Msc.Software (NYSE:MNS)
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MSC.Software Reports First Quarter Financial Results
SANTA ANA, Calif., April 28 /PRNewswire-FirstCall/ -- MSC.Software Corp. , the
leading global provider of virtual product development (VPD) products including
simulation software and services, today announced preliminary financial results
for the first quarter ended March 31, 2004.
First quarter highlights include:
* Revenue of $68.1 million, up 11% from the first quarter of 2003;
* Income from continuing operations of $2.8 million or $0.08 per diluted
share.
* Key balance sheet items include $57.2 million in cash and investments,
and $80.4 million in deferred revenue.
For the first quarter ended March 31, 2004, MSC.Software reported revenue of
$68.1 million, compared to $61.4 million for the first quarter last year.
Income from continuing operations for the first quarter was $2.8 million or
$0.08 per diluted share compared to $1.8 million or $0.06 per diluted share in
the first quarter last year.
"The MSC.Software team around the world remains very focused on executing the
plan for profitable revenue growth and the 11% topline growth in the first
quarter speaks very loudly to their combined efforts," said Frank Perna,
chairman and CEO, MSC.Software.
"Our global sales force has completed more than 600 VPD Maturity Model (VPDMM)
assessments to date and the customers who are involved in this process are
finding tremendous value in the ability to benchmark their product development
processes and attach defined return on investment analyses to increasing their
level of product development maturity in specific disciplines. The combination
of our VPDMM program, the depth and breadth of our product portfolio and the
flexibility of our MasterKey licensing system continues to be a competitive
differentiator and a definite revenue driver."
"We are also continuing to see growth opportunities in new markets like
biomedical, electromechanical and consumer products. While these markets are
relatively small sources of revenue today, we are laying a solid foundation in
new vertical markets with new customer relationships that should bolster future
growth."
"Development of the Simulation Office product suite continues to be on track
and we are rolling out the plan and messaging to the MSC.Software team in the
second quarter and to customers in the third quarter. The Simulation Office
strategy is the natural evolution of our software product portfolio and is a
clear path to increased interoperability, scalability and ease of use within
our product suite, and is complemented by our SimDesigner product line. The
acquisition of SOFY and the integration of its technology within the
MSC.Software product suite also fits well with this strategy."
"While revenue results for Asia-Pacific and Europe were quite strong, we
continue to work very hard to overcome the difficult enterprise software
environment in the Americas. The combination of pricing pressures and a
generally difficult environment for software purchases has contributed to a
decline in our revenue in the Americas. However, we have seen an encouraging
trend from both new sales of MasterKey token licenses as well incremental
investments in more tokens from existing customers and we feel that this
positions us well for growth in our software business for the long term."
Americas
In the Americas, revenue in the first quarter was $19.6 million down 15%
compared to the first quarter last year. In the first quarter, 26 transactions
over $100,000 were signed, and the total number of new accounts increased by
138. Key software and service transactions signed in the quarter included
Boeing, Delphi, Ford and Polaris.
Europe
MSC.Software's European revenue was $24.9 million in the first quarter compared
to $18.9 million in the first quarter last year, growing 32%. Growth in local
currencies was 13%. In the first quarter, the total number of new accounts
increased by 31 and the number of transactions over $100,000 totaled 61. Key
software and service engagements were signed with BAE, Ferrari, FIAT and MTU.
Asia-Pacific
The Asia-Pacific region reported revenue of $23.6 million in the first quarter
compared to $19.5 million in the first quarter last year for a growth rate of
21%, growth in local currencies was 10%. In the first quarter, the total
number of new customer accounts increased by 70. In the first quarter 41
transactions over $100,000 were signed in the region. Key software and service
contracts were signed with Toyota, HanJin Heavy Industries, Shenyang
Engineering, Olympus and Subros in India.
Outlook
Based on current visibility, the Company expects second quarter revenue to be
in the range of $65 million to $70 million and earnings to be in the range of
$0.06 to $0.08 per diluted share. The Company expects revenue for FY 2004 to
be in the range of $260 million to $280 million and earnings to be in the range
of $0.35 to $0.45 per diluted share.
Note on Status of Independent Review and Filing of Forms 10-K and 10-Q
As reported in an earlier press release dated March 30, 2004, the Company has
delayed the filing of its Form 10-K pending an independent review by outside
counsel of certain claims made regarding information relating to the accounting
for stock options of a departing employee of a foreign subsidiary. The initial
phases of this review have been completed, and as soon as possible after this
review is completed, MSC.Software will file its Form 10-K. The company's Form
10-Q for the period ended March 31, 2004 will not be filed until the Form 10-K
for the year ended December 31, 2003 is filed.
The first quarter results are preliminary and are subject to final review by
MSC.Software's independent auditors.
Conference Call
MSC.Software's conference call to discuss the preliminary first quarter results
will be Webcast live today at 8:30 a.m. Pacific (11:30 am Eastern) and can be
accessed from the Company's website at http://www.mscsoftware.com/ir. It can
also be accessed through the following dial-in numbers: US - (800) 374-0151 or
Intl. - (706) 634-4981. An archived version of the conference call will also
be available at the Company's website. Upon completion of the conference call,
a conference call replay will also be available for 48 hours at: US - (800)
642-1687 or Intl. - (706) 645-9291 using the conference ID code: 6960196.
About MSC.Software Corporation
MSC.Software (NYSE:MNS) is the leading global provider of virtual product
development (VPD) products including simulation software and services that help
companies make money, save time and reduce costs associated with designing and
testing manufactured products. MSC.Software works with thousands of companies
in hundreds of industries to develop better products faster by utilizing
information technology, software and services. MSC.Software employs more than
1300 people in 22 countries. For additional information about MSC.Software's
products and services, please visit http://www.mscsoftware.com/.
Except for the historical information contained herein, certain matters
discussed in this news release constitute forward-looking statements that
involve risks and uncertainties that could cause actual results to differ
materially from those projected. Such statements are based on management's
current expectations and are subject to a number of factors and uncertainties,
which could cause actual results to differ materially from those described in
the forward-looking statements. Other factors which could cause such results
to differ materially from those described in the forward-looking statements
include delays in developing, completing, or shipping new or enhanced products,
the ability to assimilate acquisitions into MSC's operations, foreign currency
translations, and other risks and uncertainties that are detailed in the
Company's annual report on Form 10-K and other reports filed by the Company
with the Securities and Exchange Commission.
(Financial Tables Follow)
MSC.SOFTWARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in Thousands, Except Per Share Amounts)
Three Months Ended
March 31,
2004 2003
REVENUE:
Software $40,651 $36,897
Services 27,413 24,481
Total Revenue 68,064 61,378
COST OF REVENUE:
Software 6,764 3,721
Services 14,363 13,381
Total Cost of Revenue 21,127 17,102
GROSS PROFIT 46,937 44,276
OPERATING EXPENSE:
Research and Development 6,361 7,248
Selling, General and
Administrative 34,784 30,320
Write-Off of Acquired In-
Process R&D 338 --
Amortization of
Intangibles 1,542 1,901
Total Operating Expense 43,025 39,469
OPERATING INCOME 3,912 4,807
OTHER EXPENSE
Interest Expense 1,161 1,952
Other Expense (Income),
Net (1,598) (25)
Total Other Expense, Net (437) 1,927
INCOME FROM CONTINUING
OPERATIONS
BEFORE PROVISION FOR
INCOME TAXES 4,349 2,880
Provision for Income Taxes 1,565 1,042
INCOME FROM CONTINUING
OPERATIONS 2,784 1,838
DISCONTINUED OPERATIONS
Loss from Discontinued
Operations, Net of Tax -- (704)
Loss from Disposal of
Discontinued Operations,
Net of Tax -- --
TOTAL LOSS FROM DISCONTINUED
OPERATIONS -- (704)
NET INCOME $2,784 $1,134
BASIC EARNINGS PER SHARE
FROM CONTINUING OPERATIONS $0.09 $0.06
DILUTED EARNINGS PER SHARE
FROM CONTINUING OPERATIONS $0.08 $0.06
BASIC LOSS PER SHARE
FROM DISCONTINUED
OPERATIONS $0.00 $(0.02)
DILUTED LOSS PER SHARE
FROM DISCONTINUED
OPERATIONS $0.00 $(0.02)
BASIC EARNINGS PER SHARE $0.09 $0.04
DILUTED EARNINGS PER SHARE $0.08 $0.04
Basic Weighted-Average
Shares Outstanding 30,480 29,827
Diluted Weighted-Average
Shares Outstanding 42,803 30,366
MSC.SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in Thousands)
March 31, December 31,
2004 2003
ASSETS
Cash and Investments $57,200 $48,534
Trade Accounts Receivable, Net 73,903 73,691
Current Assets of Discontinued
Operations 155 384
Other Current Assets 43,608 43,800
Total Current Assets 174,866 166,409
Property and Equipment, Net 28,545 30,169
Capitalized Software Costs, Net 29,959 29,147
Goodwill and Other Intangible
Assets, Net 241,594 237,570
Other Assets 22,851 22,735
Total Assets $497,815 $486,030
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $9,962 $11,065
Deferred Revenue 80,395 69,495
Restructuring Reserve 463 1,229
Current Liabilities of Discontinued
Operations 2,699 3,330
Other Current Liabilities 32,689 34,581
Total Current Liabilities 126,208 119,700
Deferred Income Taxes 21,630 21,832
Notes Payable to Shareholders 3,467 4,677
Subordinated Convertible Debentures 100,000 100,000
Subordinated Notes Payable, Less
Current Portion 7,060 7,015
Other Long-Term Liabilities 8,665 8,408
Total Liabilities 267,030 261,632
Total Shareholders' Equity 230,785 224,398
Total Liabilities and
Shareholders' Equity $497,815 $486,030
DATASOURCE: MSC.Software Corp.
CONTACT: Investors, Joanne Keates, Vice President, Investor Relations,
+1-714-444-8551, , or Media, Todd Evans,
Corporate Communications, +1-714-445-3066, , both of
MSC.Software Corp.
Web site: http://www.mscsoftware.com/ir
Web site: http://www.mscsoftware.com/