MatrixOne, Inc. Reports Third Quarter Operating Results
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MatrixOne, Inc. Reports Third Quarter Operating Results



WESTFORD, Mass.--(BUSINESS WIRE)--April 23, 2003--MatrixOne(R), Inc. (NASDAQ: MONE), a leading provider of collaborative Product Lifecycle Management (PLM) solutions for the value chain(TM), announced today results for its third quarter ended March 29, 2003.

For the third quarter ended March 29, 2003, total revenues were $24.0 million, compared to $32.6 million in the same period last year. For the third quarter ended March 29, 2003, net loss was $5.3 million, or $0.11 per share, compared to a net loss of $5.0 million, or $0.11 per share, in the same period last year. For the third quarter ended March 29, 2003, pro forma net loss(1), which excludes stock-based compensation, was $4.5 million, or $0.09 per share, compared to a pro forma net loss of $4.0 million, or $0.09 per share, in the same period last year.

For the nine months ended March 29, 2003, total revenues were $83.1 million, compared to $89.5 million in the same period last year. For the nine months ended March 29, 2003, net loss was $20.8 million, or $0.44 per share, compared to a net loss of $26.2 million, or $0.57 per share, in the same period last year. For the nine months ended March 29, 2003, pro forma net loss(1), which excludes stock-based compensation and restructuring charges, was $14.5 million, or $0.31 per share, compared to a pro forma net loss of $20.0 million, or $0.44 per share, in the same period last year.

"We were disappointed with our third quarter results which were adversely impacted by uncertain global economic conditions and overall sales execution," said Mark F. O'Connell, President and Chief Executive Officer of MatrixOne, Inc. "However, we made significant progress in reducing our operating expenses and winning key strategic accounts. We have taken decisive actions to improve overall sales management and effectiveness, and moving forward, we remain optimistic about our leadership position within the PLM market."

The following milestones were completed or announced since MatrixOne's second quarter earnings release on January 22, 2003:

-- During the third quarter, MatrixOne recognized revenue from a number of the world's most innovative companies, including CAE Inc., a global leader in providing advanced simulation and controls equipment; Celestica, a world leader in electronics manufacturing services; Motorola's Integrated Electronic Systems Sector, a global leader in integrated communications and embedded electronic solutions; Toshiba, a leading diversified manufacturer of advanced electronic and electrical products; and Yazaki, a leading supplier of vehicle power and data solutions to the automotive industry.
-- MatrixOne, together with its partners, launched a major initiative designed to educate the market about the power of Product Lifecycle Management (PLM) solutions. The MatrixOne PLM Seminar Series, co-sponsored by Sun Microsystems in major metropolitan areas across North America, offers perspectives from AMR Research, a leading industry analyst firm, as well as from various MatrixOne customers, including Agilent Technologies, John Deere and Procter & Gamble. The Company also launched "PLMLive," a web-based seminar series which provides participants with access to real-time insights into the results that global leaders in aerospace and defense, automotive, consumer products and high technology are realizing with PLM solutions from MatrixOne.
-- MatrixOne was positioned in the leader quadrant in Gartner, Inc.'s March 2003 "Product Lifecycle Management (PLM) Magic Quadrant" report. This positioning confirmed MatrixOne's flexible product offering, broad vision and strong track record of customer success working with world-class companies to create robust solutions for collaborative product development, global program management and supplier relationship management. The Gartner report defines companies positioned in the leader quadrant as companies that "score well on both completeness of vision and ability to execute."

Company to Host Live Webcast

The Company's management team will host a live webcast at 5:30 p.m. eastern time today to discuss the Company's financial results for the third quarter. The webcast, along with the third quarter earnings press release and accompanying financial and operating statistics, will be accessible from the Company's website at www.matrixone.com/investor.

(1)The Company uses the financial measure "pro forma net loss" to supplement its consolidated financial statements, which are presented in accordance with accounting principles generally accepted in the United States ("GAAP"). The presentation of pro forma net loss is not meant to be a substitute for "net loss" presented in accordance with GAAP but rather should be evaluated in conjunction with net loss. The Company's management believes that the presentation of pro forma net loss provides useful information to investors because this financial measure excludes stock-based compensation, which is a non-operational, non-cash charge, and restructuring charges, which are charges relating to an unusual and infrequent event. For the third quarter ended March 29, 2003 and March 30, 2002, pro forma net loss excludes stock-based compensation. For the nine months ended March 29, 2003 and March 30, 2002, pro forma net loss excludes stock-based compensation and restructuring charges. Management does not consider stock-based compensation and restructuring charges to be part of the Company's on-going operations or meaningful in evaluating the Company's past financial performance or future prospects. In addition, pro forma net loss is a primary financial indicator that the Company's management uses to evaluate the Company's financial results and forecast anticipated financial results for future periods. Stock-based compensation represents the difference between the stock option exercise price and the deemed fair value of the Company's common stock on the date of grant and relates only to the grant of certain stock options to employees during fiscal 2000 and 1999, which do not require cash settlement. Restructuring charges are material costs that were incurred relating to an unusual and infrequent event to align the Company's operations and cost structure with market conditions. The Company's definition of pro forma net loss may differ from similar measures used by other companies.

About MatrixOne

MatrixOne, Inc. (NASDAQ: MONE) is a recognized leader in delivering collaborative Product Lifecycle Management (PLM) solutions. We provide flexible solutions that unleash the creative power of global value chains to inspire innovations and speed them to market. MatrixOne's customers include global leaders in the aerospace and defense, automotive, consumer products, high technology, life sciences, machinery, and the process industries, including Agilent Technologies, General Electric, Honda, Johnson Controls, Philips, Procter & Gamble, Siemens, and Toshiba. MatrixOne ( www.matrixone.com) is headquartered in Westford, Massachusetts with locations throughout North America, Europe, and Asia/Pacific.

MatrixOne and eMatrix are registered trademarks, and a leading provider of collaborative Product Lifecycle Management (PLM) solutions for the value chain is a trademark of MatrixOne, Inc. All other trademarks and service marks are the property of their respective owners.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Forward-looking statements in this release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. We caution you not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Such statements may relate, among other things, to our growth and profitability prospects, our ability to improve our sales management and effectiveness, our position in the market, our ability to respond to economic changes and improve operational efficiency, the benefits of our products to be realized by our customers, or our plans and objectives. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances or using words such as: will, believe, anticipate, expect, could, may, estimate, project, plan, predict, or intend. The risks and uncertainties that may affect forward-looking statements include, among others: our history of losses and our ability to achieve or maintain profitability; the weak worldwide economic conditions may result in decreased revenues, increased customer credit risk, and higher net losses; the effectiveness of our cost reduction programs; the market may not accept our products; our sales cycle is lengthy and variable; we may be unable to develop new products and services that keep pace with technology; we may be unable to develop and maintain successful relationships with systems integrators and complementary technology vendors; our international operations are subject to additional business risks; future acquisitions may adversely affect our operations and financial results; and increased competition may have an adverse effect on pricing, revenues, gross margins and our customer base. For a more detailed discussion of the risks and uncertainties of our business, please refer to our periodic reports and registration statements filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended June 29, 2002 and our Quarterly Report on Form 10-Q for the quarter ended December 28, 2002.



                            MATRIXONE, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)

                         Three Months Ended       Nine Months Ended
                       ----------------------- -----------------------
                        March 29,   March 30,   March 29,   March 30,
                          2003        2002        2003        2002
                       ----------- ----------- ----------- -----------
                       (unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
  Software license         $7,153     $13,083     $31,954     $33,410
  Service                  16,848      19,501      51,189      56,043
                       ----------- ----------- ----------- -----------
  Total revenues           24,001      32,584      83,143      89,453
                       ----------- ----------- ----------- -----------
Cost of Revenues:
  Software license          1,265       1,739       3,778       4,038
  Service                  10,830      13,724      35,408      41,988
                       ----------- ----------- ----------- -----------
  Total cost of
   revenues                12,095      15,463      39,186      46,026
                       ----------- ----------- ----------- -----------
Gross Profit               11,906      17,121      43,957      43,427
                       ----------- ----------- ----------- -----------
Operating Expenses:
  Selling and marketing     8,389      12,204      32,667      38,580
  Research and
   development              5,972       6,227      19,203      18,397
  General and
   administrative           2,581       3,309       8,161       9,269
  Stock-based
   compensation               782         983       2,477       2,944
  Restructuring charges        --          --       3,800       3,202
                       ----------- ----------- ----------- -----------
  Total operating
   expenses                17,724      22,723      66,308      72,392
                       ----------- ----------- ----------- -----------
Loss from Operations       (5,818)     (5,602)    (22,351)    (28,965)
Other Income, Net             550         596       1,557       2,799
                       ----------- ----------- ----------- -----------
Net Loss                  $(5,268)    $(5,006)   $(20,794)   $(26,166)
                       =========== =========== =========== ===========

Basic and Diluted Net
 Loss Per Share            $(0.11)     $(0.11)     $(0.44)     $(0.57)
                       =========== =========== =========== ===========

Shares Used in
 Computing Basic and
 Diluted Net Loss per
 Share                     47,681      46,462      47,402      45,890
                       =========== =========== =========== ===========

Reconciliation of 
 Pro Forma Net Loss(1):
Net Loss                  $(5,268)    $(5,006)   $(20,794)   $(26,166)
Adjustments:
  Stock-based compensation    782         983       2,477       2,944
  Restructuring charges        --          --       3,800       3,202
                       ----------- ----------- ----------- -----------
Pro Forma Net Loss(1)     $(4,486)    $(4,023)   $(14,517)   $(20,020)
                       =========== =========== =========== ===========

Pro Forma Basic and 
 Diluted Net
 Loss Per Share           $ (0.09)    $ (0.09)    $ (0.31)    $ (0.44)
                       =========== =========== =========== ===========

Shares Used in Computing 
 Pro Forma Basic and 
 Diluted Net Loss 
 Per Share                 47,681      46,462      47,402      45,890
                       =========== =========== =========== ===========


(1)The Company uses the financial measure "pro forma net loss" to supplement its consolidated financial statements, which are presented in accordance with accounting principles generally accepted in the United States ("GAAP"). The presentation of pro forma net loss is not meant to be a substitute for "net loss" presented in accordance with GAAP but rather should be evaluated in conjunction with net loss. The Company's management believes that the presentation of pro forma net loss provides useful information to investors because this financial measure excludes stock-based compensation, which is a non-operational, non-cash charge, and restructuring charges, which are charges relating to an unusual and infrequent event. For the third quarter ended March 29, 2003 and March 30, 2002, pro forma net loss excludes stock-based compensation. For the nine months ended March 29, 2003 and March 30, 2002, pro forma net loss excludes stock-based compensation and restructuring charges. Management does not consider stock-based compensation and restructuring charges to be part of the Company's on-going operations or meaningful in evaluating the Company's past financial performance or future prospects. In addition, pro forma net loss is a primary financial indicator that the Company's management uses to evaluate the Company's financial results and forecast anticipated financial results for future periods. Stock-based compensation represents the difference between the stock option exercise price and the deemed fair value of the Company's common stock on the date of grant and relates only to the grant of certain stock options to employees during fiscal 2000 and 1999, which do not require cash settlement. Restructuring charges are material costs that were incurred relating to an unusual and infrequent event to align the Company's operations and cost structure with market conditions. The Company's definition of pro forma net loss may differ from similar measures used by other companies.





                            MATRIXONE, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                                  March 29,  June 29,
                                                    2003       2002
                                                 ----------- ---------
                                                 (unaudited)
                     ASSETS

Current Assets:
  Cash and equivalents                             $129,868  $139,642
  Accounts receivable, net                           23,498    35,794
  Prepaid expenses and other current assets           7,555     8,039
                                                 ----------- ---------
     Total current assets                           160,921   183,475
Property and Equipment, Net                          12,717    14,784
Other Assets                                          2,422     2,689
                                                 ----------- ---------
                                                   $176,060  $200,948
                                                 =========== =========


      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable                                   $8,111   $10,583
  Accrued expenses                                   17,328    20,663
  Deferred revenues                                  19,440    20,612
                                                 ----------- ---------
     Total current liabilities                       44,879    51,858
                                                 ----------- ---------
Stockholders' Equity:
  Common stock                                          475       470
  Additional paid-in capital                        210,481   210,788
  Deferred stock-based consideration                 (1,291)   (3,898)
  Accumulated deficit                               (79,479)  (58,685)
  Accumulated other comprehensive income                995       415
                                                 ----------- ---------
     Total stockholders' equity                     131,181   149,090
                                                 ----------- ---------
                                                   $176,060  $200,948
                                                 =========== =========


CONTACT: Investor Relations
             MatrixOne, Inc.
             Brian Norris, 978-589-4040
             
Email Contact
             or
             Public Relations
             MatrixOne, Inc.
             Charlie Guyer, 978-589-4052
             
Email Contact