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EXHIBIT 99.2
Contacts: Timothy A. Brennan, Chief Financial Officer
(408) 863-9900
[email protected]
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David Henshall, Treasurer
(408) 863-9900
[email protected]
For Press: Bill Durling, Director of Corporate Communications
(781) 676 2489
[email protected]
RATIONAL SOFTWARE ACQUIRES REMAINING SHARES OF CATAPULSE
The Catapulse Hosted Development Service Accelerates And Extends Rational's
Strategy
CUPERTINO, November 27, 2000 -- Rational Software (NASDAQ: RATL), the e-
development company, announced today that it has signed a definitive agreement
to acquire the remaining shares of Catapulse, Inc. not currently owned by
Rational.
Rational invested $50 million in Catapulse in December 1999. Other outside
investors include Benchmark Capital. Rational currently owns approximately 35
percent of the fully diluted Catapulse shares.
Under the agreement, Rational would acquire the remaining shares of Catapulse in
a stock for stock transaction valued at approximately $405 million (based on a
five day average stock price). Rational will issue common shares and assume
Catapulse options and warrants equal to approximately 5.4% of its fully diluted
shares, 67% of which will be subject to vesting and lock up agreements that will
vest and / or be released from lock up over a three to five year period.
The transaction, subject to Rational stockholder approval and other customary
conditions including regulatory approvals, is expected to close in the March
2001 quarter and will be accounted for under the purchase method of accounting.
The Catapulse Hosted Development Service (HDS) helps solve the e-software
paradox - the need to build higher quality software faster - by delivering the
power of Rational Suite as a service over the Internet while relieving customers
of the need to create their own infrastructure for building software. In
addition, the HDS provides customers with rich content and collaboration
capabilities that allow them to share and leverage their software intellectual
property.
"Rational's vision is to enable organizations to quickly build higher quality
software `anytime, anywhere, any way,'" said Paul Levy, co-founder and Chairman
of Rational
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Software. "The HDS is a new class of product that immediately
complements and accelerates our Rational Suite strategy, providing the benefits
of Rational's solution to an even broader audience."
"Over the past year, the Catapulse team has demonstrated progress in several
critical areas, including dealing with the technical risks of the HDS, and
establishing the viability of its customer and business models," said Mike
Devlin, co-founder and CEO of Rational. "Catapulse has been successful in
building initial interest in the service, including a substantial multi-year
commitment from IBM Global Services."
Rational also indicated that it is making no changes with respect to its
financial guidance for the quarters ended December 31, 2000 and March 31, 2001.
Revenue guidance for the fiscal year ending March 31, 2002 has been increased by
$50 million to a range of $1.05 billion to $1.15 billion. There is no change to
the pro forma earnings per share guidance range of $.75 to $.80.
A conference call is scheduled for today at 3 p.m. Pacific Time to review this
announcement. The conference call dial-in number is (888) 791-4030;
international (415) 228-4837 - password Rational. A replay of the conference
call will be available for two weeks. The replay number is (888) 568-0879;
international (402) 998-1551. The conference call remarks will be posted on the
company's website at www.rational.com
This press release contains certain "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and are subject to
uncertainty and changes in circumstances. Actual results may vary materially
from the expectations contained herein. The forward-looking statements
contained herein include statements about the consummation of the transaction
with Catapulse, future financial and operating results of the combined company
and benefits of the pending transaction with Catapulse. Factors that could
cause actual results to differ materially from those described herein include:
the inability to obtain regulatory approvals; the inability to successfully
integrate the Rational and Catapulse businesses; costs related to the
transaction; and the general economic environment, dependence on market growth
for sophisticated development tools and competition in the market place. More
detailed information about these factors is set forth in the reports filed by
Rational with the Securities and Exchange Commission. Rational is under no
obligation to (and expressly disclaims any such obligation to) update or alter
its forward-looking statements, whether as a result of new information, future
events or otherwise.
In connection with the proposed transaction, Rational will file a registration
statement on Form S-4, including a proxy statement-prospectus, with the
Securities and Exchange Commission. Investors and security holders are advised
to read the registration statement, including the proxy statement-prospectus
when they become available because they will contain important information about
the proposed merger. Investors and security holders may obtain a free copy of
the registration statement and the proxy statement-prospectus (when available)
and other documents filed by Rational with the
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Securities and Exchange Commission at the Securities and Exchange Commission's
web site at http://www/sec.gov. Free copies of the registration statement (when
available) and other documents filed by Rational with the Securities and
Exchange Commission may also be obtained from Rational by directing a request to
Rational, Attention: Tim Brennan, 408-863-9900.
Rational and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from Rational stockholders in favor
of the proposed transaction. These directors and executive officers include
Paul Levy, Michael Devlin, Les Denend, Al Schleicher, John Montague, Tom Bogan
and Tim Brennan. Collectively, as of March 31, 2000, the directors and
executive officers of Rational may be deemed to beneficially own approximately
6.4% of the outstanding shares of Rational common stock. Investors and security
holders may obtain additional information regarding the interests of the
participants by reading the registration statement and proxy statement-
prospectus when they become available.
Chase H&Q, a division of Chase Securities Inc., is financial advisor to the
Special Committee of the Board of Directors of Rational Software, and Credit
Suisse First Boston is financial advisor to Catapulse, Inc.
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. IDC has recognized Rational as the market revenue leader in
multiple segments of the software development life-cycle management market for
four years in a row. Founded in 1981, Rational, one of the world's largest
Internet software companies, had revenues of $684 million in its twelve months
ended September, 2000 and employs more than 3,400 people around the world.
Additional information is available on the Internet at http://www.rational.com.
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About Catapulse
Founded in October 1999 by Paul Levy and Mike Devlin, the original co-founders
of Rational Software, Catapulse is leveraging the Internet to provide an
unprecedented range of resources designed to change the nature of software
development. Through a robust, secure and integrated platform, Catapulse enables
professional software teams to work and collaborate more effectively - allowing
software-driven products and services to be delivered faster, at lower cost, and
with higher quality. Based in Cupertino, in the heart of California's Silicon
Valley, Catapulse is backed by Rational Software and Benchmark Capital. For more
information, visit www.catapulse.com.
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