Exhibit 99.1
Concord Signs Agreement to Acquire Aprisma Management Technologies
MARLBORO, Mass.--(BUSINESS WIRE)--Jan. 10, 2005--
Combination Will Create New Generation of Intelligent
Business Service Management Solutions
Concord Communications, Inc. (NASDAQ: CCRD), a global provider of
Business Service Management (BSM) software solutions, today announced
that it has signed a definitive agreement to acquire privately-held
Aprisma Management Technologies, Inc., from Gores Technology Group,
LLC, for approximately $93 million in cash. A leader in Business
Service Intelligence(TM), Aprisma's SPECTRUM(R) software manages the
availability of IT infrastructures and the business services that rely
on them. Strategically combining the two companies' complementary
technologies will enable Concord to expand its ability to deliver a
new generation of intelligent BSM software that maps IT services to
business processes, measures the actual end-user experience, and
manages the entire IT infrastructure. Aprisma, which profitably
generated approximately $43 million in 2004 revenues, will operate as
a business unit within Concord, with Aprisma's CEO Mike Fabiaschi
joining Concord's executive team reporting directly to Concord CEO
Jack Blaeser.
Concord Enhances Market Position
Through the acquisition of Aprisma, Concord expects to
significantly expand its current market presence and future market
opportunity. According to research firm IDC, the total market for
network and systems management is approximately $13.2 billion. With
its acquisition of Aprisma, Concord expects to significantly extend
its ability to address this market by augmenting its BSM product suite
with proven fault management and sophisticated service modeling
technologies. At closing, Concord anticipates adding Aprisma's 1,000
customers to Concord's installed base of 3,000, enabling the combined
companies to explore new cross-sell and up-sell opportunities for both
product lines.
"Over the past ten years as separate companies, Concord and
Aprisma have invested a combined total of more than $650 million in
research and development. This investment has resulted in more than
100 technology patents designed to help IT organizations be more
responsive to their business customers," stated Jack Blaeser,
President and CEO of Concord Communications. "Adding Aprisma's
patented fault management and service modeling technology to Concord's
existing application performance management capabilities will help
Concord accelerate by years our time to market with a whole new
generation of intelligent software. The combined offering will enable
us to aggressively pursue new opportunities in the BSM, wireless, and
voice markets. In addition, since our products already co-exist in
many customer environments, we expect customers will be able to extend
their existing investment in one product line to the other."
"Concord and Aprisma are an outstanding strategic fit," commented
Mike Fabiaschi, President and CEO of Aprisma Management Technologies.
"This combination leverages the core competencies of two respected
industry leaders to strengthen the technological and financial
foundation for delivering tangible customer value faster, better and
more cost-effectively. Aprisma and Concord share the corporate culture
that there is nothing more important than our customers. Our success
will be measured by the satisfaction and quality of those
relationships."
Strategic Technology Fit
To meet the needs of business users today, IT organizations are
increasingly committing to service level agreements (SLAs) that
require a heightened understanding of the end-to-end IT service.
Concord delivers this intelligence with a BSM solution that maps IT
services to business processes, measures the actual end-user
experience, and manages the entire IT infrastructure - applications,
systems, and networks.
MAP
-- Today, Concord's eHealth(R) Suite maps IT services to business
processes and delivers an executive business view to key
performance indicators. Adding Aprisma's SPECTRUM(R)
sophisticated service modeling technology will provide IT
organizations greater flexibility over how services are
defined and greater control when SLA compliance is at risk.
MEASURE
-- Measuring the actual end-user experience is the most effective
method to determine how well a business service is being
delivered. Observational testing is a direct measurement of
the actual user experience, while synthetic testing simulates
the same. Concord's eHealth(R) Suite delivers both of these
measurement capabilities, allowing organizations to see the
impact of IT services on the business. The value of Concord's
end-user measurement capability will be enhanced when the
results are delivered into the SPECTRUM(R) service model as an
indicator of quality of experience.
MANAGE
-- Managing the end-to-end IT infrastructure enables IT
organizations to move away from the "stove-pipe" management
frameworks of the past. This acquisition will combine
Concord's strength in predictive capacity planning and
proactive performance management with Aprisma's patented
technology in the areas of root cause analysis, technology
relationship mapping, impact analysis, topology discovery, and
condition correlation. As a result, IT organizations will be
able to better meet or exceed SLAs with their line of business
customers, increase uptime, accelerate performance and reduce
costs.
"IT organizations are increasingly under pressure from business
units to support end-to-end service-level agreements and provide a
business-oriented display of how well they are supporting critical
business processes," stated Stephen Elliot, Senior Analyst at IDC. "To
accomplish this, you need tools that document and correlate IT
components to business services, thus enabling more productive
communication between the IT organization that delivers the services
and the business users that consume them. Companies that don't improve
their product portfolio to manage business services will increasingly
lose customers and marketshare."
"The synergy resulting from the combination of Aprisma and Concord
should directly benefit customers and employees of both companies and
should create a world-class organization and market leading provider
of software solutions and services," added Alec E. Gores, Chairman of
Gores Technology Group, LLC.
The acquisition is subject to customary closing conditions and is
expected to close in the first quarter of 2005. Concord expects the
deal to be accretive in 2005.
Preliminary Fourth Quarter Financial Results
Concord anticipates releasing Q4 and 2004 audited financial
results on February 1, 2005. The company estimates Q4 revenue to be
between $28.3 and $28.9 million, with an estimated GAAP loss per share
of $.04 to $.05, and pro forma earnings per share of $.06 to $.07. The
reconciliation of GAAP to pro forma results is explained in the table
below.
- -0-
*T
---------------------
Estimated GAAP loss per share $(0.04) to $(0.05)
---------------------
Estimated
Income taxes difference between GAAP and
pro forma rates (0.03)
Compensation expenses relating to the stock
option tender offer 0.18
Change in the allowance for bad debt (0.05)
Amortization of intangibles 0.01
---------------------
Estimated pro forma EPS $0.06 to $0.07
---------------------
*T
Pro Forma Financial Results
We prepare and release quarterly unaudited financial statements
prepared in accordance with generally accepted accounting principles
("GAAP"). We also disclose and discuss certain pro forma financial
information, used to evaluate our performance, in this and other
earnings releases and investor conference calls. We believe that
current shareholders and potential investors in our company use
multiples of pro forma EPS in making investment decisions about our
company. We use pro forma EPS to evaluate the results of our ongoing
operations and to assist in historical comparisons. This measure, and
other pro forma information, should not be considered an alternative
to measurements required by accounting principles generally accepted
in the United States of America such as net income and net cash
provided by operations and should not be considered measures of our
liquidity. In addition, our non-GAAP measures may not be comparable to
similar measures reported by other companies. Our key non-GAAP measure
is: pro forma EPS and is calculated by dividing pro forma net income
by the diluted number of shares.
Pro forma net income excludes certain non-cash and special
charges, considered non-recurring, which consist primarily of non-cash
compensation expenses, in-process-research-and-development costs and
amortization of intangible assets. In the quarter ending December 31,
2004, pro forma net income also excludes two other charges considered
non-recurring: change in the allowance for bad debt resulting from a
refinement in methodology and the compensation expenses relating to
the stock option tender offer program previously announced in the
fourth quarter of 2004.
This pro forma calculation also substitutes current period GAAP
tax provisions with a pro forma tax rate of 28%. Historically, we have
had significant deferred tax assets and have not recorded a
significant federal tax provision. Accordingly the GAAP tax provision
related primarily to state and foreign taxes and has been minimal.
From a tax return perspective, and thus cash flow perspective, we
do not believe Concord will pay significant state or federal income
taxes for at least 2 years. We will continue incurring small foreign,
federal minimum and state minimum tax payments. Due to the option
tender offer in the fourth quarter of 2004, we have calculated that
our GAAP tax rate has decreased to an estimated negative 15%. We will
continue providing pro forma guidance and results at a 28% tax rate to
normalize our results against historical reported results, and such
pro forma guidance and results are provided for comparative purposes
only.
Conference Call Details
Concord will hold a conference call today to discuss this
transaction and preliminary financial results at 8:30 a.m. (EST). The
number for the call is 877-780-2271 (domestic) and 973-582-2757
(international). The call will be available for approximately two
weeks. The number for the replay is 877-519-4471 for U.S./Canada and
973-341-3080 for international callers. The access code is 5578367.
The information in this press release and call replay is posted at
www.concord.com.
About Aprisma Management Technologies
As the leader in Business Service Intelligence(TM) solutions,
Aprisma's SPECTRUM(R) software manages the health and performance of
networks and the business services that rely on them. With over 10
years experience delivering rapid return on investment for over 1,000
leading companies in more than 40 countries, SPECTRUM solutions are
delivered on time and on budget. Over $500 million has been invested
to date in the research and development of the SPECTRUM software
suite, and an intellectual property portfolio of over 100 patents
serves as evidence of Aprisma's continual innovation and industry
thought leadership. The company's culture is centered on the principle
"There is nothing more important than our customers" to strengthen the
knowledge, trust and respect customers gain from a relationship with
Aprisma. Additional information on SPECTRUM and related Aprisma
solutions is available at www.aprisma.com.
About Gores Technology Group
Gores Technology Group, LLC ("Gores") is a private investment firm
focused on the technology and telecommunications sectors. Since 1987,
Gores has amassed an enviable track record of successful investments
within these sectors. The firm combines the seasoned M & A team of a
traditional financial buyer with the operational expertise and
detailed due diligence capabilities of a strategic buyer. Gores has a
long standing record of creating sustainable value in its portfolio
companies by focusing on customers and employees, supporting
management with operational expertise, and providing the capital
required for growth. Headquartered in Los Angeles, California, Gores
maintains offices in Boulder, Colorado; London; and Zurich and can be
found on the web at www.gores.com.
About Concord Communications
Concord Communications, Inc. (NASDAQ: CCRD) provides an integrated
software solution that enables companies to map their IT services to
business needs, measure their actual end-user experience, and manage
their applications, systems, and networks. More than 3,000 companies
worldwide, including 23 of the world's 24 largest service providers,
rely on Concord's Business Service Management software to optimize IT
services to drive business success. Based in Marlboro, Massachusetts,
USA, Concord maintains offices around the globe and can be found on
the web at www.concord.com.
Concord Communications, Inc., the Concord logo, eHealth, and Map.
Measure. Manage. are trademarks of Concord Communications, Inc. All
other trademarks are the property of their respective owners.
Forward-looking statements made in this press release are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include statements as to the expected accretive nature of the
transaction, statements as to the nature, size, and opportunity in the
voice market, the benefits of the acquisition to Concord, the
strategic benefits of the proposed combination, estimated fourth
quarter financial results, and other forward-looking statements.
Readers are cautioned that all forward-looking statements involve
risks and uncertainties, and actual results could differ materially
from the forward-looking statements contained herein. Risks and
uncertainties include, without limitation, risks in product
development and market acceptance of, and demand for, the Company's
products, specifically including the Company's business service
management solution; risks associated with sales execution; risks
associated with competition, specifically including competition in the
business service management market; risks in technology development
and commercialization; the failure to successfully complete the
acquisition or to obtain the expected benefits of the acquisition, the
risk that the transaction is not accretive, risks related to the
integration of Aprisma or the assumption of unexpected liabilities out
of the acquisition; and other risks detailed in the Company's filings
with the Securities and Exchange Commission, including but not limited
to, the Company's annual report on Form 10-K and quarterly reports on
Form 10-Q. Any forward-looking statements should be considered in
light of all these factors. The information contained in this press
release is applicable only today and should thereafter be considered
historical and will no longer constitute the Company's current
expectations. The Company undertakes no obligation to update
information contained in this press release.
CONTACT: Concord Communications
Investor Relations
Ray Ruddy, 508-303-4350
rruddy@concord.com
or
Public Relations
Eric Snow, 508-486-4508
esnow@concord.com
or
Greenough Communications
Public Relations
Gillian Farquhar, 617-275-6514
gillian@greenoughcom.com