PTC Announces Q4 and FY’09 Results

Important Information About Non-GAAP References

PTC provides non-GAAP supplemental information to its financial results. Non-GAAP revenue excludes the effect of purchase accounting on the fair value of the acquired deferred revenue of CoCreate Software GmbH. Non-GAAP operating expenses, margin and EPS exclude stock-based compensation expense, amortization of acquired intangible assets, acquired in-process research and development expense, restructuring charges, non-cash effects of liquidating subsidiaries, and the related tax effects of the preceding items and any one-time tax items. PTC provides this non-GAAP information to facilitate period-to-period comparisons of its operational performance by adjusting for certain non-cash and certain episodic expenses. We believe that providing non-GAAP measures affords investors a view of our operating results that may be more easily compared to peer companies. PTC management also uses this and other non-GAAP financial information to evaluate, manage and plan our business because the information provides additional insight into ongoing financial performance. 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 use, 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 2010 and other future financial expectations, anticipated tax rates, the expected impact of our planned strategic investments on our future success, the stability of our maintenance and services businesses, and the long-term prospects for PTC 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 not resume purchases of our solutions when we expect or that they may further reduce, defer or forego investment in our solutions in the current economic climate, the possibility that our customers may not renew maintenance or enter into services engagements at historic rates, the possibility that strategic customer wins may not generate the revenue we expect, 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, the possibility that our efforts to reduce our operating expenses may not have the effects we expect and could harm our operations, the possibility that we may be unable to attain or maintain a technology leadership position or that any such leadership position may not generate the revenue we expect, 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 Reports 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.

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 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 customer needs and comply with industry regulations.

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

	Three Months Ended						Year Ended
	September 30,			September 30,			September 30,			September 30,
	2009			2008			2009			2008
Revenue:
License	$	70,688		$	103,632		$ 212,710			$	332,380
Service		175,655			195,915		725,475				737,950
Total revenue		246,343			299,547		938,185				1,070,330

Costs and expenses:
Cost of license revenue ⁽¹⁾		7,758			9,560		29,962				30,123
Cost of service revenue ⁽¹⁾		65,592			79,226		279,797				300,663
Sales and marketing ⁽¹⁾		76,297			83,731		301,369				306,880
Research and development ⁽¹⁾		48,826			47,366		188,501				182,022
General and administrative ⁽¹⁾		22,295			23,176		80,670				87,829
Amortization of acquired intangible assets		4,110			4,327		15,620				15,579
In-process research and development		--			--		300				1,887
Restructuring charges		6,274			4,735		22,671				20,102
Total costs and expenses		231,152			252,121		918,890				945,085

Operating income		15,191			47,426		19,295				125,245
Other expense, net		(312	)		(500	)	(2,124		)		(6,359	)
Income before income taxes		14,879			46,926		17,171				118,886
Provision for (benefit from) income taxes		(1,021	)		10,422		(14,351		)		39,184
Net income	$	15,900		$	36,504		$ 31,522			$	79,702
Earnings per share:
Basic	$	0.14		$	0.32		$ 0.27			$	0.70
Weighted average shares outstanding		115,288			113,829		114,950				113,703
Diluted	$	0.13		$	0.31		$ 0.27			$	0.68
Weighted average shares outstanding		119,379			118,780		117,359				117,870

(1) The amounts in the tables above include stock-based compensation as follows:
	Three Months Ended						Year Ended
	September 30,			September 30,			September 30,			September 30,
	2009			2008			2009			2008
Cost of license revenue	$	22		$	12		$	50		$ 38
Cost of service revenue		2,562			2,305			8,163		9,172
Sales and marketing		4,205			3,296			12,797		12,229
Research and development		2,404			2,500			8,214		9,429
General and administrative		5,362			3,602			14,104		13,528
Total stock-based compensation	$	14,555		$	11,715		$	43,328		$ 44,396

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

	Three Months Ended						Year Ended
	September 30,			September 30,			September 30,			September 30,
	2009			2008			2009			2008
GAAP revenue	$	246,343		$	299,547		$	938,185		$	1,070,330
Fair value adjustment of acquired CoCreate deferred maintenance revenue		--			668			--			4,588
Non-GAAP revenue	$	246,343		$	300,215		$	938,185		$	1,074,918

GAAP operating income	$	15,191		$	47,426		$	19,295		$	125,245
Fair value adjustment of acquired CoCreate deferred maintenance revenue		--			668			--			4,588
Stock-based compensation		14,555			11,715			43,328			44,396
Amortization of acquired intangible assets included in cost of license revenue		5,082			5,991			19,674			19,841
Amortization of acquired intangible assets included in cost of service revenue		--			16			8			67
Amortization of acquired intangible assets		4,110			4,327			15,620			15,579
In-process research and development		--			--			300			1,887
Restructuring charges		6,274			4,735			22,671			20,102
Non-GAAP operating income	$	45,212		$	74,878		$	120,896		$	231,705

GAAP net income	$	15,900		$	36,504		$	31,522		$	79,702
Fair value adjustment of acquired CoCreate deferred maintenance revenue		--			668			--			4,588
Stock-based compensation		14,555			11,715			43,328			44,396
Amortization of acquired intangible assets included in cost of license revenue		5,082			5,991			19,674			19,841
Amortization of acquired intangible assets included in cost of service revenue		--			16			8			67
Amortization of acquired intangible assets		4,110			4,327			15,620			15,579
In-process research and development		--			--			300			1,887
Restructuring charges		6,274			4,735			22,671			20,102
One-time non-cash loss included in other expense, net ⁽²⁾		--			--			--			6,206
Income tax adjustments ⁽³⁾		(10,308	)		(9,984	)		(39,552	)		(32,355	)
Non-GAAP net income	$	35,613		$	53,972		$	93,571		$	160,013

GAAP diluted earnings per share	$	0.13		$	0.31		$	0.27		$	0.68
Stock-based compensation		0.12			0.10			0.37			0.38
All other items identified above		0.05			0.04			0.16			0.30
Non-GAAP diluted earnings per share	$	0.30		$	0.45		$	0.80		$	1.36


Weighted average shares outstanding – diluted		119,379			118,780			117,359			117,870

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