SDRC Reports Record $403 Million Year
27 January 1999
SDRC Reports Record $403 Million Year; Fourth Quarter Revenue Up 21%
CINCINNATI--Jan. 26, 1999--SDRC , a leading global supplier of enterprise product development solutions and developer of I-DEAS(TM) and Metaphase(R) Enterprise(TM) software, today reported revenues totaling $115.0 million for the quarter ended December 31, 1998, a 21% increase over the same quarter last year. Excluding a non-recurring charge of $3.2 million related to the acquisition of Imageware Corporation of Ann Arbor, Michigan, net income was $13.1 million, or $0.35 per share, compared to $16.2 million, or $0.45 per share, last year.SDRC's best revenue quarter ever was driven by a 124% increase in Metaphase license revenue, including orders exceeding $1 million each from Ethicon Endo Surgery, Ford Motor Company, Nissan, Rolls Royce, LG, and Lockheed Martin, among others, and Metaphase orders exceeding $0.5 million each from Renault, Daimler-Benz AG, and ABB PTI AG. Significant I-DEAS license orders were received from Nissan, Trico, Renault, Minster Machine, BTR-AVS, Cards Engineering, ABB, Toshiba Corporation, and Hughes Space & Communications. Newly consolidated Imageware Corporation contributed over $2 million to revenue in the quarter, including a $0.5 million order from auto parts supplier Magna Decoma.
For the year ended December 31, 1998, SDRC's revenue was $403.0 million, up 15% compared to last year. Revenues grew in all geographic areas. Net income was $38.9 million, or $1.02 per share, excluding the non-recurring charge related to the Imageware acquisition, compared to $48.9 million, or $1.32 per share, excluding a non-recurring charge related to the acquisition of Metaphase Technology Inc. in 1997.
"As forecast, SDRC's total revenue growth accelerated in the second half of 1998, virtually doubling from 10% in the first six months of the year to over 19% for the six months just ended," according to Bill Weyand, Chairman, President and CEO. "SDRC has successfully completed its transition to a solutions oriented Company, significantly improved its business execution, and is now accelerating its growth rates in existing as well as new markets. We've passed a milestone with $400 million in revenue for 1998 and look forward to quickly surpassing a $500 million run rate while improving our profit margins."
Revenues from Metaphase licenses and services grew 31% over 1997 and accounted for 24% of total revenue. I-DEAS licenses and services revenues grew about 11%. Geographically, European operations continued to lead our sales growth for the year, up 29%, while Asian revenue increased 19% in a challenging environment. "It appears that our sales execution issues in our Americas region have been resolved," said Weyand, "with Americas revenue growth improving to 16% for the last six months compared to a 7% decline in the first half of 1998."
SDRC continued to invest significantly in its complete product suite in 1998, spending over $133 million on product development, acquisitions, and enhancements. SDRC acquired Imageware Corporation, the emerging leader of Class 1 surfacing software, in the quarter just ended. Imageware Surfacer(TM) was awarded top prize in the Software category at the EuroMold '98 International Trade Show held in December at Frankfurt, Germany. Earlier in the year, SDRC's I-DEAS software with VGX(TM) technology was awarded "Best Product of the Year" by Design News magazine at the National Design Engineering Show (NDES).
SDRC's I-DEAS Master Series 7, expected to be delivered in the second quarter of 1999, promises to leverage its award winning VGX technology and market-leading surfacing tools to enable complex, 3D associations to be developed between highly styled industrial design surfaces and supporting structural geometry. When combined with extensive new functionality in its CAM products, I-DEAS Master Series 7 will deliver complete art to part development solutions to serve the automotive, electronics, aerospace, and industrial equipment industries. Web access to 2D and 3D engineering data, leveraging standard formats via web navigation tools, will facilitate product information distribution. New capabilities to quickly assess multiple design variables against required performance criteria dramatically reduce total process time, while enabling digital prototypes to impact concept product design.
For its market-leading Metaphase solution, SDRC acquired the Rapid Information Presentation Services (RIPS) software product from Altris Software which led to the introduction in October of Metaphase Document Manager (MetaDM(TM)). MetaDM revenue has exceeded early expectations, with orders already received from Visteon ($1.8 million), Ethicon Endo Surgery ($0.7 million), and General Instruments ($0.4 million). In the fourth quarter of 1998, Metaphase and Engineering Animation, Inc. announced their joint cooperation to design Metaphase Virtual Product Development Manager (MetaVPDM(TM)) scheduled for production release in the first quarter of 1999.
Among the highlights on the Balance Sheet as of December 31, 1998, cash and marketable securities totaled $122.3 million with no debt, compared to $109.0 million at last year end. Major cash outlays in the quarter included the acquisition of Imageware Corporation for $31.0 million and the acquisition of 924,500 shares of the Company's common stock for $16.0 million under the terms of the Company's share repurchase plan adopted September 16, 1998. Days sales outstanding at year end were 72, an improvement from 84 at the end of 1997.
SDRC (Structural Dynamics Research Corporation) is one of the world's leading providers of Enterprise Product Development Solutions through its suite of Mechanical Design Automation software, Information and Product Data Management software, and related consulting and engineering services. The Company's products and services help manufacturers improve innovation and optimize the product development process, enabling them to reduce product cost and cycle time while significantly improving quality and time to market. SDRC employs more than 2,400 people and has 75 offices in 17 countries throughout The Americas, Europe, and Asia/Pacific. SDRC's market-leading PDM solution, Metaphase Enterprise, is developed, marketed and supported by the Metaphase Technology Division of SDRC.
Except for historical information contained herein, the matters discussed in this news release may include forward-looking statements that involve risks and uncertainties. SDRC cautions that the actual results could differ materially from these statements depending upon a number of important factors described at length in our publicly-filed documents with the SEC, including the 10-K and 10-Q.
SDRC - CONSOLIDATED STATEMENT OF INCOME
(000, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------- ------------------
(unaudited)
1998 1997 1998 1997
-------- -------- -------- --------
Revenue:
Licenses $ 51,822 $ 46,903 $175,137 $170,727
Maintenance and services 63,130 48,139 227,888 180,595
-------- -------- -------- --------
Total revenue 114,952 95,042 403,025 351,322
Cost of revenue 41,893 31,304 155,936 120,444
-------- -------- -------- --------
Gross profit 73,059 63,738 247,089 230,878
Operating expenses:
Selling and marketing 34,555 30,690 119,204 105,756
Research and development 14,802 10,803 64,182 49,415
General and administrative 4,851 4,899 18,038 17,798
Purchased in-process research
and development 3,230 0 3,230 20,850
-------- -------- -------- --------
Total operating expenses 57,438 46,392 204,654 193,819
-------- -------- -------- --------
Operating income 15,621 17,346 42,435 37,059
Equity in earnings (loss)
of affiliates 0 (119) 211 (39)
Other income 1,957 1,728 12,577 4,519
-------- -------- -------- --------
Income before income taxes 17,578 18,955 55,223 41,539
Income tax expense 7,685 2,143 19,551 11,509
-------- -------- -------- --------
Net income $ 9,893 16,812 $ 35,672 30,030
-------- -------- -------- --------
Proforma: (a)
Income tax expense 2,714 13,443
-------- --------
Net income $ 16,241 $ 28,096
-------- --------
Net income per share (b) $ .26 $ .45 $ .93 $ .76
Common and common
equivalent shares 37,545 36,461 38,290 36,947
(a) Reflects the tax expense that would have been reported if CASE
(an S corporation for income tax reporting purposes) had been a
C corporation.
(b) $.35, $.45, $1.02, $1.32 - excluding purchased in-process R&D.
SDRC - CONSOLIDATED BALANCE SHEET
(000 omitted)
December 31,
-------------------
1998 1997
-------- --------
Assets:
Cash and cash equivalents $100,581 $ 81,056
Marketable securities 11,787 13,030
Trade accounts receivable 92,169 88,954
Other accounts receivable 8,956 17,815
Prepaid expenses 12,102 9,082
-------- --------
Total current assets 225,595 209,937
Marketable securities 9,937 14,925
Property and equipment, net 25,674 24,627
Marketable software costs, net 36,237 31,610
Other assets 43,311 12,097
-------- --------
Total assets $340,754 $293,196
-------- --------
-------- --------
Liabilities and shareholders' equity:
Current liabilities $117,108 $107,608
Other long-term liabilities 7,872 7,751
Shareholders' equity 215,774 177,837
-------- --------
Total liabilities and
shareholders' equity $340,754 $293,196
http://www.metaphasetech.com/ http://www.sdrc.com/
Note to Editors: SDRC and Metaphase are registered trademarks and Metaphase Enterprise, Metaphase Enterprise Solution Series, MetaVPDM, MetaDM, Imageware, and Imageware Surfacer are trademarks of Structural Dynamics Research Corporation. All other trademarks or registered trademarks belong to their respective holders.