Integration of Millennium Dynamics, Inc. on Track;
35 New Customers in Fourth Quarter;
110% Revenue Increase for FY 1997
BILLERICA, Mass., Jan. 27 /PRNewswire/ -- Peritus Software Services, Inc.
(Nasdaq: PTUS) today announced results of operations for its fourth quarter
and fiscal year ended December 31, 1997, which include the effects of closing
the acquisition of Millennium Dynamics, Inc. ("MDI") on December 1, 1997.
For the three months ended December 31, 1997, revenue increased 77 percent
to $13.6 million from $7.7 million in the three months ended December 31,
1996. For the year ended December 31, 1997, revenue increased 110 percent to
$40.3 million, from $19.2 million in the year ended December 31, 1996.
Revenue growth for the three months and year ended December 31, 1997 was
driven predominately by increases in license revenues of 94% and 234%,
respectively.
For the three months ended December 31, 1997, including a charge of $70.8
million related to the acquisition of MDI, the Company's net income decreased
by $69.4 million to a net loss of $68.9 million, or $4.97 per share, compared
to a net income (loss) of $0.5 million, or $(0.01) per share, in the three
months ended December 31, 1996. For the year ended December 31, 1997, the
Company recorded a net loss of $66.9 million, or $6.43 per share, compared to
net loss of $4.9 million, or $0.66 per share, for the year ended December 31,
1996.
The following table displays the results of operations for the three
months and year ended December 31, 1997 and 1996 on an adjusted basis to
exclude from 1997 periods the $70.8 million write off of in-process research
and development associated with the acquisition of MDI.
(In thousands except percentage and per share amounts)
Three Months
Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Revenue $13,608 $7,682 $40,301 $19,235
Operating Profit (Loss) $1,453(A) $683 $ 3,218(A) $ (4,744)
Operating Margin 10.7%(A) 8.9% 8.0%(A) (24.7%)
Diluted Net Income (Loss)
Per Share $0.11(A) $(0.01) $0.26(A) $(0.66)
Weighted Average
Shares Outstanding 16,932 9,482 14,765 9,178
NOTE(A): Adjusted to exclude the write off of in-process research and
development acquired from MDI amounting to $70.8 million.
On an adjusted basis to exclude the $70.8 million write off of in-process
research and development associated with the MDI acquisition, for the three
months ended December 31,1997, net income increased 307 percent to $1.9
million, or $0.11 per share, from $0.5 million, or $(0.01) per share, in the
three months ended December 31, 1996; and for the year ended December 31,
1997, net income totaled $3.9 million, or $0.26 per share, up from a loss of
$4.9 million, or $0.46 per share, for the year ended December 31, 1996. For
details on the Company's reported results, see the condensed financial
statements at the end of this release.
"The acquisition and integration of MDI has been a success," said Allen
Deary, CFO of Peritus. Furthermore, he stated that "Although we were cautious
regarding earnings, we are excited that the deal was accretive in the fourth
quarter. Since the transaction closed on December 1 and not November 1 as we
anticipated, we could not include approximately $1 million of November MDI
license revenues that would have added to the top line growth. In addition to
the strong financial results, we are pleased to see that clients have
purchased the combined AutoEnhancer/2000 and Vantage YR2000 product suites.
This confirms our belief that clients can easily leverage the combined product
suites in addressing their Year 2000 issues."
Doug Catalano, President and CEO noted the significant accomplishments
made during the past year. "We have completed a successful IPO, doubled our
revenue from the previous year, completed the MDI acquisition and
significantly increased earnings (excluding the acquired in-process research
and development write off). We are extremely proud of our success and our
focus on near and long term opportunities in the software evolution market
place." Peritus is a leader in software evolution as evidenced by its broad
range of products and services that offer clients many options for
understanding and solving the Year 2000 problem. This includes a choice of
platforms, languages and conversion styles.
In the fourth quarter alone, Peritus added 35 significant new clients from
a range of industries, including financial services, insurance,
telecommunications and state and local governments. Included in the list of
35 new clients were new license and service agreements with Prudential
Securities/IBM, First Commercial, First Union and Lucent Technologies. All of
these contracts represent significant strategic client opportunities.
"In addition to our success in penetrating new markets, we have also added
three key new members of management to the Peritus family," continued Mr.
Catalano. Bill Sawyer joined Peritus from Project Software Development, Inc.
where he had over 20 years experience in client operations. He will lead the
consulting and support services at Peritus as Vice President of Client
Operations. Don Beck, a former senior IBM executive, joined Peritus as Vice
President of Outsourcing Services. Also, Terry Booth, formally with Texas
Instruments software and Sybase will join Peritus as Director of European
Operations located in London. Mr. Catalano emphasized that "the addition of
these senior level resources emphasizes our dedication to building a solid
leadership team and positions us to capitalize on future growth
opportunities."
Significant Highlights of Fiscal Year 1997
-- Completed an Initial Public Offering of 4,025,000 shares of Common
Stock at a price of $16.00 per share.
-- Acquired Millennium Dynamics, Inc., a wholly owned subsidiary of
American Premier Underwriters, Inc. based in Cincinnati, Ohio.
-- Formed a client advisory board geared to allowing clients and partners
to influence product planning and Year 2000 business direction.
-- Reached a training milestone with over 1,000 renovation consultants
trained to use AutoEnhancer/2000 software
-- Ranked 20th in New England, recognized for its success as one of New
England's fasting growing technology companies in the New England
Technology Fast 50 program.
About Peritus
Peritus provides software products and services that enable organizations
to improve the productivity, quality, and effectiveness of their information
technology (IT) systems maintenance or "software evolution" functions. The
Company's solutions, which employ software tools, methodologies and processes,
are designed to automate the labor-intensive processes involved in conducting
"mass change" and other software maintenance tasks. The Company licenses this
software directly to end-users as well as through consultants, systems
integrators and distributors. The Company also provides software maintenance
outsourcing services to large organizations that seek to enhance the
productivity of their IT systems and application software maintenance
functions.
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
Registration Statement on Form S-1 filed with the SEC in connection with its
July 1997 initial public offering and Form 10-Q for the quarter ended
September 30, 1997, which factors are incorporated herein by reference.
Peritus and Automate:2000 are registered trademarks, and AutoEnhancer/2000
is a trademark of Peritus Software Services, Inc. MDI and Vantage YR2000 are
trademarks of Millennium Dynamics, Inc.
PERITUS SOFTWARE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share-related data)
(unaudited)
Three Months
ended
Dec. 31, Year Ended Dec. 31,
1997 1996 1997 1996
Revenue:
Outsourcing services $2,905 $2,821 $11,447 $10,190
License 7,882 4,057 21,826 6,526
Other services 2,821 804 7,028 2,519
Total revenue 13,608 7,682 40,301 19,235
Cost of revenue:
Outsourcing services 2,689 2,077 9,536 8,488
License 260 122 690 162
Other services 1,752 938 5,357 2,931
Total cost of revenue 4,701 3,137 15,583 11,581
Gross profit 8,907 4,545 24,718 7,654
Operating expenses:
Sales and marketing 3,249 1,065 8,864 3,116
Research and development 2,746 1,766 8,324 6,033
General and administrative 1,459 1,031 4,312 3,249
Write off of acquired
in-process research
and development 70,800 --- 70,800 ---
Total operating expenses 78,254 3,862 92,300 12,398
Income (loss) from
operations (69,347) 683 (67,582) (4,744)
Interest (expense)
income, net 466 (120) 948 (296)
Income (loss) before
income taxes
and minority interest (68,881) 563 (66,634) (5,040)
Provision (benefit)
for income taxes 50 62 272 (143)
Minority interest in
consolidated subsidiary 11 (39) (4) (24)
Net income (loss) $(68,920) $462 $(66,910) $(4,921)
Net income (loss) per common share:
Basic $(4.97) $(0.01) $(6.43) $(0.66)
Diluted $(4.97) $(0.01) $(6.43) $(0.66)
Average common and common
equivalent shares outstanding:
Basic 13,868 9,482 10,522 9,178
Diluted 13,868 9,482 10,522 9,178
PERITUS SOFTWARE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(unaudited)
Dec. 31, Dec. 31,
1997 1996
Assets
Cash $11,340 $7,388
Short-term investments 3,000 ---
Accounts receivable 13,287 4,163
Costs and estimated earnings
in excess of billings
on uncompleted contracts 2,547 3,595
Prepaid expenses and other current assets 710 119
Total current assets 30,884 15,265
Intangible assets(A) 5,411 ---
Property and equipment and other assets 4,235 2,460
$40,530 $17,725
Liabilities and Stockholders' Equity (Deficit)
Accounts payable $1,650 $497
Accrued expenses 3,354 2,087
Deferred revenue 2,886 3,262
Other current liabilities 1,483 1,201
Total current liabilities 9,373 7,047
Long-term debt and other liabilities 572 1,693
Redeemable convertible preferred stock and
Common stock right --- 12,287
Stockholders' equity (deficit) 30,585 (3,302)
$40,530 $17,725
NOTE(A): Associated with the acquisition of MDI in December 1997.
SOURCE Peritus Software Services, Inc.
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Related links:
http://www.peritus.com
CONTACT:
Allen K. Deary, 978-670-0800,
adeary@peritus.com or Jacqueline Crowley, 978-670-2500,
jcrowley@peritus.com both of Peritus Software Services, Inc.
CNOC: http://www.prnewswire.com or fax, 800-758-5804, ext.
123089
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