PTC provides non-GAAP supplemental information to its financial results. Non-GAAP revenue, operating expenses, margin and EPS exclude the effect of purchase accounting on the fair value of acquired deferred revenue of MKS Inc. and Servigistics, Inc., stock-based compensation expense, amortization of acquired intangible assets, restructuring charges, acquisition-related expenses, certain foreign currency transaction losses, 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 2013 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 the macroeconomic climate may not improve or may deteriorate, the possibility that customers may not purchase our solutions when or at the rates we expect and that our pipeline deals may not convert as 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 new products, including new releases of Creo and our newly expanded SLM solutions, may not generate the revenue we expect, the possibility that resource constraints and staff reductions could adversely affect our revenue, the possibility that our strategic investments may not generate the growth or revenues we expect, the possibility that the acquisition of Servigistics may not generate the revenue we expect, and the possibility that remedial actions relating to our previously announced investigation in China will have a material impact on our operations in China and that fines and penalties may be assessed against us in connection with this matter. 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 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 PTC logo, 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
PTC (Nasdaq: PMTC) enables manufacturers to achieve sustained product and service advantage. The company’s technology solutions help customers transform the way they create and service products across the entire product lifecycle – from conception and design to sourcing and service. Founded in 1985, PTC employs nearly 6,000 professionals serving more than 27,000 businesses in rapidly-evolving, globally distributed manufacturing industries worldwide. Get more information at www.ptc.com.
PARAMETRIC TECHNOLOGY CORPORATION | ||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
(in thousands, except per share data) | ||||||||||||
Three Months Ended | ||||||||||||
December 29, | December 31, | |||||||||||
2012 | 2011 | |||||||||||
Revenue: | ||||||||||||
License | $ | 79,185 | $ | 89,088 | ||||||||
Service | 76,760 | 75,627 | ||||||||||
Support | 163,806 | 153,561 | ||||||||||
Total revenue | 319,751 | 318,276 | ||||||||||
Cost of revenue: | ||||||||||||
Cost of license revenue (1) | 8,012 | 7,659 | ||||||||||
Cost of service revenue (1) | 68,592 | 71,450 | ||||||||||
Cost of support revenue (1) | 20,468 | 19,110 | ||||||||||
Total cost of revenue | 97,072 | 98,219 | ||||||||||
Gross margin | 222,679 | 220,057 | ||||||||||
Operating expenses: | ||||||||||||
Sales and marketing (1) | 93,549 | 97,778 | ||||||||||
Research and development (1) | 57,429 | 54,993 | ||||||||||
General and administrative (1) | 35,817 | 29,572 | ||||||||||
Amortization of acquired intangible assets | 6,623 | 5,209 | ||||||||||
Restructuring charges | 15,402 | - | ||||||||||
Total operating expenses | 208,820 | 187,552 | ||||||||||
Operating income | 13,859 | 32,505 | ||||||||||
Other expense, net | (1,805 | ) | (2,643 | ) | ||||||||
Income before income taxes | 12,054 | 29,862 | ||||||||||
(Benefit) provision for income taxes | (23,757 | ) | 7,739 | |||||||||
Net income | $ | 35,811 | $ | 22,123 | ||||||||
Earnings per share: | ||||||||||||
Basic | $ | 0.30 | $ | 0.19 | ||||||||
Weighted average shares outstanding |
119,927 | 117,715 | ||||||||||
Diluted | $ | 0.29 | $ | 0.18 | ||||||||
Weighted average shares outstanding | 121,805 | 120,576 | ||||||||||
(1) The amounts in the tables above include stock-based compensation as follows: |
||||||||||||
Three Months Ended | ||||||||||||
December 29, | December 31, | |||||||||||
2012 | 2011 | |||||||||||
Cost of license revenue | $ | 5 | $ | 5 | ||||||||
Cost of service revenue | 1,612 | 1,563 | ||||||||||
Cost of support revenue | 826 | 950 | ||||||||||
Sales and marketing | 2,458 | 3,728 | ||||||||||
Research and development | 2,512 | 2,549 | ||||||||||
General and administrative | 4,480 | 4,587 | ||||||||||
Total stock-based compensation | $ | 11,893 | $ | 13,382 | ||||||||
PARAMETRIC TECHNOLOGY CORPORATION | |||||||||||||
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) | |||||||||||||
(in thousands, except per share data) | |||||||||||||
Three Months Ended | |||||||||||||
December 29, | December 31, | ||||||||||||
2012 | 2011 | ||||||||||||
GAAP revenue | $ | 319,751 | $ | 318,276 | |||||||||
Fair value of acquired company's
|
1,554 | 1,522 | |||||||||||
Non-GAAP revenue | $ | 321,305 | $ | 319,798 | |||||||||
GAAP gross margin | $ | 222,679 | $ | 220,057 | |||||||||
Fair value of acquired company's
|
1,554 | 1,522 | |||||||||||
Stock-based compensation | 2,443 | 2,518 | |||||||||||
Amortization of acquired intangible assets
|
4,639 | 4,103 | |||||||||||
Non-GAAP gross margin | $ | 231,315 | $ | 228,200 | |||||||||
GAAP operating income | $ | 13,859 | $ | 32,505 | |||||||||
Fair value of acquired company's
|
1,554 | 1,522 | |||||||||||
Stock-based compensation | 11,893 | 13,382 | |||||||||||
Amortization of acquired intangible assets
|
4,639 | 4,103 | |||||||||||
Amortization of acquired intangible assets | 6,623 | 5,209 | |||||||||||
Acquisition-related charges included in
|
4,599 | 2,068 | |||||||||||
Restructuring charges | 15,402 | - | |||||||||||
Non-GAAP operating income (2) | $ | 58,569 | $ | 58,789 | |||||||||
GAAP net income | $ | 35,811 | $ | 22,123 | |||||||||
Fair value of acquired company's
|
1,554 | 1,522 | |||||||||||
Stock-based compensation | 11,893 | 13,382 | |||||||||||
Amortization of acquired intangible assets
|
4,639 | 4,103 | |||||||||||
Amortization of acquired intangible assets |
6,623 | 5,209 | |||||||||||
Acquisition-related charges included in
|
4,599 | 2,068 | |||||||||||
Restructuring charges | 15,402 | - | |||||||||||
Non-operating foreign currency transaction losses (3) | - | 761 | |||||||||||
Income tax adjustments (4) | (36,400 | ) | (6,678 | ) | |||||||||
Non-GAAP net income | $ | 44,121 | $ | 42,490 | |||||||||
GAAP diluted earnings per share | $ | 0.29 | $ | 0.18 | |||||||||
Fair value of deferred maintenance revenue | 0.01 | 0.01 | |||||||||||
Stock-based compensation | 0.10 | 0.11 | |||||||||||
Amortization of acquired intangibles | 0.09 | 0.08 | |||||||||||
Acquisition-related charges | 0.04 | 0.02 | |||||||||||
Restructuring charges and other | 0.13 | 0.01 | |||||||||||
Income tax adjustments | (0.30 | ) | (0.06 | ) | |||||||||
Non-GAAP diluted earnings per share | $ | 0.36 | $ | 0.35 | |||||||||
(2) | Operating margin impact of non-GAAP adjustments: | ||||||||||||
Three Months Ended | |||||||||||||
December 29, | December 31, | ||||||||||||
2012 | 2011 | ||||||||||||
GAAP operating margin | 4.3 | % | 10.2 | % | |||||||||
Fair value of deferred maintenance revenue | 0.5 | % | 0.5 | % | |||||||||
Stock-based compensation | 3.7 | % | 4.2 | % | |||||||||
Amortization of acquired intangibles | 3.5 | % | 2.9 | % | |||||||||
Acquisition-related charges | 1.4 | % | 0.6 | % | |||||||||
Restructuring charges | 4.8 | % | 0.0 | % | |||||||||
Non-GAAP operating margin | 18.2 | % | 18.4 | % | |||||||||
|