<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 1-8722
THE MACNEAL-SCHWENDLER CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-2239450
------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
815 Colorado Boulevard, Los Angeles, California 90041
-----------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number (213) 258-9111
----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
------- --------
The number of shares outstanding of Registrant's Common Stock, par value $.01
per share, was 13,680,256 shares at June 8, 1998.
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
-------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - April 30, 1998 (Unaudited)
and January 31, 1998 . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income (Unaudited)
Three Months Ended April 30, 1998 and 1997 . . . . . . . . . . . 4
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended April 30, 1998 and 1997 . . . . . . . . . . . 5
Notes to Consolidated Financial Statements
(Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2.
Management's Discussion and Analysis of Results of Operations
and Financial Condition. . . . . . . . . . . . . . . . . . . . . 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30 JANUARY 31,
1998 1998
------------- -------------
(UNAUDITED)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 14,067,000 $ 10,086,000
Securities available for sale 16,075,000 16,073,000
Trade accounts receivable, net 40,376,000 50,691,000
Deferred tax charges 3,445,000 3,445,000
Other current assets 5,229,000 5,620,000
------------ ------------
Total current assets 79,192,000 85,915,000
Property and equipment, net 8,923,000 8,926,000
Capitalized software costs, net 29,507,000 28,780,000
Goodwill and other intangible assets, net 13,385,000 13,958,000
Other assets 3,151,000 2,704,000
------------ ------------
$134,158,000 $140,283,000
------------ ------------
------------ ------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,233,000 $ 3,131,000
Accrued liabilities 17,872,000 23,722,000
Deferred income 9,567,000 10,561,000
Income taxes payable 644,000 748,000
------------ ------------
Total current liabilities 30,316,000 38,162,000
Deferred income taxes 10,983,000 10,983,000
Convertible subordinated debentures 56,574,000 56,574,000
Commitments
Shareholders' equity:
Preferred stock, $0.01 par value, 10,000,000
shares authorized; no shares outstanding
at April 30, 1998 or January 31, 1998 ----- -----
Common stock, $0.01 par value,
100,000,000 shares authorized;
13,668,500 and 13,621,900 issued and
outstanding at April 30, 1998 and
January 31, 1998, respectively 31,940,000 31,482,000
Retained earnings 9,499,000 7,399,000
Accumulated unrealized investment gain 3,000 -----
Accumulated translation adjustment (5,157,000) (4,317,000)
------------ ------------
Total shareholders' equity 36,285,000 34,564,000
------------ ------------
$134,158,000 $140,283,000
------------ ------------
------------ ------------
See accompanying notes.
</TABLE>
3
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30,
--------------------------------
1998 1997
------------ -------------
<S> <C> <C>
Revenues:
Software licenses $ 24,618,000 $ 25,425,000
Software maintenance and services 8,095,000 6,511,000
------------ ------------
Total revenues 32,713,000 31,936,000
Operating expenses:
Cost of revenue 8,218,000 7,484,000
Amortization of goodwill and other intangibles 567,000 567,000
Research and development 2,708,000 2,883,000
Selling, general and administrative 17,168,000 16,898,000
------------ ------------
Total operating expenses 28,661,000 27,832,000
Operating income 4,052,000 4,104,000
Debenture interest (1,114,000) (1,114,000)
Other income (expense), net 244,000 (72,000)
------------ ------------
Income before income taxes 3,182,000 2,918,000
Provision for income taxes 1,082,000 992,000
------------ ------------
Net income $ 2,100,000 $ 1,926,000
------------ ------------
------------ ------------
Basic earnings per share $ 0.15 $ 0.14
------------ ------------
------------ ------------
Diluted earnings per share $ 0.15 $ 0.14
------------ ------------
------------ ------------
Basic weighted average
shares outstanding 13,651,000 13,462,000
------------ ------------
------------ ------------
Diluted weighted average
shares outstanding 17,550,000 17,280,000
------------ ------------
------------ ------------
</TABLE>
4
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30
-------------------------------
1998 1997
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,100,000 $ 1,926,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property and equipment 1,383,000 1,376,000
Amortization of capitalized software costs 3,686,000 2,877,000
Amortization of goodwill and other intangibles 567,000 567,000
Amortization of premiums and discounts on securities
available for sale 31,000 -
(Gain) loss on disposal of property and equipment (13,000) 70,000
Changes in assets and liabilities:
Accounts receivable, net 10,315,000 3,269,000
Other current assets 391,000 1,970,000
Accounts payable (898,000) (66,000)
Accrued liabilities (5,850,000) (7,940,000)
Deferred income (994,000) (80,000)
Income taxes payable (104,000) (968,000)
----------- ------------
Net cash provided by operating activities 10,614,000 3,001,000
Cash flows from investing activities:
Purchase of securities available for sale (30,000) -
Sale of securities available for sale - 3,000
Acquisition of property and equipment (1,361,000) (1,230,000)
Purchase of software (621,000) -
Capitalized software costs (3,792,000) (2,877,000)
Increase in other assets (447,000) (115,000)
----------- ------------
Net cash used in investing activities (6,251,000) (4,219,000)
Cash flows from financing activities:
Proceeds from capital stock issued 458,000 65,000
----------- ------------
Net cash provided by financing activities 458,000 65,000
Effect of exchange rate changes on cash (840,000) (324,000)
----------- ------------
Net increase (decrease) in cash and cash equivalents 3,981,000 (1,477,000)
Cash and cash equivalents at beginning of period 10,086,000 24,016,000
----------- ------------
Cash and cash equivalents at end of period $14,067,000 $ 22,539,000
----------- ------------
----------- ------------
</TABLE>
See accompanying notes.
5
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial information is
condensed from that which would appear in the annual financial statements and
should be read in conjunction with the consolidated financial statements
included in The MacNeal-Schwendler Corporation's Annual Report on Form 10-K
for the year ended January 31, 1998.
All interim financial data is unaudited but, in the opinion of
management, reflects all adjustments necessary for a fair presentation
thereof. However, it should be understood that accounting measurements at
interim dates might be less precise than at year-end. Operating results for
the three months ended April 30, 1998 are not necessarily indicative of the
results that may be expected for the year ended January 31, 1999.
Supplemental cash flow information for taxes paid during the three months
ended April 30, 1998 and 1997 were $1,186,000 and $1,960,000, respectively.
Additionally, the Company paid interest of $2,227,000 on its Convertible
Subordinated Debentures due 2004 during both the three months ended April 30,
1998 and 1997.
In December 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS
No. 128 replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. Diluted earnings per
share for the three months ended April 30, 1998 and April 30, 1997 includes the
dilutive effect of stock options calculated under the treasury stock method; and
assumes the convertible subordinated debentures were converted into common stock
at the beginning of the period and the related interest requirements, net of
tax, is added to net income in the calculation. All earnings per share amounts
for all periods have been restated to conform to the FASB No. 128 requirements.
Diluted earnings per share were anti-dilutive for the three months ended April
30, 1998 and 1997.
As of February 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes new rules for the reporting
and display of comprehensive income and its components; however, the adoption
of this Statement had no impact on the Company's reported net income or
shareholders' equity. SFAS No. 130 requires unrealized gains or losses on
the Company's available-for-sale securities and foreign currency translation
adjustments, which prior to adoption were reported separately in
shareholders' equity, to be included in other comprehensive income. Prior
year Consolidated Statement of Shareholders' Equity will be reclassified to
conform to the requirements of SFAS No. 130.
During the first quarter of fiscal 1999 and 1998, total comprehensive
income amounted to $1,263,000 and $1,602,000, respectively.
In December 1997, the FASB issued Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information," which requires the
Company to disclose certain information about reportable operating segments
in complete sets of financial statements of the enterprise and in condensed
financial statements of interim periods. The Company adopted SFAS No. 131 in
the first quarter of fiscal 1999.
Certain reclassifications have been made to the consolidated financial
statements for the three months ended April 30, 1997 and the balances at
January 31, 1998 in order to conform to the April 30, 1998 presentation.
6
<PAGE>
NOTE 2: CAPITALIZED SOFTWARE
The components of net capitalized software costs were as follows:
<TABLE>
<CAPTION>
Three months Ended April 30,
--------------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Software costs capitalized $(3,792,000) $(2,877,000)
Amortization of capitalized software 3,686,000 2,877,000
----------- -----------
Net capitalized software costs $ (106,000) $ (---)
----------- -----------
----------- -----------
</TABLE>
Amortization expense associated with capitalized software costs is reported
in cost of revenue, and capitalization of software costs is reported as a
reduction of research and development expense.
NOTE 3: ACCRUED LIABILITIES
The components of accrued liabilities are as follows:
<TABLE>
<CAPTION>
April 30, January 31,
1998 1998
---------- -----------
<S> <C> <C>
Compensation and related expenses $6,475,000 $6,516,000
Commissions payable 2,223,000 2,752,000
Debenture interest payable 575,000 1,688,000
Contribution to profit sharing plan 564,000 2,784,000
Post-retirement benefits 2,297,000 2,236,000
Royalties payable 605,000 929,000
Sales taxes payable 1,455,000 3,020,000
Incentive compensation 256,000 230,000
Stock purchase plan 222,000 438,000
Other 3,200,000 3,129,000
----------- -----------
$17,872,000 $23,722,000
----------- -----------
----------- -----------
</TABLE>
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THREE MONTHS ENDED APRIL 30, 1998 VS. THREE MONTHS ENDED APRIL 30, 1997
The Company reported revenue of $32,713,000 for the first quarter,
compared to revenue of $31,936,000 for the first quarter of the prior fiscal
year, a 2% increase. Revenue growth in the current year would have been
approximately $2,066,000, or 6%, if valued using prior year foreign currency
translation rates. Software license revenue and maintenance fees account for
92% of total reported revenue in the first quarter and 95% in the first
quarter of the prior fiscal year, with service revenue making up the
difference. The increase in software maintenance and service revenue was
primarily due to continued growth in maintenance revenue.
Software revenue consists of licensing fees, which are fees charged for
the right to use the software, and maintenance fees, which provide for
support and unspecified upgrade privileges on a when-and-if-available basis.
In accordance with The American Institute of Certified Public Accountant's
("AICPA") Statement of Position ("SOP") 97-2, "Software Revenue Recognition"
issued in 1997, which supercedes SOP 91-1, revenue associated with support
and upgrade privileges has been consistently deferred and recognized over the
term of the license agreement.
First quarter revenue growth was adversely affected by the strength of
the U.S. Dollar compared to foreign currencies in which the Company operates.
The Asia-Pacific region, which accounted for 24% of the Company's total
revenue, decreased by 8% in functional currency compared to the first quarter
of the prior fiscal year. Europe, which accounted for 37% of the Company's
total revenue, grew by 31% in functional currency compared to the first
quarter of the prior fiscal year, and the Americas, which accounted for 39%
of the Company's total revenue, reported less than a 1% growth in the first
quarter. In light of the economic turmoil in the Asia-Pacific region, the
Company remains cautious about its Asia-Pacific prospects. Approximately 4%
of the Company's total revenue come from outside Japan in the Asia-Pacific
region.
Operating expense of $28,661,000 in the first quarter increased by
approximately 3% from the $27,832,000 reported in the first quarter of the
prior fiscal year.
In accordance with the AICPA Statement of Financial Accounting Standards
No. 86 (FAS 86), "Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed," cost of revenue expense includes period
expenses directly related to revenue as well as the amortization of
capitalized software costs. Research and development expense is reported net
of the amount capitalized.
In the first quarter, total reported cost of revenue was $8,218,000
compared to $7,484,000 in the first quarter of the prior fiscal year, an
increase of $734,000, or 10%. This increase included $809,000 of additional
amortization of capitalized software. Capitalized software amortization
increased to $3,686,000 in the first quarter from $2,877,000 in the first
quarter of the prior fiscal year. The increase in the amount of capitalized
software costs is due to an increase in the number of products offered by the
Company. The assets' lives have remained consistent from year to year. The
increase in amortization of capitalized software has been consistent with the
increases in capitalization of software costs in prior quarters. Royalty
expense is also included in cost of revenue and paid to third parties under
various agreements. The Company does not consider any royalty expense
related to individual agreements to be material. The incremental expense of
providing maintenance and other services was not deemed to be material in the
first quarter of this fiscal year or the first quarter of the prior fiscal
year.
8
<PAGE>
Research and development expense in the first quarter of $2,708,000 was
$175,000 less than that reported in the first quarter of the prior fiscal
year. The decrease is the result of an increase of $740,000 in the total
gross research and development investment offset by an increase of $915,000
in the amount of research and development expenditures capitalized under FAS
86.
Research and development expense is reported net of capitalized software
development costs. The total gross investment in research and development
activities in the first quarter amounted to $6,500,000, or 20% of current
quarter revenue, compared to $5,760,000, or 18% of revenue in the first
quarter of the prior fiscal year. The total increase in the gross research
and development investment in the first quarter was $740,000, or 13%. This
increase resulted primarily from changes in staffing mix and staff makeup
related to a strategic revision in product development activity. This shift
in strategy de-emphasizes a features upgrade for specific products and
promotes the development of integrated software solutions for targeted
customers. The increase was in line with the Company's revised goals and
objectives for research and development.
Capitalized software development costs were $3,792,000 in the first
quarter compared to $2,877,000 in the first quarter of the prior fiscal year,
an increase of $915,000. The amount of product development capitalized in any
given period is a function of many factors including the number of products
under development at any point in time as well as their stage of development.
The Company's product development process is continually under review to
improve efficiency, product quality, and reduce time to market. Due to the
continual change in the product development process there can be no assurance
that the level of development capitalized in future periods will be
comparable to current capitalized levels.
Selling, general, and administrative expense in the first quarter was
$17,168,000 compared to $16,898,000 in the first quarter of the prior fiscal
year, an increase of $270,000, or 2%. The increase relates primarily to
expanded worldwide staffing requirements in the sales and distribution area
of $870,000, offset by the favorable affect on international expenses
totaling approximately $600,000 caused by the strengthening dollar compared
to foreign currencies on which the Company operates.
Operating income, including software capitalization and
amortization was $4,052,000 in the first quarter compared to $4,104,000 in
the first quarter of the prior fiscal year, a decrease of 1%. Operating
income can be affected by the amount of software capitalized and the
amortization thereof. The net effect of the amortization and capitalization
of software costs was a $106,000 reduction of operating expenses in the first
quarter compared to no effect on operating expenses in the first quarter of
the prior fiscal year. Thus, the operating income benefit from the
amortization and capitalization of software costs was $106,000 more in the
first quarter of fiscal 1999 than in the first quarter of fiscal 1998.
Debenture interest reflects the interest on the convertible
subordinated debentures issued as part of the acquisition of PDA Engineering
in 1994. Interest payments are due on March 15 and September 15 of each year
until the debentures are converted or redeemed.
Other income (expense) showed income of $244,000 in the first
quarter compared to an expense of $72,000 in the first quarter of the prior
fiscal year. The fluctuation is primarily attributable to increased interest
and investment income from $191,000 in the first quarter of fiscal 1998 to
$428,000 in the first quarter of fiscal 1999 and a reduction of foreign
exchange losses from a loss of $119,000 in the first quarter of fiscal 1998
to a loss of $42,000 in the first quarter of fiscal 1999. Other income
(expense) also includes gains and losses on sales of assets and other
non-operating income.
Net income was $2,100,000 in the first quarter compared to
$1,926,000 in the first quarter of the prior fiscal year, an increase of 9%.
Net income in the first quarter of fiscal 1999 was unfavorably affected by
fluctuations in functional currencies used in the Company's international
operations. The fluctuation of the U.S. Dollar versus these currencies could
continue to have an unfavorable effect throughout fiscal 1999 and future
years. The effect of foreign currency translation on net income was an
9
<PAGE>
unfavorable variance of approximately $446,000 if valued using prior year
foreign currency translation rates.
LIQUIDITY AND CAPITAL RESOURCES
Working capital needed to finance the Company's growth in the
past has been provided by cash on hand and cash flow from operations.
Management believes that cash generated from operations will continue to
provide sufficient capital for working capital needs in the foreseeable
future. Net cash from operating activities was $10,614,000 and $3,001,000 in
first quarter of fiscal 1999 and 1998, respectively. The Company's working
capital at April 30, 1998 was $48,876,000, compared to $47,753,000 at April
30, 1997. The Company has an agreement with its principal bank for a
$15,000,000 unsecured line of credit. No amounts were outstanding under this
line of credit as of April 30, 1998 or 1997.
The Company issued convertible subordinated debentures in
August 1994, in connection with its PDA acquisition, in the aggregate amount
of approximately $56,608,000. The debentures bear interest at 7 7/8% with
interest payments due semi-annually in March and September. A debenture
interest payment of $2,227,000 was made in March 1998. The amount of
interest will decrease if the debentures are converted into common stock. The
debentures mature in August 2004.
Management expects to continue to invest a substantial portion
of the Company's revenues in the research and development of new computer
software products and the enhancement of existing products. The Company
expended a total of $6,500,000 and $5,760,000 in the first quarter of fiscal
1999 and 1998, respectively, on research and development efforts of which
$3,792,000 and $2,877,000 were capitalized in the first quarter of fiscal
1999 and 1998, respectively. Product development costs and the
capitalization rate may vary depending, in part, on the number of products
and the stage of development of the products in process.
During the quarters ended April 30, 1998 and 1997, the Company
acquired $1,361,000 and $1,230,000, respectively, of new property and
equipment. Capital expenditures during the quarter included upgrades in
computer equipment in order to keep current with technological advances and
upgrades of facilities worldwide. The Company's capital expenditures vary
from year to year, as required by business needs. The Company intends to
continue to expand the capabilities of its computer equipment used in the
development and support of its proprietary software products. Management
expects expenditures for property and equipment in fiscal years 1999 and 2000
to be consistent with those for the fiscal year ended January 31, 1998.
Impact of Year 2000
The Company has initiated formal communications with all its
significant suppliers and large customers to determine the extent to which
the Company's internal applications and other interface systems are
vulnerable to those third parties' failure to remediate their own Year 2000
issues. The Company has determined that the purchased software applications
it uses and software applications developed internally are Year 2000
compliant. However, there is no guarantee that other systems of other
companies on which the Company's systems rely will be timely converted and
would not have an adverse effect on the Company's systems.
The Company has completed a study on the software that is sold
to customers. The study determined that all software sold by the Company was
Year 2000 compliant. The cost of this study was immaterial.
10
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information in the Management's Discussion and
Analysis of Results of Operations and Financial Condition contained in this
Form 10-Q includes information that is forward looking. Such forward-looking
statements include, among others, statements concerning the Company's
international expansion, expected trends in revenue and operating expense,
capital expenditure plans, expectations regarding future liquidity, and other
statements of expectations, beliefs, future plans and strategies, anticipated
events or trends, and similar expressions concerning matters that are not
historical fact.
The forward-looking statements in this report are based on
current expectations and are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed or implied by
those statements. The risks and uncertainties include but are not limited
to: the timely development and market acceptance of new versions of the
Company's software products; the impact of competitive products and pricing;
the impact of the economic issues in Asia-Pacific; successful involvement of
international and domestic business partners in creating mechanical
engineering solutions; the level of economic activity in the U.S. and abroad;
fluctuations of the U.S. dollar versus foreign currencies; timely development
of CAE technologies which, among other things, must accommodate industry
trends such as increasing computing power and increased usage of
workstations; the Company's ability to reduce costs without adversely
impacting revenues; the Company's ability to attract, motivate and retain
salespeople, programmers and other key personnel; continued demand for the
Company's products, including MSC/NASTRAN, MSC/PATRAN, MSC/ARIES,
MSC/MVISION, MSC/DYTRAN, MSC/FEA, MSC/SuperModel, MSC/FATIGUE, MSC/NVH
Manager, MSC/DropTest, MSC/CONSTRUCT, MSC/InCheck, MSC/SuperForge, MSC/AMS,
and MSC/NASTRAN FOR WINDOWS; and such other risks and uncertainties as are
described in the Company's other Securities and Exchange Commission reports
and filings.
Subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are hereby
expressly qualified in their entirety by the cautionary statements in this
section of this Form 10-Q.
11
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 - Financial Data Schedule
(b) The Company did not file any Current Reports on Form 8-K
during the quarter ended April 30, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MACNEAL-SCHWENDLER CORPORATION
(Registrant)
Date: June 11, 1998
/s/ LOUIS A. GRECO
----------------------------------------
Louis A. Greco, Chief Financial Officer
(Mr. Greco is the Principal Financial and
Accounting Officer and has been duly
authorized to sign on behalf of the
registrant.)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000717238
<NAME> MACNEAL-SCHWENDLER CORP.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<EXCHANGE-RATE> 1
<CASH> 14,067
<SECURITIES> 16,075
<RECEIVABLES> 42,035
<ALLOWANCES> 1,659
<INVENTORY> 0
<CURRENT-ASSETS> 79,192
<PP&E> 37,941
<DEPRECIATION> 29,018
<TOTAL-ASSETS> 134,158
<CURRENT-LIABILITIES> 30,316
<BONDS> 56,574
0
0
<COMMON> 31,940
<OTHER-SE> 4,345
<TOTAL-LIABILITY-AND-EQUITY> 134,158
<SALES> 0
<TOTAL-REVENUES> 32,713
<CGS> 8,218
<TOTAL-COSTS> 28,661
<OTHER-EXPENSES> (244)
<LOSS-PROVISION> 361
<INTEREST-EXPENSE> 1,114
<INCOME-PRETAX> 3,182
<INCOME-TAX> 1,082
<INCOME-CONTINUING> 2,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,100
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
