Witness Systems Announces Results and Remedial Action in Special Committee Investigation Regarding Stock Options
December 07 2006 - 5:15PM
Business Wire
Witness Systems (NASDAQ:WITS), a leading global provider of
workforce optimization software and services, announced the results
of the investigation of stock option grants and practices by the
Special Committee of independent directors established in August
2006. The Special Committee�s investigation focused primarily on
the period February 2000 (when the company went public) through the
end of August 2002. The Special Committee did not find fraud or
intentional misrepresentation in the financial reporting of the
option grants that it analyzed, but did find inaccuracies in the
determination of measurement dates for option grants affecting the
company�s accounting and disclosures. In response to the Special
Committee�s findings and recommendations, the company, working with
its independent auditors, is evaluating corrections to measurement
dates and other related accounting issues and is quantifying the
financial and tax impact of those inaccuracies and corrections. The
company currently has until January 19, 2007 to regain compliance
with Nasdaq listing requirements. Based on its preliminary
analysis, the company does not expect the impact to be materially
different from what the company has previously projected. In
response to the findings and recommendations of the Special
Committee, and in an effort to strengthen its corporate governance
mechanisms, the Board has voted to separate the positions of
chairman of the Board and chief executive officer and has elected
Mr. Dan Lautenbach, a member of the company�s Board since 2002 and
a member of the Special Committee, as Chairman of the Board,
effective immediately. Mr. Lautenbach succeeds Mr. David Gould, who
has voluntarily agreed to step down as chairman. In addition,
following the Special Committee�s findings and recommendations, Mr.
Gould also voluntarily agreed to resign from his positions as chief
executive officer and as a member of the company�s Board effective
January 3, 2007. Mr. Gould�s resignation was tendered on December 1
and was accepted by the Board on December 6, 2006. The company and
Mr. Gould are negotiating further terms of his departure. The Board
expressed its appreciation for Mr. Gould�s contributions to the
company during his tenure as chief executive officer. During that
time, the company increased total revenue from approximately $23
million in 1999 to expected revenue of more than $200 million in
calendar 2006. To replace Mr. Gould, the Board yesterday appointed
Mr. Nicholas Discombe, who has been the company�s president and
chief operating officer since April 2003, as the company�s new
chief executive officer and as a member of the company�s Board.
Both appointments will be effective upon Mr. Gould�s departure.
Prior to April 2003, Mr. Discombe served as president and chief
executive officer and a director of Eyretel PLC, a technology
company listed on the London Stock Exchange. In further response to
the Special Committee�s recommendations, and in a further effort to
strengthen the company�s management and controls and corporate
governance mechanisms, the company plans in the future to realign
certain responsibilities in the legal and financial reporting
areas. The Special Committee�s report also noted the role of a
former financial officer in the company�s option grants and option
granting practices during a portion of the period of the Special
Committee�s investigation. Because the individual in question is no
longer employed by the company and left the company several years
ago, no action was taken. Said Mr. Gould: �I am leaving the company
well positioned in the market and in very capable hands. Nick has
been instrumental in the company�s success since 2003, and ensures
a smooth transition for our people, stockholders and customers. I
am proud of the success that Witness has achieved during the past
seven years, establishing itself as the leader in our market.� The
company currently plans to hold a conference call at 5 p.m. Eastern
Time on Wednesday, January 3, 2007, at which time it will report
preliminary financial results for 2006 and comment on the outlook
for 2007. 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 eLearning. 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 possibility that the company, in consultation with its
auditors, will determine that the financial impact of measurement
date corrections will be greater than currently expected; that
additional issues as to measurement dates for option awards may
arise; and that regulatory review and litigation relating to such
matters may impact the company�s preliminary analysis. Additional
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 risk of distraction and other consequences that might
result from the management changes announced in this release;
litigation and regulatory scrutiny of the company�s option granting
practices 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, and in Current Reports on
Form 8-K filed by the company since August 11, 2006. 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.
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