-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HVfameqCRhKGStgpxUCE5kQoQDbYJn9dIBuOcY8rSc/2GgcbxoAt7ipQuN9OlK2U G77GLWkKGWxoZDVKLA9Qgg== 0000356028-96-000015.txt : 19961125 0000356028-96-000015.hdr.sgml : 19961125 ACCESSION NUMBER: 0000356028-96-000015 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961122 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961122 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER ASSOCIATES INTERNATIONAL INC CENTRAL INDEX KEY: 0000356028 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 132857434 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09247 FILM NUMBER: 96671008 BUSINESS ADDRESS: STREET 1: ONE COMPUTER ASSOCIATES PLAZA CITY: ISLANDIA STATE: NY ZIP: 11788 BUSINESS PHONE: 5163425224 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 November 11, 1996 - ----------------------------------------------------------------------- (Date of Report[Date of earliest event reported]) COMPUTER ASSOCIATES INTERNATIONAL, INC. - ----------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-10180 13-2857434 - ----------------------------------------------------------------------- (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) incorporation) One Computer Associates Plaza, Islandia, NY 11788-7000 - ----------------------------------------------------------------------- (Address of principal executive office) (Zip Code) (516) 342-5224 - ----------------------------------------------------------------------- (Registrant s telephone, including area code) Not Applicable - ----------------------------------------------------------------------- (Former name or former address, if changed since last report) 2 Item 2 Acquisition of Disposition of Assets ------------------------------------ (a) On October 11, 1996, Computer Associates International, Inc. (the Registrant), through a wholly owned subsidiary, Tse-Tsehese- Staestse, Inc. (Merger Subsidiary), commenced a tender offer for all of the issued and outstanding shares of Cheyenne Software, Inc. (Cheyenne) common stock at a price of $30.50 per share in cash. The purchase price was determined through a series of arms length negotiations between officers and representatives of the Registrant and Cheyenne s representatives and Board of Directors. The offer was made pursuant to a definitive Agreement and Plan of Merger dated as of October 7, 1996 (the Agreement) among the Registrant, the Merger Subsidiary and Cheyenne. On November 11, 1996, the Registrant through the Merger Subsidiary accepted for payment approximately 37.3 million shares of Cheyenne outstanding common stock validly tendered in the offer representing approximately 98% of the then outstanding shares. Cheyenne is engaged in the development, sale, and support of software products for use in desktop and networked personal computer environments, including local area network and wide area network applications, Cheyenne s products provide storage management, security, and communication solutions for desktops and distributed enterprise networks. The storage management, security, and communication products include backup and disaster recovery capabilities, virus detection, purging utilities and facsimile transmission. Cheyenne s assets consist of cash, receivables, property and equipment, purchased software products and other tangible and intangible assets. Cheyenne s liabilities consist primarily of trade payables and normal accruals. The purchase price and associated charges will be allocated among the identifiable tangible and intangible assets of Cheyenne based on their fair market value at the acquisition date under the purchase method of accounting for business combinations. The cost of purchased research and development for that portion of the acquired technology that has not reached the working model stage and has no alternative future use will be written off against the Registrant s earnings in its third fiscal quarter ending December 31, 1996. The after tax charge against earnings will be $598 million. The pending merger of the Merger Subsidiary and Cheyenne will become effective as soon as practicable after the satisfaction of the conditions set forth in, and subject to the terms of, the Agreement, but in no event earlier then November 30, 1996. Once the pending merger becomes effective, Cheyenne will become a wholly owned subsidiary of the Registrant. The total funds needed to consummate the offer and the merger is approximately $1.2 billion. The Registrant has obtained and will continue to obtain such funds from the Registrant s general corporate funds and drawings under the Registrant s existing $2 billion Credit Facility. (b) Cheyenne utilized its assets in its computer software business, and the Registrant intends to continue such use in its own software business. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. ----------------------------------------------------- (a) Financial statements of business acquired. The required financial statements of Cheyenne were previously reported in Cheyenne s Annual Report on Form 10-K for the year ended June 30, 1996 and Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 and are incorporated herein by reference. (b) Pro forma financial information. The following unaudited pro forma combined condensed balance sheet as of September 30, 1996, and the unaudited pro forma combined condensed income statements for the year ended March 31, 1996 and the six months ended September 30, 1996, give effect to the merger of Cheyenne as if it had occurred on March 31, 1996 for purposes of the balance sheets and as of April 1, 1995 and April 1, 1996, respectively, for purposes of the income statements. The unaudited pro forma information is based on the historical financial statements of the Registrant and Cheyenne giving 3 effect to the transaction under the purchase method of accounting and the assumptions and adjustments in the accompanying notes to the pro forma financial statements. The Registrant has a fiscal year end of March 31 while Cheyenne has a fiscal year end of June 30. As a result, the operations for the year ended March 31, 1996 for the Registrant have been combined with the twelve months ended March 31, 1996 for Cheyenne. Cheyenne s financial statements for and as of the twelve month period were derived by combining Cheyenne s financial statements for and as of the nine months ended March 31, 1996 with its financial statements for and as of the three months ended June 30, 1996. The charge of $598 million resulting from purchased research and development costs has been reflected in stockholders equity in the pro forma consolidated condensed balance sheet at September 30, 1996. This same charge has been excluded from the pro forma consolidated condensed income statements for the year ended March 31, 1996 and the six months ended September 30, 1996 consistent with Rule 11-02 of Regulation S-X. The unaudited pro forma statements have been prepared by the Registrant s management based upon the financial information of the Registrant and Cheyenne. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the financial position or results of operations which would actually have been reported had the acquisition been in effect during these periods or which may be reported in the future. These unaudited pro forma financial statements should be read in conjunction with the separate notes to unaudited financial statements and related notes thereto of the Registrant and Cheyenne. 4 Pro Forma Condensed Combined Balance Sheets of the Registrant and Cheyenne As of September 1996 (Unaudited) (Amounts in Thousands)
Historical Historical Pro Forma Pro Forma Registrant Cheyenne (a) Adjustments Results ---------- ------------ ----------- --------- ASSETS: Cash and Cash Equivalents $ 116,548 $ 28,487 $ 145,035 Marketable Securities 84,735 22,764 107,499 Trade and installment accounts receivable - net 1,129,153 46,927 1,176,080 Investment and other current assets 62,754 12,182 74,936 ---------- ---------- ---------- TOTAL CURRENT ASSETS 1,393,190 110,360 1,503,550 INSTALLMENT ACCOUNTS RECEIVABLE, due after one year - net 2,041,524 2,041,524 PROPERTY AND EQUIPMENT - net 421,476 28,898 450,374 PURCHASED SOFTWARE PRODUCTS - net 440,417 3,801 $ 112,100(b) 556,318 EXCESS OF COST OVER NET ASSETS ACQUIRED - net 767,395 1,367 415,893(b) 1,184,655 OTHER ASSETS 78,116 31,603 109,719 ---------- ---------- ---------- ---------- TOTAL ASSETS $5,142,118 $ 176,029 $ 527,993 $5,846,140 ========== ========== ========== ========== LIABILITIES AND STOCKHOLDERS EQUITY: LOANS PAYABLE - BANKS $ 495,000 $ 495,000 OTHER CURRENT LIABILITIES 999,250 $ 24,885 $ 40,900(c) 1,065,035 LONG TERM DEBT AND OTHER 740,506 3,581 1,189,500(d) 1,933,587 DEFERRED INCOME TAXES 793,655 556 42,600(b) 836,811 DEFERRED MAINTENANCE REVENUE 300,776 300,776 STOCKHOLDERS EQUITY 1,812,931 147,007 (745,007)(b) 1,214,931 ---------- ---------- ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $5,142,118 $ 176,029 $ 527,993 $5,846,140 ========== ========== ========== ========== See Notes to Pro Forma Condensed Combined Financial Statements.
5 Pro Forma Condensed Combined Balance Sheets of the Registrant and Cheyenne For the year ended March 1996 (Unaudited) (In thousands, except per share amounts)
Historical Historical Pro Forma Pro Forma Registrant Cheyenne (a) Adjustments(i) Results ---------- ------------ ----------- --------- Product revenue and other related income $2,775,261 $ 165,955 $2,941,216 Maintenance fees 729,368 729,368 ---------- ---------- ---------- TOTAL REVENUE 3,504,629 165,955 3,670,584 ---------- ---------- ---------- Costs and Expenses: Selling, marketing and administrative 1,367,301 81,250 1,448,551 Product development 285,404 23,222 308,626 Commissions and royalties 174,116 9,003 183,119 Depreciation and amortization 404,326 8,019 $ 66,443(e) 478,788 Interest expense (income), net 70,813 (3,111) 83,265(f) 150,967 Purchased research and development 1,303,280 4,199 1,307,479 ---------- ---------- ---------- ---------- TOTAL COSTS AND EXPENSES 3,605,240 122,582 149,708 3,877,530 ---------- ---------- ---------- ---------- (Loss) income before taxes (100,611) 43,373 (149,708) (206,946) Income tax (benefit) expense (44,257) 14,573 (48,987)(g) (78,671) ---------- ---------- ---------- ---------- NET (LOSS) INCOME $ (56,354) $ 28,800 $ (100,721) $ (128,275) ========== ========== ========== ========== NET (LOSS) INCOME PER SHARE $ (0.16) $ 0.74 $ (0.35) ========== ========== ========== SHARES USED IN COMPUTATION 362,268 38,931 362,268 ========== ========== ========== See Notes to Pro Forma Condensed Combined Financial Statements.
6 Pro Forma Condensed Combined Balance Sheets of the Registrant and Cheyenne For the six months ended September 1996 (Unaudited) (In thousands, except per share amounts)
Historical Historical Pro Forma Pro Forma Registrant Cheyenne (a) Adjustments(i) Results ---------- ------------ ----------- --------- Product revenue and other related income $1,403,461 $ 101,415 $1,504,876 Maintenance fees 378,762 378,762 ---------- ---------- ---------- TOTAL REVENUE 1,782,223 101,415 1,883,638 ---------- ---------- ---------- Costs and Expenses: Selling, marketing and administrative 725,286 50,171 775,457 Product development 150,721 14,437 165,158 Commissions and royalties 91,547 6,251 97,798 Depreciation and amortization 225,900 5,481 $ 33,222(h) 264,603 Interest expense (income), net 44,017 (960) 41,633(f) 84,690 Purchased research and development 13,134 13,134 ---------- ---------- ---------- ---------- TOTAL COSTS AND EXPENSES 1,237,471 88,514 74,855 1,400,840 ---------- ---------- ---------- ---------- Income (loss) before taxes 544,752 12,901 (74,855) 482,798 Income tax expense (benefit) 201,558 3,858 (24,494)(g) 180,922 ---------- ---------- ---------- ---------- NET INCOME (LOSS) $ 343,194 $ 9,043 $ (50,361) $ 301,876 ========== ========== ========== ========== NET INCOME PER SHARE $ 0.90 $ 0.23 $ 0.80 ========== ========== ========== SHARES USED IN COMPUTATION 379,421 38,679 379,421 ========== ========== ========== See Notes to Pro Forma Condensed Combined Financial Statements.
7 Computer Associates International, Inc. Notes to Pro Forma Condensed Combined Financial Statements (a) Certain reclassifications were made to conform to the Registrant s headings. (b) Estimated valuation adjustments of Cheyenne assets and liabilities resulting from the preliminary allocation of the purchase price, elimination of stockholders equity and the $598 million after tax charge taken at time of acquisition for purchased research and development costs. See (i) below for additional information. (c) Accrued expenses associated with preliminary cost estimates, including costs associated with the change of control, termination of leases, and other reserves. (d) Represents borrowings used to finance the acquisition of Cheyenne common stock. (e) Additional amortization of purchased software ($45 million) and goodwill ($21 million) resulting from the acquisition of Cheyenne assuming it had taken place on April 1, 1995. Amortization of purchased software was based on 4-year life. Goodwill is amortized on a 20-year basis. (f) Interest expense associated with purchase consideration assuming 7% per annum. (g) Income tax benefit relates to tax deductible interest and amortization of purchased software. (h) Additional amortization of purchased software ($23 million) and goodwill ($10 million) resulting from the acquisition of Cheyenne assuming it had taken place on April 1, 1996. Amortization of purchased software was based on 4-year life. Goodwill is amortized on a 20-year basis. (i) The income statement presentation excludes the effect of the $598 million after tax charge to operations taken at time of acquisition for purchased research and development costs related to acquired technology that has not reached the working model stage and has no alternative future use. 8 SIGNATURES 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 thereunto duly authorized. Computer Associates International, Inc. (Registrant) By:/s/ Peter Schwartz --------------------------------- Peter Schwartz Sr. Vice President and Chief Financial Officer Date: November 22, 1996 -----END PRIVACY-ENHANCED MESSAGE-----