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Filed by Mission Critical Software, Inc.
Pursuant to Rule 425 Under the Securities Act of 1933
Subject Company: Mission Critical Software, Inc.
Commission File No. 000-26205
SHAREHOLDERS OF MISSION CRITICAL SOFTWARE, INC. AND OTHER INVESTORS ARE URGED TO
READ THE PROXY STATEMENT-PROSPECTUS WHICH WILL BE INCLUDED IN THE REGISTRATION
STATEMENT ON FORM S-4 TO BE FILED BY MISSION CRITICAL IN CONNECTION WITH THE
MERGER WITH GANYMEDE SOFTWARE, INC. BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION. AFTER SUCH DOCUMENT IS FILED, IT WILL BE AVAILABLE FREE OF CHARGE
ON THE SEC WEBSITE AT WWW.SEC.GOV AND FROM MISSION CRITICAL AND GANYMEDE THROUGH
THE CONTACTS LISTED BELOW.
Shareholders of Mission Critical and other investors should note that Mission
Critical's and Ganymede's future results could differ materially from the
results discussed herein. Factors that could cause or contribute to such
differences include the risks inherent in acquisitions of technology businesses
including the successful integration of the companies, the timing and successful
completion of technology and product development, our ability to retain and hire
key executives, technical personnel and other employees, changing relationships
with customers, suppliers and strategic partners, unanticipated costs associated
with integration activities, as well as customer acceptance of new product
offerings, and competition in the companies' various product lines. For a more
complete discussion of risks and uncertainties see the section entitled "Risk
Factors" in Mission Critical Software's registration statement on Form S-1 as
filed with the Securities and Exchange Commission on May 28, 1999, and
subsequently amended.
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NetIQ/Mission Critical Software Merger
Analyst/Investor Conference Call Script
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Introduction and Safe Harbor - Steve Odom
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. Good morning, this is Steve Odom, Mission Critical Software's CFO and COO.
Thank you all for joining us this morning on such short notice to discuss
what is truly exciting news. Earlier today, we issued a press release
announcing the strategic merger of Mission Critical Software and NetIQ.
For those of you who have not yet seen the release, a copy is available on
either of our corporate websites. If you are
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interested in viewing a brief set of slides related to this announcement,
they are available on www.vcall.com.
. With me today are Mike Bennett, CEO of Mission Critical Software, Ching-Fa
Hwang, CEO of NetIQ, and Jim Barth, CFO of NetIQ.
. Before I turn the call over to Mike, I need to caution all listeners that
statements in this press release and answers to questions other than
statements of historical fact are "forward-looking" statements within the
meaning of the private securities litigation reform act of 1995. Although
we believe that the expectations reflected in such forward-looking
statements are reasonable, we can give no assurance that the expectations
reflected in such forward-looking statements will prove to be correct.
. The companies' future results could differ materially from the results
discussed herein. Factors that could cause or contribute to such
differences include the risks inherent in acquisitions of technology
businesses including the failure of the transactions to close due to
regulatory obstacles or other factors, the successful integration of the
companies, the timing and successful completion of technology and product
development, our ability to retain and hire key executives, technical
personnel and other employees, changing relationships with customers,
suppliers and strategic partners, unanticipated costs associated with
integration activities, as well as customer acceptance of new product
offerings, and competition in the companies' various product lines. For a
more complete discussion of risks and uncertainties see the section
entitled "Risk Factors" in NetIQ's and Mission Critical Software's reports
on form 10-Q as filed with the Securities and Exchange Commission.
. Now, I'd like to introduce Mike Bennett.
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Mike Bennett
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. Thanks Steve, I'm thrilled to be here today with my new colleagues to
discuss what we believe is an extraordinarily compelling opportunity for
Mission Critical Software
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and NetIQ, and their shareholders, customers and employees. Ching and I
would like to spend the next few minutes providing a little additional
context to this announcement, and then all of us will be happy to take your
questions.
. Today's announcement is truly exciting. With the strategic merger of
Mission Critical Software and NetIQ we are creating a true powerhouse in
the eBusiness infrastructure management space.
. From a strategic standpoint, each company is a market leader in its
respective space - NetIQ in performance and availability management, and
Mission Critical Software in administration and directory management. Both
companies have highly complementary offerings and combined the two
companies will have significant cross selling opportunities. We see this
as a great opportunity to leverage our incredible Windows NT and Windows
2000 strength to capture the overall eBusiness infrastructure management
market.
. The new company will have significantly greater size and scale - with a
market capitalization of $2.7 billion and significantly greater reach,
product scope and resources.
. As you all know, eCommerce is an increasingly pervasive element of our
economy, and eBusiness management has become a critical component for
success. And, in this new era of eBusiness, Windows 2000 is clearly poised
to be the platform of choice. We believe we are uniquely positioned to
take advantage of these market trends.
. In one decisive action, we are creating an organization uniquely positioned
to provide customers all of the tools and solutions needed to successfully
and efficiently manage eBusiness infrastructures and Windows 2000-based
networks, systems and applications.
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. Simply stated, the combined company will be able to deliver customers the
most comprehensive and scalable solutions for Windows administration,
directory, server and application management.
. Mission Critical Software and NetIQ have seen - and in fact been intimately
involved with - the explosive growth of eBusiness infrastructures in
corporate IT departments. As you are well aware, businesses of all sizes -
start-ups to Fortune 100s - and in all industries are investing heavily in
developing and expanding their eBusiness infrastructures and selecting
solutions that help them manage these infrastructures.
. To give you a sense of the opportunity in this fast-growing market, total
spending on Windows NT and Windows 2000 management products is expected to
grow to $8.1 billion in the year 2003. Spending on eBusiness
infrastructure software is expected to be $12.6 billion in the same year.
. We already have a proven ability to manage some of the largest Windows NT,
and now Windows 2000, based eBusinesses, including Microsoft's own Internet
data centers. Today's announcement propels us to a new level in delivery
capability, brings together some of the sharpest minds in the business and
truly marks us as the company to watch in this space.
. Now let me spend a few minutes recapping the terms of the merger agreement
and providing you some information on Mission Critical Software's
acquisition of Ganymede.
Under the terms of a definitive merger agreement between Mission Critical
Software and NetIQ, which was unanimously approved by the board of
directors of each company, Mission Critical Software shareholders will
receive 0.9413 shares of NetIQ common stock for each Mission Critical
Software common share.
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. Each company's stockholders will receive shares representing about 50
percent of the new company on a diluted basis.
. The merger will be accounted for as a purchase and is expected to be
tax-free to the shareholders of both companies.
. The merger is subject to regulatory approvals - which we believe do not
pose any significant obstacles - as well as approval by the shareholders of
both companies, and customary closing conditions. We expect to complete
the transaction during the June 30, 2000 quarter. At the closing of the
merger, the companies expect to create a new corporate name and stock
symbol.
. The new company will be headquartered in Santa Clara, California with key
executives, development and operational personnel in Houston, Texas. I
will be executive chairman and Ching will be chief executive officer. In a
few moments, Ching will discuss other key members of the new company's
executive team.
. The Board of Directors will be composed of 9 members, 4 each from Mission
Critical Software and NetIQ including Bennett, Hwang, and Bernhardt, plus
an additional outside director to be elected sometime in the future.
. Before I turn the call to Ching to add his perspective on this terrific
announcement, I'd like to spend a few minutes discussing our acquisition of
Ganymede.
. As you are aware, Mission Critical Software also announced today that it
has signed a letter of intent to acquire Ganymede, a privately held company
that is a recognized leader in network performance management software.
With the addition of Ganymede, we - along with NetIQ - will be able to
further provide customers a comprehensive, end-to-end network performance
management solution.
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. Under the terms of the agreement, Mission Critical Software will issue 2.75
million shares of common stock to the shareholders of Ganymede in a
transaction to be accounted for as a purchase. The total value of the
transaction would be approximately $171 million based on Friday's closing
price.
. With that, I'd now like to turn the call over to my new colleague and
partner, Ching-Fa Hwang.
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Ching-Fa Hwang
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. Thank you Mike. I'd like to begin by saying that I am equally excited
about this transaction - the combination is truly an ideal strategic fit.
. The merger of Mission Critical Software and NetIQ brings together two
established leaders in Windows 2000 eBusiness infrastructure management
with superb and highly complementary products and a shared strategic
vision.
. Most importantly, by joining two companies with synergistic product
offerings and target markets - and by leveraging the combined intellectual
property, and financial and human resources - we will be able to offer
eBusinesses, enterprise customers and application service providers (ASPs)
the most comprehensive infrastructure management solutions encompassing
administration, and directory and applications management.
. We've already been in contact with a number of our customers and have
received extremely positive initial feedback. One-stop-shopping with
outstanding products backed by a proven track record is clearly an
appealing prospect to customers who are stretched to the limits and have
high performance thresholds.
. I am very familiar with Mission Critical Software products and they will be
terrific assets as we move forward to combine the companies.
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. We have a clear vision for integrating these organizations and are
committed to ensuring that we maximize the potential of what will become
the clear leader in the Windows 2000 systems management and eBusiness
infrastructure management space.
. We are in the process of putting a team and plan together, so that we can
begin implementing it as soon as the transaction closes.
. At this time, I can share with you my initial directions of the plan. Jim
Barth, NetIQ's CFO will be the new company's CFO. Steve Odom, Mission
Critical Software's CFO and COO will become COO of the new company. He
will be responsible for operations, mergers, acquisitions, IT
infrastructure and customer support. And Tom Bernhardt, current chief
technology officer of Mission Critical Software, who will be chief
technology officer.
. For the sales and marketing organization, we want to centralize the
management of the sales organizations to maximize our broad range of
management product offerings - essentially one stop shopping for the
customer. We will continue to provide centralized and focused marketing
and communications with our customers, strategic partners, and channel
partners. Glenn Winokur, NetIQ's VP of worldwide sales will drive the
sales organization at the new company. Rick Pleczko, Mission Critical
Software's vice president of marketing will be responsible for marketing at
the new company.
. For the product lines, we will develop a cohesive product strategy and plan
to clearly position us as the leading vendor in the market. These plans
will enable our engineering teams in Santa Clara, Houston, and Raleigh to
work in parallel and maintain a high level of innovation and productivity,
while delivering a highly integrated product family to benefit our
customers. Tom Kemp, NetIQ's VP of marketing and product management will
be responsible for product management at the new company.
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. Tom Bernhardt, Mission Critical Software's CTO will have a similar role at
the new company and will lead the development efforts for the
administration and directory management products. We intend to expand the
product development of Mission Critical Software's OnePoint, NetIQ's
AppManager and also Ganymede's Chariot and Pegasus. OnePoint will continue
to evolve with leading administration and directory management products.
We intend to combine the strengths of both the NetIQ AppManager product
line and Mission Critical Software's Operations Manager product and
integrate them as appropriate. Her-Daw Che, NetIQ's VP of engineering will
lead the AppManager and Operations Manager teams to begin work on the
integration strategy immediately.
. Ganymede's end-to-end network performance management will complement these
two product lines. The three combined product lines will enable the new
company to be the leader in comprehensive end-to-end network performance
management software of Windows 2000-based infrastructures and eBusiness
applications. Tim Huntley, Ganymede's CEO will be responsible for the
Ganymede lab.
. Jim Barth will now speak in more detail regarding the financial aspects of
the merger. Jim?
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Jim Barth
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. Thanks, Ching.
. This is truly a merger of equals and we structured the transaction to
reflect that. NetIQ will issue 0.9413 shares for each share of Mission
Critical Software common stock, including the shares Mission Critical
Software is expected to issue for the purchase of Ganymede.
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. Following the closing of both transactions there will be approximately 36.3
million primary shares outstanding and approximately 41.7 million diluted
shares, based on outstanding shares last Friday.
. The transaction will result in significant goodwill, which will be
amortized to expense over several years. We expect to compute the total
amount of goodwill, and the charge to operations by the time we report our
results of operations for the fiscal year ended June 30th.
. From an operational point of view we will continue to have significant
operations in Houston, TX and Raleigh, NC. Our combined worldwide
employee base on December 31, 1999 was approximately 460 people, including
about 260 in sales and marketing, and 150 in research and development.
. Combined total assets at December 31 were more than $330 million, including
cash of more than $300 million.
. Our combined quarterly revenues have increased approximately 75% year over
year and were $22.4 million on a combined basis for the quarter ended
December 31, 1999. Together, we also achieved a gross margin of 94% and an
operating profit of $1.8 million or 8% of combined revenues.
. Now I would like to turn it back over to Mike.
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Mike Bennett
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. I firmly believe that these organizations are a superb fit from both a
market and cultural standpoint, and we look forward to working with our new
colleagues.
. The strategic rationale is clear. As I stated earlier, each company is a
market leader in its respective space, both companies have highly
complementary offerings and combined the two companies will have
significant cross selling opportunities. We see this as a great
opportunity to leverage our incredible Windows NT and Windows 2000 strength
to capture the overall eBusiness infrastructure management market.
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. I can assure you we will be sharply focused on managing this organization
for growth and creating shareholder value.
Thank you. We'd now be happy to address your questions.
***
Contacts:
For Mission Critical Software:
Susan Torrey, Press & Investor Relations, 713.548.1863,
mailto:[email protected]
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Steve Odom, Chief Financial Officer, (713) 548-1829,
mailto:[email protected]
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For Ganymede:
Katherine Demacopoulos, Public Relations, 919-469-0997 x325,
mailto:[email protected]
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