Press Release
MSC.Software Reports Third Quarter Results
SANTA ANA, Calif. - October 22, 2003 - MSC.Software Corp. (NYSE: MNS), the leading global provider of virtual product development (VPD) products including simulation software and services, today announced financial results for the third quarter ended September 30, 2003.
Third Quarter Highlights:
Reported revenue from continuing operations was $62.1 million versus revenue from continuing operations of $61.6 million in the third quarter last year.
Reported income from continuing operations was $1.4 million or $0.04 per diluted share compared to a loss from continuing operations of $4.2 million or ($0.14) per diluted share last year.
For the third quarter ended September 30, 2003, reported revenue from continuing operations was $62.1 million, compared to revenue from continuing operations of $61.6 million for the third quarter of 2002. For the third quarter ended September 30, 2003, reported income from continuing operations was $1.4 million or $0.04 per diluted share, compared to a loss from continuing operations of $4.2 million or ($0.14) per diluted share in the third quarter of 2002. During the third quarter of 2002, the Company recorded restructuring and impairment charges totaling $6.0 million. Income from continuing operations excluding these charges was $16,000 or $0.00 per diluted share.
For the nine months ended September 30, 2003, reported revenue from continuing operations was $183.9 million, compared to reported revenue from continuing operations of $175.6 million for the nine months of 2002, up 5%. For the nine months ended September 30, 2003, the reported loss from continuing operations was $3.5 million or ($0.12) per diluted share, compared to a reported loss from continuing operations of $14.0 million or ($0.48) per diluted share in the nine months of 2002. During the first nine months of 2002, the Company recorded restructuring and other impairment charges of $13.8 million, a write off associated with the acquired in-process R&D of $2.4 million and a change in accounting principle of $39.3 million. The loss from continuing operations excluding these charges was $3.0 million or ($0.10) per diluted share. During the first nine months of 2003, the Company recorded restructuring and other impairment charges of $5.0 million, and refinancing charges included in Other Expenses of $6.1 million. Income from continuing operations excluding these charges was $3.3 million or $0.11 per diluted share, for the first nine months of 2003.
The pro forma results discussed herein are a supplement to financial statements based on generally accepted accounting principles ("GAAP"). These pro forma results include adjustments for restructuring and other impairment charges, acquired in-process R&D, debt prepayment costs and a cumulative change in accounting. MSC.Software uses pro forma information to evaluate its on-going operating performance and believes this presentation provides investors with additional insight into its underlying operating results and business trends. A reconciliation between the pro forma and GAAP results is included in the accompanying financial data.
"The third quarter results are a confirmation that the refocused MSC.Software strategy is gaining momentum and turning opportunity into revenue," said Frank Perna, chairman and CEO of MSC.Software. "We recently completed our 2003 Virtual Product Development conference in Michigan and I can say without hesitation that our VPD message and product strategy rings loud and clear with our customers in North America and abroad. Our customers understand that, to be successful in product development, they must increase their use of VPD technologies and MSC.Software is the partner that can help them achieve their goals.
"We have undertaken a number of initiatives during the quarter, including providing new sales training for our worldwide staff and technical training for our support staff, that are making us a better solution selling organization and have enhanced the quality of our customer service. We have also made some significant strides in reducing our overhead costs related to facilities by combining offices, renegotiating leases and in some cases leasing office space to other companies.
"My recent interaction with customers and staff at our conference has reconfirmed my enthusiasm that we will continue to succeed in this tough market and will perform even better when the economy turns around. The breadth and depth of our software and services product portfolio uniquely positions us in the market, and we are confident we can continue this momentum into the fourth quarter and into 2004."
Americas
Software and services revenue in the Americas was $21 million, compared to $24 million in the third quarter last year. The total number of new accounts increased by 174 customers, and 19 software and services transactions greater than $100,000 were inked in the third quarter. Major software and services contracts were signed with Northrop-Grumman, Sandia and Boeing.
Europe
MSC.Software's European software and services revenue was $21 million, compared to $18 million in the third quarter last year. The total number of new accounts increased by 21 names. During the third quarter, 13 software and services transactions over $100,000 were signed in Europe. In the quarter, key software and services contracts were signed with GKN Westland, EADS-CASA, Nissan Technical Centre and Lotus Cars.
Asia-Pacific
Asia-Pacific software and services revenue was $21 million compared to $20 million in the third quarter last year. The region added 40 new account names in the quarter, and 26 software and services transactions over $100,000 were signed. Major contracts were completed with Nissan, Suzuki, Koito Manufacturing and Xi'an Aircraft.
Outlook
Based on current visibility, the Company expects fourth quarter revenue from continuing operations to be in the range of $65 million to $70 million and earnings to be in the range of $0.06 to $0.10 per diluted share. The Company expects revenue from continuing operations 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.
Conference Call
MSC.Software's conference call to discuss the third 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 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: 3335330.
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 1400 people in 23 countries. For additional information about MSC.Software's products and services, please visit 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)
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| Contact: Joanne Keates Vice President, Investor Relations MSC.Software 714.444.8551 joanne.keates@mscsoftware.com |
Contact: Catherine Meek Media Relations MSC.Software 714.445.5647 catherine.meek@mscsoftware.com |
