PTC Corrects Replay Phone Numbers CORRECTION... by PTC Business Wire NEEDHAM, Mass. -- April 29, 2010 In the Q2 Earnings Conference Call and Webcast section, for the release dated April 27, 2010, the replay phone numbers should read... 1-800-333-1825 or 402-220-0203 (sted: 1-866-373-4992 or 203-369-0272). The corrected release reads: PTC ANNOUNCES Q2 RESULTS, INITIATES Q3 GUIDANCE AND UPDATES FY’10 TARGETS Targets 35% to 40% license revenue growth in FY’10 on strength of Windchill PLM solution PTC (Nasdaq: PMTC), The Product Development Company®, today reported results for its second fiscal quarter ended April 3, 2010. Highlights *Q2 Results: Revenue of $240.6 million and non-GAAP EPS of $0.20; GAAP EPS of $0.08 *Non-GAAP operating margin of 13.6%; GAAP operating margin of 4.8% *Relative to Q2 guidance, currency was unfavorable to revenue by $3.1 million and favorable to non-GAAP expenses by $1.6 million and to GAAP expenses by $1.9 million *Q3 Guidance: Revenue of $235 to $245 million and non-GAAP EPS of $0.14 to $0.20 *GAAP EPS of $0.02 to $0.07 *Assumes $1.36 USD / EURO, down from $1.46 assumption in previous guidance, a $7 million negative impact to revenue in Q3 *FY 2010 Targets: Maintaining revenue target of $1,015 million and non-GAAP EPS of $1.00 *GAAP EPS of $0.50 *Increasing license revenue growth target to 35% to 40% year-over-year growth, up from previous target of 30% growth *Non-GAAP operating margin of 16%; GAAP operating margin of 7.5% *Assumes $1.36 USD / EURO, down from $1.46 assumption in previous guidance, a $14 million negative impact to revenue in H2’10 The Q2 non-GAAP results exclude $12.3 million of stock-based compensation expense, $8.9 million of acquisition- related intangible asset amortization and $6.7 million of income tax adjustments. The Q2 results include a non-GAAP tax rate of 27% and a GAAP tax rate of 18%. Results Commentary C. Richard Harrison, chairman and chief executive officer, commented, “Q2 was another solid quarter for PTC with total revenue up 7% year-over-year and license revenue up 54%. Adjusting for FX impact relative to guidance, our revenue performance was at the high-end of our expectations, driven primarily by continued strength of our PLM business.” On a constant currency basis total Q2 revenue was up 3% and license revenue was up 48% compared to the year ago period. “Our PLM license revenue in Q2 was $30 million, up 107% year-over-year, continuing to highlight our leadership position in a large and growing segment of the enterprise software market,” continued Harrison. “Our pipeline for new business opportunities with new and existing customers remains strong. During the quarter we recognized revenue from leading organizations such as BAE Systems, EADS, Huawei Technologies, NASA, the United States Navy, and Vestas Wind Systems.” James Heppelmann, president and chief operating officer added, “We believe there is a lot of momentum in the PLM market and that PTC is gaining share and becoming recognized as the industry leader for both our technology and product development process expertise. We secured 2 additional strategically important ‘domino’ account wins during Q2, bringing the total number of domino account wins to 13. We are also engaged in more than 200 other opportunities world-wide where companies are looking to replace their existing PLM solution to help improve their competitive position in their own markets.” “We are very optimistic about the long-term opportunity for PTC and are committed to achieve our goal of a 20% non-GAAP EPS CAGR over the next 5 years,” continued Heppelmann. “In order to enable us to achieve this goal, we are investing to extend our technology leadership position and expand our high caliber, solutions oriented sales teams. We expect to add up to 30 more sales teams through the end of FY’10, which will significantly increase capacity as we enter FY’11. As of Q2’10, we are well positioned to achieve at least 20% non-GAAP EPS growth in FY’10.” Neil Moses, chief financial officer, commented, “Our strong license revenue and solid maintenance revenue performance was partly offset by a year-over-year decline in our services revenue as we continue to work through the impact of soft license sales in 2009. Our CAD and SMB businesses are showing signs of recovery, as both businesses delivered sequential license revenue growth. Our balance sheet remains solid with $223 million of cash. During Q2 we repurchased $40 million worth of stock and repaid $20 million of our outstanding debt; leaving a balance of $34 million outstanding on our revolving credit facility.” Outlook Commentary “Looking forward to the remainder of FY’10, despite FX movements we are maintaining our full-year revenue target of $1,015 million and non-GAAP EPS target of $1.00,” continued Moses. “We have lowered our currency assumption from $1.46 USD/EURO to $1.36 USD/EURO, which negatively impacts revenue by approximately $18 million for FY’10 and which makes achieving these full year targets more challenging. We are increasing our license revenue growth expectations to 35% to 40% year over year, with our maintenance and services businesses now expected to be down modestly on a year-over-year basis.” “We are maintaining our non-GAAP operating margin target of 16%,” continued Moses, “as we intend to continue to invest in our business to leverage our technology leadership position and capitalize on our long-term growth opportunity. We expect to pay down the remaining $34 million on our revolving credit facility and repurchase an additional $15 million worth of our stock during the remainder of FY’10.” For FY’10 the GAAP operating margin target is 7.5% and the GAAP EPS target is $0.50. The FY’10 targets assume a non-GAAP tax rate of 25%, a GAAP tax rate of 17% and 120 million diluted shares outstanding. The FY’10 non-GAAP guidance excludes approximately $49 million of stock-based compensation expense, $34 million of acquisition-related intangible asset amortization and $27 million of related income tax effects. “For Q3 we are initiating guidance of $235 to $245 million in revenue with non-GAAP EPS of $0.14 to $0.20,” Moses added. “We are expecting approximately 30% year-over-year growth in our license revenue in Q3 and 7% year-over-year growth in total revenue.” The Q3 GAAP EPS target is $0.02 - $0.07. The Q3 guidance assumes a non-GAAP tax rate of 23%, a GAAP tax rate of 15% and 120 million diluted shares outstanding. The Q3 non-GAAP guidance excludes approximately $12 million of stock-based compensation expense, $9 million of acquisition-related intangible asset amortization expense and $6 million of related income tax effects. Q2 Earnings Conference Call and Webcast Prepared remarks for the conference call have been posted to the investor relations section of our website. The prepared remarks will not be read live; the call will be primarily Q&A. What: PTC Fiscal Q2 Conference Call and Webcast When: Wednesday, April 28, 2010 at 8:30 a.m. Eastern Time Dial-in: 1-888-566-8560 or 1-517-623-4768 Call Leader: Richard Harrison Passcode: PTC Webcast: www.ptc.com/for/investors.htm Replay: The audio replay of this event will be archived for public replay until 4:00 pm (CT) on May 3, 2010 at 1-800-333-1825 or 402-220-0203. To access the replay via webcast, please visit www.ptc.com/for/investors.htm. Important Information About Non-GAAP References PTC provides non-GAAP supplemental information to its financial results. Non-GAAP operating expenses, margin and EPS exclude stock-based compensation expense, amortization of acquired intangible assets, acquired in-process research and development expense, restructuring charges, and the related tax effects of the preceding items and any one-time tax items. PTC provides this non-GAAP information to facilitate period-to-period comparisons of its operational performance by adjusting for certain non-cash and certain episodic expenses. We believe that providing non-GAAP measures affords investors a view of our operating results that may be more easily compared to peer companies. PTC management also uses this and other non-GAAP financial information to evaluate, manage and plan our business because the information provides additional insight into ongoing financial performance. In addition, compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. However, non-GAAP information should not be construed as an alternative to GAAP information as the items excluded from the non-GAAP measures often have a material impact on PTC’s financial results. Management uses, and investors should use, non-GAAP measures in conjunction with our GAAP results. We calculate revenue and expenses on a constant currency basis to obtain a view of the performance of our business without the effect of differences in foreign currency exchange rates used for translation. We calculate these measures by applying the applicable prior period exchange rates to current period revenues and expenses. Forward-Looking Statements Statements in this press release that are not historic facts, including statements about our fiscal 2010 and other future financial and growth expectations, anticipated tax rates, the expected impact of our planned strategic investments on our future growth, and the long-term prospects for the PLM segment of the enterprise software market are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the possibility that customers may not purchase our solutions when or at the rates we expect, the possibility the foreign currency exchange rates may vary from our expectations and thereby affect our reported revenue and expense, the possibility that we may not achieve the license growth rates that we expect, which could result in a different mix of revenue between license, service and maintenance and could impact our EPS results, the possibility that strategic customer wins may not generate the revenue we expect, the possibility that we will experience a shortfall in revenue that causes us to decrease or eliminate planned strategic investments in our business or planned share repurchases and debt repayments, and the possibility that any strategic investments that we do make may not have the effects that we expect. In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including the geographic mix of our revenue, expenses (including restructuring charges) and profits and loans and cash repatriations from foreign subsidiaries. Other risks and uncertainties that could cause actual results to differ materially from those projected are detailed from time to time in reports we file with the Securities and Exchange Commission, including our Annual Report on Form10-K and our Quarterly Reports on Form 10-Q. PTC, The Product Development Company, 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 referenced herein are trademarks or registered trademarks of their respective holders. About PTC (www.ptc.com) PTC (Nasdaq: PMTC) provides discrete manufacturers with software and services to meet the globalization, time-to-market and operational efficiency objectives of product development. Using the company’s PLM and CAD and related solutions, organizations in the Industrial, High-Tech, Aerospace/Defense, Automotive, Retail/Consumer and Life Sciences industries are able to support key business objectives such as reducing costs and shortening lead times while creating innovative products that meet customer needs and comply with industry regulations. PARAMETRIC TECHNOLOGY CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Three Months Ended Six Months Ended April 3, April 4, April 3, April 4, 2010 2009 2010 2009 Revenue: License $ 64,644 $ 42,070 $ 139,460 $ 92,572 Service 175,912 183,222 359,525 373,111 Total revenue 240,556 225,292 498,985 465,683 Costs and expenses: Cost of license 8,232 6,976 16,379 14,560 revenue^(1) Cost of service 68,934 72,302 139,458 148,043 revenue^(1) Sales and 75,137 71,387 153,735 151,249 marketing^(1) Research and 49,960 44,752 100,650 93,113 development^(1) General and 22,807 17,693 46,878 39,130 administrative^(1) Amortization of acquired intangible 3,975 3,815 8,033 7,683 assets Restructuring -- 9,788 -- 9,788 charges Total costs and 229,045 226,713 465,133 463,566 expenses Operating income 11,511 (1,421 ) 33,852 2,117 (loss) Other expense, net (605 ) (250 ) (1,129 ) (1,321 ) Income (loss) 10,906 (1,671 ) 32,723 796 before income taxes Provision for (benefit from) 1,904 (8,846 ) 5,858 (11,038 ) income taxes Net income $ 9,002 $ 7,175 $ 26,865 $ 11,834 Earnings per share: Basic $ 0.08 $ 0.06 $ 0.23 $ 0.10 Weighted average 115,951 114,793 116,104 114,672 shares outstanding Diluted $ 0.08 $ 0.06 $ 0.22 $ 0.10 Weighted average 119,856 115,656 120,487 116,503 shares outstanding (1) The amounts in the tables above include stock-based compensation as follows: Three Months Ended Six Months Ended April 3, April 4, April 3, April 4, 2010 2009 2010 2009 Cost of license revenue $ 2 $ 3 $ 19 $ 17 Cost of service revenue 2,241 1,291 4,821 3,546 Sales and marketing 3,520 2,193 6,594 5,101 Research and development 2,383 1,566 5,042 3,824 General and 4,146 1,677 9,671 4,773 administrative Total stock-based $ 12,292 $ 6,730 $ 26,147 $ 17,261 compensation PARAMETRIC TECHNOLOGY CORPORATION NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended Six Months Ended April April 4, April 3, April 4, 3, 2010 2009 2010 2009 GAAP operating $ 11,511 $ (1,421 ) $ 33,852 $ 2,117 income (loss) Stock-based 12,292 6,730 26,147 17,261 compensation Amortization of acquired intangible assets 4,928 4,703 9,826 9,371 included in cost of license revenue Amortization of acquired intangible assets -- -- -- 8 included in cost of service revenue Amortization of acquired 3,975 3,815 8,033 7,683 intangible assets Restructuring -- 9,788 -- 9,788 charges Non-GAAP operating income $ 32,706 $ 23,615 $ 77,858 $ 46,228 ^(2) GAAP net income $ 9,002 $ 7,175 $ 26,865 $ 11,834 Stock-based 12,292 6,730 26,147 17,261 compensation Amortization of acquired intangible assets 4,928 4,703 9,826 9,371 included in cost of license revenue Amortization of acquired intangible assets -- -- -- 8 included in cost of service revenue Amortization of acquired 3,975 3,815 8,033 7,683 intangible assets Restructuring -- 9,788 -- 9,788 charges Income tax (6,696 ) (14,717 ) (14,073 ) (20,919 ) adjustments ^(3) Non-GAAP net $ 23,501 $ 17,494 $ 56,798 $ 35,026 income GAAP diluted earnings per $ 0.08 $ 0.06 $ 0.22 $ 0.10 share Stock-based 0.10 0.06 0.22 0.15 compensation All other items 0.02 0.03 0.03 0.05 identified above Non-GAAP diluted earnings per $ 0.20 $ 0.15 $ 0.47 $ 0.30 share (2) Operating margin impact of non-GAAP adjustments: Three Months Ended Six Months Ended April 3, April 4, April 3, April 4, 2010 2009 2010 2009 GAAP operating margin 4.8 % (0.6 )% 6.8 % 0.4 % Stock-based compensation 5.1 % 3.0 % 5.2 % 3.7 % Amortization of acquired 3.7 % 3.8 % 3.6 % 3.7 % intangibles Restructuring charges -- % 4.3 % -- % 2.1 % Non-GAAP operating margin 13.6 % 10.5 % 15.6 % 9.9 % (3) Reflects the tax effects of non-GAAP adjustments for the second quarter and first six months of 2010 and 2009, which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed 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) April 3, September 30, 2010 2009 ASSETS Cash and cash equivalents $ 222,692 $ 235,122 Accounts receivable, net 151,117 166,591 Property and equipment, net 61,935 58,105 Goodwill and acquired intangibles, net 559,439 596,517 Other assets 316,642 293,877 Total assets $ 1,311,825 $ 1,350,212 LIABILITIES AND STOCKHOLDERS' EQUITY Deferred revenue $ 268,899 $ 234,270 Borrowings under revolving credit facility 33,528 57,880 Other liabilities 267,639 296,481 Stockholders' equity 741,759 761,581 Total liabilities and stockholders' equity $ 1,311,825 $ 1,350,212 PARAMETRIC TECHNOLOGY CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three Months Ended Six Months Ended April 3, April 4, April 3, April 4, 2010 2009 2010 2009 Cash flows from operating activities: Net income $ 9,002 $ 7,175 $ 26,865 $ 11,834 Stock-based 12,292 6,730 26,147 17,261 compensation Depreciation and 15,976 15,162 31,899 29,957 amortization Accounts 4,550 53,576 8,761 77,015 receivable Accounts payable 2,343 (4,916 ) (12,733 ) (30,949 ) and accruals ^ (4) Deferred revenue 32,440 15,589 16,453 6,859 Income taxes (3,693 ) (23,600 ) (6,498 ) (34,787 ) Other (4,962 ) 4,510 (186 ) 11,460 Net cash provided by operating 67,948 74,226 90,708 88,650 activities Capital (9,225 ) (7,094 ) (17,102 ) (15,266 ) expenditures Acquisitions of businesses, net of (1,505 ) (113 ) (2,087 ) (8,475 ) cash acquired Proceeds from (payments on) (19,720 ) (18,686 ) (19,720 ) (31,951 ) debt, net Repurchases of (40,000 ) -- (45,072 ) (9,581 ) common stock Other investing and financing (1,460 ) (1,919 ) (12,901 ) (2,410 ) activities ^(5) Foreign exchange (4,490 ) (5,629 ) (6,256 ) (10,190 ) impact on cash Net change in cash and cash (8,452 ) 40,785 (12,430 ) 10,777 equivalents Cash and cash equivalents, 231,144 226,933 235,122 256,941 beginning of period Cash and cash equivalents, end $ 222,692 $ 267,718 $ 222,692 $ 267,718 of period (4) Includes accounts payable, accrued expenses, and accrued compensation and benefits. (5) The three months ended April 3, 2010 and April 4, 2009 include $4.6 million and $1.9 million, respectively, for payments of withholding taxes in connection with vesting of restricted stock units and restricted stock. The six months ended April 3, 2010 and April 4, 2009 include $20.2 million and $4.3 million, respectively, for payments of withholding taxes in connection with vesting of restricted stock units and restricted stock. Contact: PTC Kristian P. Talvitie, 781-370-6151 email@example.com
PTC Corrects Replay Phone Numbers
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