CIMdata PLM Industry Summary Online Archive

6 November 2007

Financial News

MSC.Software Reports Financial Results for the Third Quarter Ended September 30, 2007

MSC.Software Corporation reported results for the third quarter ended September 30, 2007.

REVENUE

Total revenue for the third quarter ended September 30, 2007 was $57.2 million compared to $58.4 million for the third quarter last year. Software revenue for the third quarter totaled $19.9 million compared to $22.7 million for the third quarter last year. For the third quarter ended September 30, 2007, maintenance revenue totaled $31.6 million and services revenue totaled $5.7 million, compared to $28.9 million of maintenance revenue and $6.8 million of services revenue for the third quarter last year.

Total revenue for the nine months ended September 30, 2007 was $175.6 million compared to $193.7 million for the nine month period last year. Software revenue for the nine months totaled $65.9 million compared to $83.3 million for the nine month period last year. For the nine months ended September 30, 2007 maintenance revenue totaled $92.3 million and services revenue totaled $17.4 million, compared to $85.7 million of maintenance revenue and $24.7 million of services revenue for the nine month period last year. The 2006 nine month period included $2.4 million of non-recurring PLM revenue.

"The strategic product transition to simulation enterprise solutions is a journey for both MSC.Software and our customers," said Bill Weyand, CEO and Chairman of MSC.Software. "Recent successful enterprise transactions with industry leaders including Airbus and Audi indicate that we are making progress with this product transition."

"During the month of October, we held our Virtual Product Development Conferences throughout all world regions, where we saw a record number of registrations and attendance was notably higher than last year. We believe this is an indication that our customers continue to see great value in all of our simulation product solutions," continued Mr. Weyand.

"We believe we are seeing certain positive signs in our business activities, both with our new enterprise solutions and our software tools, and had a number of key wins in both categories in the third quarter with customers including Spirit Aerospace, Northrop Grumman and Bombardier in the Americas, Honda R&D and Mahindra Engineering in Asia Pacific, and Airbus, Audi and Eurocopter in Europe."

REVENUE BY GEOGRAPHY

Total revenue in the Americas for the three and nine months ended September 30, 2007 was $17.6 million and $53.3 million respectively, compared to $17.1 million and $58.0 million for the same periods last year. Total revenue in EMEA for the three and nine months ended September 30, 2007 was $21.5 million and $65.9 million, respectively, compared to $23.1 million and $74.4 million for the same periods last year. Changes in the Euro dollar increased EMEA revenue during the three and nine months of 2007 by $1.5 million and $4.9 million, respectively. In the Asia Pacific region, revenue for the three and nine months of 2007 totaled $18.1 million and $56.4 million respectively, compared to $18.2 million and $61.3 million for the same periods in 2006. Changes in the Japanese Yen decreased Asia Pacific revenue during the three and nine months of 2007 by $0.3 million and $1.7 million, respectively. The decreases in total revenue in all world geographies generally reflect decreases in software revenue from the impacts of the transition from selling engineering tools to selling enterprise solutions to our major customers in certain key industries including automotive, aerospace and manufacturing industries, decreases in services revenue due to a de-emphasis on certain low value consulting engagements, partially offset by growth in maintenance revenue.

RESULTS OF OPERATIONS AND EPS

Total operating expenses for the three and nine months ended September 30, 2007 were $46.6 million and $151.9 million, respectively, compared to $48.9 million and $142.5 million for the same periods last year. Operating income for the three months ended September 30, 2007 was $87 thousand and for the nine month period was a loss of ($9.5) million, compared to an operating loss of ($2.3) million and operating income of $5.6 million for the same periods in 2006. The operating loss for the nine months ended September 30, 2007 included restructuring and impairment charges totaling $8.9 million.

For the three months ended September 30, 2007, loss from continuing operations totaled $122 thousand compared to loss from continuing operations of ($1.8) million or ($0.04) per diluted share for the third quarter last year. For the nine months ended September 30, 2007, loss from continuing operations totaled ($5.1) million or ($0.12) per diluted share, compared to income from continuing operations of $2.1 million or $0.06 per diluted share for the nine month period last year.

GUIDANCE

At this time the Company will not issue guidance. The Company will evaluate its decision to provide guidance in the future, as it continues to move through this transition period and visibility improves.

CONFERENCE CALL

The Company will host a conference call to discuss the third quarter financial results today at 7:00 am pacific (10:00 am eastern). An archived version of the audio conference call will be available until November 8, 2007 and can be accessed at: (800) 642-1687 using the conference ID code: 22241568. An archive of the conference call and slide presentation will also be available at http://www.mscsoftware.com/ir/ .

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