MSC.Software Reports Financial Results For Q3 2006

An archived version of the conference call will be available through November 14th and can be accessed at: U.S. (800) 642-1687 using the conference ID code: 1245056.

About MSC.Software Corporation

MSC.Software Corporation (NASDAQ: MSCS) is a leading global provider of enterprise simulation solutions, including simulation software and services, that helps 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 1200 people in 23 countries. For additional information about MSC.Software's products and services, please visit www.mscsoftware.com.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties. The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including, without limitation, statements regarding our expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this press release are based on information available to us on the date hereof. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results to differ materially from those implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "targets," "goals," "projects," "continue," or variations of such words, similar expressions, or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Neither we nor any other person can assume responsibility for the accuracy and completeness of forward-looking statements. Important factors that may cause actual results to differ from expectations include, but are not limited to, those discussed in "Risk Factors" on our 2005 Form 10-K filed with the Securities and Exchange Commission. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

    Investor Contact:
    Joanne Keates
    Vice President, Investor Relations
    MSC.Software
    (714) 444-8551
    
Email Contact

                           Financial Tables follow



                              MSC.SOFTWARE CORPORATION
                CONDENSED CONSOLIDATED BALANCE SHEETS  (UNAUDITED)
                   (in thousands, except per share value amounts)

                                                September 30,     December 31,
                                                    2006              2005
                             ASSETS
       Current Assets:
       Cash and Cash Equivalents                  $114,938           $99,478
       Investments                                  12,294            12,820
       Trade Accounts Receivable, less
        Allowance for Doubtful Accounts
        of $876 and $1,296, respectively            56,076            73,141
       Deferred Tax Assets                          18,005            18,059
       Other Current Assets                          9,711             8,815
       Current Assets of Discontinued Operations        --             5,803
       Total Current Assets                        211,024           218,116

       Property and Equipment, Net                  19,878            16,271
       Goodwill and Indefinite Lived Intangibles   180,491           180,491
       Other Intangible Assets, Net                 27,391            31,829
       Deferred Tax Assets                           8,388             7,917
       Other Assets                                 10,264            14,579
       Long Term Assets of Discontinued
        Operations                                      --             6,385
       Total Assets                               $457,436          $475,588

            LIABILITIES AND SHAREHOLDERS' EQUITY
       Current Liabilities:
       Accounts Payable                              9,619            12,097
       Compensation and Related Costs               17,547            18,921
       Restructuring Reserve                                   5                                11
              Income  Taxes  Payable                                                    6,764                          9,145
              Deferred  Revenue                                                          76,085                        94,625
              Other  Current  Liabilities                                        13,633                        18,572
              Current  Liabilities  of
                Discontinued  Operations                                            1,974                          2,866
              Total  Current  Liabilities                                      125,627                      156,237

              Deferred  Income  Taxes                                                16,588                        16,641
              Long-Term  Debt                                                                7,511                      107,375
              Other  Long  Term  Liabilities                                    12,845                        12,254
              Long-Term  Liabilities  of
                Discontinued  Operations                                                  --                          1,393
              Total  Liabilities                                                      162,571                      293,900

              Shareholders'  Equity:
              Preferred  Stock,  $0.01  Par  Value,
                10,000,000  Shares  Authorized;
                No  Shares  Issued  and  Outstanding                                --                                --
              Common  Stock,  $0.01  Par  Value,
                100,000,000  Shares  Authorized;
                43,209,  000  and  30,926,000  Issued
                and  43,173,000  and  30,886,000
                Outstanding,  respectively.                                          432                              309
              Additional  Paid-in  Capital                                    408,352                      300,793
              Deferred  Compensation                                                    (669)                      (3,029)
              Accumulated  Other  Comprehensive
                Income  (Loss):
                  Currency  Translation  Adjustment,
                    net  of  Tax                                                              (14,805)                    (15,863)
                  Unrealized  Investment  Gain,  net  of  Tax          10,256                        10,782
                  Minimum  Pension  Liability,  net  of  Tax                (272)                          (272)
              Total  Accumulated  Other
                Comprehensive  Loss                                                    (4,821)                      (5,353)

              Accumulated  Deficit                                                (108,182)                  (110,755)
              Treasury  Shares,  At  Cost  (36,000
                and  40,000  Shares,  respectively)                            (247)                          (277)
              Net  Shareholders'  Equity                                        294,865                      181,688

              Total  Liabilities  and
                Shareholders'  Equity                                            $457,436                    $475,588



                                                            MSC.SOFTWARE  CORPORATION
                          CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS  (UNAUDITED)
                                                (in  thousands,  except  per  share  data)

                                                                                  Three  Months  Ended    Nine  Months  Ended
                                                                                        September  30,          September  30,
                                                                                        2006          2005          2006          2005
              Revenue:
              Software                                                        $22,650    $36,832    $83,336    $97,710
              Maintenance  and  Services                          35,724      38,742    110,351    113,076
              Total  Revenue                                                58,374      75,574    193,687    210,786
              Cost  of  Revenue:
              Software                                                            2,632        3,925        9,882      12,228
              Maintenance  and  Services                            9,206      13,607      35,753      39,251
              Total  Cost  of  Revenue                                11,838      17,532      45,635      51,479

              Gross  Profit                                                  46,536      58,042    148,052    159,307

              Operating  Expense:
              Research  and  Development                            9,883      11,461      31,817      34,523
              Selling,  General  and  Administrative    38,810      32,911    110,074    108,335
              Amortization  of  Intangibles                          187            186            562            556
              Total  Operating  Expense                            48,880      44,558    142,453    143,414

              Operating  Income  (Loss)                            (2,344)    13,484        5,599      15,893

              Other  (Income)  Expense  :
              Interest  Expense                                                255        1,056        3,329        3,297
              Other  Income,  net                                        (1,346)        (703)    (3,892)        (349)
              Total  Other  (Income)  Expense,  net        (1,091)          353          (563)      2,948

              Income  (Loss)  From  Continuing
                Operations  Before  Provision
                (Benefit)  For  Income  Taxes                    (1,253)    13,131        6,162      12,945
              Provision  (Benefit)  For  Income
                Taxes                                                                    540        7,023        4,025        6,959
              Income  From  Continuing  Operations        (1,793)      6,108        2,137        5,986
              Income  From  Discontinued
                Operations,  Net  of  Income  Taxes                  --            230            436            596

              Net  Income                                                    $(1,793)    $6,338      $2,573      $6,582
                                                                                                --              --              --              --
              Basic  Earnings  Per  Share  From
                Continuing  Operations                              $(0.04)      $0.20        $0.06        $0.19
              Diluted  Earnings  Per  Share  From
                Continuing  Operations                              $(0.04)      $0.15        $0.06        $0.16
              Basic  Earnings  Per  Share  From
                Discontinued  Operations                                $--        $0.01        $0.01        $0.02
              Diluted  Earnings  Per  Share  From
                Discontinued  Operations                                $--        $0.01        $0.01        $0.01
              Basic  Earnings  Per  Share                          $(0.04)      $0.21        $0.07        $0.21
              Diluted  Earnings  Per  Share                      $(0.04)      $0.15        $0.07        $0.18
              Basic  Weighted-Average  Shares
                Outstanding                                                  42,872      30,879      36,416      30,704
              Diluted  Weighted-Average  Shares
                Outstanding                                                  45,420      44,523      45,594      43,942

 





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