PTC Reports Fourth Quarter and Fiscal Year 2005 Results;
Company Delivers 15% Year-Over-Year Revenue Growth in the Fourth Quarter; 9%
Revenue Growth for the Fiscal Year
2 November 2005
NEEDHAM, Mass.--(BUSINESS WIRE)--Nov. 2, 2005--PTC (Nasdaq:
PMTC), the Product Development Company(TM), today reported revenue of $195.1
million for the fourth fiscal quarter ended September 30, 2005, up 15% from
$170.1 million for the same period last year. The growth was driven by a
combination of strong organic growth as well as the addition of revenue from
Arbortext, which PTC acquired during the quarter. For the fiscal year, revenue
grew 9% to $720.7 million, compared to $660.0 million in fiscal 2004.
"2005 was a great year for PTC," said C. Richard
Harrison, president and chief executive officer. "We exceeded our goals
for organic revenue growth and also expanded our business through strategic
acquisition. We strengthened our ability to serve existing customers with new
product and service offerings. And we leveraged our own solutions as well as
those we acquired to enter new markets, such as Retail, Footwear & Apparel,
and Life Sciences."
As previously announced, PTC adopted FAS 123(R) during the
fourth quarter, which requires the expensing of stock-based compensation. Additionally,
as previously announced, commencing with fourth quarter 2005 results, PTC has
begun to provide a non-GAAP income statement to supplement its GAAP income
statement. Accordingly, earnings and expense results are provided below on both
a GAAP and a non-GAAP basis, and we have provided a reconciliation between GAAP
and non-GAAP results in the attached financial tables.
GAAP net income for the fourth quarter was $17.3 million, or
$0.06 per diluted share, compared with GAAP net income of $42.0 million, or
$0.15 per diluted share, in the year-ago period. Non-GAAP net income, which
excludes restructuring charges, stock-based compensation, acquisition-related
amortization, in-process research and development, and their related tax
effects, as well as the effect of one-time tax items, was $24.6 million for the
fourth quarter, or $0.09 per diluted share, compared to $25.4 million in the
year-ago period, or $0.09 per diluted share.
For the fiscal year, GAAP net income was $83.6 million, or
$0.30 per diluted share, compared to $34.8 million, or $0.13 per diluted share,
in fiscal 2004. Non-GAAP net income was $87.2 million, or $0.31 per diluted
share, compared to $61.1 million, or $0.22 per diluted share, in fiscal 2004.
Cash and investments were $204.4 million at the end of the fourth quarter, down
from $403.0 million at the end of the third quarter, reflecting the cost of the
Arbortext acquisition ($190 million) and the employee stock option buyback
($12.7 million).
Revenue Metrics
With the acquisition of Arbortext and the launch of
Pro/INTRALINK 8.0, PTC has begun to classify its revenue into two new
categories:
--
"Desktop Solutions", which includes Pro/ENGINEER, Arbortext
Editor and all other
solutions that help companies create
content and improve
desktop productivity. In the commentary
below, this category is
compared to the revenue category
formerly called Design
Solutions.
-- "Enterprise
Solutions", which includes Windchill,
Pro/INTRALINK, Arbortext
Publishing Engine and all other
solutions that help
companies collaborate, manage and publish
information across an
extended enterprise. In the commentary
below, this category is
compared to the revenue category
formerly called Collaboration
and Control Solutions.
Total Desktop Solutions revenue for the fourth quarter was
$129.3 million, which includes $37.8 million of license revenue. Both license
revenue and total revenue grew 6% from the year-ago period. For fiscal year
2005, PTC delivered total Desktop Solutions revenue of $503.1 million, up 5%
from fiscal 2004.
Total Enterprise Solutions revenue grew 37% in the fourth
quarter to $65.8 million from $47.9 million in the fourth quarter of 2004.
Enterprise Solutions license revenue was $23.0 million, up 40% from $16.4
million in the year-ago period. For the fiscal year 2005, PTC delivered total
Enterprise Solutions revenue of $217.6 million, or 21% growth from fiscal 2004.
Revenue growth in both categories reflects organic growth as
well as growth through acquisition, primarily from the contribution of
Arbortext, which PTC acquired on July 19, 2005.
In the fourth quarter, PTC received orders from leading
organizations, including AGCO Corporation, Alion Science and Technology
Corporation, Boeing Company, Casio Hitachi Mobile Communications Co., Ltd.,
Fila USA Inc., Hino Motors, Ltd., Mitsubishi Electric Engineering Co., Ltd.,
NASA, Naval Reactors Program (U.S. Navy), Northrop Grumman Corporation,
Novellus Systems Inc., Pfizer Inc., Siemens VDO Automotive AG, Turbomeca SA,
and Volkswagen AG. PTC's reseller channel delivered $34.8 million in total
revenue during the quarter. For the fiscal year, PTC's channel delivered $138.6
million in total revenue.
"We are executing very well and are in a position to
deliver accelerated revenue growth in 2006," continued Harrison. "We
have articulated a highly differentiated vision with our integral product
development system. Our solutions are unmatched in breadth, ease-of-use and
ease-of-deployment, and we are building momentum in new and existing accounts
of all sizes. We are enthusiastic about our outlook as a result, and we are
poised to deliver 12% revenue growth in 2006."
First Quarter and Fiscal Year 2006 Financial Outlook
PTC's revenue forecast for the first quarter of fiscal 2006
is between $190 million and $195 million. On a GAAP basis, first quarter total
costs and expenses are expected to be approximately $177 million to $182
million, and earnings per share are expected to be between $0.02 and $0.04.
Total non-GAAP first quarter operating costs are expected to be approximately
$165 million to $170 million. The Company expects non-GAAP first quarter
earnings per share to be between $0.06 and $0.08. These non-GAAP operating cost
and earnings expectations exclude the following first quarter estimated
expenses:
--
Approximately $10 million of expense related to stock-based
compensation. This
expense is slightly higher than previously
expected because the
Company has decided to implement a mix of
performance-based and
time-based equity incentive plans. PTC
previously used only
time-based equity incentives, which carry
a lower initial
accounting expense than do performance-based
equity incentives.
-- Approximately $2 million of
acquisition-related amortization
expense.
For the fiscal year ending September 30, 2006, PTC expects
revenue to be between $805 and $815 million. On a GAAP basis, fiscal year 2006
earnings per share are expected to be between $0.18 and $0.20. The Company
expects non-GAAP earnings per share to be between $0.35 and $0.37 for the
fiscal year. These non-GAAP earnings expectations exclude the following
full-year estimated expenses:
--
Approximately $40 million of expense related to stock-based
compensation.
-- Approximately $9 million
of acquisition-related amortization
expense.
Other Important Information
Separately, PTC has identified irregularities in certain
sales orders in the Asia-Pacific region, principally related to PTC's 2001-2003
fiscal years. The orders identified are not material to the results for these
fiscal years, but PTC's investigation has not been completed. PTC expects to
complete its investigation in time for the filing of its Annual Report on Form
10-K in December.
Important Information about Non-GAAP References
References by the Company to non-GAAP operating costs and
non-GAAP earnings per share refer to costs and expenses or earnings per share
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 the effect of 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 (loss) and earnings per share. The Company'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 the Company believes that they are among several useful measures for an
enhanced understanding of our operating results for a number of reasons.
First, excluding the stock-based compensation cost from GAAP
operating income enables management and investors to perform a meaningful
comparison of the Company's operating results to prior periods. In these prior
periods, the Company's GAAP financial results were not required to include
expense associated with stock-based compensation, and now these expenses will
be distributed among the functional expense line items in the GAAP
presentation. Second, although the Company undertakes analyses to ensure that
its stock-based compensation grants are in line with peer companies and do not
unduly dilute shareholders, the Company 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 the
Company's functional organizations since they are episodic in nature and
unrelated to our core operating metrics. Likewise, we believe that excluding
items such as in-process R&D 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 the acquisitions or restructuring activities on our results of
operations. In addition, the Company's management excludes the financial
statement effect of these items in creating operating budgets for the Company'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 the Company's earnings on both a GAAP and non-GAAP basis in periods
when the Company is engaged in acquisition activities or undertaking
non-recurring activities.
The Company believes these non-GAAP measures will aid
investors' overall understanding of the Company's results by providing a higher
degree of transparency for certain expenses, and providing a level of
disclosure that will help investors understand how the Company plans and
measures its own business. However, non-GAAP net income (loss) should be
construed neither as an alternative to GAAP net income (loss) or earnings
(loss) 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 the
Company's results of operations. Therefore, management uses, and investors
should use, non-GAAP measures in conjunction with our reported GAAP results.
Earnings Call Webcast
The Company will provide detailed financial information and
an outlook update on its fourth quarter and fiscal year 2005 results conference
call and live webcast on November 2, 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 1-888-566-8560
(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 November 7, 2005. To
access the replay via webcast, please visit www.ptc.com/for/investors.htm . To
access the replay by phone, please dial 402-220-9726.
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 fourth
quarter and fiscal year 2005 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 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 financial results for
the fourth quarter and the full year of fiscal 2005 are reported herein on an
unaudited basis and are subject to adjustments as part of the audit process; we
may be unable to conclude the investigation in the Asia Pacific region as
described above in time for the filing of our Annual Report on Form 10-K by the
date it is due and our reported results could change as a result of that
investigation; 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 technology
footprint and augmenting our product lines may not generate expected additional
sales or revenues; we may be unable to successfully complete the acquisitions
of strategic businesses and any businesses we have acquired or acquire may not
generate the revenues and earnings we expected; we may be unable to
successfully develop and integrate the technologies and the businesses we have
acquired or may acquire in order to offer integrated solutions that complement
PTC's product development system; we may be unable to retain and maintain
relationships with key employees, customers and other strategic partners,
including those within markets and vertical industries with which PTC has
little experience; 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, Pro/INTRALINK, Arbortext, 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.
CONTACT: PTC
Investors:
Meredith Mendola, 781-370-6151
mmendola@ptc.com
or
Media:
Nicole Rowe, 781-370-6369
nrowe@ptc.com
SOURCE: PTC
