The MacNeal-Schwendler Corp. Reports Revenue for the First Quarter
28 April 1999
The MacNeal-Schwendler Corp. Reports Revenue for the First Quarter of $30.7 Million
LOS ANGELES--April 28, 1999--The MacNeal-Schwendler Corp. (MSC), the world's leading developer of simulation software, Wednesday reported first-quarter results.For the first quarter ended March 31, 1999, MSC reported revenue of $30.7 million and a net loss of $5.4 million, or a loss of 39 cents per share.
As previously announced, MSC changed its fiscal year-end and modified its revenue recognition policy beginning in the fourth quarter of calendar year 1998. If the new revenue recognition policy had been in place in the first quarter last year, MSC would have reported revenue of $27.3 million, compared with first-quarter 1999 results of $30.7 million, representing a revenue growth rate of 12 percent.
For the first quarter this year, MSC reported a net loss of $5.4 million, or a loss of 39 cents per share, compared with reported net income of $5.0 million, or 33 cents per share, in the first quarter last year. Included in the results for the first quarter ended March 31, 1999, were restructuring charges, before taxes, of approximately $6 million.
Excluding the restructuring charges, MSC would have reported a net loss for 1999's quarter of $1.3 million, or a loss of 10 cents per share. If the new revenue recognition policy had been in place for the first quarter last year, MSC would have reported a net loss of $1.3 million, or a loss of 10 cents per share, for 1998's first quarter.
In making this announcement, Frank Perna Jr., chairman and CEO of MSC, said: "The strategic business decisions we made to take advantage of new growth market opportunities proved a significant success in the first quarter. Revenue on a comparative basis grew by 12 percent, the first time in three years that MSC has achieved double-digit revenue growth."
This growth is attributed to successful contract renewals with key customers throughout the world, including General Motors, Lockheed Martin, Northrup Grumman and Ford in the Americas, and DaimlerChrysler Aerospace, Fiat, British Aerospace, Rolls Royce and GKN Westland in Europe. Although economic pressures continued in Asia, MSC did score key account wins in the tire/rubber industry at Toyo Rubber and Bridgestone.
"Over the past four months, MSC has truly been transformed into an organization positioned to take clear advantage of all rapidly changing and growing market possibilities," added Perna.
Strong performance for the company's core products continued in MSC's Mechanical Solutions division with 23 new accounts signing for MSC.NASTRAN in Europe. Strong sales of MSC.SuperModel, the shipment of MSC.FlightLoads and Dynamics and MSC.PATRAN Version 8.0 fueled growth in the company's base of large installations.
Management also cited growth from the completed acquisition of Knowledge Revolution and new Internet-based market initiatives as building momentum.
"In April, MSC.Working Knowledge leveraged its combination with MSC to deliver a new suite of products in the MSC.Working Model family," said Perna. "Combining the power of Working Model Motion with MSC's simulation technologies, these collaborative simulation tools for design engineers solidify MSC's position in the mid-range market."
During the first quarter, MSC.Working Knowledge signed Rand Technology as a worldwide distributor targeting the Pro/ENGINEER channel and expanding MSC's base of value-added resellers. The division also added new seat sales at Boeing, Westinghouse, Panasonic, Litton and IBM. In Asia, the division contributed by closing major sales at Mitsubishi and DaHeng Company in China.
In addition during the quarter, the company created a new division, MSC.Engineering-e.com, to focus on developing Web-related opportunities. The division has launched www.Engineering-e.com, an e-marketplace for engineers.
"We opened for business last week, with four `marts' featuring items and services that provide value for MSC's installed base of customers. During the coming months, Engineering-e.com will expand considerably with additional MSC product offerings and complementary products from industry-leading hardware and software partners to serve an expanding customer base with cost and time-saving solutions," said Perna.
MSC is the world's leading supplier of simulation software. MSC's products play a key role in the design of virtually every major automobile, aircraft and space vehicle. MSC products are supported by offices throughout the Americas, Europe and the Asia Pacific region. For additional information, visit www.macsch.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. Factors that 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; fluctuation in quarterly results; 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.
The MacNeal-Schwendler Corp.
Condensed Consolidated Statements of Income
(amounts in thousands, except for earnings per share; unaudited)
Three Months Ended
March 31,
1999 1998
REVENUE
Software Licenses $ 20,989 $ 28,639
Software Maintenance and Services 9,664 9,131
TOTAL REVENUE 30,653 37,770
OPERATING EXPENSES
Cost of Revenue 5,290 6,112
Goodwill Amortization 1,121 567
Research & Development 6,540 5,713
Selling, General & Administrative 17,903 17,154
Capitalized Software Costs, net (1,709) (3,467)
Amortization of Software Costs 1,950 3,312
Restructuring and other impairment charges 5,897 --
TOTAL OPERATING EXPENSE 36,992 29,391
OPERATING INCOME (LOSS) (6,339) 8,379
Other (Income) Expense, net 400 (259)
Debenture Interest 1,114 1,114
INCOME (LOSS) BEFORE TAXES (7,853) 7,524
PROVISION (BENEFIT) FOR INCOME TAXES (2,434) 2,558
NET INCOME (LOSS) $ (5,419) $ 4,966
BASIC EARNINGS (LOSS) PER SHARE $ (0.39) $ 0.36
DILUTED EARNINGS (LOSS) PER SHARE $ (0.39) $ 0.33
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 13,770 13,636
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 13,770 17,539
The MacNeal-Schwendler Corp.
Condensed Consolidated Statements of Income
Earnings Release Supplement
(amounts in thousands, except for earnings per share; unaudited)
Three Months Ended Three Months Ended
March 31, March 31,
1998 1998 1999 1999
Without
Restructuring
Reported Adjusted Reported Expense
REVENUE $ 37,770 $ 27,261(a) $ 30,653 $ 30,653
OPERATING EXPENSES
Cost of Revenue 6,112 5,161(a) 5,290 5,290
Goodwill Amortization 567 567 1,121 1,121
Research & Development 5,713 5,713 6,540 6,540
Selling, General &
Administrative 17,154 17,154 17,903 17,903
Software Costs, net of
Amortization (155) (155) 241 241
Restructuring and other
impairment charges -- -- 5,897 --
TOTAL OPERATING EXPENSE 29,391 28,440 36,992 31,095
Other (Income)
Expense, net 855 855 1,514 1,514
INCOME (LOSS)
BEFORE TAXES 7,524 (2,034) (7,853) (1,956)
PROVISION (BENEFIT)
FOR INCOME TAXES 2,558 (692) (2,434) (606)
NET INCOME (LOSS) $ 4,966 $ (1,342) $ (5,419) $ (1,350)
BASIC EARNINGS
(LOSS) PER SHARE $ 0.36 $ (0.10) $ (0.39) $ (0.10)
DILUTED EARNINGS
(LOSS) PER SHARE $ 0.33 $ (0.10) $ (0.39) $ (0.10)
BASIC WEIGHTED AVERAGE
SHARES OUTSTANDING 13,636 13,636 13,770 13,770
DILUTED WEIGHTED
AVERAGE SHARES
OUTSTANDING 17,539 13,636 13,770 13,770
(a) Modified to reflect estimates of revenue and cost of revenue as
if revenue was recognized consistently for Q1 1998 under SOP
98-9.
The MacNeal-Schwendler Corp.
Condensed Consolidated Balance Sheets
(amounts in thousands)
March 31, Dec. 31,
1999 1998
unaudited
ASSETS
CASH AND SHORT TERM INVESTMENTS $ 35,883 $ 27,303
TRADE-ACCOUNTS RECEIVABLE, NET 34,114 39,674
OTHER CURRENT ASSETS 16,473 14,154
TOTAL CURRENT ASSETS 86,470 81,131
NET PROPERTY & EQUIPMENT 8,148 8,895
NET GOODWILL AND OTHER INTANGIBLE ASSETS 22,896 23,996
NET CAPITALIZED SOFTWARE 21,193 21,034
OTHER ASSETS 3,725 3,773
TOTAL ASSETS $142,432 $138,829
LIABILITIES & SHAREHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES $ 59,408 $ 48,595
DEBENTURES 56,574 56,574
LINE OF CREDIT 10,800 10,800
DEFERRED TAXES 5,173 5,173
EQUITY 10,477 17,687
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $142,432 $138,829