SANTA ANA, Calif., Nov. 4, 2008 (GLOBE NEWSWIRE) -- 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, 2008. Financial highlights include the following:
HIGHLIGHTS Quarter ended September 30, 2008: * Total revenue of $63.7 million, an increase of 11% over the third quarter last year, * Software revenue of $21.5 million, an increase of 8% over the third quarter last year, * Maintenance revenue of $34.6 million, an increase of 9% over the third quarter last year, * Services revenue of $7.6 million, an increase of 33% over third quarter last year, * Net income of $2.3 million, and EPS of $0.05 per share. Nine Months ended September 30, 2008: * Total revenue of $189.4 million, an increase of 8% over the same period last year, * Maintenance revenue of $103.6 million, an increase of 12% versus the same period last year, * Deferred revenue at September 30, 2008 of $77.2 million, and * Cash and Investments at September 30, 2008 of $154.2 million.
REVENUE
Total revenue for the third quarter ended September 30, 2008 was $63.7 million compared with $57.2 million for the third quarter in 2007. Software revenue for the third quarter of 2008 totaled $21.5 million compared with $19.9 million for the third quarter in 2007. Maintenance revenue totaled $34.6 million and services revenue totaled $7.6 million for the 2008 third quarter, compared with $31.6 million of maintenance revenue and $5.7 million of services revenue for the 2007 third quarter. Foreign exchange favorably impacted total revenue by $4.6 million in the 2008 third quarter.
Total revenue for the nine months ended September 30, 2008 was $189.4 million compared with $175.6 million for the nine month period in 2007. Software revenue totaled $64.6 million in 2008 compared with $65.9 million in 2007. Maintenance revenue totaled $103.6 million and services revenue totaled $21.2 million for the first nine months of 2008, compared with $92.3 million of maintenance revenue and $17.4 million of services revenue for the nine months in 2007. Foreign exchange favorably impacted total revenue by $15.7 million in the nine months ended September 30, 2008.
"Revenue growth of 11% in the third quarter indicates better acceptance of our business across both SimEnterprise and MD solutions, as well as increases in maintenance revenue and services activities," said Bill Weyand, CEO and Chairman of MSC.Software. "With our enterprise solutions being deployed under multi-phase, multi-year implementation programs, we believe this can provide a good base of business for us going forward."
"While we are mindful of the global macroeconomic environment, we believe a number of important factors will allow MSC to weather this storm," said Bill Weyand, CEO and Chairman of MSC.Software. "As a software company with more than 45 years serving the aerospace and automotive industries, we have seen these cycles before and we know how our customers behave. We believe they will look at their internal processes to improve productivity by reducing physical prototype testing in order to save costs, speed time to market and accelerate product innovation. However, we believe that a prolonged economic downturn could adversely impact our customers, IT spending patterns, and thereby our business as well."
"SimEnterprise releases in the third quarter are enhanced with features that address industry specific requirements related to a number of simulation technologies including composites, advanced materials, collaboration and multi-discipline analysis. In addition these releases have features designed to support and demonstrate the value of SimEnterprise in new industries such as packaging and consumer goods," continued Mr. Weyand.
REVENUE BY GEOGRAPHY
Total revenue in the Americas for the third quarter and nine months ended September 30, 2008 was $20.3 million and $59.0 million, respectively, compared with $17.6 million and $53.2 million last year. Total revenue in EMEA for the third quarter and nine months ended September 30, 2008 was $25.3 million and $73.6 million, respectively, compared with $21.5 million and $65.9 million last year. Changes in the Euro increased EMEA revenue by $2.6 million in the quarter and $9.0 million in the nine month period. In the Asia region, revenue for the third quarter and nine months ended September 30, 2008 totaled $18.1 million and $56.8 million, respectively, compared with $18.1 million and $56.4 million last year. Changes in the Japanese Yen increased Asia revenue by $2.0 million in the quarter and $6.7 million in the nine months.
RESULTS OF OPERATIONS AND EPS
Total operating expenses for the third quarter ended September 30, 2008 were $48.1 million, compared with $46.3 million last year. Foreign currency impacts increased total operating expenses by $1.9 million in the third quarter of 2008. Operating income for the third quarter was $3.0 million, which compares with operating income of $0.4 million in the third quarter last year. This quarter's operating expenses included $1.1 million of restructuring and other charges and the third quarter last year included $0.8 million of restructuring and other charges. Income from continuing operations for the quarter totaled $2.3 million or $0.05 per diluted share, compared with $0.1 million in the third quarter last year.
Total operating expenses for the nine months ended September 30, 2008 were $154.3 million, compared with $151.6 million last year. Foreign currency impacts increased total operating expenses by $7.6 million in the nine month period of 2008. The operating loss for the nine month period was $1.8 million, compared with an operating loss of $9.1 million in the nine month period last year. The operating loss for the first nine months of 2008 included $2.0 million of restructuring charges and for the nine month period ended September 30, 2007 included $8.6 million of restructuring and other charges. Net income from continuing operations for the nine months totaled $1.2 million or $0.03 per diluted share, compared with a loss of $4.9 million or ($0.11) per diluted share in the nine months last year.
CONFERENCE CALL
The Company will host a conference call to discuss the third quarter financial results today at 8:00 am pacific (11:00 am eastern). The third quarter conference call will include a slide presentation that can be downloaded at: http://www.mscsoftware.com/ir/. The conference call can be accessed by web cast at: http://www.mscsoftware.com/ir/ or by dialing in to (800) 374-0151 for U.S. callers or (706) 634-4981 for international callers. To participate in the live conference call, use the following conference ID code: 68570574.
An archived version of the conference call will be available at http://www.mscsoftware.com/ir/. The teleconference replay will be available for 48 hours and can be accessed by dialing in to: U.S. (800) 642-1687 or Intl. (706) 645-9291 using the conference ID code: 68570574.
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 1100 people in 23 countries. For additional information about MSC.Software's products and services, please visit 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, disruption and/or uncertainties in the worldwide economy, market acceptance of our products and new releases, the ability to manage relationships with key customers and suppliers, the financial conditions of our customers, and other factors discussed in "Risk Factors" on our 2007 Form 10-K and other subsequent Quarterly Reports on Form 10-Q, 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,
------------------ ------------------
2007 2008 2007 2008
------------------ ------------------
Revenue:
Software $ 19,874 $ 21,541 $ 65,859 $64,566
Maintenance 31,632 34,610 92,272 103,585
Services 5,681 7,583 17,443 21,234
------------------ ------------------
Total Revenue 57,187 63,734 175,574 189,385
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Cost of Revenue:
Software 2,173 2,636 7,692 7,818
Maintenance and Services 8,281 10,007 25,422 29,052
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Total Cost of Revenue 10,454 12,643 33,114 36,870
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Gross Profit 46,733 51,091 142,460 152,515
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Operating Expenses:
Research and Development 12,428 11,612 37,530 39,239
Selling and Marketing 20,242 20,129 59,662 67,398
General and Administrative 12,670 14,906 45,294 44,670
Amortization of Intangibles 177 337 522 1,010
Restructuring
and Other Charges 809 1,149 8,599 1,994
------------------ ------------------
Total Operating Expenses 46,326 48,133 151,607 154,311
------------------ ------------------
Operating Income (Loss) 407 2,958 (9,147) (1,796)
------------------ ------------------
Other (Income) Expense :
Interest Expense 300 271 873 814
Other (Income) Expense, net (1,834) 1,220 (2,464) (2,395)
------------------ ------------------
Total Other (Income)
Expense, net (1,534) 1,491 (1,591) (1,581)
------------------ ------------------
Income (Loss) From Continuing
Operations Before Provision
(Benefit) For Income Taxes 1,941 1,467 (7,556) (215)
Provision (Benefit)
For Income Taxes 1,879 (870) (2,660) (1,378)
------------------ ------------------
Income (Loss) From
Continuing Operations 62 2,337 (4,896) 1,163
------------------ ------------------
Income From Discontinued
Operations, net of
Income Taxes -- -- 1,046 --
------------------ ------------------
Net Income (Loss) $ 62 $ 2,337 $ (3,850) $ 1,163
================== ==================
Basic and Diluted Earnings
(Loss) Per Share From
Continuing Operations $ -- $ 0.05 $ (0.11) $ 0.03
Basic and Diluted Earnings Per
Share From
Discontinued Operations $ -- $ -- $ 0.02 $ --
Basic and Diluted Earnings
(Loss) Per Share $ -- $ 0.05 $ (0.09) $ 0.03
Basic Weighted-Average
Shares Outstanding 44,219 45,047 44,026 44,921
Diluted Weighted-Average
Shares Outstanding 45,050 45,696 44,026 45,592
PRELIMINARY
MSC.SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share value amounts)
Dec 31, Sept 30,
2007 2008
------------------
ASSETS
Cash and Investment $135,029 $154,243
Trade Accounts Receivable, less Allowance for
Doubtful Accounts of $1,855 and $1,671,
respectively 70,204 48,276
Property and Equipment, Net 18,900 15,865
Goodwill, Indefinite Lived & Other Intangibles 195,311 195,128
Other Assets 47,701 58,264
------------------
Total Assets $467,145 $471,776
==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deferred Revenue $ 80,584 $ 77,218
Long-Term Debt 6,936 6,351
Other Liabilities 60,215 56,997
------------------
Total Liabilities 147,735 140,566
------------------
------------------
Net Shareholders' Equity 319,410 331,210
------------------
------------------
Total Liabilities and Shareholders' Equity $467,145 $471,776
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