content: <PAGE>
   
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                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549
                                     FORM 8-K
                 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                            THE SECURITIES ACT OF 1934
   
   
          Date of Report (Date of earliest event reported)  July 30, 1997
  --------------------------------------------------------------------------------
   
   
   
                           RATIONAL SOFTWARE CORPORATION
  --------------------------------------------------------------------------------
              (Exact name of Registrant as specified in its charter)
   
   
          Delaware                    0-12167                    54-1217099
  --------------------------------------------------------------------------------
  (State or other jurisdiction of  (Commission File Number)   (I.R.S. Employer 
  incorporation or organization)                             Identification No.)
   
                              18880 Homestead Road
                               Cupertino, CA 95014
  --------------------------------------------------------------------------------
                     (Address of principal executive offices)
   
   
        Registrant's telephone number, including area code:  (408) 863-9900
   
   
                                  Not Applicable
  --------------------------------------------------------------------------------
           (Former name or former address, if changed since last report)
  
  ================================================================================
  <PAGE>
   
  ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS
  
       On April 7, 1997, Rational Software Corporation, a Delaware corporation
  ("Rational") and Pure Atria Corporation, a Delaware corporation ("Pure Atria")
  entered into an Agreement and Plan of Reorganization (the "Merger Agreement")
  by and among Rational, Wings Merger Corp., a Delaware corporation and a wholly-
  owned subsidiary of Rational ("Merger Sub") and Pure Atria , providing for,
  among other things, the merger of Merger Sub with and into Pure Atria, which
  will be the surviving corporation and will become a wholly owned subsidiary of
  Rational (the "Merger"). At a Special Meeting of Stockholders on July 30,
  1997, the Rational shareholders approved an amendment of Rational's
  Certificate of Incorporation to increase the authorized number of shares of
  Rational Common Stock from 75,000,000 to 150,000,000 to, among other things,
  provide Rational with a sufficient number of authorized but unissued shares of
  Common Stock to consummate the Merger. The Merger was effected on July 30,
  1997, pursuant to the Certificate of Merger filed with the Secretary of State
  of Delaware on that date. Pursuant to the Merger Agreement, each outstanding
  share of Common Stock, par value $0.0001 per share, of Pure Atria (the "Pure
  Atria Common Stock") was converted into the right to receive 0.9 (the
  ''Exchange Ratio'') shares of Rational Common Stock, and each outstanding
  option or right to purchase Pure Atria Common Stock under the Pure Atria stock
  option plans, the Pure Atria stock purchase plan or outstanding warrants was
  assumed by Rational and became an option or right to purchase Rational Common
  Stock, with appropriate adjustments made to the number of shares issuable
  thereunder and the exercise price thereof based on the Exchange Ratio.
  Approximately 39 million shares of Rational Common Stock were issued in
  connection with the acquisition, and approximately 8 million additional shares
  of Rational Common Stock are subject to options and other rights assumed in
  connection with the acquisition.
  
       The Merger is intended to be a tax-free reorganization under Section 368(a)
  of the Internal Revenue Code of 1986, as amended, and is intended to be treated
  as a pooling of interests for financial reporting purposes in accordance with
  generally accepted accounting principles.  The assets of Pure Atria were used,
  prior to the completion of the Merger, for the development, marketing and
  support of a comprehensive, integrated suite of software products designed to
  improve the software development process and enable the production of reliable,
  high quality software, a use that Rational intends to continue immediately
  following the Merger.
  
  
  ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.
  
       (a) Financial statements of the business acquired, prepared pursuant to
           Rule 3.05 of Regulation S-X are incorporated herein by reference to
           Rational's Registration Statement on Form S-4 (File No. 333-29799)
           filed with the Securities and Exchange Commission on June 23, 1997.
  
       (b) Pro forma financial information required pursuant to Article 11 of
           Regulation S-X:
  <PAGE>
   
          The following unaudited pro forma condensed combined financial
  statements assume a business combination between Rational and Pure Atria
  accounted for on a "pooling of interest" basis. The unaudited pro forma
  condensed combined financial statements are based upon the respective
  historical financial statements of Rational and Pure Atria should be read in
  conjunction with such historical financial statements and the notes thereto,
  which are incorporated by reference into this Form 8-K. The unaudited pro
  forma condensed combined balance sheet as of June 30, 1997 combine Rational's
  June 30, 1997 unaudited condensed consolidated balance sheet with Pure Atria's
  June 30, 1997 unaudited condensed consolidated balance sheet. The unaudited
  pro forma condensed combined balance sheets as of March 31, 1997 combine
  Rational's March 31, 1997 unaudited condensed consolidated balance sheet with
  Pure Atria's December 31, 1996 unaudited condensed consolidated balance sheet.
  The unaudited pro forma condensed combined statements of operations for the
  three month periods ended June 30, 1997 and 1996 combine Rational's historical
  condensed consolidated statements of operations for the three month periods
  ended June 30, 1997 and 1996 with the three month period ended June 30, 1997
  and March 31, 1996 of Pure Atria, respectively. The unaudited pro forma
  condensed combined statements of operations for the years ended March 31,
  1997, 1996 and 1995 combine Rational's historical condensed consolidated
  statements of operations for the fiscal years ended March 31, 1997, 1996 and
  1995 with the fiscal years ended December 31, 1996, 1995 and 1994 of Pure
  Atria, respectively.
  
          The pro forma information is presented for illustrative purposes only 
  and is not necessarily indicative of the operating results or financial position
  that would have occurred if the Merger had been consummated as presented in the 
  accompanying unaudited pro forma condensed combined financial information, nor 
  is it necessarily indicative of future operating results or financial position.
  
          These unaudited pro forma condensed combined financial statements should
  be read in conjunction with the historical consolidated financial statements and
  the related notes thereto of Rational and of Pure Atria incorporated by
  reference herein.
  <PAGE>
   
                UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
                      REFLECTING RATIONAL SOFTWARE CORPORATION
                         AFTER GIVING EFFECT TO THE MERGER
                                   (IN THOUSANDS)
  <TABLE>
  <CAPTION>
                                                   JUNE 30, 1997
                                     -------------------------------------------
                                                                       COMBINED
                                     RATIONAL               PRO FORMA  PRO FORMA
                                     SOFTWARE   PURE ATRIA ADJUSTMENTS  BALANCE
                                     ---------  ---------- ----------- ---------
                ASSETS
                ------
  <S>                                <C>        <C>        <C>         <C>
  Current assets:
    Cash and cash equivalents....... $ 155,857   $ 19,943              $ 175,800
    Short-term investments..........    66,906     60,650                127,556
    Accounts receivable, net........    35,279     13,632                 48,911
    Prepaid expenses and other          
     assets.........................     4,565      5,061                  9,626
    Deferred tax assets.............        --      9,901                  9,901
                                     ---------   --------              ---------
      Total current assets..........   262,607    109,187                371,794
  Property and equipment, net.......    19,438     18,783                 38,221
  Other assets, net.................    20,897        619                 21,516
                                     ---------   --------              ---------
  Total assets...................... $ 302,942   $128,589              $ 431,531
                                     =========   ========              =========
  <CAPTION>
    LIABILITIES AND STOCKHOLDERS'
                EQUITY
    -----------------------------
  <S>                                <C>        <C>        <C>         <C>
  Current liabilities:
    Accounts payable................ $   4,584   $  2,830              $   7,414
    Accrued employee benefits.......     8,903      9,916                 18,819
    Other accrued expenses..........    10,268      7,343                 17,611
    Current portion of accrued          
     merger and integration                                                      
     expenses.......................     5,895      9,701     75,000      90,596
    Deferred revenue................    18,978     23,665                 42,643
    Current portion of long-term                              
     debt and lease obligations.....     1,624         --                  1,624
                                     ---------   --------    -------   ---------
      Total current liabilities.....    50,252     53,455     75,000     178,707
  Accrued rent......................       434         --                    434
  Long-term accrued merger and                                                   
   integration expenses.............       808         --                    808 
  Long-term debt....................     1,738         --                  1,738
                                     ---------   --------    -------   ---------
      Total liabilities.............    53,232     53,455     75,000     181,687
  Stockholders' equity:
    Common stock....................       502          4        386         892
    Additional paid-in capital......   357,706    131,135       (386)    488,455
    Treasury stock..................    (1,340)        --                 (1,340) 
  
  
    Accumulated deficit.............  (107,192)   (54,669)   (75,000)   (236,861) 
    Cumulative translation                                              
     adjustment.....................        34     (1,336)                (1,302)
                                     ---------   --------    -------   ---------
      Total stockholders' equity....   249,710     75,134    (75,000)    249,844
                                     ---------   --------    -------   ---------
  Total liabilities and
   stockholders' equity............. $ 302,942   $128,589    $    --   $ 431,531
                                     =========   ========    =======   =========
  </TABLE>
   
     See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.
  <PAGE>
   
                UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
                      REFLECTING RATIONAL SOFTWARE CORPORATION
                         AFTER GIVING EFFECT TO THE MERGER
                                   (IN THOUSANDS)
  <TABLE>
  <CAPTION>
                                    MARCH 31,  DECEMBER 31,
                                      1997         1996    
                                    ---------  ------------
                                                                        COMBINED
                                    RATIONAL                 PRO FORMA  PRO FORMA
                                    SOFTWARE    PURE ATRIA  ADJUSTMENTS  BALANCE
                                    ---------  ------------ ----------- ---------
                ASSETS
                ------
  <S>                               <C>        <C>          <C>         <C>
  Current assets:
    Cash and cash equivalents....... $ 227,493   $ 17,363               $ 244,856
    Short-term investments..........     2,525     80,014                  82,539
    Accounts receivable, net........    33,565     29,478                  63,043
    Prepaid expenses and other
     assets.........................     3,395      3,526                   6,921
    Deferred tax assets.............       --       9,054                   9,054
                                     ---------   --------               ---------
      Total current assets..........   266,978    139,435                 406,413
  Property and equipment, net.......    13,291     12,974                  26,265
  Other assets, net.................    22,521      1,541                  24,062
                                     ---------   --------               ---------
  Total assets...................... $ 302,790   $153,950               $ 456,740
                                     =========   ========               =========
  <CAPTION>
    LIABILITIES AND STOCKHOLDERS'
                EQUITY
    -----------------------------
  <S>                               <C>        <C>          <C>         <C>
  Current liabilities:
    Accounts payable................ $   9,981   $  3,802               $  13,783
    Accrued employee benefits.......    12,269      8,987                  21,256
    Other accrued expenses..........     8,255     11,311                  19,566
    Current portion of accrued
     merger and integration
     expenses.......................     9,236     15,371      $75,000     99,607
    Deferred revenue................    17,936     24,281                  42,217
    Current portion of long-term
     debt and lease obligations.....     2,010        --                    2,010
                                     ---------   --------      -------  ---------
      Total current liabilities.....    59,687     63,752       75,000    198,439
  Accrued rent......................       535        --                      535
  Long-term accrued merger and
   integration expenses.............       916        --                      916
  Long-term debt....................     1,741        --                    1,741
                                     ---------   --------      -------  ---------
      Total liabilities.............    62,879     63,752       75,000    201,631
  Stockholders' equity:
    Common stock....................       477          4          364        845
    Additional paid-in capital......   356,270     99,847         (364)   455,753
    Treasury stock..................    (1,340)       --                   (1,340)
    Accumulated deficit.............  (115,006)    (8,822)     (75,000)  (198,828)
    Cumulative translation
     adjustment.....................      (490)      (831)                 (1,321)
                                     ---------   --------      -------  ---------
      Total stockholders' equity....   239,911     90,198      (75,000)   255,109
                                     ---------   --------      -------  ---------
  Total liabilities and
   stockholders' equity............. $ 302,790   $153,950      $   --   $ 456,740
                                     =========   ========      =======  =========
  </TABLE>
   
     See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.
   
  <PAGE>
   
          UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
                  FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1997       
                                                                      
                      REFLECTING RATIONAL SOFTWARE CORPORATION    
                                                              
                         AFTER GIVING EFFECT TO THE MERGER     
                     (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)  
  <TABLE>     
  <CAPTION>                                                                
                                                                             THREE MONTHS                            
                                                                          ENDED JUNE 30, 1997
                                                             -------------------------------------------------      
                                                                                                    COMBINED        
                                                            RATIONAL                 PRO FORMA      PRO FORMA       
                                                            SOFTWARE  PURE ATRIA    ADJUSTMENTS      BALANCE        
                                                           ---------- ----------   ------------   ------------       
  <S>                                                      <C>        <C>          <C>            <C>               
  Net product revenue..................................... $  27,705  $   10,650                  $    38,355
  Consulting and support revenue..........................    15,223      12,570                       27,793   
                                                           ---------  ----------                  ------------         
  Total revenue...........................................    42,928      23,220                        66,148
  Cost of product revenue.................................     3,610         263                         3,873            
  Cost of consulting and support revenue..................     7,072       4,338                        11,410            
                                                           ---------  ----------                  ------------             
  Total cost of revenue...................................    10,682       4,601                        15,283
                                                           ---------  ----------                  ------------             
  Gross margin............................................    32,246      18,619                        50,865
                                                           ---------  ----------                  ------------              
    Research and development expenses.....................     6,704       6,785                        13,489
    Sales and marketing expenses..........................    14,481      14,057                        28,538
    General and administrative expenses...................     3,972       2,947                         6,919
                                                           ---------  ----------                  ------------            
  Total operating expenses................................    25,157      23,789                       48,946
                                                           ---------  ----------                  ------------             
  Operating income (loss).................................     7,089      (5,170)                       1,919
  Other income, net.......................................     3,330       1,255                        4,585
                                                           ---------  ----------                  ------------             
  Income (loss) before income taxes.......................    10,419      (3,915)                       6,504
  Provision for income taxes..............................     2,605      (1,229)                       1,376
                                                           ---------  ----------                  ------------            
  Net income (loss)....................................... $   7,814  $   (2,686)                 $     5,128
                                                           =========  ==========                  ============                     
  
  Net income (loss) per share............................  $    0.16  $    (0.06)  $      (0.04)  $       0.06         
                                                           =========  ==========   ============   ============                     
  Shares used in net income (loss) per share 
    computations.........................................     50,218      43,166         (6,765)        86,619              
                                                           =========  ==========   ============   ============                     
  </TABLE>                   
                                                                 
                                                                       
     See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.                
                                                                   
  <PAGE>
   
          UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS       
                  FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1996
                                                                     
                      REFLECTING RATIONAL SOFTWARE CORPORATION               
                                                                   
                         AFTER GIVING EFFECT TO THE MERGER           
                     (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)     
  <TABLE>   
  <CAPTION>                                                                                                       
                                                             THREE MONTHS ENDED 
                                                           ----------------------
                                                            JUNE 30,    MARCH 31,
                                                              1996        1996
                                                           ----------  ----------   
                                                                                                    COMBINED      
                                                            RATIONAL                 PRO FORMA      PRO FORMA     
                                                            SOFTWARE   PURE ATRIA   ADJUSTMENTS     BALANCE      
                                                           ----------  ----------   -----------   ------------    
  <S>                                                      <C>        <C>          <C>            <C>             
  Net product revenue..................................... $  20,329  $   20,164                    $  40,493
  Consulting and support revenue..........................    11,673       8,466                       20,138
                                                           ---------  ----------                   ----------                    
  Total revenue...........................................    32,002      28,630                       60,632
  Cost of product revenue.................................     1,944         561                        2,502
  Cost of consulting and support revenue..................     6,007       2,253                        8,260
                                                           ---------  ----------                    ---------              
  Total cost of revenue...................................     7,948       2,814                       10,762
                                                           ---------  ----------                    ---------                  
  Gross margin............................................    24,054      25,816                       49,870
                                                           ---------  ----------                    ---------             
    Research and development expenses.....................     5,279       5,185                       10,464
    Sales and marketing expenses..........................    10,927      13,227                       24,154
    General and administrative expenses...................     2,892       2,335                        5,227
                                                           ---------  ----------                    ---------      
  Total operating expenses................................    19,098      20,747                       39,845
                                                           ---------  ----------                    ---------     
  Operating income (loss).................................     4,956       5,069                       10,025
  Other income, net.......................................       947         761                        1,708
                                                           ---------  ----------                    ---------     
  Income (loss) before income taxes.......................     5,903       5,830                       11,733
  Provision for income taxes..............................       810       1,979                        2,789
                                                           ---------  ----------                    ---------     
  Net income.............................................. $   5,093  $    3,851                    $   8,944
                                                           =========  ==========                    =========
  Net income per share.................................... $    0.11   $    0.09    $   (0.09)      $    0.11 
                                                           =========   =========    =========       =========
  Shares used in net income per share computations........    44,407      43,399       (4,340)         83,466        
                                                           =========   =========    =========       ========= 
  </TABLE>                                                       
                                                           
                                                                       
     See accompanying notes to unaudited pro forma condensed combined financial  
                                    statements.                     
                                                                     
  <PAGE>
   
    UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR
                                ENDED MARCH 31, 1997
   
                      REFLECTING RATIONAL SOFTWARE CORPORATION
   
                         AFTER GIVING EFFECT TO THE MERGER
                     (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
   
  <TABLE>
  <CAPTION>
                                                                                                                RATIONAL/
                                                                                                               PERFORMANCE
                                                         RATIONAL/                                     PURE    AWARENESS/
                                                        PERFORMANCE                                   ATRIA/   PURE ATRIA/
                                PERFORMANCE              AWARENESS                                   INTEGRITY  INTEGRITY
                                 AWARENESS   PRO FORMA   COMBINED                         PRO FORMA  COMBINED   COMBINED
                      RATIONAL  CORPORATION ADJUSTMENTS  PRO FORMA  PURE ATRIA INTEGRITY ADJUSTMENTS PRO FORMA  PRO FORMA
                      --------  ----------- ----------- ----------- ---------- --------- ----------- --------- -----------
  <S>                 <C>       <C>         <C>         <C>         <C>        <C>       <C>         <C>       <C>
  Net product
   revenue..........  $ 91,696    $ 4,064                $ 95,760    $93,437    $   --                $93,437   $189,197
  Consulting and
   support revenue..    53,677      1,614                  55,291     39,058        --                 39,058     94,349
                      --------    -------                --------    -------    -------               -------   --------
  Total revenue.....   145,373      5,678                 151,051    132,495        --                132,495    283,546
  Cost of product
   revenue..........     9,134         69      2,500       11,703      2,643        --                  2,643     14,346
  Cost of consulting
   and support
   revenue..........    26,566      1,091                  27,657     11,739        --                 11,739     39,396
                      --------    -------     ------     --------    -------    -------               -------   --------
  Total cost of
   revenue..........    35,700      1,160      2,500       39,360     14,382        --                 14,382     53,742
                      --------    -------     ------     --------    -------    -------               -------   --------
  Gross margin......   109,673      4,518     (2,500)     111,691    118,113        --                118,113    229,804
                      --------    -------     ------     --------    -------    -------               -------   --------
   Research and
    development
    expenses........    24,445      2,078                  26,523     22,794        887                23,681     50,204
   Sales and
    marketing
    expenses........    50,646      4,005                  54,651     57,757        --                 57,757    112,408
   General and
    administrative
    expenses........    16,995        885        600       18,480     10,272        729                11,001     29,481
   Charges for
    acquired in-
    process research
    and
    development.....    56,798        --                   56,798        --         --                    --      56,798
   Merger and
    restructuring
    costs...........     7,201        --                    7,201     35,255        --                 35,255     42,456
                      --------    -------     ------     --------    -------    -------               -------   --------
  Total operating
   expenses.........   156,085      6,968        600      163,653    126,078      1,616               127,694    291,347
                      --------    -------     ------     --------    -------    -------               -------   --------
  Operating loss....   (46,412)    (2,450)    (3,100)     (51,962)    (7,965)    (1,616)               (9,581)   (61,543)
  Other income,
   net..............     7,917        (45)                  7,872      3,669         18                 3,687     11,559
                      --------    -------     ------     --------    -------    -------               -------   --------
  Loss before income
   taxes............   (38,495)    (2,495)    (3,100)     (44,090)    (4,296)    (1,598)               (5,894)   (49,984)
  Provision for
   (benefit from)
   income taxes.....     4,459       (276)                  4,183      2,361        --                  2,361      6,544
                      --------    -------     ------     --------    -------    -------               -------   --------
  Net loss..........  $(42,954)   $(2,219)    (3,100)    $(48,273)   $(6,657)   $(1,598)               (8,255)  $(56,528)
                      ========    =======     ======     ========    =======    =======               =======   ========
  Net loss per
   share............  $  (0.98)                          $  (1.10)   $ (0.17)                         $ (0.20)  $  (0.70)
                      ========                           ========    =======                          =======   ========
  Shares used in per
   share
   computation......    43,702                             43,702     39,921                1,125      41,046     80,643
                      ========                           ========    =======                =====     =======   ========
  </TABLE>
   
   
     See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.
   
  <PAGE>
   
          UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
                    FOR THE YEARS ENDED MARCH 31, 1995 AND 1996
   
                      REFLECTING RATIONAL SOFTWARE CORPORATION
   
                         AFTER GIVING EFFECT TO THE MERGER
                     (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
   
  <TABLE>
  <CAPTION>
                                                           YEAR ENDED MARCH 31,
                                                           ---------------------
                                                             1995        1996
                                                           ---------- ----------
  <S>                                                      <C>        <C>
  Net product revenue..................................... $  74,688  $  126,876
  Consulting and support revenue..........................    45,419      61,261
                                                           ---------  ----------
  Total revenue...........................................   120,107     188,137
  Cost of product revenue.................................     7,989       9,735
  Cost of consulting and support revenue..................    22,016      26,779
                                                           ---------  ----------
  Total cost of revenue...................................    30,005      36,514
                                                           ---------  ----------
  Gross margin............................................    90,102     151,623
                                                           ---------  ----------
    Research and development expenses.....................    23,379      33,773
    Sales and marketing expenses..........................    47,388      80,063
    General and administrative expenses...................    12,342      19,481
    Charges for acquired in-process research and
     development..........................................       --       20,300
    Merger and restructuring costs........................    (1,100)      2,961
                                                           ---------  ----------
  Total operating expenses................................    82,009     156,578
                                                           ---------  ----------
  Operating income (loss).................................     8,093      (4,955)
  Other income, net.......................................     1,331       4,234
                                                           ---------  ----------
  Income (loss) before income taxes.......................     9,424        (721)
  Provision for income taxes..............................     1,741       6,391
                                                           ---------  ----------
  Net income (loss)....................................... $   7,683  $   (7,112)
                                                           =========  ==========
  Pro forma net income (loss) per share:
    Income (loss) before income taxes, as reported........ $   9,424  $     (721)
    Pro forma income taxes................................     2,036       7,115
                                                           ---------  ----------
    Pro forma net income (loss)........................... $   7,388  $   (7,836)
                                                           ---------  ----------
  Pro forma net income (loss) per share................... $    0.12  $    (0.11)
                                                           =========  ==========
  Shares used in pro forma per share computations.........    62,500      69,778
                                                           =========  ==========
  </TABLE>
   
   
     See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.
  <PAGE>
   
       NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
   
  1. The adjustments to the pro forma condensed combined financial statements
     reflect the issuance of up to           shares of Rational Common Stock
     for all of the outstanding shares of Pure Atria Common Stock in connection
     with the Merger based on an exchange rate of 0.9 shares of Rational Common
     Stock for each outstanding share of Pure Atria Common Stock.
   
     Additionally, the unaudited pro forma condensed combined statement of
     operations for the fiscal year ended March 31, 1997 gives effect to the
     acquisition of Performance Awareness Corporation which was completed by
     Rational on March 31, 1997 and accounted for using the purchase method. The
     aggregate purchase price (including direct acquisition costs) was
     approximately $32.9 million in cash and options assumed by Rational. The
     fiscal year 1997 pro forma statements of operations give effect to the
     acquisition as if it had occurred on April 1, 1996, accordingly the Company
     would have recorded approximately $3.1 million of amortization on purchased
     intangibles.
   
     The unaudited pro forma condensed combined statement of operations for the
     fiscal year ended March 31, 1997 also gives effect to the acquisition of
     Integrity QA Software, Inc. ("Integrity") which was completed by Pure Atria
     on January 31, 1997 and accounted for using the purchase method. The
     1,125,000 shares issued by Pure Atria pursuant to the acquisition of
     Integrity are included in the weighted average share calculation of Pure
     Atria on a pro forma basis.
   
  2. There were no material transactions between Rational and Pure Atria during
     any period presented. In addition, it is currently expected that the impact
     of any conforming accounting policies will not be material.
   
  3. The Combined Company expects to incur charges to operations currently
     estimated to be between $55 and $75 million, in Rational's third quarter 
     ended September 30, 1997, to reflect direct transaction fees and
     costs incident to the Merger of $15 million and additional anticipated
     costs of $40 to $60 million associated with integrating the two companies.
     Integration costs of merging the companies are expected to include
     severance costs associated with any employee terminations, costs associated
     with conforming employee benefits plans, charges associated with the
     closure of duplicate facilities and asset writedowns related to duplicate
     business systems. The final amounts associated with each of these items has
     not yet been determined. An estimated charge of $75 million is reflected in
     the pro forma condensed combined balance sheet as a reduction to retained
     earnings and an increase to accrued liabilities. The estimated charge is
     not reflected in the pro forma condensed combined statement of operations
     data. The amount of this charge is a preliminary estimate and therefore is
     subject to change.
   
  4. For the three months ended March 31, 1997, Pure Atria reported a net loss
     of $43.2 million ($1.02 per share) on total revenues of $30.0 million
     compared to net income $3.9 million ($0.09 per share) on total revenues
     $28.6 million for the comparable 1996 quarter. Pure Atria's three-month
     period ended March 31, 1997 includes one-time pre-tax charges to operations
     related to the Integrity acquisition of $43.6 million for in-process
     research and development and $1.1 million for certain merger and
     integration costs. Pure Atria also recorded a charge of $0.5 million during
     the first quarter of 1997 for in-process research and development in
     connection with the acquisition of other technology.
  <PAGE>
   
       (c)  Exhibits
  
       2.1  Agreement and Plan of Reorganization dated April 7, 1997 by and among
            Rational Software Corporation, a Delaware corporation, Wings Merger
            Corp., a Delaware corporation and wholly-owned subsidiary of Rational
            Software Corporation, and Pure Atria Corporation, a Delaware
            corporation is incorporated herein by reference to Rational's
            Registration Statement on Form S-4 (File No. 333-19669) filed with the
            Securities and Exchange Commission on June 23, 1997.
  
       2.2  Certificate of Merger merging Wings Merger Corp. with and into Target,
            dated July 30, 1997.
       
       3.1  Amendment to Certificate of Incorporation of Rational Software
            Corporation dated July 30, 1997.
  
      23.1  Consent of KPMG Peat Marwick LLP, Independent Auditors.
  
  
  
  
  
  <PAGE>
   
       99.1  Press Release dated July 30, 1997.
  
  
    Pursuant to the requirements of the Securities Exchange Act of 1934, the
  registrant has duly caused this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
                                RATIONAL SOFTWARE CORPORATION
  
  
  August 11, 1997               /s/  Robert T. Bond
                                ------------------------------------------------
                                Robert T. Bond
                                Senior Vice President, Chief Operating Officer,
                                Chief Financial Officer, and Secretary
metadata_documents: [{"type": "8-K", "sequence": "1", "description": "FORM 8-K", "secsgml_size_bytes": 40851}]
metadata_filer: {"company-data": {"conformed-name": "RATIONAL SOFTWARE CORP", "cik": "0000722056", "assigned-sic": "7372", "irs-number": "54121709", "state-of-incorporation": "DE", "fiscal-year-end": "0331"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-12167", "film-number": "97656050"}, "business-address": {"street1": "2800 SAN TOMAS EXPRESSWAY", "city": "SANTA CLARA", "state": "CA", "zip": "95051-0951", "phone": "4084963600"}, "mail-address": {"street1": "2800 SAN TOMAS EXPRESSWAY", "city": "SANTA CLARA", "state": "CA", "zip": "95051-0951"}, "former-company": {"former-conformed-name": "VERDIX CORP", "date-changed": "19920703"}}
text: ================================================================================
  
                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549
                                     FORM 8-K
                 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                            THE SECURITIES ACT OF 1934
   
   
          Date of Report (Date of earliest event reported)  July 30, 1997
  --------------------------------------------------------------------------------
   
   
   
                           RATIONAL SOFTWARE CORPORATION
  --------------------------------------------------------------------------------
              (Exact name of Registrant as specified in its charter)
   
   
          Delaware                    0-12167                    54-1217099
  --------------------------------------------------------------------------------
  (State or other jurisdiction of  (Commission File Number)   (I.R.S. Employer 
  incorporation or organization)                             Identification No.)
   
                              18880 Homestead Road
                               Cupertino, CA 95014
  --------------------------------------------------------------------------------
                     (Address of principal executive offices)
   
   
        Registrant's telephone number, including area code:  (408) 863-9900
   
   
                                  Not Applicable
  --------------------------------------------------------------------------------
           (Former name or former address, if changed since last report)
  
  ================================================================================
  ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS
  
       On April 7, 1997, Rational Software Corporation, a Delaware corporation
  ("Rational") and Pure Atria Corporation, a Delaware corporation ("Pure Atria")
  entered into an Agreement and Plan of Reorganization (the "Merger Agreement")
  by and among Rational, Wings Merger Corp., a Delaware corporation and a wholly-
  owned subsidiary of Rational ("Merger Sub") and Pure Atria , providing for,
  among other things, the merger of Merger Sub with and into Pure Atria, which
  will be the surviving corporation and will become a wholly owned subsidiary of
  Rational (the "Merger"). At a Special Meeting of Stockholders on July 30,
  1997, the Rational shareholders approved an amendment of Rational's
  Certificate of Incorporation to increase the authorized number of shares of
  Rational Common Stock from 75,000,000 to 150,000,000 to, among other things,
  provide Rational with a sufficient number of authorized but unissued shares of
  Common Stock to consummate the Merger. The Merger was effected on July 30,
  1997, pursuant to the Certificate of Merger filed with the Secretary of State
  of Delaware on that date. Pursuant to the Merger Agreement, each outstanding
  share of Common Stock, par value $0.0001 per share, of Pure Atria (the "Pure
  Atria Common Stock") was converted into the right to receive 0.9 (the
  ''Exchange Ratio'') shares of Rational Common Stock, and each outstanding
  option or right to purchase Pure Atria Common Stock under the Pure Atria stock
  option plans, the Pure Atria stock purchase plan or outstanding warrants was
  assumed by Rational and became an option or right to purchase Rational Common
  Stock, with appropriate adjustments made to the number of shares issuable
  thereunder and the exercise price thereof based on the Exchange Ratio.
  Approximately 39 million shares of Rational Common Stock were issued in
  connection with the acquisition, and approximately 8 million additional shares
  of Rational Common Stock are subject to options and other rights assumed in
  connection with the acquisition.
  
       The Merger is intended to be a tax-free reorganization under Section 368(a)
  of the Internal Revenue Code of 1986, as amended, and is intended to be treated
  as a pooling of interests for financial reporting purposes in accordance with
  generally accepted accounting principles.  The assets of Pure Atria were used,
  prior to the completion of the Merger, for the development, marketing and
  support of a comprehensive, integrated suite of software products designed to
  improve the software development process and enable the production of reliable,
  high quality software, a use that Rational intends to continue immediately
  following the Merger.
  
  ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.
  
       (a) Financial statements of the business acquired, prepared pursuant to
           Rule 3.05 of Regulation S-X are incorporated herein by reference to
           Rational's Registration Statement on Form S-4 (File No. 333-29799)
           filed with the Securities and Exchange Commission on June 23, 1997.
  
       (b) Pro forma financial information required pursuant to Article 11 of
           Regulation S-X:
  The following unaudited pro forma condensed combined financial
  statements assume a business combination between Rational and Pure Atria
  accounted for on a "pooling of interest" basis. The unaudited pro forma
  condensed combined financial statements are based upon the respective
  historical financial statements of Rational and Pure Atria should be read in
  conjunction with such historical financial statements and the notes thereto,
  which are incorporated by reference into this Form 8-K. The unaudited pro
  forma condensed combined balance sheet as of June 30, 1997 combine Rational's
  June 30, 1997 unaudited condensed consolidated balance sheet with Pure Atria's
  June 30, 1997 unaudited condensed consolidated balance sheet. The unaudited
  pro forma condensed combined balance sheets as of March 31, 1997 combine
  Rational's March 31, 1997 unaudited condensed consolidated balance sheet with
  Pure Atria's December 31, 1996 unaudited condensed consolidated balance sheet.
  The unaudited pro forma condensed combined statements of operations for the
  three month periods ended June 30, 1997 and 1996 combine Rational's historical
  condensed consolidated statements of operations for the three month periods
  ended June 30, 1997 and 1996 with the three month period ended June 30, 1997
  and March 31, 1996 of Pure Atria, respectively. The unaudited pro forma
  condensed combined statements of operations for the years ended March 31,
  1997, 1996 and 1995 combine Rational's historical condensed consolidated
  statements of operations for the fiscal years ended March 31, 1997, 1996 and
  1995 with the fiscal years ended December 31, 1996, 1995 and 1994 of Pure
  Atria, respectively.
  
          The pro forma information is presented for illustrative purposes only 
  and is not necessarily indicative of the operating results or financial position
  that would have occurred if the Merger had been consummated as presented in the 
  accompanying unaudited pro forma condensed combined financial information, nor 
  is it necessarily indicative of future operating results or financial position.
  
          These unaudited pro forma condensed combined financial statements should
  be read in conjunction with the historical consolidated financial statements and
  the related notes thereto of Rational and of Pure Atria incorporated by
  reference herein.
  UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
                      REFLECTING RATIONAL SOFTWARE CORPORATION
                         AFTER GIVING EFFECT TO THE MERGER
                                   (IN THOUSANDS)
  JUNE 30, 1997
                                     -------------------------------------------
                                                                       COMBINED
                                     RATIONAL               PRO FORMA  PRO FORMA
                                     SOFTWARE   PURE ATRIA ADJUSTMENTS  BALANCE
                                     ---------  ---------- ----------- ---------
                ASSETS
                ------
  Current assets:
    Cash and cash equivalents....... $ 155,857   $ 19,943              $ 175,800
    Short-term investments..........    66,906     60,650                127,556
    Accounts receivable, net........    35,279     13,632                 48,911
    Prepaid expenses and other          
     assets.........................     4,565      5,061                  9,626
    Deferred tax assets.............        --      9,901                  9,901
                                     ---------   --------              ---------
      Total current assets..........   262,607    109,187                371,794
  Property and equipment, net.......    19,438     18,783                 38,221
  Other assets, net.................    20,897        619                 21,516
                                     ---------   --------              ---------
  Total assets...................... $ 302,942   $128,589              $ 431,531
                                     =========   ========              =========
  LIABILITIES AND STOCKHOLDERS'
                EQUITY
    -----------------------------
  Current liabilities:
    Accounts payable................ $   4,584   $  2,830              $   7,414
    Accrued employee benefits.......     8,903      9,916                 18,819
    Other accrued expenses..........    10,268      7,343                 17,611
    Current portion of accrued          
     merger and integration                                                      
     expenses.......................     5,895      9,701     75,000      90,596
    Deferred revenue................    18,978     23,665                 42,643
    Current portion of long-term                              
     debt and lease obligations.....     1,624         --                  1,624
                                     ---------   --------    -------   ---------
      Total current liabilities.....    50,252     53,455     75,000     178,707
  Accrued rent......................       434         --                    434
  Long-term accrued merger and                                                   
   integration expenses.............       808         --                    808 
  Long-term debt....................     1,738         --                  1,738
                                     ---------   --------    -------   ---------
      Total liabilities.............    53,232     53,455     75,000     181,687
  Stockholders' equity:
    Common stock....................       502          4        386         892
    Additional paid-in capital......   357,706    131,135       (386)    488,455
    Treasury stock..................    (1,340)        --                 (1,340) 
  
    Accumulated deficit.............  (107,192)   (54,669)   (75,000)   (236,861) 
    Cumulative translation                                              
     adjustment.....................        34     (1,336)                (1,302)
                                     ---------   --------    -------   ---------
      Total stockholders' equity....   249,710     75,134    (75,000)    249,844
                                     ---------   --------    -------   ---------
  Total liabilities and
   stockholders' equity............. $ 302,942   $128,589    $    --   $ 431,531
                                     =========   ========    =======   =========
  See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.
  UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
                      REFLECTING RATIONAL SOFTWARE CORPORATION
                         AFTER GIVING EFFECT TO THE MERGER
                                   (IN THOUSANDS)
  MARCH 31,  DECEMBER 31,
                                      1997         1996    
                                    ---------  ------------
                                                                        COMBINED
                                    RATIONAL                 PRO FORMA  PRO FORMA
                                    SOFTWARE    PURE ATRIA  ADJUSTMENTS  BALANCE
                                    ---------  ------------ ----------- ---------
                ASSETS
                ------
  Current assets:
    Cash and cash equivalents....... $ 227,493   $ 17,363               $ 244,856
    Short-term investments..........     2,525     80,014                  82,539
    Accounts receivable, net........    33,565     29,478                  63,043
    Prepaid expenses and other
     assets.........................     3,395      3,526                   6,921
    Deferred tax assets.............       --       9,054                   9,054
                                     ---------   --------               ---------
      Total current assets..........   266,978    139,435                 406,413
  Property and equipment, net.......    13,291     12,974                  26,265
  Other assets, net.................    22,521      1,541                  24,062
                                     ---------   --------               ---------
  Total assets...................... $ 302,790   $153,950               $ 456,740
                                     =========   ========               =========
  LIABILITIES AND STOCKHOLDERS'
                EQUITY
    -----------------------------
  Current liabilities:
    Accounts payable................ $   9,981   $  3,802               $  13,783
    Accrued employee benefits.......    12,269      8,987                  21,256
    Other accrued expenses..........     8,255     11,311                  19,566
    Current portion of accrued
     merger and integration
     expenses.......................     9,236     15,371      $75,000     99,607
    Deferred revenue................    17,936     24,281                  42,217
    Current portion of long-term
     debt and lease obligations.....     2,010        --                    2,010
                                     ---------   --------      -------  ---------
      Total current liabilities.....    59,687     63,752       75,000    198,439
  Accrued rent......................       535        --                      535
  Long-term accrued merger and
   integration expenses.............       916        --                      916
  Long-term debt....................     1,741        --                    1,741
                                     ---------   --------      -------  ---------
      Total liabilities.............    62,879     63,752       75,000    201,631
  Stockholders' equity:
    Common stock....................       477          4          364        845
    Additional paid-in capital......   356,270     99,847         (364)   455,753
    Treasury stock..................    (1,340)       --                   (1,340)
    Accumulated deficit.............  (115,006)    (8,822)     (75,000)  (198,828)
    Cumulative translation
     adjustment.....................      (490)      (831)                 (1,321)
                                     ---------   --------      -------  ---------
      Total stockholders' equity....   239,911     90,198      (75,000)   255,109
                                     ---------   --------      -------  ---------
  Total liabilities and
   stockholders' equity............. $ 302,790   $153,950      $   --   $ 456,740
                                     =========   ========      =======  =========
  See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.
  UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
                  FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1997       
                                                                      
                      REFLECTING RATIONAL SOFTWARE CORPORATION    
                                                              
                         AFTER GIVING EFFECT TO THE MERGER     
                     (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
  THREE MONTHS                            
                                                                          ENDED JUNE 30, 1997
                                                             -------------------------------------------------      
                                                                                                    COMBINED        
                                                            RATIONAL                 PRO FORMA      PRO FORMA       
                                                            SOFTWARE  PURE ATRIA    ADJUSTMENTS      BALANCE        
                                                           ---------- ----------   ------------   ------------
  Net product revenue..................................... $  27,705  $   10,650                  $    38,355
  Consulting and support revenue..........................    15,223      12,570                       27,793   
                                                           ---------  ----------                  ------------         
  Total revenue...........................................    42,928      23,220                        66,148
  Cost of product revenue.................................     3,610         263                         3,873            
  Cost of consulting and support revenue..................     7,072       4,338                        11,410            
                                                           ---------  ----------                  ------------             
  Total cost of revenue...................................    10,682       4,601                        15,283
                                                           ---------  ----------                  ------------             
  Gross margin............................................    32,246      18,619                        50,865
                                                           ---------  ----------                  ------------              
    Research and development expenses.....................     6,704       6,785                        13,489
    Sales and marketing expenses..........................    14,481      14,057                        28,538
    General and administrative expenses...................     3,972       2,947                         6,919
                                                           ---------  ----------                  ------------            
  Total operating expenses................................    25,157      23,789                       48,946
                                                           ---------  ----------                  ------------             
  Operating income (loss).................................     7,089      (5,170)                       1,919
  Other income, net.......................................     3,330       1,255                        4,585
                                                           ---------  ----------                  ------------             
  Income (loss) before income taxes.......................    10,419      (3,915)                       6,504
  Provision for income taxes..............................     2,605      (1,229)                       1,376
                                                           ---------  ----------                  ------------            
  Net income (loss)....................................... $   7,814  $   (2,686)                 $     5,128
                                                           =========  ==========                  ============                     
  
  Net income (loss) per share............................  $    0.16  $    (0.06)  $      (0.04)  $       0.06         
                                                           =========  ==========   ============   ============                     
  Shares used in net income (loss) per share 
    computations.........................................     50,218      43,166         (6,765)        86,619              
                                                           =========  ==========   ============   ============
  See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.
  UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS       
                  FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1996
                                                                     
                      REFLECTING RATIONAL SOFTWARE CORPORATION               
                                                                   
                         AFTER GIVING EFFECT TO THE MERGER           
                     (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
  THREE MONTHS ENDED 
                                                           ----------------------
                                                            JUNE 30,    MARCH 31,
                                                              1996        1996
                                                           ----------  ----------   
                                                                                                    COMBINED      
                                                            RATIONAL                 PRO FORMA      PRO FORMA     
                                                            SOFTWARE   PURE ATRIA   ADJUSTMENTS     BALANCE      
                                                           ----------  ----------   -----------   ------------
  Net product revenue..................................... $  20,329  $   20,164                    $  40,493
  Consulting and support revenue..........................    11,673       8,466                       20,138
                                                           ---------  ----------                   ----------                    
  Total revenue...........................................    32,002      28,630                       60,632
  Cost of product revenue.................................     1,944         561                        2,502
  Cost of consulting and support revenue..................     6,007       2,253                        8,260
                                                           ---------  ----------                    ---------              
  Total cost of revenue...................................     7,948       2,814                       10,762
                                                           ---------  ----------                    ---------                  
  Gross margin............................................    24,054      25,816                       49,870
                                                           ---------  ----------                    ---------             
    Research and development expenses.....................     5,279       5,185                       10,464
    Sales and marketing expenses..........................    10,927      13,227                       24,154
    General and administrative expenses...................     2,892       2,335                        5,227
                                                           ---------  ----------                    ---------      
  Total operating expenses................................    19,098      20,747                       39,845
                                                           ---------  ----------                    ---------     
  Operating income (loss).................................     4,956       5,069                       10,025
  Other income, net.......................................       947         761                        1,708
                                                           ---------  ----------                    ---------     
  Income (loss) before income taxes.......................     5,903       5,830                       11,733
  Provision for income taxes..............................       810       1,979                        2,789
                                                           ---------  ----------                    ---------     
  Net income.............................................. $   5,093  $    3,851                    $   8,944
                                                           =========  ==========                    =========
  Net income per share.................................... $    0.11   $    0.09    $   (0.09)      $    0.11 
                                                           =========   =========    =========       =========
  Shares used in net income per share computations........    44,407      43,399       (4,340)         83,466        
                                                           =========   =========    =========       =========
  See accompanying notes to unaudited pro forma condensed combined financial  
                                    statements.
  UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR
                                ENDED MARCH 31, 1997
   
                      REFLECTING RATIONAL SOFTWARE CORPORATION
   
                         AFTER GIVING EFFECT TO THE MERGER
                     (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
  RATIONAL/
                                                                                                               PERFORMANCE
                                                         RATIONAL/                                     PURE    AWARENESS/
                                                        PERFORMANCE                                   ATRIA/   PURE ATRIA/
                                PERFORMANCE              AWARENESS                                   INTEGRITY  INTEGRITY
                                 AWARENESS   PRO FORMA   COMBINED                         PRO FORMA  COMBINED   COMBINED
                      RATIONAL  CORPORATION ADJUSTMENTS  PRO FORMA  PURE ATRIA INTEGRITY ADJUSTMENTS PRO FORMA  PRO FORMA
                      --------  ----------- ----------- ----------- ---------- --------- ----------- --------- -----------
  Net product
   revenue..........  $ 91,696    $ 4,064                $ 95,760    $93,437    $   --                $93,437   $189,197
  Consulting and
   support revenue..    53,677      1,614                  55,291     39,058        --                 39,058     94,349
                      --------    -------                --------    -------    -------               -------   --------
  Total revenue.....   145,373      5,678                 151,051    132,495        --                132,495    283,546
  Cost of product
   revenue..........     9,134         69      2,500       11,703      2,643        --                  2,643     14,346
  Cost of consulting
   and support
   revenue..........    26,566      1,091                  27,657     11,739        --                 11,739     39,396
                      --------    -------     ------     --------    -------    -------               -------   --------
  Total cost of
   revenue..........    35,700      1,160      2,500       39,360     14,382        --                 14,382     53,742
                      --------    -------     ------     --------    -------    -------               -------   --------
  Gross margin......   109,673      4,518     (2,500)     111,691    118,113        --                118,113    229,804
                      --------    -------     ------     --------    -------    -------               -------   --------
   Research and
    development
    expenses........    24,445      2,078                  26,523     22,794        887                23,681     50,204
   Sales and
    marketing
    expenses........    50,646      4,005                  54,651     57,757        --                 57,757    112,408
   General and
    administrative
    expenses........    16,995        885        600       18,480     10,272        729                11,001     29,481
   Charges for
    acquired in-
    process research
    and
    development.....    56,798        --                   56,798        --         --                    --      56,798
   Merger and
    restructuring
    costs...........     7,201        --                    7,201     35,255        --                 35,255     42,456
                      --------    -------     ------     --------    -------    -------               -------   --------
  Total operating
   expenses.........   156,085      6,968        600      163,653    126,078      1,616               127,694    291,347
                      --------    -------     ------     --------    -------    -------               -------   --------
  Operating loss....   (46,412)    (2,450)    (3,100)     (51,962)    (7,965)    (1,616)               (9,581)   (61,543)
  Other income,
   net..............     7,917        (45)                  7,872      3,669         18                 3,687     11,559
                      --------    -------     ------     --------    -------    -------               -------   --------
  Loss before income
   taxes............   (38,495)    (2,495)    (3,100)     (44,090)    (4,296)    (1,598)               (5,894)   (49,984)
  Provision for
   (benefit from)
   income taxes.....     4,459       (276)                  4,183      2,361        --                  2,361      6,544
                      --------    -------     ------     --------    -------    -------               -------   --------
  Net loss..........  $(42,954)   $(2,219)    (3,100)    $(48,273)   $(6,657)   $(1,598)               (8,255)  $(56,528)
                      ========    =======     ======     ========    =======    =======               =======   ========
  Net loss per
   share............  $  (0.98)                          $  (1.10)   $ (0.17)                         $ (0.20)  $  (0.70)
                      ========                           ========    =======                          =======   ========
  Shares used in per
   share
   computation......    43,702                             43,702     39,921                1,125      41,046     80,643
                      ========                           ========    =======                =====     =======   ========
  See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.
  UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
                    FOR THE YEARS ENDED MARCH 31, 1995 AND 1996
   
                      REFLECTING RATIONAL SOFTWARE CORPORATION
   
                         AFTER GIVING EFFECT TO THE MERGER
                     (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
  YEAR ENDED MARCH 31,
                                                           ---------------------
                                                             1995        1996
                                                           ---------- ----------
  Net product revenue..................................... $  74,688  $  126,876
  Consulting and support revenue..........................    45,419      61,261
                                                           ---------  ----------
  Total revenue...........................................   120,107     188,137
  Cost of product revenue.................................     7,989       9,735
  Cost of consulting and support revenue..................    22,016      26,779
                                                           ---------  ----------
  Total cost of revenue...................................    30,005      36,514
                                                           ---------  ----------
  Gross margin............................................    90,102     151,623
                                                           ---------  ----------
    Research and development expenses.....................    23,379      33,773
    Sales and marketing expenses..........................    47,388      80,063
    General and administrative expenses...................    12,342      19,481
    Charges for acquired in-process research and
     development..........................................       --       20,300
    Merger and restructuring costs........................    (1,100)      2,961
                                                           ---------  ----------
  Total operating expenses................................    82,009     156,578
                                                           ---------  ----------
  Operating income (loss).................................     8,093      (4,955)
  Other income, net.......................................     1,331       4,234
                                                           ---------  ----------
  Income (loss) before income taxes.......................     9,424        (721)
  Provision for income taxes..............................     1,741       6,391
                                                           ---------  ----------
  Net income (loss)....................................... $   7,683  $   (7,112)
                                                           =========  ==========
  Pro forma net income (loss) per share:
    Income (loss) before income taxes, as reported........ $   9,424  $     (721)
    Pro forma income taxes................................     2,036       7,115
                                                           ---------  ----------
    Pro forma net income (loss)........................... $   7,388  $   (7,836)
                                                           ---------  ----------
  Pro forma net income (loss) per share................... $    0.12  $    (0.11)
                                                           =========  ==========
  Shares used in pro forma per share computations.........    62,500      69,778
                                                           =========  ==========
  See accompanying notes to unaudited pro forma condensed combined financial
                                    statements.
  NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
   
  1. The adjustments to the pro forma condensed combined financial statements
     reflect the issuance of up to           shares of Rational Common Stock
     for all of the outstanding shares of Pure Atria Common Stock in connection
     with the Merger based on an exchange rate of 0.9 shares of Rational Common
     Stock for each outstanding share of Pure Atria Common Stock.
   
     Additionally, the unaudited pro forma condensed combined statement of
     operations for the fiscal year ended March 31, 1997 gives effect to the
     acquisition of Performance Awareness Corporation which was completed by
     Rational on March 31, 1997 and accounted for using the purchase method. The
     aggregate purchase price (including direct acquisition costs) was
     approximately $32.9 million in cash and options assumed by Rational. The
     fiscal year 1997 pro forma statements of operations give effect to the
     acquisition as if it had occurred on April 1, 1996, accordingly the Company
     would have recorded approximately $3.1 million of amortization on purchased
     intangibles.
   
     The unaudited pro forma condensed combined statement of operations for the
     fiscal year ended March 31, 1997 also gives effect to the acquisition of
     Integrity QA Software, Inc. ("Integrity") which was completed by Pure Atria
     on January 31, 1997 and accounted for using the purchase method. The
     1,125,000 shares issued by Pure Atria pursuant to the acquisition of
     Integrity are included in the weighted average share calculation of Pure
     Atria on a pro forma basis.
   
  2. There were no material transactions between Rational and Pure Atria during
     any period presented. In addition, it is currently expected that the impact
     of any conforming accounting policies will not be material.
   
  3. The Combined Company expects to incur charges to operations currently
     estimated to be between $55 and $75 million, in Rational's third quarter 
     ended September 30, 1997, to reflect direct transaction fees and
     costs incident to the Merger of $15 million and additional anticipated
     costs of $40 to $60 million associated with integrating the two companies.
     Integration costs of merging the companies are expected to include
     severance costs associated with any employee terminations, costs associated
     with conforming employee benefits plans, charges associated with the
     closure of duplicate facilities and asset writedowns related to duplicate
     business systems. The final amounts associated with each of these items has
     not yet been determined. An estimated charge of $75 million is reflected in
     the pro forma condensed combined balance sheet as a reduction to retained
     earnings and an increase to accrued liabilities. The estimated charge is
     not reflected in the pro forma condensed combined statement of operations
     data. The amount of this charge is a preliminary estimate and therefore is
     subject to change.
   
  4. For the three months ended March 31, 1997, Pure Atria reported a net loss
     of $43.2 million ($1.02 per share) on total revenues of $30.0 million
     compared to net income $3.9 million ($0.09 per share) on total revenues
     $28.6 million for the comparable 1996 quarter. Pure Atria's three-month
     period ended March 31, 1997 includes one-time pre-tax charges to operations
     related to the Integrity acquisition of $43.6 million for in-process
     research and development and $1.1 million for certain merger and
     integration costs. Pure Atria also recorded a charge of $0.5 million during
     the first quarter of 1997 for in-process research and development in
     connection with the acquisition of other technology.
  (c)  Exhibits
  
       2.1  Agreement and Plan of Reorganization dated April 7, 1997 by and among
            Rational Software Corporation, a Delaware corporation, Wings Merger
            Corp., a Delaware corporation and wholly-owned subsidiary of Rational
            Software Corporation, and Pure Atria Corporation, a Delaware
            corporation is incorporated herein by reference to Rational's
            Registration Statement on Form S-4 (File No. 333-19669) filed with the
            Securities and Exchange Commission on June 23, 1997.
  
       2.2  Certificate of Merger merging Wings Merger Corp. with and into Target,
            dated July 30, 1997.
       
       3.1  Amendment to Certificate of Incorporation of Rational Software
            Corporation dated July 30, 1997.
  
      23.1  Consent of KPMG Peat Marwick LLP, Independent Auditors.
  99.1  Press Release dated July 30, 1997.
  
    Pursuant to the requirements of the Securities Exchange Act of 1934, the
  registrant has duly caused this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
                                RATIONAL SOFTWARE CORPORATION
  
  August 11, 1997               /s/  Robert T. Bond
                                ------------------------------------------------
                                Robert T. Bond
                                Senior Vice President, Chief Operating Officer,
                                Chief Financial Officer, and Secretary