PTC Announces Fiscal 2008 Q2 Results; Issues Q3 Guidance

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 maintenance revenue balance of CoCreate Software GmbH. Non-GAAP operating margin and EPS exclude stock-based compensation expense, amortization of intangible assets and acquired in-process research and development expenses, restructuring expenses, and any one-time tax items, such as valuation allowance reversals. PTC provides this non-GAAP information to facilitate period-to-period comparisons of its operational performance by adjusting for 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 alternative to GAAP information as the items excluded from the non-GAAP measures often have a material impact on PTCs financial results. Therefore, management uses, and investors should use, non-GAAP measures in conjunction with our reported GAAP results. Please refer to the attached tables for a reconciliation between GAAP results and the non-GAAP supplemental information.

About PTC

PTC (Nasdaq: PMTC - News) provides leading product lifecycle management (PLM), content management and dynamic publishing solutions to more than 50,000 companies worldwide. PTC customers include the world's most innovative companies in manufacturing, publishing, services, government and life sciences industries. PTC is included in the S&P Midcap 400 and Russell 2000 indices. For more information on PTC, please visit

Statements in this news release that are not historical facts, including statements about our confidence that we will achieve our fiscal 2008 financial targets, our expected revenue growth rates and projected revenue and earnings, 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 continue to spend at recent levels or may elect to defer or forego investment in our solutions in the current economic climate. In addition, our purchase price allocations associated with our first quarter acquisitions, including CoCreate, are preliminary and may change. Likewise, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including geographic mix of our revenue 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 Annual Report on Form 10-K.

PTC, The Product Development Company, Windchill 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.

(in thousands, except per share data)
Three Months Ended Six Months Ended
March 29, March 31, March 29, March 31,
2008 2007 2008 2007
License $ 72,910 $ 71,336 $ 140,101 $ 137,924
Service 184,883 156,760 358,934 311,839
Total revenue 257,793 228,096 499,035 449,763
Costs and expenses:
Cost of license revenue (1) 6,599 4,211 11,346 7,771
Cost of service revenue (1) 74,054 68,614 145,092 137,182
Sales and marketing (1) 73,359 71,560 144,387 141,121
Research and development (1) 45,734 40,153 87,282 78,137
General and administrative (1) 20,808 20,711 44,359 39,634
Amortization of acquired intangible assets 4,315 1,588 7,208 3,676
In-process research and development -- -- 1,887 --
Restructuring charge 1,892 -- 11,577 --
Total costs and expenses 226,761 206,837 453,138 407,521
Operating income 31,032 21,259 45,897 42,242
Other (expense) income, net (355) 1,348 1,251 2,128
Income before income taxes 30,677 22,607 47,148 44,370
Provision for income taxes 11,829 5,208 18,420 11,818
Net income $ 18,848 $ 17,399 $ 28,728 $ 32,552
Earnings per share:
Basic $ 0.17 0.15 $ 0.25 $ 0.29
Weighted average shares outstanding 113,811 112,845 113,746 112,337
Diluted $ 0.16 0.15 $ 0.24 $ 0.28
Weighted average shares outstanding 117,247 117,486 117,667 117,384

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