MCAD Industry View – A March 2010 Update

On February 8, 2010 PTC announced it has extended its InSightTM Product Analytics solution with technology to help manufacturers analyze carbon and other key environmental impacts during product development and manufacturing. The core of PTC's InSight Product Analytics solution is built upon delivering a suite of capabilities to enable bill of material (BOM) analysis for environmental performance, cost, and reliability throughout the product lifecycle. Extending the environmental analytics capabilities of InSight, PTC has acquired leading technology from Planet Metrics, Inc., said to be a leader in environmental impact analysis technology. This new technology enables manufacturers and retailers to model, analyze and optimize carbon emissions and energy use throughout the entire value chain, from concept to end-of-life. The Planet Metrics software includes an exhaustive, normalized database of environmental profiles and combines both analytics and intuitive heat map displays that make it easy to identify high-impact "hot spots" in materials, packaging, supply chain, transportation, and disposal. "The process of predicting, measuring, and improving a product's environmental performance is becoming increasingly important to the success of manufacturers across all industries," said Howard Heppelmann, Vice President of Product Analytics solutions at PTC:

"The acquisition of this technology is an important step in the execution of our product analytics strategy and overall differentiation in PLM. We are excited to expand our Product Analytics capabilities to further enable manufacturers to analyze the environmental footprint of products early in the product development cycle, helping them make informed design and supply chain decisions that can lower risk and cost."

With a total of 1000 people employed in 23 countries, MSC.Software on February 9. 2010 announced the formation of a new business unit to focus on its recognized position in Simulation Data and Process Management (SDPM). Albrecht Pfaff, Vice President SimManager Business Unit, MSC.Software, said, “We are very pleased to be recognized as the thought leader in Simulation Data and Process Management by the recent assessment performed by the PLM business analyst group, Collaborative Product Development Associates (CPDA).”

We have successfully deployed SimManager in the High-Lift System test department at Airbus Bremen and benefit from a tight connection between Physical Test and Virtual Test correlation. SimManager will help us to tremendously improve the testing procedure of the new A350 aircraft - we expect to reduce lead-time and cost for system certification while increasing aircraft maturity”, explained Thomas Krüger, project leader for Virtual Testing at Airbus.

“Manufacturers are looking for a force multiplier to better predict real world behaviors for their products during design. SimManager uniquely delivers this”, said Dominic Gallello, President and CEO, MSC.Software:

Siemens PLM Software

On February 3, 2010 Siemens PLM Software announced that its software solutions have been used as important enablers in the development of the award winning Ford Motor Company vehicles. The Ford Fusion™ Hybrid and Ford Transit Connect™ were named 2010 North American Car of the Year and Truck of the Year, respectively. This was only the third time in 17 years that one automaker has won both awards.

Separately, the entire Ford Fusion lineup captured the acclaimed MOTOR TREND® Car of the Year award for 2010.

“Siemens PLM Software is proud to be a key partner in delivering PLM solutions that support Ford Motor Company's delivery of outstanding vehicles and congratulates Ford on its award winning car and truck of the year,” said Chuck Grindstaff, executive vice president, Products and Chief Technology Officer, Siemens PLM Software. “The automotive industry understands the need to streamline product development and create efficiencies across entire organizations, and leading OEMs like Ford are increasingly relying on PLM software to bring quality, efficient vehicles to market in a timely manner.”

Headquartered in Plano, Texas, Siemens PLM Software is a global provider of product lifecycle management (PLM) software and services with 6.7 million licensed seats and 63,000 customers worldwide. It is a part of the Siemens Industry Automation Division (Nuremberg, Germany), a worldwide leader in the fields of automation systems, industrial controls and industrial software. With around 39,000 employees, Siemens Industry Automation achieved sales of €7.0 billion in fiscal year 2009.

The G5 MCAD Vendors' Financial Performances in Q4 2009

Measured in $US, Table 1 below reveals that the combined total revenue of the G5 recovered in Q4 2009 to the point of being virtually even with Q4 2008, a feat that required a massive $158 million or thirteen percent increase in total revenue from the just-prior Q3 2009. The “Great Recession”, as the worldwide economic downturn is now being called in some circles, is still affecting the MCAD marketplace, although signs of gradual recovery are beginning to show around the edges.

ANSYS and DASSAULT enjoyed the largest percentage sequential revenue increases in the teens, but both AUTODESK and PTC also reported significant single digit sequential percentage improvements.

On a year-over-year basis, however, only ANSYS managed a double digit percentage revenue boost, although PTC turned in a high single digit growth percentage. Neither AUTODESK nor DASSAULT is yet back to even with its Q4 2008 revenue level,

Turning to earnings in Table 2 below, it is a relief to see that the four MCAD vendors reporting earnings achieved a handsome total of US$219.6 million in net income in Q4 2009, quite a surprising return on sales (ROS) of 16.1%. (It's worth mentioning that Dassault's results in $US were helped in Q4 2009 by the then-weakening dollar vs. the euro). In Q4 2008 the total combined profit of the reporting G4 barely broke into black ink, mostly due to the dismal Q4 2008 losses at Autodesk.

Dassault led the profit improvement parade sequentially, with 47 million euros positive difference in Q4 2009 over Q3 2009.

But by improving its year-over-year profit in nominal Q4 2009 over Q4 2008 by 155.4 million dollars, Autodesk takes that medal easily.

All four reporting vendors improved their profit amounts sequentially and year-over-year.

* Note: ESI Group reported a loss of 0.8 million euros for the six month period ending July 31, 2009, on 31.2 million euros of revenue.

Details on Individual G5 Vendors' Q4 2009 Performances

On February 25, 2010 ANSYS, Inc. (NASDAQ: ANSS) reported its fiscal fourth quarter and full year 2009 results, the periods ending December 31, 2009. (ANSYS was the last member of the G5 to report its financial results for 2009 (February 25, 2010)).

Comparing quarterly results, the company achieved total revenue of $150 million Q4 2009, some 11% higher than the $135 million in Q4 2008, and 17% higher than the sequential $128 million in Q3 2009. The $150 million in Q4 revenue was some 6% above the top of the range given as Q4 guidance last quarter.

On the earnings front, ANSYS generated net income of $37.6 million in Q4 2009, 18% more than the net income of $31.9 million in Q4 2008 and 23% more than the sequential $30.5 million in Q3 2009.

These earnings figures produced GAAP diluted earnings per share of $0.41 in Q4 2009, as compared to $0.34 in Q4 2008 and $0.33 in Q3 2009.

For the entire 12 months of 2009, ANSYS grew revenue to $517 million, or a modest 8% more than the $478 million recognized in 2008. The $517 million for the year was ~2% above the top of the forecast range given as guidance just three months ago.

GAAP net income for the 2009 year was $116 million in 2009, only 4% more than the $112 million in 2008. This resulted in GAAP diluted earnings per share of $1.27 for the entire year 2009; in fact 2 cents lower than the GAAP diluted earnings per share of $1.29 for the 2008 year.

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