MSC.Software Reports Financial Results for Q3

SANTA ANA, Calif., Nov. 6 /PRNewswire-FirstCall/ -- MSC.Software Corporation (NASDAQ: MSCS), a leading global provider of enterprise simulation solutions including simulation software and services, today reported results for the third quarter ended September 30, 2007.

REVENUE

Total revenue for the third quarter ended September 30, 2007 was $57.2 million compared to $58.4 million for the third quarter last year. Software revenue for the third quarter totaled $19.9 million compared to $22.7 million for the third quarter last year. For the third quarter ended September 30, 2007, maintenance revenue totaled $31.6 million and services revenue totaled $5.7 million, compared to $28.9 million of maintenance revenue and $6.8 million of services revenue for the third quarter last year.

Total revenue for the nine months ended September 30, 2007 was $175.6 million compared to $193.7 million for the nine month period last year. Software revenue for the nine months totaled $65.9 million compared to $83.3 million for the nine month period last year. For the nine months ended September 30, 2007 maintenance revenue totaled $92.3 million and services revenue totaled $17.4 million, compared to $85.7 million of maintenance revenue and $24.7 million of services revenue for the nine month period last year. The 2006 nine month period included $2.4 million of non-recurring PLM revenue.

"The strategic product transition to simulation enterprise solutions is a journey for both MSC.Software and our customers," said Bill Weyand, CEO and Chairman of MSC.Software. "Recent successful enterprise transactions with industry leaders including Airbus and Audi indicate that we are making progress with this product transition."

"During the month of October, we held our Virtual Product Development Conferences throughout all world regions, where we saw a record number of registrations and attendance was notably higher than last year. We believe this is an indication that our customers continue to see great value in all of our simulation product solutions," continued Mr. Weyand.

"We believe we are seeing certain positive signs in our business activities, both with our new enterprise solutions and our software tools, and had a number of key wins in both categories in the third quarter with customers including Spirit Aerospace, Northrop Grumman and Bombardier in the Americas, Honda R&D and Mahindra Engineering in Asia Pacific, and Airbus, Audi and Eurocopter in Europe."

REVENUE BY GEOGRAPHY

Total revenue in the Americas for the three and nine months ended September 30, 2007 was $17.6 million and $53.3 million respectively, compared to $17.1 million and $58.0 million for the same periods last year. Total revenue in EMEA for the three and nine months ended September 30, 2007 was $21.5 million and $65.9 million, respectively, compared to $23.1 million and $74.4 million for the same periods last year. Changes in the Euro dollar increased EMEA revenue during the three and nine months of 2007 by $1.5 million and $4.9 million, respectively. In the Asia Pacific region, revenue for the three and nine months of 2007 totaled $18.1 million and $56.4 million respectively, compared to $18.2 million and $61.3 million for the same periods in 2006. Changes in the Japanese Yen decreased Asia Pacific revenue during the three and nine months of 2007 by $0.3 million and $1.7 million, respectively. The decreases in total revenue in all world geographies generally reflect decreases in software revenue from the impacts of the transition from selling engineering tools to selling enterprise solutions to our major customers in certain key industries including automotive, aerospace and manufacturing industries, decreases in services revenue due to a de-emphasis on certain low value consulting engagements, partially offset by growth in maintenance revenue.

RESULTS OF OPERATIONS AND EPS

Total operating expenses for the three and nine months ended September 30, 2007 were $46.6 million and $151.9 million, respectively, compared to $48.9 million and $142.5 million for the same periods last year. Operating income for the three months ended September 30, 2007 was $87 thousand and for the nine month period was a loss of ($9.5) million, compared to an operating loss of ($2.3) million and operating income of $5.6 million for the same periods in 2006. The operating loss for the nine months ended September 30, 2007 included restructuring and impairment charges totaling $8.9 million.

For the three months ended September 30, 2007, loss from continuing operations totaled $122 thousand compared to loss from continuing operations of ($1.8) million or ($0.04) per diluted share for the third quarter last year. For the nine months ended September 30, 2007, loss from continuing operations totaled ($5.1) million or ($0.12) per diluted share, compared to income from continuing operations of $2.1 million or $0.06 per diluted share for the nine month period last year.

GUIDANCE

At this time the Company will not issue guidance. The Company will evaluate its decision to provide guidance in the future, as it continues to move through this transition period and visibility improves.

CONFERENCE CALL

The Company will host a conference call to discuss the third quarter financial results today at 7:00 am pacific (10:00 am eastern). The conference call will be web cast and can be accessed at the following URL: http://www.mscsoftware.com/ir/, or by dialing in to (800) 374-0151. The international dial-in number to access the live call is (706) 634-4981. To participate in the live conference call, use the following conference ID code: 22241568. The conference call slide presentation will be available along with the audio web cast and at the Company's website at http://www.mscsoftware.com/ir/.

An archived version of the audio conference call will be available until November 8, 2007 and can be accessed at: (800) 642-1687 using the conference ID code: 22241568. An archive of the conference call and slide presentation will also be available at http://www.mscsoftware.com/ir/.

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 http://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," "preliminary," "guidance," 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 2006 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.



                                 PRELIMINARY
                                                     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            2007            2006            2007
              Revenue:
              Software                                                  $22,650      $19,874      $83,336      $65,859
              Maintenance                                              28,946        31,632        85,713        92,272
              Services                                                      6,778          5,681        24,638        17,443
              Total  Revenue                                          58,374        57,187      193,687      175,574

              Cost  of  Revenue:
              Software                                                      2,632          2,173          9,882          7,692
              Maintenance  and  Services                      9,206          8,281        35,753        25,422
              Total  Cost  of  Revenue                          11,838        10,454        45,635        33,114

              Gross  Profit                                            46,536        46,733      148,052      142,460

              Operating  Expenses:
              Research  and  Development                      9,883        12,428        31,817        37,530
              Selling,  General  and
                Administrative                                      38,810        32,912      110,074      104,956
              Amortization  of  Intangibles                    187              177              562              522
              Restructuring    and  Other  Charges            --          1,129                --          8,919
              Total  Operating  Expenses                    48,880        46,646      142,453      151,927

              Operating  Income  (Loss)                      (2,344)              87          5,599        (9,467)

              Other  (Income)  Expense  :
              Interest  Expense                                          255              300          3,329              873
              Other  Income,  net                                  (1,346)      (1,834)      (3,892)      (2,464)
              Total  Other  Income,  net                      (1,091)      (1,534)          (563)      (1,591)

              Income  (Loss)  From  Continuing
                Operations  Before  Provision
                (Benefit)  For  Income  Taxes              (1,253)        1,621          6,162        (7,876)
              Provision  (Benefit)  For  Income
                Taxes                                                              540          1,743          4,025        (2,796)
              Income  (Loss)  From  Continuing
                Operations                                              (1,793)          (122)        2,137        (5,080)
              Income  From  Discontinued
                Operations,  net  of  Income
                Taxes                                                                --                --              436          1,046
              Net  Income  (Loss)                                $(1,793)        $(122)      $2,573      $(4,034)

              Basic  Earnings  (Loss)  Per  Share
                From  Continuing  Operations              $(0.04)            $--          $0.06        $(0.12)
              Diluted  Earnings  (Loss)  Per
                Share  From  Continuing
                Operations                                              $(0.04)            $--          $0.06        $(0.12)
              Basic  Earnings  Per  Share  From
                Discontinued  Operations                          $--              $--          $0.01          $0.02
              Diluted  Earnings  Per  Share  From
                Discontinued  Operations                          $--              $--          $0.01          $0.02
              Basic  Earnings  (Loss)  Per  Share      $(0.04)            $--          $0.07        $(0.09)
              Diluted  Earnings  (Loss)  Per
                Share                                                        $(0.04)            $--          $0.07        $(0.09)
              Basic  Weighted-Average  Shares
                Outstanding                                            42,872        44,219        36,416        44,026
              Diluted  Weighted-Average  Shares
                Outstanding                                            45,420        44,219        45,594        44,026



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

                                                                                                  December  31,        September  30,
                                                                                                        2006                            2007
                                        ASSETS
                Cash  and  Investment                                              $126,001                    $134,337
                Trade  Accounts  Receivable,  less
                  Allowance  for  Doubtful  Accounts
                  of  $1,555  and  $1,846,  respectively                  70,432                        48,105
                Property  and  Equipment,  Net                                  19,055                        19,642
                Goodwill,  Indefinite  Lived  &
                  Other  Intangibles                                                  204,369                      201,101
                Other  Assets                                                                38,981                        55,575
                                  Total  Assets                                          $458,838                    $458,760

          LIABILITIES  AND  SHAREHOLDERS'  EQUITY
                Deferred  Revenue                                                      $78,189                      $75,240
                Long-Term  Debt                                                              7,556                          6,891
                Other    Liabilities                                                    62,185                        63,011
                            Total  Liabilities                                        147,930                      145,142

                      Net  Shareholders'  Equity                                310,908                      313,618

          Total  Liabilities  and  Shareholders'  Equity      $458,838                    $458,760
 

Web site: http://www.mscsoftware.com/




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