Exhibit No. 99
PERITUS SOFTWARE SERVICES, INC.
FOR IMMEDIATE RELEASE
PERITUS SOFTWARE SERVICES, INC. REPORTS FOURTH QUARTER AND 1998 YEAR END RESULTS
BILLERICA, MA. - FEBRUARY 18, 1999 - Peritus Software Services, Inc.
(OTC: PTUS), a provider of solutions for software maintenance, today announced
financial results for the fourth quarter and year ended December 31, 1998.
For the three months ended December 31, 1998, revenue decreased 60% to $5.7
million from $14.2 million in the three months ended December 31, 1997. For the
year ended December 31, 1998, revenue decreased 21% to $31.5 million from $39.7
million in the year ended December 31, 1997. The revenue decrease was primarily
attributable to reductions in license revenue of 90% and 56% for the quarter and
year, respectively.
For the three months ended December 31, 1998, including charges totaling $2.1
million for restructuring and asset impairment, the Company's net loss decreased
92% to $5.3 million from $68.4 million for the three months ended December 31,
1997. The 1997 results included a charge of $70.8 million associated with the
acquisition of Millennium Dynamics, Inc. (MDI). Excluding charges related to
the MDI acquisition, restructuring and asset impairment, the Company's net loss
was $3.2 million for the fourth quarter of 1998 versus net income of $2.4
million for the fourth quarter of 1997. The Company announced the details of
its fourth quarter restructuring on December 2, 1998 and the $1.2 million charge
recorded was consistent with the estimated amount. The Company also announced
in December that it would review its property, plant and equipment to determine
if any adjustment was required. The Company completed its review and the fourth
quarter results include a write-down of $0.9 million to the carrying value of
its property, plant and equipment primarily related to excess computer equipment
and furniture.
For the year ended December 31, 1998, including charges totaling $11.1 million
for restructuring and asset impairment, the Company's net loss decreased 60% to
$26.7 million from $67.5 million for the year ended December 31, 1997. Excluding
charges related to the MDI acquisition, restructuring and asset impairment, the
Company's net loss was $15.5 million for the year 1998 versus net income of
$3.3 million for the year 1997.
Commenting on the results, Dominic Chan, President and CEO said: "Our fourth
quarter loss, although disappointing, is within the range we announced in early
December. We continue to focus on improving our business as well as exploring
strategic alternatives."
The Company stated that its ability to continue to finance operations is
dependent upon its achieving a cash flow breakeven position and/or obtaining
additional sources of financing. As disclosed in the Company's most recent
Quarterly Report on Form 10-Q, there can be no assurance that the Company will
achieve a cash flow breakeven position or that it will be able to raise
additional financing.
Finally, the Company announced that it has retained Covington Associates to
render financial advisory and investment banking services in connection with
exploring strategic alternatives including the potential sale of the Company.
ABOUT PERITUS
- -------------
Peritus Software Services, Inc. is a quality provider of software maintenance
solutions that boost the productivity, quality, and performance of IT systems.
Using unique technologies and processes, Peritus transforms software maintenance
into an efficient, cost-effective practice. Offerings include Software Asset
Maintenance (SAM) tools and services for long-term software management, and
Renovation Quality Evaluation (RQE) tools and services for Independent
Verification and Validation of Year 2000 renovations. Founded in 1991, Peritus
Software Services (OTC: PTUS) is headquartered in Billerica, MA. Visit our 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, as amended, the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998, and other public filings
made by Peritus with the Securities and Exchange Commission, which factors are
incorporated herein by reference.
Contact: John Giordano
Chief Financial Officer
Peritus Software Services, Inc.
978-670-0800
Fax: 978-670-2060
Internet: jgiordano@peritus.com
---------------------
Peritus is a registered trademark and Software Asset Maintenance is a service
mark of Peritus Software Services, Inc.
PERITUS SOFTWARE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share-related data)
Three Months Year
Ended Ended
December 31, December 31,
------------------------ --------------------
1998 1997 1998 1997
------------- --------- --------- ---------
Revenue:
Outsourcing services............................................. $ 2,240 $ 2,905 $ 9,925 $ 11,447
License.......................................................... 842 8,511 9,444 21,255
Other services................................................... 2,641 2,800 12,163 7,007
------- -------- -------- --------
Total revenue................................................... 5,723 14,216 31,532 39,709
------- -------- -------- --------
Cost of revenue:
Cost of outsourcing services..................................... 1,744 2,689 7,577 9,536
Cost of license............................................... 111 260 1,631 690
Cost of other services........................................... 1,474 1,752 9,110 5,357
------- -------- -------- --------
Total cost of revenue........................................... 3,329 4,701 18,318 15,583
------- -------- -------- --------
Gross profit....................................................... 2,394 9,515 13,214 24,126
------- -------- -------- --------
Operating expenses:
Sales and marketing.............................................. 2,889 3,249 13,244 8,864
Research and development......................................... 1,333 2,746 8,528 8,324
General and administrative....................................... 1,449 1,459 7,466 4,312
Impairment of long-lived assets.................................. 924 -- 5,218 --
Restructuring charges............................................ 1,188 -- 5,906 --
Write-off of acquired in-process R&D............................. -- 70,800 -- 70,800
------- -------- -------- --------
Total operating expenses........................................ 7,783 78,254 40,362 92,300
------- -------- -------- --------
Loss from operations............................................ (5,389) (68,739) (27,148) (68,174)
Interest income, net............................................... 45 466 485 948
------- -------- -------- --------
Loss before gain on sale of majority-owned
subsidiary, income taxes and minority interest
in majority-owned subsidiary.................................... (5,344) (68,273) (26,663) (67,226)
Gain on sale of majority-owned subsidiary ......................... -- -- (11) --
Provision for estimated income taxes............................... -- 156 25 260
Minority interest in majority-owned subsidiary..................... -- (11) (4) 4
------- -------- -------- --------
Net loss......................................................... (5,344) (68,418) (26,673) (67,490)
Accrual of dividends on Series A and B preferred stock............. -- -- -- 675
Accretion to redemption value of redeemable stock.................. -- -- -- 57
------- -------- -------- ---------
Net loss available to common stockholders.......................... (5,344) $(68,418) $(26,673) $ (68,222)
======= ======== ======== =========
Net loss per common share:
Basic............................................................ $(0.33) $(4.93) $(1.65) $(7.03)
======= ======== ======== ========
Diluted.......................................................... $(0.33) $(4.93) $(1.65) $(7.03)
======= ======== ======== ========
Weighted average common shares outstanding:
Basic............................................................ 16,344 13,868 16,177 9,708
======= ======== ======== ========
Diluted.......................................................... 16,344 13,868 16,177 9,708
======= ======== ======== ========
PERITUS SOFTWARE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
December 31, December 31,
1998 1997
------------ ------------
ASSETS
Cash and cash equivalents............................................... $3,378 $11,340
Short-term investments.................................................. 500 3,000
Accounts receivable, net................................................ 3,720 12,627
Costs and estimated earnings in excess of billings
on uncompleted contracts............................................ 951 2,547
Prepaid expenses and other current assets............................... 816 710
------ -------
Total current assets.................................................. 9,365 30,224
Property and equipment, net............................................. 3,848 3,859
Intangible and other assets, net........................................ 510 5,787
------ -------
$13,723 $39,870
====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable........................................................ $ 462 $ 1,650
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................................. 435 976
Deferred revenue........................................................ 1,890 2,818
Other accrued expenses and current liabilities.......................... 4,773 3,849
------ -------
Total current liabilities............................................. 7,560 9,293
Long-term liabilities................................................... 1,353 572
------ -------
Total liabilities..................................................... 8,913 9,865
------ -------
Stockholders' equity.................................................... 4,810 30,005
------ -------
$13,723 $39,870
====== ======