EXHIBIT (a)(1)(i)
OFFER TO PURCHASE FOR CASH
BY
CREDIT ACCEPTANCE CORPORATION
OF
UP TO 3,500,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT GREATER THAN $31.50
NOR LESS THAN $28.00 PER SHARE
THE TENDER OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON SEPTEMBER 26, 2006, UNLESS THE TENDER OFFER IS EXTENDED.
Credit Acceptance Corporation, a Michigan corporation ("CA"), is offering
to purchase for cash up to 3,500,000 shares of its common stock, par value $.01
per share, upon the terms and subject to the conditions set forth in this Offer
to Purchase and the related letter of transmittal (which together, as they may
be amended and supplemented from time to time, constitute the tender offer).
Unless the context otherwise requires, all references to shares shall refer to
the shares of common stock, par value $.01 per share, of CA.
On the terms and subject to the conditions of the tender offer, we will
determine the single per share price, not greater than $31.50 nor less than
$28.00 per share, net to you in cash, without interest, that we will pay for
shares properly tendered and not properly withdrawn in the tender offer, taking
into account the total number of shares so tendered and the prices specified by
the tendering shareholders. All shares acquired in the tender offer will be
acquired at the same price. We will select the lowest purchase price that will
allow us to purchase 3,500,000 shares, or such fewer number of shares as are
properly tendered and not properly withdrawn, at prices not greater than $31.50
nor less than $28.00 per share. Only shares properly tendered at prices at or
below the purchase price and not properly withdrawn will be purchased, on the
terms and subject to the conditions of the tender offer. However, because of the
"odd lot" priority, proration and conditional tender provisions described in
this document, all of the shares tendered at or below the purchase price may not
be purchased if more than the number of shares we seek are properly tendered.
Shares not purchased in the tender offer will be returned to the tendering
shareholders at our expense promptly after the expiration of the tender offer.
See Section 1. To tender shares properly, you must properly complete and duly
execute the letter of transmittal, including the section relating to the price
at which you are tendering your shares. We reserve the right, in our sole
discretion, to purchase more than 3,500,000 shares in the tender offer, subject
to applicable law.
THE TENDER OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE TENDER OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE SECTION
7.
Our shares are listed and traded on the NASDAQ Global Market under the
symbol "CACC." On August 25, 2006, the last trading day prior to the
commencement of the tender offer, the last sale price of our shares reported on
the NASDAQ Global Market was $27.87 per share. YOU ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES BEFORE DECIDING WHETHER AND AT WHICH PRICE OR
PRICES TO TENDER YOUR SHARES. SEE SECTION 8.
OUR BOARD OF DIRECTORS HAS APPROVED THE TENDER OFFER. HOWEVER, NEITHER WE
NOR OUR BOARD OF DIRECTORS OR INFORMATION AGENT MAKES ANY RECOMMENDATION TO YOU
AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR SHARES OR AS TO
THE PRICE OR PRICES AT WHICH YOU MAY CHOOSE TO TENDER YOUR SHARES. YOU MUST MAKE
YOUR OWN DECISION AS
TO WHETHER TO TENDER YOUR SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH YOUR SHARES SHOULD BE TENDERED.
DONALD FOSS, OUR CHAIRMAN OF THE BOARD, HAS INDICATED HIS INTENTION TO
TENDER 20 MILLION SHARES IN THE TENDER OFFER. IN ADDITION, ONE OTHER OFFICER HAS
ADVISED US THAT HE INTENDS TO TENDER SHARES IN THE TENDER OFFER. SEE SECTIONS 1
AND 11.
Questions and requests for assistance may be directed to Georgeson Inc.,
the information agent for the tender offer, at its address and telephone number
set forth on the back cover page of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase, the letter of transmittal or the
notice of guaranteed delivery, or any document incorporated herein by reference,
may be directed to the information agent.
-------------------------
August 28, 2006
ii
TABLE OF CONTENTS
<Table>
IMPORTANT................................................... iv
SUMMARY TERM SHEET.......................................... 1
FORWARD-LOOKING STATEMENTS.................................. 7
THE TENDER OFFER............................................ 8
SECTION 1. NUMBER OF SHARES; PRORATION................... 8
SECTION 2. PURPOSE OF THE TENDER OFFER; CERTAIN EFFECTS
OF THE TENDER OFFER; PLANS AND PROPOSALS...... 10
SECTION 3. PROCEDURES FOR TENDERING SHARES............... 13
SECTION 4. WITHDRAWAL RIGHTS............................. 17
SECTION 5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE
PRICE......................................... 17
SECTION 6. CONDITIONAL TENDER OF SHARES.................. 18
SECTION 7. CONDITIONS OF THE TENDER OFFER................ 19
SECTION 8. PRICE RANGE OF SHARES; DIVIDENDS.............. 21
SECTION 9. SOURCE AND AMOUNT OF FUNDS.................... 21
SECTION 10. CERTAIN INFORMATION CONCERNING CA............. 23
SECTION 11. INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS;
TRANSACTIONS AND ARRANGEMENTS CONCERNING
SHARES........................................ 25
SECTION 12. LEGAL MATTERS; REGULATORY APPROVALS........... 29
SECTION 13. U.S. FEDERAL INCOME TAX CONSEQUENCES.......... 30
SECTION 14. EXTENSION OF THE TENDER OFFER; TERMINATION;
AMENDMENT..................................... 35
SECTION 15. FEES AND EXPENSES............................. 36
SECTION 16. MISCELLANEOUS................................. 36
</Table>
iii
IMPORTANT
If you wish to tender all or any part of your shares, you should either
(1)(a) complete and sign a letter of transmittal, or a facsimile of it,
according to the instructions in the letter of transmittal and mail or deliver
it, together with any required signature guarantee and any other required
documents, to Computershare Trust Company, N.A., the depositary for the tender
offer, and mail or deliver the share certificates to the depositary together
with any other documents required by the letter of transmittal, or (b) tender
the shares according to the procedure for book-entry transfer described in
Section 3, or (2) request a broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for you. If your shares are registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee, you should contact that person if you desire to tender your shares. If
you desire to tender your shares and (1) your share certificates are not
immediately available or cannot be delivered to the depositary, (2) you cannot
comply with the procedure for book-entry transfer, or (3) your other required
documents cannot be delivered to the depositary by the expiration of the tender
offer, you must tender your shares according to the guaranteed delivery
procedure described in Section 3.
If you wish to maximize the chance that your shares will be purchased by
us, you should check the box in the section of the letter of transmittal
captioned "Shares Tendered at Price Determined Under the Tender Offer." You
should understand that this election will have the same effect as if you
selected the minimum price of $28.00 per share.
The tender offer is not being made to (nor will any tender of shares be
accepted from or on behalf of) holders in any jurisdiction in which the making
of the tender offer or the acceptance of any tender of shares therein would not
be in compliance with the laws of such jurisdiction. However, we may, at our
discretion, take such action as we may deem necessary for us to make the tender
offer in any such jurisdiction and extend the tender offer to holders in such
jurisdiction.
We have not authorized any person to make any recommendation on our behalf
as to whether you should tender or refrain from tendering your shares in the
tender offer or as to the price or prices at which you may choose to tender your
shares. We have not authorized any person to give any information or to make any
representation in connection with the tender offer other than those contained in
this document or in the letter of transmittal. If given or made, any
recommendation or any such information or representation must not be relied upon
as having been authorized by us.
iv
SUMMARY TERM SHEET
We are providing this summary term sheet for your convenience. It
highlights the most material information in this document, but you should
understand that it does not describe all of the details of the tender offer to
the same extent described in this document. We urge you to read the entire
document and the related letter of transmittal because they contain the full
details of the tender offer. We have included references to the sections of this
document where you will find a more complete discussion.
Who is offering to purchase my
shares?....................... Credit Acceptance Corporation, which we refer
to as "we," "us" or "CA," is offering to
purchase shares of its common stock, par value
$.01 per share, in a tender offer.
What will the purchase price
for the shares be and what
will be the form of
payment?...................... We are conducting the tender offer through a
procedure commonly called a modified "Dutch
auction." This procedure allows you to select
the price within a price range specified by us
at which you are willing to sell your shares.
The price range for the tender offer is $28.00
to $31.50 per share. We will select the lowest
purchase price that will allow us to buy
3,500,000 shares or, if a lesser number of
shares are properly tendered, all shares that
are properly tendered and not properly
withdrawn. All shares we purchase will be
purchased at the same purchase price, even if
you have selected a lower purchase price, but
we will not purchase any shares above the
purchase price selected by us. You should be
aware that if Donald Foss, our Chairman of the
Board, tenders 20 million of his shares as he
intends, then the price at which he tenders
will likely be the price we select. If you wish
to maximize the chance that your shares will be
purchased, you should check the box under the
caption "Shares Tendered at Price Determined
Under the Tender Offer" in the letter of
transmittal indicating that you will accept the
purchase price selected by us. You should
understand that this election will have the
same effect as if you selected the minimum
price of $28.00 per share. If your shares are
purchased in the tender offer, you will be paid
the purchase price in cash, without interest,
promptly after the expiration of the tender
offer. Under no circumstances will we pay
interest on the purchase price, even if there
is a delay in making payment. See Sections 1
and 11.
How many shares will CA
purchase?..................... We will purchase 3,500,000 shares validly
tendered in the tender offer, or such fewer
number of shares as are properly tendered and
not properly withdrawn prior to the expiration
date. 3,500,000 shares represents approximately
10.49% of our outstanding common stock. We also
expressly reserve the right to purchase an
additional number of shares not to exceed 2% of
the outstanding shares, and could decide to
purchase more shares, subject to applicable
legal requirements. As of August 24, 2006,
there were 33,362,080 shares issued and
outstanding. See Section 11. The tender offer
is not conditioned on any minimum number of
shares being tendered. See Section 7.
Why is CA making the tender
offer?........................ We believe that the tender offer is a prudent
use of our financial resources given our
business profile, assets and current market
price, and that investing in our own shares is
an attractive use of capital and an efficient
means to provide value to our shareholders. The
tender offer also will provide increased
liquidity to holders of shares and the
opportunity for holders to sell shares without
the usual transaction costs associated with
open market sales. On August 24, 2006, the CA
board of directors authorized CA to enter into
the tender offer and approved spending up to
$110,250,000 to repurchase the shares tendered.
CA has previously engaged in repurchases of its
shares, and depending on market conditions and
the availability of capital, CA's board may
authorize additional repurchases pursuant to
one or more tender offers. Pursuant to existing
board authority, management is also authorized
to spend up to $22.5 million on additional
share repurchases in market or private
transactions in the future. See Section 2.
How will CA pay for the
shares?....................... Assuming we purchase 3,500,000 shares in the
tender offer at the maximum specified purchase
price of $31.50 per share, $110,250,000 will be
required to purchase such shares. We anticipate
that we will obtain all of the funds necessary
to purchase shares tendered in the tender
offer, and to pay related fees and expenses,
from existing cash reserves and by borrowing
under our $135 million secured revolving credit
facility and our $325 million warehouse
revolving credit facility. The tender offer is
not conditioned upon the receipt of financing.
See Sections 7 and 9.
Can I tender part of my shares
at different prices?.......... Yes, you can elect to tender part of your
shares at one price and other shares at a
different price. However, you cannot tender the
same share at more than one price. If you
tender some shares at one price and other
shares at another price, you must use a
separate letter of transmittal for each price.
See Section 3.
How long do I have to tender
my shares?.................... You may tender your shares until the tender
offer expires. The tender offer will expire on
September 26, 2006 at 5:00 p.m., New York City
time, unless we extend it. See Section 1. We
may choose to extend the tender offer for any
reason, subject to applicable laws. See Section
14.
How will I be notified if CA
extends the tender offer?..... We will issue a press release by 9:00 a.m., New
York City time, on the business day after the
previously scheduled expiration date if we
decide to extend the tender offer. See Section
14.
What will happen if I do not
tender my shares?............. Upon the completion of the tender offer,
non-tendering shareholders will realize a
proportionate increase in their relative
ownership interest in us and thus in our future
earnings and assets, subject to our right to
issue additional shares of common stock and
other equity securities in the future. See
Section 2.
2
Are there any conditions to
the tender offer?............. Yes. Our obligation to accept and pay for your
tendered shares depends upon a number of
conditions, including:
- No legal action shall be pending, or shall
have been threatened or taken, that might
adversely affect the tender offer.
- No commencement or escalation of a war, armed
hostilities or other international or
national calamity, including, but not limited
to, an act of terrorism.
- No significant decrease in the price of our
common stock or in the price of equity
securities generally and no adverse changes
in the U.S. stock markets or credit markets
shall have occurred during the tender offer.
- No one shall have proposed, announced or made
a tender or exchange offer (other than this
tender offer), merger, business combination
or other similar transaction involving us.
- No one (including certain groups) shall have
acquired, or proposed to acquire, beneficial
ownership of more than 5% of the outstanding
shares (other than anyone who publicly
disclosed such ownership in a filing with the
Securities and Exchange Commission prior to
August 28, 2006). In addition, no new group
shall have been formed which beneficially
owns more than 5% of the outstanding shares.
Finally, no one shall have filed a
Notification and Report Form under the
Hart-Scott-Rodino Antitrust Improvements Act
of 1976, or made a public announcement
reflecting an intent to acquire us or any of
our subsidiaries or any of our respective
assets or securities.
- No material adverse change in our business,
condition (financial or otherwise), assets,
income, operations, prospects or stock
ownership shall have occurred during the
tender offer.
- No determination by CA that the consummation
of the tender offer is reasonably likely to
cause the shares to be eligible for
deregistration under the Securities Exchange
Act of 1934 or to be delisted from the NASDAQ
Global Market. See Section 7.
How do I tender my shares?.... To tender your shares, prior to 5:00 p.m., New
York City time, on September 26, 2006 (unless
the tender offer is extended):
- you must deliver your share certificate(s)
and a properly completed and duly executed
letter of transmittal to the depositary at
the address appearing on the back cover page
of this document; or
- the depositary must receive a confirmation of
receipt of your shares by book-entry transfer
and a properly completed and duly executed
letter of transmittal; or
- you must comply with the guaranteed delivery
procedure.
If your shares are held through a broker,
dealer, commercial bank or other nominee, you
must request such broker, dealer,
3
commercial bank or other nominee to effect the
transaction for you. You may also contact the
information agent for assistance. See Section 3
and the instructions to the related letter of
transmittal.
The Plan Administrator of the CA 401(k) Profit
Sharing Plan and Trust has indicated to us that
it does not intend to tender shares held in the
Trust.
Once I have tendered shares in
the tender offer, can I
withdraw my tender?........... You may withdraw any shares you have tendered
at any time before 5:00 p.m., New York City
time, on September 26, 2006, unless we extend
the tender offer, in which case you may
withdraw tendered shares until the tender
offer, as so extended, expires. If we have not
accepted for payment the shares you have
tendered to us, you may also withdraw your
shares after October 25, 2006. See Section 4.
How do I withdraw shares I
previously tendered?.......... You must deliver, on a timely basis, a written,
telegraphic or facsimile notice of your
withdrawal to the depositary at the address
appearing on the back cover page of this
document. Your notice of withdrawal must
specify your name, the number of shares to be
withdrawn and the name of the registered holder
of these shares. Some additional requirements
apply if the share certificates to be withdrawn
have been delivered to the depositary or if
your shares have been tendered under the
procedure for book-entry transfer set forth in
Section 3. If you wish to withdraw shares
tendered at more than one price, you must
submit a separate withdrawal notice for each
price at which shares were tendered and are
being withdrawn. See Section 4.
Has CA or its board of
directors adopted a position
on the tender offer?.......... Our board of directors has approved the tender
offer. However, neither we nor our board of
directors makes any recommendation to you as to
whether you should tender or refrain from
tendering your shares or as to the price at
which you may choose to tender your shares. You
must make your own decision as to whether to
tender your shares and, if so, how many shares
to tender and the price at which your shares
should be tendered. See Sections 2 and 11.
Will CA's directors and
officers tender shares in the
tender offer?................. Mr. Foss has indicated his non-binding
intention to tender 20 million shares. In
addition, one other officer has advised us that
he plans to tender shares in the tender offer.
See Section 11.
Following the tender offer,
will CA continue as a public
company?...................... We do not believe that our purchase of shares
in the tender offer will cause us to be
eligible for deregistration under the
Securities Exchange Act of 1934 or delisted
from the NASDAQ Global Market. It is a
condition of our obligation to purchase shares
pursuant to the tender offer that there not be
any reasonable
4
likelihood, as determined by us in our
reasonable judgment, that either of these
events will occur. See Section 8.
What happens if more than
3,500,000 shares are tendered
in the tender offer?.......... We will purchase shares:
- first, from all holders of "odd lots" of less
than 100 shares who properly tender all of
their shares at or below the purchase price
selected by us and do not properly withdraw
them before the expiration date;
- second, after purchasing the shares from the
"odd lot" holders, from all other
shareholders who properly tender shares at or
below the purchase price selected by us, on a
pro rata basis, subject to the conditional
tender provisions described in Section 6; and
- third, only if necessary to permit us to
purchase 3,500,000 shares, from holders who
have tendered shares subject to the condition
that a specified minimum number of the
holder's shares be purchased if any shares
are purchased in the tender offer as
described in Section 6 (for which the
condition was not initially satisfied) by
random lot, to the extent feasible. To be
eligible for purchase by random lot,
shareholders whose shares are conditionally
tendered must have tendered all of their
shares. Therefore, all of the shares that you
tender on a conditional basis in the tender
offer may not be purchased even if they are
tendered at or below the purchase price. See
Section 1.
When will CA pay for the
shares I tender?.............. We will pay the purchase price, net to you in
cash, without interest, for the shares we
purchase within three business days after the
expiration of the tender offer and the
acceptance of the shares for payment. In the
event of proration, we do not expect to be able
to commence payment for shares until
approximately five business days after the
expiration date. See Sections 1 and 5.
What is the recent market
price of my CA shares?........ On August 25, 2006, the last trading day prior
to the commencement of the tender offer, the
last sale price for our shares reported on the
NASDAQ Global Market was $27.87 per share. You
are urged to obtain current market quotations
for the shares before deciding whether and at
which purchase price to tender your shares. The
common stock has recently traded at prices
higher than $28.00 per share. As a result, it
is possible that you may receive less for your
shares if you tender them than you would
receive in a market sale. See Section 8.
Will I have to pay brokerage
commissions if I tender my
shares?....................... If you are a registered shareholder and you
tender your shares directly to the depositary,
you will not incur any brokerage commissions.
If you hold shares through a broker or bank, we
5
urge you to consult your broker or bank to
determine whether transaction costs are
applicable. See Section 1 and Section 3.
What are the U.S. federal
income tax consequences if I
tender my shares?............. Generally, you will be subject to U.S. federal
income taxation when you receive cash from us
in exchange for the shares you tender. In
addition, the receipt of cash for your tendered
shares will be treated either as (1) a sale or
exchange eligible for capital gains treatment,
or (2) a dividend. Non-United States holders
are urged to consult their tax advisors
regarding the application of U.S. federal
income tax withholding and backup withholding,
including eligibility for a withholding tax
reduction or exemption, and the refund
procedure. See Section 13.
Will I have to pay any stock
transfer tax if I tender my
shares?....................... If you instruct the depositary in the letter of
transmittal to make the payment for the shares
to the registered holder, you will not incur
any stock transfer tax. See Section 5.
To whom can I talk if I have
questions?.................... The information agent can help answer your
questions. The information agent is Georgeson
Inc. Its contact information is set forth on
the back cover page of this document.
6
FORWARD-LOOKING STATEMENTS
We make forward-looking statements in this Offer to Purchase and in filings
we have made with the Securities and Exchange Commission, or SEC, and may make
such statements in future filings. We may also make forward-looking statements
in our press releases or other public or shareholder communications. Our
forward-looking statements are subject to risks and uncertainties and include
information about our expectations and possible or assumed future results of
operations. When we use any of the words "may," "will," "should," "believes,"
"expects," "assumes," "assumptions," "anticipates," "estimates," "forecasts,"
"intends," "plans" or similar expressions, we are making forward-looking
statements.
These forward-looking statements represent our outlook only as of the date
of this Offer to Purchase. While we believe that our forward-looking statements
are reasonable, actual results could differ materially since the statements are
based on our current expectations, which are subject to risks and uncertainties.
Factors that might cause such a difference include the following:
- our potential inability to accurately forecast and estimate the amount
and timing of future collections could have a material adverse effect on
our results of operations,
- increased competition from traditional financing sources and from
non-traditional lenders,
- our ability to maintain and grow our business is dependent on our ability
to continue to access funding sources and obtain capital on favorable
terms,
- our potential inability to generate sufficient cash flow to service our
debt and fund our future operations,
- the substantial regulation to which we are subject limits our business,
and such regulation or changes in such regulation could result in
potential liability,
- adverse changes in economic conditions, or adverse changes in the
automobile or finance industries or in the non-prime consumer finance
market could adversely affect our financial position, liquidity and
results of operations and our ability to enter into future financing
transactions,
- litigation we are involved in from time to time may adversely affect our
financial condition, results of operations and cash flows,
- we are dependent on our senior management and the loss of any of these
individuals or an inability to hire additional personnel could adversely
affect our ability to operate profitably,
- natural disasters, acts of war, terrorist attacks and threats or the
escalation of military activity in response to such attacks or otherwise
may negatively affect our business, financial condition and results of
operations; and
- other risks set forth in this Offer to Purchase and the other reports we
file or furnish from time to time with the SEC.
Other factors not currently anticipated by management may also materially
and adversely affect our results of operations. We do not undertake, and
expressly disclaim any obligation, to update or alter our forward-looking
statements whether as a result of new information, future events or otherwise,
except as required by applicable law. In addition, please refer to our reports
on Form 10-K and Form 10-Q that are incorporated herein by reference for
information on these and other risk factors. See Section 10.
7
THE TENDER OFFER
SECTION 1. NUMBER OF SHARES; PRORATION
GENERAL. Upon the terms and subject to the conditions of the tender offer,
CA will purchase 3,500,000 shares, or such fewer number of shares as are
properly tendered and not properly withdrawn in accordance with Section 4,
before the scheduled expiration date of the tender offer, at prices not greater
than $31.50 nor less than $28.00 per share, net to the seller in cash, without
interest.
The term "expiration date" means 5:00 p.m., New York City time, on
September 26, 2006, unless and until CA, in its sole discretion, shall have
extended the period of time during which the tender offer will remain open, in
which event the term "expiration date" shall refer to the latest time and date
at which the tender offer, as so extended by CA, shall expire. See Section 14
for a description of CA's right to extend, delay, terminate or amend the tender
offer. In accordance with the rules of the Securities and Exchange Commission,
CA may, and CA expressly reserves the right to, purchase under the tender offer
an additional number of shares not to exceed 2% of the outstanding shares
without amending or extending the tender offer. See Section 14. In the event of
an over-subscription of the tender offer as described below, shares tendered at
or below the purchase price will be subject to proration, except for odd lots.
Except as described herein, withdrawal rights expire on the expiration date.
If (1)(a) CA increases the price to be paid for shares above $31.50 per
share or decreases the price to be paid for shares below $28.00 per share, (b)
CA increases the number of shares being sought in the tender offer and the
increase exceeds 2% of the outstanding shares, or (c) CA decreases the number of
shares being sought, and (2) the tender offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that notice of any increase or decrease is first
published, sent or given in the manner specified in Section 14, the tender offer
will be extended until the expiration of ten business days from the date that
notice of any increase or decrease is first published. For the purposes of the
tender offer, a "business day" means any day other than a Saturday, Sunday or
U.S. federal holiday and consists of the time period from 12:01 a.m. through
12:00 Midnight, New York City time.
The tender offer is not conditioned on any minimum number of shares being
tendered. The tender offer is, however, subject to other conditions. See Section
7.
In accordance with Instruction 5 of the related letter of transmittal,
shareholders desiring to tender shares must specify the price or prices, not
greater than $31.50 nor less than $28.00 per share, at which they are willing to
sell their shares to CA under the tender offer. Alternatively, shareholders
desiring to tender shares can choose not to specify a price and, instead,
specify that they will sell their shares at the purchase price ultimately paid
for shares properly tendered and not properly withdrawn in the tender offer,
which could result in the tendering shareholder receiving a price per share as
low as $28.00 or as high as $31.50, and will have the same effect as if the
shareholder selected the minimum price of $28.00 per share. Promptly following
the expiration date, CA will, in its sole discretion, determine the purchase
price that it will pay for shares properly tendered and not properly withdrawn,
taking into account the number of shares tendered and the prices specified by
tendering shareholders. CA will select the lowest purchase price, not greater
than $31.50 nor less than $28.00 per share, net to the seller in cash, without
interest, that will enable it to purchase 3,500,000 shares, or such fewer number
of shares as are properly tendered and not properly withdrawn in the tender
offer. Donald Foss, CA's Chairman of the Board, has indicated his non-binding
intention to tender 20 million shares. The price at which Mr. Foss tenders such
shares would likely be the price at which CA purchases shares in the offer.
Shares tendered at any price above the price chosen by Mr. Foss would not be
purchased and shares tendered at or below the price chosen by Mr. Foss would be
purchased on a pro rata basis. See Sections 1 and 11.
Only shares properly tendered at or below the purchase price and not
properly withdrawn will be purchased, upon the terms and subject to the
conditions of the tender offer. However, because of the odd lot priority,
proration and conditional tender provisions of the tender offer, all of the
shares tendered at or below the purchase price will not be purchased if more
than the number of shares CA seeks are properly
8
tendered at or below the purchase price. All shares tendered and not purchased
under the tender offer, including shares tendered at prices greater than the
purchase price and shares not purchased because of proration or conditional
tenders, will be returned to the tendering shareholders at CA's expense promptly
after the expiration date. By following the instructions in the letter of
transmittal, shareholders can specify one minimum price for a specified portion
of their shares and a different minimum price for other specified shares, but a
separate letter of transmittal must be submitted for shares tendered at each
price. Shareholders also can specify the order in which the specified portions
will be purchased in the event that, as a result of the proration provisions or
otherwise, some but not all of the tendered shares are purchased pursuant to the
tender offer. In the event a shareholder does not designate the order and fewer
than all shares are purchased due to proration, the order of shares purchased
will be selected by the depositary.
If the number of shares properly tendered at or below the purchase price
and not properly withdrawn prior to the expiration date is fewer than or equal
to 3,500,000 shares, or such greater number of shares as CA may elect to
purchase, subject to applicable law, CA will, upon the terms and subject to the
conditions of the tender offer, purchase all such shares.
PRIORITY OF PURCHASES. Upon the terms and subject to the conditions of the
tender offer, if greater than 3,500,000 shares, or such greater number of shares
as CA may elect to purchase, subject to applicable law, have been properly
tendered at prices at or below the purchase price and not properly withdrawn
prior to the expiration date, CA will purchase properly tendered shares on the
basis set forth below:
(1) First, CA will purchase all shares properly tendered and not properly
withdrawn prior to the expiration date by any odd lot holder (as defined below)
who:
(a) tenders all shares owned beneficially or of record by that odd lot
holder at a price at or below the purchase price (tenders of fewer than all
the shares owned by that odd lot holder will not qualify for this
preference); and
(b) completes the section entitled "Odd Lots" in the related letter of
transmittal and, if applicable, in the notice of guaranteed delivery.
(2) Second, after the purchase of all of the shares tendered by odd lot
holders, subject to the conditional tender provisions described in Section 6, CA
will purchase all other shares properly tendered at prices at or below the
purchase price and not properly withdrawn prior to the expiration date, on a pro
rata basis.
(3) Third, only if necessary to permit us to purchase 3,500,000 shares (or
such greater number of shares as CA may elect to purchase), CA will purchase
shares conditionally tendered (for which the condition was not initially
satisfied) at or below the purchase price, by random lot, to the extent
feasible. To be eligible for purchase by random lot, shareholders whose shares
are conditionally tendered must have tendered all of their shares.
As a result of the foregoing priorities applicable to the purchase of
shares tendered, it is possible that fewer than all shares tendered by a
shareholder will be purchased or that, if a tender is conditioned upon the
purchase of a specified number of shares, none of those shares will be purchased
even though those shares were tendered at prices at or below the purchase price.
ODD LOTS. For purposes of the tender offer, the term "odd lots" shall mean
all shares properly tendered prior to the expiration date at prices at or below
the purchase price and not properly withdrawn by any person referred to as an
"odd lot holder" who owns beneficially or of record an aggregate of fewer than
100 shares and so certifies in the appropriate place on the letter of
transmittal and, if applicable, on the notice of guaranteed delivery. To qualify
for this preference, an odd lot holder must tender all shares owned beneficially
or of record by the odd lot holder in accordance with the procedures described
in Section 3. As set forth above, odd lots will be accepted for payment before
proration, if any, of the purchase of other tendered shares. This preference is
not available to partial tenders or to beneficial or record holders of an
aggregate of 100 or more shares, even if these holders have share certificates
9
representing fewer than 100 shares. By accepting the tender offer, an odd lot
holder who holds shares in its name and tenders its shares directly to the
depositary would not only avoid the payment of brokerage commissions, but also
would avoid any applicable odd lot discounts in a sale of the odd lot holder's
shares. Any odd lot holder wishing to tender all of its shares pursuant to the
tender offer should complete the section entitled "Odd Lots" in the letter of
transmittal and, if applicable, in the notice of guaranteed delivery.
PRORATION. If proration of tendered shares is required, CA will determine
the proration factor as soon as practicable following the expiration date.
Proration for each shareholder tendering shares, other than odd lot holders,
shall be based on the ratio of the number of shares properly tendered and not
properly withdrawn by the shareholder to the total number of shares properly
tendered and not properly withdrawn by all shareholders, other than odd lot
holders, at or below the purchase price, subject to conditional tenders. If Mr.
Foss tenders 20 million shares as he has indicated, the proration factor will be
substantially impacted such that only a limited number of shares properly
tendered by shareholders other than odd lot holders would be purchased and it is
likely that no shares conditionally tendered would be purchased. See Section 11.
Because of the difficulty in determining the number of shares properly
tendered, including shares tendered by guaranteed delivery procedures, as
described in Section 3, and not properly withdrawn, and because of the odd lot
procedure described above and the conditional tender procedure described in
Section 6, CA does not expect that it will be able to announce the final
proration factor or commence payment for any shares purchased under the tender
offer until approximately five business days after the expiration date. The
preliminary results of any proration will be announced by press release promptly
after the expiration date. Shareholders may obtain preliminary proration
information from the information agent and may be able to obtain this
information from their brokers.
As described in Section 13, the number of shares that CA will purchase from
a shareholder under the tender offer may affect the U.S. federal income tax
consequences to that shareholder and, therefore, may be relevant to that
shareholder's decision whether or not to tender shares. The letter of
transmittal affords each shareholder who tenders shares registered in such
shareholder's name directly to the depositary the opportunity to designate the
order of priority in which shares tendered are to be purchased in the event of
proration as well as the ability to condition such tender on a minimum number of
shares being purchased. See Section 6.
This Offer to Purchase and the related letter of transmittal will be mailed
to record holders of shares and will be furnished to brokers, dealers,
commercial banks and trust companies whose names, or the names of whose
nominees, appear on CA's shareholder list or, if applicable, that are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of shares.
SECTION 2. PURPOSE OF THE TENDER OFFER; CERTAIN EFFECTS OF THE TENDER OFFER;
PLANS AND PROPOSALS
PURPOSE OF THE TENDER OFFER. CA's management and its board of directors
have evaluated CA's operations, strategy and expectations for the future and
believe that the tender offer is a prudent use of CA's financial resources given
its business profile, assets and current market price. CA believes that its
current financial resources and debt capacity exceed the financial requirements
of its business.
CA believes that the modified "Dutch auction" tender offer set forth herein
represents a mechanism to provide all shareholders with the opportunity to
tender all or a portion of their shares and, thereby, receive a return of CA's
capital if they so elect. This format of repurchase provides a method for
shareholders not participating to increase their relative percentage interest in
CA and its future operations at no additional cost. As a result, the board of
directors believes that investing in CA's own shares in this manner is an
attractive use of capital and an efficient means to provide value to
shareholders. The tender offer also provides liquidity to shareholders
(particularly those who, because of the size of their stockholdings, might not
be able to sell their shares without potential disruption to the share price) by
providing them the opportunity to determine the price not greater than $31.50
nor less than $28.00, at which they are willing to sell all or a portion of
their shares, and if those shares are purchased in the offer
10
to sell their shares for cash without potential disruption to the share price
and the usual transaction costs associated with market sales.
CA has previously repurchased shares as a means of increasing shareholder
value. In 1999, CA began acquiring shares of its common stock in connection with
a stock repurchase program announced in August 1999. That program authorized CA
to purchase up to 1.0 million common shares on the open market or pursuant to
negotiated transactions at price levels CA deems attractive. Since August 1999,
CA's board of directors has authorized several increases to the stock repurchase
program, the most recent occurring on August 1, 2006, which authorized the
repurchase of up to $25 million of CA's common stock in addition to the 7.0
million shares previously authorized. As of August 28, 2006, CA has repurchased
approximately 7.1 million shares under this program at a cost of approximately
$71.4 million or $10.08 per share on a weighted basis. These shares were
repurchased at prevailing market prices ranging from $3.63 to $27.99 per share
and include the 7.0 million shares previously authorized and $2.5 million of the
most recent authorization. On January 9, 2004, CA completed a modified Dutch
auction tender offer pursuant to which it repurchased approximately 2.2 million
shares at a cost of approximately $37.4 million or $17.00 per share. On
September 9, 2004, CA completed another modified Dutch auction tender offer
pursuant to which it repurchased approximately 2.7 million shares at a cost of
approximately $53.5 million or $20.00 per share. On March 13, 2006, CA completed
a third modified Dutch auction tender offer pursuant to which it repurchased
approximately 4.1 million shares at a cost of approximately $103.2 million, or
$25.00 per share. The 7.1 million shares purchased under the repurchase program
and the 9.0 million shares repurchased in the prior tender offers together
represent approximately 34.8% of the shares that were outstanding at the
beginning of the repurchase program. On August 24, 2006, the CA board of
directors authorized CA to enter into this tender offer and approved spending up
to $110,250,000 to repurchase shares tendered. Depending on market conditions
and the availability of capital, CA's board may authorize additional repurchases
in the future, including repurchases pursuant to additional tender offers.
After the tender offer is completed, CA believes that its anticipated cash
flow from operations, access to credit facilities and capital markets and
financial condition will be adequate for its needs. Depending on the number of
shares purchased in the tender offer, the result and prospects of CA's business,
prevailing economic and market conditions and the market price of the shares, CA
may continue its previously authorized repurchase program subsequent to the
termination of the tender offer. However, Rule 13e-4 under the Securities
Exchange Act of 1934, referred to herein as the "Exchange Act," prohibits CA and
its affiliates from purchasing any shares, other than in the tender offer, until
at least ten business days after the expiration date.
Neither CA, the CA board of directors nor the information agent makes any
recommendation to any shareholder as to whether to tender or refrain from
tendering any shares or as to the price at which shareholders may choose to
tender their shares. CA has not authorized any person to make any
recommendation. Shareholders should carefully evaluate all information in the
tender offer, should consult their own investment and tax advisors, and should
make their own decisions about whether to tender shares, and, if so, how many
shares to tender and the price or prices at which to tender.
Mr. Foss has indicated his non-binding intention to tender 20 million
shares. In addition, one other officer has advised CA that he intends to tender
shares in the tender offer. See Section 11.
CERTAIN EFFECTS OF THE TENDER OFFER. Upon the completion of the tender
offer, non-tendering shareholders will realize a proportionate increase in their
relative ownership interest in CA and thus in CA's future earnings and assets,
subject to CA's right to issue additional shares of common stock and other
equity securities in the future. Shareholders may be able to sell non-tendered
shares in the future in market transactions or otherwise, at a net price higher
or lower than the purchase price in the tender offer. CA can give no assurance,
however, as to the price at which a shareholder may be able to sell his or her
shares in the future, which price may be higher or lower than the purchase price
paid in the tender offer.
Shares that CA acquires pursuant to the tender offer will be cancelled and
will have the status of authorized but unissued shares.
11
The purchase of shares in the tender offer will reduce the number of shares
that might otherwise trade publicly and is likely to reduce the number of CA
shareholders. As of August 24, 2006, there were 33,362,080 shares issued and
outstanding. Assuming CA acquires 3,500,000 shares in the tender offer,
29,862,080 shares will be outstanding immediately after the tender offer. This
may reduce the volume of trading in the shares and make it more difficult to buy
or sell significant amounts of the shares without materially affecting the
market price. Nonetheless, CA anticipates that there will be a sufficient number
of shares outstanding and publicly traded following consummation of the tender
offer to ensure a continued trading market for the shares.
The shares are registered under the Exchange Act, which requires, among
other things, that CA furnish information to its shareholders and to the
Securities and Exchange Commission and comply with the Securities and Exchange
Commission's proxy rules in connection with meetings of shareholders. CA
believes that the purchase of shares pursuant to the tender offer will not
result in the shares becoming eligible for deregistration under the Exchange
Act. The tender offer is conditioned upon there not being any reasonable
likelihood, in CA's reasonable judgment, that the consummation of the tender
offer and the purchase of shares will cause its common stock to be eligible for
deregistration under the Exchange Act. See Section 7.
The shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using the shares as collateral. CA believes
that, following the purchase of the shares pursuant to the tender offer, the
shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin rules and regulations as long as CA's shares continue to
be listed on the NASDAQ Global Market. See Section 8.
PLANS AND PROPOSALS. CA is considering whether to fill the vacancy on the
CA board of directors created by the recent resignation of Daniel Leff, and is
in the process of replacing its former Chief Information Officer. Mr. McCluskey,
CA's President, announced his resignation, effective September 1, 2006. Except
for these items or as disclosed elsewhere in this offer to purchase, or as may
occur in the ordinary course of its business, CA currently has no plans or
proposals that relate to or would result in:
- an extraordinary transaction, such as a merger, reorganization or
liquidation, involving CA or any of its subsidiaries;
- a purchase, sale or transfer of a material amount of CA's assets or any
of its subsidiaries' assets;
- any material change in CA's present dividend rate or policy, indebtedness
or capitalization;
- any change in CA's present board of directors or management, including,
but not limited to, any plans or proposals to change the number or the
term of directors, or to fill any existing vacancies on the board or to
change any material term of the employment contract of any executive
officer;
- any other material change in CA's corporate structure or business;
- a class of CA's equity security being delisted from a national securities
exchange or ceasing to be authorized to be quoted in an automated
quotations system of a registered national securities association;
- a class of CA's equity securities becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act;
- the suspension of CA's obligation to file reports pursuant to Section
15(d) of the Exchange Act;
- the acquisition by any person of additional securities of CA, or the
disposition of securities by CA; or
- any changes in CA's charter, bylaws or other governing instruments or
other actions that could impede the acquisition of control of CA.
CA reserves the right to change its plans and intentions at any time, as it
deems appropriate.
12
SECTION 3. PROCEDURES FOR TENDERING SHARES
PROPER TENDER OF SHARES. For shares to be tendered properly under the
tender offer, (1) the share certificates (or confirmation of receipt of such
shares under the procedure for book-entry transfer set forth below), together
with a properly completed and duly executed letter of transmittal, or a manually
signed facsimile thereof, including any required signature guarantees, or an
"agent's message" (as defined below) or a specific acknowledgement in the case
of a tender through the Automated Tender Offer Program (as described below) of
The Depository Trust Company, referred to as the "book-entry transfer facility,"
and any other documents required by the letter of transmittal, must be received
before 5:00 p.m., New York City time, on the expiration date by the depositary
at its address set forth on the back cover page of this Offer to Purchase, or
(2) the tendering shareholder must comply with the guaranteed delivery procedure
set forth below. In accordance with Instruction 5 of the letter of transmittal,
shareholders desiring to tender shares in the tender offer must properly
indicate in the section captioned (1) "Shares Tendered at Price Determined by
Shareholder" on the letter of transmittal the price (in increments of $0.50) at
which shares are being tendered, or (2) "Shares Tendered at Price Determined
Under the Tender Offer" in the letter of transmittal that the shareholder will
accept the purchase price determined by CA in accordance with the terms of the
tender offer. Shareholders who desire to tender shares at more than one price
must complete a separate letter of transmittal for each price at which shares
are tendered, provided that the same shares cannot be tendered (unless properly
withdrawn previously in accordance with Section 4) at more than one price. To
tender shares properly, one and only one price box must be checked in the
appropriate section in each letter of transmittal.
If tendering shareholders wish to maximize the chance that their shares
will be purchased, they should check the box in the section of the letter of
transmittal captioned "Shares Tendered at Price Determined Under the Tender
Offer." Note that this election will have the same effect as if you selected the
minimum price of $28.00 per share.
If tendering shareholders wish to indicate a specific price (in increments
of $0.50) at which their shares are being tendered, they must check a box under
the section captioned "Shares Tendered at Price Determined by Shareholder."
Tendering shareholders should be aware that this election could mean that none
of their shares will be purchased if they check a box other than the box
representing the lowest price.
In addition, odd lot holders who tender all shares must complete the
section captioned "Odd Lots" in the letter of transmittal and, if applicable, in
the notice of guaranteed delivery, to qualify for the preferential treatment
available to odd lot holders as set forth in Section 1.
Shareholders may tender shares subject to the condition that all or a
specified minimum number of their shares be purchased. Any shareholder desiring
to make such a conditional tender should so indicate in the box captioned
"Conditional Tender" on the letter of transmittal, and, if appropriate, the
Notice of Guaranteed Delivery. It is the tendering shareholder's responsibility
to determine the minimum number of shares to be purchased. SHAREHOLDERS SHOULD
CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS WITH RESPECT TO THE EFFECT OF
PRORATION OF THE TENDER OFFER AND THE ADVISABILITY OF MAKING A CONDITIONAL
TENDER. See Section 6 and Section 13.
Shareholders who hold shares through brokers or banks are urged to consult
the brokers or banks to determine whether transaction costs are applicable if
they tender shares through the brokers or banks and not directly to the
depositary.
SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required: (1) if the letter of transmittal is signed by the registered holder of
the shares (which term, for purposes of this Section 3, shall include any
participant in book-entry transfer facility, whose name appears on a security
position listing as the owner of the shares) tendered therewith and the holder
has not completed either the box captioned "Special Delivery Instructions" or
the box captioned "Special Payment Instructions" in the letter of transmittal,
or (2) if shares are tendered for the account of a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents
13
Medallion Program or a bank, broker, dealer, credit union, savings association
or other entity which is an "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Exchange Act, as amended. See Instruction 1 of
the letter of transmittal. If a share certificate is registered in the name of a
person other than the person executing a letter of transmittal, or if payment is
to be made to a person other than the registered holder, then the certificate
must be endorsed or accompanied by an appropriate stock power, in either case
signed exactly as the name of the registered holder appears on the certificate,
with the signature guaranteed by an eligible guarantor institution.
In all cases, payment for shares tendered and accepted for payment under
the tender offer will be made only after timely receipt by the depositary of
share certificates or a timely confirmation of the book-entry transfer of the
shares into the depositary's account at the book-entry transfer facility as
described above, a properly completed and duly executed letter of transmittal or
a manually signed facsimile thereof, an agent's message in the case of a
book-entry transfer, or a specific acknowledgment in the case of a tender
through the Automated Tender Offer Program ("ATOP"), and any other documents
required by the letter of transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY DELIVERY. The depositary will establish an account with respect
to the shares for purposes of the tender offer at the book-entry transfer
facility within two business days after the date of this Offer to Purchase, and
any financial institution that is a participant in the book-entry transfer
facility's system may make book-entry delivery of the shares by causing the
book-entry transfer facility to transfer shares into the depositary's account in
accordance with the book-entry transfer facility's procedures for transfer.
Although delivery of shares may be effected through a book-entry transfer into
the depositary's account at the book-entry transfer facility, either (1) a
properly completed and duly executed letter of transmittal, or a manually signed
facsimile thereof, including any required signature guarantees, or an agent's
message in the case of book-entry transfer or a specific acknowledgement in the
case of a tender through ATOP, and any other required documents must, in any
case, be transmitted to and received by the depositary at its address set forth
on the back cover page of this Offer to Purchase before the expiration date, or
(2) the guaranteed delivery procedure described below must be followed. Delivery
of the letter of transmittal and any other required documents to the book-entry
transfer facility does not constitute delivery to the depositary.
The term "agent's message" means a message transmitted by the book-entry
transfer facility to, and received by, the depositary, which states that the
book-entry transfer facility has received an express acknowledgment from the
participant in the book-entry transfer facility tendering the shares that the
participant has received and agrees to be bound by the terms of the letter of
transmittal and that CA may enforce such agreement against such participant.
Participants in the book-entry transfer facility may tender their shares in
accordance with ATOP to the extent it is available to them for the shares they
wish to tender. A shareholder tendering through ATOP must expressly acknowledge
that the shareholder has received and agreed to be bound by the letter of
transmittal and that the letter of transmittal may be enforced against that
shareholder.
FEDERAL BACKUP WITHHOLDING TAX. Under the United States federal backup
withholding tax rules, as amended by the Jobs and Growth Tax Reconciliation Act
of 2003, 28% of the gross proceeds payable to a shareholder or other payee under
the tender offer must be withheld and remitted to the United States Treasury,
unless the shareholder or other payee provides such person's taxpayer
identification number (employer identification number or social security number)
to the depositary and certifies under penalties of perjury that such number is
correct or otherwise establishes an exemption. If the depositary is not provided
with the correct taxpayer identification number or another adequate basis for
exemption, the holder may be subject to certain penalties imposed by the
Internal Revenue Service. Therefore, each tendering shareholder should complete
and sign the Substitute Form W-9 included as part of the letter of
14
transmittal in order to provide the information and certification necessary to
avoid backup withholding, unless such shareholder otherwise establishes to the
satisfaction of the depositary that the shareholder is not subject to backup
withholding. Specified shareholders (including, among others, all corporations
and certain foreign shareholders (in addition to foreign corporations)) are
exempted from the backup withholding and reporting requirements rules. In order
for a foreign shareholder to qualify as an exempt recipient, that shareholder
must submit an IRS Form W-8BEN, signed under penalties of perjury, attesting to
that shareholder's exempt status. The applicable form can be obtained from the
information agent. See Instructions 14 and 15 of the letter of transmittal.
To prevent federal backup withholding tax equal to 28% of the gross
payments made to shareholders for shares purchased under the tender offer, each
shareholder who does not otherwise establish an exemption from such withholding
must provide the depositary with the shareholder's correct taxpayer
identification number and provide other information by completing the substitute
Form W-9 included with the letter of transmittal. For a discussion of United
States federal income tax consequences to tendering shareholders, see Section
13.
FEDERAL INCOME TAX WITHHOLDING ON FOREIGN SHAREHOLDERS. Even if a foreign
shareholder has provided the required certification as described in the
preceding paragraph to avoid backup withholding, the depositary will withhold
United States federal income taxes at a rate of 30% of the gross payment payable
to a foreign shareholder or his or her agent unless the depositary determines
that an exemption from, or a reduced rate of, withholding tax is available under
a tax treaty or that an exemption from withholding is applicable because such
gross proceeds are effectively connected with the conduct of a trade or business
of the foreign shareholder within the United States or that such proceeds are
subject to capital gains treatment. For this purpose, a foreign shareholder is
any shareholder that is not a "United States holder" (as defined in Section 13).
In order to obtain a reduced rate of withholding under a tax treaty, a foreign
shareholder must deliver to the depositary before the payment a properly
completed and executed IRS Form W-8BEN or any other equivalent form. In order to
obtain an exemption from withholding on the grounds that the gross proceeds paid
under the tender offer are effectively connected with the conduct of a trade or
business within the United States, a foreign shareholder must deliver to the
depositary a properly completed and executed IRS Form W-8ECI or any other
equivalent form. A foreign shareholder may be eligible to obtain a refund of all
or a portion of any tax withheld if such shareholder satisfies one of the
"Section 302 tests" for capital gain treatment described in Section 13 or is
otherwise able to establish that no withholding or a reduced amount of
withholding is due. Federal backup withholding generally will not apply to
amounts subject to the 30% or a treaty-reduced rate of federal income tax
withholding.
Foreign shareholders are urged to consult their tax advisors regarding the
application of U.S. federal income tax withholding, including eligibility for a
reduction of or an exemption from withholding tax, and the refund procedure. See
Instructions 14 and 15 of the letter of transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender shares under the
tender offer and the shareholder's share certificates are not immediately
available or cannot be delivered to the depositary before the expiration date,
or the procedure for book-entry transfer cannot be completed on a timely basis,
or if time will not permit all required documents to reach the depositary before
the expiration date, the shares may nevertheless be tendered, provided that all
of the following conditions are satisfied:
- the tender is made by or through an eligible guarantor institution;
- the depositary receives by hand, mail, overnight courier, telegram or
facsimile transmission, before the expiration date, a properly completed
and duly executed notice of guaranteed delivery in the form CA has
provided with this document, specifying the price at which shares are
being tendered, including (where required) a signature guarantee by an
eligible guarantor institution in the form set forth in such notice of
guaranteed delivery; and
- the share certificates, in proper form for transfer, or confirmation of
book-entry transfer of the shares into the depositary's account at the
book-entry transfer facility, together with a properly
15
completed and duly executed letter of transmittal, or a manually signed
facsimile thereof, and including any required signature guarantees, or an
agent's message, and any other documents required by the letter of transmittal,
are received by the depositary within three business days after the date
of receipt by the depositary of the notice of guaranteed delivery.
RETURN OF UNPURCHASED SHARES. If any tendered shares are not purchased
under the tender offer or are properly withdrawn before the expiration date, or
if fewer than all shares evidenced by share certificates are tendered,
certificates for unpurchased shares will be returned promptly after the
expiration or termination of the tender offer or the proper withdrawal of the
shares, as applicable, or, in the case of shares tendered by book-entry transfer
at the book-entry transfer facility, the shares will be credited to the
appropriate account maintained by the tendering shareholder at the book-entry
transfer facility, in each case without expense to the shareholder.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of shares
to be accepted, the price to be paid for shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance for payment of any
tender of shares will be determined by CA, in its sole discretion, and CA's
determination will be final and binding on all parties. CA reserves the absolute
right to reject any or all tenders of any shares that it determines are not in
proper form or the acceptance for payment of or payment for which CA determines
may be unlawful. CA also reserves the absolute right to waive any of the
conditions of the tender offer or any defect or irregularity in any tender with
respect to any particular shares or any particular shareholder, and CA's
interpretation of the terms of the tender offer will be final and binding on all
parties. In the event a condition is waived with respect to any particular
shareholder, the same condition will be waived with respect to all shareholders.
No tender of shares will be deemed to have been properly made until all defects
or irregularities have been cured by the tendering shareholder or waived by CA.
None of CA, the depositary, the information agent or any other person will be
under any duty to give notification of any defects or irregularities in any
tender or incur any liability for failure to give this notification.
TENDERING SHAREHOLDER'S REPRESENTATION AND WARRANTY; CA'S ACCEPTANCE
CONSTITUTES AN AGREEMENT. A tender of shares under any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the tender offer, as well as the tendering shareholder's
representation and warranty to CA that (1) the shareholder has a net long
position in the shares or equivalent securities at least equal to the shares
tendered within the meaning of Rule 14e-4 promulgated by the Securities and
Exchange Commission under the Exchange Act, and (2) the tender of shares
complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person, directly
or indirectly, to tender shares for that person's own account unless, at the
time of tender and at the end of the period during which shares are accepted by
lot (including any extensions thereof), the person so tendering (1) has a net
long position equal to or greater than the amount tendered in (a) the subject
securities, or (b) securities immediately convertible into, or exchangeable or
exercisable for, the subject securities, and (2) will deliver or cause to be
delivered the shares in accordance with the terms of the tender offer. Rule
14e-4 provides a similar restriction applicable to the tender or guarantee of a
tender on behalf of another person. CA's acceptance for payment of shares
tendered under the tender offer will constitute a binding agreement between the
tendering shareholder and CA upon the terms and conditions of the tender offer.
LOST OR DESTROYED CERTIFICATES. Shareholders whose share certificate for
part or all of their shares has been lost, stolen, misplaced or destroyed may
contact the depositary, Computershare Trust Company, N.A., at (800) 245-7630 for
instructions as to obtaining the necessary documents. Those documents will then
be required to be submitted together with the letter of transmittal in order to
receive payment for shares that are tendered and accepted for payment. A bond
will be required to be posted by the shareholder to secure against the risk that
the share certificates may be subsequently recirculated. Shareholders are urged
to contact the depositary immediately in order to permit timely processing of
this documentation. Share certificates, together with a properly completed and
duly executed letter of transmittal, or a manually signed facsimile thereof,
including any signature guarantees, or an agent's message, and any other
required documents must be delivered to the depositary and not to CA or the
16
information agent. Any such documents delivered to CA or the information agent
will not be forwarded to the depositary and, therefore, will not be deemed to be
properly tendered.
SECTION 4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of shares under the
tender offer are irrevocable. Shares tendered under the tender offer may be
withdrawn at any time prior to the expiration date and, unless previously
accepted for payment by CA under the tender offer, also may be withdrawn at any
time after October 25, 2006.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the depositary at
its address set forth on the back cover page of this Offer to Purchase.
Shareholders who wish to withdraw shares tendered at more than one price must
submit a separate notice for each price at which shares were tendered and are
being withdrawn. Any such notice of withdrawal must specify the name of the
tendering shareholder, the number of shares to be withdrawn and the name of the
registered holder of the shares. If the share certificates to be withdrawn have
been delivered or otherwise identified to the depositary, then, before the
release of the share certificates, the serial numbers shown on the share
certificates must be submitted to the depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an eligible guarantor institution,
unless the shares have been tendered for the account of an eligible guarantor
institution.
If shares have been tendered under the procedure for book-entry transfer
set forth in Section 3, any notice of withdrawal also must specify the name and
the number of the account at the book-entry transfer facility to be credited
with the withdrawn shares and must otherwise comply with the book-entry transfer
facility's procedures. All questions as to the form and validity (including the
time of receipt) of any notice of withdrawal will be determined by CA, in its
sole discretion, whose determination will be final and binding. None of CA, the
depositary, the information agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give this notification.
Withdrawals may not be rescinded and any shares properly withdrawn
thereafter will be deemed not properly tendered for purposes of the tender
offer, unless the withdrawn shares are properly re-tendered before the
expiration date by following one of the procedures described in Section 3.
If CA extends the tender offer, is delayed in its purchase of shares or is
unable to purchase shares under the tender offer for any reason, then, without
prejudice to CA's rights under the tender offer, the depositary may, subject to
applicable law, retain tendered shares on behalf of CA, and these shares may not
be withdrawn except to the extent tendering shareholders are entitled to
withdrawal rights as described in this Section 4. The right to retain shares is
subject to CA's legal obligation to pay for shares properly tendered at prices
at or below the purchase price and not properly withdrawn promptly following the
expiration date (subject to the terms and conditions of the offer) or to return
the tendered securities promptly after the termination of the offer.
SECTION 5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the tender offer, promptly
following the expiration date, CA (1) will determine the purchase price it will
pay for shares properly tendered and not properly withdrawn before the
expiration date, taking into account the number of shares so tendered and the
prices specified by tendering shareholders, and (2) will accept for payment and
pay for, and thereby purchase, shares properly tendered at prices at or below
the purchase price and not properly withdrawn prior to the expiration date. For
purposes of the tender offer, CA will be deemed to have accepted for payment,
and therefore purchased shares, that are properly tendered at or below the
purchase price and not properly withdrawn, subject to the proration and
conditional tender provisions of the tender offer, only when, as and if it gives
oral or written notice to the depositary of its acceptance of the shares for
payment under the tender offer.
17
Upon the terms and subject to the conditions of the tender offer, promptly
after the expiration date, CA will accept for payment and pay a single per share
purchase price not greater than $31.50 nor less than $28.00 per share for
3,500,000 shares, subject to increase or decrease as provided in Section 14, if
properly tendered and not properly withdrawn, or such fewer number of shares as
are properly tendered and not properly withdrawn. In all cases, payment for
shares tendered and accepted for payment pursuant to the tender offer will be
made promptly, but only after timely receipt by the depositary of:
- certificates for shares or of a timely book-entry confirmation of shares
into the depositary's account at the book-entry transfer facility;
- a properly completed and duly executed letter of transmittal, an agent's
message in the case of book-entry transfer or a specific acknowledgement
in the case of a tender through ATOP; and
- any other required documents.
CA will pay for shares purchased under the tender offer by depositing the
aggregate purchase price for these shares with the depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from CA
and transmitting payment to the tendering shareholders.
In the event of proration, CA will determine the proration factor and pay
for those tendered shares accepted for payment promptly after the expiration
date; however, CA does not expect to be able to announce the final results of
any proration and commence payment for shares purchased until approximately five
business days after the expiration date. Certificates for all shares tendered
and not purchased, including all shares tendered at prices greater than the
purchase price and shares not purchased due to proration or conditional tenders,
will be returned to the tendering shareholder, or, in the case of shares
tendered by book-entry transfer, will be credited to the account maintained with
the book-entry transfer facility by the participant therein who so delivered the
shares, at CA's expense promptly after the expiration date or termination of the
tender offer without expense to the tendering shareholders. Under no
circumstances will interest on the purchase price be paid by CA regardless of
any delay in making the payment. In addition, if certain events occur, CA may
not be obligated to purchase shares under the tender offer. See Section 7.
CA will pay all stock transfer taxes, if any, payable on the transfer to it
of shares purchased under the tender offer. If, however, payment of the purchase
price is to be made to any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person signing the letter of transmittal, the amount of all stock transfer
taxes, if any (whether imposed on the registered holder or the other person),
payable on account of the transfer to the person will be deducted from the
purchase price unless satisfactory evidence of the payment of the stock transfer
taxes, or exemption therefrom, is submitted. See Instruction 8 of the letter of
transmittal.
Any tendering shareholder or other payee who fails to complete fully, sign
and return to the depositary the substitute Form W-9 included with the letter of
transmittal may be subject to U.S. federal income tax backup withholding of 28%
of the gross proceeds paid to the shareholder or other payee under the tender
offer. See Section 3. Also see Section 13 regarding United States federal income
tax consequences for foreign shareholders.
SECTION 6. CONDITIONAL TENDER OF SHARES
Subject to the exceptions for odd lot holders, in the event of an
over-subscription of the tender offer, shares tendered at or below the purchase
price prior to the expiration date will be subject to proration. See Section 1.
As discussed in Section 13, the number of shares to be purchased from a
particular shareholder may affect the tax treatment of the purchase to the
shareholder and the shareholder's decision whether to tender. Accordingly, a
shareholder may tender shares subject to the condition that a specified minimum
number of the shareholder's shares tendered pursuant to a letter of transmittal
must be purchased if any shares tendered are purchased. Any shareholder desiring
to make a conditional tender must so indicate in the box captioned "Conditional
Tender" in the letter of transmittal, and if applicable, the Notice of
Guaranteed Delivery. Each shareholder is urged to consult with his or her own
financial or tax advisor.
18
Any tendering shareholder wishing to make a conditional tender must
calculate and appropriately indicate the minimum number of shares that must be
purchased if any are to be purchased. After the tender offer expires, if more
than 3,500,000 shares (or such greater number of shares as CA may elect to
purchase) are properly tendered and not properly withdrawn and CA must prorate
its acceptance of and payment for tendered shares, CA will calculate a
preliminary proration percentage based upon all shares properly tendered,
conditionally or unconditionally. If the effect of this preliminary proration
would be to reduce the number of shares to be purchased from any shareholder
(tendered pursuant to a letter of transmittal) below the minimum number
specified, the tender will automatically be regarded as withdrawn (except as
provided in the next paragraph). In addition, if Mr. Foss tenders 20 million
shares, the preliminary proration would be substantially impacted and it is
likely that no shares conditionally tendered would be purchased. All shares
tendered by a shareholder subject to a conditional tender pursuant to the letter
of transmittal and regarded as withdrawn as a result of proration will be
returned promptly after the expiration date without any expense to the
shareholder.
After giving effect to these withdrawals, CA will accept the remaining
shares properly tendered, conditionally or unconditionally, on a pro rata basis,
if necessary. If conditional tenders would otherwise be regarded as withdrawn
and would cause the total number of shares to be purchased to fall below
3,500,000 (or such greater number of shares as CA may elect to purchase) then,
to the extent feasible, CA will select enough of the conditional tenders that
would otherwise have been withdrawn to permit CA to purchase 3,500,000 shares
(or such greater number of shares as CA may elect to purchase). In selecting
among the conditional tenders, CA will select by random lot treating all tenders
by a particular shareholder as a single lot and will limit its purchase in each
case to the designated minimum of shares to be purchased. Conditional tenders
will be selected by lot only from shareholders who tender all of their shares.
SECTION 7. CONDITIONS OF THE TENDER OFFER
Notwithstanding any other provision of the tender offer, CA will not be
required to accept for payment, purchase or pay for any shares tendered, and may
terminate or amend the tender offer or may postpone the acceptance for payment
of, or the purchase of and the payment for shares tendered, subject to Rule
13e-4(f) under the Exchange Act if, at any time on or after August 28, 2006 and
before the expiration date, any of the following events shall have occurred (or
shall have been determined by CA in its reasonable judgment to have occurred).
(1) there shall have been proposed, instituted or pending any legal
action or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal that directly
or indirectly (a) challenges the making of the tender offer, challenges the
acquisition of some or all of the shares under the tender offer, delays or
restricts CA's ability, or renders CA unable to accept for payment some or
all of the shares under the tender offer, or (b) in CA's reasonable
judgment, could materially and adversely affect the business, condition
(financial or otherwise), income, operations or prospects of CA and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of CA or any of its
subsidiaries or materially impair CA's ability to purchase up to 3,500,000
shares in the tender offer;
(2) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the tender offer or CA or
any of its subsidiaries, by any court or any authority, agency or tribunal
that, in CA's reasonable judgment, would or might, directly or indirectly,
(a) make the acceptance for payment of, or payment for, some or all of the
shares illegal or otherwise restrict or prohibit completion of the tender
offer, (b) delay or restrict the ability of CA, or render CA unable, to
accept for payment or pay for some or all of the shares, or (c) materially
and adversely affect the business, condition (financial or otherwise),
income, operations or prospects of CA and its subsidiaries, taken as a
whole, or otherwise materially impair in any way the contemplated future
conduct of the business of CA or any of its subsidiaries;
19
(3) there shall have occurred (a) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (b) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (c) the commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States or any of its territories,
including, but not limited to, an act of terrorism, (d) any limitation
(whether or not mandatory) by any governmental, regulatory or
administrative agency or authority on, or any event, or any adverse change
in the financial or capital markets generally, that, in CA's reasonable
judgment, might affect, the extension of credit by banks or other lending
institutions in the United States, (e) any significant decrease in the
market price of the shares or any change in the general political, market,
economic or financial conditions in the United States or abroad that could,
in the reasonable judgment of CA, have a material adverse effect on the
business, condition (financial or otherwise), income, operations or
prospects of CA and its subsidiaries, taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of the
business of CA or any of its subsidiaries, (f) in the case of any of the
foregoing existing at the time of the commencement of the tender offer, a
material acceleration or worsening thereof, or (g) any decline in either
the Dow Jones Industrial Average or the Standard and Poor's Index of 500
Industrial Companies by a material amount (including, without limitation,
an amount greater than 10%) from the close of business on August 28, 2006;
(4) a tender or exchange offer for any or all of the shares (other
than this tender offer), or any merger, acquisition, business combination
or other similar transaction with or involving CA or any subsidiary, has
been proposed, announced or made by any person or has been publicly
disclosed;
(5) CA learns that (a) any entity, "group" (as that term is used in
Section 13(d)(3) of the Exchange Act) or person has acquired or proposes to
acquire beneficial ownership of more than 5% of the outstanding shares,
whether through the acquisition of stock, the formation of a group, the
grant of any option or right, or otherwise (other than as and to the extent
disclosed in a Schedule 13D or Schedule 13G filed with the Commission on or
before August 28, 2006), or (b) any entity, group or person who has filed a
Schedule 13D or Schedule 13G with the Commission on or before August 28,
2006 has acquired or proposes to acquire, whether through the acquisition
of stock, the formation of a group, the grant of any option or right, or
otherwise (other than by virtue of the tender offer made hereby),
beneficial ownership of an additional 2% or more of the outstanding shares;
(6) any person, entity or group has filed a Notification and Report
Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, reflecting an intent to acquire CA or any of its shares of common
stock, or has made a public announcement reflecting an intent to acquire CA
or any of its subsidiaries or any of the respective assets or securities of
CA and its subsidiaries;
(7) any change or event has occurred or is threatened in CA or CA's
subsidiaries' business, condition (financial or otherwise), assets, income,
operations, prospects or stock ownership that, in the reasonable judgment
of CA, has or is reasonably likely to have a material adverse effect on CA
and its subsidiaries; or
(8) there shall be any reasonable likelihood, as determined by CA in
its reasonable judgment, that the consummation of the tender offer and the
purchase of shares could result in the offer being considered a "going
private transaction" under Rule 13e-3 of the Exchange Act, that is, if our
purchase of shares pursuant to this offer would result in our common stock
being held of record by fewer than 300 persons and eligible for
deregistration under the Exchange Act or being delisted from the NASDAQ
Global Market.
The foregoing conditions are for the sole benefit of CA and may be asserted
by CA regardless of the circumstances giving rise to any of these conditions,
and, with the exception of condition (8) above, may be waived by CA, in whole or
in part, at any time and from time to time, before the expiration date, in its
sole discretion. CA's failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any of these rights, and each of these
rights shall be deemed an ongoing right that may be asserted at any time and
from time to time. In certain circumstances, if CA waives any of the conditions
20
described above, CA may be required to extend the expiration date. Any
determination or judgment by CA concerning the events described above will be
final and binding on all parties.
SECTION 8. PRICE RANGE OF SHARES; DIVIDENDS
Our shares are traded on the NASDAQ Global Market (formerly known as the
Nasdaq National Market) under the trading symbol "CACC," although between July
19, 2005 and April 25, 2006, our shares were delisted from NASDAQ and were
instead traded over the counter and reported by the Pink Sheets Electronic
Quotation Service (the "Pink Sheets"). The following table sets forth the high
and low sales prices per share reported on the NASDAQ Global Market and the high
and low bid prices per share as reported by the Pink Sheets for the time periods
since January 1, 2004 during which the common stock was traded on the NASDAQ or
reported by the Pink Sheets, respectively. The bid price information in the
table reflects inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions. Shareholders
are urged to obtain current market quotations for the shares.
<Table>
<Caption>
HIGH LOW
------ ------
2004
First Quarter............................................... $20.65 $14.97
Second Quarter.............................................. 19.25 12.55
Third Quarter............................................... 20.00 12.65
Fourth Quarter.............................................. 26.92 18.52
2005
First Quarter............................................... $26.46 $19.16
Second Quarter.............................................. 20.09 12.90
Third Quarter............................................... 16.25 12.08
Fourth Quarter.............................................. 17.90 14.50
2006
First Quarter............................................... $25.00 $15.89
Second Quarter.............................................. 30.55 23.05
Third Quarter (through August 25, 2006)..................... 28.80 24.53
</Table>
On August 25, 2006, the last trading day before the date of announcement of
the tender offer, the last reported sale price of the shares on the NASDAQ
Global Market was $27.87 per share. As shown in the table, the common stock has
recently traded at prices higher than $28.00 per share. As a result, it is
possible that you may receive less for your shares if you tender them than you
would receive in a market sale of your shares.
CA has not paid any dividends on the common stock to date and currently
anticipates that any earnings will be retained for the development of its
business. CA's credit agreements contain financial covenants pertaining to CA's
ratio of liabilities to tangible net worth and amount of tangible net worth,
which may indirectly limit the payment of dividends on common stock.
SECTION 9. SOURCE AND AMOUNT OF FUNDS
Assuming CA purchases 3,500,000 shares in the tender offer at the maximum
specified purchase price of $31.50 per share, $110,250,000 will be required to
purchase such shares. CA anticipates that it will obtain the funds necessary to
purchase shares tendered in the tender offer, as well as to pay related fees and
expenses, from available cash on hand and by borrowing under its $135 million
secured revolving credit facility and its $325 million warehouse revolving
facility. CA intends to repay amounts borrowed under the revolving credit
facility for the purchase of shares tendered in the tender offer with available
cash flow or by refinancing through other available credit facilities. The
tender offer is not conditioned upon the receipt of financing. See Section 7.
21
The revolving credit facility has been established pursuant to a Fourth
Amended and Restated Credit Agreement, dated as of February 7, 2006, among CA,
Comerica Bank, as agent, and the other lenders party thereto. The revolving
credit facility matures on June 20, 2008, or such later date as extended under
the terms of the credit agreement.
The agreement provides that, at CA's option, interest is payable at either
the eurodollar rate plus 130 basis points (6.62% at June 30, 2006), or at the
prime rate (8.25% at June 30, 2006). The eurodollar borrowings may be fixed for
periods of us to six months. Borrowings under the credit agreement are subject
to a borrowing base limitation equal to 75% of net book value of dealer loans
receivable plus 75% of the net book value of consumer loans purchased by CA (not
to exceed a maximum of 25% of the aggregate borrowing base limitation), less a
hedging reserve (not exceeding $1.0 million), the amount of letters of credit
issued under the line of credit, and the amount of other debt secured by the
collateral which secures the line of credit. Currently, the borrowing base
limitation does not inhibit CA's borrowing ability under the line of credit.
The credit agreement has certain restrictive covenants, including a minimum
required ratio of CA's assets to debt and its earnings before interest, taxes
and non-cash expenses to fixed charges. Additionally, the agreement limits the
maximum ratio of CA's debt to tangible net worth and requires that CA maintain a
specified minimum level of net worth which may indirectly limit the payment of
dividends on common stock. Borrowings under the credit agreement are secured by
a lien on most of CA's assets. CA must pay annual and quarterly fees on the
amount of the commitment. As of August 24, 2006, June 30, 2006 and December 31,
2005, there was $28.9 million, $34.4 million and $36.3 million outstanding under
this facility. The maximum amount outstanding was approximately $103.9 million
and $54.9 million during the three months ended June 30, 2006 and 2005,
respectively. The weighted average balance outstanding was $66.9 million and
$40.8 million during the three months ended June 30, 2006 and 2005,
respectively. The weighted average interest rate on line of credit borrowings
outstanding on June 30, 2006 was 6.60%.
The warehouse revolving credit facility has been established pursuant to a
First Amended and Restated Loan and Security Agreement dated February 15, 2006
among CA, CAC Warehouse Funding Corporation II ("Warehouse Funding"), Wachovia
Bank, National Association, JPMorgan Chase Bank, N.A., Variable Funding Capital
Company, LLC, Park Avenue Receivables Company, LLC, Wachovia Capital Markets,
LLC, and Systems & Services Technologies, Inc., as amended. The warehouse
revolving credit facility matures on February 14, 2007.
The agreement currently provides that Warehouse Funding may receive up to
$325.0 million in financing when CA conveys Dealer Loans to Warehouse Funding
for cash and equity in Warehouse Funding. Warehouse Funding will in turn pledge
dealer loans as collateral to the institutional investors to secure loans that
will fund the cash portion of the purchase price of dealer loans. This revolving
facility allows conveyances of dealer loans by CA and related borrowing by
Warehouse Funding in which Warehouse Funding will receive 75% of the net book
value of the contributed dealer loans up to the $325.0 million facility limit.
In addition to the maturity of the facility, there is a requirement that certain
amounts outstanding under the facility be refinanced within 360 days of the most
recent refinancing occurring after February 15, 2006. On April 18, 2006, $100.0
million of the amounts outstanding under the facility were refinanced. If the
second refinancing does not occur within 360 days of April 18, 2006, or the
requirement is not waived, or if the facility is not extended, the transaction
will cease to revolve, will amortize as collections are received and, at the
option of the institutional investors, may be subject to acceleration and
foreclosure. Although Warehouse Funding will be liable for any secured financing
under the facility, the financing will be non-recourse to CA, even though
Warehouse Funding and CA are consolidated for financial reporting purposes. As
Warehouse Funding is organized as a separate special purpose legal entity from
CA, assets of Warehouse Funding (including the conveyed dealer loans) will not
be available to satisfy the general obligations of CA. All the assets of
Warehouse Funding have been encumbered to secure Warehouse Funding's obligations
to its creditors. Borrowings under the facility will bear interest at a floating
rate equal to the commercial paper rate plus 65 basis points (5.86% at June 30,
2006), which has been limited to a maximum rate of 6.75% through interest rate
cap agreements executed in the third quarter of 2005 and first quarter of 2006.
CA receives a monthly servicing fee paid out of
22
collections equal to 6% of the collections received with respect to the conveyed
Dealer Loans. Except for the servicing fee and payments due to dealer-partners,
CA does not have any rights in any portion of such collections. As of August 24,
2006, June 30, 2006 and December 31, 2005, there was $110.5 million, $102.0
million and $101.5 million, respectively, outstanding under this facility.
The foregoing description is qualified in its entirety by reference to the
related agreements, which are exhibits to the Schedule TO in which this document
has been filed with the Commission.
SECTION 10. CERTAIN INFORMATION CONCERNING CA
PRINCIPAL BUSINESS. Since 1972, CA has provided auto loans to consumers,
regardless of their credit history. CA's product is offered through a nationwide
network of automobile dealers who benefit from sales of vehicles to consumers
who otherwise could not obtain financing; from repeat and referral sales
generated by these same customers; and from sales to customers responding to
advertisements for CA's product, but who actually end up qualifying for
traditional financing.
CA was founded to service and collect retail installment contracts
(referred to as "Consumer Loans") originated and funded by automobile
dealerships owned by CA's founder, majority shareholder, and current Chairman,
Donald Foss. During the 1980s, CA began to market this service to non-affiliated
dealers and, at the same time, began to offer dealers a non-recourse cash
payment (referred to as an "advance") against anticipated future collections on
Consumer Loans serviced for that dealer. Today, CA's program is offered to
dealers throughout the United States. CA refers to dealers who participate in
its program and who share its commitment to changing consumers' lives as
"dealer-partners".
A consumer who does not qualify for conventional automobile financing can
purchase a used vehicle from a CA dealer-partner and finance the purchase
through CA. As payment for the vehicle, the dealer-partner receives the
following:
(i) a down payment from the consumer;
(ii) a cash advance from CA; and
(iii) after the advance has been recovered by CA, the cash from payments
made on the Consumer Loan, net of certain collection costs and CA's servicing
fee ("dealer holdback").
CA's servicing fee is equal to a fixed percentage (typically 20%) of each
payment collected. In addition, CA receives fees for other products and
services.
If CA discovers a misrepresentation by the dealer-partner relating to a
Consumer Loan assigned to CA, CA can demand that the Consumer Loan be
repurchased for the current balance of the Consumer Loan less the amount of any
unearned finance charge plus the applicable termination fee, which is generally
$500. Upon receipt of such amount in full, CA will reassign the Consumer Loan
receivable and its security interest in the financed vehicle to the
dealer-partner. The dealer-partner can also opt to repurchase Consumer Loans at
their own discretion. To date, no dealer-partner has repurchased receivables
under these options.
CA is an indirect lender from a legal perspective, meaning the Consumer
Loan is originated by the dealer-partner and immediately assigned to CA. The
compensation paid to the dealer-partner in exchange for the Consumer Loan is
paid in two parts. A portion of the compensation is paid at the time of
origination, and a portion is paid based on the performance of the loan. The
amount paid at the time of origination is called an advance; the portion paid
over time is called dealer holdback.
For accounting purposes, a majority of the transactions described above are
not considered to be loans to consumers. Instead, CA's accounting reflects that
of a lender to the dealer-partner. This classification for accounting purposes
is primarily a result of (i) the dealer-partner's financial interest in the
Consumer Loan and (ii) certain elements of CA's legal relationship with the
dealer-partner. A small percentage of transactions in the United States are
considered to be Consumer Loans for accounting purposes. The cash amount
advanced to the dealer-partner is recorded as an asset on CA's balance sheet.
The aggregate
23
amount of all advances to an individual dealer-partner, plus accrued income,
less repayments comprises the amount recorded in Loans receivable.
As of June 30, 2006, CA had approximately 100% of its capital invested in
the United States business segment. In early 2002, CA stopped originating
automobile leases and effective June 30, 2003 stopped accepting Consumer Loans
originated in the United Kingdom and Canada. CA sold the remaining Consumer Loan
portfolio of its United Kingdom subsidiary on December 30, 2005.
During the first quarter of 2006, CA combined the United Kingdom business
segment into its Other business segment as the United Kingdom segment no longer
met the quantitative thresholds of a reportable segment. As a result, CA now has
two reportable business segments: United States and Other. Prior year's
disclosures have been reclassified to conform to the current year presentation.
The United States segment primarily consists of CA's United States automobile
financing business. The Other segment consists of CA's discontinued United
Kingdom automobile financing business, automobile leasing business, Canadian
automobile financing business and secured lines of credit and floorplan
financing products. CA is currently liquidating its operations in the Other
segment. For information regarding CA's reportable segments, see Note 12 to the
consolidated financial statements in CA's Form 10-K for the year ended December
31, 2005, which is incorporated herein by reference.
AVAILABLE INFORMATION. CA is subject to the information requirements of
the Exchange Act, and, in accordance therewith, files periodic reports and other
information relating to its business, financial condition and other matters. CA
is required to disclose in these periodic reports certain information, as of
particular dates, concerning the CA directors and executive officers, their
compensation, stock options granted to them, the principal holders of the
securities of CA and any material interest of such persons in transactions with
CA. Pursuant to Rule 13e-4(c)(2) under the Exchange Act, CA has filed with the
Securities and Exchange Commission an Issuer Tender Offer Statement on Schedule
TO which includes additional information with respect to the tender offer. This
material and other information may be inspected at the public reference
facilities maintained by the Securities and Exchange Commission at 100 F.
Street, N.E., Washington, D.C. 20549. Copies of this material can also be
obtained by mail, upon payment of the Securities and Exchange Commission's
customary charges, by writing to the Public Reference Section at 100 F. Street,
N.E., Washington, D.C. 20549. The Securities and Exchange Commission also
maintains a web site on the Internet at http://www.sec.gov that contains
periodic reports and information statements and other information regarding
registrants that file electronically with the Securities and Exchange
Commission.
INCORPORATION BY REFERENCE. CA's annual report on Form 10-K for the year
ended December 31, 2005 and its quarterly reports on Form 10-Q for the quarters
ended March 31, 2006 and June 30, 2006 are incorporated herein by reference and
shall be deemed to be a part hereof. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Offer to Purchase to the extent that a statement contained
herein modifies or supersedes such statement. Any statement so modified shall
not be deemed to constitute a part of this Offer to Purchase, except as so
modified or superseded.
Shareholders can obtain any of the documents incorporated by reference in
this document from CA or from the Securities and Exchange Commission's web site
at the address described above. Documents incorporated by reference are
available from CA without charge, excluding any exhibits to those documents.
Shareholders can obtain documents incorporated by reference in this document by
requesting them in writing or by telephone from CA at 25505 West Twelve Mile
Road, Suite 3000, Southfield, Michigan 48034; telephone: (248) 353-2700,
extension 4993. Any shareholder requesting information should be sure to include
his or her complete name and address in the request. If a shareholder requests
any incorporated documents, CA will mail the requested material by first class
mail, or another equally prompt means, within one business day after CA receives
the request.
24
SECTION 11. INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING SHARES.
As of August 24, 2006, CA had 33,362,080 issued and outstanding shares,
excluding 3,596,494 shares of common stock reserved for issuance under its stock
compensation plans, of which 2,809,888 shares are subject to outstanding options
and 786,606 shares are currently reserved for issuance under the plans, none of
which have been issued. The 3,500,000 shares that CA is offering to purchase
represent approximately 10.49% of the shares outstanding on August 24, 2006.
Donald Foss, CA's Chairman and owner of approximately 69% of CA's
outstanding shares, has indicated his non-binding intention to tender 20 million
shares in the offer. Mr. Foss has indicated to CA that he does not want his
proportionate interest in CA to increase as a result of the tender offer. He
therefore intends to tender a number of shares which he believes will prevent
his proportionate ownership interest from increasing when the proration formula
is applied to the total shares tendered in the offer and the shares are
purchased by CA pursuant to the offer and no longer outstanding.
If Mr. Foss tenders the indicated number of shares, then tendering
shareholders, other than tendering odd lot holders, are likely to have only a
few of their tendered shares purchased by CA, even if they tender at a price at
or below the price at which Mr. Foss tenders. None of the shares tendered at a
price higher than the price at which Mr. Foss tenders would be purchased and it
is likely that no conditional tenders would be accepted. See Section 1.
On August 24, 2006, CA's independent directors considered the offer and
determined that the terms of the offer, including any price in the range of
prices established for this offer, are fair to CA and its shareholders. Mr. Foss
did not participate in the deliberations or decision-making process of the board
in connection with the offer. The board's determination was based on a number of
factors, including without limitation the following:
(i) the board's familiarity with the business, results of operations and
financial condition of CA and the nature of CA's business;
(ii) the board's familiarity and experience with modified Dutch auction
tender offers;
(iii) the board's collective judgment regarding the value of CA and its
present market value, earnings and financial condition;
(iv) the range of prices at which shares may be tendered in the offer
compared to current and historical market prices of the shares; and
(v) management's recommendation with regard to the price and terms of the
offer.
The board of directors did not undertake a separate analysis of each of
these factors nor did the board reach a separate conclusion with respect to each
such factor in its determination of the fairness of the terms of the offer. The
consideration of such factors resulted from the information relating to such
factors being added to the collective business knowledge, experience and
understanding of the board of directors so as to enable the board to apply such
information to its deliberative processes. In view of the above, the board did
not find it practicable to and did not quantify or otherwise assign relative
weights to the specific factors considered in reaching its determination as to
the fairness of the terms of the offer.
The following directors and officers of CA have indicated their non-binding
intention to tender shares in the amounts set forth in the table below on the
terms and conditions set forth in this Offer to Purchase. No other directors,
officers or affiliates of CA have indicated their intention to tender shares
pursuant to the tender offer. There can be no assurance that the persons listed
in the table below will in fact tender
25
the number of shares indicated, nor can there be any assurance that other
directors, officers or affiliates of CA will not decide to tender shares.
<Table>
<Caption>
NAME POSITION NUMBER OF SHARES(1)
---- ------------------------------------- -------------------
Donald A. Foss............................ Director, Chairman of the Board 20,000,000
Keith McCluskey........................... President (until September 1, 2006) 150,000
</Table>
- ---------------
(1) One-half of the shares intended to be sold by Mr. Foss are owned of record
by one or more trusts controlled by Karol Foss. See note (a) to the
ownership table below.
As of August 24, 2006, the directors and executive officers of CA as a
group (12 persons) beneficially owned 25,490,446 shares (which number includes
1,892,701 shares issuable upon exercise of options which are exercisable
currently or within 60 days of August 24, 2006), or 72.3% of the total
outstanding shares on that date. If CA purchases 3,500,000 shares in the tender
offer, and the directors and officers tender shares in the tender offer as set
forth in the table above, then after the purchase of shares, our directors and
executive officers as a group would beneficially own approximately 70.5% of our
total shares outstanding immediately after the tender offer.
The following table sets forth, as to each director or executive officer
and their associates (i) the number of shares and percentage beneficially owned
as of August 24, 2006 (including shares under exercisable options); and (ii) the
percentage beneficially owned after consummation of the tender offer, assuming
CA purchases 3,500,000 shares of common stock, the directors and executive
officers tender shares as indicated in the table above and persons other than
directors, executive officers and their associates tender a total of 2.5 million
shares. The address of the listed directors and officers is c/o CA, 25505 W.
Twelve Mile Road, Suite 3000, Southfield, Michigan 48034.
<Table>
<Caption>
PERCENTAGE
BENEFICIALLY OWNED
NUMBER OF ---------------------
SHARES OWNED BEFORE AFTER THE
BENEFICIAL OWNER POSITION BENEFICIALLY THE OFFER OFFER
- ---------------- --------------------------------- ------------ --------- ---------
Donald A. Foss................ Director, Chairman of Board 22,836,898(a) 68.5% 66.1%
Brett A. Roberts.............. Director, Chief Executive Officer 824,572(b) 2.4% 2.7%
Steven M. Jones............... Chief Analytics Officer 151,587(c) * *
Michael W. Knoblauch.......... Chief Operating Officer 373,725(d) 1.1% 1.2%
Keith P. McCluskey............ President 784,488(e) 2.3% 2.5%
Kenneth S. Booth.............. Chief Financial Officer 17,246(f) * *
Douglas W. Busk............... Treasurer 52,000(g) * *
Steven M. Dion................ Chief Human Resources Officer 11,204(h) * *
Charles A. Pearce............. Chief Legal Officer 33,050(i) * *
Harry E. Craig................ Director 10,000(j) * *
Glenda J. Chamberlain......... Director 44,000(k) * *
Thomas N. Tryforos............ Director 434,842 1.3% 1.5%
All Directors and Executive
Officers as a Group (12
Persons).................... 25,490,446(l) 72.3% 70.5%
</Table>
- ---------------
* Represents less than 1% of the total number of outstanding shares.
(a) Shares are held by Donald A. Foss and Donald A. Foss Revocable Living Trust
dated January 26, 1984 as to which Mr. Foss is the trustee. Karol A. Foss
as trustee of the Karol A. Foss Revocable Trust Under Agreement dated
January 16, 1981, as amended and restated on January 26, 1984, June 28,
1990, December 10, 1997 and April 1, 2005, and Allan Apple as trustee of
the Karol A. Foss 2005 Grantor Retained Annuity Trust under Agreement dated
November 11, 2005, are the record owners of 11,368,587 of these shares of
which Mr. Foss has sole voting power and dispositive power of such shares
pursuant to an agreement dated December 6, 2001. In addition, Mr. Foss has
26
shared voting and dispositive power with respect to 83,166 shares which are
owned by a limited liability company in which he has a 20% interest. Mr.
Foss' business address is 25505 West Twelve Mile Road, Suite 3000,
Southfield, Michigan 48034-8339.
(b) Includes 652,469 shares which Mr. Roberts has the right to acquire upon
exercise of employee stock options and 104,103 restricted shares as to
which Mr. Roberts has voting power but which are subject to forfeiture and
restrictions on transfer until the related vesting conditions have been
satisfied.
(c) Includes 138,000 shares which Mr. Jones has the right to acquire upon
exercise of employee stock options and 13,587 restricted shares as to which
Mr. Jones has voting power but which are subject to forfeiture and
restrictions on transfer until the related vesting conditions have been
satisfied.
(d) Includes 370,000 shares which Mr. Knoblauch has the right to acquire upon
exercise of employee stock options and 1,125 restricted shares as to which
Mr. Knoblauch has voting power but which are subject to forfeiture and
restrictions on transfer until the related vesting conditions have been
satisfied.
(e) Includes 591,182 shares which Mr. McCluskey has the right to acquire upon
exercise of employee stock options and 68,306 restricted shares as to which
Mr. McCluskey has voting power but which are subject to forfeiture and
restrictions on transfer until the related vesting conditions have been
satisfied. In addition, Mr. McCluskey has shared voting and dispositive
power with respect to 83,166 shares which are owned by a limited liability
company in which he has an 80% interest. Prior to the announcement of the
tender offer on August 28, 2006, Mr. McCluskey exercised 150,000 of his
outstanding exercisable options. Mr. McCluskey has announced his
resignation from CA, effective September 1, 2006.
(f) Includes 10,000 shares which Mr. Booth has the right to acquire upon
exercise of employee stock options and 6,567 restricted shares as to which
Mr. Booth has voting power but which are subject to forfeiture and
restrictions on transfers until the related vesting conditions have been
satisfied.
(g) Includes 50,000 shares which Mr. Busk has the right to acquire upon
exercise of employee stock options.
(h) Includes 8,000 shares which Mr. Dion has the right to acquire upon exercise
of employee stock options and 3,204 restricted shares as to which Mr. Dion
has voting power but which are subject to forfeiture and restrictions on
transfers until the related vesting conditions have been satisfied.
(i) Includes 33,050 shares which Mr. Pearce has the right to acquire upon
exercise of employee stock options.
(j) Shares are held by the Craig Living Trust as to which Mr. Craig is the
trustee.
(k) Includes 40,000 shares which Mrs. Chamberlain has the right to acquire upon
exercise of director stock options.
(l) Includes a total of 1,892,701 shares which such persons have the right to
acquire upon exercise of employee and director stock options and 196,892
restricted shares as to which such persons have voting power but which are
subject to forfeiture and restrictions on transfer until the related
vesting conditions have been satisfied.
AGREEMENTS, ARRANGEMENTS OR UNDERSTANDINGS
CA's Incentive Compensation Plan (the "Incentive Plan") provides for the
grant of restricted stock, restricted stock units, nonqualified stock options,
incentive stock options, and performance awards, including cash, at any time
prior to April 1, 2014. A total of 1,000,000 shares of common stock have been
set aside for issuance under the Incentive Plan. The Incentive Plan is
administered by the compensation committee of the board of directors (the
"Compensation Committee"). All of the terms relating to vesting or other
restrictions of restricted stock awards or restricted stock unit grants will be
determined by the Compensation Committee. Options granted under the Incentive
Plan may be either incentive stock options under Section 422 of the Code or
nonqualified stock options. The terms of options granted under the Incentive
Plan will be set forth in agreements between CA and the recipients and will be
determined by the Compensation Committee. The exercise price will not be less
than the fair market value of the shares
27
on the date of grant and, for incentive stock options, the exercise price must
be at least 110% of fair market value if the recipient is the holder of more
than 10% of CA's stock. All of the terms relating to the satisfaction of
performance goals, the length of any performance period, the amount of any
performance award granted, the amount of any payment or transfer to be made
pursuant to any performance award, and any other terms and conditions of any
performance award will be determined by the Compensation Committee and included
in an agreement between the recipient and CA.
CA's 1992 Stock Option Plan (the "1992 Plan"), was terminated as to future
grants on May 13, 2004 with the approval by CA's shareholders of the Incentive
Compensation Plan. Executive officers currently hold a total of 1,862,701
options issued under the 1992 Plan prior to its termination, and CA has reserved
2,609,888 shares of its common stock for all outstanding options to executive
officers and other employees. Under the 1992 Plan, Options were granted and
become exercisable as determined at the date of the grant by the Compensation
Committee. The exercise price of the options is no less than the fair market
value on the date of the grant. Options under the 1992 Plan generally become
exercisable over a three- to five-year period, or CA's attainment of certain
performance related criteria, or immediately upon a change of control. Options
granted in 2000 to 2004 will vest only if certain performance targets are met.
Nonvested performance options are forfeited upon termination of employment and
otherwise expire ten years from the date of grant. No new options will be
granted under the 1992 Plan.
CA's Director Stock Option Plan (the "Director Plan") was also terminated
as to future grants on May 13, 2004 with the approval by CA's shareholders of
the Incentive Plan. Current and former directors currently hold a total of
200,000 options issued under the Director Plan prior to its termination, and CA
has reserved that number of shares of its common stock for such options. The
exercise price of the options is equal to the fair market value on the date of
grant. Options granted under this plan will vest only if CA meets certain
performance targets. Nonvested options are forfeited if the participant should
cease to be a director and otherwise expire ten years from the date of grant. No
new options will be granted under the Director Plan.
CA also maintains the CA 401(k) Profit Sharing Plan and Trust, pursuant to
which eligible employees may purchase shares at market prices. Eligible
employees contribute to the plan by payroll deduction or by additional
discretionary payments made to the trustee. These contributions are then used by
the trustee of the plan to purchase shares.
During the last 60 days, CA has engaged in the following market repurchase
transactions in its common stock:
<Table>
<Caption>
WEIGHTED
NUMBER OF AVERAGE
DATE SHARES PRICE
- ---- --------- --------
August 7, 2006 23,778 $27.75
August 8, 2006 14,500 $27.96
August 9, 2006 110,000 $27.15
August 10, 2006 1,207 $27.10
August 11, 2006 26,448 $27.49
August 14, 2006 21,500 $27.47
August 15, 2006 11,600 $27.29
August 16, 2006 16,500 $27.25
August 17, 2006 16,500 $27.30
August 18, 2006 16,500 $27.29
August 21, 2006 39,700 $27.34
August 22, 2006 16,150 $27.45
</Table>
28
The following table sets forth all transactions in CA common stock during
the last 60 days by CA's directors and executive officers.
<Table>
<Caption>
NUMBER OF TRANSACTION
NAME TITLE SHARES PRICE DATE TRANSACTION TYPE
- ---- ----- --------- ------ --------------- ----------------
Busk Douglas W. Treasurer 4,500 $28.00 August 7, 2006 Disposition to CA to pay option
exercise price
Busk Douglas W. Treasurer 4,500 $ 6.00 August 7, 2006 Exercise of employee stock option
Busk Douglas W. Treasurer 100 $28.00 August 4, 2006 Disposition to CA to pay option
exercise price
Busk Douglas W. Treasurer 400 $28.00 August 4, 2006 Disposition to CA to pay option
exercise price
Busk Douglas W. Treasurer 100 $ 6.00 August 4, 2006 Exercise of employee stock option
Busk Douglas W. Treasurer 400 $ 6.00 August 4, 2006 Exercise of employee stock option
Knoblauch Michael W. Chief Operating Officer 40,000 $27.27 August 16, 2006 Disposition to CA to pay option
exercise price
Knoblauch Michael W. Chief Operating Officer 40,000 $ 6.00 August 16, 2006 Exercise of employee stock option
McCluskey Keith P. President 3,000 $27.40 August 22, 2006 Disposition to CA to pay option
exercise price
McCluskey Keith P. President 3,000 $ 6.09 August 22, 2006 Exercise of employee stock option
McCluskey Keith P. President 63,303 $27.29 August 21, 2006 Disposition to CA to pay option
exercise price
McCluskey Keith P. President 63,303 $ 6.09 August 21, 2006 Exercise of employee stock option
McCluskey Keith P. President 30,656 $27.26 August 16, 2006 Disposition to CA to pay option
exercise price
McCluskey Keith P. President 30,656 $ 6.09 August 16, 2006 Exercise of employee stock option
McCluskey Keith P. President 22,727 $27.25 August 15, 2006 Disposition to CA to pay option
exercise price
McCluskey Keith P. President 22,727 $ 6.09 August 15, 2006 Exercise of employee stock option
McCluskey Keith P. President 4,687 $27.50 August 11, 2006 Disposition to CA to pay option
exercise price
McCluskey Keith P. President 4,687 $ 6.09 August 11, 2006 Exercise of employee stock option
McCluskey Keith P. President 5,864 $27.50 August 11, 2006 Disposition to CA to pay option
exercise price
McCluskey Keith P. President 5,864 $ 6.09 August 11, 2006 Exercise of employee stock option
Pearce Charles A. Chief Legal Officer 6,950 $27.50 August 14, 2006 Disposition to CA to pay option
exercise price
Pearce Charles A. Chief Legal Officer 6,950 $ 8.00 August 14, 2006 Exercise of employee stock option
Pearce Charles A. Chief Legal Officer 1,000 $27.50 August 14, 2006 Disposition to CA to pay option
exercise price
Pearce Charles A. Chief Legal Officer 1,000 $ 6.63 August 14, 2006 Exercise of employee stock option
</Table>
Except as otherwise described in this Offer to Purchase or as described in
CA's Form 10-K for the year ended December 31, 2005, neither CA nor, to the best
knowledge of CA, any of CA's affiliates, directors or executive officers, is a
party to any contract, arrangement, understanding or relationship, whether or
not legally enforceable, with any other person, relating, directly or
indirectly, to the tender offer or with respect to any of CA's securities,
including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of the securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations.
SECTION 12. LEGAL MATTERS; REGULATORY APPROVALS
Except as described above, CA is not aware of any license or regulatory
permit material to its business that might be adversely affected by its
acquisition of shares as contemplated by the tender offer or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of shares by CA as contemplated by the tender offer.
Should any approval or other action be required, CA presently
29
contemplates that it will seek that approval or other action. CA is unable to
predict whether it will be required to delay the acceptance for payment of or
payment for shares tendered under the tender offer pending the outcome of any
such matter. There can be no assurance that any approval or other action, if
needed, would be obtained or would be obtained without substantial cost or
conditions or that the failure to obtain the approval or other action might not
result in adverse consequences to its business and financial condition. The
obligation of CA under the tender offer to accept for payment and pay for shares
is subject to conditions. See Section 7.
SECTION 13. U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the United States federal income tax
consequences of our offer was, within the meaning of Internal Revenue Service
Circular 230 Disclosure requirements, written for the purpose of promoting our
offer, but it was not written or intended to be used, and cannot be used, by a
shareholder or any other party for the purpose of avoiding sanctions, including
federal tax penalties, under the Internal Revenue Code of 1986, as amended. You
should consult your own tax advisor as to the particular United States federal
income tax consequences to you of tendering shares pursuant to our offer and the
applicability and effect of any state, local, or foreign tax laws and recent
changes in applicable tax laws.
GENERAL. The following summary describes the material United States
federal income tax consequences relating to the tender offer. This summary is
based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations promulgated thereunder, administrative pronouncements and judicial
decisions, all as in effect as of the date hereof and all of which are subject
to change, possibly with retroactive effect. This summary addresses only shares
that are held as capital assets within the meaning of Section 1221 of the Code
and does not address all of the tax consequences that may be relevant to
shareholders in light of their particular circumstances or to certain types of
shareholders subject to special treatment under the Code, including, without
limitation, certain financial institutions, dealers in securities or
commodities, traders in securities who elect to apply a mark-to-market method of
accounting, insurance companies, tax-exempt organizations, S corporations,
expatriates of the United States, persons who are subject to alternative minimum
tax, persons that have a "functional currency" other than the United States
dollar, persons who hold shares as a position in a "straddle" or as a part of a
"hedging," "conversion" or "constructive sale" transaction for United States
federal income tax purposes or persons who received their shares through the
exercise of employee stock options or otherwise as compensation. This summary
also does not address the state, local or foreign tax consequences of
participating in the tender offer. You should consult your tax advisor as to the
particular tax consequences to you of participation in this tender offer. Those
shareholders who do not participate in the tender offer should not incur any
United States federal income tax liability from the tender offer. Moreover, this
summary assumes that the provisions of Section 5881 to the Code are not
applicable to any payments made by CA pursuant to the tender offer.
In addition, except as otherwise specifically noted, this summary applies
only to holders of shares that are "United States holders." For purposes of this
discussion, a "United States holder" means a holder of shares that for United
States federal income tax purposes is:
- a citizen or resident of the United States;
- a corporation or other entity created or organized in the United States
or under the laws of the United States or of any political subdivision
thereof;
- an estate, the income of which is includible in gross income for United
States federal income tax purposes regardless of its source; or
- a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who
have the authority to control all of its substantial decisions.
30
Holders of shares who are not United States holders ("foreign
shareholders") should consult their tax advisors regarding the United States
federal income tax consequences and any applicable foreign tax consequences of
the tender offer and should also see Section 3 for a discussion of the
applicable United States withholding rules and the potential for obtaining a
refund of all or a portion of any tax withheld.
Shareholders are urged to consult their tax advisors to determine the
particular tax consequences to them of participating in the tender offer.
CHARACTERIZATION OF THE PURCHASE. The purchase of a United States holder's
shares by CA under the tender offer will be a taxable transaction for United
States federal income tax purposes. As a consequence of the purchase, a United
States holder will, depending on the United States holder's particular
circumstances, be treated either as having sold the United States holder's
shares or as having received a distribution in respect of stock from CA.
Under Section 302 of the Code, a United States holder whose shares are
purchased by CA under the tender offer will be treated as having sold its
shares, and thus will recognize capital gain or loss if the purchase:
- results in a "complete termination" of the United States holder's equity
interest in CA;
- results in a "substantially disproportionate" redemption with respect to
the United States holder; or
- is "not essentially equivalent to a dividend" with respect to the United
States holder.
Each of these tests, referred to as the "Section 302 tests," is explained
in more detail below.
TREATMENT OF TENDER OFFER AS SALE OR EXCHANGE. If a United States holder
satisfies any of the Section 302 tests explained below, the United States holder
will be treated as if it sold its shares to CA and will recognize capital gain
or loss equal to the difference between the amount of cash received under the
tender offer and the United States holder's adjusted tax basis in the shares
surrendered in exchange therefore. This gain or loss will be long-term capital
gain or loss if the United States holder's holding period for the shares that
were sold exceeds one year as of the date of purchase by CA under the tender
offer. Specified limitations apply to the deductibility of capital losses by
United States holders. Gain or loss must be determined separately for each block
of shares (shares acquired at the same cost in a single transaction) that is
purchased by CA from a United States holder under the tender offer. In certain
circumstances, a holder may be able to designate, generally through its broker,
which blocks of shares it wishes to tender under the tender offer if less than
all of its shares are tendered under the tender offer, and the order in which
different blocks will be purchased by CA in the event of proration under the
tender offer. This right of designation is not available, however, with respect
to shares held in the CA 401(k) Profit Sharing Plan and Trust. United States
holders should consult their tax advisors concerning the mechanics and
desirability of that designation. Under the "wash sale" rules of Section 1091 of
the Code, losses recognized on shares sold pursuant to the tender offer will be
disallowed to the extent the United States holder acquires shares of CA within
thirty days before or after the date the shares are purchased pursuant to the
tender offer and in that event, the basis and holding period will be adjusted to
reflect the disallowed loss.
TREATMENT OF TENDER OFFER AS A DIVIDEND OR DISTRIBUTION. If a United
States holder does not satisfy any of the Section 302 tests explained below, the
purchase of a United States holder's shares by CA under the tender offer will
not be treated as a sale or exchange under Section 302 of the Code with respect
to the United States holder. Instead, the entire amount received by a United
States holder with respect to the purchase of its shares by CA under the tender
offer will be treated as a distribution to the United States holder with respect
to its shares under Section 301 of the Code, taxable as a dividend at ordinary
income tax rates to the extent of the United States holder's share of the
available current and accumulated earnings and profits (within the meaning of
the Code) of CA. However, under the "Jobs and Growth Tax Reconciliation Act of
2003", capital gains rates may apply to most dividends received by individuals,
estates and trusts after December 31, 2002 and before January 1, 2009 (see
below). To the extent the amount exceeds the United States holder's share of the
available current and accumulated earnings and
31
profits of CA, the excess first will be treated as a tax-free return of capital
to the extent of the United States holder's adjusted tax basis in its shares and
any remainder will be treated as capital gain (which may be long-term capital
gain as described above). The determination of whether a corporation has current
or accumulated earnings or profits is complex and the legal standards to be
applied are subject to uncertainties and ambiguities. Additionally, whether a
corporation has current earnings and profits can be determined only at the end
of the taxable year. Accordingly, it is unclear whether all or any portion of
the amount received by a United States holder with respect to the purchase of
its shares by CA under the tender offer that is not treated as a sale or
exchange under Section 302 of the Code will constitute a dividend. To the extent
that a purchase of a United States holder's shares by CA under the tender offer
is treated as the receipt by the United States holder of a dividend, the United
States holder's remaining adjusted tax basis in the purchased shares will be
added to any shares retained by the United States holder. If all the United
States holder's stock is redeemed but the redemption is considered dividend-
equivalent because of the attribution rules of Section 318. Example (2) of
Treas. Reg. Section 1.302-2(c) indicates that the basis of the surrendered stock
is to be allocated to the person whose stock was attributed to the distributee
where the distributee gave the stock to the related person before the
redemption.
In October 2002, the IRS issued proposed rules (Proposed Treasury
Regulation Section 1.302-5) for the treatment of the basis of stock redeemed or
treated as redeemed when redemption proceeds are treated as a dividend
distribution. The proposed regulations provide that where a complete or partial
redemption under Section 302 or Section 304 is treated as a dividend
distribution under Section 301, an amount equal to the adjusted basis of the
redeemed stock is treated as a loss recognized on the disposition of the
redeemed stock on the date of redemption, but taking the loss into account at a
later date. The taxpayer may deduct such loss on either (1) the "final inclusion
date," which is the first date that a Section 302 redemption occurs or the date
of an event that terminates the shareholder's interest, such as the death of an
individual or the liquidation or reorganization of a corporation; or (2) the
"accelerated loss inclusion date," which is the date the shareholder recognizes
gain on stock of the redeeming corporation, but only up to the amount of the
gain.
The Jobs and Growth Tax Reconciliation Act of 2003 significantly alters the
treatment of dividends and long term capital gains of individuals. Under this
legislation, dividends received in taxable years beginning after 2002 and prior
to 2009, and long term capital gains on sales and exchanges (and payments
received) after May 6, 2003 and before January 1, 2009, by individuals are taxed
at a maximum rate of 15%. The rate applicable to individuals with taxable income
at or below $28,400 (if single) or $56,800 (if married and filing jointly) is 5%
through the end of 2007 (0% in 2008). In order to qualify for the special rate
for dividends, the shares must have been held for more than 60 days during the
120 day period beginning on the date which is 60 days before the date on which
such share becomes ex-dividend with respect to such dividend (in this case,
prior to the repurchase date) and the taxpayer cannot be under an obligation
(pursuant to a short sale or otherwise) to make related payments with respect to
positions in substantially similar or related property. As such, these changes
may impact the tax consequences of this tender offer to certain United States
holders.
CONSTRUCTIVE OWNERSHIP OF STOCK AND OTHER ISSUES. In applying each of the
Section 302 tests explained below, United States holders must take into account
not only shares that they actually own but also shares they are treated as
owning under the constructive ownership rules of Section 318 of the Code. Under
the constructive ownership rules, a United States holder is treated as owning
any shares that are owned (actually and in some cases constructively) by certain
related individuals and entities as well as shares that the United States holder
has the right to acquire by exercise of an option or by conversion or exchange
of a security. A shareholder in a corporation is treated as owning that
shareholder's proportionate share of any stock owned, directly or indirectly, by
that corporation only if the shareholder actually or constructively owns 50
percent or more of the value of the stock of the corporation. More specifically,
under Code Section 318 a stockholder will be considered to own all or a portion
of any shares owned directly or indirectly by his or her parents, spouse,
children and grandchildren; by a partnership of which the stockholder is a
partner; by a trust of which the stockholder is a beneficiary or is treated as
the owner for tax purposes; by an estate of which the stockholder is a
beneficiary; or by a corporation in which the
32
stockholder owns 50% or more value of the stock. In addition, a stockholder will
be considered to own shares that the stockholder has an option to acquire. Also,
a stockholder that is a partnership, estate, trust, or corporation may be
considered to own shares owned by its parents, grantors, beneficiaries, or
shareholders, as the case may be, but there is generally no "double" attribution
from such partnership, trust estate or corporation to another shareholder. Due
to the factual nature of the Section 302 tests explained below, United States
holders should consult their tax advisors to determine whether the purchase of
their shares under the tender offer qualifies for sale treatment in their
particular circumstances. For purposes of the attribution rules, an S
corporation is treated as a partnership and any stockholder of an S corporation
is treated as a partner in a partnership.
Contemporaneous dispositions or acquisitions of stock by a shareholder or
related individuals or entities may be deemed to be part of a single integrated
transaction and may be taken into account in determining whether any of the
three tests under Section 302 have been satisfied. United States holders should
consult their tax advisors regarding the treatment of other sales of shares that
may be integrated with the purchase of their shares by CA under the tender
offer. Additionally, CA cannot predict whether or the extent to which the tender
offer will be oversubscribed. If the tender offer is oversubscribed, proration
of tenders under the tender offer will cause CA to accept fewer shares than are
tendered. Therefore, no assurance can be given that CA will purchase a
sufficient number of a United States holder's shares under the tender offer to
ensure that the United States holder receives sale treatment, rather than
dividend treatment, for United States federal income tax purposes under the
rules discussed below.
SECTION 302 TESTS. One of the following tests must be satisfied in order
for the purchase of shares by CA under the tender offer to be treated as a sale
or exchange for federal income tax purposes:
Complete Termination Test. The purchase of a holder's shares by CA
under the tender offer will result in a "complete termination" of the
holder's equity interest in CA if all of the shares that are actually or
constructively owned by the holder are sold under the tender offer,
provided that no shares of any other class of stock in CA are actually or
constructively owned by the holder. If the tender offer is prorated, the
shares not purchased due to such proration must be taken into account in
determining whether a "complete termination" has occurred. With respect to
shares owned by certain related individuals, the holder may be entitled to
and may waive, in accordance with Section 302(c) of the Code, attribution
of shares which otherwise would be considered as constructively owned by
the holder. Holders wishing to satisfy the "complete termination" test
through waiver of the constructive ownership rules should consult their tax
advisors.
Substantially Disproportionate Test. The purchase of a holder's
shares by CA under the tender offer will result in a "substantially
disproportionate" redemption with respect to the holder if, among other
things, the percentage of the then outstanding voting stock actually and
constructively owned by the holder immediately after the purchase is less
than 80% of the percentage of such shares actually and constructively owned
by the holder immediately before the purchase (treating as outstanding all
shares purchased under the tender offer). For those holders who also own CA
common stock, the "substantially disproportionate" test will not be
satisfied unless the holder's ownership of common stock immediately after
completion of the tender offer is less than 80 percent of that owned
immediately before the completion of the tender offer.
Not Essentially Equivalent to a Dividend Test. The purchase of a
holder's shares by CA under the tender offer will be treated as "not
essentially equivalent to a dividend" if the reduction in the holder's
proportionate interest in CA as a result of the purchase constitutes a
"meaningful reduction" given the holder's particular circumstances. Whether
the receipt of cash by a shareholder who sells shares under the tender
offer will be "not essentially equivalent to a dividend" will depend upon
the shareholder's particular facts and circumstances. The IRS has indicated
in a published revenue ruling that the redemption of any amount of stock
that is nonvoting, nonconvertible and limited and preferred as to dividends
and in liquidation (such as the Cumulative Exchangeable Preferred Stock)
represents a meaningful reduction of the shareholder's proportionate
interest in the corporation if the
33
shareholder does not own stock of any other class. Holders should consult
their tax advisors as to the application of this test in their particular
circumstances.
CORPORATE SHAREHOLDER DIVIDEND TREATMENT. In the case of a corporate
United States holder, to the extent that any amounts received under the tender
offer are treated as a dividend, such holder may be eligible for the
dividends-received deduction. The dividends-received deduction is subject to
certain limitations under Section 243 of the Code. The dividends-received
deduction may not be available if a corporate United States holder does not
satisfy certain holding period requirements with respect to its shares or if its
shares are treated as "debt-financed portfolio stock" within the meaning of
Section 246A of the Code. In addition, in certain circumstances amounts received
by a corporate United States holder pursuant to the tender offer that is treated
as a dividend will constitute an "extraordinary dividend" under Section 1059 of
the Code. If any such amount were treated as an "extraordinary dividend," a
corporate Unites States holder would be required under Section 1059(a) of the
Code to reduce its adjusted tax basis, but not below zero, in its shares by the
non-taxed portion of the extraordinary dividend (i.e.. the portion of the
dividend for which a deduction is allowed) and, if such portion exceeds the
corporate Unites States holder's adjusted tax basis in its shares, to treat the
excess as gain from the sale of such shares in the year in which the dividend is
received. These basis reduction and gain recognition rules would be applied by
taking account only of the corporate Unites States holder's adjusted tax basis
in the shares that were sold, without regard to other shares that the corporate
Unites States holder may continue to own. Corporate United States holders should
consult their own tax advisors as to the application of Sections 243, 246, 246A
and 1059 of the Code to the tender offer, and to the tax consequences of
dividend treatment in their particular circumstances.
FOREIGN SHAREHOLDERS. Generally, the depositary will withhold United
States federal income tax at a rate of 30% from the gross proceeds paid under
the tender offer to a foreign shareholder (as defined in Section 3) or his
agent, unless the depositary determines that an exemption from, or a reduced
rate of, withholding tax is available under a tax treaty or that an exemption
from withholding otherwise applies or that proceeds received by the foreign
shareholder are entitled to capital gains treatment. See Section 3 for a
discussion of the applicable United States withholding rules and the potential
for a foreign shareholder being subject to reduced withholding and for obtaining
a refund of all or a portion of any tax withheld. Foreign shareholders generally
will not be subject to United States federal income or withholding tax on any
gain realized on the purchase of shares by CA in the tender offer unless (i) the
gain is effectively connected with the conduct by such foreign shareholder of a
trade or business in the United States (in which case the branch profits tax
discussed below may also apply if the foreign shareholder is a corporation); or
(ii) the foreign shareholder is an individual and is present in the United
States for 183 days or more in the taxable year of such sale or exchange and
certain other conditions are met; or (iii) CA is or has been a U.S. real
property holding corporation (a "USRPHC") for United States federal income tax
purposes (which CA does not believe that it has been, currently is, or will
likely become) at any time within the shorter of the five-year period preceding
the purchase and such foreign shareholder's holding period. Even if CA were or
were to become a USRPHC at any time during this period, gains realized upon the
purchase pursuant to the tender offer by a foreign shareholder that did not
directly or indirectly own more than 5% of the shares during this period
generally would not be subject to United States federal income tax, provided
that the shares are "regularly traded on an established securities market"
(within the meaning of Section 897(c)(3) of the Code). CA believes that the
shares are and at the time the shares would be purchased pursuant to the tender
offer will be considered to be "regularly traded on an established security
market." If a foreign shareholder does not satisfy any of the Section 302 tests
explained above, the purchase of a foreign shareholder's shares by CA under the
tender offer will not be treated as a sale or exchange under Section 302 of the
Code with respect to the foreign shareholder. Instead, the entire amount
received by the foreign shareholder with respect to the purchase of its shares
by CA under the tender offer will be treated as a distribution to the foreign
shareholder with respect to its shares under Section 301 of the Code, and
treated as a dividend to the extent of the foreign shareholder's allocable share
of the available current and accumulated earnings and profits (within the
meaning of the Code) of CA. Dividends paid to foreign shareholders are subject
to United States withholding tax at a rate of 30% of the gross amount of the
dividend or, if applicable, a lower treaty rate, unless the dividend is
34
effectively connected with the conduct of a trade or business in the United
States by a foreign shareholder (and, if certain tax treaties apply, is
attributable to a United States permanent establishment maintained by such
foreign shareholder) and an IRS form that is available from the depositary is
filed with CA. A dividend that is effectively connected with the conduct of a
trade or business in the United States by a foreign shareholder (and, if certain
tax treaties apply, is attributable to a United States permanent establishment
maintained by such foreign shareholder) will be exempt from the withholding tax
described above and subject instead (i) to the United States federal income tax
on net income that generally applies to United States persons and (ii) with
respect to corporate holders under certain circumstances, a 30% (or, if
applicable, a lower treaty rate) branch profits tax that in general is imposed
on its "effectively connected earnings and profits" (within the meaning of the
Code) for the taxable year, as adjusted for certain items.
SHAREHOLDERS WHO DO NOT RECEIVE CASH UNDER THE TENDER OFFER. Shareholders
whose shares are not purchased by CA under the tender offer should not incur any
United States federal income tax liability as a result of the completion of the
tender offer.
BACKUP WITHHOLDING. See Section 3 with respect to the application of
United States federal backup withholding tax.
TAX RETURN DISCLOSURE AND INVESTOR LIST REQUIREMENTS. Treasury regulations
generally require a shareholder that recognizes a loss in any single year on the
exchange of shares pursuant to the tender offer that exceeds $2 million for
individuals, S-corporations, and trusts, $10 million for partnerships that have
only corporations as partners ($2 million for all other partnerships), and $10
million for corporations to disclose the transaction and certain other
information on IRS Form 8886. The regulations also require "material advisors"
to such a transaction maintain records (including participant lists) and furnish
such records to the IRS on demand. Significant penalties may be imposed for
failure to comply with these requirements.
Final regulations have been issued by the Treasury Department clarifying
the types of transactions subject to these disclosure and list maintenance
rules. As these rules are relatively new, it remains unclear how they will apply
to a sale of shares pursuant to the tender offer. Shareholders should consult
your their tax advisors with regard to any possible disclosure obligations with
respect to their exchange of shares.
Shareholders are urged to consult their tax advisor to determine the
particular tax consequences to them of the tender offer, including without
limitation the applicability and effect of the constructive ownership rules, any
state, local and foreign tax laws, and any proposed changes in applicable tax
laws.
SECTION 14. EXTENSION OF THE TENDER OFFER; TERMINATION; AMENDMENT
CA expressly reserves the right, in its sole discretion, at any time and
from time to time, and regardless of whether or not any of the events set forth
in Section 7 shall have occurred or shall be deemed by CA to have occurred, to
extend the period of time during which the tender offer is open and thereby
delay acceptance for payment of, and payment for, any shares by giving oral or
written notice of the extension to the depositary and making a public
announcement of the extension. CA also expressly reserves the right, in its sole
discretion, to terminate the tender offer and not accept for payment or pay for
any shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for shares upon the occurrence of any of the
conditions specified in Section 7 by giving oral or written notice of
termination or postponement to the depositary and making a public announcement
of termination or postponement. CA's reservation of the right to delay payment
for shares that it has accepted for payment is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that CA must pay the
consideration offered or return the shares tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law, CA
further reserves the right, in its sole discretion, and regardless of whether
any of the events set forth in Section 7 shall have occurred or shall be deemed
by CA to have occurred, to amend the tender offer in any respect, including,
without limitation, by decreasing or increasing the consideration offered in the
tender offer to holders of shares or by decreasing or increasing the number of
shares being sought in the tender offer.
35
Amendments to the tender offer may be made at any time and from time to
time effected by public announcement, the announcement, in the case of an
extension, to be issued no later than 9:00 a.m., New York City time, on the next
business day after the last previously scheduled or announced expiration date.
Any public announcement made under the tender offer will be disseminated
promptly to shareholders in a manner reasonably designed to inform shareholders
of the change. Without limiting the manner in which CA may choose to make a
public announcement, except as required by applicable law, CA shall have no
obligation to publish, advertise or otherwise communicate any public
announcement other than by issuing a press release.
If CA materially changes the terms of the tender offer or the information
concerning the tender offer, CA will extend the tender offer to the extent
required by Rules 13e-4(d)(2), 13e-4(e)(3) and 13e-4(f)(1) promulgated under the
Exchange Act. These rules and certain related releases and interpretations of
the Securities and Exchange Commission provide that the minimum period during
which a tender offer must remain open following material changes in the terms of
the tender offer or information concerning the tender offer (other than a change
in price or a change in percentage of securities sought) will depend on the
facts and circumstances, including the relative materiality of the terms or
information. If (1) CA increases or decreases the price to be paid for shares or
increases or decreases the number of shares being sought in the tender offer
and, if an increase in the number of shares being sought, such increase exceeds
2% of the outstanding shares, and (2) the tender offer is scheduled to expire at
any time earlier than the expiration of a period ending on the tenth business
day from, and including, the date that the notice of an increase or decrease is
first published, sent or given to security holders in the manner specified in
this Section 14, the tender offer will be extended until the expiration of such
ten business day period.
SECTION 15. FEES AND EXPENSES
CA has retained Georgeson Inc. to act as information agent and
Computershare Trust Company, N.A. to act as depositary in connection with the
tender offer. The information agent may contact holders of shares by mail,
telephone, telegraph and in person, and may request brokers, dealers, commercial
banks, trust companies and other nominee shareholders to forward materials
relating to the tender offer to beneficial owners. The information agent and
depositary will receive reasonable and customary compensation for their services
as information agent and depositary. The amount of such compensation is not
material to the financial position or results of operations of CA and its
subsidiaries. The information agent and depositary will also be reimbursed by CA
for specified reasonable out-of-pocket expenses, and will be indemnified against
certain liabilities in connection with the tender offer, including certain
liabilities under the U.S. federal securities laws.
No fees or commissions will be payable by CA to brokers, dealers,
commercial banks or trust companies (other than fees to the information agent
and depositary) for soliciting tenders of shares under the tender offer.
Shareholders holding shares through brokers or banks are urged to consult the
brokers or banks to determine whether transaction costs are applicable if
shareholders tender shares through such brokers or banks and not directly to the
depositary. CA, however, upon request, will reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling expenses
incurred by them in forwarding the tender offer and related materials to the
beneficial owners of shares held by them as a nominee or in a fiduciary
capacity. No broker, dealer, commercial bank or trust company has been
authorized to act as the agent of CA, the information agent or the depositary
for purposes of the tender offer. CA will pay or cause to be paid all stock
transfer taxes, if any, on its purchase of shares, except as otherwise provided
in this document and Instruction 8 in the letter of transmittal.
SECTION 16. MISCELLANEOUS
CA is not aware of any jurisdiction where the making of the tender offer is
not in compliance with applicable law. If CA becomes aware of any jurisdiction
where the making of the tender offer or the acceptance of shares pursuant
thereto is not in compliance with applicable law, CA will make a good faith
effort to comply with the applicable law. If, after such good faith effort, CA
cannot comply with the
36
applicable law, the tender offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of shares in that jurisdiction.
Pursuant to Rule 13e-4(c)(2) under the Exchange Act, CA has filed with the
Securities and Exchange Commission an Issuer Tender Offer Statement on Schedule
TO which contains additional information with respect to the tender offer. The
Schedule TO, including the exhibits and any amendments and supplements thereto,
may be examined, and copies may be obtained, at the same places and in the same
manner as is set forth in Section 10 with respect to information concerning CA.
CA has not authorized any person to make any recommendation on behalf of CA
as to whether shareholders should tender or refrain from tendering shares in the
tender offer or as to the price or prices at which shareholders may choose to
tender shares. CA has not authorized any person to give any information or to
make any representation in connection with the tender offer other than those
contained in this Offer to Purchase or in the letter of transmittal. If given or
made, any recommendation or any such information or representation must not be
relied upon as having been authorized by CA.
August 28, 2006
37
The letter of transmittal and share certificates and any other required
documents should be sent or delivered by each shareholder, or that shareholder's
broker, dealer, commercial bank, trust company or nominee, to the depositary at
one of its addresses set forth below.
The depositary for the tender offer is:
(COMPUTERSHARE LOGO)
<Table>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Computershare Trust Company, For Eligible Institutions Only: Computershare Trust Company,
N.A. (781) 380-3388 N.A.
Attention: Corporate Actions Attention: Corporate Actions
P.O. Box 859208 For Confirmation Only Telephone: 161 Bay Street Drive
Braintree, MA 02185-9208 (781) 843-1833 extension 200 Braintree, MA 02184
</Table>
Questions or requests for assistance or additional copies of this Offer to
Purchase, the letter of transmittal and the notice of guaranteed delivery may be
directed to the information agent at its address and telephone number set forth
below. You may also contact your broker, dealer, commercial bank or trust
company for assistance concerning the tender offer.
The information agent for the tender offer is:
(GEORGESON LOGO)
17 State Street -- 10th Floor
New York, NY 10004
Banks and Brokers Call (212)440-9800
ALL OTHERS CALL TOLL-FREE (888)219-8475