<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED: JUNE 29, 1996 COMMISSION FILE NUMBER: 0-18059
----------------
PARAMETRIC TECHNOLOGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2866152
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
----------------
128 TECHNOLOGY DRIVE, WALTHAM, MA 02154
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(617) 398-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
----------------
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
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
COMMON STOCK, PAR VALUE $.01 PER 126,863,809
SHARE OUTSTANDING AT JUNE 29, 1996
CLASS
TOTAL NUMBER OF PAGES: 11
EXHIBIT INDEX APPEARS ON PAGE 11
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<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheet
June 29, 1996 and September 30, 1995........................ 3
Consolidated Statement of Income
Three and nine months ended June 29, 1996 and July 1, 1995.. 4
Consolidated Statement of Cash Flows
Nine months ended June 29, 1996 and July 1, 1995............ 5
Notes to Consolidated Financial Statements................... 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 7
PART II OTHER INFORMATION
Item 6 Exhibits..................................................... 9
SIGNATURE............................................................... 10
</TABLE>
2
<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEET
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 29, 1996 SEPTEMBER 30, 1995
------------- ------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $183,748 $145,638
Short-term investments...................... 187,791 162,610
Accounts receivable, net of allowance for
doubtful accounts of $2,673 and $2,733..... 102,378 80,405
Other current assets........................ 11,442 11,079
-------- --------
Total current assets...................... 485,359 399,732
Marketable investments........................ 43,030 --
Property and equipment, net................... 35,782 19,811
Capitalized computer software costs, net...... 3,523 4,380
Other assets.................................. 25,718 29,804
-------- --------
Total assets.............................. $593,412 $453,727
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses....... $ 30,508 $ 19,578
Accrued compensation........................ 25,207 19,821
Deferred revenue............................ 48,784 37,953
Income taxes................................ 10,252 4,678
-------- --------
Total current liabilities................. 114,751 82,030
Other liabilities............................. 711 768
Stockholders' equity:
Preferred stock, $.01 par value; 5,000
shares authorized; none issued............. -- --
Common stock, $.01 par value; 215,000 shares
authorized; 127,131 and 125,129 shares
issued..................................... 1,271 1,251
Additional paid-in capital.................. 187,372 155,497
Cumulative translation adjustments.......... (1,010) 1,710
Unrealized loss on investments.............. (90) --
Retained earnings........................... 302,905 212,471
Treasury stock, at cost, 267 and 0 shares... (12,498) --
-------- --------
Total stockholders' equity................ 477,950 370,929
-------- --------
Total liabilities and stockholders'
equity................................... $593,412 $453,727
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
JUNE 29, JULY 1, JUNE 29, JULY 1,
1996 1995 1996 1995
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
License................................ $ 117,836 $ 75,851 $312,686 $200,073
Service................................ 39,268 29,344 110,308 74,993
--------- -------- -------- --------
Total revenue........................ 157,104 105,195 422,994 275,066
--------- -------- -------- --------
Cost of revenue:
License................................ 1,160 622 2,926 2,407
Service................................ 12,930 8,848 37,007 22,759
--------- -------- -------- --------
Total cost of revenue................ 14,090 9,470 39,933 25,166
--------- -------- -------- --------
Gross profit............................. 143,014 95,725 383,061 249,900
--------- -------- -------- --------
Operating expenses:
Sales and marketing.................... 62,916 44,527 169,670 114,303
Research and development............... 10,499 6,846 27,225 18,007
General and administrative............. 7,426 5,860 20,174 14,890
Acquisition and related costs.......... -- 19,000 -- 19,000
--------- -------- -------- --------
Total operating expenses............. 80,841 76,233 217,069 166,200
--------- -------- -------- --------
Operating income......................... 62,173 19,492 165,992 83,700
Other income, net........................ 3,063 2,580 8,737 6,355
--------- -------- -------- --------
Income before income taxes............... 65,236 22,072 174,729 90,055
Provision for income taxes............... 23,616 8,256 63,252 33,728
--------- -------- -------- --------
Net income............................... $ 41,620 $ 13,816 $111,477 $ 56,327
========= ======== ======== ========
Net income per share..................... $ 0.31 $ 0.11 $ 0.84 $ 0.44
========= ======== ======== ========
Weighted average number of common and
dilutive common equivalent shares
outstanding............................. 134,426 129,790 133,175 128,016
========= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
JUNE 29, 1996 JULY 1, 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income....................................... $ 111,477 $ 56,327
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 12,043 6,384
Deferred income taxes.......................... 2,684 (8,815)
Charge for purchased research and development
in process.................................... -- 19,000
Changes in assets and liabilities:
Increase in accounts receivable.............. (23,968) (7,288)
Increase in other current assets............. (959) (5,654)
(Increase) decrease in other assets.......... 1,879 (2,810)
Increase in accounts payable and accrued
expenses.................................... 11,484 2,512
Increase in accrued compensation............. 5,679 1,071
Increase in income taxes..................... 22,508 10,108
Increase in deferred revenue................. 11,652 17,843
--------- ---------
Net cash provided by operating activities........ 154,479 88,678
--------- ---------
Cash flows from investing activities:
Additions to property and equipment, net......... (25,040) (7,502)
Payment for acquisition of a business............ -- (34,550)
Additions to capitalized computer software
costs........................................... (645) (997)
Proceeds from sales of investments............... 160,850 109,589
Purchases of investments......................... (229,151) (165,374)
--------- ---------
Net cash used by investing activities............ (93,986) (98,834)
--------- ---------
Cash flows from financing activities:
Repayment of long-term obligations............... (92) (11)
Proceeds from issuance of common stock........... 26,348 18,783
Purchases of treasury stock...................... (45,404) --
--------- ---------
Net cash provided (used) by financing
activities...................................... (19,148) 18,772
--------- ---------
Elimination of Rasna's net cash activity for the
three months ended December 31, 1994.............. -- (112)
Effect of exchange rate changes on cash............ (3,235) 1,667
--------- ---------
Net increase in cash and cash equivalents.......... 38,110 10,171
Cash and cash equivalents at beginning of period... 145,638 142,202
--------- ---------
Cash and cash equivalents at end of period......... $ 183,748 $ 152,373
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, and have been
prepared by the Company in accordance with generally accepted accounting
principles. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting only of
those of a normal recurring nature, necessary for a fair presentation of the
Company's financial position, results of operations and cash flows at the
dates and for the periods indicated. While the Company believes that the
disclosures presented are adequate to make the information not misleading,
these financial statements should be read in conjunction with the consolidated
financial statements and related notes included in the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 1995.
The results of operations for the three-month and nine-month periods ended
June 29, 1996 are not necessarily indicative of the results expected for the
full fiscal year.
2. MARKETABLE INVESTMENTS
Marketable investments, classified as available for sale, consist of
investments in debt instruments of financial institutions, government entities
and corporations with maturities in excess of one year, but less than two
years. The Company has established guidelines relative to credit ratings,
diversification and maturity that maintain safety and liquidity for these
investments.
3. COMMON STOCK
On February 8, 1996, the stockholders of the Company approved an increase in
the number of authorized shares of the Company's common stock from 75,000,000
to 215,000,000. Also, on February 8, 1996, the Company's Board of Directors
declared a one-for-one stock dividend on all shares of common stock, which
became effective on February 29, 1996 to all stockholders of record on
February 22, 1996. These financial statements and related notes have been
retroactively adjusted, where appropriate, to reflect the one-for-one stock
dividend.
4. SUBSEQUENT EVENT
On July 10, 1996, the Company acquired project modeling and management
software technology from Greenshire License Co. for approximately $30,000,000.
The acquisition will be accounted for as a purchase and the Company will
record a non-recurring charge for purchased research and development during
the fourth quarter of fiscal 1996 for substantially all of the purchase price.
The Company plans to incur additional costs during fiscal 1996 and 1997 to
complete the development of the purchased technology prior to the release of
the software.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Parametric Technology Corporation is a leading supplier of software tools
used to automate the mechanical development of a product from its conceptual
design through its release into manufacturing. The Company derives its revenue
from the license and support of software used in the mechanical segment of the
CAD/CAM/CAE (computer-aided design, manufacturing and engineering) industry.
RESULTS OF OPERATIONS
Revenue, including license and service revenues, for the three-month and
nine-month periods ended June 29, 1996 was $157,104,000 and $422,994,000,
respectively, compared with $105,195,000 and $275,066,000 for the three-month
and nine-month periods ended July 1, 1995. These totals represent increases of
49% for the three-month period and 54% for the nine-month period over the
corresponding periods in fiscal 1995. The increase in license revenue results
from an increase in the number of seats of software licensed and an increase
in the average price per seat. A seat of software generally consists of the
Company's core product, Pro/ENGINEER(R), together with several other software
modules, configured to serve the needs of a single end-user. The increase in
the number of seats licensed was achieved as a result of continued market
penetration by the Company's products. The average prices per seat during the
three months and nine months ended June 29, 1996 were approximately $20,000
and $19,100, compared with average prices of $18,900 and $17,800 for the same
periods in fiscal 1995. Service revenue is derived from the sale of software
maintenance contracts and the performance of training and consulting services.
During the three-month and nine-month periods ended June 29, 1996, service
revenue was 25% and 26% of total revenue, respectively, compared to 28% and
27% during the three-month and nine-month periods ended July 1, 1995. Revenue
from outside of North America accounted for 56% and 55% of revenue for the
three-month and nine-month periods ended June 29, 1996, compared with 51% and
49% for the same periods in fiscal 1995. These increases are a result of the
Company's continued investment in the international marketplace. The Company
expects that total revenue will increase throughout fiscal 1996 from continued
penetration in the mechanical CAD/CAM/CAE industry and that international
revenue will continue to account for a significant portion of that total
growth.
Cost of license revenue consists of the amortization of capitalized computer
software costs as well as material and overhead costs associated with compact
disks, packaging and shipping. Cost of service revenue includes the costs
associated with training, software maintenance and consulting revenues.
Combined, these expenses increased to $14,090,000 and $39,933,000 for the
three-month and nine-month periods ended June 29, 1996 from $9,470,000 and
$25,166,000 for the corresponding periods in fiscal 1995. Total cost of
revenue as a percentage of revenue remained stable at 9% for the three-month
and nine-month periods ended June 29, 1996 and the corresponding periods in
fiscal 1995. The absolute increase in total cost of revenue resulted primarily
from growth in staffing necessary to generate and support increased worldwide
service revenue and costs of materials associated with increased revenue. Cost
of service revenue, which is the largest component of total cost of revenue,
increased 46% and 63% during the three-month and nine-month periods ended June
29, 1996 from such costs in the corresponding periods in fiscal 1995, while
the associated revenue increased 34% and 47%.
Sales and marketing expenses increased to $62,916,000 and $169,670,000 for
the three-month and nine-month periods ended June 29, 1996 from $44,527,000
and $114,303,000 for the corresponding periods in fiscal 1995. These costs
decreased as a percentage of revenue to 40% for both the three-month and nine-
month periods ended June 29, 1996, compared with 42% for the comparable
periods in fiscal 1995. The absolute increase in these expenses was due
primarily to worldwide expansion of the sales force and sales commissions
associated with higher revenue. International sales and marketing expenses
represented 57% and 58% of total sales and marketing expenses for the three-
month and nine-month periods ended June 29, 1996, compared with 52% and 50%
for the same periods in fiscal 1995. The Company expects to continue the
growth of its worldwide sales
7
<PAGE>
and marketing organization during future periods, reflecting the Company's
commitment to expand its global market penetration.
Research and development expenses increased to $10,499,000 and $27,225,000
for the three-month and nine-month periods ended June 29, 1996 from $6,846,000
and $18,007,000 for the corresponding periods in fiscal 1995. Total research
and development expenses were 7% and 6% of revenue for the three-month and
nine-month periods ended June 29, 1996 compared with 7% for the same periods
in fiscal 1995. The absolute increase in expenses resulted primarily from
growth in the research and development staff.
Software development costs of $245,000 and $645,000 during the three-month
and nine-month periods ended June 29, 1996 have been capitalized in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed", compared
with $375,000 and $997,000 in the corresponding periods in fiscal 1995. The
amounts capitalized represent 2% of total research and development costs for
both the three-month and nine-month periods in fiscal 1996, compared with 5%
during the same periods in fiscal 1995. Capitalized computer software costs
are amortized over the economic useful lives of the related products,
typically three years.
General and administrative expenses include the costs of corporate, finance,
information technology, human resources and administrative functions of the
Company. These expenses increased to $7,426,000 and $20,174,000 for the three-
month and nine-month periods ended June 29, 1996 from $5,860,000 and
$14,890,000 for the corresponding periods in fiscal 1995. General and
administrative expenses decreased as a percentage of revenue to 5% for the
three-month period ended June 29, 1996 compared to 6% for the comparable
period in fiscal 1995, but remained stable at 5% for the nine-month periods
ended June 29, 1996 and July 1, 1995. The absolute increase in these expenses
was primarily due to the hiring of additional employees necessary to support
the Company's worldwide growth.
The Company recorded, in the third quarter of fiscal 1995, a non-recurring
charge of $19,000,000 related to the write-off of purchased research and
development in process associated with the acquisition of the Conceptual
Design and Rendering System software business operated by the Design Software
Division of Evans & Sutherland Computer Corporation.
Other income, net, primarily includes interest income and expense and
foreign currency gains and losses. Interest income increased to $10,132,000
for the nine-month period ended June 29, 1996 compared with $7,066,000 for the
corresponding period in fiscal 1995 due primarily to higher interest-bearing
cash and investment balances, which resulted from positive cash flows from
operations and proceeds from stock option exercises.
The Company's effective tax rate for the nine-month period ended June 29,
1996 was 36.2%, compared with 37.5% for the same period in fiscal 1995. The
difference between the effective and statutory federal rate was due primarily
to the benefit of tax exempt interest income offset by the impact of state
income taxes.
The number of worldwide employees increased 40% to 2,573 at June 29, 1996
compared with 1,844 at July 1, 1995. Employment increased significantly to
support higher revenues and international expansion, with the largest portion
of this growth occurring in the sales and marketing department.
LIQUIDITY AND CAPITAL RESOURCES
As of June 29, 1996, the Company had $183,748,000 of cash and cash
equivalents and $230,821,000 of investments. Net cash provided by operating
activities, consisting primarily of net income from operations and the
increases in income taxes, deferred revenue, accounts payable and accrued
expenses, offset by the increase in accounts receivable was $154,479,000 for
the nine-month period ended June 29, 1996 compared with $88,678,000 for the
corresponding period in fiscal 1995. Investment activities consisted primarily
of purchases and sales of investments, additions to property and equipment,
and acquisition of a business in fiscal 1995. Net
8
<PAGE>
cash used by investing activities totaled $93,986,000 for the nine-month
period ended June 29, 1996, compared with $98,834,000 for the corresponding
period in fiscal 1995. Financing activities, consisting primarily of proceeds
from issuance of common stock, offset by the purchases of treasury stock in
fiscal 1996, used $19,148,000 for the nine months ended June 29, 1996 and
provided $18,772,000 for the nine months ended July 1, 1995.
On May 12, 1994, the Company announced that its Board of Directors had
authorized a plan that allows the Company to repurchase up to 6,000,000 shares
of its common stock. The Company intends to repurchase these shares to
partially offset the dilution caused by the exercise of stock options under
the Company's option plans and the purchase of shares under the employee stock
purchase plan. During the nine-month period ended June 29, 1996, the Company
repurchased 1,253,000 shares at a cost of $45,404,000, of which 267,000
remained in treasury at June 29, 1996. Since the inception of the plan, the
Company has repurchased 1,567,000 shares. The Company expects to use available
cash and cash generated from operations in future fiscal periods to fund any
such repurchases.
On July 10, 1996, the Company acquired project modeling and management
software technology from Greenshire License Co. for approximately $30,000,000.
The acquisition will be accounted for as a purchase and the Company will
record a non-recurring charge for purchased research and development during
the fourth quarter of fiscal 1996 for substantially all of the purchase price.
The Company plans to incur additional costs during fiscal 1996 and 1997 to
complete the development of the purchased technology prior to the release of
the software.
The Company believes that existing cash and investment balances together
with cash generated from operations will be sufficient to meet the Company's
working capital, financing and capital expenditure requirements through at
least calendar 1996.
Certain matters discussed in this Form 10-Q constitute forward-looking
statements that involve risks and uncertainties that could cause actual
results to differ materially from those projected. These include the Company's
ability to continue to penetrate the relevant market, anticipate or respond
adequately to technological developments and customer needs, and attract and
retain highly skilled technical, managerial and sales people, as well as other
risks and uncertainties that are detailed from time to time in reports filed
by the Company with the Securities and Exchange Commission, including the
Company's report on Form 10-Q for the quarter ended March 30, 1996, which is
incorporated herein by reference.
PART II--OTHER INFORMATION
ITEM 6: EXHIBITS
99.1Press Release of the Company dated July 11, 1996
99.2Important Factors Regarding Future Results
9
<PAGE>
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.
Parametric Technology Corporation
/S/ Edwin J. Gillis
by: _________________________________
Edwin J. Gillis
Senior Vice President of Finance
and Administration, Chief
Financial Officer and Treasurer
Date: August 2, 1996
10
<PAGE>
EXHIBIT INDEX
99.1Press Release of the Company dated July 11, 1996; filed herewith.
99.2 Important Factors Regarding Future Results (filed as Exhibit 99 to the
Quarterly Report on Form 10-Q for the fiscal quarter ended March 30,
1996 and incorporated herein by reference).
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE FORM 10-Q FOR THE QUARTER ENDED JUNE 29,
1996 AND IS QUALIFIED IN TIS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-29-1996
<CASH> 183,748
<SECURITIES> 187,791
<RECEIVABLES> 105,051
<ALLOWANCES> 2,673
<INVENTORY> 0
<CURRENT-ASSETS> 485,359
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 593,412
<CURRENT-LIABILITIES> 114,751
<BONDS> 0
0
0
<COMMON> 1,271
<OTHER-SE> 476,679
<TOTAL-LIABILITY-AND-EQUITY> 593,412
<SALES> 312,686
<TOTAL-REVENUES> 422,994
<CGS> 2,926
<TOTAL-COSTS> 39,933
<OTHER-EXPENSES> 217,069
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 174,729
<INCOME-TAX> 63,252
<INCOME-CONTINUING> 111,477
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,477
<EPS-PRIMARY> 0.84
<EPS-DILUTED> 0.84
</TABLE>
<PAGE>
EXHIBIT 99.1 FOR IMMEDIATE RELEASE
Contact:
John W. Hudson
Parametric Technology Corp.
(617) 398-5000
PARAMETRIC TECHNOLOGY CORPORATION ACQUIRES OBJECT-ORIENTED
SOFTWARE TECHNOLOGY FOR PROJECT MODELING AND MANAGEMENT
WALTHAM, Mass., July 11, 1996--Parametric Technology Corporation (NASDAQ:
PMTC), developer of the Pro/ENGINEER(R) family of software tools used to
automate mechanical product development, announced today that it has acquired
project modeling and management software technology from Greenshire License
Co. for approximately $30 million. Specific terms were not disclosed. The
acquisition will be accounted for as a purchase and the company will record a
non-recurring charge during its current fiscal quarter (which ends September
30, 1996) for substantially all of the purchase price.
The acquired software technology, called Reflex, is a three-dimensional
(3D), object-oriented modeling and management system that enables designers to
use objects, created and stored in library databases, to design, visualize,
manage and operate various types of large engineering projects.
According to Steven C. Walske, chairman and chief executive officer of
Parametric Technology: "Consistent with our own flagship product,
Pro/ENGINEER, the Reflex software represents very interesting, leading-edge
technology with a great deal of potential for transforming the way engineers,
designers and architects work. At present, however, this is raw technology,
and we anticipate that it will require additional development effort by PTC
before we have applications that are commercially viable."
Walske noted that the Reflex software has generated no meaningful revenue to
date, and that any revenue generated from the acquired technology would be
immaterial during Parametric's first year of ownership. There should be no
dilutive impact from the acquisition or its follow-on development and start-up
activities, he added.
"While the acquisition has no near-term impact on our business operations or
growth prospects, we believe that it should--over time--expand the size of the
market opportunity that Parametric Technology is addressing," said Walske. "We
view that aspect of this acquisition very positively."
Jonathan Ingram and Gerard Gartside are the co-founders and principal
developers of the Reflex software. According to Ingram, "We knew we had some
pretty exciting core technology on our hands, but we also knew that we needed
the leverage of Parametric's technical and marketing resources if we were ever
going to make significant inroads in the marketplace. With Parametric behind
this technology, we believe that the software has an opportunity to one day
set new standards for project modeling and design."
At present, the Reflex software consists of three components--the core
technology or "object engine"; various libraries of standard elements for
automating the design process; and a library development language, which is a
tool for developing applications on top of the core architecture. The Reflex
modeler comprises functionality for fully coordinating project modeling,
including 2D drafting, 3D modeling, drawing production, inherent coordination,
fully dynamic model movement in all views, element creation, interference or
clash detection, and various data exchange capabilities. The core modeler is
complemented by rendering and visualization software.
Walske estimated that it will take at least six months to complete the
development of a 1.0 release of the software. The development program includes
plans for a new user interface; support for multiple platforms and operating
systems; and development of applications for selected vertical markets.
-MORE-
1
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PARAMETRIC TECHNOLOGY ACQUIRES NEW SOFTWARE TECHNOLOGY--PAGE 2
Walske noted that the Reflex technology is differentiated from other project
modeling systems by its "intelligent" parametric elements which can provide
Pro/ENGINEER-like associativity, so that changes to the specifications of a
project result in all relevant elements of the model and the related drawings
and schedules being instantly updated. He also noted that while Reflex
represents raw technology by Parametric's standards, there are several large
architectural and engineering firms currently using customized early versions
of the software to manage large projects.
"The ability to track, manage and instantly update the vast amounts of data
generated by a large engineering project should be applicable and beneficial
to a wide spectrum of applications throughout the AEC (architectural,
engineering and construction) market," said Walske. "The technology is also
scaleable in that its productivity-enhancing benefits should be as valuable to
a small engineering project as to a large-scale project that encompasses
multiple companies and multiple disciplines."
He added, "Our initial focus with this technology will be on higher end
applications that permit us to leverage our large and very successful direct
sales organization. From there, we can evaluate the marketplace's interest in
and reaction to this technology, and allow that feedback to guide future
technical direction."
Parametric Technology Corporation is the CAD/CAM/CAE industry's leading
supplier of software tools used to automate the mechanical development of a
product from its conceptual design through its release into manufacturing.
Worldwide, more than 10,500 companies employ PTC's integrated software
technologies to reduce time to market, improve engineering processes, and
optimize product quality. Parametric Technology's growth strategy emphasizes
technological leadership, aggressive price/performance, hardware independence,
worldwide distribution, and extensive customer support.
Except for the historical information contained herein, some 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. These include the company's ability to
integrate the acquired technology successfully, retain key personnel
associated with the acquisition, develop new products in a timely manner, as
well as other risks and uncertainties that are detailed from time to time in
reports filed by PTC with the Securities and Exchange Commission, including
the company's report on Form 10-Q for the quarter ended March 30, 1996.
* * * * * *
Pro/ENGINEER is a registered trademark of Parametric Technology Corporation.
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