Exhibit 99.1
Investor Contact: Media Contact:
Meredith Mendola Nicole Rowe
781-370-6151 781-370-6369
mmendola@ptc.com nrowe@ptc.com
PTC Reports First Quarter Fiscal Year 2007 Results
- Company Delivers Year-over-Year Revenue Growth of 15% and Net Income Growth
of over 100% -
NEEDHAM, Mass., January 24, 2007 - PTC (Nasdaq: PMTC), the Product Development
Company(R), today reported revenue of $221.7 million for the first quarter
ended December 30, 2006, up 15% from the same period last year. Total license
revenue for the first quarter of 2007 was $66.6 million, up 14% from the same
period last year. Results for the first quarter of 2007 reflected year-over-year
growth in all geographies and strength across all product lines.
"We are off to a great start in fiscal 2007 with revenue and earnings growth
above our targets," said C. Richard Harrison, president and chief executive
officer. "We continue to deliver strong financial results because we are driving
customer satisfaction with our highly differentiated offerings. We have brought
together the world's leading solutions for engineering calculations,
CAD/CAM/CAE, content and process management, and technical publications to drive
competitive advantage for our customers."
GAAP operating income for the first quarter of 2007 was $21.0 million, compared
with $11.3 million in the year-ago period. GAAP net income for the first quarter
of 2007 was $15.2 million, or $0.13 per diluted share, compared with GAAP net
income of $7.5 million, or $0.07 per diluted share, in the year-ago period.
Non-GAAP operating income, which excludes stock-based compensation cost and
amortization of acquisition-related intangible assets, was $33.0 million, or 15%
of total revenue for the first quarter of 2007, compared with $23.1 million, or
12% of total revenue in the year-ago period. Non-GAAP net income, which excludes
the items excluded from non-GAAP operating income and the related tax effect of
those items, was $26.8 million for the first quarter of 2007, or $0.23 per
diluted share, compared to $18.8 million in the year-ago period, or $0.17 per
diluted share. We have provided a reconciliation between GAAP and non-GAAP
results in the attached financial tables.
Cash and cash equivalents were $147 million at the end of the first fiscal
quarter of 2007, down from $183 million at the end of the fourth fiscal quarter
2006 primarily due to the $17 million acquisition of ITEDO and annual
compensation and commission payments made in the first quarter that related to
fiscal 2006 performance.
First Quarter 2007 Revenue Metrics
PTC delivered the following results for the first quarter of fiscal 2007
compared to the same period last year:
o Total revenue growth of 15%, driven by training and consulting
service revenue growth of 23%, license revenue growth of 14%,
and maintenance revenue growth of 12%;
o Desktop Solutions total revenue growth of 14% to $144.3 million,
driven by license revenue growth of 20%, training and consulting
service revenue growth of 15%, and maintenance revenue growth of
11%. License revenue growth reflects strong sales of
Pro/ENGINEER(R), including new seats, upgrades and modules, as
well as revenue attributable to the recently acquired Mathcad
and IsoDraw products, which we acquired in the third quarter of
fiscal 2006 and first quarter of fiscal 2007, respectively;
o Enterprise Solutions total revenue growth of 17% to $77.4
million, driven by training and consulting service revenue
growth of 27%, maintenance revenue growth of 18%, and license
revenue growth of 4%. License revenue growth was impacted by a
significant customer transaction in the first quarter of fiscal
2006. Growth in license revenue was primarily attributable to
sales of Windchill PDMLink(R) and Pro/INTRALINK(R) solutions,
reflecting our continued success in helping customers move to
our single platform for content and process management both
within engineering and the enterprise.
o Total revenue from our reseller channel of $47.3 million, up
20%, reflecting success in the SMB market around the world;
o Revenue growth across all major geographies: 14% growth in North
America, 10% growth in Europe, and 26% growth in Asia-Pacific.
Asia-Pacific revenue reflects 24% growth in Japan and 28% growth
in the Pacific Rim.
In the first quarter, PTC received orders from leading organizations, including
Boeing; Festo AG & Co. KG; ITT Corporation; Jenoptik Laser, Optik, Systeme GMBH;
Lockheed Martin; Maxon Motor; Mitsubishi Electric Corporation; Newell
Rubbermaid; Sampo Corporation; Toyota; and Volkswagen.
"Both our organic and acquired solutions continue to perform well, and we
continue to grow faster than the overall market growth of approximately 9%,"
continued Harrison. "As a result, we have increased confidence in our
business outlook and we are raising our revenue and earnings per share targets
for fiscal 2007. Additionally, we have established new long-term financial goals
to achieve $1.5 billion in revenue and 22% non-GAAP operating margins by 2010.
This reflects about 15% annual revenue growth, which should primarily come from
organic revenue. We plan to continue to drive operating margin growth through a
combination of productivity improvements in our distribution and service
delivery models, as well as by leveraging top-line growth."
Second Quarter and Fiscal Year 2007 Financial Outlook
PTC's revenue forecast for the second quarter of fiscal 2007 is between $225
million and $230 million. On a GAAP basis, second quarter total costs and
expenses are expected to be between $208 million and $211 million, and earnings
per share are expected to be between $0.11 and $0.13. Total non-GAAP second
quarter operating costs and expenses are expected to be between $195 million and
$198 million. The Company expects non-GAAP second quarter earnings per share to
be between $0.22 and $0.24. These non-GAAP operating cost and earnings
expectations exclude the following second quarter estimated expenses and their
tax effects:
o Approximately $10 million of expense related to stock-based
compensation
o Approximately $3 million of acquisition-related amortization
expense
PTC expects its cash balance to be approximately $185 million at the end of the
second quarter.
For the fiscal year ending September 30, 2007, PTC expects revenue to be about
$950 million. On a GAAP basis, fiscal year 2007 total costs and expenses are
expected to be approximately $837 million, and earnings per share are expected
to be between $0.71 and $0.76. Total non-GAAP operating costs and expenses are
expected to be approximately $783 million. The Company expects non-GAAP earnings
per share to be between $1.17 and $1.22 for the fiscal year. These non-GAAP
earnings expectations exclude the following full-year estimated expenses and
their tax effects:
o Approximately $40 million of expense related to stock-based
compensation
o Approximately $14 million of acquisition-related amortization
expense
Other Important Information
PTC has received notice that a large customer is disputing outstanding payments
owed to the customer's third party financing provider, which relate in part to
purchases of PTC software and services from 2003 to 2006. PTC has learned that
the customer has defended its non-payment by disputing certain aspects of the
underlying purchase transactions. PTC is reviewing this matter, but has been
paid for such software and services and, based on its review to date, believes
the transactions were binding and that neither party has any basis for recourse
against PTC.
Important Information about Non-GAAP References
References by PTC to non-GAAP operating costs and expenses, non-GAAP operating
income, non-GAAP net income and non-GAAP earnings per share refer to costs and
expenses, operating income, net income or earnings per share, respectively,
excluding stock-based compensation cost, amortization of acquisition-related
intangible assets, in-process research and development write-offs associated
with acquisitions, restructuring charges, and their related tax effects, as well
one-time tax items, if any. GAAP requires that these costs and charges be
included in costs and expenses and, accordingly, used to determine operating
income and earnings per share. PTC's management uses non-GAAP operating costs
and associated non-GAAP net income (which is the basis for non-GAAP earnings per
share) to make operational and investment decisions, and PTC believes that they
are among several useful measures for an enhanced understanding of our operating
results for a number of reasons.
First, although PTC undertakes analyses to ensure that its stock-based
compensation grants are in line with peer companies and do not unduly dilute
shareholders, PTC allocates these grants and measures them at the corporate
level. Management excludes their financial statement effect when planning or
measuring the periodic financial performance of PTC's functional organizations
since they are unrelated to our core operating metrics. Likewise, we believe
that excluding items such as in-process research and development write-offs and
amortization of intangible assets associated with acquisitions, or restructuring
charges that are not directly attributable to our ongoing operations and that do
not generally fluctuate in correlation with periodic performance, provides
investors with information that helps to compare period-over-period operating
performance by highlighting the effect of acquisitions or restructuring
activities on our results of operations. In addition, PTC's management excludes
the financial statement effect of these items in creating operating budgets for
PTC's functional business units and in evaluating and compensating employees due
to the fact that it is difficult to forecast these expenses. Lastly, we believe
that providing non-GAAP earnings per share affords investors a view of earnings
that may be more easily compared to peer companies and enables investors to
consider PTC's earnings on both a GAAP and non-GAAP basis in periods when PTC is
engaged in acquisition activities or undertaking non-recurring activities.
PTC believes these non-GAAP measures will aid investors' overall understanding
of PTC's results by providing a higher degree of transparency for certain
expenses, and providing a level of disclosure that will help investors
understand how PTC plans and measures its own business. However, non-GAAP net
income should be construed neither as an alternative to GAAP net income or
earnings per share as an indicator of our operating performance nor as a
substitute for cash flow from operations as a measure of liquidity because the
items excluded from the non-GAAP measures often have a material impact on PTC's
results of operations. Therefore, management uses, and investors should use,
non-GAAP measures in conjunction with our reported GAAP results.
Earnings Call Webcast
PTC will provide detailed financial information and an outlook update on its
first quarter fiscal year 2007 results conference call and live webcast on
January 24, 2007 at 10 a.m. ET. This earnings press release and accompanying
financial and operating statistics will be accessible prior to the conference
call and webcast on PTC's web site at www.ptc.com/for/investors.htm. In
addition, the live webcast may be accessed at the same web address. To access
the live call, please dial 888-566-8560 (in the U.S.) or +1-517-623-4768
(international). Please use passcode PTC. A replay of the call will be available
until 5:00 p.m. ET on January 29, 2007. To access the replay via webcast,
please visit www.ptc.com/for/investors.htm. To access the replay by phone,
please dial 402-220-9741.
PTC's unaudited consolidated statements of operations, the unaudited condensed
consolidated balance sheets, and the unaudited condensed consolidated
statements of cash flows for the first fiscal quarter 2007 are attached.
About PTC
PTC (Nasdaq: PMTC) provides leading product lifecycle management (PLM), content
management and dynamic publishing solutions to more than 40,000 companies
worldwide. PTC customers include the world's most innovative companies in
manufacturing, publishing, services, government and life sciences industries.
PTC is included in the S&P Midcap 400 and Russell 2000 indices. For more
information on PTC, please visit http://www.ptc.com.
Statements in this news release that are not historical facts, including
statements about our confidence and strategies and our expectations about
revenue, results of operations, market growth and market acceptance of our
products, are forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from those projected. Those
risks and uncertainties include the following: we may be unable to achieve
revenue and earnings growth at recent or expected future rates; the market for
our products and market adoption of our products may not continue to grow at
recent rates; our recent acquisitions may not generate the revenue we expect; as
well as other risks and uncertainties detailed from time to time in reports we
file with the Securities and Exchange Commission, including our most recent
reports on Forms 10-K and 10-Q.
PTC, The Product Development Company, Windchill, Windchill PDMLink,
Pro/INTRALINK, Mathcad, IsoDraw, and all other PTC product names and logos are
trademarks or registered 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.
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended
------------------------------
December 30, December 31,
2006 2005
------------------------------
Revenue:
License $ 66,588 $ 58,527
Service 155,079 133,991
------------------------------
Total revenue 221,667 192,518
------------------------------
Costs and expenses:
Cost of license revenue(2) 3,560 3,303
Cost of service revenue(2) 68,568 58,722
Sales and marketing(2) 69,561 63,645
Research and development(2) 37,984 34,583
General and administrative(2) 18,923 19,629
Amortization of acquired intangible assets 2,088 1,358
------------------------------
Total costs and expenses 200,684 181,240
------------------------------
Operating income 20,983 11,278
Other income, net 780 1,099
------------------------------
Income before income taxes 21,763 12,377
Provision for income taxes 6,610 4,861
------------------------------
Net income $ 15,153 $ 7,516
==============================
Earnings per share: (2)
Basic $ 0.14 $ 0.07
Weighted average shares outstanding (1) 111,830 109,485
Diluted $ 0.13 $ 0.07
Weighted average shares outstanding (1) 117,283 112,671
(1) A two-for-five reverse stock split of our common stock became effective on
February 28, 2006. All earnings per share and weighted-average share amounts
are presented on a post-split basis.
(2) Effective July 3, 2005, PTC adopted SFAS 123(R), "Share-Based Payment".
Accordingly, for each of the three months ended December 31, 2005 and
December 30, 2006, stock-based compensation was accounted under SFAS 123(R).
The amounts in the tables above include stock-based compensation as follows:
Three Months Ended
------------------------------
December 30, December 31,
2006 2005
------------------------------
Cost of license revenue $ 21 $ 40
Cost of service revenue 1,910 1,947
Sales and marketing 1,565 2,315
Research and development 1,842 2,105
General and administrative 3,292 3,257
------------------------------
Total stock-based compensation $ 8,630 $ 9,664
==============================
PARAMETRIC TECHNOLOGY CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended
------------------------------
December 30, December 31,
2006 2005
------------------------------
GAAP operating income $ 20,983 $ 11,278
Stock-based compensation 8,630 9,664
Amortization of acquired intangible assets
included in cost of license revenue 1,287 772
Amortization of acquired intangible assets
included in cost of service revenue 32 -
Amortization of acquired intangible assets 2,088 1,358
------------------------------
Non-GAAP operating income $ 33,020 $ 23,072
==============================
GAAP net income $ 15,153 $ 7,516
Stock-based compensation 8,630 9,664
Amortization of acquired intangible assets
included in cost of license revenue 1,287 772
Amortization of acquired intangible assets
included in cost of service revenue 32 -
Amortization of acquired intangible assets 2,088 1,358
Income tax adjustments(3) (352) (558)
------------------------------
Non-GAAP net income $ 26,838 $ 18,752
==============================
GAAP diluted earnings per share $ 0.13 $ 0.07
Stock-based compensation 0.07 0.09
All other items noted identified above 0.03 0.01
------------------------------
Non-GAAP diluted earnings per share $ 0.23 $ 0.17
==============================
Weighted average shares used in calculating
non-GAAP diluted earnings per share (4) 117,283 113,576
(3) Reflects the tax effect of non-GAAP adjustments above.
(4) Weighted average shares used in calculating non-GAAP diluted earnings per
share for the first quarter of 2006 includes 0.9 million additional shares
related to outstanding stock options assumed to be repurchased under SFAS
123(R) that would not be assumed to be repurchased under APB No. 25.
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 30, September 30,
2006 2006
------------------------------
ASSETS
Cash and cash equivalents $ 147,341 $ 183,448
Accounts receivable, net 195,757 181,008
Property and equipment, net 52,441 51,603
Goodwill and acquired intangibles, net 343,381 327,122
Other assets 157,767 152,263
------------------------------
Total assets $ 896,687 $ 895,444
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenue $ 205,554 $ 210,997
Other liabilities 225,136 246,348
Stockholders' equity 465,997 438,099
------------------------------
Total liabilities and stockholders' equity $ 896,687 $ 895,444
==============================
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
------------------------------
December 30, December 31,
2006 2005
------------------------------
Cash flows from operating activities:
Net income $ 15,153 $ 7,516
Stock-based compensation 8,630 9,664
Depreciation and amortization 9,536 8,061
Accounts receivable, net (8,302) (4,720)
Accounts payable and accruals (27,604) (28,788)
Deferred revenue (14,895) (8,947)
Other 1,144 (4,355)
------------------------------
Net cash used by operating activities (16,338) (21,569)
Capital expenditures (6,345) (3,350)
Acquisitions of businesses, net of cash acquired(5) (17,639) (10,675)
Other investing and financing activities 2,212 738
Foreign exchange impact on cash 2,003 (2,415)
------------------------------
Net change in cash and cash equivalents (36,107) (37,271)
Cash and cash equivalents, beginning of period 183,448 204,423
------------------------------
Cash and cash equivalents, end of period $ 147,341 $ 167,152
==============================
(5) Acquisitions of businesses in the first quarter of 2007 include $16.1
million for our acquisition of ITEDO, net of cash acquired, and $1.5
million of contingent purchase price earned in the first quarter of 2007
related to our 2006 acquisition of certain assets and liabilities of
Cadtrain, Inc.