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Accelrys Announces Fourth Quarter and Full Year 2012 Results

  Accelrys Announces Fourth Quarter and Full Year 2012 Results

        Non-GAAP Revenue up 16% to $47.5 million in the Fourth Quarter

Business Wire

SAN DIEGO -- February 26, 2013

Accelrys, Inc. (NASDAQ: ACCL) today reported financial results for the fiscal
quarter and year ended December31, 2012, including a 16% year-over-year
increase in Non-GAAP revenue in the fourth quarter.

Non-GAAP revenue for the quarter ended December31, 2012 increased $6.7
million to $47.5 million from $40.8 million for the same quarter of the
previous year, or an increase of 16%. Non-GAAP revenue for the year ended
December31, 2012 increased $19.3 million to $174.3 million from $155.0
million for the year ended December 31, 2011, or an increase of 12%.

Non-GAAP net income was $4.5 million, or $0.08 per diluted share, for the
quarter ended December31, 2012 compared to non-GAAP net income of $4.6
million, or $0.08 per diluted share, for the same quarter of the previous
year. Non-GAAP net income was $19.6 million, or $0.35 per diluted share, for
the year ended December31, 2012 compared to non-GAAP net income of $19.0
million, or $0.34 per diluted share, for the year ended December 31, 2011.

GAAP revenue for the quarter ended December31, 2012 increased $4.4 million to
$44.2 million from $39.8 million for the same quarter of the previous year, or
an increase of 11%. GAAP revenue for the year ended December31, 2012
increased $18.2 million to $162.5 million from $144.3 million for the year
ended December 31, 2011, or an increase of 13%.

GAAP net loss was $(8.2) million, or $(0.15) per diluted share, for the
quarter ended December31, 2012 compared to GAAP net income of $14.2 million,
or $0.25 per diluted share, for the same quarter of the previous year. GAAP
net loss was $(10.4) million, or $(0.19) per diluted share, for the year ended
December31, 2012 compared to GAAP net income of $1.8 million, or $0.03 per
diluted share, for the same period of the previous year.

“We are pleased with our performance in both 2012 and against the three-year
plan we developed for our business following our 2010 merger with Symyx. We
achieved both market momentum and acknowledgment of our position as the
leading provider of scientific innovation lifecycle management software,” said
Max Carnecchia, President and CEO. “Performance in the fourth quarter of 2012
was strong as our revenues grew 16% over the prior year.In addition, we
completed and are integrating three acquisitions key to our strategy of
optimizing the lab-to-market value chain. We remain enthusiastic about the
market opportunity in front of us and in our ability to continue to grow
orders, revenue and profits both organically and inorganically in 2013.”

Recent Business Highlights:

  *Completed three acquisitions that add important domain expertise and
    technology capabilities that further our strategy to optimize the
    innovation lifecycle from research through commercialization.

       *HEOS, a secure Cloud-based information management workspace for
         scientific collaboration, accelerates and streamlines collaborative
         drug-discovery.
       *Aegis Analytical Corporation (Aegis), the leading provider of process
         management informatics software, further expands the footprint in
         downstream operation with solutions that help aggregate,
         contextualize and analyze manufacturing, quality and product
         development data.
       *Vialis AG, a leading systems integrator with deep experience
         implementing and supporting paperless laboratory solutions, further
         strengthening Accelrys' position in the laboratory informatics
         software market.

  *Delivered new product releases in the core product lines and significantly
    progressed the integration roadmap for the solutions acquired into the
    portfolio, including:

       *New Accelrys Enterprise Platform (AEP), the industry's first
         scientifically aware, service-oriented architecture (SOA) that
         enables integration and deployment of broad scientific solutions
         (Platform)
       *New biology capabilities from screening through pre-clinical
         development in the Accelrys Electronic Laboratory Notebook
         (Enterprise Lab Management)
       *New Process Management and Compliance suite, a unified approach to
         product development and process management which combines the
         capabilities of the Accelrys ELN, Accelrys Lab Execution System
         (LES), Accelrys Electronic Batch Records (EBR) and the Accelrys
         Enterprise Platform (Enterprise Lab Management)
       *New integration between Accelrys Materials Studio and AEP, enabling
         computational scientists to collaborate across the enterprise;
         deepened biotherapeutics capabilities in Accelrys Discovery Studio
         (Modeling and Simulation)

Non-GAAP results for the quarter and year ended December31, 2012 exclude the
impact of business combination activities associated with the acquisitions of
Aegis on October 23, 2012 and Contur Industry Holding AB and Contur Software
AB (collectively, “Contur”) and VelQuest Corporation (“VelQuest”), both in
2011, and the merger with Symyx Technologies, Inc. (“Symyx”) in 2010, and
other nonrecurring items.

Non-GAAP revenue, non-GAAP operating income, and non-GAAP net income for the
quarter and year ended December31, 2012 include fair value adjustments to
deferred revenue ($3.3 million and $11.8 million, respectively). Non-GAAP
operating income for such three and twelve-month periods also excludes
stock-based compensation expense ($2.5 million and $8.1 million,
respectively), business consolidation, transaction and restructuring costs
($6.6 million and $7.8 million, respectively) and purchased intangible asset
amortization ($5.2 million and $17.8 million, respectively), offset by an
adjustment to include acquisition-related cost of revenue related to VelQuest
non-GAAP revenue recognized during such periods ($0.8 million and $1.9
million, respectively). Non-GAAP net income for the quarter and year ended
December31, 2012 also excludes additional purchased intangible asset
amortization ($0.4 million and $1.7 million, respectively) offset by removing
the impact of the amortization of note receivable discount related to our
promissory note receivable from Intermolecular, Inc. (“Intermolecular”) ($0.3
million and $0.9 million, respectively). In addition to the aforementioned
items, non-GAAP net income for the year ended December 31, 2012 includes fair
value adjustments to deferred royalty income of $0.6 million and excludes $2.1
million in other non-operating income resulting from our real estate related
activities.

Calendar Year 2013 Outlook

For the year ending December 31, 2013, the Company expects non-GAAP revenue to
be between $185 and $190 million, and non-GAAP diluted earnings per share to
be between $0.36 and $0.39 per diluted share on fully diluted weighted average
shares outstanding of 56.6 million and using an effective tax rate of 40%.

Non-GAAP Financial Measures:

This press release describes financial measures for revenue, operating income,
net income, net income per diluted share and free cash flow that exclude
deferred revenue fair value adjustments, acquisition-related cost of revenue,
business consolidation, transaction and restructuring costs, stock-based
compensation expense, purchased intangible asset amortization, royalty income
fair value adjustments, amortization of note receivable discount, gain on sale
of real estate, gain on sale of equity investments, sale of intangible assets,
other non-operating expense and income tax adjustments. These financial
measures are not calculated in accordance with generally accepted accounting
principles (GAAP) and are not based on any comprehensive set of accounting
rules or principles.

Management believes these non-GAAP financial measures provide a useful measure
of the Company's operating results, a meaningful comparison with historical
results and with the results of other companies, and insight into the
Company's ongoing operating performance. Further, management and the Board of
Directors utilize these measures, in addition to GAAP measures, when
evaluating and comparing the Company's operating performance against internal
financial forecasts and budgets. These non-GAAP financial measures should not
be considered as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. In addition, these non-GAAP
financial measures may be different from non-GAAP financial measures used by
other companies.

For additional information on the items excluded by the Company from its
non-GAAP financial measures please refer to the Form8-K regarding this
release that was furnished today to the Securities and Exchange Commission.

The following table contains a reconciliation of the non-GAAP financial
measures to the most directly comparable GAAP financial measures (unaudited,
amounts in thousands, except per share amounts, including footnotes):

                          Three Months Ended       Year Ended
                           December 31,              December 31,
                           2012        2011         2012         2011
GAAP revenue               $ 44,194     $ 39,762     $ 162,526     $ 144,339
Deferred revenue fair      3,332       1,081       11,758       10,652    
value adjustment^1
Non-GAAP revenue           $ 47,526    $ 40,843    $ 174,284    $ 154,991 
                                                                   
GAAP operating loss        (11,203  )   (2,926   )   (19,054   )   (19,701   )
Deferred revenue fair      3,332        1,081        11,758        10,652
value adjustment^1
Acquisition-related cost   (762     )   —            (1,921    )   —
of revenue^2
Business consolidation,
transaction and            6,583        1,538        7,845         7,772
restructuring costs^3
Stock-based compensation   2,505        1,424        8,115         5,572
expense^4
Purchased intangible       5,199       4,638       17,782       18,239    
asset amortization^5
Non-GAAP operating         $ 5,654      $ 5,755      $ 24,525      $ 22,534
income
Depreciation expense       872          923          3,325         3,800
Cash received for
interest and royalty       2,002        2,269        9,265         9,574
income
Cash (paid) for income
taxes, net of refunds      (198     )   (153     )   (2,690    )   1,182
received
Capital expenditures       (3,043   )   (934     )   (6,332    )   (3,908    )
Non-GAAP free cash flow    5,287       7,860       28,093       33,182    
                                                                   
GAAP net income (loss)     $ (8,229 )   $ 14,205     $ (10,402 )   $ 1,765
Deferred revenue fair      3,332        1,081        11,758        10,652
value adjustment^1
Acquisition-related cost   (762     )   —            (1,921    )   —
of revenue^2
Business consolidation,
transaction and            6,583        1,538        7,845         7,772
restructuring costs ^3
Stock-based compensation   2,505        1,424        8,115         5,572
expense^4
Purchased intangible       5,623        5,230        19,477        20,604
asset amortization^5
Royalty income fair        —            200          600           803
value adjustment^6
Amortization of note       (270     )   —            (932      )   —
receivable discount^7
Gain on sale of real       —            —            (2,744    )   —
estate^8
Gain on sale of equity     —            (18,970  )   —             (18,970   )
method investment^9
Sale of intangible         —            4,303        —             4,303
assets^10
Other non-operating        —            —            670           —
expense^11
Income tax^12              (4,239   )   (4,456   )   (12,855   )   (13,454   )
Non-GAAP net income        $ 4,543     $ 4,555     $ 19,611     $ 19,047  
                                                                   
GAAP diluted net income    $ (0.15  )   $ 0.25       $ (0.19   )   $ 0.03
(loss) per share
Deferred revenue fair      0.06         0.02         0.21          0.19
value adjustment^1
Acquisition-related cost   (0.01    )   —            (0.03     )   —
of revenue^2
Business consolidation,
transaction and            0.12         0.03         0.14          0.14
restructuring costs^3
Stock-based compensation   0.04         0.03         0.14          0.10
expense^4
Purchased intangible       0.10         0.09         0.34          0.37
asset amortization^5
Royalty income fair        —            —            0.01          0.01
value adjustment^6
Amortization of note       —            —            (0.02     )   —
receivable discount^7
Gain on sale of real       —            —            (0.05     )   —
estate^8
Gain on sale of equity     —            (0.34    )   —             (0.34     )
method investment^9
Sale of intangible         —            0.08         —             0.08
assets^10
Other non-operating        —            —            0.01          —
expense^11
Income tax^12              (0.07    )   (0.08    )   (0.23     )   (0.24     )
Non-GAAP diluted net       $ 0.08      $ 0.08      $ 0.35       $ 0.34    
income per share^13
Weighted average shares
used to compute net
income per share:
Basic                      55,713       55,587       55,696        55,489
Diluted                    56,848       55,933       56,563        56,037

^1Deferred revenue fair value adjustment relates to our acquisitions of Aegis,
VelQuest and Contur and our merger with Symyx, and adds back the impact of
writing down the acquired historical deferred revenue to fair value as
required by purchase accounting guidance.

^2Acquisition-related cost of revenue relates to our acquisition of VelQuest,
and adds back the impact of writing down the acquired deferred cost of revenue
as required by purchase accounting guidance.

^3Business consolidation, transaction and restructuring costs are included in
the business consolidation, transaction and restructuring costs line in our
consolidated statements of operations and consist of accounting, legal,
litigation and other costs incurred in connection with our acquisition
activities, including our merger with Symyx and acquisitions of Contur,
VelQuest and Aegis, as well as integration costs incurred in connection with
such transactions, including consultant and employee related costs incurred
during integration and transition periods. Also included are contingent
compensation costs relating to the Contur acquisition as well as lease
obligation exit costs, facility closure costs and severance and other related
costs incurred in connection with the various restructuring activities
commenced by the Company.

^4Stock-based compensation expense is included in our consolidated statements
of operations as follows:

                                  Three Months Ended     Year Ended
                                   December 31,            December 31,
                                   2012       2011        2012       2011
Cost of revenue                    $ 262       $ 117       $ 755       $ 333
Product development                517         313         1,763       1,136
Sales and marketing                853         362         2,545       1,672
General and administrative         867         620         3,093       2,428
Business consolidation,
transaction and restructuring      6          12         (41     )   3
costs
Total stock-based compensation     $ 2,505    $ 1,424    $ 8,115    $ 5,572
expense

^5Purchased intangible asset amortization is included in our consolidated
statements of operations as follows:

                                Three Months Ended     Year Ended
                                 December 31,            December 31,
                                 2012       2011        2012        2011
Amortization of completed        $ 2,580     $ 2,135     $ 8,843      $ 8,393
technology
Purchased intangible asset       2,619       2,503       8,939        9,846
amortization
Royalty and other income, net    424        592        1,695       2,365
Total purchased intangible       $ 5,623    $ 5,230    $ 19,477    $ 20,604
amortization expense

^6Royalty income fair value adjustment relates to our merger with Symyx, and
adds back the impact of writing down deferred royalty income to fair value as
required by purchase accounting guidance.

^7Amortization of note receivable discount adjusts the amortization of the
discount on our promissory note receivable from Intermolecular in connection
with the sale of intellectual property in November 2011.

^8Gain on sale of real estate relates to the sale of real property, comprised
of land and an office building located in Santa Clara, California, which we
sold in June 2012. This property was acquired as a result of our merger with
Symyx and was not utilized in our ongoing operations.

^9Gain on sale of equity investment reflects the gain recognized upon the sale
of our investment in Intermolecular in November 2011.

^10Sale of intangible asset reflects the write off of our cost basis in the
intellectual property sold to Intermolecular in November 2011.

^11Other non-operating expense relates to the write off in June 2012 of
certain assets in connection with exiting the lease of a restructured facility
net of other non-operating income.

^12Income tax adjustments relate to adjusting our non-GAAP operating results
to reflect an effective tax rate of 40% that would be applied if the Company
was in a taxable income position and was not able to utilize its net operating
loss carryforwards. The income tax adjustment also excludes any impact of a
release of our valuation allowance against deferred tax assets.

^13Earnings per share amounts for the three months and year ended December 31,
2012 do not add due to rounding.

Conference Call Details:

At 5:00 p.m. ET, February 26, 2013, Accelrys will conduct a conference call to
discuss its financial results. To participate, please dial (866) 309-0459 (+
(937) 999-3232 outside the United States) and enter the access code, 88646167,
approximately 15 minutes before the scheduled start of the call. The
conference call will also be accessible live on the Investor Relations section
of the Accelrys website at www.accelrys.com.

A replay of the conference call will be available online at www.accelrys.com
and via telephone by dialing (855) 859-2056 (+1 (404) 537-3406 outside the
United States) and entering access code, 88646167, beginning 8:00 p.m. ET on
February 26, 2013, through 11:59 p.m. ET on April 26, 2013.

About Accelrys:

Accelrys, Inc. (NASDAQ: ACCL), a leading provider of scientific innovation
lifecycle management software, supports industries and organizations that rely
on scientific innovation to differentiate themselves. The industry-leading
Accelrys Enterprise Platform provides a broad and flexible scientific solution
optimized to integrate the diversity of science, experimental processes and
information requirements across the research, development, process scale-up
and early manufacturing phases of product development. By incorporating
capabilities in applications for modeling and simulation, enterprise lab
management, workflow and automation, and data management and informatics,
Accelrys enables scientific innovators to access, organize, analyze and share
data in unprecedented ways, ultimately enhancing innovation, improving
productivity and compliance, reducing costs and speeding time from lab to
market.

Accelrys solutions are used by more than 1,300 companies in the
pharmaceutical, biotechnology, energy, chemicals, aerospace, consumer packaged
goods and industrial products industries. Headquartered in San Diego,
California, USA, Accelrys employs more than 200 full-time PhD scientists. For
more information about Accelrys, visit www.accelrys.com.

Forward-Looking Statements:

Statements contained in this press release relating to the Company's or
management's intentions, hopes, beliefs, expectations or predictions of the
future, including, but not limited to, statements relating to the Company's
expected non-GAAP revenue and diluted earnings per share for the year ending
December 31, 2013 and statements relating to the Company's long-term prospects
and execution of its strategic growth and acquisition-related initiatives, are
forward-looking statements. Such forward-looking statements are subject to a
number of risks and uncertainties, including, but not limited to, risks that
the Company will not achieve its expected non-GAAP revenue or diluted earnings
per share for the year ending December 31, 2013 and/or that the Company will
not successfully execute its strategic growth and acquisition-related
initiatives, in each case due to, among other possibilities, an inability to
withstand negative conditions in the global economy or a lack of demand for or
market acceptance of the Company's products. Additional risks and
uncertainties faced by the Company are contained from time to time in the
Company's filings with the U.S. Securities and Exchange Commission, including,
but not limited to, the Company's Annual Report on Form 10-K for the year
ended December 31, 2011, quarterly reports on Form 10-Q and current reports on
Form 8-K. Collectively, these risks and uncertainties could cause the
Company's actual results to differ materially from those projected in its
forward-looking statements, and the Company disclaims any intention or
obligation to revise any forward-looking statements whether as a result of new
information, future events or otherwise.

ACCELRYS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)
                                                   
                            Three Months Ended        Year Ended
                            December 31,              December 31,
                            2012        2011         2012         2011
Revenue:
License and subscription    23,149       $ 21,231     $ 89,440      $ 79,425
revenue
Maintenance on perpetual    10,035       9,301        38,254        34,862
licenses
Content                     2,991        4,270        12,485        16,838
Professional services and   8,019       4,960       22,347       13,214   
other
Total revenue               44,194      39,762      162,526      144,339  
Cost of revenue:
Cost of revenue             11,961       9,501        41,695        36,065
Amortization of completed   2,580       2,135       8,843        8,393    
technology
Total cost of revenue       14,541      11,636      50,538       44,458   
Gross profit                29,653       28,126       111,988       99,881
Operating expenses:
Product development         9,892        8,779        38,849        33,977
Sales and marketing         17,528       14,173       57,971        51,517
General and                 4,229        4,047        17,480        16,467
administrative
Business consolidation,
transaction and             6,588        1,550        7,803         7,775
restructuring costs
Purchased intangible        2,619       2,503       8,939        9,846    
asset amortization
Total operating expenses    40,856      31,052      131,042      119,582  
Operating loss              (11,203  )   (2,926   )   (19,054   )   (19,701  )
Net gain on sale of cost    —            18,970       —             18,970
method investment
Royalty and other income,
including gain on sale of   1,763       (3,259   )   8,870        1,740    
real estate, net
Income (loss) before        (9,440   )   12,785       (10,184   )   1,009
income taxes
Income tax expense          (1,211   )   (1,420   )   218          (756     )
(benefit)
Net income (loss)           $ (8,229 )   $ 14,205    $ (10,402 )   $ 1,765  
                                                                    
Net income (loss) per
share amounts:
Basic                       $ (0.15  )   $ 0.26       $ (0.19   )   $ 0.03
Diluted                     $ (0.15  )   $ 0.25       $ (0.19   )   $ 0.03
Weighted average shares
used to compute net
income (loss) per share:
Basic                       55,713       55,587       55,696        55,489
Diluted                     55,713       55,933       55,696        56,037
                                                                             

ACCELRYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)
                                                               
                                                   December 31,   December 31,
                                                   2012           2011
                                                   (unaudited)    (audited)
Assets
Cash, cash equivalents, and marketable             $  115,646     $   143,624
securities^1
Trade receivables, net                             47,196         40,706
Notes receivable                                   34,796         34,720
Other assets, net^2                                208,204       188,836
Total assets                                       $  405,842    $   407,886
Liabilities and stockholders’ equity
Current liabilities, excluding deferred revenue    37,877         36,582
Deferred revenue, including current portion^3      89,151         86,012
Deferred gain, including current portion^4         25,895         25,974
Non-current liabilities, excluding deferred        10,098         10,634
revenue and deferred gain^5
Total stockholders’ equity                         242,821       248,684
Total liabilities and stockholders’ equity         $  405,842    $   407,886

^1Cash, cash equivalents, and marketable securities consist of the following
line items in our consolidated balance sheet: Cash and cash equivalents;
Restricted cash; Marketable securities; Marketable securities, net of current
portion; and Restricted cash, net of current portion.

^2Other assets, net, consists of the following line items in our consolidated
balance sheet: Prepaid expenses, deferred tax assets and other current assets;
Property and equipment, net; Goodwill; Purchased intangible assets, net; and
Other assets.

^3Total deferred revenue consists of the following line items in our
consolidated balance sheet: Current portion of deferred revenue; and Deferred
revenue, net of current portion.

^4Total deferred gain consists of the following line items in our consolidated
balance sheet: Current portion of deferred gain on sale of intellectual
property; and Deferred gain on sale of intellectual property, net of current
portion.

^5Noncurrent liabilities, excluding deferred revenue and deferred gain
consists of the following line items in our consolidated balance sheet:
Accrued income tax; Accrued restructuring charges, net of current portion and
Lease-related liabilities, net of current portion.

Contact:

Accelrys, Inc.
Michael A. Piraino
Executive Vice President &
Chief Financial Officer
858-799-5200
or
Investor Relations
MKR Group
Charles Messman or Todd Kehrli
323-468-2300
accl@mkr-group.com
 
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