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November 29, 1998

PERITUS RESTATES AGAIN AND FACES DELISTING IN ONE WEEK

By CBR Staff Writer

Peritus Software Services Inc has finally published its third quarter results alongside the news that yet more accounting irregularities have been unearthed, this time relating to the latter part of 1997. Dominic Chan, newly appointed CEO at the Billerica, Massachusetts-based provider of software maintenance outsourcing services, said he was very disappointed by the overall results which showed net losses of $16m compared with profits last time of $84,000 on revenues down 38.8% to $5.3m. Losses also include restructuring charges and asset write-downs of $8m. And having already restated results for the two preceding quarters of 1998, the company’s auditors PricewaterhouseCoopers LLC have withdrawn their signature from the whole of 1997’s figures on the basis of two further instances of dubious revenue recognition in that period. And to compound the company’s already acute misery, the Securities and Exchange Commission (SEC) is questioning the accounting treatment adopted by Peritus for its acquisition of Millenium Dynamics Inc in 1997. An adverse outcome from this investigation will require further restatements, the company warned. Delays in the filing of the company’s quarterly report for the just announced third quarter through September have now earned Peritus the dreaded E appendage to its stock symbol (now PTUSE) and the Nasdaq Stock Market has given the company until December 2 to file its 10Q for the period or face delisting. Peritus has blamed its falling revenues on delays in client buying decisions and decreases in Year 2000 licenses due to market shifts. It is currently attempting to move its business away from Year 2000 work and back towards its software management business which it calls Software Asset Maintenance or SAM. á

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