UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): December 3, 1999
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(Exact name of registrant as specified in its charter)
Delaware 0-12167 54-1217099
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
18880 HOMESTEAD ROAD, CUPERTINO, CA 95014
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (408) 863-9900
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(Not Applicable)
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 3, 1999, the Company closed a $50,000,000 investment in the Series
A Preferred Stock of a newly formed corporation, founded by Paul Levy and
Mike Devlin. The Company funded the investment from operating cash flows. The
new company will focus on developing a portal to meet the needs of the global
community of software professionals. The new company also intends to develop
an electronic marketplace for products and services relating to software
development and intends to develop and deploy a hosted development service for
Internet software development.
Item 7. Financial Statements and Exhibits
99.1 Press Release dated October 19, 1999 released by the Company
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 hereunto duly authorized.
RATIONAL SOFTWARE CORPORATION
(Registrant)
December 16, 1999 /s/ Timothy A. Brennan
Timothy A. Brennan,
Chief Financial Officer and Secretary
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contacts: Bill Durling, Director of Corporate Communications
(781) 676 2489
E-mail: [email protected]
Thomas F. Bogan, Chief Operating Officer
(408) 863-4500
E-mail: [email protected]
RATIONAL SOFTWARE'S E-DEVELOPMENT STRATEGY DRIVES
RECORD SECOND QUARTER REVENUE
Accelerating its e-development focus, Rational capitalizes on strategic
alliances with IBM and Microsoft and invests in new Internet company
Cupertino, Calif., October 19, 1999 -- Rational Software (RATL), the
e-development company, announced last week that its focus on e-development
drove 80 percent of its record second quarter revenue of $128 million, making
it one of the largest Internet-focused software companies in the world.
"The Internet economy depends on software. Virtually every organization in the
world is determining how to compete using the Internet, making their business
strategies dependent on Internet-software development," said Mike Devlin,
co-founder and CEO of Rational. "These organizations face an `e- software
paradox' - they must develop increasingly complex software faster - in
`Internet time'- and yet have that software work flawlessly. Rational's
solution helps organizations overcome the e- software paradox."
"Based on the success of our e-development strategy and the formidable market
opportunities that we foresee for Rational in an Internet-enabled world, we
feel that we have the potential to accelerate our growth rate during Fiscal
2001," said Devlin. "The rate at which the Internet-economy has impacted
Rational's sales has exceeded our expectations and created new and exciting
growth opportunities that we will continue to take advantage of."
Rational's e-development solution is a one-stop integration of industry-leading
tools, services and software engineering best practices. Rational's flagship
products include Rational Suite, Rational ClearCase, and the Rational Unified
Process. Together these integrated products form a comprehensive platform for
e-development that speeds software delivery, increases quality, and reduces
risk.
Rational helps organizations successfully deliver software in three major
segments: e-business, e- infrastructure, and e-devices.
E-business applications use both the Internet and Intranets to automate and
accelerate business-to- business and business-to-consumer interactions.
Rational customers in this segment include E-Trade and Fidelity Investments,
and more than 100 "dot-com" companies who are building applications for
consumer to consumer e-commerce, consumer to business e-commerce, as well as
Intranets that form the core of their e-businesses.
E-infrastructure software is the foundation on which the Internet operates and
extends its reach, bandwidth, and functionality in areas such as
telecommunications, data communications, operating systems, web servers and
middleware. Rational's customers and partners in this segment include Cisco,
IBM, Microsoft, Lucent, and Motorola, who are providing the physical and
software infrastructure that enables the Internet.
E-devices combine the power of embedded software with Internet connectivity to
create powerful, yet easy-to-use devices that leverage the Internet.
Applications include personal digital assistants digital mobile phones,
set-top boxes, and embedded devices found in automobiles, home appliances, and
medical instruments. Customers in this segment include Nokia, General Electric,
and DaimlerChrysler.
Rational estimates that during its fiscal second quarter approximately 35
percent of its revenue came from e-business projects, 35 percent from
e-projects, and 10 percent from e-device projects.
IBM, Microsoft Alliances
Rational's leadership in providing e-development infrastructure has enabled it
to forge a set of powerful and expanding business alliances. Earlier this
year, Rational announced strategic alliances with Microsoft and IBM focused
around e-business and enterprise Web application development. Joint marketing
and development activities are currently underway with both companies.
"IBM recognizes that Rational is a key partner in providing the tools necessary
for customers to build e-business applications," said John Swainson, IBM's
general manager of Application and Integration Middleware. "The IBM/Rational
Alliance was formed to complement IBM's VisualAge application development
tools, giving our customers a complete solution to assist them in the adoption
of the IBM Application Framework for e-business."
"Rational's enterprise team-unifying solution is a powerful complement to
Microsoft's Visual Studio tool suite for customers building Internet
applications for the Windows DNA platform," said Paul Maritz, group vice
president of Microsoft's Developer Group. "A number of our own development
teams are using Rational's products to write software for the Internet."
Invests in a new Internet company to accelerate strategy
To accelerate and broaden its Internet strategy, Rational has invested in a
new Internet company whose business will focus on developing a portal to meet
the needs of the global community of Internet software professionals. The new
company will also create an electronic marketplace for products and services
relating to Internet software development, and create and deploy a
comprehensive hosted development service for Internet software development.
Rational has acquired an eighty-percent interest in this new company in return
for a $50 million investment in preferred stock. Paul Levy, Rational's
co-founder and chairman, and Mike Devlin, Rational's co-founder and chief
executive officer, will continue in these roles as well as serve as chairman
and vice chairman, respectively, of the new company. Paul Levy and Mike Devlin
are founders of the new company, each with a ten-percent equity interest
subject to vesting over a four-year period. It is anticipated that the new
company will consider adding strategic investors and, in the future, consider
a public offering.
Policy regarding "forward looking" statements Statements
Statements contained in this press release may include "forward looking"
statements relating to financial performance which are subject to risks and
uncertainties. The actual future results of the company could differ
materially from those projected herein. Certain risks which could cause actual
results to differ materially include the need to successfully execute the
company's Internet strategy, fluctuations in operating results, dependence on
market growth for sophisticated development tools and competition in the
market place. For a list of additional risk factors, see recent SEC filings.
About Rational Software Corporation
Rational Software Corporation (Nasdaq: RATL), the e-development company, helps
organizations develop and deploy software for e-business, e-infrastructure,
and e-devices through a combination of tools, services and software
engineering best practices. Rational's e-development solution helps
organizations overcome the e-software paradox by accelerating time to market
while improving quality. Rational's integrated solution simplifies the
process of acquiring, deploying and supporting a comprehensive software
development platform, reducing total cost of ownership. International Data
Corporation (IDC) has recognized Rational as the leader in multiple segments of
the software development life-cycle management market for three years in a
row. Founded in 1981, Rational, one of the world's largest Internet software
companies, had revenues of $411 million in its fiscal year that ended in
March, 1999 and employs more than 2,000 people around the world.
