-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, MFLNsVDKfQFHGh7OdspZO9LKsLMoPQRNeumbc5iN8TNU863aqtqQBJGL+4wjkIi7 2dhlSEzKa2TmnrB+2xkXtQ== 0000356028-94-000014.txt : 19940706 0000356028-94-000014.hdr.sgml : 19940706 ACCESSION NUMBER: 0000356028-94-000014 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940701 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER ASSOCIATES INTERNATIONAL INC CENTRAL INDEX KEY: 0000356028 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94537573 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 June 23, 1994 ----------------------------------------------------- (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) 1 Computer Associates Plaza, Islandia, New York 11788 ------------------------------------------------------------- (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 or Disposition of Assets ------------------------------------ (a) On May 25, 1994, Computer Associates International, Inc. (the "Registrant") through a wholly owned subsidiary, Speedbird Merge, Inc. ("Speedbird"), commenced a tender offer for all of the approximately 23.5 million issued and outstanding shares of The ASK Group, Inc. ("ASK") common stock at a price of $13.25 per share in cash. The purchase price was determined through a series of arms length negotiations between officers and representatives of the Registrant and ASK's representatives and Board of Directors. The offer was made pursuant to a definitive Agreement and Plan of Merger dated as of May 18, 1994 (the "Agreement") among the Registrant, Speedbird and ASK. On June 23, 1994, the Registrant through Speedbird accepted for payment approximately 23.2 million shares of ASK's outstanding common stock validly tendered in the offer. ASK is in the business of developing, marketing and selling computer-based relational database management systems, data access and connectivity products, manufacturing and financial software application development tools and providing related consulting and support services. ASK's assets consist of cash, receivables, property and equipment, purchased software products and other tangible and intangible assets. ASK's liabilities consist primarily of trade payables, normal accruals, restructuring cost accruals taken during ASK's third quarter ended March 31, 1994 and bank debt under revolving and term loan facilities. The purchase price and associated charges will be allocated among the identifiable tangible and intangible assets of ASK 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 first quarter ending June 30, 1994. The after- tax charge against earnings is initially estimated to be approximately $155 million, or approximately $.89 per share. The pending merger of ASK and Speedbird will become effective as reasonably practicable after the satisfaction of the conditions set forth in, and subject to the terms of, the Agreement (including, without limitation, the resolution of certain matters, and the expiration of applicable notice periods, under certain of ASK's stock option plans). Once the pending merger becomes effective, ASK will become a wholly owned subsidiary of the Registrant. - 2 - 3 The total funds needed to consummate the offer and the merger is approximately $330 million. The Registrant has obtained and will continue to obtain such funds from the Registrant's general corporate funds and drawings under the Registrant's $500 million Credit Agreement dated as of June 21, 1994, between the Registrant, the banks and other financial institutions party thereto and Credit Suisse, as Agent. (b) ASK 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 and Exhibits. ---------------------------------- (a) Financial Statements of Business Acquired. The required financial statements of ASK were previously reported in ASK's Annual Report on Form 10-K for the year ended June 30, 1993 and Quarterly Reports on Form 10-Q for the quarters ended September 30, 1993, December 31, 1993 and March 31, 1994, respectively, and incorporated herein by reference. (b) Pro Forma Financial Information. -------------------------------- The following unaudited pro forma combined condensed balance sheet as of March 31, 1994 and the unaudited pro forma combined condensed income statement for the year ended March 31, 1994 gives effect to the merger of ASK as if it had occurred on April 1, 1993 for purposes of the income statement and as of March 31, 1994 for purposes of the balance sheet. The unaudited pro forma information is based on the historical financial statements of the Registrant and ASK giving 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 ASK has a fiscal year end of June 30. As a result, the operations for the twelve months ended March 31, 1994 for the Registrant have been combined with the twelve months ended March 31, 1994 for ASK. ASK's twelve month period was derived by adding ASK's three months ended June 30, 1993 with its nine months ended March 31, 1994. The after-tax charge of $155 million resulting from purchased research and development costs has been reflected in stockholders' equity in the pro forma consolidated condensed balance sheet at March 31, 1994. This same charge has been excluded from the pro forma consolidated condensed income statement for the year ended March 31, 1994 consistent with Rule 11-02 of Regulation S-X. - 3 - 4 The unaudited pro forma statements have been prepared by the Registrant's management based upon the financial information of the Registrant and ASK. 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 pro forma financial statements as well as the audited financial statements and related notes thereto of the Registrant and ASK. - 4 - 5 Pro Forma Condensed Combined Balance Sheets of the Registrant and ASK March 31, 1994 (Unaudited)
(Amounts in Thousands) Historical Historical Pro Forma Pro Forma Registrant ASK(a) Adjustments Results ----------- ----------- ----------- ----------- ASSETS: Cash and cash equivalents . . . . . . $133,127 $30,804 $163,931 Marketable securities . . . . . . . . 235,071 235,071 Trade and installment accounts receivable . . . . . . . . 594,854 123,725 718,579 Inventories and other current assets. . . . . . . . . . . 36,169 15,098 51,267 ----------- ----------- ----------- ----------- TOTAL CURRENT ASSETS . . . . . . . 999,221 169,627 1,168,848 INSTALLMENT ACCOUNTS RECEIVABLE, due after one year - net. . . . . . . . . . . 626,923 999 627,922 PROPERTY AND EQUIPMENT - net. . . . . 304,590 44,469 349,059 PURCHASED SOFTWARE PRODUCTS - net . . 259,290 15,091 $234,947 (c) 509,328 GOODWILL - net. . . . . . . . . . . . 201,665 42,283 38,635 (c) 282,583 INVESTMENT AND OTHER NONCURRENT ASSETS. . . . . . . . . . 99,916 14,202 (12,394)(c) 101,724 ----------- ----------- ----------- ----------- TOTAL ASSETS $2,491,605 $286,671 $261,188 $3,039,464 =========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS" EQUITY: LOANS PAYABLE - BANKS. . . . . . . . . $50,000 $43,100 $330,000 (b) $423,100 OTHER CURRENT LIABILITIES. . . . . . . 498,622 117,498 160,000 (d) 776,120 LONG-TERM DEBT . . . . . . . . . . . . 71,381 71,381 DEFERRED INCOME TAXES. . . . . . . . . 298,914 555 52,500 (c) 351,969 DEFERRED MAINTENANCE . . . . . . . . . 329,555 62,721 (62,721)(c) 329,555 STOCKHOLDERS' EQUITY . . . . . . . . . 1,243,133 62,797 (218,591)(c) 1,087,339 ----------- ----------- ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . $2,491,605 $286,671 $261,188 $3,039,464 =========== =========== =========== ===========
- 5 - 6 Pro Forma Condensed Combined Income Sheets of the Registrant and ASK March 31, 1994 (Unaudited)
(In thousands, except per share amounts) Historical Historical Pro Forma Pro Forma Registrant ASK(a) Adjustments(j) Results ----------- ----------- ----------- ----------- Product revenue and other related income. . . . . . $1,455,675 $275,343 $1,731,018 Maintenance fees. . . . . . . . . . . 692,795 120,336 ($56,545)(e) 756,586 ----------- ----------- ----------- ----------- TOTAL REVENUE . . . . . . . . . . . 2,148,470 395,679 (56,545) 2,487,604 ----------- ----------- ----------- ----------- Selling, marketing and admin. . . . . 1,000,682 308,420 (50,000)(f) 1,259,102 Product development . . . . . . . . . 211,273 42,651 253,924 Commissions and royalties . . . . . . 101,410 35,727 137,137 Depreciation and amortization . . . . 206,317 33,337 106,046 (g) 345,700 Interest expense (income), net. . . . 1,816 3,244 26,400 (h) 31,460 Unusual Expense (k) . . . . . . . . . 49,000 49,000 ----------- ----------- ----------- ----------- TOTAL COSTS AND EXPENSES. . . . . . 1,521,498 472,379 82,446 2,076,323 ----------- ----------- ----------- ----------- Income (loss) before taxes. . . . . . 626,972 (76,700) (138,991) 411,281 Income tax expense (benefit). . . . . 225,710 7,832 (85,481)(i) 148,061 ----------- ----------- ----------- ----------- NET INCOME (LOSS) . . . . . . . . . $401,262 ($84,532) ($53,510) $263,220 =========== =========== =========== =========== NET INCOME PER SHARE. . . . . . . . $2.34 $1.54 =========== =========== SHARES USED IN COMPUTATION. . . . . 171,428 171,428 =========== ===========
- 6 - 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) Represents borrowings used to finance the acquisition of ASK common stock. (c) Estimated valuation adjustments of ASK assets and liabilities resulting from the preliminary allocation of the purchase price, elimination of stockholders' equity and the estimated $155 million after tax charge taken at time of acquisition for purchased research and development costs. See (j) below for additional information. (d) Accrued expenses associated with preliminary cost estimates, including severence costs, termination of leases, cost to provide maintenance contracts existing at date of acquisition and other reserves. (e) Ratable recognition of maintenance assuming acquisition had taken place on April 1, 1993. (f) Cost of providing maintenance contracts existing at date of acquisition and accrued at that time. (g) Additional amortization of purchased software and goodwill resulting from ASK acquisition assuming acquisition had taken place on April 1, 1993. Amortization of purchased software was based on 5-year life. Goodwill is amortized on a 20-year basis. (h) Interest expense associated with purchase consideration assuming 7% per annum. (i) Income tax benefit to bring the combined pro forma results to the Registrant's combined effective tax rate of 36%. (j) The income statement presentation EXCLUDES the effect of an estimated $155 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. (k) The Unusual Expense related to restructuring charges taken by ASK during its second quarter ended December 31, 1994 ($4 million) and during its third quarter ended March 31, 1994 ($45 million). - 7 - 8 (c) Exhibits. --------- 1. The ASK Group, Inc. Annual Report on Form 10-K (File 0- 10625) for the year ended June 30, 1993 previously filed and incorporated by reference herein. 2. The ASK Group, Inc. Form 10-Q (File 0-10625) for the quarter ended September 30, 1993 previously filed and incorporated herein by reference. 3. The ASK Group, Inc. Form 10-Q (File 0-10625) for the quarter ended December 31, 1993 previously filed and incorporated herein by reference. 4. The ASK Group, Inc. Form 10-Q (File 0-10625) for the quarter ended March 31, 1994 previously filed and incorporated herein by reference. 5. Computer Associates International, Inc. Annual Report on Form 10-K (File 0-10180) for the year ended March 31, 1994 previously filed and incorporated herein by reference. 6. Agreement and Plan of Merger dated as of May 18, 1994 among the Registrant, Speedbird and ASK previously filed as an Exhibit to the Registrant's 14D-1/13D (File 005-34725) and incorporated herein by reference. 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/Sanjay Kumar ----------------------------------- Sanjay Kumar President and Chief Operating Officer Date: July 1, 1994 - 8 - -----END PRIVACY-ENHANCED MESSAGE-----