Pegasystems Announces Strategic Restructuring to Improve Profitability; Fourth-Quarter Revenues Will Fall Below Third Quarter Levels

CAMBRIDGE, Mass., January 2, 2001 — Pegasystems (NASDAQ: PEGA) has announced a strategic reorganization designed to increase cash flow and improve profitability. The restructuring will result in a one-time charge to earnings of approximately $1 million, or three cents per share, in the fourth quarter of 2000. The company also expects fourth quarter revenues will be about 20% below the amount reported in the third quarter because several licenses targeted for the fourth quarter will slip into 2001. The company expects to report record revenues for the fiscal year 2000.

The restructuring, to be completed in the first quarter of 2001, will result in a reduction of approximately 75 employees out of a global workforce approaching 600. The company expects the restructuring to improve productivity and generate savings of more than $5 million in 2001.

In making the announcement, Rick Jones, President and COO, Pegasystems, stated: "The restructuring is intended to re-align the company to improve customer satisfaction, profitability and financial predictability. Despite our disappointment with fourth quarter results, we believe that our company has regained its momentum and anticipate that we will report record revenues in 2000. We also anticipate further increasing revenues in 2001, based on recent new customers sales and implementations. Our increased focus on partners, as demonstrated by the growth of the partner program in fourth quarter of 2000, will help to expand our sales and implementation capabilities. We anticipate announcing in the first quarter of 2001 a new product line that will drive Pegasystems forward as a leader in the rules technology market. Pegasystems has been serving customers for 18 years, and we will continue to deliver superior rules-driven workflow automation solutions for CRM."

Forward-Looking Statements

Certain statements contained in this press release may be construed as "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including our expectations with respect to future revenues. These statements involve various risks and uncertainties which could cause the Company's actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties include the impact of pending regulatory proceedings, material weaknesses in the Company's financial control environment, difficulty in predicting the completion of product implementations and consequently the timing of revenue recognition, the inability to attract and retain key employees, reliance on key third-party relationships, management of the Company's growth and other risks and uncertainties. Further information regarding these and other factors which could cause the Company's actual results to differ materially from any forward-looking statements contained in this press release is contained in the Company's quarterly report on Form 10Q for the quarter ended Sept. 30, 2000 on file with the Securities and Exchange Commission.

About Pegasystems

Pegasystems (NASDAQ: PEGA) develops strategic applications for marketing, sales, service, and operations. Pega’s applications streamline critical business operations, connect enterprises to their customers seamlessly in real-time across channels, and adapt to meet rapidly changing requirements. Pega’s Global 3000 customers include many of the world’s most sophisticated and successful enterprises. Pega’s applications, available in the cloud or on-premises, are built on its unified Pega 7 platform, which uses visual tools to easily extend and change applications to meet clients’ strategic business needs. Pega’s clients report that Pega gives them the fastest time to value, extremely rapid deployment, efficient re-use, and global scale. For more information, please visit us at

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The information contained in this press release is not a commitment, promise, or legal obligation to deliver any material, code or functionality. The development, release and timing of any features or functionality described remains at the sole discretion of Pegasystems, Pegasystems specifically disclaims any liability with respect to this information.


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Pegasystems Inc.
One Rogers St.
Cambridge, MA 02142
Phone +1 617-374-9600
Fax +1 617-374-9620