to calendar year 2003 and calendar year 2004 EBITDA, to calendar year 2003 and calendar year 2004 EBIT, and the ratio of the share price to calendar year 2003 and calendar year 2004 EPS. All data for the Epicor comparable companies were based on publicly-available information and on market information as of December 10, 2003. Estimated 2003 and 2004 revenues, EBITDA figures, EBIT figures and EPS figures for the Epicor comparable companies were based upon estimates from various research analysts. Fortis Bank compared these ratios to the multiples derived for Epicor based on its enterprise value (based upon its market capitalization as of December 10, 2003) and management’s estimates for 2003 and 2004. The following table summarizes the results of this analysis:

Enterprise
Value/Revenues

Enterprise

Value/EBITDA

Enterprise

Value/EBIT

Price/Earnings

2003E

2004E

2003E

2004E

2003E

2004E

2003E

2004E

High

6.0x

5.6x

25.5x

16.1x

23.6x

21.1x

42.0x

42.4x

Low

1.4x

1.3x

10.0x

7.2x

11.3x

8.1x

26.5x

21.6x

Average

3.2x

2.8x

17.2x

11.6x

18.1x

15.2x

33.2x

27.8x

Median

2.2x

1.8x

15.4x

11.6x

18.8x

15.1x

33.1x

25.2x

Epicor

2.7x

2.4x

20.7x

14.7x

46.3x

18.7x

47.4x

19.7x

No company used in the comparable company analysis is identical to Scala or Epicor. Accordingly, any comparable company analysis necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics of Scala and Epicor and other factors that could affect the public trading value of the companies to which they are being compared. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using comparable company data.

Bid premium analysis. Fortis Bank reviewed the premiums paid in a broad group of selected public offer transactions in the software sector with the acquiror or acquisition target located in Western Europe, announced since January 1, 2001 and compared it to the premium represented by the Epicor offer. The analysis reflects 32 transactions announced since January 1, 2001, for which public data are available. Fortis Bank reviewed the purchase premiums based on the targets’ closing share prices one day, one week, and four weeks prior to the announcement date of the respective transactions. All data are based on publicly-available information. The average and median of these premiums are summarized in the table below. For comparison purposes, the premiums implied by the offer are also added.


	Premium Paid
	One day		One week		Four weeks
Average	44	%	55	%	49	%
Median	31	%	35	%	34	%
Epicor Offer	44	%	55	%	64	%

No transaction used in the bid premium analysis is identical to the transaction between Scala and Epicor. Accordingly, any bid premium analysis necessarily involves complex considerations and judgments concerning differences in transaction characteristics of the selected transactions. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using transaction data.

Discounted Cash Flow Analysis. Fortis Bank performed a discounted cash flow analysis to calculate an estimate of the theoretical present value per common share of Scala using financial forecasts through the fiscal year ending December 2006 that were prepared by the management of Scala extrapolated for subsequent fiscal years through December 2010 based on publicly available information and discussions with management and a residual value formula taking into account 2% annual growth. Fortis Bank utilized discount rates ranging from 13.2% to 15.2%. This analysis showed a range of present values per Scala share of €2.17 to €2.59. The Discounted Cash Flow Analysis did not purport to be indicative of actual values or expected values of the Scala common shares before or after the acquisition transaction.

Fortis Bank performed a discounted cash flow analysis to calculate an estimate of the theoretical present value per common share of Epicor using financial forecasts through the fiscal year ending December 2006 that were prepared by the management of Epicor, extrapolated for subsequent fiscal years through the fiscal year ending December 2010 based on publicly available information and a residual value formula taking into account 2% annual growth. Fortis Bank utilized discount rates ranging from 10.1% to 12.1%. This analysis showed a range of present values per Epicor share of $7.28 to $8.93. The Discounted Cash Flow Analysis did not purport to be indicative of actual values or expected values of the Epicor common shares before or after the acquisition transaction.

Comparison of offer price to Scala share price. Fortis Bank noted that the price offered by Epicor represented a value of €3.25 on the day prior to the announcement of the offer. This value is higher than the Scala share price during the entire preceding twelve month period, as depicted in the graph below.

LOGO

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Fortis Bank’s opinion. In arriving at its fairness determination, Fortis Bank considered the results of all of its analyses. Rather, Fortis Bank made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Scala or Epicor or the contemplated exchange offer.

The analyses summarized above do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Scala, Epicor, Fortis Bank or any other person assumes responsibility if future results are materially different from those forecast.

As described above, Fortis Bank’s opinion to the Scala managing and supervisory boards was one of many factors taken into consideration by the Scala managing and supervisory boards in making their determination to approve the contemplated transaction. The foregoing summary does not purport to be a complete description of the analyses performed by Fortis Bank in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Fortis Bank attached as Annex C to this prospectus.

Fortis Bank is an internationally-recognized banking and advisory firm that regularly engages in the valuation of businesses and their securities in connection with mergers and acquisitions. Scala engaged Fortis Bank based on its qualifications, expertise and reputation. Fortis Bank has acted as financial advisor to Scala in connection with, and has participated in certain of the negotiations leading to, the merger protocol. In addition, Fortis Bank and its affiliates have provided certain merchant banking, financing and advisory services to Scala from time to time. Fortis Bank or its affiliates also may provide merchant banking or advisory services to Scala, Epicor, the combined company, or their respective affiliates in the future. In connection with the above-described merchant banking, financing and advisory services Fortis Bank has received, and may receive, compensation. Furthermore, Fortis Bank and its affiliates provide a full range of financial advisory, financing and securities services and, in the course of their normal trading activities, may from time to time effect transactions and hold long and short positions in securities, including derivative securities, of Scala and Epicor for their own account or for the accounts of third parties.

Pursuant to a letter agreement dated October 20, 2003 as amended on April 13, 2004, Scala engaged Fortis Bank to act as its financial advisor in connection with the contemplated transaction. Pursuant to the terms of this engagement letter, as amended, Scala has agreed to pay Fortis Bank (i) a customary fee upon the issuance of the fairness opinion, irrespective of the content of the opinion and/or the exchange offer being declared unconditional and (ii) an additional customary fee payable upon consummation of the exchange offer. In addition, Scala agreed to reimburse Fortis Bank for its reasonable expenses and to indemnify Fortis Bank and related persons against various liabilities. Scala also agreed that it would cause Epicor to guarantee the performance of and/or assume its indemnification and payment obligations to Fortis Bank in the event that following the consummation of the exchange offer, Scala merges into, or transfers substantially all of its assets to, Epicor or its subsidiaries, or Scala is liquidated by Epicor. The engagement letter is governed by Dutch law.

The consideration to be offered to the holders of Scala ordinary shares in connection with the exchange offer was determined through negotiations between the board of directors of Epicor and the managing and supervisory boards of Scala. Fortis Bank provided advice to the managing and supervisory boards of Scala during such negotiations; however, Fortis Bank did not recommend any specific consideration to the Scala boards or that any specific consideration constituted the only appropriate consideration for the exchange offer.

Description of the Exchange Offer

Purpose of the Exchange Offer

We have entered into a merger protocol with Scala, which was subsequently amended and restated, pursuant to which we will make a public offer to acquire all of the outstanding Scala ordinary shares.

The Exchange Offer

We are offering to exchange, for each Scala ordinary share that is validly tendered and not properly withdrawn, 0.1795 shares of Epicor common stock and $1.8230 in cash, subject to adjustment as described below.

The cash portion offered per Scala ordinary share will be increased if the product of (i) the average closing price per share of Epicor common stock during the 10 trading-day period that is two full trading days prior to the expiration of the exchange offer and (ii) 0.1795 is less than $1.8327, in which case the cash portion will be increased by the amount such product is less than $1.8327, up to a maximum of $0.3665.

We will publish the final exchange ratio in a press release to be issued immediately after the close of the Nasdaq trading day that is two full Nasdaq trading days prior to the expiration of the exchange offer, and in an advertisement in the Daily Official List of Euronext Amsterdam and in one or more daily newspapers with nation-wide distribution in the Netherlands. We will also file a current report on Form 8-K with the SEC containing the final exchange ratio on the Nasdaq trading day immediately prior to the date on which the exchange offer expires. You may also contact your bank or broker who administers your Scala shares to find out the final exchange ratio.

You may also call ( ) - toll free in the United States or ( ) - outside the United States to obtain the final exchange ratio starting at the close of the Nasdaq trading day that is two full Nasdaq trading days prior to the expiration of the exchange offer. These telephone numbers will be available throughout the exchange offer period to provide callers with the exchange ratio on each day during the exchange offer as if the exchange ratio had been determined on that date.

The following table illustrates the adjustment to the cash portion offered per Scala ordinary share, rounded to the fourth decimal place, at different average closing prices per share of the Epicor common stock during the 10 trading-day period ending two full trading days prior to the expiration of the exchange offer:


Average Closing Price Per Share of Epicor Common Stock	Average Closing Price Per 0.1795 of a Share of Epicor Common Stock	Shares of Epicor Common Stock Offered Per Scala Ordinary Share	Original Cash Offered per Scala Ordinary Share before Adjustment	Additional Amount of Cash Offered per Scala Ordinary Share	Adjusted Total Cash Offered Per Scala Ordinary Share
$10.50	$1.8848	0.1795	$1.8230	$0.0000	$1.8230
$10.21	$1.8327	0.1795	$1.8230	$0.0000	$1.8230
$ 9.78	$1.7555	0.1795	$1.8230	$0.0772	$1.9002
$ 8.56	$1.5365	0.1795	$1.8230	$0.2962	$2.1192
$ 8.17	$1.4665	0.1795	$1.8230	$0.3662	$2.1892
$ 7.55	$1.3552	0.1795	$1.8230	$0.3665	$2.1895
$ 6.75	$1.2116	0.1795	$1.8230	$0.3665	$2.1895

No Fractional Shares

In so far as the number of Scala ordinary shares tendered for acceptance and delivered to Epicor would otherwise result in the issue of fractional shares of Epicor common stock, such fractions will not be issued but instead be settled by payment in cash, without interest. The settlement per individual Scala shareholder who has tendered and delivered Scala ordinary shares will be based on the normal practice used by their bank or broker, which means a maximum exchange of Scala ordinary shares tendered into Epicor common stock, whereby, in general, the entitlement to 0.5 or more remaining Epicor common stock will be rounded upwards (with additional charge) while the entitlement to less than 0.5 remaining Epicor common stock will be rounded downwards (with additional payment). Fractional entitlements will be settled against the opening price of one share of Epicor common stock, as reported on Nasdaq, on the settlement date.

Structure of the Exchange Offer

advertisement in one or more daily newspapers with nation-wide distribution in the Netherlands and in the Daily Official List of Euronext Amsterdam. Scala shareholders who tender their shares into the exchange offer will be deemed to have been validly notified of this assignment in accordance with Dutch law by way of these advertisements if and when published by Epicor.

Conditions to the Exchange Offer

Our obligation to accept for exchange, and to deliver shares of Epicor common stock and cash in exchange for, Scala ordinary shares pursuant to the exchange offer is subject to the satisfaction or, where permissible, the waiver of the conditions set forth in the merger protocol, as summarized in the section entitled “The Merger Protocol—Conditions to Epicor’s Obligation to Declare the Exchange Offer Unconditional.”

Timing of the Exchange Offer

The expected expiration time of the exchange offer is 3:00 p.m., Central European Time, on , 2004, but we may extend the exchange offer under certain conditions described below, in which case the term “the expiration of the exchange offer period” means the latest time and date on which the exchange offer, as so extended, expires. For more information, you should read the discussion in the section below entitled “Extension and Waiver of Conditions in the Exchange Offer.”

Extension and Waiver of Conditions in the Exchange Offer

If the conditions related to the receipt of all regulatory approvals and the effectiveness of the registration statement on Form S-4, of which this prospectus is a part, are the only conditions to the exchange offer that have not been satisfied or waived then the expiration of the exchange offer will be extended by us for 60 days. If certain conditions to the exchange offer relating to receipt of all regulatory approvals or the effectiveness of the registration statement on Form S-4, of which this prospectus is a part, are not satisfied on the expiration of the exchange offer, and one or more other conditions are not satisfied or waived, the date for fulfillment may be unilaterally extended by us for up to 60 days. If any conditions other than the conditions related to the receipt of all regulatory approvals and the effectiveness of the registration statement on Form S-4, of which this prospectus is a part, have not been satisfied or waived then the expiration of the exchange offer may be extended by us with Scala’s consent.

In addition, we may unilaterally waive the condition that the number of Scala ordinary shares tendered into the exchange offer, together with such shares held by us, represent at least 95% of the outstanding Scala ordinary shares on or before the expiration of the exchange offer, provided that the number of Scala ordinary shares tendered into the exchange offer represents at least 80% of the outstanding Scala ordinary shares at the expiration of the exchange offer. If such number of Scala ordinary shares is less than 80%, we may mutually agree with Scala to decrease the number of Scala ordinary shares required to be tendered to satisfy such condition and/or extend the exchange offer period.

Any other extension to the exchange offer period requires the mutual agreement of Scala and us. If the exchange offer period is extended, we will make a public announcement to that effect by way of an advertisement to be published in one or more daily newspapers with nation-wide distribution in the Netherlands and in the Daily Official List of Euronext Amsterdam on the official segment of the stock market no later than the third Euronext Amsterdam trading day after the previously scheduled expiration date. These announcements shall be made in accordance with section 9o of the 1995 Decree on the Supervision of the Securities Trade (Netherlands) and shall contain the new expiration date of the exchange offer. Scala shareholders are entitled during the extended exchange offer period to withdraw Scala ordinary shares tendered during the original exchange offer period. You should read the discussion in the section entitled “Withdrawal Rights” for more details.

We also have the right to waive certain other conditions to our obligation to accept all validly tendered Scala ordinary shares, including, but not limited to the conditions requiring that:

•

the managing board and the supervisory board of Scala will not have resolved to revoke their unanimous favorable recommendations of the exchange offer;

•

all necessary regulatory approvals will have been obtained;

•

Scala will not have breached the merger protocol in a material respect relevant to our determination to declare the exchange offer unconditional; or

•

Scala has not breached the merger protocol in a material respect relevant to our acceptance of the Scala ordinary shares tendered into the exchange offer.

Subsequent Offer Period

We may elect, in our sole discretion, to provide a subsequent offer period of not less than three U.S. business days nor more than 15 Euronext Amsterdam trading days. A subsequent offer period is not an extension of the initial (or extended) exchange offer period. A subsequent offer period would be an additional period of time, following the expiration of the initial (or extended) exchange offer period, in which stockholders may tender shares of their Scala ordinary shares not tendered during the initial (or extended) offer period.

If we elect to have a subsequent offer period, we will publicly announce this by way of an advertisement in one or more daily newspapers with nationwide distribution in the Netherlands and in Daily Official List of Euronext Amsterdam together with the public announcement as to whether or not the exchange offer is declared unconditional and the results of the initial (or extended) exchange offer period, including the approximate number and percentage of securities tendered to date, no later than the date that we declare the offer unconditional, which will be five Euronext Amsterdam trading days after the expiration of the initial (or extended) exchange offer period. We will accept for exchange and deliver Epicor common stock and cash in exchange for Scala ordinary shares that are validly tendered within three Euronext Amsterdam trading days after the expiration of any subsequent offer period.

Procedure for Tendering

Following a public notice concerning the exchange offer and the availability of this prospectus and the Dutch offering memorandum, each holder of Scala ordinary shares will by customary practice be contacted by such shareholder’s bank or broker through which such shareholder’s Scala ordinary shares are held. You will be asked by your bank or broker whether you desire to tender your Scala ordinary shares into the exchange offer. You may also contact your bank or broker directly and request them to tender your Scala ordinary shares into the exchange offer by tendering them to ABN AMRO Bank N.V.

Unless the exchange offer period is extended in accordance with Dutch law and the merger protocol, any holder of Scala ordinary shares who wishes to validly tender its shares must instruct its bank or broker to that effect by no later than the expiration of the exchange offer period, 3:00 p.m., Central European Time, on , 2004. Shares must be tendered in accordance with the procedures established by your bank or broker.

All banks and brokers will notify ABN AMRO Bank N.V. on the expiration of the exchange offer period of the number of Scala ordinary shares tendered by their respective clients that they have in their custody and that they bind themselves in writing to deliver these shares no later than 10:00 a.m., Central European Time, on the settlement date, which is no later than three Euronext Amsterdam trading days after the exchange offer is declared unconditional (gestand gedaan).

Exchange of Scala Ordinary Shares; Delivery of Consideration

We will accept for exchange, and deliver a combination of shares of Epicor common stock and cash in exchange for Scala ordinary shares that are validly tendered and not properly withdrawn, within three Euronext Amsterdam trading days after we have declared the exchange offer unconditional, pursuant to the terms and conditions of the exchange offer, including, the terms and conditions of any extension or amendment.

In all cases, exchange of Scala ordinary shares tendered and accepted for exchange pursuant to the exchange offer will be made only after timely receipt in book-entry form by ABN AMRO Bank N.V. of the Scala ordinary shares.

For purposes of the exchange offer, we will be deemed to have accepted for exchange Scala ordinary shares validly tendered and not properly withdrawn as, if and when we have declared the exchange offer unconditional (gestand gedaan) in a public announcement. The paying and exchange agent is required to then deliver shares of Epicor common stock and cash in exchange for the Scala ordinary shares to your bank or broker on settlement date, being no later than the third Euronext Amsterdam trading day after receipt of the notice referred to in the preceding sentence. Subsequently on the settlement date the banks and brokers will cause the Scala ordinary shares validly tendered by their respective clients to be transferred in book-entry form into the account of ABN AMRO for further credit to the account of Epicor. You will not receive any interest on any cash that Epicor pays to you, even if there is a delay in making the exchange.

Payment of the cash component to the Scala shareholders who have tendered their Scala ordinary shares for acceptance will be effected on the settlement date of the exchange offer, which will be within three Euronext Amsterdam trading days after the exchange offer is declared unconditional, in accordance with the terms of the exchange offer. The shares of Epicor common stock to be delivered to the Scala shareholders who have validly tendered their Scala ordinary shares for acceptance under the exchange offer will be delivered via their securities account held through their bank or broker. Such delivery is also expected to take place on the settlement date. Scala shareholders should note that if they tender their Scala ordinary shares into the exchange offer they will receive on the settlement date the cash component in United States dollars, which amount will be automatically converted into Euros, in accordance with the customary procedures of the particular bank or stockbroker, if they only have a Euro-account with their bank or stockbroker.

Withdrawal Rights

Scala shareholders can withdraw their tender by instructing the bank or broker, through which such shareholders’ ordinary shares are held to withdraw the shares they have tendered. See also “Procedure for Tendering.”

Neither we, the exchange agent nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or will incur any liability for failure to give any notification. Any Scala ordinary shares properly withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer. However, you may tender withdrawn Scala ordinary shares by following one of the procedures discussed in the sections entitled “Procedure for Tendering” at any time prior to the expiration date of the exchange offer.

Regulatory Filings and Approvals Required to Complete the Exchange Offer

Our obligation to declare the exchange offer unconditional and subsequently accept Scala ordinary shares tendered for exchange in the exchange offer is subject to the satisfaction of a number of conditions, which may, in some instances, be waived, including the receipt of all regulatory approvals necessary to complete the exchange offer. Other than (i) the SEC declaring effective the registration statement on Form S-4, of which this prospectus is a part, (ii) the review by the AFM of the draft Dutch offering memorandum, which shall be completed prior to commencing the exchange offer, (iii) a dispensation by the AFM from the requirement to publish a specified price or exchange ratio in the Dutch offering memorandum, which was granted on December 10, 2003, (iv) a dispensation by the AFM from the requirement to publish a Dutch Bte-prospectus, which was granted on December 24, 2003, and (v) the dispensations by the AFM from the requirement to publish the Dutch offering memorandum within six weeks after December 12, 2003, which were granted on January 22, 2004 and March 30, 2004, we do not believe that any additional material governmental filings are required with respect to the exchange offer. However, foreign or domestic antitrust authorities or private parties could also take any action available to them under the relevant antitrust laws that they deem necessary or desirable, including seeking to enjoin the completion of the exchange offer or seeking the divestiture of assets of Epicor or Scala. In addition, in some jurisdictions, a competitor, customer or other third party could initiate a private action under the antitrust laws challenging or seeking to enjoin the exchange offer, before or after it is completed. Although we believe that neither the exchange offer nor, any proposed post-closing restructuring raises concerns under United States or foreign antitrust laws, we intend to comply fully with the antitrust laws of any jurisdiction in which the transaction may be subject to review, and we can give no assurance that a challenge to the exchange offer or any post-closing restructuring on antitrust grounds will not be made or, if a challenge is made, that we and Scala would prevail.

Scala Appraisal Rights

Dutch law does not recognize the concept of appraisal or dissenters’ rights and, accordingly, holders of shares of a Dutch company, such as Scala, have no appraisal rights. However, Dutch corporate law requires that the management of a company and its majority shareholders act in accordance with the “principles of reasonableness and fairness” when dealing with minority shareholders. Acts in violation of those principles may be challenged through court proceedings. In addition, see the section below entitled “—Buy-out Procedure” for a discussion of the judicial proceedings under Dutch law relating to the determination of the amount of consideration to be paid to the remaining minority Scala shareholders in a buy-out procedure.

Post-Closing Restructuring

We are making the exchange offer in order to acquire all of the outstanding Scala ordinary shares. If the exchange offer is completed and there are Scala shareholders who have not tendered their shares into the exchange offer, then such Scala shareholders will continue to own their Scala ordinary shares. After the completion of the exchange offer, we intend to de-list the Scala ordinary shares from Euronext Amsterdam, such that there will no longer be a public market for Scala ordinary shares. We can only commence such a delisting procedure once we have obtained 95% or more of the issued and outstanding Scala ordinary shares. After the completion of the exchange offer, the value of your Scala ordinary shares may decline and you may be unable to sell your Scala ordinary shares readily or at all after the completion of the exchange offer.

After the completion of the exchange offer, we intend to effectuate a corporate restructuring of Scala. This post-closing restructuring may include, among other things:

•

the commencement of a “buy-out procedure” in accordance with Section 2:92a of the Dutch Civil Code by us of Scala ordinary shares from any remaining minority Scala shareholders, as described below in the section entitled “Buy-out Procedure”;

•

the sale and transfer by Scala, or any of its subsidiaries, to us, or any of our affiliates, of all or a portion of the assets of Scala (including capital stock of a Scala affiliate) or its subsidiaries;

•

the transfer of employees from Scala or a Scala subsidiary to us or any of our affiliates, and the transfer of employees from us or any of our affiliates to Scala or a Scala subsidiary;

•

the merger of a Scala subsidiary into Scala or us or any of our affiliates;

•

the effectuation by Scala and one or more of our Dutch subsidiaries of a legal merger within the meaning of Section 2:309 of the Dutch Civil Code, as described below in the section entitled “Post-Closing Legal Merger;”

•

the transformation of Scala into a private company with limited liability (which we can only effectuate once the Scala ordinary shares have been delisted from Euronext Amsterdam); or

•

any one or more combinations of the foregoing actions.

Buy-out Procedure

Section 2:92a of the Dutch Civil Code, which is attached to this prospectus as Annex D, contains a buy-out procedure for shares owned by minority shareholders of a “naamloze vennootschap” or “N.V.,” a public company with limited liability, such as Scala. As soon as we and our affiliates, other than Scala, hold for our own account at least 95% of the issued and outstanding Scala ordinary shares, we and such affiliates may institute proceedings against the minority shareholders of Scala, in accordance with Section 2:92a of the Dutch Civil Code, in order to force those minority Scala shareholders to transfer their Scala ordinary shares to us. The buy-out procedure may be initiated at any time after we hold 95% of the issued and outstanding Scala ordinary shares. The proceedings are instituted by means of a writ of summons served upon each of the minority shareholders in accordance with the provisions of the Dutch Code of Civil Procedure. The proceedings are held before the Enterprise Chamber of the Court of Appeals in Amsterdam, the Netherlands, which is referred to as the Enterprise Chamber. The Enterprise Chamber may render the following judgments:

•

Dismiss the buy-out proceedings in relation to all minority shareholders if it is established that

—

notwithstanding monetary compensation, one (or more) of the minority shareholders would sustain serious tangible loss by the forced transfer of their Scala ordinary shares,

—

one (or more) of the minority shareholders is holder of a share to which, pursuant to Scala’s articles of association, a special control right over Scala is attached, or

—

the plaintiffs have waived their right to institute these proceedings against one or more of the minority shareholders;

•

Grant the claim for buy-out in relation to all minority shareholders, and:

—

appoint one or three experts to offer an opinion to the Enterprise Chamber on the value to be paid for the Scala ordinary shares of the minority shareholders, after which the Enterprise Chamber will determine the price as at a date specified by the Enterprise Chamber, or

—

determine the price to be paid for the Scala ordinary shares of the minority shareholders as of a specified date if the Enterprise Chamber does not deem it necessary to appoint an expert (for example, if the Enterprise Chamber determines that the plaintiffs have already provided the Enterprise Chamber with sufficient evidence that the price offered is reasonable); and

—

order the plaintiffs to pay the minority shareholders the determined price with interest against transfer of their unencumbered rights to the shares.

If the Enterprise Chamber determines the price to be paid for the Scala ordinary shares of the minority Scala shareholders, such price shall be increased by the statutory interest rate applicable in the Netherlands, at present 4% per annum, for the period from the date determined by the Enterprise Chamber until the date of transfer. However, any dividends or other distributions, including any post-closing dividend, that have been made payable to the Scala shareholders within such period will be deemed a partial payment of the transfer price to be paid to the minority shareholders.

The minority Scala shareholders will be required to transfer their Scala ordinary shares, against payment of the price determined by the Enterprise Chamber when the order to transfer becomes final before the Enterprise Chamber. The plaintiffs will serve the Enterprise Chamber’s judgment upon the Scala minority shareholders in accordance with the provisions of the Dutch Code of Civil Procedure and will notify these shareholders of the date and place of payment for the Scala ordinary shares and the price to be paid for the Scala ordinary shares.

The plaintiffs may, at any time, discharge themselves from any obligations pursuant to the judgment by paying the entire amount due for the Scala ordinary shares of the minority shareholders, inclusive of interest accrued thereon, into a bank account of the consignment office (administered by the Dutch Ministry of Finance). Upon such payment, the plaintiffs become the holders of the Scala ordinary shares by operation of law. An advertisement is published regarding the payment to the consignment office has been made will be released from such Scala ordinary shares and are vested on the rights to receive the transfer price paid for such shares from the consignment office. At such time, the minority shareholders of the Scala ordinary shares would cease to have any rights in respect of their Scala ordinary shares, including with respect to voting of such shares. The only right of the minority shareholders will be the right to receive payment for their Scala ordinary shares.

Because the buy-out procedure would require a court proceeding and possibly expert valuation, receipt of funds could be substantially delayed. The price paid to Scala shareholders in the buy-out procedure is determined by the Enterprise Chamber.

Post-Closing Legal Merger

Section 2:309 of the Dutch Civil Code provides for the possibility to merge one company into another company, as long as they are both limited liability companies incorporated under Dutch law, pursuant to which the merging company will cease to exist and be “absorbed” by the surviving entity. As a result of such a legal merger, the assets and liabilities of the merging entity are transferred to the surviving entity by operation of law and the shareholders of the merging entity receive shares in the surviving entity in accordance with an exchange ratio based on the value of the merging companies. As a part of the contemplated post-closing restructuring, we may decide to effect a legal merger between Scala and a newly-incorporated or existing Dutch subsidiary of Epicor.

Dutch law provides that if, on the basis of the exchange ratio, a shareholder is entitled to receive less than one share in the surviving entity, that shareholder will receive cash instead of shares. However, the total amount of cash to be distributed to shareholders as a result of the merger may not exceed 10% of the nominal value of the shares allocated as a result of the merger. By increasing the aggregate nominal value of the shares that will be allocated by the surviving Dutch subsidiary of Epicor in the legal merger between Scala and that subsidiary, and by making the denominations of individual shares sufficiently large, the individual remaining shareholders of Scala may not be entitled to receive shares in that surviving Dutch subsidiary of Epicor. In that event, Scala would cease to exist and the remaining shareholders of Scala would then be paid an amount in cash rather than receiving shares in the surviving Dutch subsidiary of Epicor.

Other Post-Closing Actions

Following the completion of the exchange offer, we may also from time to time purchase Scala ordinary shares by means of regular purchases on Euronext Amsterdam, subject to Dutch law and other applicable law, at market prices then prevailing. Such prices may be higher or lower than the consideration paid in the exchange offer.

If we implement a post-closing restructuring to acquire any remaining Scala ordinary shares not tendered into the exchange offer, the aggregate consideration payable to the remaining minority shareholders of Scala is expected to be equivalent to the value of the offer price in this exchange offer.

In light of our post-closing restructuring options, we have not determined whether the Scala ordinary shares obtained in the exchange offer will be retained, retired, held in treasury or otherwise disposed of.

Restrictions on Sales of Shares of Epicor Common Stock Received in the Exchange Offer

The shares of Epicor common stock to be issued in the exchange offer will be registered under the U.S. Securities Act and will be freely transferable under the Securities Act, except for shares of Epicor common stock issued to any person who is deemed to be an “affiliate” of Scala prior to the exchange offer. Persons who may be deemed to be “affiliates” of Scala prior to the exchange offer include individuals or entities that control, are controlled by, or are under common control of Scala prior to the exchange offer, and may include officers and directors, as well as principal shareholders of Scala prior to the exchange offer. You will be notified separately if you may be an affiliate. Persons who may be deemed to be affiliates of Scala prior to the exchange offer may not sell any of the shares of Epicor common stock received by them in the exchange offer, except pursuant to:

•

An effective registration statement under the U.S. Securities Act of 1933, as amended, covering the resale of those shares;

•

An exemption under paragraph (d) of Rule 145 under the U.S. Securities Act of 1933, as amended; or

•

Any other applicable exemption under the U.S. Securities Act of 1933, as amended.

Our registration statement on Form S-4, of which this prospectus forms a part, does not cover the resale of shares of Epicor common stock to be received in the exchange offer by persons who may be deemed to be affiliates of Scala prior to the exchange offer.

Listing of Epicor Common Stock Issued in the Exchange Offer on the Nasdaq National Market

Delisting of Scala Ordinary Shares after the Exchange Offer

Pursuant to the merger protocol, after the closing of the exchange offer, we intend to effectuate a post-closing restructuring of Scala and its subsidiaries, which may include, without limitation, the termination of the listing of Scala ordinary shares on Euronext Amsterdam. We may only de-list Scala ordinary shares if we own 95% of the outstanding Scala ordinary shares. See the section entitled “Post-Closing Restructuring” for a description of the possible effects of such delisting and deregistration on the liquidity and market value of the remaining Scala ordinary shares held by the public and not tendered pursuant to the exchange offer.

THE MERGER PROTOCOL

The following describes the material provisions of the merger protocol. The merger protocol is governed by Dutch law. The provisions of the merger protocol are complicated and not easily summarized. This summary may not contain all of the information about the merger protocol that is important to you. The merger protocol is attached to this prospectus as Annex A and is incorporated by reference into this prospectus, and we encourage you to read it carefully in its entirety for a more complete understanding of the merger protocol.

The Exchange Offer

Subject to the conditions of the merger protocol which was originally entered into on November 13, 2003, Pacific Standard Time (and November 14, 2003, Central European Time) and amended and restated on April 14, 2004, we will offer for each Scala ordinary share tendered into the exchange offer (a) $1.8230 in cash, subject to adjustment as described below, and (b) 0.1795 of a share of Epicor common stock. If the product obtained by multiplying (a) the average closing price per share of Epicor common stock during the 10 trading day period that is two full trading days prior to the expiration of the exchange offer by (b) 0.1795 is less than $1.8327, then the amount of cash to be received in exchange for each Scala ordinary share tendered will be increased by an amount equal to the lesser of (x) $0.3665 and (y) the amount by which $1.8327 exceeds the product obtained by multiplying (i) the average closing price per share of Epicor common stock during the 10 trading day period that is two full trading days prior to the expiration of the exchange offer by (ii) 0.1795.

Subject to the satisfaction or waiver of the conditions set forth in the merger protocol and provided that the merger protocol is not terminated, the exchange offer will commence on , Central European time, on , 2004 and will terminate on 3:00 p.m. Central European Time on , 2004, unless otherwise extended by us in accordance with the provisions of the merger protocol. If we declare the exchange offer unconditional (gestand doen), we shall publicly announce this within five Euronext Amsterdam trading days of the tender closing date. As used in the merger protocol, the “tender closing date” means the date and time on which the period ends during which Scala shareholders can tender their Scala ordinary shares to us under the exchange offer, which in any event will be at least 20 business days after the date the exchange offer is commenced. If and when we declare the exchange offer unconditional, our obligation to accept and pay for all shares tendered becomes irrevocable, and we will acquire all Scala ordinary shares tendered within three Euronext Amsterdam trading days in exchange for amounts of cash and shares of Epicor common stock described above.

Regulatory Filings and Dutch Offering Memorandum; Antitrust Matters

We are obligated to prepare and file a registration statement on Form S-4, of which this prospectus is a part, under the United States Securities Act of 1933, as amended, with the United States Securities and Exchange Commission as soon as reasonably practicable following the date of the merger protocol to register the offer and sale of shares of Epicor common stock pursuant to the exchange offer. In addition, we are in principle obligated to prepare and file with the AFM a Dutch Bte-prospectus under the Act on the Supervision of the Securities Trade of 1995 (Netherlands) in relation to the offer in the Netherlands of shares of Epicor common stock pursuant to the exchange offer. However, because this prospectus contains similar information to that required in a Dutch Bte-prospectus we have received on December 24, 2003 a dispensation from the AFM from the requirement to publish a Dutch Bte-prospectus in connection with the exchange offer and we have agreed with the AFM to make this prospectus publicly available in the Netherlands. We are also obligated to prepare a Dutch offering memorandum, which will be made publicly available in the Netherlands and filed as an exhibit to the registration statement, of which this prospectus is a part.

In the event that Scala and we mutually agree that Rule 802 of the U.S. Securities Act of 1933 is available with respect to the Epicor common stock issued in connection with the exchange offer and that reliance on Rule 802 of the U.S. Securities Act of 1933 is preferable to registering such Epicor common stock issued in connection with the exchange offer, we will be obligated to prepare and file with the AFM a Bte-prospectus in

lieu of our obligations with respect to the registration statement on Form S-4, of which this prospectus is a part. In that event, the tender closing date will be at least 23 calendar days after the date the exchange offer commences.

Scala and we have agreed to prepare and file any necessary notifications or other submissions required by any antitrust or similar laws or regulations with any applicable authorities. Scala and we have further agreed to supply such authorities all information required to investigate the exchange offer and to cooperate with such authorities regarding any necessary contacts and filings.

Approval and Recommendation of each of the Scala Boards

The managing board and the supervisory board of Scala have each unanimously approved and consented to the exchange offer. Unless the merger protocol is terminated, the managing board and the supervisory board of Scala have agreed to (a) unanimously support the exchange offer for the amounts of cash and shares of Epicor common stock described above and recommend it to the Scala shareholders and take all necessary corporate action to that effect and (b) make their unanimous recommendations in the Dutch offering memorandum.

Scala Fairness Opinion

The managing and supervisory boards of Scala have agreed to use their best efforts to obtain a fairness opinion that states that the amounts of cash and shares of Epicor common stock to be exchanged for Scala ordinary shares tendered into the exchange offer are fair to the Scala shareholders from a financial point of view as soon as possible from Fortis Bank (Nederland) N.V., or another reputable bank. The Scala managing and supervisory boards have agreed to use such best efforts until at least the earlier of (i) obtaining such fairness opinion or (ii) three weeks after the date of the merger protocol. Epicor has agreed to promptly supply any information needed to prepare such fairness opinion. Any such fairness opinion will be included in the Dutch offering memorandum.

Satisfaction of the Conditions to the Commencement of the Exchange Offer

Pursuant to the original merger protocol, our obligation to commence the exchange offer was conditioned upon the satisfaction or, as permitted in accordance with the merger protocol, waiver of the following conditions, all of which were satisfied prior to December 12, 2003:

•

no event will have occurred and be continuing which (i) makes it illegal or otherwise prohibits us from making the exchange offer in accordance with the terms of the merger protocol or from accepting the Scala ordinary shares, (ii) imposes material limitations on our ability to acquire, hold or exercise full rights of ownership of the Scala ordinary shares, or (iii) requires divestiture by us or any of our subsidiaries of any Scala ordinary shares or of any part of our business or the business of Scala;

•

no event, change or development will have occurred since 11:00 p.m., Pacific Standard time, on November 13, 2003 (or 8:00 a.m., Central European time, on November 14, 2003) which has had or would be reasonably expected to result in a material adverse change;

•

the merger protocol will not have been terminated in accordance with its terms;

•

Scala will have received the fairness opinion described above;

•

the due diligence review of Scala by us will not have resulted in adverse findings which in the aggregate and in the context of the exchange offer constitute a material adverse change (provided that any such finding is reported by us to Scala in writing on or before December 10, 2003);

•

the managing and supervisory boards of Scala will not have revoked their unanimous favorable recommendation of the exchange offer;

•

no third party will have obtained the right to acquire or agreed to acquire or take up shares to be issued by Scala or a substantial part of the assets or business of Scala or Scala’s group companies;

•

Scala will not have breached the merger protocol in any material respect;

•

the managing and supervisory boards of Scala will not have taken any action or made any public announcement that may prejudice or frustrate the exchange offer;

•

any or all, at our option, of certain employees of Scala will agree to continue their employment pursuant to their existing employment agreements for a period of at least six months after the tender closing date effectively waiving their “change of control” benefits in exchange for cash payments, and another employee of Scala will agree to continue her employment pursuant to her existing employment agreement for a period of five months after tender closing date; and

•

subject to the termination of the merger protocol, the members of the managing and supervisory boards of Scala and holders of 5% or more of Scala ordinary shares that are affiliates of Scala, if any, will have agreed to validly tender and not withdraw any of the Scala ordinary shares that they own to us pursuant to the exchange offer after the exchange offer has been made and declared unconditional.

As used in the merger protocol, “material adverse change” means any material adverse change, facts or circumstances with respect to Scala and its subsidiaries’ business, taken as a whole, which were not known to us as of the date of the merger protocol (including, without limitation, national and/or international developments in financial, political and/or economic circumstances) and which would be of such a significant impact on the value of the business of Scala in light of the strategic nature of the exchange offer that we could not reasonably be expected to commence the exchange offer.

Conditions to Epicor’s Obligation to Declare the Exchange Offer Unconditional

Our obligation to declare the exchange offer unconditional is subject to the satisfaction or waiver of the following conditions on the tender closing date:

on or before the tender closing date, the number of Scala ordinary shares tendered into the exchange offer, together with the Scala ordinary shares held directly or indirectly by us, must represent at least 95% of the issued and outstanding Scala ordinary shares;

the managing and supervisory boards of Scala will not have resolved to revoke their unanimous favorable recommendation of the exchange offer;

all regulatory approvals necessary for the exchange offer will have been obtained prior to the tender closing date;

the exchange offer will not have been rendered impossible in part or in whole or materially adversely affected by any decisions of competent courts or authorities;

prior to the tender closing date there will have been no material facts or circumstances that were not known to Epicor as of December 12, 2003 (including, but not limited to, national and/or international extraordinary developments in financial, political and/or economic circumstances) and that would be such a very significant impact on the value of the business of Scala that we could not reasonably be expected to declare the exchange offer unconditional;

nothing will have occurred and be continuing which (i) makes it illegal or otherwise prohibits us from declaring the exchange offer unconditional in accordance with the terms of the merger protocol or from accepting the Scala ordinary shares, (ii) imposes material limitations on our ability to acquire, hold or exercise full rights of ownership of the Scala ordinary shares, or (iii) requires divestiture by us or any of our subsidiaries of any Scala ordinary shares or of any part of our business or the business of Scala;

Scala will not have breached the merger protocol in a material respect relevant to our determination to declare the exchange offer unconditional;

prior to the expiration of the exchange offer period, no notification will have been received from the AFM that the Dutch public offer has been made in conflict with Chapter IIa of the 1995 Act on the Supervision of the Securities Trade (Netherlands) in which case the securities institutions, pursuant to section 32a of the 1995 Decree on the Supervision of the Securities Trade (Netherlands), would not be allowed to cooperate with the settlement of the exchange offer, and Euronext Amsterdam will not have suspended and continued to suspend Scala’s listing on Euronext Amsterdam; and

10.

the registration statement on Form S-4 to register shares of our common stock in the exchange offer will not be the subject of any stop orders or proceedings seeking a stop order.

Other than the first, the ninth, the tenth and the first part of the seventh conditions listed above, we may unilaterally waive in whole or in part any of the above conditions to the extent such conditions are not satisfied on or before the tender closing date.

With respect to the first condition listed above, we may waive such condition provided that the number of Scala ordinary shares tendered into the exchange offer represents at least 80% of the issued and outstanding Scala ordinary shares at the tender closing date. If such condition cannot be waived by us because the number of Scala ordinary shares is less than such amount, we will consult with Scala and may mutually agree with Scala to decrease the number of Scala ordinary shares required to be tendered to satisfy such condition and/or extend the exchange offer period for a mutually agreed number of days.

With respect to the fourth and tenth conditions listed above, if either such conditions has not been satisfied on the tender closing date, the date for fulfillment of such condition may be unilaterally extended by us for up to 60 days and such period will be extended only if all the conditions other than those conditions have been satisfied or waived at such time. Except as provided in the preceding paragraph with respect to the first condition, if we have not satisfied or waived the conditions to the exchange offer listed above (other than the fourth and tenth conditions as described in the preceding sentence) on the tender closing date, the exchange offer period for the exchange offer may only be extended by mutual agreement of Scala and us.

Due Diligence and the Provision of Information

Pursuant to the original merger protocol, we were entitled to conduct a due diligence investigation of Scala, including, but not limited to, a due diligence investigation of the financial, accounting, legal, tax, market, product, operational, customer, technical and current trading conditions of Scala. In connection with this due diligence investigation, Scala agreed to fully cooperate with the proper performance of the due diligence review and to promptly disclose any and all information reasonably requested by us. During the due diligence investigation, we and our advisors had the right to visit the site and offices of Scala during normal working hours and after having made an appointment with the relevant representatives of Scala. In addition, management and other key employees of Scala were to be made available as reasonably appropriate to discuss relevant issues and respond to relevant questions. We agreed to use reasonable best efforts not to disturb the daily business of Scala group during the due diligence investigation and to make the due diligence procedures as efficient as possible. The due diligence investigation described in the preceding sentence ended on December 12, 2003. Following December 12, 2003, Scala and we have agreed that we will continue to have access for such further due diligence as is reasonable in view of the anticipated integration of the parties.

In addition, Scala agreed to prepare and deliver to Epicor, as promptly as practicable, and in any event before the tender closing date, audited financial statements for the fiscal years ended December 31, 2002 and 2003. Scala also agreed to use its best efforts to deliver as promptly as practicable before the tender closing date unaudited quarterly financial information for each fiscal quarter in the fiscal year ended December 31, 2003 and any

completed fiscal quarter in the fiscal year ended December 31, 2004, each reviewed by independent auditors under Statement of Auditing Standards No. 100.

Conduct of Business and Other Actions of Scala and Epicor

Until the earlier of the termination of the merger protocol or the settlement date (which settlement date will be no later than three Euronext Amsterdam trading days after the exchange offer is declared unconditional), each of Scala and we will conduct its business in the ordinary course consistent with past practices. Each of Scala and we will use all reasonable commercial efforts to procure that no material adverse change occurs in its capital, its businesses, it assets or its operations or those of its subsidiaries and joint ventures taken as a whole. Each of Scala and we have agreed to procure that our respective subsidiaries comply with terms of the merger protocol described in this paragraph.

In addition, Scala will not, other than in the ordinary course of business in accordance with its current business plans and budgets, without our prior written consent:

•

make any distributions to its shareholders;

•

procure any capital reorganization, including, but not limited to, the issuance of new securities (including shares), expect pursuant to the current share option plans of Scala (provided that Scala will inform us if shares are to be issued pursuant to such plans);

•

incur any indebtedness or guarantee any indebtedness or issue or sell any debt securities or guarantee any debt securities of others;

•

grant option rights on existing or new securities (including shares), grant rights with respect to profits and/or similar rights to any third party, including any member of each of the managing and supervisory boards or employees of Scala, other than pursuant to the current share option plans of Scala;

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enter into any new employment, severance, consulting or salary continuation agreements with any officers, directors or employees or grant any increases in compensation, severance or benefits to employees or non-equity performance awards;

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adopt or amend any employee benefit plan or arrangement, stock option plan or stock purchase plan;

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amend or otherwise modify the terms of sale with respect to any products or technology of Scala, including existing customer contracts, outside of the ordinary course of business;

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sell, license or transfer to any person or entity any rights to any intellectual property of Scala outside of the ordinary course of business;

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amend its articles of association;

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change the composition of the managing or supervisory boards of Scala;

•

merge or consolidate with or into any other business or materially change the character of its business in any manner;

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make any acquisition or divestiture or other capital expenditure;

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take any actions with respect to its working capital or fail to maintain adequate working capital to fund its ordinary business operations;

•

take any actions resulting in obligations for Scala or which may impose liabilities on Scala in excess of EUR 25,000; or

•

agree to any of the foregoing.

Scala has agreed to convene a meeting of its shareholders as required to provide its shareholders with necessary information concerning the exchange offer in accordance with the 1995 Decree on the Supervision of

the Securities Trade (Netherlands). At Scala’s request, we will provide information reasonably necessary for such meeting of Scala’s shareholders and will make any necessary persons available to attend such meeting.

Scala and we have agreed to cooperate fully with each other in progressing the exchange offer. In addition, Scala and we have agreed to consult with each other with respect to, and prior to, any and all public announcements and meetings with the media, analysts and shareholders related to the exchange offer.

Composition and Other Matters regarding the Boards of Scala and Epicor

We have agreed to take all requisite action as of the tender closing date to cause our board of directors to be expanded to enable Andreas F. Kemi to be appointed to our board of directors effective as of the consummation of the exchange offer. Scala and we have acknowledged and agreed that the Scala ordinary shares not tendered pursuant to the exchange offer will be acquired pursuant to compulsory buy-out procedures from remaining minority Scala shareholders or other procedures or legal actions in accordance with the laws of the Netherlands, including a legal merger between Scala and one or more of our subsidiaries. Scala and we have acknowledged that we intend to terminate the listing agreement between Scala and Euronext Amsterdam relating to the listing of Scala ordinary shares as soon as possible after the consummation of the exchange offer.

In the event that the condition requiring the number of Scala ordinary shares tendered into the exchange offer together with the Scala ordinary shares held by us to represent at least 95% of the issued and outstanding Scala ordinary shares is waived or lowered pursuant to the merger protocol, promptly upon the purchase by us of Scala ordinary shares representing not less than 51% of the outstanding Scala ordinary shares, Scala will convene an extraordinary general meeting of shareholders in accordance with law for the election of such number of directors, rounded up to the next whole number, to serve on each of the managing and supervisory boards of Scala as will give us representation on each of such Scala boards equal to (i) the total number of members of each such Scala board (after giving effect to the election of any additional members pursuant to the merger protocol as described in this sentence) and (ii) the percentage that the number of Scala ordinary shares beneficially owned by us (including Scala ordinary shares accepted for payment) bears to the outstanding share capital of Scala. Scala has also agreed to use reasonable best efforts to secure the resignations of such number of members of each of the managing and supervisory boards of Scala as is necessary to enable our designees to be elected and will cause our designees to be elected. If we own at least 80% of the issued and outstanding Scala ordinary shares, all of the members of the supervisory board of Scala will resign upon the payment of the exchange offer price by us to Scala shareholders that tendered their shares in the exchange offer. Upon resignation, each resigning supervisory board member will receive an additional full annual payment of EUR 25,000 and the chairman of the supervisory board will receive an additional full annual payment of EUR 50,000 as compensation for loss of office.

Strategy, Management and Organization

The merger protocol states that the parties acknowledge that they identified considerable cultural affinity between their organizations which they believe will form the foundation of an effective combined organization. The merger protocol states that, in the spirit of supporting a combined organization, we intend to:

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create a strong international player in the ERP and ERP II mid-market sector;

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identify future product development for the Epicor “E-Division” to be based around the product suite of Scala;

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further strengthen the adoption by us and Scala of Microsoft core technologies for future development; and

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strive to create a centralized research and development function for the Epicor “E-Division” and Scala based around existing Scala facilities.

We have further agreed that we will facilitate and encourage full consultation with Scala over forms of rationalization or reorganization plans involving staff or facilities of Scala.

Scala Prohibited from Soliciting Other Offers

Under the terms of the merger protocol, Scala has agreed not to, directly or indirectly, and not to authorize or permit any of its subsidiaries or any of its or its subsidiaries’ respective officers, directors, managing directors, employees, agents and representatives (including, but not limited to, any investment banker, attorney or accountant retained by Scala or any of its subsidiaries) to:

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solicit, encourage (whether by the provision of information or otherwise) or engage in discussions with other parties regarding the sale of Scala ordinary shares or merger, association, acquisition or other similar transaction concerning Scala or its subsidiaries or their businesses unless and until the merger protocol is terminated in accordance with its terms; or

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enter into a transaction with any person, other than us, concerning the possible acquisition by such person of the Scala ordinary shares or part of such shares or any material portion of the assets of Scala (in each case, whether by way of merger, purchase of capital stock or otherwise) unless and until the merger protocol is terminated in accordance with its terms.

In the event of any unsolicited competing offer for the Scala ordinary shares that is substantially better for Scala and its shareholders with respect to the price offered and the proposed strategy, the merger protocol will not prohibit the members of the managing and supervisory boards of Scala, to the extent necessary to comply with their fiduciary duties, from considering or engaging in discussions or negotiations regarding such competing offer or making recommendations (and withdrawing the recommendation otherwise required by the merger protocol) to Scala’s shareholders regarding such competing offer. Scala has agreed to immediately notify us in writing of any such unsolicited competing offer and to consult with us as to whether, or how to proceed with the exchange offer. We have agreed to inform Scala within two business days after the notification whether or not we will materially match such competing offer and to inform Scala of the terms of any such alternative offer.

Scala has agreed to keep us reasonably informed on a current basis of the status of any competing proposal, offer or inquiry, including, but not limited to, with respect to discussions or negotiations relating thereto, the identity of the person or persons making such proposal, offer or inquiry and the terms of any such proposal, offer or inquiry and any material amendments or modifications thereto, if (i) such proposal, offer or inquiry is of the type which the members of either the managing or supervisory boards of Scala have determined is substantially better for Scala and its shareholders with respect to the price offered and the proposed strategy and (ii) either the managing board or the supervisory board of Scala has determined that it is necessary to comply with its fiduciary duties to consider or engage in discussions or negotiations regarding such competing proposal, offer or inquiry or make any recommendations (or withdraw the recommendation otherwise required by the merger protocol) to Scala’s shareholders regarding such competing proposal, offer or inquiry.

Treatment of Scala Share Options

Scala will comply, and will ensure that the trustee of The Scala Share Option Scheme complies, with certain provisions of the Scala Share Option Scheme Rules, the Scala Share Option Plan (U.S.) and the terms of any other outstanding and exercisable share options and other rights to acquire Scala ordinary shares. The provisions of the Scala Share Option Scheme Rules require, among other things, that the trustee provide written notice of the exchange offer to every Scala share option holder at least 14 calendar days prior to the expiration of the exchange offer. Scala share option holders will generally be entitled, within 14 calendar days of such notice and subject to certain limitations, to exercise their Scala share options (whether or not such share options would otherwise have been vested at such time) conditional upon expiration of the exchange offer being declared unconditional. Any outstanding share options under the Scala Share Option Scheme, the Scala Share Option Plan (U.S.) or other outstanding and exercisable share options or other rights to acquire Scala ordinary shares that are not conditionally exercised by the settlement date of the exchange offer will terminate and cease to exist.

Upon the exercise of any Scala share options (assuming such exercise occurs by the expiration of the exchange offer period), the former Scala share option holders may, just as other Scala shareholders, elect to tender into the exchange offer the Scala ordinary shares that they receive upon exercise of the Scala share options. Any shares that are not tendered into the exchange offer will remain outstanding and will be subject to the post-closing restructuring options of Epicor that are described in the section entitled “The Exchange Offer—Other Post-Closing Actions”.

Market Stand Still with respect to Scala Ordinary Shares

Until the earlier of the date on which an announcement will be made that the exchange offer will be declared unconditional or August 31, 2004, we have agreed that we will not, and will ensure that our affiliates will not, without the prior written approval of Scala, acquire, agree to acquire, make any proposal or offer to acquire any Scala ordinary shares in any manner other than pursuant to the terms and conditions of the exchange offer as set forth in the merger protocol.

Termination of the Merger Protocol

The merger protocol and the rights and obligations thereunder will terminate immediately upon written notice:

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if Scala and we mutually agree in writing;

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by Scala or us, if all of the conditions to the exchange offer described in the section above entitled “—Conditions to Epicor’s Obligation to Declare the Exchange Offer Unconditional” are not satisfied and unsatisfied conditions capable of being waived have not been waived by the appropriate party on the earlier of (i) the date on which an announcement will be made that the exchange offer will be declared unconditional and (ii) August 31, 2004, provided that this right to terminate the merger protocol will not be available to a party whose failure to fulfill any obligation under the merger protocol was the cause of or resulted in the failure of the exchange offer to be consummated on or before such date;

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if there is any law that makes the consummation of the exchange offer illegal or prohibited or if any court of competent jurisdiction or other governmental entity has issued an order, judgment, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the consummation of the exchange offer and such order, judgment, decree, ruling or other action has become final and non-appealable; or

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by Scala or us, if Scala has resolved to revoke its intended unanimous favorable recommendation of the exchange offer pursuant to the merger protocol in the event of an unsolicited competing offer for the Scala ordinary shares that is substantially better for Scala and its shareholders with respect to the price offered and the proposed strategy as described above in the section entitled “—Scala Prohibited from Soliciting Other Offers.”

Payment of Termination and Break-Up Fees

Pursuant to the merger protocol, if the exchange offer is not consummated due to any breach of the obligations under the merger protocol, the party that caused the breach will be required to pay the other party a EUR 3 million termination fee for fixed damages.

In addition, in consideration of us having incurred substantial costs (including, but not limited to, internal costs, advisory fees and other out-of-pocket expenses, loss of profits and opportunity costs), having made substantial efforts in connection with the exchange offer and having through the exchange offer enhanced the possibility of a third party proposing such a third party transaction, Scala has agreed to pay us a break-up fee

equal to EUR 1.5 million immediately upon written and documented request for the costs incurred by Epicor related to the exchange offer (including internal costs, advisory fees and other out-of-pocket expenses, loss of profits and opportunity costs) if:

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a public announcement indicating that a third party is preparing, has prepared or made a public offer for the Scala ordinary shares or an indication that a third party has obtained the right to acquire or has agreed to acquire or take up shares to be issued by Scala in an amount of more than 51% of Scala’s then outstanding ordinary shares or a substantial part of the assets or business of Scala or Scala’s group companies, and such third party transaction has been approved or recommended by the Scala managing board or supervisory board or submitted for approval by the shareholders of Scala;

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the merger protocol is terminated, not due to certain breaches by Epicor, at a point in time when less than 95% of the outstanding Scala ordinary shares has been tendered into the exchange offer, because such a transaction with a third party has been announced, has not been withdrawn, is superior in value to the exchange offer and a transaction with such third party is consummated within six months of terminating the merger protocol; or

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either of the Scala managing board or supervisory board has resolved to revoke its unanimous recommendation in favor of the exchange offer.

However, in the event that the revocation by either of the Scala managing board or supervisory board of its unanimous recommendation supporting the exchange offer causes Scala to pay the initial EUR 3 million termination fee because it constitutes a breach of the merger protocol, the additional EUR 1.5 million reimbursement payment for Epicor’s costs due to such revocation shall be credited against the EUR 3 million payment.

Conditions to the Commencement of the Tender Period

The period during which Scala shareholders can tender their shares to us in the exchange offer is known as the tender period. Provided that the merger protocol is not terminated, the tender period will begin on the first Euronext Amsterdam trading day following the day on which we announce that we will make the Dutch offering memorandum and this prospectus publicly available in the Netherlands, subject to the following conditions:

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all of the conditions listed under the section entitled “—Conditions to Epicor’s Obligation to Declare the Exchange Offer Unconditional,” except conditions numbered 1 and 4, will have been satisfied or validly waived as of the date prior to the date on which the Dutch offering memorandum and this prospectus are made publicly available in the Netherlands;

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the AFM will have reviewed the Dutch offering memorandum and confirmed in writing that it has no further comments on it;

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the registration statement on Form S-4, of which this prospectus is a part, will have been declared effective and will not be subject to any stop order, and a valid dispensation from the AFM from the requirement to publish a Dutch Bte-prospectus will be in effect; and

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the fairness opinion described above will not have been withdrawn or revoked by Fortis Bank (Nederland) N.V. as of the date prior to the date on which the Dutch offering memorandum and this prospectus are made publicly available in the Netherlands; provided, however, that this condition will be deemed satisfied if (i) Fortis Bank (Nederland) N.V. withdraws or revokes the fairness opinion solely due to an untrue statement by us to them or our omission to state any material fact to them or (ii) Fortis Bank (Nederland) N.V. withdraws or revokes the fairness opinion for any other reason and Scala procures a similar fairness opinion from another reputable bank.

THE TENDER AGREEMENTS

Pursuant to the merger protocol, all members of the Scala managing and supervisory boards that hold Scala ordinary shares or options to purchase Scala ordinary shares have entered into tender agreements with Epicor. These shareholders and holders of share options are Jan A. Palmquist, Andreas F. Kemi, Sergey Shvedov, Jan-Erik Lundberg, Frank Ewald and Barbara Moorhouse and they hold in the aggregate 294,542 Scala ordinary shares and 277,200 share options to purchase Scala ordinary shares, representing approximately 0.25% of the outstanding Scala ordinary shares as of March 31, 2004. The following is a summary description of the tender agreements. The form of tender agreement is attached to this prospectus as Annex B and is hereby incorporated by reference into this prospectus.

Pursuant to the tender agreements, each party to such agreement has agreed to tender all the Scala ordinary shares beneficially owned by such shareholder into the exchange offer. The tender of Scala ordinary shares by such shareholders will be irrevocable, unless the merger protocol is terminated, notwithstanding any withdrawal rights available to such shareholders into the exchange offer.

In addition, under the tender agreements, these parties have agreed that until the exchange offer is declared unconditional or the merger protocol is terminated, they will not transfer or otherwise dispose of their Scala ordinary shares or discuss, negotiate, or make any offer or agreement relating to their Scala ordinary shares with anyone other than Epicor.

SCALA EXTRAORDINARY GENERAL MEETING

The Scala extraordinary general meeting of shareholders will be held on , 2004 at , Central European time, at in Amsterdam, the Netherlands.

The agenda for the Scala extraordinary general meeting of shareholders will include the following matters:

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opening;

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discussion of the exchange offer in accordance with section 9q of the 1995 Decree on the Supervision of the Securities Trade (Netherlands);

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resignation of the current members of the Scala supervisory board, conditional upon the exchange offer being declared unconditional and effective upon the settlement date of the exchange offer; and discharge for the performance by the current members of the Scala supervisory board of their duties as members of the Scala supervisory board for the period from May 15, 2003 through the date of the Scala extraordinary general meeting of shareholders;

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closing.

The Scala extraordinary general meeting of shareholders will be convened in the usual manner and in accordance with the articles of association of Scala and Dutch law.

SCALA BUSINESS DESCRIPTION

Introduction

Scala designs, develops, markets and supports collaborative enterprise resource planning (ERP) software that is used by the small- and medium-size divisions and subsidiaries of large multinational corporations, as well as by independent stand-alone companies, in developed and emerging markets. Scala’s solutions enable these companies to better manage resources and information throughout their enterprise through integrating back-office applications for manufacturing, distribution and accounting with front-office applications for sales, marketing and customer service and support, helping them increase their business efficiency and productivity.

Scala’s software and services support local currencies and accounting regulations, are available in more than 30 languages, and are used by customers in over 140 countries. Scala’s local presence and its multi-language and multi-currency software, together with local know-how and expertise gained from over 25 years of working with multinational corporations and their subsidiaries and divisions across a wide variety of industries, allow Scala to serve customers who do business globally. Scala’s software and services also enable its customers to integrate all of their ERP systems in multiple locations throughout the world, whether in a subsidiary, division or headquarters—and whether they are Scala systems or other vendors’ systems.

Products

Substantially all of Scala’s revenue is derived from the licensing of software products and providing related consulting, maintenance, support and training services.

Scala’s success is to a large extent based on the history of its standard Scala ERP product, and in particular versions 5.0 and 5.1 developed to run on Microsoft Windows. This product formed the basis for Scala’s growth throughout the 1990s, with upgrade versions and enhancements released during this period. In 1999, Scala won the grand prize in a competition organized by Gartner, information technology industry analysts, for its web-enabled connectivity features. In 2001, Scala 5.1 was awarded the accolade ‘ERP Solution of the Year’ by Microsoft in recognition of Scala’s commitment to delivering global ERP applications based on Microsoft’s latest technology.

Scala offers its customers the iScala Collaborative ERP system—an integrated ERP, customer relationship management (CRM) and supply chain management (SCM) solution on a web services platform—that helps midmarket companies increase their business efficiency and productivity.

Scala commercially-released the first version of iScala in May 2002, building on the knowledge and experience it had gained over the years in delivering the ERP system in Scala 5.1, and its established user base across the world.

iScala is the successor product to Scala 5.1. Launched as one of the world’s first purpose-built, packaged ERP solutions in the market, iScala utilizes XML (extensible markup language), an industry-standard method of creating common information formats and sharing both the format and the data on the web, intranets, and elsewhere. In September 2003, Scala commercially-released iScala 2.2, a new version of iScala containing over 500 enhancements and new features.

iScala is available in two packages:

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The iScala Business Server is Scala’s entry-level product, targeted at single-site midmarket companies. The iScala Business Server is designed to provide a comprehensive collaborative ERP package that offers full ERP functionality, providing a first step towards automating business processes across applications and with customers’ or suppliers’ systems.

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The iScala Enterprise Server is targeted at medium-size multinational companies and the subsidiaries and divisions of global enterprises. The iScala Enterprise Server includes all the functionality of the iScala Business Server with additional integration and administration functionality to support larger, multi-site business environments, providing a scalable collaborative ERP package for business centralization. It also gives users the ability to centrally-manage all their iScala installations.

Both the iScala Business Server and the iScala Enterprise Server integrate a broad set of ERP, customer relationship management and supply chain management business processes and services, in over 30 languages.

A key feature of the iScala system is its connectivity solutions. These are built to support specific collaborative processes, connecting different business entities, applications or users. All iScala connectivity solutions are open industry standards and technology, enabling businesses to readily deploy these solutions. iScala connectivity solutions utilize XML, electronic message transfer and transaction-based processing technologies, which are highly reliable and easy to use.

Each package in the iScala Collaborative ERP system includes the following modules:

iScala Core Business Processes. Comprising financials and asset management, this core set of business processes provides automatic internal accounting to consolidate single and multiple locations, helping customers improve their business efficiency. Key differentiating features include multi-currency and multi-legislative financial functionality, asset management and a set of packaged integration solutions to allow the exchange of data electronically between headquarters ERP systems and those in subsidiaries. The iScala Enterprise Server includes an option for the ERP systems in headquarters, regional centers and subsidiaries to collaborate electronically by exchanging both transaction and master data.

iScala CRM. Powered by Microsoft Business Solutions CRM software, iScala customer relationship management software is a front-office product designed for use by sales and customer service staff to enable companies to better manage, from one place, all information related to their customers, such as history, orders and activities. iScala is integrated with the iScala ERP product (and with other business systems) and is accessible from both Microsoft Outlook^® and the web. iScala CRM is easy to use, customize and maintain, and scales to grow in line with a company’s business.

iScala SCM. iScala supply chain management software addresses the typical operational needs of distribution and manufacturing organizations, comprising materials management (purchase and inventory management), warehouse management (including quality control), manufacturing (planning, configuration, shop floor control), tools (such as lead time management, delivery and shipment) and integration.

iScala Service Management, Contract Management, Project Management. This software provides customers with a solution to manage their service management, contract management and project management business processes. The iScala solution allows customers to improve financial and operational management and control, and, in the case of the service management module, extends the customer’s product and customer lifecycle management capability. This set of business processes was significantly improved and extended in the latest version of iScala to provide additional automation.

iScala Human Resource Management. iScala human resource management software includes a global payroll module that customers can use to improve their personnel management globally. This module also incorporates software that allows a company to meet local legislative requirements relating to human resource management.

iScala Business Intelligence (BI) Server. Gives users access to information they need to make decisions quickly. Designed to make operational and management reporting easier, iScala BI Server enables users to quickly perform inquiries and comparative analysis to find out how a business is performing and where improvements are needed.

iScala Developer. The iScala Developer is a sophisticated development tool typically used by a customer’s own software development staff for creating vertical and unique company-specific processes inside and outside the iScala system using Microsoft Visual Basic^® for Applications. An advanced version of iScala Developer enables developers to customize the user interface and supports Microsoft .NET in order for programming to be done in the preferred language.

Services

As part of its comprehensive solutions, Scala offers its customers the following services:

Software implementation. Scala provides certified consultants globally, both its own employees as well as highly-skilled third-party consultants, who have been trained extensively and certified in their respective specialties to use Scala’s Signature implementation methodology. Many customers “go live” in as little as four weeks from the date they receive their iScala software.

Software maintenance and support. iScala systems are sold with maintenance support services. Customers are provided with support, repairs and upgrades to the iScala product. A key element in customer support is a multi-language telephone hotline with trained support staff, directly supporting customers from centers in Europe, Asia and the United States. Customers generally enter into one year maintenance agreements with Scala, and may renew their maintenance agreements for additional one-year periods.

Training and education. Scala has its own corporate training facility (Scala University) dedicated to increasing the productivity of iScala software users, employees, and VARs through training and education. Scala University is integrated with Scala’s research and development organization and plays a key part in rolling out new products more effectively.

Competition

The business information system industry in general and the market for ERP software specifically, in which Scala competes, are very competitive and subject to rapid technological change, evolving standards, frequent product enhancements and changing customer requirements. Scala competes on the basis of price, the functionality of its products, its ability to meet the requirements of its customers, including maintenance and customer support, and its ability to integrate new and emerging technologies into its products.

Scala primarily competes in the midmarket of the ERP software market. This segment of the market is fragmented and highly competitive, with over fifty companies selling ERP software and services. Scala competes

with established vendors, including Microsoft Business Solutions (Great Plains/Navision), Lawson, Intentia, Exact, Unit4Agresso, Epicor, IFS, Lawson, Cegid, Systems Union and Made 2 Manage, as well as local vendors in single markets offering locally-developed software.

Scala also competes with software vendors who operate in the enterprise and who are now selling versions of their software to companies in the midmarket segment. These include SAP (the industry leader), Oracle, PeopleSoft and SSA Global (Baan). In addition, Scala competes for customers in the lower end of the midmarket segment with vendors who have traditionally focused on customers in the entry level, such as Sage, Intuit, Microsoft Business Solutions and other software companies specializing in small-business accounting software.

Marketing, Sales and Distribution

Scala’s products are sold to and used by a broad customer base, including companies in the industrial machinery, light engineering, automotive, electronics, hospitality, pharmaceutical, and consumer packaged goods industries, and not-for-profit organizations. Scala translates and localizes certain of its products, either directly or through outside contractors, for sale globally. Scala sells its products directly (approximately 67%) and through a worldwide network of more than 140 third-party value-added resellers (VARs), consisting of non-exclusive dealers and a small number of exclusive third-party distributors.

As of December 31, 2003, Scala had a direct sales force of approximately 57 employees. To support its local in-country sales, Scala has established subsidiaries in 27 countries. Its principal offices are in countries that include China, the Czech Republic, Estonia, Finland, France, Germany, Hungary, Japan, Latvia, Lithuania, Malaysia, Poland, Singapore, Slovakia, Sweden, Russia, the Netherlands, the United Kingdom, and the United States. Scala’s field sales organization is generally organized on a geographic basis.

In the countries where Scala has a direct sales force, Scala’s sales force generally focuses on multinational companies (headquarters as well as local subsidiaries and divisions) and larger local companies. In these countries, Scala’s local third-party VARs focus on the small- and medium-size enterprise market or specialize in a specific industry. The VARs provide sales leads to Scala’s local in-house sales force. The end-user agreements are typically entered into directly by Scala’s local subsidiary which then pays a commission to the relevant local VAR. The local VAR is responsible for the software implementation, while Scala provides maintenance and support services directly to the end-user.

In the countries where Scala does not have a direct sales force, the third-party VAR representing Scala in the relevant country will target multinational companies as well as local companies. The VAR makes the sale and licenses software, and is responsible for implementation, maintenance and support services. Traditionally, these VARs enter into end-user agreements with customers and pay license and maintenance royalties to Scala. Scala is currently changing this practice so that Scala will invoice customers directly for license and maintenance fees and pay commissions to its VARs.

Scala organizes its indirect distribution channel into four categories of VARs, which operate on a local, regional or international basis:

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Scala Recommenders—independent industry professionals whose business activities allow them to identify potential new Scala customers. Recommenders receive a commission for leads passed to the Scala sales channel which result in successfully closed sales. Recommenders do not carry a quota and do not have the same obligations as other Scala partners. Scala’s relationship with its recommenders is non-exclusive.

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Scala Collaborative Partners—independent companies whose software complements Scala’s system architecture and functionality. The relationship provides exposure to existing customers, prospects and distribution channels. Each company remains fully independent in the sales and support of their own

products. Scala works on this basis with Ascent Technology, B*Smart Intelligent Solutions, B*Mobile Solutions and Eliad Technologies. Scala’s relationship with its collaborative partners is non-exclusive.

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Scala Accredited Implementation Partners—consulting organizations who are certified to implement Scala systems but not to sell Scala products. Those companies complement Scala by providing specialist skills and services to its customers. Scala works on this basis with large consulting companies like Cap Gemini Ernst & Young, Atos KPMG Consulting, Deloitte Consulting and PWC Consulting (now part of IBM Global Services); and with local consulting companies that provide Scala customers with a lower total cost of ownership. The accredited implementation partners pay Scala a commission on their consulting services invoiced to Scala end-users. Scala’s relationship with its accredited implementation partners is non-exclusive. Subsequent to the closing of the proposed transaction, Scala will cease working with Deloitte Consulting.

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Scala Accredited Solution Partners—third-party VARs who offer the full range of Scala products and services. They are engaged in selling, implementing and supporting Scala software. The relationship is on a local, regional or global basis depending on the size of the company and its geographical presence. Scala has non-exclusive, and a limited number of exclusive, relationships with its accredited solution partners.

To support Scala’s network of VARs, Scala provides experienced personnel who are specifically tasked with growth and support of distribution channels. These indirect channel managers are responsible for recruiting VARs, educating and training the distribution channel, disseminating information, driving sales through the VARs, implementing marketing programs and developing regional markets. Scala’s VARs undergo training and accreditation procedures provided by Scala on the use, installation and implementation of Scala’s products.

Customers

Scala has a strong, established customer base and provides its software and services to customers in the discrete manufacturing industry as well as in industries such as industrial machinery, light engineering, automotive, electronics, hospitality, pharmaceutical and consumer packaged goods, and not-for-profit organizations. Scala’s 5.x and iScala software has been installed at over 6,000 customer locations in more than 140 countries. No single customer or distributor accounts for 10% or more of Scala’s total revenues.

Scala customers often purchase licenses for a single location, department or division and may later expand their use of Scala products to other parts of their organizations. In the year ended December 31, 2003, existing customers accounted for approximately 62% of license revenue and approximately 93% of maintenance revenue.

Product Development and Quality Assurance

Scala has devoted significant resources to the development of its products and technology that address the needs of midmarket users of web services-based enterprise software. Scala’s technology strategy is to develop leading business application software on the Microsoft technology platform, adding in its own technologies combined with leading third-party, industry-standard technologies in business intelligence, reporting and other technology. In 1997, Scala made the strategic decision to cease developing its software for the Unix and Oracle platforms and to develop its products only for the Microsoft platform and to integrate with other vendors’ ERP systems.

Scala uses core technologies from Microsoft and builds its products based on web services architecture. In particular, Scala believes that it is an industry leader in designing and developing products for operation on the Microsoft technology platform.

Scala works closely with Microsoft to develop its products for the Microsoft platform. Two examples of this in 2003 are the Microsoft CRM-based iScala CRM product (Scala is the first ERP vendor in Europe to extend Microsoft CRM with unique additional functionality) and integration with Microsoft’s Office 2003 Editions products launched worldwide in October 2003 (Scala is the first ERP vendor worldwide to fully utilize the

collaborative potential of Office 2003 in an ERP integration). In September 2003, Scala announced its participation as an early adopter in Microsoft’s emerging business application platform code-named Microsoft Business Framework.

Scala invests significantly in product development, spending $12.8 million in 2003. Scala has based its software development center in Moscow, Russia, where costs are relatively low, highly skilled software developers are available and output and production are high by comparison with the cost and other factors associated with higher-cost facilities in Western Europe or the United States.

Scala’s research and development strategy is (i) to develop product enhancements, including additional functions and features, for its product lines, (ii) to develop or acquire new applications and products to make its product portfolio more competitive and deliver more business benefits to its customers in key vertical industries (such as industrial machinery, light engineering, automotive, electronics, hospitality, pharmaceutical and consumer packaged goods) and geographies (Europe and Asia Pacific), and (iii) to increasingly leverage web services and the Microsoft technology platform.

Scala’s headcount in its research and development activities was 177 people at December 31, 2003 and is further supplemented by the use of external contractors. All software development work takes place in Scala’s Moscow, Russia, product development center. Complementing the Moscow product development center, Scala maintains four other product centers:

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United Kingdom. Focusing on product management and defining product strategies and the scope of product releases, and managing product roll-out;

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Sweden. Working closely with customers, maintaining awareness of customer needs through requirement analyses, assisting product acceptance, and managing beta testing of new products;

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Switzerland. Working on business architecture for the next product versions; and

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Hungary. Responsible for product planning, resource and project monitoring, product translation management, product manufacturing and other activities.

Scala pursues its product development objectives by developing new software products and product enhancements using both internal and external (outsourced) resources. Some of Scala’s product enhancements have been developed in cooperation with its customers where those customers have requested and paid for the development of specific features in the standard product or in a special customized version of the product.

Rapid technological advances and changes in customer requirements characterize the computer software industry. The future success of Scala’s business will depend upon its ability to enhance its current products and develop and introduce new products that keep pace with technological developments, respond to evolving customer requirements and continue to achieve market acceptance.

Intellectual Property

Certain components of Scala’s products are licensed from third parties. Scala attempts to protect its software with a combination of copyright, trademark and trade secret laws, employee and third-party nondisclosure agreements and other industry-standard methods for protecting ownership of proprietary software. Although Scala has filed for patent protection on limited technology, Scala does not generally rely on patent protection for its software.

Despite these precautions, there can be no assurance unauthorized third-parties will not copy certain portions of Scala’s products, reverse engineer or obtain and use information that Scala regards as proprietary, nor can there be assurance that Scala’s competitors will not independently develop software products that are substantially equivalent or superior to Scala’s software, thus affecting Scala’s competitive position. In addition,

the laws of some countries do not protect Scala’s proprietary rights to the same extent as do the laws of the United States.

Scala’s software products are generally licensed to end users, for the duration of the copyright protection, on a “right to use” basis by means of a perpetual, non-exclusive license. The license restricts the end user to use the software for the organization’s internal business purposes only and the end user is generally not permitted to sublicense or transfer the licensed Scala software.

Historically, access to and use of the source code for Scala’s software has been licensed to a very limited number of end users to enable such end users to customize the software to meet their particular requirements. Some of Scala’s exclusive third-party VARs for certain territories hold a license to access and use the Scala software source code specifically to localize Scala’s software for their local markets. Some of such resellers hold the intellectual property rights to the software that was developed as a result of this localization. In addition, some of Scala’s exclusive third-party VARs own the copyrights on the local language translations of Scala’s products.

As the number of software products in the industry increases and the functionality of these products further overlaps, software producers may increasingly become subject to infringement claims. There can be no assurance that third-parties will not assert infringement claims against Scala in the future with respect to current or future products. In addition, there can be no assurance that any such assertion may not require Scala to enter into royalty arrangements or result in costly litigation.

Production

The principal materials and components used in Scala’s software products include computer media, including CD-ROMs, and user manuals. For each product, Scala prepares a master CD-ROM, user manuals (which may be in printed form or distributed on a CD-ROM), and packaging. Substantially all of Scala’s CD-ROM duplication is performed by third-party vendors, using blank CD-ROMs acquired from various sources. Outside sources print Scala’s packaging and related materials to Scala’s specifications. Portions of the completed packages are assembled by third-party vendors. To date, Scala has not experienced any material difficulties or delays in the manufacture and assembly of its products, or material returns due to product defects.

Employees

As of December 31, 2003, Scala had 589 full-time employees, including 119 in sales and marketing, 187 in services and support, 177 in research and development and 106 in general and administrative functions. In the Netherlands, none of Scala’s employees are represented by a labor union or are subject to collective bargaining agreements. Scala has never experienced a work stoppage and believes that its employee relations are good. Scala believes its future success will depend in large part upon its ability to attract and retain highly skilled managerial, product development, sales and marketing personnel.

Properties

Scala’s principal executive offices are located in Amsterdam, the Netherlands. Scala’s properties consist of leased facilities for sales and marketing, research and development, services and support and administrative personnel. The majority of Scala’s facilities are occupied under leases that expire at various times through fiscal 2013. At March 31, 2004, Scala’s leased space approximated 132,000 square feet with approximately 91,500 square feet located in Europe, 33,000 square feet located in Asia, 6,500 square feet located in the United States and 1,000 square feet located in the Middle East.

Material Legal Proceedings

Scala is, from time to time, involved as plaintiff or defendant in litigation arising in the ordinary course of its business. While Scala believes that the ultimate outcome of these matters will not have a material adverse

effect on Scala, the outcome of these matters is not currently determinable and negative outcomes may adversely affect business, results of operations and Scala’s financial condition.

At the end of March 2004, Scala received a letter from a former distributor whose contract was terminated during 2000. The former distributor is threatening to commence arbitration proceedings against Scala in respect of damages for the alleged loss of profits and certain other matters. The letter from the former distributor sets out proposals for damages of up to approximately $10 million. Scala believes the claim does not have any substance and considers that the likelihood of any arbitration tribunal awarding damages to the former distributor to be remote. If arbitration is commenced, Scala intends to defend itself vigorously; however, arbitration is subject to many uncertainties and the favorable outcome of an arbitration cannot be assured.

SCALA MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis together with Scala’s consolidated financial statements, including the notes to those financial statements, included in this prospectus. Certain statements in this section are forward-looking statements and should be read together with the section entitled “Cautionary Statement Regarding Forward-Looking Information.”

Overview

Scala designs, develops, markets and supports collaborative enterprise resource planning (ERP) software that is used by companies to manage resources and information throughout their enterprise. Scala’s software and services support local currencies and accounting regulations, are available in more than 30 languages and are used by customers in over 140 countries. Approximately half of Scala’s customers are mid-sized companies and subsidiaries or divisions of large multinational corporations, with the remaining half being smaller, local companies. Scala’s products and services are sold worldwide by its direct sales force and through a network of exclusive and non-exclusive VARs.

Identification of Reportable Segments

Scala management reviews financial information presented on a consolidated basis, accompanied by revenue and expense information by geographic region for purposes of assessing financial performance and making operating decisions. Accordingly, Scala management considers that the company operates in a single industry segment, providing business management software solutions to small and mid-market businesses. Substantially all of Scala’s revenue is derived from the licensing of software products and the provision of related maintenance, support and consulting services. Scala does not manage its business by solution or focus area and therefore does not maintain its revenue on such a basis.

Sources of Revenue

Scala derives revenue from licensing, maintenance and consulting activities from other revenue. License revenue is derived primarily from the licensing of Scala products with the remainder coming from the sale of third-party products. Maintenance revenue is derived from the provision of support and periodic upgrades of the Scala products. Consulting revenue is derived from the provision of consulting and technical support services to customers using products sold or licensed by Scala, and is generated on a fee basis by Scala’s internal consultants and on a commission basis by third party consultants. Other revenue mainly relates to the revenue generated by the Scala payroll bureau in Moscow, which processes payroll transactions for third parties.

Costs of Revenue

Scala allocates costs to each of its main sources of revenue. The cost of license revenue includes direct, quota-carrying headcount costs, commissions and third-party royalties. The cost of maintenance revenue includes external commissions, external royalty costs and direct headcount relating to the provision of maintenance and hotline support and upgrades. The cost of consulting revenue includes the cost of billable work by external consultants, training expenses, external customization costs, consultants’ expenses and direct headcount costs relating to consulting.

Revenue Mix

Consulting has historically been a significant source of revenue for Scala. In connection with its restructuring in the second quarter of 2000, and slowing customer demand for consulting services, Scala reduced its in-house consulting staff and increased the use of contractors to deliver consulting services. As a result,

consulting revenue as a percentage of total revenue has decreased each year since 2000 and decreased from approximately 22.7% in 2002 to approximately 22.0% in 2003.

During the same two-year period, revenue from maintenance contracts has increased as a percentage of total revenue and is the largest contributor to total revenue. The increase in maintenance revenue as a percentage of total revenue is due to an increase in Scala’s customer base, the renegotiation of higher pricing on existing contracts and the sale of new maintenance contracts. Maintenance revenue as a percentage of total revenue increased from approximately 41.8% in 2002 to approximately 49.2% in 2003.

License revenue represented approximately 27.4% of total revenue in 2003, as compared to 34.8% in 2002. The decline in license revenue as a percentage of total revenue in 2003 is due to the economic and political uncertainties in the early part of the year, which delayed customer purchasing decisions, disruptions to the sales force from changes in the corporate sales strategy in the first quarter of 2003 and customers delaying upgrades and purchases pending the commercial release of the new version 2.2 of the iScala collaborative ERP system. An increase in sales by third party VARs has also affected the contribution of license revenue to total revenue. Furthermore, as part of its 2003 restructuring activities, Scala reduced its direct sales force and increased its use of exclusive and non-exclusive VARs. The restructuring reduced Scala’s cost structure but it negatively affected its license revenue as royalty payments generated by indirect sales are generally lower than the revenue Scala would generate from a direct sale.

Operating Expenses

Sales and marketing expenses consist principally of salaries, benefits and travel expenses of marketing personnel and the costs of programs aimed at increasing revenue, such as advertising, trade shows, public relations and other marketing development programs.

Research and development expenses consist principally of salaries and benefits for software developers, contracted development efforts, facilities costs and expenses associated with computer equipment used in software development.

General and administrative expenses consist principally of salaries and benefits, travel expenses, related facility costs, and costs attributable to corporate overhead such as finance, human resources, legal, information services, and the executive personnel of Scala. General and administrative expenses also include outside legal, audit and accounting fees, provision for bad debts and expenses associated with computer equipment and communications used in the administration of the business.

Internal Controls; Financial Reporting; Disclosure Issues

Specifically, the letter from Scala’s independent auditors noted that Scala’s independent auditors identified the following “reportable conditions” which constituted “material weaknesses” (as those terms are defined under standards established by the American Institute of Certified Public Accountants, or AICPA) in Scala’s internal controls, financial reporting and board process controls. Under the AICPA standards, a “reportable condition” is a matter than comes to an auditor’s attention that relates to a significant deficiency in the design or operation of internal control that could adversely affect an entity’s ability to record, process, summarize, and report financial data in the consolidated financial statements consistent with assertions of management in accordance with United States generally accepted accounting principles. A “material weakness” is a reportable condition in which the

design or operation of one or more internal control components does not reduce to a relatively low level the risk that errors or fraud in amounts would be material in related to the consolidated financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions.

The independent auditor’s letter stated: “During the first half of 2003 the Company implemented two phases of corporate restructuring. Further, following the loss of a number of central finance staff, the Company significantly reorganized its financial accounting department. These changes initially led to a deterioration of the financial control environment in central finance and the business units as noted during our half-year review. In the second half of 2003 the changes to the financial accounting department and the establishment of additional controls reversed the deterioration noted in the first half of the year and we consider the internal control environment operating by the end of the year to be a marked improvement on that noted during 2002.”

“The Company has historically not had sufficient dedicated US GAAP financial reporting and accounting resources for the Company to continue to operate within an SEC reporting environment, and notwithstanding the improvements noted above, this continues to be the case. This has contributed to a number of adjustments and/or reclassifications of amounts previously reported and a number of areas requiring specialist technical input from ourselves during the course of the audit. Although a number of these issues arose from the accounting adopted by the company when a different finance team was in place we believe that there is a need for the Company to further enhance existing technical accounting and financial reporting resources, or employ additional personnel with the required level of expertise.”

“In addition, disclosure controls failed to ensure that full information on the extent and nature of the financial commitments made by the Supervisory and Management Boards in respect of employee taxes and severance payments were reported on a timely basis in the board minutes to enable all appropriate accounting adjustments and disclosures to be made in Scala’s financial statements. We emphasize the importance of processes to ensure that all decisions of the Supervisory and Management Boards are documented in a complete and timely basis and the awareness amongst non financial management of the need for timely reporting of all commitments entered into.” See “—2002 Restatements—2. Employee Taxes.”

These material weaknesses, if not addressed, could result in accounting errors and cause future restatements of Scala’s financial statements. In order to address these deficiencies and in light of the ongoing need for compliance with U.S. generally accepted auditing standards as applied by the SEC following the exchange offer, Scala is implementing additional improvements to its financial reporting systems and controls including evaluating the staffing of its finance and financial reporting department, increasing the training of its finance personnel with respect to U.S. generally accepted accounting principles, and adopting new policies and procedures, including with respect to the documentation of decisions of the Scala managing and supervisory boards. In addition, Epicor intends to further evaluate Scala’s internal control systems, and integrate Scala’s internal control and reporting systems with those of Epicor, following successful completion of the exchange offer. While Scala expects that these measures will help it to address the identified material weaknesses and to comply with U.S. generally accepted auditing standards following the exchange offer, Scala cannot assure you that they will ultimately prove successful or that unanticipated factors may not hinder the effectiveness of these new processes or delay the integration of Epicor and Scala’s control systems. If these material weaknesses are not adequately addressed, it could have a material adverse effect on the business, results of operations and financial condition of Scala, and, ultimately, following completion of the offer, Epicor’s business, results of operations and financial condition.

Notwithstanding the identification of the material weaknesses described above, and following the restatement of Scala’s financials as described below under “—2002 Restatements” KPMG Accountant N.V. issued an unqualified audit opinion with respect to Scala’s financial statements for the fiscal years ended 2002 and 2003.

Foreign Exchange Risk

Scala transacts business globally, primarily in European countries, and in various foreign currencies. Scala is exposed to the impact of fluctuation of foreign currencies versus the U.S. dollar, which is its reporting currency. Due to high volume and generally low value of non-U.S. dollar transactions, Scala believes it would not be cost effective to enter into any hedging or similar foreign currency arrangements to protect itself against risk in exchange rate fluctuations. Scala cannot predict the effect of exchange rate fluctuations upon its future results.

2002 Restatements

Scala has historically produced U.S. and Dutch GAAP financial statements. As part of the preparation for the merger with Epicor, Scala was required to review its historic consolidated financial statements. Following this review and in consultation with its auditors, Scala recognized the need to restate its U.S. GAAP consolidated financial statements for periods prior to 2003.

In the aggregate, the restatements affecting 2002 have resulted in a $0.3 million increase in net income to $5.0 million in 2002 from the previously reported $4.7 million, and a $3.9 million decrease in shareholders’ equity to $11.7 million at December 31, 2001 from the previously reported $15.6 million. The restatement of Scala’s 2002 consolidated financial statements relates to four issues:

1.	Revenue Recognition

Application of Contract Accounting

Statement of Position (“SOP”) 97-2, “Software Revenue Recognition”, requires that an arrangement to deliver software that includes services that involve significant production, modification, or customization of software should be accounted for in accordance with ARB No. 45, “Long-Term Construction-Type Contracts”, and the relevant guidance provided by SOP 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts”. The accounting in this guidance is often referred to as contract accounting.

In 2001, Scala entered into a software license arrangement with a customer and at the same time agreed to perform significant modification and customization of the software for this customer. In 2001, Scala recognized the license revenue on delivery of the software separately from the revenue related to the modification and customization of the software that was performed during 2002 and 2003. Scala’s 2002 consolidated financial statements have been restated in accordance with contract accounting to recognize both the software license revenue and the modification and customization revenue on a percentage of completion basis over the period during which the modification and customization services were performed. Progress to completion has been measured based on the percentage of work done. This restatement resulted in a $2.0 million increase in revenue in 2002, a $2.1 million decrease in revenue in 2001 and a $0.1 million increase in revenue in 2003, and a $2.1 million decrease in shareholders’ equity as at January 1, 2002.

Vendor Specific Objective Evidence (“VSOE”)

Scala allocates the total arrangement fee in multiple element arrangements to each of the separable elements based on VSOE of fair value. Where VSOE of fair value of undelivered elements such as modifications and customizations does not exist, revenue from the arrangement is deferred until all elements are delivered. Where a service (including maintenance) is the only undelivered element, revenue is recognized as the service is performed.

Scala’s 2002 consolidated financial statements have been restated as follows to correctly apply this policy:

•

In respect of a sale of a software license entered into at the same time as a development services arrangement, Scala recognized the software license revenue under the residual method and the development services revenue on an as delivered basis. Scala has concluded that the VSOE of fair value of the development services element cannot be determined due to the infrequency of the provision of development services of this size. Scala has restated its 2002 consolidated financial statements to recognize both the software license and development services revenue over the performance period of the development arrangement.

•

Scala’s 2002 consolidated financial statements have also been restated for certain multiple element arrangements entered into during 2001 and 2002 where the amounts deferred for maintenance and consulting services were found to be lower than Scala’s VSOE analysis. The software license revenue recognized on delivery of the software has been reduced, allocated to maintenance and consulting services, and deferred to later periods.

The restatements relating to VSOE resulted in a $0.6 million decrease in revenue in 2002, a $0.2 million decrease in revenue in 2001 and a $0.8 million increase in revenue in 2003, and a $0.2 million decrease in shareholders’ equity as at January 1, 2002.

2.	Employee Taxes

From the time of listing on the Amsterdam Stock Exchange in 1998, Scala has operated in a number of locations. In keeping with the nature of Scala’s operations, directors, senior management and other staff have been required to relocate to different offices in response to business changes. This has given rise to considerable complexity in employment and compensation arrangements, which have in some cases been compounded by the termination of individual’s employment contracts.

Actions were taken by Scala in 2001 and 2002 to regularize these complex historic employee compensation arrangements. Provisions for certain of these liabilities were made in the 2002 statutory accounts.

In the third quarter of 2003, the formalization of the associated settlements highlighted potential additional settlement costs amounting to $2.1 million, $0.9 million of which related to unrecorded liabilities for 2002. Scala has restated the results and balances for the year ended December 31, 2002, resulting in a $0.9 million increase in operating expenses and accrued liabilities in 2002 and a corresponding decrease in operating expenses and accrued liabilities in 2003.

3.	Shares Issued to Employees

Scala has previously accounted for share options on a fixed plan accounting basis and generally recognized no compensation expense with respect to the grant of share options as the exercise price of the share options awarded was equal to the fair market value of the underlying security on the grant date. Scala has reviewed its accounting treatment for share options and determined that variable plan accounting is required to be applied for (1) options that were granted to employees remunerated in currencies other than the Euro, the currency of the exercise price of Scala’s share options, and (2) options whose terms were modified after the grant date. In both cases, Scala is required to recognize a compensation expense with respect to the grant of the share options. Scala’s 2002 consolidated financial statements have been restated to account for these share options on a variable plan basis, resulting in a $0.6 million increase in general and administrative expenses.

4.	Transaction with Abisko Development Limited (“Abisko”)

Scala recognized revenue in 1998 and 1999 associated with the sale and licensing of intellectual property to Abisko, in which Scala holds, indirectly through one of its subsidiaries, a 19.9% share. In 1999 and 2001, Scala purchased the modified intellectual property developed by Abisko from the intellectual property licensed to it by Scala. The purchase price included an effective refund of the costs incurred by Abisko in 1998 and 1999 in the purchase and licensing of the Scala intellectual property. Scala capitalized and amortized the purchase costs as an intangible asset.

As realization of the proceeds of the 1998 and 1999 sale by Scala to Abisko could not have been reasonably assured at the time of sale, Scala has reversed the revenue and restated the prior period results. Scala has also restated the purchase costs capitalized by Scala to eliminate the effective refund of the costs incurred by Abisko in 1998 and 1999. Scala’s 2002 consolidated financial statements have been restated to account for these changes, resulting in a $0.4 million decrease in amortization charge in 2002, a $0.2 million decrease in

amortization charge in 2001, a $0.4 million decrease in amortization charge in 2003 and a $0.2 million increase in shareholders’ equity as at January 1, 2002.

2003 Restructuring Program

In May 2003, Scala commenced a restructuring program to enhance its commercial focus by simplifying its sales organization, reducing costs, centralizing and consolidating management, rationalizing its research and development base and reducing headcount. By the end of June 2003, the restructuring program had been substantially implemented. As a result, a combined European business unit, accounting for approximately 80% of Scala’s operations, was created under a single, commercially-oriented management structure. Certain research and development capabilities were transferred to Scala’s research and development center in Moscow, Russia. As at the end of the third quarter, headcount was reduced by 10.0% from the previous employee level of 673 as at the end of the first quarter and Scala incurred a charge of $2.6 million.

Although no future restructuring program of a similar nature is planned, there can be no assurance that Scala will not engage in additional restructuring activities in the future.

Microsoft Strategic Relationship

Scala has had a close relationship with Microsoft since 1993, and works together with Microsoft to develop Scala’s products utilizing Microsoft technologies. All of Scala’s products are designed for the Microsoft platform. Scala is a Microsoft globally-managed independent software vendor, and Scala’s long-standing association with Microsoft has helped Scala promote solutions that run on the Microsoft platform. This strategic relationship has resulted in several new initiatives during 2003. Scala announced that it had entered into an agreement with Microsoft to extend Microsoft Business Solutions’ CRM software with additional functionality, by integrating it with the iScala Collaborative ERP system and launching it as iScala CRM. The new product was jointly launched by Scala and Microsoft in September 2003, and a full roll out is underway in the fourth quarter, with collaborative marketing activity, promotion of iScala CRM at Microsoft events and Microsoft participation at Scala customer events. Also in September 2003, Scala confirmed its continued commitment to the Microsoft technology platform by announcing its early participation in Microsoft’s emerging business application platform, code-named Microsoft Business Framework. These opportunities are in addition to the several early adaptor programs that Scala has engaged in together with Microsoft.

Critical Accounting Policies

The consolidated financial statements of Scala are prepared in accordance with accounting principles generally accepted in the United States of America. As such, management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from those estimates. The accounting policies discussed below are those that we consider to be critical to an understanding and evaluation of our financial statements because their application places the most significant demands on our ability to judge the effect of inherently uncertain matters on our financial results.

Revenue Recognition

Scala licenses software under non-cancelable license agreements and provides related services, including consulting and maintenance.

License revenue. Scala recognizes license fee revenue using the residual method as defined under AICPA Statement of Position No. 97-2 “Software Revenue Recognition” (“SOP 97-2”), as amended by AICPA Statement of Position No. 98-9 “Software Revenue Recognition with Respect to Certain Arrangements.”

Under the residual method, revenue is recognized on delivered elements of a multiple-element arrangement when company-specific objective evidence of fair value exists for all of the undelivered elements in the arrangement. At the outset of the arrangement with the customer, Scala defers revenue for the fair value of any undelivered elements (typically maintenance services) and recognizes the remainder of the arrangement fee, attributable to those elements that have been delivered (typically the software license), when criteria in SOP 97-2 have been met.

The criteria, which must be met before revenue attributable to a delivered element in a customer arrangement is recognized, are that persuasive evidence of an arrangement exists, that delivery has occurred, that the fee is fixed or determinable, that collectibility is probable and that the arrangement does not require significant customization of the software.

Where objective evidence of the fair value of undelivered elements does not exist, revenue from the arrangement is deferred until all elements are delivered or where services are the only undelivered element, revenue is recognized as the services are performed.

Where the arrangement requires significant customization of the software, the associated revenue is recognized using the percentage-of-completion method as work progresses on the contract or, where appropriate, Scala recognizes the associated revenue on a stage payment basis in line with milestones agreed with customers and reflected in contracts.

In certain contracts, the customer has software reproduction rights under a non-cancelable license arrangement, in which case revenue is recognized upon delivery of the first master copy.

Scala also enters into license arrangements with third party VARs whereby revenue is recognized only upon sell-through to the end user by the VAR. Payments made to or on behalf of a third party VAR by Scala for cooperative advertising, buydowns and similar arrangements are classified as reductions to net revenue.

Maintenance revenue. Maintenance revenue arises from the provision of support and periodic upgrades. The fair value of the maintenance is initially deferred and subsequently recognized as revenue ratably over the contractual term of the maintenance arrangement, which in most cases is one year. When applicable the total maintenance period over which the maintenance revenue is recognized includes any free maintenance periods granted.

Consulting revenue. Revenue for consulting services is recognized as consulting services are performed. Reimbursements received for out-of-pocket expenses incurred are classified as revenue in the statement of operations.

When recognition of revenue has been deferred, this deferred revenue is recorded as a liability in the balance sheet.

Allowance for Doubtful Accounts

Scala sells its products directly to end users on payment terms appropriate to the credit worthiness of the customer. Scala also sells its products through exclusive and non-exclusive VARs under terms appropriate to the credit worthiness of the distributor or dealer. Scala believes no specific concentration of credit risk exists due to its large customer base and the dispersion of customers among a broad array of industries and geographic areas. To the extent that emerging markets represent a greater risk of bad debt, Scala takes all appropriate steps to

verify the credit worthiness of customers and provide for doubtful debts at an early stage. Receivables from customers are generally unsecured. Scala continuously monitors its customer account balances and actively pursues collections on past due balances.

Foreign Currency Translation

Scala has adopted the U.S. dollar as its reporting currency. The functional currency of Scala’s subsidiaries is generally the local currency, however, the parent company and some subsidiaries that are not U.S. based have adopted the U.S. dollar as their functional currency. Scala’s subsidiaries recognize foreign currency transaction gains and losses arising from the settlement of foreign currency denominated assets and liabilities in the income statement in the period in which they arise. Upon consolidation, revenues and expenses are translated at average rates in effect for the periods presented and the cumulative translation adjustment is reflected as a component of shareholders’ equity on the consolidated balance sheet. The balance sheets of Scala subsidiaries whose functional currency is not the U.S. dollar are translated into U.S. dollars using the exchange rates on the respective balance sheet dates.

Net Income/(Loss) per Ordinary Share

Basic net income/(loss) per ordinary share is computed using the weighted average number of ordinary shares outstanding during the period. Diluted net income/(loss) per ordinary share is computed using the weighted average number of ordinary shares and potential ordinary shares (when dilutive) outstanding during the period. Potential ordinary shares are shares that are issuable upon the exercise of share options where the options have vested and the exercise price is greater than the closing market price per share on the last day of the period.

Share Based Compensation

Scala accounts for share options granted to employees who are remunerated in Euros using the “intrinsic” method. For these employees, Scala recognizes no compensation expense with respect to the grant of share options since the exercise price of the share options awarded, which is denominated in Euros, is equal to the fair market value of the underlying security on the grant date. For share options granted to employees who are remunerated in currencies other than the Euro, Scala applies variable accounting as required by EITF 00-23 “Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25 and FASB Interpretation No. 44”. Exercise dates are generally between 1 and 5 years from the date of grant. A maximum of 10% of the current issued number of shares may be issued as options.

Impairment of Intangible and Tangible Fixed Assets other Than Goodwill

Scala accounts for intangible and tangible fixed assets in accordance with the provision of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This Statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets held for sale are reported at the lower of the carrying amount or fair value, less costs to sell.

Deferred Income Taxes

Scala accounts for deferred income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases and operating losses carried forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable profit in

the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Deferred tax assets, including assets arising from loss carry forwards, are recognized if it is more likely than not that the assets will be realized.

Results of Operations

Comparison of years ended December 31, 2002 and 2003

The table below sets forth selected income statement data for the periods indicated.


	Year Ended December 31,
	2003			2002
				Restated
	(in millions)
Total revenue	$	69.1		$	74.8
Cost of revenue		28.3			27.0
Gross profit		40.8			47.8
Total operating expenses		47.5			40.4
Operating income (loss)		(6.7	)		7.4

Net income (loss)		(10.7	)		5.0

Total Revenues

Total revenue is derived from four main sources – license, maintenance, consulting and other revenues. For the year ended December 31, 2003, Scala’s total revenues decreased by approximately 7.7% to $69.1 million from $74.8 million in 2002, due primarily to a decline in license revenue.

The table below sets forth Scala’s revenues for the periods indicated.