Rational Acquires Visual Test From Microsoft

REDMOND, Wash., and SANTA CLARA, Calif., Oct. 2, 1996 — Microsoft Corp. and Rational Software Corp. announced today that Rational has acquired Microsoft® Visual Test , a leading software quality automation tool. This acquisition will allow Microsoft to focus on development environments such as the Visual Basic® programming system, the Visual C++® development system and the Visual J++
development tool, and Rational to focus on life-cycle tools for analysis and design, testing, documentation and change management.

Visual Test is an automated testing tool that brings new levels of productivity to developers and testers and makes it easier for organizations to deploy mission-critical applications for the Microsoft Windows® 95 and Windows NT® operating systems and for the World Wide Web. Visual Test helps developers rapidly create tests for applications of virtually any size, created with any development tool. Microsoft has shipped more than 75,000 licenses of Visual Test since its release in 1992.

The product is available immediately from Rational worldwide. Current customers of Visual Test will continue to receive the same level of technical support from Microsoft for the next six months; paid support will continue for an additional six months. Future upgrades and support will be available from Rational. The first upgrade is scheduled for early 1997.

“Visual Test is a key element of Rational’s strategy,”
said Paul Levy, chairman and chief executive officer at Rational.

It is a natural complement to our Rational Rose visual modeling tool, and it is a critical part of our plan for a complete suite of life-cycle tools that integrate with Microsoft Visual Basic, Visual C++ , and Visual J++ for enterprise and Internet applications.”

Bob Muglia, vice president, developer tools at Microsoft, said,
“Microsoft selected Rational because of its excellent record of working with the developer community. We are confident about Rational’s ability to continue the development of Visual Test and to support the large installed base of Visual Test users, including Microsoft’s own development teams. Rational’s continued evolution of the product will extend its support for component-based development. The combination of Rational and Microsoft tools provides a scalable end-to-end solution for enterprise and Internet application development.”

Visual Modeling and Testing

The combination of the Rational Rose visual modeling tool and Visual Test represents a significant advance in software specification and verification. Finding and fixing defects early in the development process is vital for software quality and critical to reducing development time. Using Rational Rose and Visual Test together enables development teams to begin testing during their projects’ earliest iterations. Visual Test today supports testing of ActiveX
Controls, which helps developers ensure the quality of their applications while realizing the productivity benefits of component software.

Software Life-Cycle Strategy

Rational Software Corp. produces life-cycle tools that integrate with Visual Basic , Visual C++ and Visual J++ development tools. Rational is licensing the Microsoft Developer Studio integrated development environment from Microsoft as a foundation for Rational’s development tools for Windows. Visual Test is the only testing tool integrated into this framework. Developers using these tools can build applications and test them from within Developer Studio, resulting in reduced learning curves and higher productivity. Rational also intends to integrate its defect-tracking and change-management software with Visual Test.

Pricing and Availability

Rational Visual Test 4.0 is available immediately for $599 (U.S.). Please contact Rational at (800) 728-1212 or (408) 496-3600 (outside North America) for more information. Additional information is available on the World Wide Web at (http://www.rational.com/vtest/) .

Terms of Agreement

On Oct. 2, 1996, Rational purchased from Microsoft Corp. the Microsoft Visual Test product. The acquisition of Visual Test further extends the company’s Windows 95 – and Windows NT-compatible product lines. The purchase price of the Visual Test product consisted of a single $23 million cash payment, which will be accounted for using the purchase method. The company’s earnings for the quarter ending Dec. 31, 1996, will be reduced by charges and operating expenses associated with the acquisition of the Visual Test product, including an expected acquired in-process research and development charge to operations of between $15 million and $19 million, as well as increased marketing expenditures related to the promotion of the Visual Test product. As a result, the company will incur a significant net loss for the quarter ending Dec. 31, 1996, and may incur a net loss for fiscal 1997. Amounts attributed to other purchased intangible assets will be amortized to operations over their estimated useful lives, which in most cases are two to four years.

Rational Software Corp. (NASDAQ: RATL) develops, markets and supports a comprehensive solution for the component-based development of software systems, based on visual modeling and object technology. Rational’s solution includes an integrated family of products that automate development throughout the software life cycle, a software process that can be configured to the specific needs of customers, and a range of consulting and support services. For more information on Rational’s products and services, visit Rational’s Web site at (http://www.rational.com/) .

Founded in 1975, Microsoft (NASDAQ
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which statements are based upon current intentions and involve risks and uncertainties. Actual results and future actions taken by Microsoft or Rational could differ materially as a result of certain factors, including those identified below. There can be no assurance that the market for tools supporting component-based development will grow or that the companies will be able to respond effectively to the evolving requirements of the market; that Rational will be successful in integrating Visual Test into its family of software-development tools or in making other product introductions or enhancements on a timely basis; that Rational will be able to achieve sales of Visual Test at levels previously experienced by Microsoft; that the inclusion of Rational Rose technology in Microsoft products will have a positive effect on demand for Rational products; or that priorities of either Rational or Microsoft will not change in the future.

Microsoft, Visual Basic, Visual C++, Visual J++ , Windows, Windows NT and ActiveX are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass/ on Microsoft’s corporate information pages.

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