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Witness
Systems Drives Workforce Optimization Into
the Enterprise With Strategic Acquisitions
– Acquires
Demos Solutions and Exametric, Inc. –
–
Helps
bank branches improve customer service, lower operating costs
and increase profitability –
–
Provides
preliminary third quarter financial update –
ATLANTA
(October 2, 2006) – Witness Systems
(NASDAQ: WITS), a leading global provider of workforce optimization
software and services, announced that today it has acquired Demos
Solutions Consulting Group Ltd. (also known as Demos Solutions) and
Exametric, Inc., the two leaders in supplying enterprise productivity
and resource planning solutions to the financial services industry.
The
acquisitions broaden the revenue opportunity and customer base for
Witness Systems, further extending the business value of its
workforce optimization (WFO) solutions from contact centers to bank
branches and ultimately to other areas in the enterprise.
The
aggregate purchase price for both transactions is $29 million in cash
plus a potential earn-out of up to $18 million based on the growth of
the business over the next few years. The
acquisitions will be financed from Witness Systems’ existing
cash resources. These acquisitions are
expected to be accretive (before amortization of intangibles and
other acquisition-related costs) and add $13 million to $15 million
to the company’s revenue in 2007.
“Today
we’re announcing a pair of innovative, market-changing
acquisitions that expand our opportunity by extending workforce
optimization into the enterprise,” said Dave Gould, CEO of
Witness Systems. “This combination creates immediate scale and
momentum, with over $10 million of revenue from a blue chip customer
base in the financial services industry. We’ve been probing
this market for a while and believe it will emerge as a real growth
driver for us over the next 18–24 months. By combining the two
leaders, we enter this new market with the deepest talent and
strongest offering.”
The
two companies will be combined and operate as Witness Enterprise
Solutions, a group focusing initially on WFO solutions for retail
bank branches and operations. Gould added, “Approximately 30
percent of our revenue is derived from financial services, and we
have been extending our overall reach through our leadership in
providing VoIP solutions. Starting with branch offices allows us to
leverage the congruence of WFO and VoIP, and is a natural catalyst
for our continued expansion across the broader enterprise.”
Banks
Focused on Improving the Customer Experience
According
to the Bank Administration Institute (BAI), a
leading professional organization focused on enhancing employee and
organizational performance, 70
percent of customers view their bank as a commodity service provider,
and 30 percent desire a hands-on relationship. As a result, BAI
contends that it’s no longer enough for banks to know what
their customers want; they also need to understand the nuances of how
their customers feel. Many branch renewal projects are targeting
improving staff skills, such as consultative selling, and broadening
branch technology infrastructure.
Further,
according to TowerGroup, a global research and
consulting firm for the financial services industry, a shift to
relationship banking is clearly under way in banks of all asset
sizes. Banking customers are demanding a consistent customer
experience across all touch points. According to Forrester Research,
an independent technology and market research company,
banking is one of the industries with the most comprehensive
multi-channel requirements and sophisticated multi-channel solutions.
Enterprise WFO technology from Witness
Systems can now address this challenge both in the contact center and
retail branch banks.
Demos
Solutions and Exametric have both built industry-leading solutions
and an impressive customer base committed to optimizing workforce
performance. The new Witness Enterprise Solutions group will be led
by Darryl Demos, the CEO and founder of Demos
Solutions.
“The
combined organization will help further enable companies to model and
monitor business processes to maximize their return on resource
investments and the customer experience,” explained Demos.
“Creating accurate
forecasts and optimizing staff resources is no longer a ‘nice
to have’ in the competitive landscape for customers.
Workforce optimization is the only way to improve margins and
drive customer and employee satisfaction, which ultimately creates a
more loyal and profitable customer base.”
According
to Dr. Ali S. Kiran, Ph.D., founder and CEO of Exametric, this
acquisition will further the company’s strategy
of expanding to other markets while continuing its strong, managed
growth. “As part of the greater Witness Systems organization,
Exametric and Demos Solutions make a powerful alliance through our
combined programs
that help banks improve and quantify how changes in processes,
layout, technology and staffing impact both customer satisfaction
levels and overall branch efficiency,” said Dr. Kiran.
With
this combination, current Witness Systems customers will be able to
extend their technology investment from the contact center to their
branch offices and other areas of the enterprise that impact the
customer experience. Similarly, Demos Solutions and Exametric
customers will have access to a broader range of WFO solutions,
including customer interaction recording, performance management,
e-learning and other performance improvement and analytical software,
from the established market leader, Witness Systems.
William
Evans, CFO of Witness Systems added, “We have an established,
proven model in place to ensure the successful integration of
products, people and processes following strategic acquisitions,
enabling meaningful value creation for our customers and
shareholders. We believe this combination will be accretive to
earnings in 2007 and will enhance our future value proposition.”
Financial
Update
Also
today, the company provided a preliminary estimate of third quarter
2006 revenue in the range of $50 to $51 million, excluding hardware
revenue of approximately $1 million. The company’s cash and
short term investments exceeded $160 million at September 30, 2006.
Previously,
on August 9, 2006, Witness Systems announced that the company
has voluntarily formed a special committee of independent directors
to review stock option practices and grants. Given the status
of the review, which is ongoing, the company does not expect to be in
a position to announce further financial results for the third
quarter until the option review and audit procedures have been
completed, appropriate accounting adjustments and restated financial
statements have been finalized, and amended Reports on Forms 10-K and
10-Q have been filed.
Conference
Call Information
Witness
Systems will conduct a conference call on Tuesday, October 3, 2006
beginning at 8:30 a.m. ET to discuss the details of the acquisitions
and respond to appropriate questions. The conference call and replay
will be available online at www.witness.com.
About Demos Solutions
Demos
Solutions is a leading productivity solution provider for the
financial services industry. Demos Solutions applies the Art and
Science of Workforce Optimization (SM) to improve the
productivity of leading financial services companies through its
combination of hands-on consulting and workforce management
technologies. Demos Solutions is the workforce optimization partner
to four of the five largest banks in Canada, and 33 percent of the
top 100 North American bank branches use Demos Solutions’
StaffSmart Enterprise® resource planning and
scheduling tool.
About
Exametric
Exametric Inc.
is a leading software solutions company specializing in workforce
management and optimization. The Exametric Workforce Management
Suite provides precision forecasting, automated scheduling, time and
attendance, and strategic planning solutions. The solution
helps companies predict service and transaction levels in order to
manage labor scheduling, improve customer satisfaction and increase
revenue. Exametric’s products are in use at more than 12,000
locations worldwide.
About
Witness Systems
Witness Systems (NASDAQ: WITS) is the
worldwide leader in software and services that help businesses
capture customer intelligence and optimize their workforce
performance. The company's Impact 360™ solution features
quality monitoring, compliance and IP recording, workforce
management, performance management and e-learning. Primarily
deployed in contact centers – as well as the remote, branch and
back offices of global organizations – the workforce
optimization solution captures, analyzes and enables users to share
and act on cross-functional information across the enterprise. With
Impact 360, organizations can improve interactions and the underlying
back-office processes that enhance the customer experience and build
customer loyalty. For more information, visit us at
www.witness.com.
Cautionary
Note Regarding Forward-looking Statements:
Information in this release that involves expectations, plans,
intentions or strategies regarding the future are forward-looking
statements that are not facts and involve a number of risks and
uncertainties. They are identified by words such as “will,”
"anticipates," "expects," "intends,"
"plans," "believes," "estimates," and
similar expressions and statements about present trends and
conditions that may extend into the future. These statements are
based upon information available to Witness Systems as of the date of
this release, and the company assumes no obligation to update any
such forward-looking statement. Forward-looking statements believed
true when made may ultimately prove to be incorrect. These statements
are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control
and may cause actual results to differ materially from our current
expectations. Some of the factors that could cause actual future
results to differ materially from current expectations include the
company’s ability to compete successfully in the future;
fluctuations and changes in customer demand and preferences; the
timing of orders; the company's ability to manage its growth; the
risk of new product introductions and customer acceptance of new
products; the rapid technological change which characterizes the
company's markets; the risks associated with international sales as
the company expands its markets, including the risks associated with
foreign currency exchange rates; the ability of the company to
complete and integrate successfully the Demos Solutions and Exametric
acquisitions and any other acquisitions or investments it may make;
strategy and execution risks relating to these and other acquisitions
and investments; the risk of management distraction and other
consequences that might result from the review of certain option
grants and option granting practices described in the Current Report
on Form 8-K filed by the Company on August 11, 2006 and related
developments, as well as other risks identified under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the company's Form 10-K for the year
ended December 31, 2005 and its Form 10-Q for the quarter ended March
31, 2006, as filed with the Securities and Exchange Commission.
Witness,
Impact 360, Improve Everything and the Witness logo are the
trademarks (registered or otherwise) of Witness Systems, Inc.
protected by laws of the U.S. and other countries. All other
trademarks mentioned in this document are the property of their
respective owners.
For
More Information, Contact:
William Evans Ryan Hollenbeck
Executive VP/CFO VP
Corporate Marketing/IR
Witness Systems Witness Systems
770.754.1915 770.754.1962
bevans@witness.com rhollenbeck@witness.com
600 Cordwainer Drive · Norwell, Massachusetts 02061
P: 781.681.1400 · F: 781.681.1499
Copyright ©2006 Demos Solutions
