Integration of Products Will Be Virtually Immediate, Creating the Most Comprehensive Solution in the Market
Southborough, Mass. - February 26, 2002 - ViryaNet (NASDAQ: VRYA), a provider of integrated wireless and Web-based software applications for workforce management and the automation of field and enterprise-wide service delivery, today announced that it has acquired all outstanding shares of iMedeon, Inc. of Alpharetta, GA for approximately 4.3 million shares of ViryaNet, plus an additional 900,000 shares, subject to the approval of ViryaNet shareholders. Based on the closing
price of ViryaNet shares on February 25, 2002, the transaction is valued at approximately $2.85 million. The Company expects that earnings in Q1, excluding one-time charges related to the transaction, will be $0.00, $0.01 less than previous guidance, and earnings on a full-year basis will be $0.09 to $0.10, $0.01 to $0.02 higher than previous guidance.
A conference call is scheduled for 8:30 AM (EST) on Tuesday, February 26, 2002 to discuss the acquisition.
iMedeon is a privately-held company and leading provider of mobile workforce management applications to the utilities sector. ViryaNet, a leading application provider to the telecommunications, industrial automation, high-technology manufacturing, and retail markets, believes that the acquisition will accelerate its penetration of the utilities sector, strengthen its delivery teams, and result in a further
strengthening of its best-in-class product offerings. Benefits of the acquisition include:
Mobile Computing Technology - The ViryaNet product set will benefit from iMedeon's industry-leading mobile computing technology as well as its industry-specific product features.
Domain Expertise - ViryaNet will benefit from the extensive utilities industry experience and domain knowledge of iMedeon's employees, which is a key differentiator in selling to organizations within this sector.
Powerful Partnerships - ViryaNet intends to further extend its market reach through the many partnerships that iMedeon forged with industry leaders such as GE Power, Siebel, SchlumbergerSema, Eftia, Indus, and Aspective, Inc.
Growing Customer Base - This acquisition will add iMedeon's customers, including utilities such as Arizona Public Service, JEA, and Lumbee River EMC, and several other large, well-known companies, such as Nextel Communications, to the growing ViryaNet client roster. The acquisition increases ViryaNet's customer base to approximately 60 clients.
"ViryaNet's strategy is to become the dominant best-in-class provider of Web-based and wireless workforce management solutions to companies that provide service to their customers in multiple industries, including the utilities sector," stated Win Burke, president and CEO, ViryaNet. "This acquisition will allow ViryaNet to capitalize on iMedeon's utilities market presence, customer base, domain expertise, unequaled wireless capabilities, and powerful partnerships.
Our goal is to provide service organizations in the utilities sector and other industries with applications that automate all service activities - focusing on workforce management, supported by contract administration, spare parts logistics, and depot repair - over the Web and wirelessly. Our applications are built not by generalists in enterprise software, but by people who understand and specialize in the intricate details of service delivery. We are committed to building the best workforce
management and supporting applications for service delivery in the world."
iMedeon's former chairman and CEO, Larry Duckworth, observed that, "Present and future customers of the new ViryaNet will benefit in many ways from the combined capabilities. ViryaNet's philosophy of customer care, industry commitment, and product excellence is an extension of iMedeon's vision and values. We also believe that iMedeon's partnerships with GE and others will be enhanced by
this union, due to the comprehensive, multi-component nature of the ViryaNet applications."
Proven Application for Mobile Workforce Management
"With the iMedeon acquisition, users get a strong alternative to [competitors' offerings], an alternative with a proven complex work and non-linear scheduling application. With iMedeon, ViryaNet gets a customer base anchored by JEA and Arizona Public Service (APS), and a utility [prospect] pipeline that iMedeon and its partner network were developing. The acquisition also provides ViryaNet with
wireless technology to manage its mobile workforce application. As the mobile workforce space continues to consolidate, users should select vendors based on an enterprise view rather than a function or department need." Source: Marc McCluskey, The AMR Alert, February 26, 2002.
Applications for the Continuum of Utilities Field Work
"The market for field service automation and entitlements is crowded with vendors with narrow, point solutions, at a time when service organizations are looking for less complexity and broader solutions from a single vendor. A mobile solution for utilities that can support connects, disconnects, and meter services, and also addresses complicated work management issues such as non-linear,
resource-intensive installation and maintenance projects, will be of high value to customers," stated Michael Maoz, vice president and research director, Gartner, Inc. "This acquisition makes sense as it creates an entity that offers applications for the continuum of utilities field work."
Comprehensive Field Service Capability
"There exists rich opportunity within the field service marketplace," stated Michael Blumberg, a service industry expert and chief operating officer of
D.F. Blumberg Associates, Inc., a management consulting firm, headquartered in Fort Washington, PA. "Specifically, the utilities industry accounts for a significant percentage of the annual technology investment across the wider field service marketplace. Within this sector, however, there are many vendors, some with old solutions designed to address the requirements of short-duration, high-volume tasks. What's been ignored in this space until now is the offering of an
application that addresses comprehensive field service management at an enterprise level. The utilities vertical demands a single vendor to meet the technological and functional needs of its diverse requirements. The ViryaNet acquisition of iMedeon makes sense, as it is a logical consolidation and sign of the times. The combination of ViryaNet Service Hub and broad field service management applications with iMedeon's utilities business processes and wireless expertise has the potential to
create an unrivalled offering."
Rapid Integration of Products
Integration of iMedeon's standards-based iM:Work field service management application with ViryaNet Service Hub and ViryaNet's extensive suite of service delivery applications is expected to be virtually immediate. Rapid integration is possible because both iM:Work and ViryaNet's Service Hub are built with common technologies such as Java and XML, and employ state-of-the-art integration
capabilities. The combined product will be the first workforce management system that supports both simple work orders like meter reads as well as complex projects that can span months and involve many resources. It will also be the first service delivery platform that incorporates work order management, contracts, materials, and repair management. Finally, because of the complementary domain expertise, the merged product will offer proven best-practice business processes for industry verticals
such as utilities, telecommunications, industrial automation, high-technology manufacturing, and more.
Support and maintenance of previous product releases from both companies will be continued. iMedeon and ViryaNet customers alike will benefit from the strength of the combined products going forward, while their existing investments will be protected.
Combined Operations and Financial Impact
As a result of the acquisition, iMedeon has become a wholly-owned subsidiary of ViryaNet. The Company intends to maintain the iMedeon offices in Alpharetta, GA. iMedeon employees will report immediately into the respective ViryaNet functional groups. Prior to the acquisition, iMedeon had 27 people and ViryaNet headcount was approximately 92. After the combination of operations, ViryaNet headcount is expected
to be approximately 105.
ViryaNet expects revenue for 2002 to increase $3-$4 million as a result of the iMedeon acquisition. The Company indicated that it expects earnings in Q1, excluding one-time charges, to be about $0.00, and earnings on a full-year basis in 2002 are expected to be $0.09 to $0.10.
The Company's assessment of iMedeon's in-process R&D has not been completed. Although the Company believes it will report a one-time charge related to the acquisition in Q1, it does not believe it will be substantial.
The cash balance at the end of Q1 is expected to be at least equal to the cash balance at the end of December 31, 2001 and grow steadily during the remainder of 2002.
Terms of the Agreement
ViryaNet has acquired all the outstanding shares of iMedeon, Inc. of Alpharetta, GA for approximately 4.3 million shares of ViryaNet. Within 90 days of the closing of this transaction, iMedeon's former shareholders will receive, subject to approval by ViryaNet shareholders, approximately 900,000 additional ordinary shares of ViryaNet, or, in the absence of such shareholder approval, will receive
approximately $500,000 in cash.
Former iMedeon shareholders will be represented on the ViryaNet board of directors by one voting board member, who will be Michael Donnelly of GE Equity, as well as by one non-voting observer member, who will be Larry Duckworth, former chairman and CEO of iMedeon.
Conference Call Notice
ViryaNet will host a conference call to discuss the acquisition of iMedeon at 8:30 AM (EST) on Tuesday, February 26, 2002. A Web cast of the conference call will be available to all interested parties on the "Investor Relations" section of the ViryaNet Website at
www.viryanet.com. To listen to the event, call 800-288-8976 (United States) or 612-332-0720 (International). A digital replay of the conference call will be available beginning at 2:30 PM (EST) on February 26, 2002 by dialing 800-475-6701 (United States) or 320-365-3844 (International). The access code from either phone number is 629447.
About iMedeon
iMedeon is a leading global provider of open systems, wireless and Web-based mobile workforce management solutions. The Company's iM:Work solution suite completely incorporates today's important open systems standards and is 100% Web-based. It delivers award-winning functionality to help organizations of all sizes optimize the service chain, maximize customer satisfaction and retention, increase
service revenues and decrease associated field service costs. Dramatically improving organization-wide service performance through mobile workforce optimization, iM:Work quickly becomes a mission-critical component of iMedeon's customers' competitive strategies.
Among the world's leading companies featured on the iMedeon client roster are Arizona Public Service, JEA, and Lumbee River EMC, and Nextel Communications. The Company, which is headquartered in Alpharetta, GA, is pleased to have an impressive group of industry leaders as investors, including GE Equity, Insight Venture Partners, and Aether Systems.
About ViryaNet
ViryaNet is a provider of software solutions that improve the quality and efficiency of an organization's service operations. ViryaNet's flagship product - the award-winning ViryaNet Service Hub - combines the power of the Internet, the freedom of wireless technologies, and the resources of ViryaNet's deep service expertise to help companies improve workforce scheduling, dispatching, and activity
reporting; customer contract and entitlement automation; and asset, logistics and repairs management.
Customers in the consumer goods, grocery and retail, telecommunications, manufacturing, utilities, third-party maintenance, and other industries use ViryaNet Service Hub to transition complex service business processes into a manageable, scalable Internet operation, with the goal of increasing service revenues, decreasing service costs, and maximizing customer satisfaction.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding ViryaNet's expectations, beliefs, intentions, or strategies regarding the capabilities of its
products, its relationships with its customers, its customer purchases, its future operational plans and objectives, its future business prospects, its future financial performance, and its future prospects for profitability. All forward-looking statements included in this document are based upon information available to ViryaNet Inc. as of the date hereof, and ViryaNet Inc. assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and
uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to ViryaNet's business include market acceptance of and demand for the Company's products, risks associated with a slow-down in the economy, risks associated with the financial condition of the Company's customers, risks associated with the events associated with the September 11, 2001 terror attacks in the US, risks associated with competition and competitive
pricing pressures, risks associated with increases in costs and operating expenses, risks in technology development and commercialization, the risk of operating losses, risks in product development, risks associated with international sales, and other risks that are set forth in ViryaNet's Form F-1, as amended, declared effective by the SEC on September 19, 2000, and the other reports filed from time to time with the Securities and Exchange Commission. Reported results should not be
considered an indication of future performance. You should not place undue reliance on these forward-looking statements, which speak only as the date hereof. ViryaNet disclaims any obligation to publicly update or revise any such forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking
statements.