WALTHAM, Mass., April 18, 2000 - PTC (NASDAQ:PMTC) today reported revenue totaling $227.1 million for the second quarter ended April 1, 2000, compared to $263.2 million for the same period last year. Pro forma net income for the quarter, which excludes both the impact of nonrecurring charges and the amortization of intangible assets related to acquisitions, was $0.5 million, or $0.00 per share, compared to $45.9 million, or $0.17 per share, for the year-ago period. The company reported a net loss for the second quarter of $5.8 million, or ($0.02) per share, compared to net income of $10.5 million, or $0.04 per share, for the second quarter of fiscal 1999.
C. Richard Harrison, president and chief executive officer, commented: "As noted in our announcement of preliminary Q2 results on April 3rd, we are clearly disappointed with our revenue performance. This is due in large part to the difficulty we've experienced in balancing our efforts between our traditional MCAD (mechanical computer-aided design) business and our newer, faster growing business in Internet-based collaborative product commerce (CPC). As a result, we are taking immediate actions designed specifically to provide more discrete product line focus and accountability."
Harrison announced the creation of three business units that will have overall responsibility for the company's major product line initiatives. They are:
All three business units will report to Harrison, who noted: "This new organizational model will allow us to better leverage the respective strengths of our primary product lines. We have tremendous assets in our CPC and flexible engineering solutions. We have significant resources behind these product lines in terms of R&D investments and our global support services. We also have large market opportunities for our products, and we expect this organizational structure to maximize the full potential of our assets and resources."
In association with the creation of the company's new business units, Harrison also noted that plans call for PTC to reduce its existing cost structure to improve profitability. This will result in a restructuring charge to be taken during PTC's third fiscal quarter.
Regarding results for the second quarter specifically, Harrison said total Windchill revenue, at $39.4 million, more than tripled from the same quarter last year. "Our Windchill business in Q2 fell short of our own expectations of about $55 million due to our inability to close some large deals by quarter end. Nonetheless, we remain very encouraged by the continued acceptance of Windchill in the marketplace and believe that the overall CPC market represents a large opportunity."
Harrison added that total Windchill revenue over the past four quarters exceeded $140 million. In Q2 specifically, PTC received significant orders for Windchill products from SKF Group (Sweden), Tatung Co. (Taiwan), CargoLifter Development (Germany), NEC Yonezawa (Japan) and the United States Army.
Harrison noted that total MCAD revenue for Q2, at $187.7 million, fell significantly short of the company's expectations. He added that the shortfall was concentrated in North America. "Improving our focus in MCAD should enhance our revenue opportunities going forward. We continue to make significant investments in the product line, and we have tremendous assets in both our technology breadth and depth, and in our installed base of nearly 29,000 customers. During the quarter we introduced Pro/ENGINEER 2000iČ, a major release of software featuring more than 440 enhancements focused on ease-of-use, Windows 2000 certification, distributed computing, and multi-system integration."
In Q2, PTC received several significant orders for MCAD software and services. Among them were purchases by Mitsubishi Electric Engineering (Japan), Izumi Products Co. (Japan), KUHN (France), Fiat (Italy), YASDA (Japan), BAE SYSTEMS Marine Ltd. (United Kingdom), Lamborghini (Italy) and SCP Global Technologies (USA).
Harrison concluded: "As previously noted, the actions we are taking internally are designed to improve our revenues. While we believe such measures will result in improved performance over time, we obviously can't gauge with certainty how quickly these actions will have an impact. Therefore, we remain cautious in our outlook for the near term.
"Nonetheless, the plans I've highlighted indicate our enthusiasm for the opportunities we continue to see because we possess an outstanding set of products, people and customers. They are tremendous assets to PTC, and it's up to us to make the best use of them."
The unaudited consolidated statement of income and condensed consolidated balance sheet for the second quarter and first six months of fiscal 2000 are attached.
PTC's conference call to discuss the second quarter results will be webcast live on April 18th at 10 a.m. Eastern on the company's website, located at http://www.ptc.com. The call will also be webcast live via Nasdaq (www.nasdaq.com), Streetevents (www.streetevents.com), Vcall (www.vcall.com) and Bestcalls (www.bestcalls.com). An archived version of the conference call will be available for replay on all these sites until April 28th.
About PTC
PTC (Parametric Technology Corporation), founded in 1985 and headquartered
in Waltham, Mass., USA, develops, markets, and supports collaborative product commerce (CPC) solutions that help manufacturing companies shape innovation and achieve sustainable competitive advantage in the Internet age. These B2B
e-commerce solutions employ powerful Web-based collaboration and flexible engineering technologies to streamline product development and delivery processes. PTC's software solutions are complemented by the strength and experience of PTC Global Services, which provides training, consulting, support and e-commerce services to customers worldwide. With PTC's CPC solutions, manufacturers can take advantage of the Internet to improve product quality, reduce costs and shorten time-to-market cycles. In its fiscal year ended September 30, 1999, the company achieved more than $1 billion in revenue. PTC can be reached at 781-398-5000, or via the Web at http://www.ptc.com.
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Six Months Ended
April 3, April 1, April 3, April 1,
1999 2000 1999 2000
Revenue:
License $ 141,125 $ 87,890 $ 277,205 $ 192,764
Service 122,123 139,215 236,160 273,378
Total revenue 263,248 227,105 513,365 466,142
Costs and expenses:
Cost of license revenue 2,997 4,604 7,136 8,732
Cost of service revenue 47,567 59,799 89,283 115,826
Sales and marketing 103,161 105,384 199,273 210,324
Research and development 30,310 37,611 59,483 71,678
General and administrative 15,248 18,331 31,812 34,802
Amortization of goodwill
and other intangible assets 3,607 9,777 6,094 19,205
Acquisition and
nonrecurring charges 39,518 - 53,347 -
Total costs and expenses 242,408 235,506 446,428 460,567
Operating income (loss) 20,840 (8,401) 66,937 5,575
Other income
(expense), net 728 393 2,672 1,036
Income (loss) before
income taxes 21,568 (8,008) 69,609 6,611
Provision for (benefit from)
income taxes 11,019 (2,162) 29,069 2,076
Net income (loss) $ 10,549 $ (5,846) $ 40,540 $ 4,535
Earnings (loss) per share:
Basic $ 0.04 $ (0.02) $ 0.15 $ 0.02
Diluted $ 0.04 $ (0.02) $ 0.15 $ 0.02
Weighted average shares
and dilutive equivalent
shares outstanding 275,487 275,107 274,891 288,389
PARAMETRIC TECHNOLOGY CORPORATION
PRO FORMA RESULTS (1)
(in thousands, except per share data)
Operating income $ 63,965 $ 1,376 $ 126,378 $ 24,780
Net income $ 45,904 $ 518 $ 90,754 $ 18,073
Net income
per share - diluted $ 0.17 $ 0.00 $ 0.33 $ 0.06
Weighted average shares
and dilutive equivalent
shares outstanding 275,487 290,038 274,891 288,389
(1) The pro forma results exclude the amortization of intangible
assets and acquisition and nonrecurring charges.
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, April 1,
1999 2000
ASSETS
Cash and investments $ 353,895 $ 401,453
Accounts receivable, net 221,889 179,487
Other assets 440,836 421,916
Total assets $1,016,620 $1,002,856
LIABILITIES AND STOCKHOLDERS' EQUITY
Total liabilities $ 495,516 $ 402,809
Stockholders' equity 521,104 600,047
Total liabilities and stockholders' equity $1,016,620 $1,002,856
Except for the historical information contained herein, matters discussed in this news release may constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These include: the success of our new organizational model in improving our distribution efforts; our ability to realize revenue from the larger, strategic business opportunities we are pursuing; market acceptance of the Windchill family of products, which have a longer sales cycle than our other products; our ability to successfully transform to a solutions-oriented, multi-product business model; our ability to compete successfully in the MCAD industry; our ability to differentiate our MCAD products and invigorate our MCAD business via emphasis on collaborative product commerce opportunities; the success of our third-party distributor's sales to smaller customers; as well as other risks and uncertainties detailed from time to time in reports filed by PTC with the Securities and Exchange Commission, including the company's most recent reports on Form 10-K and 10-Q.
Parametric Technology Corporation, Pro/ENGINEER and Windchill are registered trademarks and all names in the PTC product family as well as the PTC logo are trademarks of Parametric Technology Corporation or its subsidiaries in the United States and in other countries. All other companies and products referenced herein have trademarks or registered trademarks of their respective holders.