BILLERICA, Mass., Sept. 29 /PRNewswire/ -- Peritus Software Services, Inc.
(Nasdaq: PTUS) today announced a restructuring plan in response to a reduction
in forecasted revenues. The goal of the plan is to reduce expenses and lessen
the impact of Year 2000 market shifts while focusing the Company back on its
core services business. The restructuring will include primarily a reduction
in workforce of approximately 90 employees, the closing of facilities in
Cincinnati and Dayton, OH, and Lisle, IL and the consolidation of other
facilities. The total charge related to these actions to be recorded in the
quarter ending September 30, 1998 is expected to be approximately $3.7
million. In light of the plan to restructure and developments in the
Company's markets and excluded from the above charge, the Company is also
evaluating the net realizability of the intangible assets originally recorded
in connection with the acquisition of Millennium Dynamics, Inc. in December
1997. Those assets, primarily reflecting acquired existing technology, today
have a net recorded value of approximately $4.6 million on the Company's
balance sheet.
According to the Company, the projected shortfall in third quarter revenue
can be attributed to a number of factors, including the following items.
-- Delays in client buying decisions for and decreases in Year 2000
licenses
-- Sharply lower than expected demand for its renovation factory services
-- Despite increases in interest for the Company's independent
verification and validation offering (Renovation Quality Evaluation (RQE)),
the Company experienced slower then expected inflows of actual code for RQE
Allen Deary, president and CEO of Peritus, commented: "The changes we are
making will better align our costs with forecasted revenues. At the same
time, we will continue to meet all of our client commitments. Our actions are
intended to address clients' current needs while maintaining investments in
important service offerings for the future."
According to the Company, the changes being made include the following
items.
-- A reduction in excess delivery capacity for renovation services
-- A combination of outsourcing and year 2000 services units into one
streamlined group to serve its clients' requirements
-- Realignment of the sales organization into three regions in the
northeast, south and west
-- A shift of research and development resources to focus on specific
practice initiatives including extending the Software Asset Maintenance (SAM)
offerings into new areas
"Despite our disappointment this quarter, we remain confident about the
longer term." said Mr. Deary. "Our Software Asset Maintenance (SAM)
outsourcing services continue to receive a very positive reaction from
prospects and industry analysts. Interest in SAM assessments is rising and we
have the capacity to meet our near-term service delivery needs. Despite the
difficult decisions we are making to downsize, the Company is retaining the
core people and technology necessary to assist clients with their software
maintenance activities including development, code conversion, and system
migration and modernization which represent the future of the Company."
About Peritus
Founded in 1991, Peritus Software Services, Inc. is a leading provider of
software maintenance outsourcing services. The Peritus Software Asset
Maintenance (SAM) offerings enable organizations to transform the maintenance
process into an efficient, cost-effective discipline that boosts productivity
and performance. SAM offerings include customized services for software
providers, information systems organizations, and Year 2000 renovations.
Peritus is headquartered in Billerica, MA, with offices worldwide. For more
information, see the Peritus web site at http://www.peritus.com.
This press release may contain certain forward-looking statements, which
involve risks and uncertainties. The Company's actual results may differ
materially from the results discussed in such statements. Certain factors that
could cause actual results to differ materially from those discussed in such
forward-looking statements include the risks described in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, the Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998, and other public filings
made by Peritus with the Securities and Exchange Commission, which factors are
incorporated herein by reference.
Peritus is a registered trademark and Software Asset Maintenance and
Renovation Quality Evaluation are service marks of Peritus Software Services,
Inc.
SOURCE Peritus Software Services, Inc.
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Related links:
http://www.peritus.com
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 123089
CONTACT:
Jacqueline Crowley, Investor Relations of
Peritus Software Services, Inc., 978-670-0800,
jcrowley@peritus.com
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