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State of the Art Agrees to Buy Manzanita

October 19, 1994|ROSS KERBER

IRVINE — Accounting software developer State of the Art Inc., seeking access to the small business market, said Tuesday that it has reached a tentative agreement to buy a Northern California company in a stock swap worth $13 million.

The Irvine company said it hopes to complete the acquisition of Manzanita Software Systems in Roseville, which develops financial management software for small business, by the end of the year.

State of the Art plans to operate Manzanita as a subsidiary with all 81 employees. The acquisition is not expected to affect State of the Art's 250 employees.

Analysts said the move would help State of the Art maintain its reputation as a strong software company. The acquisition also could soften the blow of disappointing third-quarter results, which the company also announced late Tuesday.

State of the Art earned $531,000, or 6 cents a share, for the third quarter, a 59% drop from $1.3 million, or 15 cents a share, earned in last year's third quarter. Revenue for the quarter increased 3% to $6.9 million from $6.7 million last year.

Earnings for the first nine months fell 51% to $1.9 million, or 21 cents a share, from $3.9 million, or 43 cents a share, for the year-earlier period. Revenue grew slightly to $20.5 million from $19.4 million.

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