PTC Announces Q3 Results

PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                                                                                                           
        Three Months Ended                 Nine Months Ended
        July 4,                 June 28,                 July 4,                 June 28,
        2009                  2008                 2009                  2008
Revenue:                                                                                                                         
License         $         49,450                         $         79,911                         $         142,022                         $         228,748         
Service                  176,709                                   191,837                                   549,820                                   542,035         
Total revenue                  226,159                                   271,748                                   691,842                                   770,783         
                                                                                                                        
Costs and expenses:                                                                                                                         
Cost of license revenue(1)                 7,644                                 8,980                                 22,204                                 20,563         
Cost of service revenue(1)                 66,162                                 76,582                                 214,205                                 221,437         
Sales and marketing(1)                 73,823                                 78,762                                 225,072                                 223,149         
Research and development(1)                 46,562                                 47,374                                 139,675                                 134,656         
General and administrative(1)                 19,245                                 20,294                                 58,375                                 64,653         
Amortization of acquired intangible assets                 3,827                                 4,044                                 11,510                                 11,252         
In-process research and development                 300                                 --                                 300                                 1,887         
Restructuring charges                  6,609                                   3,790                                   16,397                                   15,367         
Total costs and expenses                  224,172                                   239,826                                   687,738                                   692,964         
                                                                                                                        
Operating income                 1,987                                 31,922                                 4,104                                 77,819         
Other expense, net                  (491         )                          (7,110         )                          (1,812         )                          (5,859         )
Income before income taxes                 1,496                                 24,812                                 2,292                                 71,960         
Provision for (benefit from) income taxes                  (2,292         )                          10,342                                   (13,330         )                          28,762         
Net income         $         3,788                          $         14,470                          $         15,622                          $         43,198         
Earnings per share:                                                                                                                         
Basic         $         0.03                         $         0.13                         $         0.14                         $         0.38         
Weighted average shares outstanding                 115,194                                 113,491                                 114,843                                 113,661         
Diluted         $         0.03                         $         0.12                         $         0.13                         $         0.37         
Weighted average shares outstanding                 117,074                                 117,363                                 116,691                                 117,565         
(1) The amounts in the tables above include stock-based compensation as follows:
        Three Months Ended                  Nine Months Ended
        July 4,                  June 28,                 July 4,                  June 28,
        2009                 2008                 2009                 2008
Cost of license revenue         $         11                 $         12                 $         28                 $         26
Cost of service revenue                 2,055                         2,298                         5,601                         6,867
Sales and marketing                 3,491                         3,130                         8,592                         8,933
Research and development                 1,986                         2,322                         5,810                         6,929
General and administrative                  3,969                          3,387                          8,742                          9,926
Total stock-based compensation         $         11,512                 $         11,149                 $         28,773                 $         32,681
PARAMETRIC TECHNOLOGY CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands, except per share data)
                                                                                                                           
        Three Months Ended                 Nine Months Ended
        July 4,                 June 28,                 July 4,                 June 28,
        2009                  2008                  2009                  2008
GAAP revenue         $         226,159                         $         271,748                         $         691,842                         $         770,783         
Fair value adjustment of acquired CoCreate deferred maintenance revenue                  --                                   978                                   --                                   3,920         
Non-GAAP revenue         $         226,159                          $         272,726                          $         691,842                          $         774,703         
                                                                                                                        
GAAP operating income         $         1,987                         $         31,922                         $         4,104                         $         77,819         
Fair value adjustment of acquired CoCreate deferred maintenance revenue                 --                                 978                                 --                                 3,920         
Stock-based compensation                 11,512                                 11,149                                 28,773                                 32,681         
Amortization of acquired intangible assets
included in cost of license revenue                 5,221                                 6,289                                 14,592                                 13,850         
Amortization of acquired intangible assets
included in cost of service revenue                 --                                 17                                 8                                 51         
Amortization of acquired intangible assets                 3,827                                 4,044                                 11,510                                 11,252         
In-process research and development                 300                                 --                                 300                                 1,887         
Restructuring charges                  6,609                                   3,790                                   16,397                                   15,367         
Non-GAAP operating income         $         29,456                          $         58,189                          $         75,684                          $         156,827         
                                                                                                                        
GAAP net income         $         3,788                         $         14,470                         $         15,622                         $         43,198         
Fair value adjustment of acquired CoCreate deferred maintenance revenue                 --                                 978                                 --                                 3,920         
Stock-based compensation                 11,512                                 11,149                                 28,773                                 32,681         
Amortization of acquired intangible assets included in cost of license revenue                 5,221                                 6,289                                 14,592                                 13,850         
Amortization of acquired intangible assets included in cost of service revenue                 --                                 17                                 8                                 51         
Amortization of acquired intangible assets                 3,827                                 4,044                                 11,510                                 11,252         
In-process research and development                 300                                 --                                 300                                 1,887         
Restructuring charges                 6,609                                 3,790                                 16,397                                 15,367         
One-time non-cash loss included in other expense, net (2)                 --                                 6,206                                 --                                 6,206         
Income tax adjustments (3)                  (8,325         )                          (7,724         )                          (29,244         )                          (22,371         )
Non-GAAP net income         $         22,932                          $         39,219                          $         57,958                          $         106,041         
                                                                                                                        
GAAP diluted earnings per share         $         0.03                         $         0.12                         $         0.13                         $         0.37         
Stock-based compensation                 0.10                                 0.09                                 0.25                                 0.28         
All other items identified above                  0.07                                   0.12                                   0.12                                   0.25         
Non-GAAP diluted earnings per share         $         0.20                          $         0.33                          $         0.50                          $         0.90         
                                                                                                                        
Weighted average shares outstanding – diluted                                                                                                                 
Non-GAAP diluted earnings per share                 117,074                                 117,363                                 116,691                                 117,565         

(2) Reflects a one-time non-cash loss from the liquidation of certain legal entities related to previous acquisitions.
(3) Reflects the tax effect of non-GAAP adjustments above, as well as the effect of a $7.6 million one-time tax benefit recorded in the second quarter of 2009 due to the recognition of deferred tax assets in a foreign jurisdiction.
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                  
                                                
                July 4,                 September 30,
                2009                 2008
                                                
ASSETS                                                 
                                                
Cash and cash equivalents                 $         231,345                 $         256,941
Accounts receivable, net                         149,198                         201,509
Property and equipment, net                         58,560                         55,253
Goodwill and acquired intangibles, net                         593,280                         587,537
Other assets                         264,139                         248,333
                                                   
Total assets                 $         1,296,522                 $         1,349,573
                                                
LIABILITIES AND STOCKHOLDERS' EQUITY                                                 
                                                
Deferred revenue                 $         255,206                 $         258,295
Borrowings under revolving credit facility                         55,286                         88,505
Other liabilities                         240,995                         300,248
Stockholders' equity                         745,035                         702,525
                                                   
Total liabilities and stockholders' equity                 $         1,296,522                 $         1,349,573
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                                                                           
                                                                                                                        
        Three Months Ended                 Nine Months Ended
        July 4,                 June 28,                 July 4,                 June 28,
        2009                 2008                 2009                 2008
                                                                                                                        
Cash flows from operating activities:                                                                                                                         
Net income         $         3,788                         $         14,470                         $         15,622                         $         43,198         
Stock-based compensation                 11,512                                 11,149                                 28,773                                 32,681         
Depreciation and amortization                 15,601                                 16,636                                 45,558                                 43,484         
Accounts receivable                 (9,560         )                         268                                 67,455                                 69,819         
Accounts payable and accruals(4)                 963                                 1,041                                 (29,986         )                         (29,155         )
Deferred revenue                 (9,559         )                         (5,411         )                         (2,700         )                         16,305         
In-process research and development                 300                                 --                                 300                                 1,887         
Income taxes                 (18,584         )                         (868         )                         (53,371         )                         1,645         
Other                  (5,814         )                           16,017                                    5,646                                    1,242         
Net cash (used) provided by operating activities                 (11,353         )                         53,302                                 77,297                                 181,106         
                                                                                                                        
Capital expenditures                 (8,543         )                         (9,785         )                         (23,809         )                         (20,492         )
Acquisitions of businesses, net of cash acquired (5)                 (24,315         )                         --                                 (32,790         )                         (261,592         )
Proceeds from (payments on) debt, net                 --                                 (53,643         )                         (31,951         )                         98,999         
Repurchases of common stock                 --                                 (5,288         )                         (9,581         )                         (27,297         )




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