SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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NETEGRITY, INC.
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(Name of Registrant as Specified in Its Charter)
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Registrant)
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0-11.
(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
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This filing consists of Questions and Answers for Netegrity customers for
use by Netegrity employees.
NETEGRITY/COMPUTER ASSOCIATES ACQUISITION
MASTER QUESTIONS AND ANSWERS
For Internal Use Only
October 6, 2004
GENERAL QUESTIONS
Q. WHAT ARE NETEGRITY AND COMPUTER ASSOCIATES ANNOUNCING?
A. We have announced that we have signed a definitive agreement for
Computer Associates to acquire Netegrity in a cash transaction. The
combined company is expected to provide customers with the broadest end to
end security management solutions available on the market today.
Netegrity's market leading identity and access management technology is
expected to be a key complement to Computer Associates' eTrust security
solution.
Q. WHAT ARE THE TERMS OF THE DEAL?
A. Computer Associates will acquire Netegrity for $10.75 per share or
approximately $430 million in cash.
Q. WHEN DO YOU EXPECT THE DEAL TO CLOSE? WHAT ARE THE APPROVALS THAT
ARE REQUIRED FOR THE DEAL TO CLOSE?
A. The acquisition is subject to customary regulatory approvals and the
approval of Netegrity's shareholders. While approval timelines are
not under our control, the acquisition is expected to be completed
in the next 90 days.
Q. WHY DID NETEGRITY DECIDE TO BE ACQUIRED?
A. Identity and access management is one of the fastest growing
segments in the enterprise software market. As a result, it has attracted
major players with significant resources. While Netegrity has market
leading technology, strong intellectual capital, and a premier customer
base, we believe that the fastest path to gain significant market share
and time to value for our shareholders is to combine with a major market
player like Computer Associates.
Q. WHY DID NETEGRITY DECIDE TO WORK WITH COMPUTER ASSOCIATES ON AN
ACQUISITION?
A. After extensive evaluations, Netegrity concluded that Computer Associates
has significant global resources that could help accelerate our market
penetration and drive rapid growth. Furthermore we believe there are a
number of important synergies between Computer Associates and Netegrity.
The security market segment is one in which Computer Associates has made
significant investment, and we believe this deal would further reinforce
their focus on this key strategic area. We believe Netegrity's
heterogeneous identity and access management solution would extend
Computer Associates' ability to deliver on their Enterprise Infrastructure
Management strategy which is designed to help our customers simplify
management of their IT infrastructures, increase utilization rates,
accommodate both real-time and on-demand needs and better align IT
infrastructure with the operations of their business. We also believe the
addition of Netegrity's security offerings to CA's Identity and Access
Management suite would enable the delivery of a complete, integrated and
open solution.
From a resource perspective, Computer Associates' marketing and sales
resources, along with a very large customer base, should allow us to
penetrate companies and regions that we might not have been able to reach
as quickly on our own. Like Netegrity, Computer Associates is located on
the east coast, and has a number of development and sales offices
throughout the world.
Q. WAS ANYONE ELSE INTERESTED IN ACQUIRING NETEGRITY?
A. Because the identity and access management market segment has become
so attractive, Netegrity had been approached by multiple companies seeking
to establish and/or enhance their foothold in this market segment. With
the proliferation of industry giants in this market space, we felt it was
necessary to explore whether combining our resources with those of a
larger market player would enable us to accelerate market penetration and
value creation for our shareholders and customers.
Q. DID NETEGRITY SEEK TO BE ACQUIRED OR WAS NETEGRITY APPROACHED BY
COMPUTER ASSOCIATES?
A. Computer Associates has been interested in Netegrity for some time. In
response to the high degree of interest in Netegrity in the recent past,
we felt that it was necessary to consider strategic alternatives to
increase shareholder value and better serve our customers. Netegrity's
Board of Directors and senior management team considered M&A options in
the context of evaluating all of the strategic alternatives available to
Netegrity.
It was determined that this acquisition would best enable Netegrity to
seize the strategic growth opportunities in identity management and would
help ensure we deliver the highest possible returns to our shareholders
and to our customers.
QUESTIONS ON COMPUTER ASSOCIATES
Q. WHAT DOES COMPUTER ASSOCIATES SPECIALIZE IN?
A. Computer Associates is a publicly traded software company with
approximately 15,000 employees headquartered in Islandia, New York. They
are a global
company with operations in more than 50 countries. Computer Associates had
$3.2B in revenue for fiscal year 2004 with a market cap of $16B. Computer
Associates is a leading worldwide provider of solutions and services for
the management of IT infrastructure, business information and application
development. Computer Associates' solutions address an extensive range of
management challenges across the full range of heterogeneous distributed
and mainframe platforms found in today's enterprise environments. They are
organized into six powerful brands: Unicenter for enterprise management,
BrightStor for storage management, eTrust for security management,
AllFusion for application life cycle management, Advantage for data
management and application development, and CleverPath for portal and
business intelligence.
Q. IS COMPUTER ASSOCIATES PUBLIC?
A. Yes. They are listed on the New York Stock Exchange under the symbol
CA.
Q. WHEN WAS COMPUTER ASSOCIATES FOUNDED?
A. Computer Associates was founded in 1976
Q. WHAT ARE COMPUTER ASSOCIATES' REVENUES?
A. Computer Associates' revenues are $3.2B for fiscal year 2004.
Q. WHO DOES COMPUTER ASSOCIATES COMPETE WITH?
A. Computer Associates today competes with a broad range of major
enterprise software vendors including IBM, HP, Oracle and Symantec.
Q. WHERE IS COMPUTER ASSOCIATES LOCATED?
A. Computer Associates is headquartered in Islandia, New York
Q. DOES IT HAVE ANY INTERNATIONAL OFFICES?
A. Yes they have operations in more than 50 countries.
Q. HOW MANY EMPLOYEES DOES COMPUTER ASSOCIATES HAVE?
A. Computer Associates has approximately 15,000 employees.
Q. HOW MANY CUSTOMERS DOES COMPUTER ASSOCIATES HAVE AND WHO ARE SOME OF
THEIR KEY CLIENTS?
A. They have approximately 95% of the Fortune 500 as customers
and many other major accounts across the globe.
Q. DO NETEGRITY AND COMPUTER ASSOCIATES HAVE ANY JOINT CUSTOMERS
TODAY?
A. Yes, we do have some joint customers today. For some time now we have
worked collaboratively with a variety of Computer Associates' eTrust
products including eTrust LDAP directory.
Q. WHAT IS THE STRATEGIC FIT WITH COMPUTER ASSOCIATES?
A. Computer Associates is looking to leverage Netegrity's strong assets
in the identity and access market segment. Today Netegrity brings
significant strength in solving major customer pains in identity and
access management. This complements Computer Associates' strength in the
mainframe and distributed computing market segments providing a broad end
to end security solution.
Q. HOW WILL THE COMBINATION OF NETEGRITY AND COMPUTER ASSOCIATES
ENHANCE THE COMBINED COMPANY'S MARKET POSITION?
A. We believe there are a number of important synergies between Computer
Associates and Netegrity. We expect the combination of our two companies
would carry forward our commitment to solve customer's greatest enterprise
security challenges. In addition, Computer Associates would bring
significant sales and marketing reach to Netegrity to drive more rapid
penetration into the global identity and access management market.
Q. DOES THIS ACQUISITION AFFECT ANY OF NETEGRITY'S CURRENT
PRODUCT PLANS?
A. Until we get regulatory approval we cannot complete the integration plan.
However, Computer Associates' interest in this acquisition was because of
Netegrity's strong technology solutions, people expertise and strong
customer base.
Q. DOES THIS ACQUISITION CREATE ANY ISSUES WITH NETEGRITY'S
CURRENT STRATEGIC PARTNERS?
A. No, in fact we believe the increased breadth of solution that the combined
product line offers would present a greater opportunity for our major
partners.
QUESTIONS ON COMPANY INTEGRATION
Q. HOW WILL NETEGRITY'S PRODUCT LINE BE INTEGRATED WITH THOSE OF
COMPUTER ASSOCIATES?
A. Computer Associates is looking to take advantage of Netegrity's strong
assets in the identity and access management market segment. Today
Netegrity brings significant strength in solving major customer pains in
identity and access management. This complements Computer Associates'
strength in the legacy host and midrange market segments.
We anticipate having regulatory approval within 90 days. However, until
the acquisition closes, Netegrity will operate as an independent business.
CUSTOMER QUESTIONS
Q. WILL COMPUTER ASSOCIATES SUPPORT NETEGRITY'S CUSTOMERS WITH ITS
TECHNICAL SUPPORT STAFF OR WILL I NEED TO GO TO NETEGRITY?
A. Until the acquisition is closed, Netegrity customers should continue
to follow the current process to get technical support
Q. WILL NETEGRITY CONTINUE TO FOCUS ON THE IDENTITY AND ACCESS
MANAGEMENT SPACE OR ARE YOU MOVING AWAY FROM THAT?
A. Computer Associates is looking to take advantage of Netegrity's strong
assets in the identity and access management market segment. Today
Netegrity brings significant strength in solving major customer pains in
identity and access management. We believe this complements Computer
Associates' strength in the mainframe and midrange computing environments.
Q. DOES THIS ACQUISITION AFFECT ANY OF NETEGRITY'S CURRENT PRODUCT
PLANS?
A. Computer Associates is looking to take advantage of Netegrity's strong
assets in the identity and access market segment. Today Netegrity brings
significant strength in solving major customer pains in identity and
access management. We believe this complements Computer Associates'
strength in the legacy host and midrange market segments.
Once the acquisition has received regulatory approval, the companies can
begin their integrated plan. We anticipate having regulatory approval
within 90 days. However, until the acquisition closes, Netegrity will
operate as an independent business.
SALES QUESTIONS
Q. WILL THE U.S. SALES TRAINING STILL TAKE PLACE NEXT WEEK?
A. Yes. Please ensure that you do attend.
Q. WILL THERE BE A FREEZE ON TRAVEL OR OTHER ACTIVITIES AS A RESULT OF
THIS ANNOUNCEMENT?
A. No, it will be business as usual at Netegrity until the transaction
is completed. All operations will continue as before.
Q. WHAT DO I DO IF A CUSTOMER WANTS TO SPEAK WITH COMPUTER ASSOCIATES
ABOUT THE ACQUISITION AND FUTURE PLANS?
A. We cannot speak about the joint plans between the two companies until we
have received regulatory approval. After regulatory approval and as soon
as we have the joint plans completed, we will provide those details.
Q. WHEN WILL COMPUTER ASSOCIATES BEGIN TO SELL NETEGRITY'S PRODUCTS?
A. After the transaction has received regulatory approval, the sales
and marketing strategy and organizational structure to support that
strategy for Netegrity's products will be announced.
Q3 EARNINGS QUESTIONS
Q. WHAT DID NETEGRITY REPORT ABOUT ITS Q3-2004 PERFORMANCE?
A. Netegrity today announced preliminary results for its third quarter
ended September 30, 2004. Netegrity expects total revenues to be in the
range of
approximately $19 million to $21 million. Based on these estimated
revenues, Netegrity anticipates that it will report net income ranging
from approximately breakeven to a net loss of $(1.0) million, which
includes the after-tax effect of the non-cash software amortization of
approximately $500,000. This will result in earnings per share ranging
from $0.00 to a loss per share of ($0.03).
Netegrity expects to report its full results for Q3-2004 on October 26th
after the market closes.
EMPLOYEE QUESTIONS
Q. WILL WALTHAM BASED NETEGRITY EMPLOYEES BE MOVED TO COMPUTER
ASSOCIATES' CORPORATE HEADQUARTERS OR WILL COMPUTER ASSOCIATES
MAINTAIN A MASSACHUSETTS OFFICE? WILL NETEGRITY EMPLOYEES IN OTHER
LOCATIONS BE REQUIRED TO MOVE?
A. In any acquisition, companies will look for opportunities to consolidate
operations. Both Netegrity and Computer Associates do have major locations
in MA and Israel and it is expected that these locations will be looked at
as part of the acquisition integration. These decisions, however, will not
be made until after the acquisition closes, which is expected within 90
days.
Q. HOW DOES THIS ANNOUNCEMENT IMMEDIATELY AFFECT MY JOB, SALARY AND
BENEFITS?
A Today's announcement will not have any immediate effect on your job. You
will continue to perform in the same role, at the same rate of pay and
with your current benefits.
Q. WILL MY JOB BE AFFECTED AFTER THE ACQUISITION CLOSES?
A. One of the major reasons Computer Associates is interested in
Netegrity is because of our team of people and the intellectual capital
Netegrity's people bring to this transaction. Therefore, it is anticipated
that Netegrity's operations will be integrated with CA's eTrust Identity
and Access Management group and that the majority of Netegrity's
approximately 400 employees will remain with Computer Associates. As in
all acquisitions, there will most likely be some overlap, and there may be
some number of positions that will be eliminated.
Q. WHEN WILL I KNOW IF MY POSITION IS GOING TO BE ELIMINATED?
A. We expect that after the acquisition closes, an integration team
made up of representatives from both Computer Associates and Netegrity
will work together to understand the synergies and overlaps that may exist
in each functional area and will confirm as soon as possible if any
positions will be eliminated.
Q. WHAT WILL MY SEVERANCE BE IF MY JOB IS ELIMINATED?
A. Computer Associates has agreed to use the severance calculation that
Netegrity has used in the recent past. This severance calculation is a
base of two weeks base pay plus an additional week for every partial
completed year of service. For
example 2 years and 2 months of service would equal 2 weeks base pay plus
3 weeks for service time for a total of 5 weeks pay.
Q. WILL MY PAY AND BENEFITS CHANGE WHEN THE TRANSACTION CLOSES?
A. Both Netegrity and Computer Associates use similar surveys to
benchmark pay and benefits. It is expected that there will be no change in
pay levels or in the general level of benefits that Netegrity offers
today. After the closing, the H.R. departments of both companies will work
on a plan to integrate salary and benefit plans. Until the closing of this
transaction all Netegrity benefits will remain in effect.
Q. WHAT WILL HAPPEN TO NETEGRITY STOCK OPTIONS?
A. At the closing date of the merger, each outstanding option to
purchase Netegrity common stock and the grant price would be converted to
outstanding options to purchase Computer Associates common stock based on
a conversion ratio. The conversion ratio will be calculated based on the
$10.75 per share purchase price of the Netegrity stock divided by the
average of Computer Associates' closing prices for the 5 days prior to
close.
Q. WHAT WILL HAPPEN TO NETEGRITY'S VESTING SCHEDULES?
A. Upon closing, the vesting schedule for your newly issued Computer
Associates options would be based on the vesting schedule based on your
Netegrity options. For example, if 50% of your options have vested at the
time of the deal closing, then 50% of your newly issued Computer
Associates options would also be vested. The unvested options would
continue to vest at the same rate as your Netegrity options would have
vested.
Q. CAN I STILL SELL STOCK BEFORE THE TRANSACTION CLOSES? WILL THERE
STILL BE BLACKOUT DATES?
A. Yes, you can still sell stock as long as the Netegrity blackout period has
expired. There will continue to be blackout periods, as usual, under
Netegrity's policy until the transaction closes.
Q. WHAT WILL HAPPEN TO THE NETEGRITY ESPP?
A. The new offering period will start as usual in November and will continue
until just before the transaction closes. At that time you would receive
Netegrity common stock that will be converted to cash at the closing based
on the conversion ratio described above.
Q. WHAT WILL HAPPEN TO THE NETEGRITY BONUS?
A. Computer Associates is committed to a 2004 bonus plan, which is expected
to be similar to Netegrity's bonus plan. The bonus will be based on the
performance of the Netegrity business as well as individual performance
against objectives. It is anticipated that the bonus will be paid in early
April 2005.
Q. WILL THERE BE A FREEZE ON NEW HEADCOUNT?
A. No. Business operations will continue as usual.
Q. HOW WILL NETEGRITY EMPLOYEES BE KEPT INFORMED OF THE INTEGRATION
PLANS?
A. We will communicate with all employees through multiple vehicles.
First, we will be setting up a site on the home page of Netegrity's
KnowledgeMinder portal later today that will be updated with all
employee communications regarding the acquisition. Additionally, we
will provide Team Netegrity emails every other week updating you on
the status of the integration plans. We will also conduct
departmental updates, and as always we will continue our Open Door
Policy so that Netegrity team members should feel free to approach
any manager in the company with questions.
Q. WHO DO I CALL WITH ANY QUESTIONS ABOUT THE ACQUISITION?
A. Please refer your questions to your current manager. If your manager
cannot answer your question, please send an email to
integration@netegrity.com and your question will then be routed to the
appropriate individual. We will aim to answer your question within 48
hours.
PARTNER QUESTIONS
Q. HOW WILL THIS TRANSACTION CHANGE PARTNER RELATIONSHIPS WITH NETEGRITY?
A. Computer Associates has expressed interest in the partnership
relationships that Netegrity has. Once the transaction is closed, each
partnership will be reviewed to determine the strategic direction of those
partnerships.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
Netegrity plans to file with the Securities and Exchange Commission and
mail to its stockholders a Proxy Statement in connection with the transaction.
The Proxy Statement will contain important information about Computer
Associates, Netegrity, the transaction and related matters. Investors and
security holders are urged to read the Proxy Statement carefully when it is
available. Investors and security holders will be able to obtain free copies of
the Proxy Statement and other documents filed with the SEC by Computer
Associates and Netegrity through the web site maintained by the SEC at
www.sec.gov.
In addition, investors and security holders will be able to obtain free
copies of the Proxy Statement from Netegrity by contacting Investor Relations,
Netegrity, 201 Jones Road, Waltham, MA 02451, 800-325-9870.
Computer Associates and Netegrity, and their respective directors and
executive officers, may be deemed to be participants in the solicitation of
proxies in respect of the transactions contemplated by the merger agreement.
Information regarding Computer Associates' directors and executive officers is
contained in Computer Associates' Form 10-K for the year ended March 31, 2004
and its proxy statement dated July 28, 2004, as amended. Information regarding
Netegrity's directors and executive officers is contained in Netegrity's Form
10-K for the year ended December 31, 2004 and its proxy statement dated March
31, 2004, which are filed with the SEC. As of October 5, 2004, Netegrity's
directors and executive officers beneficially owned approximately 4.8 million
shares, or 12%, of Netegrity's common stock.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Statements in this document regarding the proposed transaction between
Computer Associates and Netegrity, the expected timetable for completing the
transaction, future financial and operating results, benefits and synergies of
the transaction, future opportunities for the combined company and any other
statements about Computer Associates or Netegrity managements' future
expectations, beliefs, goals, plans or prospects constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Any statements that are not statements of historical fact (including
statements containing the words "believes," "plans," "anticipates," "expects,"
estimates and similar expressions) should also be considered to be
forward-looking statements. A number of important factors could cause actual
results or events to differ materially from those indicated by such
forward-looking statements, including: the ability to consummate the
transaction, the ability of Computer Associates to successfully integrate
Netegrity's operations and employees; the ability to realize anticipated
synergies and cost savings; the emergence of new competitive initiatives
resulting from rapid technological advances or changes in pricing in the market;
market acceptance of new products and services and continued acceptance of
existing products and services; risks associated with the entry into new
markets; business conditions in the distributed systems and mainframe software
and hardware markets; uncertainty and volatility associated with Internet and
eBusiness-related activities; and the other factors described in Computer
Associates' Annual Report on Form 10-K for the year ended March 31, 2004 and its
most recent quarterly report filed with the SEC and in Netegrity's Annual Report
on Form 10-K for the year ended December 31, 2003 and its most recent quarterly
report filed with the SEC. Computer Associates and Netegrity disclaim any
intention or obligation to update any forward-looking statements as a result of
developments occurring after the date of this document.