PTC Reports Second Quarter Fiscal Year 2005 Results; Company Focus on

    Business Editors/Software Writers/High-Tech Writers

    NEEDHAM, Mass.--(BUSINESS WIRE)--April 27, 2005--PTC (Nasdaq: PMTC), the Product Development Company(TM), today reported revenue of $176.1 million for the second fiscal quarter ended April 2, 2005, up 7% from $164.7 million for the same period last year. The growth was driven primarily by strength in sales of PTC's collaboration and control solutions, as well as consulting services offerings.
    Net income for the second quarter was $20.5 million, or $0.07 per diluted share, compared with net income of $3.2 million, or $0.01 per diluted share, in the year-ago period. The year-ago period net income included restructuring charges of $16.7 million. Cash and cash equivalents grew to $384.2 million at the end of the second quarter from $334.1 million at the end of the first quarter of 2005.
    "We continue to deliver meaningful growth across our business and exceed our own targets," said C. Richard Harrison, president and chief executive officer. "We attribute our success to solid and patient execution of our business strategy. Our ability to help customers create innovative products across a globally distributed development environment differentiates PTC's offerings from others in the industry. It has helped drive sales of our software, as well as services offerings focused on unlocking the value of our technology and product development expertise."
    Total revenue for design solutions in the second quarter was $124.8 million, up 2% from the second quarter of 2004. Design solutions license revenue of $34.8 million declined 9% year over year due to a decline in revenue from large transactions; however, design solutions license sales showed 7% sequential growth. Pro/ENGINEER(R) Wildfire(TM) continues to gain traction in the market with higher year-over-year sales of its entry-level and mid-range packages. Additionally, design solutions consulting and training services revenue grew 16% year over year, reflecting higher sales of offerings that help improve user proficiency and engineering productivity.
    Total revenue for collaboration and control solutions in the second quarter was $51.3 million, up 23% from the second quarter of 2004. Collaboration and control solutions license revenue of $17.9 million grew 38% year over year and 24% sequentially. Sales were driven by significant growth in new seats to both existing and new customers. Windchill(R) Link solutions license revenue grew 24% year over year. Additionally, collaboration and control solutions consulting and training services revenue grew 13% year over year as PTC helped customers adopt its technology and improve their product development processes.
    In the second quarter, PTC received orders from leading organizations including Boeing Company, ENI SpA, Exostar, Hino Motors, Ltd., Lockheed Martin Corporation, Mitsubishi Heavy Industries, Ltd., Schneider Electric Industries, Tata Motors Ltd., Sanyo Epson Imaging Devices Corp., Thales, TRW, and the U.S. Army. Additionally, PTC's reseller channel delivered $34.7 million in total revenue during the quarter, an 8% year-over-year increase.
    "Our outlook is bright as we execute our long-term growth strategy," continued Harrison. "We will maintain our strong focus on driving customer success and delivering highly differentiated product and service offerings to the market. We will expand our capabilities by investing in a combination of R&D initiatives, sales and services delivery capacity, strategic partnerships and corporate development activities. In this way, we plan to reach our targets of $1 billion in revenue and 20% operating margins by fiscal 2008."

    Third Quarter and Fiscal 2005 Financial Outlook

    PTC's revenue forecast for the third quarter of fiscal 2005 is between $175 million and $180 million. Total third quarter costs and expenses (operating expenses) are expected to be between $150 million and $155 million. The Company expects third quarter earnings per share on a GAAP basis to be between $0.06 and $0.08. For the fiscal year ending September 30, 2005, PTC expects revenue to be between $700 million and $710 million. Total costs and expenses (operating expenses) are expected to be between $600 million and $610 million for the fiscal year. The Company expects earnings per share on a GAAP basis to be between $0.26 and $0.30 for the fiscal year. The earnings per share outlook does not include any potential impact from expensing or granting equity-based awards to employees.
    The Company will provide detailed financial information and an outlook update on its second quarter fiscal year 2005 results conference call and live webcast on April 27, 2005 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 the Company'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 May 2, 2005. To access the replay via webcast, please visit www.ptc.com/for/investors.htm. To access the replay by phone, please dial 402-280-1615.
    The Company's unaudited consolidated statements of operations, the unaudited condensed consolidated balance sheets, and the unaudited condensed consolidated statements of cash flows for the second quarter of fiscal year 2005 are attached.

    About PTC

    PTC (Nasdaq: PMTC) provides leading Product Lifecycle Management (PLM) software solutions to more than 35,000 companies worldwide. PTC customers include many of the world's most innovative manufacturing companies in the aerospace & defense, automotive, consumer, electronics & high technology, industrial equipment and medical products industries. PTC is included in the S&P 500 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, 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: the PLM market is relatively new and may not grow at the rate we expect; we may be unable to capture market share by differentiating our product and service offerings from those of our competitors; expanding our sales and services delivery capacity may not generate expected additional sales or revenues; we may be unable to successfully acquire strategic businesses and any businesses we acquire may not generate the revenues and earnings we expected; we may be unable to undertake our strategic initiatives while controlling increases in our operating cost structure; the IT spending environment may not continue to improve or may not improve at the rate 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, Pro/ENGINEER, Wildfire, Windchill, and all 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 Six Months Ended ------------------ ----------------- April 2, April 3, April 2, April 3, 2005 2004 2005 2004 -------- -------- -------- --------

Revenue: License $ 52,698 $ 50,971 $ 99,627 $ 94,488 Service 123,405 113,737 245,666 227,030 -------- -------- -------- -------- Total revenue 176,103 164,708 345,293 321,518 -------- -------- -------- --------

Costs and expenses: Cost of license revenue 1,756 1,914 3,253 4,041 Cost of service revenue 47,817 38,656 93,977 88,676 Sales and marketing 59,074 57,132 115,119 115,317 Research and development 28,347 26,780 54,814 56,359 General and administrative 14,395 14,364 29,982 29,324 Amortization of other intangible assets 222 1,336 444 2,745 Restructuring and other charges - 16,680 - 38,300 -------- -------- -------- -------- Total costs and expenses 151,611 156,862 297,589 334,762 -------- -------- -------- --------

Operating income (loss) 24,492 7,846 47,704 (13,244) Other income (expense), net 2,237 177 1,750 (313) -------- -------- -------- -------- Income (loss) before income taxes 26,729 8,023 49,454 (13,557) Provision for income taxes 6,225 4,852 9,791 9,809 -------- -------- -------- -------- Net income (loss) $ 20,504 $ 3,171 $ 39,663 $(23,366) ======== ======== ======== ========

Earnings (loss) per share: Basic $ 0.08 $ 0.01 $ 0.15 $ (0.09) Weighted average shares outstanding 271,248 267,515 270,636 266,895

Diluted $ 0.07 $ 0.01 $ 0.14 $ (0.09) Weighted average shares outstanding 279,895 273,601 279,538 266,895

PARAMETRIC TECHNOLOGY CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)

April 2, September 30, 2005 2004 ---------- ----------

ASSETS

Cash and cash equivalents $ 384,170 $ 294,887 Accounts receivable, net 138,023 130,393 Property and equipment, net 54,764 55,780 Goodwill and other intangibles, net 56,609 56,543 Other assets 118,125 128,779

---------- ---------- Total assets $ 751,691 $ 666,382 ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Deferred revenue $ 220,779 $ 176,664 Other liabilities 238,060 247,767 Stockholders' equity 292,852 241,951

---------- ---------- Total liabilities and stockholders' equity $ 751,691 $ 666,382 ========== ==========

PARAMETRIC TECHNOLOGY CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

Three Months Ended Six Months Ended ------------------- ------------------- April 2, April 3, April 2, April 3, 2005 2004 2005 2004 --------- --------- --------- ---------

Cash flows from operating activities: Net income (loss) $ 20,504 $ 3,171 $ 39,663 $(23,366) Depreciation and amortization 6,126 9,180 12,599 18,742 Other 28,479 18,834 31,531 19,796 --------- --------- --------- --------- Net cash provided by operating activities 55,109 31,185 83,793 15,172

Capital expenditures (6,291) (2,796) (9,095) (5,692) Other investing and financing activities 4,243 4,430 7,288 4,771 Foreign exchange impact on cash (2,955) (1,209) 7,297 2,102 --------- --------- --------- ---------

Net change in cash and cash equivalents 50,106 31,610 89,283 16,353 Cash and cash equivalents, beginning of period 334,064 190,055 294,887 205,312 --------- --------- --------- --------- Cash and cash equivalents, end of period $384,170 $221,665 $384,170 $221,665 ========= ========= ========= =========

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CONTACT: PTC Investor Contact: Meredith Mendola, 781-370-6151 mmendola@ptc.com or Media Contact: Nicole Rowe, 781-370-6369 nrowe@ptc.com

KEYWORD: MASSACHUSETTS INDUSTRY KEYWORD: SOFTWARE EARNINGS CONFERENCE CALLS SOURCE: PTC

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