MNS Msc.Software Corp

MSC.Software Reports First Quarter Financial Results SANTA ANA, Calif., April 28 /PRNewswire-FirstCall/ -- MSC.Software Corp. , the leading global provider of virtual product development (VPD) products including simulation software and services, today announced preliminary financial results for the first quarter ended March 31, 2004. First quarter highlights include: * Revenue of $68.1 million, up 11% from the first quarter of 2003; * Income from continuing operations of $2.8 million or $0.08 per diluted share. * Key balance sheet items include $57.2 million in cash and investments, and $80.4 million in deferred revenue. For the first quarter ended March 31, 2004, MSC.Software reported revenue of $68.1 million, compared to $61.4 million for the first quarter last year. Income from continuing operations for the first quarter was $2.8 million or $0.08 per diluted share compared to $1.8 million or $0.06 per diluted share in the first quarter last year. "The MSC.Software team around the world remains very focused on executing the plan for profitable revenue growth and the 11% topline growth in the first quarter speaks very loudly to their combined efforts," said Frank Perna, chairman and CEO, MSC.Software. "Our global sales force has completed more than 600 VPD Maturity Model (VPDMM) assessments to date and the customers who are involved in this process are finding tremendous value in the ability to benchmark their product development processes and attach defined return on investment analyses to increasing their level of product development maturity in specific disciplines. The combination of our VPDMM program, the depth and breadth of our product portfolio and the flexibility of our MasterKey licensing system continues to be a competitive differentiator and a definite revenue driver." "We are also continuing to see growth opportunities in new markets like biomedical, electromechanical and consumer products. While these markets are relatively small sources of revenue today, we are laying a solid foundation in new vertical markets with new customer relationships that should bolster future growth." "Development of the Simulation Office product suite continues to be on track and we are rolling out the plan and messaging to the MSC.Software team in the second quarter and to customers in the third quarter. The Simulation Office strategy is the natural evolution of our software product portfolio and is a clear path to increased interoperability, scalability and ease of use within our product suite, and is complemented by our SimDesigner product line. The acquisition of SOFY and the integration of its technology within the MSC.Software product suite also fits well with this strategy." "While revenue results for Asia-Pacific and Europe were quite strong, we continue to work very hard to overcome the difficult enterprise software environment in the Americas. The combination of pricing pressures and a generally difficult environment for software purchases has contributed to a decline in our revenue in the Americas. However, we have seen an encouraging trend from both new sales of MasterKey token licenses as well incremental investments in more tokens from existing customers and we feel that this positions us well for growth in our software business for the long term." Americas In the Americas, revenue in the first quarter was $19.6 million down 15% compared to the first quarter last year. In the first quarter, 26 transactions over $100,000 were signed, and the total number of new accounts increased by 138. Key software and service transactions signed in the quarter included Boeing, Delphi, Ford and Polaris. Europe MSC.Software's European revenue was $24.9 million in the first quarter compared to $18.9 million in the first quarter last year, growing 32%. Growth in local currencies was 13%. In the first quarter, the total number of new accounts increased by 31 and the number of transactions over $100,000 totaled 61. Key software and service engagements were signed with BAE, Ferrari, FIAT and MTU. Asia-Pacific The Asia-Pacific region reported revenue of $23.6 million in the first quarter compared to $19.5 million in the first quarter last year for a growth rate of 21%, growth in local currencies was 10%. In the first quarter, the total number of new customer accounts increased by 70. In the first quarter 41 transactions over $100,000 were signed in the region. Key software and service contracts were signed with Toyota, HanJin Heavy Industries, Shenyang Engineering, Olympus and Subros in India. Outlook Based on current visibility, the Company expects second quarter revenue to be in the range of $65 million to $70 million and earnings to be in the range of $0.06 to $0.08 per diluted share. The Company expects revenue for FY 2004 to be in the range of $260 million to $280 million and earnings to be in the range of $0.35 to $0.45 per diluted share. Note on Status of Independent Review and Filing of Forms 10-K and 10-Q As reported in an earlier press release dated March 30, 2004, the Company has delayed the filing of its Form 10-K pending an independent review by outside counsel of certain claims made regarding information relating to the accounting for stock options of a departing employee of a foreign subsidiary. The initial phases of this review have been completed, and as soon as possible after this review is completed, MSC.Software will file its Form 10-K. The company's Form 10-Q for the period ended March 31, 2004 will not be filed until the Form 10-K for the year ended December 31, 2003 is filed. The first quarter results are preliminary and are subject to final review by MSC.Software's independent auditors. Conference Call MSC.Software's conference call to discuss the preliminary first quarter results will be Webcast live today at 8:30 a.m. Pacific (11:30 am Eastern) and can be accessed from the Company's website at http://www.mscsoftware.com/ir. It can also be accessed through the following dial-in numbers: US - (800) 374-0151 or Intl. - (706) 634-4981. An archived version of the conference call will also be available at the Company's website. Upon completion of the conference call, a conference call replay will also be available for 48 hours at: US - (800) 642-1687 or Intl. - (706) 645-9291 using the conference ID code: 6960196. About MSC.Software Corporation MSC.Software (NYSE:MNS) is the leading global provider of virtual product development (VPD) products including simulation software and services that help 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 1300 people in 22 countries. For additional information about MSC.Software's products and services, please visit http://www.mscsoftware.com/. Except for the historical information contained herein, certain matters discussed in this news release constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Other factors which could cause such results to differ materially from those described in the forward-looking statements include delays in developing, completing, or shipping new or enhanced products, the ability to assimilate acquisitions into MSC's operations, foreign currency translations, and other risks and uncertainties that are detailed in the Company's annual report on Form 10-K and other reports filed by the Company with the Securities and Exchange Commission. (Financial Tables Follow) MSC.SOFTWARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Amounts in Thousands, Except Per Share Amounts) Three Months Ended March 31, 2004 2003 REVENUE: Software $40,651 $36,897 Services 27,413 24,481 Total Revenue 68,064 61,378 COST OF REVENUE: Software 6,764 3,721 Services 14,363 13,381 Total Cost of Revenue 21,127 17,102 GROSS PROFIT 46,937 44,276 OPERATING EXPENSE: Research and Development 6,361 7,248 Selling, General and Administrative 34,784 30,320 Write-Off of Acquired In- Process R&D 338 -- Amortization of Intangibles 1,542 1,901 Total Operating Expense 43,025 39,469 OPERATING INCOME 3,912 4,807 OTHER EXPENSE Interest Expense 1,161 1,952 Other Expense (Income), Net (1,598) (25) Total Other Expense, Net (437) 1,927 INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES 4,349 2,880 Provision for Income Taxes 1,565 1,042 INCOME FROM CONTINUING OPERATIONS 2,784 1,838 DISCONTINUED OPERATIONS Loss from Discontinued Operations, Net of Tax -- (704) Loss from Disposal of Discontinued Operations, Net of Tax -- -- TOTAL LOSS FROM DISCONTINUED OPERATIONS -- (704) NET INCOME $2,784 $1,134 BASIC EARNINGS PER SHARE FROM CONTINUING OPERATIONS $0.09 $0.06 DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $0.08 $0.06 BASIC LOSS PER SHARE FROM DISCONTINUED OPERATIONS $0.00 $(0.02) DILUTED LOSS PER SHARE FROM DISCONTINUED OPERATIONS $0.00 $(0.02) BASIC EARNINGS PER SHARE $0.09 $0.04 DILUTED EARNINGS PER SHARE $0.08 $0.04 Basic Weighted-Average Shares Outstanding 30,480 29,827 Diluted Weighted-Average Shares Outstanding 42,803 30,366 MSC.SOFTWARE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Amounts in Thousands) March 31, December 31, 2004 2003 ASSETS Cash and Investments $57,200 $48,534 Trade Accounts Receivable, Net 73,903 73,691 Current Assets of Discontinued Operations 155 384 Other Current Assets 43,608 43,800 Total Current Assets 174,866 166,409 Property and Equipment, Net 28,545 30,169 Capitalized Software Costs, Net 29,959 29,147 Goodwill and Other Intangible Assets, Net 241,594 237,570 Other Assets 22,851 22,735 Total Assets $497,815 $486,030 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts Payable $9,962 $11,065 Deferred Revenue 80,395 69,495 Restructuring Reserve 463 1,229 Current Liabilities of Discontinued Operations 2,699 3,330 Other Current Liabilities 32,689 34,581 Total Current Liabilities 126,208 119,700 Deferred Income Taxes 21,630 21,832 Notes Payable to Shareholders 3,467 4,677 Subordinated Convertible Debentures 100,000 100,000 Subordinated Notes Payable, Less Current Portion 7,060 7,015 Other Long-Term Liabilities 8,665 8,408 Total Liabilities 267,030 261,632 Total Shareholders' Equity 230,785 224,398 Total Liabilities and Shareholders' Equity $497,815 $486,030 DATASOURCE: MSC.Software Corp. CONTACT: Investors, Joanne Keates, Vice President, Investor Relations, +1-714-444-8551, , or Media, Todd Evans, Corporate Communications, +1-714-445-3066, , both of MSC.Software Corp. Web site: http://www.mscsoftware.com/ir Web site: http://www.mscsoftware.com/

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