Important Information About Non-GAAP References

PTC provides non-GAAP supplemental information to its financial results. Non-GAAP operating expenses, margin and EPS exclude stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses, foreign currency transaction losses related to a litigation resolution, and the related tax effects of the preceding items and any one-time tax items. We use these non-GAAP measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provide a view of our operating results without items that are not, in our view, indicative of our core operating results. We believe that these non-GAAP measures help illustrate underlying trends in our business, and we use the measures to establish budgets and operational goals, communicated internally and externally, for managing our business and evaluating our performance. We believe that providing non-GAAP measures affords investors a view of our operating results that may be more easily compared to the results of peer companies. In addition, compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. However, non-GAAP information should not be construed as an alternative to GAAP information as the items excluded from the non-GAAP measures often have a material impact on PTC’s financial results. Management uses, and investors should consider, non-GAAP measures in conjunction with our GAAP results.

Forward-Looking Statements

Statements in this press release that are not historic facts, including statements about our fiscal 2011 and other future financial and growth expectations and anticipated tax rates 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 customers may not purchase our solutions when or at the rates we expect, the possibility the foreign currency exchange rates may vary from our expectations and thereby affect our reported revenue and expense, the possibility that we may not achieve the license, services or maintenance growth rates that we expect, which could result in a different mix of revenue between license, service and maintenance and could impact our EPS results, the possibility that strategic customer wins may not generate the revenue we expect, the possibility that new product releases may be delayed or may not generate the revenue we expect, the possibility that resource constraints could adversely affect our revenue, the possibility that our strategic investments may not generate the growth or revenues we expect, and the possibility that our proposed acquisition of MKS Inc. may not be consummated or that such acquisition may not generate the revenues we expect. 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 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.

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.

About PTC ( www.ptc.com)

PTC (Nasdaq: PMTC) provides discrete manufacturers with software and services to meet the globalization, time-to-market and operational efficiency objectives of product development. Using the company’s PLM and CAD and related solutions, organizations in the Industrial, High-Tech, Aerospace/Defense, Automotive, Retail/Consumer and Life Sciences industries are able to support key business objectives such as reducing costs and shortening lead times while creating innovative products that meet customer needs and comply with industry regulations.

PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
					Three Months Ended								Six Months Ended
					April 2,				April 3,				April 2,				April 3,
					2011				2010				2011				2010
Revenue:
	License				$	74,215			$	64,644			$	149,688			$	139,460
	Service					194,974				175,912				386,053				359,525
Total revenue						269,189				240,556				535,741				498,985
Costs and expenses:
	Cost of license revenue (1)					6,558				8,232				12,512				16,379
	Cost of service revenue (1)					75,213				68,934				155,320				139,458
	Sales and marketing (1)					81,163				75,137				165,684				153,735
	Research and development (1)					53,051				49,960				104,573				100,650
	General and administrative (1)					24,712				22,807				48,196				46,878
	Amortization of acquired intangible assets					4,266				3,975				8,120				8,033
Total costs and expenses						244,963				229,045				494,405				465,133
Operating income						24,226				11,511				41,336				33,852
	Other expense, net					(822	)			(605	)			(2,708	)			(1,129	)
Income before income taxes						23,404				10,906				38,628				32,723
	Provision for income taxes					4,387				1,904				6,351				5,858
Net income					$	19,017			$	9,002			$	32,277			$	26,865
Earnings per share:
	Basic				$	0.16			$	0.08			$	0.27			$	0.23
			Weighted average shares outstanding			118,194				115,951				117,501				116,104
	Diluted				$	0.16			$	0.08			$	0.27			$	0.22
			Weighted average shares outstanding			121,502				119,856				121,317				120,487
	(1	)	The amounts in the tables above include stock-based compensation as follows:
					Three Months Ended								Six Months Ended
					April 2,				April 3,				April 2,				April 3,
					2011				2010				2011				2010
	Cost of license revenue				$	3			$	2			$	6			$	19
	Cost of service revenue					1,583				2,241				3,720				4,821
	Sales and marketing					2,350				3,520				4,779				6,594
	Research and development					1,749				2,383				4,142				5,042
	General and administrative					4,186				4,146				8,251				9,671
			Total stock-based compensation		$	9,871			$	12,292			$	20,898			$	26,147

PARAMETRIC TECHNOLOGY CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands, except per share data)
						Three Months Ended								Six Months Ended
						April 2,				April 3,				April 2,				April 3,
						2011				2010				2011				2010
GAAP operating income						$	24,226			$	11,511			$	41,336			$	33,852
	Stock-based compensation						9,871				12,292				20,898				26,147
	Amortization of acquired intangible assets
			included in cost of license revenue				3,339				4,928				6,702				9,826
	Amortization of acquired intangible assets						4,266				3,975				8,120				8,033
	Acquisition-related charges included in
			general and administrative expenses				608				-				608				-
Non-GAAP operating income (2)						$	42,310			$	32,706			$	77,664			$	77,858
GAAP net income						$	19,017			$	9,002			$	32,277			$	26,865
	Stock-based compensation						9,871				12,292				20,898				26,147
	Amortization of acquired intangible assets
			included in cost of license revenue				3,339				4,928				6,702				9,826
	Amortization of acquired intangible assets						4,266				3,975				8,120				8,033
	Acquisition-related charges included in
			general and administrative expenses				608				-				608				-
	Non-operating foreign currency transaction loss (3)						-				-				722				-
	Income tax adjustments (4)						(5,848	)			(6,696	)			(11,658	)			(14,073	)
Non-GAAP net income						$	31,253			$	23,501			$	57,669			$	56,798
GAAP diluted earnings per share						$	0.16			$	0.08			$	0.27			$	0.22
	Stock-based compensation						0.08				0.10				0.17				0.22
	Income tax adjustments						(0.05	)			(0.06	)			(0.10	)			(0.12	)
	All other items identified above						0.07				0.08				0.14				0.15
Non-GAAP diluted earnings per share						$	0.26			$	0.20			$	0.48			$	0.47
	(2	)	Operating margin impact of non-GAAP adjustments:
						Three Months Ended								Six Months Ended
						April 2,				April 3,				April 2,				April 3,
						2011				2010				2011				2010
	GAAP operating margin						9.0	%			4.8	%			7.7	%			6.8	%
			Stock-based compensation				3.7	%			5.1	%			3.9	%			5.2	%
			Amortization of acquired intangibles				2.8	%			3.7	%			2.8	%			3.6	%
			Acquisition-related charges				0.2	%			0.0	%			0.1	%			0.0	%
	Non-GAAP operating margin						15.7	%			13.6	%			14.5	%			15.6	%
	(3	)	Reflects foreign currency transaction losses related to a previously announced litigation settlement in Japan.
	(4	)	Reflects the tax effects of non-GAAP adjustments for the three and six months ended April 2, 2011 and April 3, 2010, which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above.

PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
		April 2,			September 30,
		2011			2010
ASSETS
Cash and cash equivalents		$	259,504		$	240,253
Accounts receivable, net			178,558			169,281
Property and equipment, net			55,780			58,064
Goodwill and acquired intangibles, net			541,753			546,440
Other assets			311,506			293,026
Total assets		$	1,347,101		$	1,307,064
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenue		$	300,269		$	245,840
Other liabilities			243,804			313,920
Stockholders' equity			803,028			747,304
Total liabilities and stockholders' equity		$	1,347,101		$	1,307,064

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,
				2011				2010				2011				2010
Cash flows from operating activities:
		Net income		$	19,017			$	9,002			$	32,277			$	26,865
		Stock-based compensation			9,871				12,292				20,898				26,147
		Depreciation and amortization			14,651				15,976				28,720				31,899
		Accounts receivable			16,857				4,550				15,899				8,761
		Accounts payable and accruals (5)			3,916				2,343				(25,317	)			(12,733	)
		Deferred revenue			34,594				32,440				27,169				16,453
		Income taxes			(7,129	)			(3,693	)			(9,198	)			(6,498	)
		Litigation settlement			-				-				(52,129	)			-
		Other			(13,501	)			(4,962	)			(8,081	)			(186	)
Net cash provided by operating activities					78,276				67,948				30,238				90,708
Capital expenditures					(6,148	)			(9,225	)			(11,560	)			(17,102	)
Acquisitions of businesses, net of cash acquired					-				(1,505	)			-				(2,087	)
Payments on debt					-				(19,720	)			-				(19,720	)
Repurchases of common stock					-				(40,000	)			-				(45,072	)
Other investing and financing activities (6)					(778	)			(1,460	)			(5,452	)			(12,901	)
Foreign exchange impact on cash					5,239				(4,490	)			6,025				(6,256	)
Net change in cash and cash equivalents					76,589				(8,452	)			19,251				(12,430	)
Cash and cash equivalents, beginning of period					182,915				231,144				240,253				235,122
Cash and cash equivalents, end of period				$	259,504			$	222,692			$	259,504			$	222,692
(5	)	Includes accounts payable, accrued expenses, and accrued compensation and benefits
(6	)	The three months ended April 2, 2011 and April 3, 2010 include $4.8 million and $4.6 million, respectively, for payments of withholding taxes in connection with the vesting of restricted stock units and restricted stock. The six months ended April 2, 2011 and April 3, 2010 include $22.0 million and $20.2 million, respectively, for payments of withholding taxes in connection with vesting of restricted stock units and restricted stock.

« Previous Page 1 | 2 | 3 | 4  Next Page »