-----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, Lvy0tQDNY1P9tti/neJ9J3yAP1vsJ5MaZEabfpRcS1zG8rJjh8+mqVUa4oNAOstM eR9XH+dzIsJswxBFDS/TEQ== 0000898822-96-000426.txt : 19961023 0000898822-96-000426.hdr.sgml : 19961023 ACCESSION NUMBER: 0000898822-96-000426 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19961022 SROS: AMEX SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHEYENNE SOFTWARE INC CENTRAL INDEX KEY: 0000738830 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 133175893 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-37554 FILM NUMBER: 96646368 BUSINESS ADDRESS: STREET 1: 3 EXPRESSWAY PLZ CITY: ROSLYN HEIGHTS STATE: NY ZIP: 11577 BUSINESS PHONE: 5164845110 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CHEYENNE SOFTWARE INC CENTRAL INDEX KEY: 0000738830 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 133175893 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: 3 EXPRESSWAY PLZ CITY: ROSLYN HEIGHTS STATE: NY ZIP: 11577 BUSINESS PHONE: 5164845110 SC 14D9/A 1 SCHEDULE 14D-9 AMENDMENT NO. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO SCHEDULE 14D-9 Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 CHEYENNE SOFTWARE, INC. (Name of Subject Company) CHEYENNE SOFTWARE, INC. (Name of Person Filing Statement) COMMON STOCK, PAR VALUE $.01 PER SHARE (INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS) (Title of Class of Securities) 16688810 (CUSIP Number of Class of Securities) MICHAEL B. ADLER VICE PRESIDENT AND GENERAL COUNSEL CHEYENNE SOFTWARE, INC. 3 EXPRESSWAY PLAZA ROSLYN HEIGHTS, NEW YORK 11577 (516) 465-4000 (Name, address and telephone number of person authorized to receive notice and communications on behalf of the person filing statement) COPY TO: BARRY A. BRYER WACHTELL, LIPTON, ROSEN & KATZ 51 WEST 52ND STREET NEW YORK, NEW YORK 10019-6150 (212) 403-1000 This Amendment No. 1 to Schedule 14D-9 Solicitation/ Recomendation Statement amends and supplements the Schedule 14D-9 Solicitation/Recomendation Statement (as amended or supplemented from time to time, the "Schedule 14D-9") filed with the Securities and Exchange Commission (the "Commission") on October 11, 1996 by Cheyenne Software, Inc. (the "Company"). This Schedule 14D-9 relates to the tender offer described in the Tender Offer Statement on Schedule 14D-1 dated October 11, 1996 (as amended or supplemented from time to time, the "Schedule 14D-1"), filed by Tse-tsehese-staestse, Inc., a Dela- ware corporation (the "Purchaser"), which is a wholly owned subsidiary of Computer Associates International, Inc., a Dela- ware corporation ("CA"), with the Commission relating to an offer (the "Offer") by the Purchaser to purchase all the issued and outstanding shares of common stock of the Company ("Shares") at a price of $30.50 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase dated October 11, 1996, as amended or supplemented, and the related Letter of Transmittal. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED. On October 18, 1996, an amendment was filed in the Court of Chancery of the State of Delaware to a purported class action complaint against the Company and members of the Company's board of directors which had been filed in April 1996. The original complaint had alleged substantially, among other things, that the Company's directors had breached their fiduciary duties by rejecting an earlier request of McAfee Associates, Inc. ("McAfee") to negotiate a merger of the Com- pany and McAfee. The amended complaint alleges that the Company's directors breached their fiduciary duties by agreeing to the proposed transaction with CA pursuant to the merger agreement between the Company, CA and the Purchaser described in the Schedule 14D-9, allegedly in breach of their duties of care, loyalty and disclosure. The amended class action complaint also adds CA as a defendant and alleges that CA aided and abetted such alleged breaches by the Company's directors of their fiduciary duties. The plaintiffs seek, among other things, a preliminary and permanent injunction against the consummation of the proposed transaction with CA. The amended complaint is filed as an exhibit to the Schedule 14D-9 and is incorporated by reference herein; the foregoing description is qualified in its entirety by reference to such exhibit. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. EXHIBIT NUMBER DESCRIPTION 1 Merger Agreement* 2 Rights Agreement Amendment* 3 Opinion of Lazard Freres, dated October 7, 1996 (Attached as Annex B to Schedule 14D-9 mailed to stockholders)* 4 Press Release of the Company and CA, issued October 7, 1996* 5 Confidentiality Agreement dated October 1, 1996 between CA and the Company* 6 Article Nine of the Restated Certificate of Incorporation of the Company* 7 Section Seven of the Restated By-Laws of the Company* 8 Letter dated October 11, 1996 from ReiJane Huai to the stockholders of the Company (Included with Schedule 14D-9 mailed to stockholders)* 9 Amended Class Action Complaint in Lia Moskowitz v. ReiJane Huai, et. al. and in Miles Tepper v. ReiJane Huai et. al. filed in the Court of Chancery of the State of Delaware 10 Press Release of the Company, issued October 22, 1996 -2- _____________________ * Previously filed. SIGNATURE After reasonable inquiry and to the best of my knowl- edge and belief, I certify that the information set forth in this statement is true, complete and correct. October 22, 1996 CHEYENNE SOFTWARE, INC. By /s/ Elliott Levine Name: Elliot Levine Title: Executive Vice President, Senior Financial Officer and Treasurer -3- EX-9 2 EXHIBIT 9 Exhibit 9 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY ------------------------------------x LIA MOSKOWITZ, : : Plaintiff, : : - against - : Civil Action No. 14941 : REIJANE HUAI, RINO BERGONZI, : RICHARD F. KRAMER, BERNARD RUBIEN, : GINETTE WACHTEL, CHEYENNE : SOFTWARE, INC. and COMPUTER : ASSOCIATES INTERNATIONAL, INC., : : Defendants. : ------------------------------------x MILES TEPPER, : : Plaintiff, : : - against - : Civil Action No. 14942 : REIJANE HUAI, RINO BERGONZI, : RICHARD F. KRAMER, BERNARD RUBIEN, : GINETTE WACHTEL, CHEYENNE : SOFTWARE, INC. and COMPUTER : ASSOCIATES INTERNATIONAL, INC., : : Defendants. : ------------------------------------x AMENDED CLASS ACTION COMPLAINT Plaintiffs, by their attorneys, allege upon informa- tion and belief, except for paragraph 5 hereof which is alleged upon knowledge, as follows: 1. Plaintiffs bring this action on their own behalf and on behalf of all other public stockholders of Cheyenne Software, Inc. ("Cheyenne" or the "Company") seeking, inter alia, to enjoin the proposed acquisition of all of the out- standing shares of Cheyenne common stock by defendant Computer Associates International, Inc. ("Computer Associates") for $30.50 cash per share. The individual defendants, constituting the Board of Directors of Cheyenne, have breached their fidu- ciary duties of loyalty, candor and care in connection with the proposed acquisition of Cheyenne, and Computer Associates has aided and abetted such breaches. 2. As set forth below, the individual defendants have placed their own interests above those of the public shareholders of Cheyenne by agreeing to the proposed transac- tion by reason of Computer Associates' special relationship with Cheyenne's senior management and assurances that Computer Associates would maintain Cheyenne's current management after the transaction is consummated. The Cheyenne Board recently rebuffed a financially superior unsolicited proposal to acquire Cheyenne where such personal relationships and assurances were not present, to the detriment of Cheyenne's public stockhold- ers. 3. The individual defendants have agreed to the sale of Cheyenne without having taken any affirmative steps to maxi- mize shareholder value, having conducted no auction or market- check, having failed to contact any potential bidders, and even having failed to pursue discussions with parties who expressed -2- interest in acquiring Cheyenne. In order to discourage any third party from interfering with the individual defendants' friendly deal with Computer Associates, the individual defen- dants have caused Cheyenne to agree to pay a termination fee plus expenses to Computer Associates of $42.5 million in case any third party tries to acquire Cheyenne in a superior trans- action. 4. In an effort to obtain shareholder approval of the merger and/or to effectively absolve themselves of their breaches of fiduciary duty, the individual defendants have sought to portray the transaction as "fair" to Cheyenne share- holders while withholding vital information needed by the shareholders to properly assess and consider the transaction. Specifically, the individual defendants have withheld essential information concerning contacts by other potential acquirors which Cheyenne received over the last several months and which the individual defendants intentionally failed to pursue. Fur- ther, the individual defendants have withheld entirely the bases for the so-called "fairness opinion" obtained by Cheyenne from an investment banker to induce Cheyenne shareholders to accept the Computer Associates proposal. The public share- holders, therefore, will be forced, without full or accurate disclosure by the individual defendants, who are themselves receiving favored treatment from Computer Associates, to make -3- material, irrevocable decisions regarding their investment in Cheyenne to their detriment. PARTIES 5. Plaintiffs have owned shares of the common stock of the Company since prior to the transaction herein complained of and continuously to date. 6. Defendant Cheyenne is a corporation duly orga- nized and existing under the laws of the State of Delaware. The Company develops and sells software for use in micro- computers and computer systems. 7. Defendant Computer Associates is a corporation duly organized and existing under the laws of the State of Delaware. Computer Associates designs and markets standardized computer software products for mainframe, midrange and desktop computers. 8. The individual defendants constitute the entire Board of Directors of Cheyenne. In addition, defendant Reijane Huai is Chairman of the Board, President and Chief Executive Officer. 9. The individual defendants are in a fiduciary relationship with plaintiffs and the other public stockholders -4- of Cheyenne and owe them the highest obligations of good faith, due care, candor and fair dealing. CLASS ACTION ALLEGATIONS 10. Plaintiffs bring this action on their own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all holders of common stock of the Company (except the defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants) and their successors in interest, who are or will be threatened with injury arising from defen- dants' actions as more fully described herein. 11. This action is properly maintainable as a class action because. (a) The class is so numerous that joinder of all members is impracticable. There are approximately 37,538,688 shares of Cheyenne common stock outstanding, owned by over 870 record shareholders scattered throughout the coun- try. (b) There are questions of law and fact which are common to the class including, inter alia, the following: (i) whether the individual defendants have breached their fidu- ciary and other common law duties owed by them to plaintiff and -5- the members of the class; (ii) whether the individual defen- dants have failed to maintain a level playing field and to max- imize shareholder value in a sale of the Company; and (iii) whether the class is entitled to injunctive relief as a result of the individual defendants' wrongful conduct, aided and abet- ted by Computer Associates. (c) Plaintiffs are committed to prosecuting this action and have retained competent counsel experienced in litigation of this nature. Plaintiffs' claims are typical of the claims of other members of the class and plaintiffs have the same interests as the other members of the class. Plain- tiffs will fairly and adequately represent the class. (d) The prosecution of separate actions by individual members of the Class would create the risk of incon- sistent or varying adjudications with respect to individual members of the Class which would establish incompatible stan- dards of conduct for defendants, or adjudications with respect to individual members of the Class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests. (e) Defendants have acted, or refused to act, on grounds generally applicable to, and causing injury to, the -6- Class and, therefore, preliminary and final injunctive relief on behalf of the Class as a whole is appropriate. A. Cheyenne Thwarts McAfee's Unsolicited Proposal 12. On April 15, 1996, Cheyenne announced that it had rejected an unsolicited offer from McAfee Associates, Inc. ("McAfee") to merge with Cheyenne in a stock-for-stock business combination. Under the terms of the transaction as then pro- posed, Cheyenne shareholders would have received approximately $27.50 in McAfee common stock for each share of Cheyenne common stock. This consideration represented a premium of approxi- mately 75% over the April 12, 1996 closing price of Cheyenne common stock. 13. In response to McAfee's unsolicited merger pro- posal, Cheyenne adopted a shareholder rights plan to thwart any takeover attempt unfavored by the individual defendants. The plan provided, among other things, for an amendment to the by- laws governing consent solicitations to make an unsolicited merger more difficult to accomplish. 14. On April 16, 1996, McAfee confirmed that it had made a bid for Cheyenne. McAfee also stated that it had been in talks with Cheyenne since November 1995, talks it charac- terized as "previously friendly merger discussions." McAfee -7- also said that it had made a similar proposal to Cheyenne in February 1996. 15. On April 16, 1996, the Wall Street Journal reported that McAfee had stated it intended to marshall share- holder pressure to force Cheyenne to accept its takeover offer. The news story also reported Cheyenne's response: "We're not for sale," said Reijane Huai, Cheyenne's president and chief executive officer. Besides, he said, "McAfee's offer is 'abso- lutely inadequate from a valuations point of view, from the point of view of strategic business.'" 16. Additionally, the Wall Street Journal reported on April 18, 1996 that Cheyenne was refusing to negotiate or to even talk to McAfee's president and chief executive officer Bill Larson. The news story stated: Mr. Larson said he asked Mr. Huai Monday night if he should still fly to New York to meet Mr. Huai yesterday. Mr. Huai said he would call back by Tuesday but didn't, according to Mr. Larson. Yesterday, Mr. Larson called two outside Cheyenne board members, Richard F. Kramer, CEO of FAXplus Inc., and Rino Bergonzi, an information-systems executive at AT&T Corp. Mr. Larson claims these members were "shocked that Rei wasn't returning my calls," and would instruct him to do so.... Mr. Larson maintains that he is still open to doing a friendly deal with Cheyenne. "We're serious about bagging this bear," he said. 17. Besides refusing to negotiate, Cheyenne also took active measures to scuttle McAfee's offer. On April 18, -8- 1996, Cheyenne filed suit against McAfee and Larson for securi- ties fraud. An April 19, 1996 Wall Street Journal article re- porting on Cheyenne's lawsuit against McAfee stated that Cheyenne's chairman and chief executive officer Haui denied that he had spoken with Larson at any time during the year and indicated that Larson's statements that the two companies had been in merger negotiations since November 1995 were a "'sys- tematic and cynical campaign' to promote the company's unsolic- ited bid." Cheyenne's lawsuit sought to enjoin McAfee from "making further false and misleading public statements concern- ing Cheyenne and from soliciting proxies from shareholders." 18. On or about May 1, 1996, McAfee announced that it was withdrawing its proposal for the acquisition of Chey- enne. In a May 2, 1996 article, the New York Times reported that Larson stated that "'[t]he Cheyenne board's continuing refusal to discuss our merger proposal has made the combination impossible to effect on a friendly basis." However, the news story continued, "Mr. Larson said he would still consider a 'friendly business combination' between the two companies." (emphasis added). -9- B. Cheyenne Agrees To Merge With Computer Associates Without Seeking Any Alternatives To Maximize Shareholder Value 19. On or about October 7, 1996, Cheyenne announced that it had entered into a merger agreement with Computer Associates for Computer Associates to acquire Cheyenne through a cash tender offer followed by a merger for untendered shares, both steps at a price of $30.50 per share. The merger was unanimously approved by the Boards of Directors of both Chey- enne and Computer Associates. 20. The transaction also provides for payment to Computer Associates of a $37.5 million termination fee and up to $5 million in expenses if the transaction is not consummated because the Company is acquired by another party. These actions were taken to discourage any competing bidders, par- ticularly McAfee, who might otherwise seek to acquire Cheyenne at a better price and upon better terms. 21. Additionally, on October 8, 1996, the Wall Street Journal commented on Computer Associates' agreement to acquire Cheyenne. The news story noted that "since early May, McAfee stock is up nearly 80%, while Cheyenne's stock has lan- guished until recently," causing some analysts to "wonder if McAfee's overture was a missed opportunity for Cheyenne." Indeed, Melissa Eisenstat, an investment analyst at Oppenheimer -10- & Co. stated "[t]here's no question that this was the wrong decision from a financial standpoint." 22. In breach of their fiduciary duties to the pub- lic stockholders of Cheyenne, all of Cheyenne's directors have voted in favor of the merger. This was done by the individual defendants primarily to protect the compensation and positions of Cheyenne's senior management, including director Huai, for, as reported by the Business Wire on October 7, 1996, all of Cheyenne's management and employees will be retained by Com- puter Associates. Charles B. Wang, Computer Associates' chair- man and chief executive, said that "Cheyenne's employees are an integral part of the value in this acquisition. In recognition of their skills and talents, CA intends to retain all of Cheyenne's employees." Cheyenne's president Huai also stated: "Equally exciting is the fact that all of us at Cheyenne will have the opportunity to participate in the next chapter of Cheyenne's growth." 23. Additionally, an October 8, 1996, a Wall Street Journal article noted further conflicts between the individual defendants and the interests of Cheyenne's public shareholders. The news story stated: "Mr. Wang also took pains yesterday to clarify the friendly nature of the deal -- a sharp contrast to the acrimonious feud between Cheyenne and McAfee -- and called Reijane. Huai, Cheyenne's Chairman and CEO, a "dear friend" -11- (emphasis added). The news story also stated that: "Cheyenne said it didn't contact McAfee to see if it would beat Computer Associates offer," (emphasis added) despite the fact that McAfee had earlier indicated that it would be interested in a "friendly business combination." It is clear that the indi- vidual defendants have allowed the friendship between Wang and Huai to supersede the interests of the public shareholders of Cheyenne. 24. The individual defendants have agreed to the sale of Cheyenne without having fulfilled their Revlon obliga- tions to seek to maximize shareholder value. 25. Specifically, despite the expressed interest of McAfee in pursuing a friendly merger transaction with Cheyenne, the individual defendants caused Cheyenne to enter into the merger agreement with Computer Associates without having even responded to McAfee's continuing expression of interest. 26. Indeed, the individual defendants failed to take any affirmative steps to seek to maximize shareholder value through any sort of auction or market-check, in addition to failing and/or refusing to respond to parties who expressed interest in acquiring Cheyenne. -12- 27. The consideration to be paid to Class members in the proposed acquisition is unfair and grossly inadequate be- cause, among other things: a. The intrinsic value of Cheyenne's common stock is materially in excess of the amount offered for those securities in the acquisition, giving due consideration to the anticipated operating results, net asset value, cash flow, and profitability of the Company; and b. the consideration to be paid to Class mem- bers is not the result of an appropriate consideration of the value of Cheyenne because the Cheyenne Board approved the pro- posed transaction without undertaking steps to reliably ascer- tain Cheyenne's value through open bidding or at least a "market check" mechanism. Indeed, the Cheyenne Board has failed to even solicit an offer from McAfee, which has publicly expressed its interest in acquiring Cheyenne. C. Cheyenne's Public Shareholders Are Misled 28. On or about October 11, 1996, Cheyenne mailed a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") to its shareholders recommending and seeking shareholder acceptance of the transaction. 29. The Schedule 14D-9, in violation of the indi- vidual defendants' disclosure obligations and duty of candor, -13- misrepresents and/or omits to state material information neces- sary for shareholders to make an informed decision. Specifi- cally, the Schedule 14D-9 states that Cheyenne did not receive "any substantial expressions of interest from any [other] par- ties" about a possible acquisition of the Company at or about the time of the McAfee proposal, but fails to disclose what expressions of interest, substantial or otherwise, were made, or, what efforts, if any, were made to encourage or stimulate an "insubstantial" expression of interest so that it might be- come "substantial" in the context of a sale of the Company which obligates fiduciaries to maximize value. 30. Moreover, the Schedule 14D-9 "discloses" by ob- vious omission that defendants failed to conduct any sort of auction or market-check before agreeing to sell the Company. The Schedule 14D-9 fails to disclose, however, that McAfee, at the time of withdrawing its April 1996 offer, openly stated that it remained willing to consider an acquisition on a friendly basis. 31. The Schedule 14D-9 also fails to disclose that Computer Associates repeatedly emphasized during its negotia- tions with Cheyenne that Computer Associates intended that a merger of the companies would involve no fundamental change in Cheyenne's management and that all of Cheyenne's employees would be maintained (though this is disclosed by Computer -14- Associates in its Offer To Purchase, addressed to Cheyenne shareholders, dated October 11, 1996). 32. In order to induce Cheyenne shareholders to accept the terms of the transaction, the individual defendants caused Cheyenne to retain an investment banker, Lazard Freres & Co. LLC ("Lazard Freres") to render a fairness opinion. The Schedule 14D-9 prominently emphasizes that Lazard Freres deter- mined that the proposed merger consideration is fair from a financial point of view. The Schedule 14D-9 fails to disclose, however, any specific information about how Lazard Freres made its determination. Thus, completely lacking from the Schedule 14D-9 is any disclosure whatsoever of the criteria, methodology or results of Lazard Freres' work, including a complete failure to disclose what range of values Lazard Freres calculated for Cheyenne. 33. The individual defendants' failure to disclose the above described information denies Cheyenne's shareholders critical information necessary to make an informed evaluation of the fairness opinion and of the fairness of the proposed merger in its entirety. 34. Computer Associates knowingly aided and abetted the breaches of fiduciary duty committed by the individual defendants. Indeed, the proposed transaction could not take place without the knowing participation of Computer Associates. -15- 35. Plaintiffs have no adequate remedy at law. WHEREFORE, plaintiffs demand judgment as follows: A. declaring this to be a proper class action; B. enjoining, preliminarily and permanently, the proposed transaction complained of herein; C. requiring the individual defendants to make full and fair disclosure of all material facts to the Class; D. to the extent, if any, that the transaction com- plained of is consummated prior to the entry of this Court's final judgment, rescinding the same or awarding rescissory dam- ages to the Class; E. directing that defendants account to plaintiffs and the Class for all damages caused to them and account for all profits and any special benefits obtained by defendants as a result of their unlawful conduct; F. awarding to plaintiffs the costs and disburse- ments of this action, including a reasonable allowance for the fees and expenses of plaintiffs' attorneys and experts; and -16- G. granting such other and further relief as the Court deems appropriate. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ Joseph A. Rosenthal P.O. Box 1070 Suite 1401, Mellon Bank Center Wilmington, Delaware 19801 Attorneys for Plaintiffs OF COUNSEL: BERNSTEIN LIEBHARD & LIFSHITZ 274 Madison Avenue New York, New York 10016 (212) 779-1414 GOODKIND LABATON RUDOFF & SUCHAROW, LLP 100 Park Avenue New York, NY 10017 (212) 907-0700 -17- CERTIFICATE OF SERVICE I, JOSEPH A. ROSENTHAL, hereby certify that on October 18, 1996, I caused copies of the foregoing Notice of Filing Amended Class Action Complaint to be served by hand delivery on: Kenneth J. Nachbar, Esquire Morris, Nichols, Arsht & Tunnell 1201 N. Market Street Wilmington, DE 19801 /s/ Joseph A. Rosenthal Joseph A. Rosenthal EX-10 3 EXHIBIT 10 Exhibit 10 [LETTERHEAD OF CHEYENNE SOFTWARE, INC.] NEWS RELEASE Contacts: ReiJane Huai, President and CEO Elliot Levine, EVP/CFO CHEYENNE SOFTWARE, INC. (516) 465-4000 FOR IMMEDIATE RELEASE CHEYENNE SOFTWARE, INC. REPORTS FIRST QUARTER SALES AND EARNINGS RESULTS --SALES FOR THE FIRST-QUARTER ENDED SEPTEMBER 30, 1996 INCREASED 36% TO $52.2 MILLION FROM LAST YEAR'S COMPARABLE QUARTER-- --NET INCOME FOR THE FIRST QUARTER WAS 4 CENTS PER SHARE INCLUDING WRITE-OFFS OF PURCHASED R&D OF ABOUT 20 CENTS PER SHARE, NET OF INCOME TAXES, VERSUS LAST YEAR'S 19 CENTS PER SHARE THAT INCLUDED A 3 CENTER PER SHARE, NET OF INCOME TAXES, WRITE-OFF OF PURCHASED R&D -- -- EXCLUDING ONE-TIME FACTORS, EPS FOR FQ197 WERE 24 CENTS VERSUS 22 CENTS IN LAST YEAR'S COMPARABLE QUARTER -- ROSLYN HEIGHTS, N.Y., October 22, 1996 -- Cheyenne Software, Inc. (AMEX; CYE) reported that, for the first quarter ended September 30, 1996 (FQ197), revenues were $52,246,000 versus $38,464,000 in last year's comparable quarter, a 36% increase. Net income for the quarter was $1,637,000 or 4 cents per share, after a charge for purchased R&D of 20 cents per share, net of income taxes, for the previously announced acquisitions of IQ International, Ltd., Mediatrends, Inc. and Moniker, Inc. In last year's comparable quarter, net income was $7,396,000 or 19 cents per share. Excluding one-time factors, EPS for FQ197 were 24 cents per share versus 22 cents per share in last year's comparable quarter. Cheyenne's cash, cash equivalents and investments as of September 30, 1996 were $77,975,000, a $7,048,000 decrease from June 30, 1996 due to the payment of cash consideration in FQ197 in connection with the previously disclosed acquisitions, as well as the repurchase of 308,900 Cheyenne shares during the quarter. (more) CHEYENNE ANNOUNCES FIRST QUARTER RESULTS PAGE 2 ReiJane Huai, Chairman, President and Chief Executive Officer of Cheyenne, said: "Despite the normal summer seasonality of our business, we achieved record quarterly sales and strong POS results (about 15% growth in North America versus FQ496) and reduced inventories in our global distribution channels. Our NetWare- related sales remain good, while our NT and desktop sales expanded significantly." Pursuant to the October 7, 1996 Merger Agreement among Cheyenne, Computer Associates International, Inc. ("CA") and a wholly-owned subsidiary of CA, CA commenced a tender offer on October 11, 1996 to acquire all of the outstanding shares of Cheyenne's common stock (with associated rights) for a price of $30.50 per share net to the seller in cash. The Cheyenne Board of Directors recommends that Cheyenne stockholders accept the offer and tender their shares to CA. About Cheyenne Software Cheyenne Software, Inc. is an international developer of essential software solutions for NetWare, Windows NT, UNIX, Macintosh, OS/2, Windows 3.1 and Windows 95 operating systems. Its enterprise-wide offerings include an array of storage management, security, and communications products, including Cheyenne [Registered Mark] HSM, JETserve [Trademark], InocuLAN [Registered Mark], FAXserve [Trademark], and its flagship product line, the ARCserve [Registered Mark] family of network backup software. Cheyenne can be contacted at (800)243-9462 (U.S. or Canada) or (516) 465-4000, or by visiting its WWW home page at: http://www.cheyenne.com. [table follows] CHEYENNE ANNOUNCES FIRST QUARTER RESULTS PAGE 3 CHEYENNE SOFTWARE, INC. AND SUBSIDIARIES Consolidated Statements of Earnings Three Months Ended September 30, 1996 and 1995 (Unaudited) Three Months Ended Sept. 30, 1996 1995 (In thousands, except per share data) Revenues $52,246 $38,464 Cost of sales 9,732 6,693 Gross profit 42,512 31,771 Operating expenses: Research and development 7,476 5,166 Selling and marketing 16,623 11,126 General and administrative 5,441 3,277 Charge for purchased research and development* 11,061 1,636 Total operating expenses 40,601 21,205 Operating income 1,913 10,566 Non-operating income: Interest income and other 553 726 Other (losses) gains, net (59) -- Income before income taxes 2,407 11,292 Provision for income taxes 770 3,896 Net income 1,637 7,396 Net income per share 0.04 0.19 Weighted average number of common shares and equivalents outstanding 38,679 38,829 *acquisition related charges ### -----END PRIVACY-ENHANCED MESSAGE-----