BILLERICA, Mass., Oct. 26 /PRNewswire/ -- Peritus Software Services, Inc.
(Nasdaq: PTUS) today announced that it will restate financial results for the
first and second quarters ended March 31, 1998 and June 30, 1998,
respectively. After review by Peritus' management, the Audit Committee of the
Company's Board of Directors and PricewaterhouseCoopers LLP, the Company's
independent auditor, the Company has concluded that a restatement is required.
Peritus will restate first quarter 1998 revenue to $9.453 million, versus
the originally reported $10.150 million. The loss from operations for the
quarter is restated to $3.547 million from $2.775 million. The restated first
quarter 1998 net loss is $3.338 million, or $.21 per share, versus the
originally reported net loss of $2.566 million, or $.16 per share.
Peritus will restate second quarter 1998 revenue to $11.083 million,
versus the originally reported $11.830 million. The loss from operations for
the quarter is restated to $1.961 million from $1.102 million. The restated
second quarter 1998 net loss is $1.838 million, or $.11 per share, versus the
originally reported net loss of $979,000, or $.06 per share.
The restatement first relates to the recording by Peritus of approximately
$1.086 million of software license revenue for a single customer in the second
quarter of 1998. Peritus believes that the amount of software license revenue
as originally recorded reflected a part of an approximately $1.9 million
business arrangement agreed to between the parties under a signed purchase
order. Peritus now believes that as a result of errors and delays in
communication, certain elements of the transaction were not sufficient to
substantiate the revenue recording. Due to changes in management at the
customer, Peritus has not been able to confirm its understanding of the
original arrangement. Peritus invoiced the customer for certain completed
work to date and is in the process of negotiating certain agreements with the
customer's new management for an approximately $1.9 million revised business
arrangement.
The balance of the restatement relates primarily to the Company's
incorrect interpretation of the complex provisions regarding recognition of
revenue for combined software/services arrangements under Statement of
Position 97-2, Software Revenue Recognition issued by the American Institute
of Certified Public Accountants, and effective for the Company as of January
1, 1998. In applying the Statement to its new year 2000 renovation offerings
which the Company commenced in the first quarter, the Company mistimed the
recognition of revenue between quarters under certain contracts providing for
the delivery of combined software and services.
The Company has also received and responded to a comment letter related to
the Company's Form 10-K for the year ended December 31, 1997 from the
Securities and Exchange Commission regarding, among other things, the
Company's accounting for in-process research and development in connection
with its acquisition of Millennium Dynamics, Inc. Although the Company
believes that it has properly accounted for the item, a different conclusion
would require further restatement of the Company's results beginning with the
fourth quarter of 1997. The Company understands that accounting and valuation
techniques regarding in-process research and development have been recently
under debate in the accounting profession and with the Securities and Exchange
Commission.
Peritus expects to announce final results for the quarter ended September
30, 1998 before the end of the month. Within the next several weeks, Peritus
expects to file with the Securities and Exchange Commission an amendment to
its Forms 10-Q for the quarters ended March 31, 1998 and June 30, 1998 which
will include restated results for the quarters.
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 is a
service mark 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/comp/123089.html or fax,
800-758-5804, ext. 123089
CONTACT:
John Giordano, Chief Financial Officer,
jgiordano@peritus.com or Jacqueline Crowley, Investor Relations,
jcrowley@peritus.com, both of
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