FileNet to acquire Saros Corporation; Acquisition redefines enterprise document management.

COSTA MESA, Calif.--(BUSINESS WIRE)--Jan.18, 1996--FileNet Corp. (NASDAQ NMS:FILE) today announced it has signed a definitive agreement to acquire Saros Corp., one of the leading suppliers of enterprise document-management and Internet web server software.

Under the terms of the definitive agreement, FileNet will issue 2,222,000 shares, consisting of directly issued shares and options to purchase FileNet Common Stock, in exchange for all of the outstanding stock and options of Saros. The transaction is expected to qualify as a tax-free reorganization and a pooling of interests for accounting and financial reporting purposes. Consummation of the transaction is subject to the approval of Saros shareholders and certain regulatory approvals. No vote of FileNet shareholders will be required for the transaction. The transaction is expected to close by April 1996.

FileNet is a leading supplier of client/server workflow and document-imaging software for corporate enterprises worldwide. Saros is one of the leading suppliers of enteprise document-management software in both market share and technology. Its software ensures the accuracy, manageability, and security of information in any form. With Saros software, text, spreadsheets, graphics, electronic forms, CAD drawings, and video are easily accessible in a platform-independent environment. With its @mezzanine(TM) software product, Saros is also leading the market in providing capabilities to organize, update, protect, and maintain documents published on the World Wide Web. @mezzanine, the cyberlibrarian, enhances Web servers for commercial Intranet and Internet applications.

With its acquisition of Saros, FileNet will redefine enterprise document management by becoming the first software vendor to provide a family of integrated best-of-class workflow, document-imaging, and document-management products designed to scale from the workgroup to enterprise-wide, including Intranet and Internet applications.

"As organizations think strategically about employee productivity, the next logical evolution in their information infrastructure is to provide the ability to access both document-management and business process automation systems from any desktop," said Ted Smith, president and CEO of FileNet. "With the acquisition of Saros, FileNet strengthens its market leadership position and helps customers increase their return on investment in document information, control the flow of documents, and manage the complete document life-cycle."

Saros has licensed more than 425,000 seats of its Mezzanine(R) enterprise library server software and sold Mezzanine-based document-management solutions to more than 275 commercial and government customers worldwide. The company's Saros Document Manager, was named to Network World's prestigious short list in its January 8, 1996 issue, citing the product as providing a high-performance and scalable library engine, layering an easy-to-use client interface on top of it and capable of meeting the needs of users with multivendor enterprise networks.

FileNet is a leading supplier of client/server workflow and document-imaging software for corporate enterprises worldwide. Its products support UNIX, Microsoft Windows, Microsoft BackOffice, OS/2, and NetWare, the most popular client/server platforms. FileNet and Saros will integrate their product families and announce their plans at the 1996 Association for Information and Image Management (AIIM) International Show in Chicago (March 31 to April 3).

"After an extensive search of the document-management market, we found Saros to be strong in providing proven, enterprise technology, and maintaining high-quality business partner and customer relationships," said Smith. "Saros also demonstrates leadership by delivering document servers for two key high-growth technology platforms - the Internet and Microsoft BackOffice."

"Increasingly, organizations are looking for solutions which allow them to access files of various types, both within and across workgroups as well as across the enterprise," said Linda Myers- Tierney, director of Electronic Workgroup Technologies at International Data Corp. "For example, in an IDC survey conducted in 1995, 80 percent of respondents using Electronic Document Management systems stated a requirement for integrated workflow and imaging by year-end. The FileNet/Saros marriage has the potential to offer a powerful integrated solution that will appeal to this market demand, leveraging the leadership each company has enjoyed.

FileNet Financial Results

In a separate press release issued today, FileNet also announced its estimated record fourth quarter and full-year financial results, which are subject to a year-end audit. Net income will approximate $0.59 a share on $63.5 million in revenue for the fourth quarter, compared to net income of $0.39 a share on revenue of $52.1 million last year. For the full year, net income will approximate $1.43 per share on $215.5 million in revenue, compared to $1.02 per share on $176.9 million last year. In addition, the company announced it will acquire the Greenbar Software COLD (Computer Output to Laser Disk) software technology.

Leader in document management

Saros, a privately-held and venture-backed company which is headquartered in Bellevue, Wash., will operate as a FileNet business unit, developing document-management software that will be sold and supported by FileNet's worldwide sales and support organization. Wayne Carpenter, a Saros co-founder and president, will remain as president of the business unit and will report to Smith.

Saros provides easy-to-use document-management and electronic library services running on standard local area networks and across popular client and server operating systems. It offers a comprehensive solution for organizing, managing, and processing large volumes of electronic documents from the first "File Save" through final archive.

Included in the Saros family of library server products is Saros Document Server for BackOffice, designed specifically for the Microsoft BackOffice family of Windows NT server products. Saros is the only company to offer document-management software built exclusively for Microsoft BackOffice.

"Document management is a strategic application for many companies and government organizations, driving them to be selective in the vendor they choose," said Carpenter. "FileNet offers award-winning software, and outstanding service and support that will further advance market acceptance of Saros technology. It also provides financial strength and market success that is unmatched in the document-management industry."

According to industry experts, Saros is recognized as providing short paybacks to its blue-chip customer base that includes Aetna Life & Casualty, Bankers Trust Company, Pacific Gas & Electric, Frank Russell Company, Merck & Company, and Royal Dutch Shell. For example, Bankers Trust Company, the seventh largest banking company in the U.S., uses both Saros and FileNet software products.

According to Laura Del Gaudio, vice president, corporate systems/electronic document management of Bankers Trust, "Our corporate goal is to provide every authorized employee with reliable access to our business information, maximizing our investment in those assets. We feel Saros will provide us with a tool for capitalizing on the value of our existing documents, located across our worldwide organization. Combining FileNet and Saros capabilities will enable us to redefine and extend traditional document management by attacking the key pieces of our document handling problems as well."

Saros is also a major innovator in developing industry standards. Along with IBM, Novell and Xerox, Saros is a co-founder of the Document Management Alliance. The alliance now consists of more than 50 Fortune 500 companies and document-management vendors that are working under the auspices of AIIM International to provide a single document-management standard.

Saros has established OEM relationships with leading companies, including Autodesk, AT&T GIS, Data General, Frame/Adobe, IBM, and Standard Register. In addition, Saros has a strong presence in the reseller market, particularly among Microsoft Solution Providers.

About Saros

Saros Corporation is an industry leading enterprise document-management company, with more than 425,000 seats sold to commercial and government customers worldwide. Saros products are sold directly to end-user customers through the Saros sales, service, and consulting organization, and through Saros-authorized resellers. Saros, co-founder of the Document Management Alliance (with IBM, Novell, and Xerox), has technology and marketing agreements with a number of major hardware and software vendors, and is the preeminent provider of OEM document-management technology. Founded in 1986, the company is based in Bellevue, Wash.

About FileNet

FileNet Corp. is a leader in client/server-based workflow and document-imaging software. The company's WorkFlo(R) Business System and FileNet:WorkGroup(TM) software manage and control the movement of document images, data, text, and other information throughout an enterprise. Software from FileNet and Watermark Software Inc., a FileNet company, enable paper-intensive organizations in many industries and levels of government worldwide to maximize enterprise productivity. Headquartered in Costa Mesa, Calif., FileNet has a sales and support organization that spans more than 45 countries.

For more information, call (800) FILENET (345-3638) or [phone]. -0-

Editors: For FileNet corporate and product information, and press releases, access the FileNet Home Page on the World Wide Web at http://www.filenet.com. Please use (800) FILENET (345-3638) for reader inquiries. For Saros corporate and product information, and press releases, access the Saros Home Page on the World Wide Web at http://www.saros.com.

FileNet and WorkFlo are registered trademarks of FileNet Corp., and FileNet:WorkGroup is a trademark of FileNet Corp. Saros and Mezzanine are registered trademarks and @mezzanine is a trademark of Saros Corporation. Watermark is a trademark of Watermark Software Inc. Other trademarks are the property of their respective holders.

CONTACT: Robin Tanchum

FileNet Corp.,714/966-3444

E-mail: [e-mail]

OR

Albie Jarvis

Copithorne & Bellows, 617/252-0606

E-mail: [e-mail]

OR

Christine McCaffrey

Saros Corp., 206/450-1490

E-mail: [e-mail]

OR

Darren Stordahl

Waggener Edstrom, 503/245-0905

E-mail: [e-mail]