UGS Reports Year-End Revenue

PLANO, Texas—(BUSINESS WIRE)—February 22, 2007— UGS Corp., a leading global provider of product lifecycle management (PLM) software and services, today announced fourth quarter 2006 and full year 2006 results.

Fourth quarter financial highlights include:

-- Total revenue increased to US$352.7 million, or 8 percent growth over the same period a year earlier. The company's fourth quarter revenue included US$128.1 million in license revenue, or a 12 percent increase as compared to the fourth quarter 2005.

-- EBITDA (defined below) was US$110.6 million, a 19 percent growth over the same period a year earlier. Net income was US$22.7 million, a 76 percent increase over the same period a year earlier.

-- Operating income was US$51.3 million, a 9 percent increase as compared to the fourth quarter 2005.

-- License revenue for all product portfolios grew: Collaborative Product Development Management (cPDM) license revenue increased 22 percent, digital manufacturing license revenue increased 28 percent and UGS Velocity Series(TM) portfolio license revenue increased 30 percent over the same period a year earlier. CAx license revenue increased 2 percent over the same period a year earlier.

-- In the amounts presented above, the company has not made adjustments for the impact of deferred revenues written off in connection with the acquisition of the company and acquisitions by the company. These write-offs had the effect of reducing fourth quarter 2006 revenues by US$0.1 million and 2005 revenues by US$1.1 million.

Financial highlights from the full year 2006 include:

-- Total revenue increased to US$1.2 billion, a 6 percent growth over the same period a year earlier. The company's 2006 revenue included US$379.2 million in license revenue, an increase of 6 percent as compared to 2005.

-- EBITDA (defined below) was US$297.1 million, a 23 percent increase over the same period a year earlier. Net income (loss) was US$(10.3) million as compared to US$(10.0) million from the same period a year earlier.

-- Operating income was US$71.8 million, and represents a 14 percent decrease from the same period a year earlier, and includes the impact of total amortization expenses of US$190.8 million in 2006 compared to $160.8 million in 2005.

-- Within product portfolios, cPDM license revenue increased 11 percent, digital manufacturing license revenue increased 26 percent and UGS Velocity Series portfolio license revenue increased 19 percent over the same period a year earlier.

-- In the amounts presented above, the company has not made adjustments for the impact of deferred revenues written off in connection with the acquisition of the company and acquisitions by the company. These write-offs had the effect of reducing full year 2006 revenues by US$0.8 million and 2005 revenues by US$11.3 million.

"We are pleased with our strong performance in the quarter and that execution of our strategic plan delivered solid earnings and top-line organic revenue growth as planned, with 12 percent license revenue growth in the quarter," said Tony Affuso, chairman, CEO and president of UGS. "Our vision continues to be supported by customers who are market leaders and invest in UGS PLM to further their global innovation networks. We look forward to more growth in 2007 driven by our world-class product portfolio to be enhanced with major releases of Teamcenter and NX."

Business Highlights and Announcements

-- IBM and UGS recently announced a new agreement to support the cPDM requirements of small- to medium-sized businesses (SMBs) on a global basis. IBM and UGS will jointly market Teamcenter(R) Express software and services to SMB customers in six countries: the U.S., Canada, France, Germany, Japan and China. (see separate release)

-- BIZERBA GmbH & Co. KG, a technology company for professional weighing and information technology system solutions, selected UGS' NX(R), Teamcenter and Geolus(R) search software solutions to enhance efficiency in the development and construction of its retail and compact scales. (see separate release)

-- Sichuan Changhong Electric Co., Ltd. (Changhong), a leader in China's electronics industry, selected UGS' Teamcenter product data management (PDM) solution for its PLM backbone. (see separate release)

-- ThyssenKrupp Bilstein Brasil, a ThyssenKrupp Technologies Company, a major automotive supplier, selected UGS' Velocity Series portfolio of products to address initiatives for enhancing speed to market, decreasing prototype costs and protect its intellectual property.

-- Advanced Integration Technology, L.P. (AIT), a provider of turnkey aerospace factory automation, including the design, fabrication, installation and maintenance of fully integrated plant floor systems, integrated Tecnomatix(TM) FactoryLink into its standard solution. AIT cited Tecnomatix's flexibility, scalability and ease of use as key decision making factors for including it as a standard component of its automated assembly solution which helps the aerospace industry increase manufacturing efficiency.

The company expects to realize revenue from the contracts highlighted above over multiple quarters.

Other Events

Because of the income tax impact of currency fluctuations on intercompany debt in one of the company's foreign subsidiaries, the company is restating its earnings for 2004 and 2005 by increasing its deferred income tax expense in 2004 by a currently estimated amount of US$12.0 million and correspondingly increasing its deferred income tax benefit in 2005 by a currently estimated amount of US$12.0 million. There is no impact on the company's cash flows from operations.

UGS will host its year-end and fourth quarter 2006 earnings call with securities analysts live on the Internet at 11:30 a.m. Central time, Thursday, Feb. 22, 2007. Presentation slides will be posted on www.ugs.com prior to the call. See below for webcast/teleconference access information.
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