The Company offers its products and services to end users in a number of
industries. Below is a partial list of the Company's clients from industries
including insurance, financial services, telecommunications, transportation,
utilities and manufacturing. <TABLE> <S> <C>
Advanced Micro Devices, Inc. Merrill Lynch, Pierce, Fenner & Smith Incorporated
Bell Communications Research,
Inc. ("Merrill Lynch")
Bull HN Information Systems
Inc. ("Bull") Metropolitan Life Insurance Company ("Met Life")
Computervision Corporation MicroAge Computer Center, Inc.
("Computervision") Microcom, Inc.
BankBoston Corporation Bell Atlantic
Lucent Technologies Prudential Life Insurance</TABLE>
To date, the Company's revenue has been dependent on a few major clients,
including Bull, Stratus Computer, Inc. ("Stratus"), Computervision, Met Life,
IBM Global Services ("IBM") and Merrill Lynch. During 1997, Bull, Merrill
Lynch and Met Life represented approximately 8.2%, 6.6% and 6.6% of the
Company's total revenues, respectively. During 1996, Bull, Merrill Lynch and
Stratus represented approximately 29.0%, 14.6% and 12.1% of the Company's
total revenue, respectively. During 1995, Bull, Stratus and Computervision
represented approximately 50.3%, 12.9% and 11.0% of the Company's total
revenue, respectively. During 1994, Bull and Computervision represented
approximately 51.7% and 29.3% of the Company's total revenue, respectively. In
addition, the Company's ten largest clients represented approximately 62.9%,
77.9% and 90.5% and of the Company's total revenue in the years ended December
31, 1997, 1996 and 1995, respectively.
The Company has entered into agreements to provide software consulting
services and software maintenance services with each of Computervision,
Stratus and Bull. These agreements expire, subject to extension, on December
31, 2000, June 6, 1998 and December 31, 1999, respectively.
The Company has also entered into a license agreement with Bull that expires
on December 31, 2001. This agreement grants to Bull certain use rights,
sublicensing rights and the right to make certain derivative works with regard
to proprietary software programs of the Company. In the event that the Company
fails to fulfill any 12<PAGE>
of its obligations under the Bull license agreement for a period of 90 days,
Bull has the option, upon notice to the Company, to elect in lieu of
termination to assume performance of the Company's obligations and to have
access to source code of the Company's licensed software to perform such
assumed obligations.
The Company and Merrill Lynch have entered into a master license agreement
granting to Merrill Lynch the right to use certain proprietary software of the
Company on a non-exclusive, perpetual use basis to address year 2000 issues.
The Company has also entered into a license agreement with Met Life that
provides for the purchase by Met Life of several non-exclusive, worldwide
licenses of certain of the Company's proprietary software. The Met Life
agreement is terminable by Met Life upon 90 days' written notice. Such
termination may result in a partial refund of sums paid to the Company under
the agreement.
While each client engagement differs, the following examples illustrate the
types of business needs the Company has addressed:
Merrill Lynch--AutoEnhancer/2000 Licensee. Merrill Lynch, a global financial
services concern, evaluated the Company's AutoEnhancer/2000 software in 1996
as part of its process of developing a comprehensive solution to its year 2000
renovation efforts. Along with a number of other vendors, Peritus was invited
to conduct two pilot programs, which were designed to demonstrate the tool's
ability to automate the identification and correction tasks of a year 2000
conversion. In December 1996, Merrill Lynch entered into a direct end-user
license for the AutoEnhancer/2000 software to support its data expansion
renovation efforts. Merrill Lynch notified the Company that the tool was among
those selected based upon the accuracy of its identification function and the
level of automation provided. Merrill Lynch has established a renovation
center in New York that provides divisions with remote access to perform the
renovations, and Peritus has trained more than 35 of Merrill Lynch's
renovation engineers.
Computer Sciences Corp.--AutoEnhancer/2000 Value Added Integrator. Computer
Sciences Corp. ("CSC"), an international provider of IT services, provides a
dedicated national practice that addresses the year 2000 problem. CSC's
Catalyst 2000(R) service includes a renovation center designed to process
large amounts of code through the correction phase. To achieve the desired
throughput, the CSC renovation center sought tools that would automate the
process. After evaluating several tools and technologies, CSC chose the
Company's AutoEnhancer/2000 software for its center and signed a strategic
agreement that provided for a usage-based license. Since the initiation of the
agreement, Peritus has trained CSC renovation engineers to work with the
Peritus technology in this renovation center.
Bell Atlantic--Outsourcing Engagement. In mid-1995, NYNEX began exploring
ways to reduce costs and improve the process of maintaining its IT
applications. Peritus was invited to bid on an outsourcing engagement that
involved the maintenance of a budget and planning application. After a
competitive process, NYNEX awarded the contract to Peritus for a number of
reasons, including the fixed-price nature of the bid and the commitment to
improved productivity. In April 1996, NYNEX extended the contract to include
additional applications.
Fina Oil and Chemical--Vantage YR2000 Licensee. In 1996, Fina Oil and
Chemical ("Fina"), a large petroleum and chemical company, conducted an impact
analysis of its year 2000 problem and began to review the options available to
address the problem in April of that year. MDI conducted a pilot program for
Fina later in the year after which Fina licensed the Vantage YR2000 tools.
Fina set up an internal factory in early 1997 to begin renovating its code and
had completed renovating over 1.5 million lines of code by the end of 1997. |
