Moldflow Announces Revised Corporate Strategy

FRAMINGHAM, Mass.—(BUSINESS WIRE)—May 10, 2007— Moldflow Corporation (NASDAQ: MFLO) today announced the results for its third quarter of fiscal 2007 and a revised corporate strategy which focuses on its CAE Design Analysis Solutions business. The Company also announced its intention to sell its Manufacturing Solutions division. Third quarter fiscal 2007 results from continuing operations, which are derived from the Company's Design Analysis Solutions division, include solid year-over-year growth in revenue, earnings and net income.

For comparability purposes, the Company today presented its results from the third fiscal quarter of 2007 in a format combining the results of continuing Design Analysis Solutions operations and discontinued Manufacturing Solutions operations, as well as a presentation of continuing operations only. These results include references to non-GAAP financial measures, which are reconciled to the most appropriate generally accepted accounting principles ("GAAP") financial measure in the charts at the end of this press release.
                                       Combined Operations(a)
                               ---------------------------------------
                               Three Months Ended  Three Months Ended
                                 March 31, 2007      March 31, 2006
------------------------------ ------------------- -------------------
Total Revenue                     $18.0 million       $16.3 million
------------------------------ ------------------- -------------------
Net Income                        $2.9 million        $1.8 million
------------------------------ ------------------- -------------------
Net Income per Diluted Share                $0.24               $0.15
------------------------------ ------------------- -------------------


(a) The results for the Company's combined operations shown above include the results for both the continuing Design Analysis Solutions operations and discontinued Manufacturing Solutions operations, but exclude from net income and net income per diluted share the impact of share-based compensation expenses, net of taxes, and the write-off of goodwill in the third quarter of fiscal 2007.
                                       Continuing Operations(b)
                                 -------------------------------------
                                 Three Months Ended Three Months Ended
                                   March 31, 2007     March 31, 2006
-------------------------------- ------------------ ------------------
Total Revenue                      $14.7 million      $11.6 million
-------------------------------- ------------------ ------------------
Net Income                          $3.3 million       $2.3 million
-------------------------------- ------------------ ------------------
Net Income per Diluted Share                 $0.27              $0.19
-------------------------------- ------------------ ------------------


(b) The results of the Company's continuing operations shown above present the results of its continuing Design Analysis Solutions operations but exclude from net income and net income per diluted share the impact of share-based compensation expenses, net of taxes.

Commenting on today's announcements, Roland Thomas, Moldflow Corporation's president and CEO said, "Our third quarter results reflect yet another step in our plan showing growth and leverage from our Design Analysis Solutions division. We remain excited by the strength and increased level of sales we see coming from our core business around the world and we believe it provides a solid platform for our more focused business. As Moldflow moves forward with our market leading Design Analysis Solutions business, we will continue to pursue our growth strategy to extend our leadership position in the industry for technically advanced CAE solutions."

In connection with the announcement of its intention to sell the Manufacturing Solutions division, the Company has designated the division as an asset held-for-sale and the Company's on-going financial results will reflect the classification of the Manufacturing Solutions division as discontinued operations as required under GAAP. During the preparation of its financial statements for the third fiscal quarter, the Company determined that the goodwill associated with the Manufacturing Solutions division was impaired and recorded a non-cash charge of $10.2 million dollars in its third fiscal quarter, which is reflected as part of the net loss from discontinued operations.

Thomas continued, "During this fiscal year, we have been managing our Manufacturing Solutions business to achieve a break-even operating result. As planned, this has generally been the case, with that business achieving a small operating loss excluding non-cash charges through the first three quarters of the year. Looking forward, we have now concluded that the best path to renewed growth for that business is to find a suitable owner with the infrastructure and expertise needed to promote our Altanium and shop floor products in the geographies we serve around the world."

Thomas concluded, "Our business outlook, updated today, reflects our expectation for our continuing operations for the full fiscal year and is broadly in-line with, or better than, our previous guidance for our annual 2007 revenue growth rate and non-GAAP earnings per share."

Business Outlook

The current business outlook is based on information as of May 10, 2007 and is current as of that day only. In connection with today's announcements, the Company is adjusting full year fiscal 2007 guidance to reflect the results of continuing operations. The Company now expects revenue from continuing operations for the fiscal 2007 year to be between $54.9 million to $55.3 million dollars, which represents year-over-year growth of 13% to 14% when compared to fiscal 2006. The Company expects non-GAAP net income per diluted share from continuing operations of approximately $0.87 to $0.90. Non-GAAP net income per diluted share from continuing operations excludes charges for share-based compensation expenses which are expected to be approximately $1.6 million. The Company expects GAAP net income per diluted share from continuing operations for fiscal 2007 to be between $0.72 and $0.75.

The Company has provided its fiscal 2007 revenue from continuing operations and net income per diluted share from continuing operations guidance above, part of which has been provided on a non-GAAP basis. Non-GAAP net income per diluted share from continuing operations excludes estimated charges for share-based compensation costs. Because there are significant limitations in estimating the impact of share-based compensation costs, including but not limited to, the number of share-based awards that will be exercised and/or cancelled during the period, the fair market value of the Company's share price on the exercise dates, and the number and type of issuances that may be awarded in any year, the estimated charges and tax benefits associated with share-based issuances are unpredictable. For these reasons, the actual impact of share-based compensation on GAAP net income per diluted share from continuing operations may differ materially from the estimated amounts included in the guidance above.

Use of Other Non-GAAP Financial Measures

The Company provided non-GAAP total revenue from combined operations, non-GAAP net income from combined operations and non-GAAP net income per diluted share from combined operations as supplemental measures to GAAP financial measures regarding the Company's operating performance. These financial measures include the results of our Manufacturing Solutions division. Non-GAAP net income from combined operations and non-GAAP net income per diluted share from combined operations exclude the impact of share-based compensation expenses and the write down of goodwill associated with our Manufacturing Solutions division and, therefore, have not been calculated in accordance with GAAP. The Company has provided non-GAAP net income from continuing operations and non-GAAP net income per diluted share from continuing operations as supplemental measures to GAAP regarding the Company's operating performance. These financial measures exclude the impact of share-based compensation expense and therefore have not been calculated in accordance with GAAP. Moldflow is presenting these measures because management uses this information in evaluating the results of the Company's continuing operations and operations as a whole and for internal planning and forecasting purposes and believes that this information provides additional insight into our continuing operations and operating results as a whole, as well as enables comparison of these results to prior periods. These measures should not be considered an alternative to measurements required by GAAP, such as net income (loss), net income from continuing operations and net income per diluted share from continuing operations, and should not be considered a measure of our liquidity. In addition, these non-GAAP financial measures may not be comparable to similar measures reported by other companies. With respect to the non-GAAP financial measures for the third quarter, the GAAP financial measures most directly comparable to each non-GAAP financial measure used or discussed in this press release and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included in this press release and can be found on the Investors page of the Moldflow Web site at http://www.moldflow.com/stp/english/investors/index.htm.

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