PTC Announces Q2 Results

About PTC ( www.ptc.com)

PTC (Nasdaq: PMTC) provides discrete manufacturers with PLM software and services to meet the globalization, time-to-market and operational efficiency objectives of product development. Using the company’s CAD, and content and process management solutions, organizations in the Industrial, High-Tech, Aerospace and Defense, Automotive, Consumer and Medical industries are able to support key business objectives and create innovative products that meet both customer needs and comply with industry regulations.

Statements in this news release that are not historic facts, including statements about our fiscal 2009 expectations, financial targets, anticipated tax rates and cash flows, the expected impact of our planned strategic investments on our future success, the expected effect of our operating expense reduction efforts on future results, and our ability to successfully generate cash at the level we expect, 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 our customers may further reduce, defer or forego investment in our solutions in the current economic climate, the possibility that our customers may not renew maintenance at historic rates in the current economic environment, the possibility that our strategic investments may not have the effects 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 to defer or forego repurchases of our stock or repayment of our outstanding debt, the possibility that our efforts to reduce our operating expenses may not have the effects we expect and could harm our operations, and the possibility that we may be unable to draw from our revolving credit facility when or to the extent we decide to do so. 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 most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K.

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.

PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

		Three Months Ended						Six Months Ended
		April 4,			March 29,			April 4,			March 29,
		2009			2008			2009			2008

Revenue:
License	$	42,070		$	77,862		$	92,572		$	148,837
Service		183,222			179,931			373,111			350,198
Total revenue		225,292			257,793			465,683			499,035

Costs and expenses:
Cost of license revenue ⁽¹⁾		6,976			6,778			14,560			11,583
Cost of service revenue ⁽¹⁾		72,302			73,875			148,043			144,855
Sales and marketing ⁽¹⁾		71,387			73,359			151,249			144,387
Research and development ⁽¹⁾		44,752			45,734			93,113			87,282
General and administrative ⁽¹⁾		17,693			20,808			39,130			44,359
Amortization of acquired intangible assets		3,815			4,315			7,683			7,208
In-process research and development		--			--			--			1,887
Restructuring charges, net		9,788			1,892			9,788			11,577
Total costs and expenses		226,713			226,761			463,566			453,138

Operating income (loss)		(1,421	)		31,032			2,117			45,897
Other income (expense), net		(250	)		(355	)		(1,321	)		1,251
Income (loss) before income taxes		(1,671	)		30,677			796			47,148
Provision for (benefit from) income taxes		(8,846	)		11,829			(11,038	)		18,420
Net income	$	7,175		$	18,848		$	11,834		$	28,728
Earnings per share:
Basic	$	0.06		$	0.17		$	0.10		$	0.25
Weighted average shares outstanding		114,793			113,811			114,672			113,746
Diluted	$	0.06		$	0.16		$	0.10		$	0.24
Weighted average shares outstanding		115,656			117,247			116,503			117,667

(1) The amounts in the tables above include stock-based compensation as follows:

		Three Months Ended				Six Months Ended
		April 4,		March 29,		April 4,		March 29,
		2009		2008		2009		2008

Cost of license revenue	$	3	$	14	$	17	$	14
Cost of service revenue		1,291		2,222		3,546		4,569
Sales and marketing		2,193		2,936		5,101		5,803
Research and development		1,566		2,337		3,824		4,607
General and administrative		1,677		3,420		4,773		6,539
Total stock-based compensation	$	6,730	$	10,929	$	17,261	$	21,532

PARAMETRIC TECHNOLOGY CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands, except per share data)

		Three Months Ended						Six Months Ended
		April 4,			March 29,			April 4,			March 29,
		2009			2008			2009			2008
GAAP revenue	$	225,292		$	257,793		$	465,683		$	499,035
Fair value adjustment of acquired CoCreate deferred maintenance revenue		--			1,705			--			2,942
Non-GAAP revenue	$	225,292		$	259,498		$	465,683		$	501,977

GAAP operating income (loss)	$	(1,421	)	$	31,032		$	2,117		$	45,897
Fair value adjustment of acquired CoCreate deferred maintenance revenue		--			1,705			--			2,942
Stock-based compensation		6,730			10,929			17,261			21,532
Amortization of acquired intangible assets included in cost of license revenue		4,703			4,607			9,371			7,561
Amortization of acquired intangible assets included in cost of service revenue		--			17			8			34
Amortization of acquired intangible assets		3,815			4,315			7,683			7,208
In-process research and development		--			--			--			1,887
Restructuring charges, net		9,788			1,892			9,788			11,577
Non-GAAP operating income	$	23,615		$	54,497		$	46,228		$	98,638

GAAP net income	$	7,175		$	18,848		$	11,834		$	28,728
Fair value adjustment of acquired CoCreate deferred maintenance revenue		--			1,705			--			2,942
Stock-based compensation		6,730			10,929			17,261			21,532
Amortization of acquired intangible assets included in cost of license revenue		4,703			4,607			9,371			7,561
Amortization of acquired intangible assets included in cost of service revenue		--			17			8			34
Amortization of acquired intangible assets		3,815			4,315			7,683			7,208
In-process research and development		--			--			--			1,887
Restructuring charges, net		9,788			1,892			9,788			11,577
Income tax adjustments ⁽¹⁾		(14,717	)		(6,571	)		(20,919	)		(14,647	)
Non-GAAP net income	$	17,494		$	35,742		$	35,026		$	66,822

GAAP diluted earnings per share	$	0.06		$	0.16		$	0.10		$	0.24
Stock-based compensation		0.06			0.09			0.15			0.18
All other items identified above		0.03			0.05			0.05			0.15
Non-GAAP diluted earnings per share	$	0.15		$	0.30		$	0.30		$	0.57

Weighted average shares outstanding - diluted		115,656			117,247			116,503			117,667

(1)

Reflects the tax effect of non-GAAP adjustments above, as well as the effect of a $7.6 million one-time tax benefit recorded in the three and six months ended April 4, 2009 due to the recognition of deferred tax assets in a foreign jurisdiction.

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

		April 4,		September 30,
		2009		2008

ASSETS

Cash and cash equivalents	$	267,718	$	256,941
Accounts receivable, net		131,886		201,509
Property and equipment, net		57,853		55,253
Goodwill and acquired intangibles, net		565,754		587,537
Other assets		243,651		248,333

Total assets	$	1,266,862	$	1,349,573

LIABILITIES AND STOCKHOLDERS' EQUITY

Deferred revenue	$	267,032	$	258,295
Borrowings under revolving credit facility		53,348		88,505
Other liabilities		236,964		300,248
Stockholders' equity		709,518		702,525

Total liabilities and stockholders' equity	$	1,266,862	$	1,349,573

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


		Three Months Ended						Six Months Ended
		April 4,			March 29,			April 4,			March 29,
		2009			2008			2009			2008

Cash flows from operating activities:
Net income	$	7,175		$	18,848		$	11,834		$	28,728
Stock-based compensation		6,730			10,929			17,261			21,532
Amortization of acquired intangible assets		8,518			9,001			17,062			14,865
Depreciation and other amortization		6,644			5,912			12,895			11,983
Accounts receivable		53,576			31,451			77,015			69,551
Accounts payable and accruals ⁽¹⁾		(4,916	)		(77	)		(30,949	)		(30,196	)
Deferred revenue		15,589			38,133			6,859			21,716
In-process research and development		--			--			--			1,887
Other		(19,090	)		(6,948	)		(23,327	)		(12,262	)
Net cash provided by operating activities		74,226			107,249			88,650			127,804

Capital expenditures		(7,094	)		(5,877	)		(15,266	)		(10,707	)
Acquisitions of businesses, net of cash acquired ⁽²⁾		(113	)		693			(8,475	)		(261,592	)
(Payments on) proceeds from debt, net		(18,686	)		(52,358	)		(31,951	)		152,642
Repurchases of common stock		--			(22,009	)		(9,581	)		(22,009	)
Other investing and financing activities		(1,919	)		(296	)		(2,410	)		(7,242	)
Foreign exchange impact on cash		(5,629	)		16,756			(10,190	)		16,779

Net change in cash and cash equivalents		40,785			44,158			10,777			(4,325	)
Cash and cash equivalents, beginning of period		226,933			214,788			256,941			263,271
Cash and cash equivalents, end of period	$	267,718		$	258,946		$	267,718		$	258,946

(1) Includes accounts payable, accrued expenses, and accrued compensation and benefits.
(2) Acquisitions of businesses:
a. The first quarter of 2009 includes $7 million for our acquisition of Synapsis and $1 million for a contingent purchase price earned during the quarter related to a prior acquisition. b. The first quarter of 2008 includes $248 million for our acquisition of CoCreate and $14 million for two other acquisitions, net of cash acquired.

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