Exhibit 99
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Peritus
C R E A T I V E
E X C E L L E N C E
I N S O F T W A R E
E V O L U T I O N
CONTACT: Allen K. Deary Jaqueline Crowley
Peritus Software Services, Inc. Peritus Software Services, Inc.
978/670-0800 978/670-2500
fax: 978/262-9948 fax: 978/670-1172
Internet: adeary@peritus.com Internet: jcrowley@peritus.com
PERITUS SOFTWARE SERVICES, INC. REPORTS RESULTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997,
THE ACQUISITION OF MILLENNIUM DYNAMICS, INC.
AND CERTAIN MANAGEMENT CHANGES
BILLERICA, Mass., October 22, 1997 -- Peritus Software Services, Inc.
(NASDAQ:PTUS) today announced results for the three months and nine months ended
September 30, 1997, the acquisition of Millennium Dynamics, Inc. and certain
management changes.
For the three months ended September 30, 1997, revenue increased to $9,852,000,
up 75% from revenue of $5,645,000 in the comparable period in 1996. Net income
totaled $1,166,000, or pro forma $0.07 per share, up from a loss of $206,000 in
the comparable period in 1996.
For the nine months ended September 30, 1997, revenue increased to $26,693,000,
up 131% from revenue of $11,553,000 in the comparable period in 1996. Net
income totaled $2,010,000, or pro forma $0.14 per share, up from a loss of
$5,383,000 in the comparable period in 1996.
Douglas A. Catalano, President and COO of Peritus, stated "We are very pleased
with our financial performance in the third quarter. We continued to grow
revenue significantly over the comparable periods in 1996." Summarizing certain
important developments for the quarter, Mr. Catalano noted: "During the third
quarter we brought out an enhanced version of our AutoEnhancer/2000 logic
correction product. We added three new value added integrators to our "Powered
by Peritus" program. And we have recruited and hired a number of new people to
the Peritus team providing more expertise and capability."
"In the third quarter we saw strength in both direct and indirect sales
channels. Our value added integrators have acquired additional Line of Code
usage based licenses
-more-
Peritus Software Services, Inc. 978.670.0800
304 Concord Road Fax 978.670.1173
Billerica, MA 01821-3485 www.peritus.com
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PERITUS REPORTS RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997
which is an indication that they are experiencing increased demand and
throughput in their factories," said Allen Deary, Chief Financial Officer of
Peritus. Mr. Deary continued, "Investments made during late 1996 and early 1997
are also providing momentum on the bottom line. We completed much of our
infrastructure development during the first half of 1997 and we are now seeing
the benefits of these investments in improved earnings."
ACQUISITION OF THE MILLENNIUM DYNAMICS, INC. BUSINESS
Peritus also announced today that it has signed an agreement to acquire the
assets and assume certain liabilities of Millennium Dynamics, Inc., a wholly-
owned subsidiary of American Premier Underwriters, Inc. based in Cincinnati,
Ohio. Peritus, with its AutoEnhancer/2000 family of products, has become a
leading choice for the dedicated factory approach to solving the Year 2000
problem. Millennium Dynamics, with its Vantage YR2000 family of products, has
become a leading mainframe-based and AS 400 renovation choice. The acquisition,
which will be accounted for as a purchase, provides for the payment of $30
million in cash by Peritus and the issuance of up to 2,222,000 shares of Peritus
common stock at the closing. Completion of the transaction is subject to
regulatory approvals.
"Both companies were pioneers in solving the Year 2000 problem in their
respective markets," said Doug Catalano, President and COO of Peritus.
"Combining them is an outstanding opportunity from both strategic and tactical
perspectives. Strategically, the combination of each company's products and
services provides the most comprehensive set of choices for performing Year 2000
renovations. Tactically, combining the operations fulfills each company's
growth plans by enhancing the expansion of R&D, marketing, sales, and
distribution channels."
"In addition to the dedicated factory solution which is Peritus' strength, there
is an enormous need for tools that can coexist on a client's mainframe and
enable in-house IT managers to apply their domain knowledge and manpower to
solving the Year 2000 problem," said Dominic Chan, Chairman of the Board at
Peritus. "That is exactly the market that Millennium Dynamics addresses so
well."
"The combined offerings of Peritus and Millennium Dynamics provide an expanded
solution to the marketplace," said Tom Hayes, Chairman of the Board at
Millennium Dynamics. "In addition, both companies have a number of development
efforts under way including extended language technologies and platforms, test
products, Euro currency conversion and other mass change products, and feature
extensions to existing products. The combined development organizations will
enhance product releases and leverage overall R&D efficiencies," he added.
-more-
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PERITUS REPORTS RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997
"The products, markets, cultures, technologies, and people fit well. We believe
it is a positive step for the clients and the employees of the combined
companies," said Allen Deary, Chief Financial Officer of Peritus.
MANAGEMENT CHANGES
In addition, it was announced today that Dominic K. Chan, the founder and
Chairman of Peritus, will assume the role of Chief Technology Officer and has
transitioned his role as Chief Executive Officer of the Company to Douglas A.
Catalano. Mr. Catalano, currently the President and Chief Operating Officer of
Peritus, will serve as the Company's President and Chief Executive Officer.
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 June 30, 1997, which factors are
incorporated herein by reference, as well as the operating difficulties and
expenditures associated with acquisitions.
Peritus is a registered trademark, Automate:2000 is a registered servicemark,
and AutoEnhancer/2000 is a trademark of Peritus Software Services, Inc. Vantage
YR2000 is a trademark of Millennium Dynamics, Inc.
PAGE 4
PERITUS REPORTS RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997
PERITUS SOFTWARE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share-related data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
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1996 1997 1996 1997
---- ---- ---- ----
Revenue:
Outsourcing services..................... $ 2,611 $ 2,979 $ 7,369 $ 8,542
License.................................. 2,424 5,157 2,469 13,944
Other services........................... 610 1,716 1,715 4,207
------- ------- ------- -------
Total revenue......................... 5,645 9,852 11,553 26,693
------- ------- ------- -------
Cost of revenue:
Outsourcing services..................... 1,977 2,444 6,410 6,847
License.................................. 40 155 40 430
Other services........................... 816 1,280 1,994 3,606
------- ------- ------- -------
Total cost of revenue................. 2,833 3,879 8,444 10,883
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Gross profit.............................. 2,812 5,973 3,109 15,810
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Operating expenses:
Sales and Marketing...................... 668 2,197 2,051 5,615
Research and development................. 1,506 1,975 4,267 5,578
General and administrative............... 763 1,053 2,218 2,853
------- ------- ------- -------
Total operating expenses.............. 2,937 5,225 8,536 14,046
------- ------- ------- -------
Income (loss) from operations......... (125) 748 (5,427) 1,764
------- -------
Interest (expense) income, net............ (77) 462 (176) 482
------- ------- ------- -------
Income (loss) before income taxes
and minority interest................. (202) 1,210 (5,603) 2,246
Provision (benefit) for income taxes...... (1) 50 (205) 222
Minority interest in consolidated
subsidiary............................. (5) 6 15 (14)
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Net income (loss)........................ $ (206) $ 1,166 $(5,383) $ 2,010
======= ======= ======= =======
Pro forma net income (loss) per share(1).. $(0.02) $0.07 $(0.51) $0.14
======= ======= ======= =======
Weighted average common and common
equivalent shares outstanding(1)......... 11,083 16,228 10,539 13,910
======= ======= ======= =======
(1) The weighted average number of common and common equivalent shares
outstanding during the period includes the effect of the assumed conversion
of all convertible preferred stock as of the beginning of all periods
presented.
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PERITUS REPORTS RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997
PERITUS SOFTWARE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
December 31, September 30,
1996 1997
------------- ------------
ASSETS
Cash.................................................. $ 7,388 $46,292
Accounts receivable................................... 4,163 7,169
Costs and estimated earnings in excess of billings
on uncompleted contracts............................. 3,595 1,619
Prepaid expenses and other current assets............. 119 570
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Total current assets................................. 15,265 55,650
Property and equipment and other assets............... 2,460 3,156
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$17,725 $58,806
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable...................................... $ 497 $ 912
Accrued expenses...................................... 2,087 2,604
Deferred revenue...................................... 3,262 1,382
Other current liabilities............................. 1,201 1,004
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Total current liabilities............................ 7,047 5,902
Long-term debt and other liabilities.................. 1,693 751
Redeemable convertible preferred stock and
common stock right................................... 12,287 --
Stockholders' equity (deficit)........................ (3,302) 52,153
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$17,725 $58,806
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