(3) In the first quarter of 2012 we recorded $0.8 million of foreign currency transaction losses related to legal entity mergers completed during the quarter.

(4) Reflects the tax effects of non-GAAP adjustments for the three and six months ended March 30, 2013 and March 31, 2012, which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above, as well as any one-time non-cash GAAP charges. In the fourth quarter of 2012, a valuation allowance was established against our U.S. net deferred tax assets. As the U.S. is profitable on a non-GAAP basis, the 2013 non-GAAP tax provision is being calculated assuming there is no U.S. valuation allowance and, as a result, an income tax benefit of $4.1 million and $10.3 million is included for the three and six months ended March 30, 2013. The three and six months ended March 30, 2013 excludes tax benefits of $3.2 million relating to final resolution of a long standing tax litigation and completion of an international jurisdiction tax audit. The six months ended March 30, 2013 includes a one-time non-cash tax benefit of $32.6 million related to the release of a portion of the valuation allowance as a result of deferred tax liabilities established in accounting for the acquisition of Servigistics. The six months ended March 31, 2012 exclude one-time non-cash GAAP charges net, of $1.4 million related to the impact from a reduction in the statutory tax rate in Japan on deferred tax assets from a litigation settlement.

PTC Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
			March 30,				September 30,
			2013				2012
ASSETS
Cash and cash equivalents			$	240,809			$	489,543
Accounts receivable, net				213,252				217,370
Property and equipment, net				62,731				63,466
Goodwill and acquired intangible assets, net				1,026,999				796,232
Other assets				241,028				225,023
Total assets			$	1,784,819			$	1,791,634
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenue			$	350,341			$	327,529
Borrowings under credit facility				308,125				370,000
Other liabilities				298,554				296,846
Stockholders' equity				827,799				797,259
Total liabilities and stockholders' equity			$	1,784,819			$	1,791,634

PTC Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
			Three Months Ended												Six Months Ended
			March 30,					March 31,							March 30,					March 31,
			2013					2012							2013					2012
Cash flows from operating activities:
Net income			$	17,037				$	3,569						$	52,848				$	25,692
Stock-based compensation				11,810					12,692							23,703					26,074
Depreciation and amortization				19,387					16,259							38,864					33,285
Accounts receivable				6,047					25,403							22,185					38,698
Accounts payable and accruals (5)				3,216					18,988							(24,742	)				(13,868	)
Deferred revenue				34,377					35,557							30,843					33,482
Income taxes				(6,774	)				(9,492	)						(40,553	)				(11,901	)
Excess tax benefits from stock-based awards				(111	)				(303	)						(139	)				(453	)
Other				(2,193	)				(6,124	)						(6,577	)				2,025
Net cash provided by operating activities (6)				82,796					96,549							96,432					133,034
Capital expenditures				(5,033	)				(9,054	)						(12,426	)				(16,624	)
Acquisitions of businesses, net of cash acquired (7)				-					(290	)						(222,423	)				(1,170	)
Proceeds (payments) on debt, net				(60,000	)				(40,000	)						(61,875	)				(40,000	)
Proceeds from issuance of common stock				2,229					6,927							2,874					14,123
Payments of withholding taxes in connection with
vesting of stock-based awards				(3,543	)				(6,804	)						(12,891	)				(19,465	)
Repurchases of common stock				(19,155	)				(14,983	)						(34,947	)				(14,983	)
Excess tax benefits from stock-based awards				111					303							139					453
Foreign exchange impact on cash				(4,988	)				4,108							(3,617	)				861
Net change in cash and cash equivalents				(7,583	)				36,756							(248,734	)				56,229
Cash and cash equivalents, beginning of period				248,392					187,351							489,543					167,878
Cash and cash equivalents, end of period			$	240,809				$	224,107						$	240,809				$	224,107

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