MSC.Software Reports Revenue Growth of 30% in the Second Quarter
26 July 2000
Record Second Quarter Revenue Results, With EPS Up 250%
LOS ANGELES & COSTA MESA, Calif. - MSC.Software Corporation, the world's leading developer of simulation software, today announced financial results for the second quarter and six months ended June 30, 2000.For the second quarter ended June 30, 2000, MSC reported revenue of $43.4 million, an increase of 30% over revenue of $33.4 million for the same period last year. MSC reported net income of $2.0 million or $0.14 per share, an increase of 250% over net income of $612,000 or $0.04 per share, in the second quarter last year (prior to an investment gain and certain charges in 1999). Reported net income for last year's second quarter was $3.3 million or $0.23 per share and included, before tax effect, an investment gain of $10.7 million and write-offs of $5.2 million. For the second quarter, excluding amortization of goodwill, earnings per share were $0.22 compared to $0.08 for the second quarter last year (prior to an investment gain and certain charges in 1999).
For the six months ended June 30, 2000, MSC reported revenue of $82.8 million, an increase of 29% over revenue of $64.1 million for the same period last year. MSC reported net income of $3.0 million or $0.21 per share for the six months ended June 30, 2000, compared to a net loss of ($769,000) or ($0.06) per share for the same period last year (prior to investment gain and certain charges in 1999). Reported net loss for last year's six month period was ($2.1) million or ($0.16) per share and included, before tax effect, an investment gain of $10.7 million and write-off of acquired in-process technology and restructuring charges of approximately $11.1 million. For the six months, excluding amortization of goodwill, earnings per share were $0.38 compared to $0.00 for the six month period last year (prior to investment gain and certain charges in 1999).
"We have now completed six consecutive quarters of double-digit revenue growth. Our revenue growth is exceeding traditional industry growth rates, which is attributed to a continued strong penetration within our customer base as we expand into new markets," said Frank Perna Jr., Chairman and CEO of MSC. "Earnings up 100% sequentially over the first quarter is a tribute to the strength we see in our markets and the momentum of our team.
"As a direct result of our deliberate and strategic move to grow the service segment of our business through selective, high-impact training within the sales organization, our services business showed substantial growth of 59% in the second quarter. We are now selling higher and more effectively within the enterprise and using specific customer value and return on investment analyses to secure new sales momentum," continued Perna. "The Application Service Provider activities of our simulation center at www.engineering-e.com are seeing demonstrative success. Research from GartnerGroup indicates that the ASP marketplace will see meaningful participation from not only small and medium sized companies, but also from large Fortune 500 organizations. MSC's unique ASP infrastructure methods, e-MSCvisualNastran, e-submit and e-consultant, address all size businesses within and beyond our customer base and will benefit from this substantial market opportunity."
MSC's conference call to discuss the second quarter results will be webcast live today at 11:30 am Pacific Time on the company's website.
About MSC.Software Corporation
MSC.Software is the world's leading provider of simulation software and services to major manufacturers worldwide. MSC.Software's software and services are used to enhance and automate the product design and manufacturing process. The ability to model and test software prototypes has cost effectively enabled manufacturers to design and build everything from sophisticated aircraft and automobiles to electronic products. Simulating product performance reduces development costs, time to market and warranty costs, positively impacting customer profitability. MSC.Software is capitalizing on the advantages of the Linux operating system for high performance computing, and the Web in all of its forms.
MSC.SOFTWARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(Unaudited) (Unaudited)
REVENUE:
Software Licenses $25,941 $22,748 $49,758 $43,739
Software Maintenance
and Services 17,500 10,694 33,030 20,356
Total Revenue 43,441 33,442 82,788 64,095
COST OF REVENUE:
Software Licenses 5,348 6,438 10,729 9,972
Software Maintenance
and Services 5,377 4,713 11,063 8,677
Total Cost of Revenue 10,725 11,151 21,792 18,649
GROSS PROFIT 32,716 22,291 60,996 45,446
OPERATING EXPENSE:
Research and
Development 4,721 4,605 8,943 9,436
Selling, General
and Administrative 19,977 16,228 38,401 33,873
Amortization of
Goodwill and
Other Intangibles 2,721 1,244 5,396 2,365
Restructuring Charges
(Income) -- (400) -- 5,497
Write-Off of Acquired
In-Process Technology -- 4,067 -- 4,067
Total Operating Expense 27,419 25,744 52,740 55,238
OPERATING INCOME (LOSS) 5,297 (3,453) 8,256 (9,792)
OTHER EXPENSE (INCOME):
Interest Expense 1,676 1,257 3,371 2,602
Gain on Sale of Investment -- (10,773) -- (10,773)
Other Expense (Income), Net 207 (422) (65) (253)
Total Other Expense
(Income), Net 1,883 (9,938) 3,306 (8,424)
INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES 3,414 6,485 4,950 (1,368)
Provision for Income Taxes 1,397 3,205 1,935 771
NET INCOME (LOSS) $2,017 $3,280 $3,015 $(2,139)
BASIC EARNINGS (LOSS)
PER SHARE $0.14 $0.24 $0.22 $(0.16)
DILUTED EARNINGS (LOSS)
PER SHARE $0.14 $0.23 $0.21 $(0.16)
Basic Weighted-Average
Shares Outstanding 14,008 13,770 13,944 13,770
Diluted Weighted-Average
Shares Outstanding 14,564 17,643 14,586 13,770
MSC.SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
June 30, December 31,
2000 1999
(Unaudited)
ASSETS
Cash and Investments $ 31,004 $ 21,918
Trade Accounts Receivable, Net 38,207 37,995
Other Current Assets 27,310 22,576
Total Current Assets 96,521 82,489
Property and Equipment, Net 11,191 8,585
Goodwill and Other Intangible Assets, Net 67,879 72,280
Capitalized Software Costs, Net 21,041 20,117
Other Assets 3,008 3,749
Total Assets $ 199,640 $ 187,220
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $ 3,517 $ 4,692
Restructuring Reserve 1,873 2,875
Deferred Revenue 45,246 34,013
Other Current Liabilities 29,825 29,253
Total Current Liabilities 80,461 70,833
Deferred Income Taxes 16,957 16,957
Note Payable, Less Current Portion 2,933 4,533
Convertible Subordinated Debentures, Net 58,316 58,287
Subordinated Notes Payable, Net 11,957 11,804
Total Liabilities 170,624 162,414
Total Shareholders' Equity 29,016 24,806
Total Liabilities and
Shareholders' Equity $ 199,640 $ 187,220