Why was this 10-K filed late, and what is the restatement?

The filing states the delay was needed to determine the allocation of deferred maintenance revenue. After implementing a new accounting system in late 2002, the company found it had miscalculated the allocation of deferred maintenance revenue from 1999 through 2002. It identified $33.4 million of maintenance revenue that should have been deferred at September 30, 2002, and restated fiscal 1999 through 2001 results accordingly.

What drove the decline in revenue and the larger net loss?

Management cites weak technology spending in the global manufacturing economy, declines in market share for design solutions, and a decline in large customer commitments for Windchill-based products. Net loss also reflected $31,150 thousand in restructuring charges and a $48.0 million increase in the valuation allowance against deferred tax assets, which contributed to a $19,282 thousand income tax provision despite a pre-tax loss of $74,339 thousand.

What is the risk to the stock listing?

The filing states that the company received a Nasdaq Staff Determination letter on January 15, 2003 stating its common stock was subject to delisting for failure to meet filing requirements. The company requested a hearing before a Nasdaq Listing Qualifications Panel, scheduled for February 14, 2003. The filing states there can be no assurance the Panel will grant continued listing, and that delisting could reduce liquidity and affect the stock price.

How is the company's liquidity position?

Cash and investments totaled $210,414 thousand at September 30, 2002, down from $249,098 thousand. The company states that existing cash, operating cash flow and stock plan proceeds should be sufficient through at least 2003. In the first quarter of 2003 it received a U.S. federal income tax refund of $48.2 million and made a $10.6 million pension contribution. The filing also warns that cash could be adversely affected if operating losses continue.

What is management's outlook?

Management states that spending in its sector is weak and in its view is likely to continue at disappointing levels for the next several quarters. Its growth depends on improved economic conditions, the success of Pro/ENGINEER Wildfire (with production shipments expected in the first calendar quarter of 2003), and adoption of its Windchill Link point solutions.

PTC 10-K FY2002 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed January 28, 2003. Cited figures are marked; the original filing is the authoritative source.

Parametric Technology Corporation (PTC), headquartered in Needham, MA, develops product lifecycle management (PLM) software, comprising its Pro/ENGINEER design solutions and its Windchill-based collaboration and control solutions.

This 10-K for fiscal 2002 (year ended September 30, 2002) was filed late, on January 28, 2003, following a restatement of 1999 through 2002 maintenance revenue. Total revenue fell to $741,957 thousand^a in 2002 from $937,549 thousand in 2001 (restated), while the net loss widened to $93,621 thousand from $10,138 thousand. The loss was driven by an operating loss of $78,486 thousand, $31,150 thousand of restructuring charges, and a $48,000 thousand increase in the deferred tax valuation allowance that pushed the tax provision to $19,282 thousand.

The filing shows design solutions revenue declining to $564,882 thousand^b from $720,253 thousand, while collaboration and control (Windchill-based) revenue fell to $177,075 thousand from $217,296 thousand. Management attributes the decline to weak technology spending in the manufacturing economy and lost market share in design solutions. Cash and investments dropped to $210,414 thousand from $249,098 thousand, and cash used by operations was $22,614 thousand.

Shareholders' equity declined to $289,928 thousand^c from $385,092 thousand. The filing also discloses a Nasdaq Staff Determination letter, received January 15, 2003, citing the late filing and subjecting the stock to possible delisting; a hearing was set for February 14, 2003, and the company's ticker was changed to PMTCE during the delay. Management expects weak spending to continue for several quarters.

02—Key points

Key Highlights

Total revenue was $741,957 thousand in 2002, down from $937,549 thousand in 2001, a decrease the filing describes as 21%.
Net loss was $93,621 thousand in 2002 versus $10,138 thousand in 2001, including a $48.0 million increase in the deferred tax valuation allowance.
Restatement reduced service revenue by $12.0 million in 2002 after $33.4 million of maintenance revenue was identified as needing deferral to fiscal 2003 and later.
Design solutions revenue fell to $564,882 thousand from $720,253 thousand, while Windchill-based collaboration and control revenue fell to $177,075 thousand from $217,296 thousand.
Cash and investments totaled $210,414 thousand at September 30, 2002, down from $249,098 thousand, with operating cash flow of negative $22,614 thousand.
Nasdaq issued a Staff Determination letter on January 15, 2003 citing the late filing; a Listing Qualifications Panel hearing was set for February 14, 2003.
Restructuring charges were $31,150 thousand in 2002, and the company reduced its headcount to 3,803 employees from 4,533 at the end of 2001.

03—Questions

Frequently Asked Questions

Why was this 10-K filed late, and what is the restatement?
The filing states the delay was needed to determine the allocation of deferred maintenance revenue. After implementing a new accounting system in late 2002, the company found it had miscalculated the allocation of deferred maintenance revenue from 1999 through 2002. It identified $33.4 million of maintenance revenue that should have been deferred at September 30, 2002, and restated fiscal 1999 through 2001 results accordingly.
What drove the decline in revenue and the larger net loss?
Management cites weak technology spending in the global manufacturing economy, declines in market share for design solutions, and a decline in large customer commitments for Windchill-based products. Net loss also reflected $31,150 thousand in restructuring charges and a $48.0 million increase in the valuation allowance against deferred tax assets, which contributed to a $19,282 thousand income tax provision despite a pre-tax loss of $74,339 thousand.
What is the risk to the stock listing?
The filing states that the company received a Nasdaq Staff Determination letter on January 15, 2003 stating its common stock was subject to delisting for failure to meet filing requirements. The company requested a hearing before a Nasdaq Listing Qualifications Panel, scheduled for February 14, 2003. The filing states there can be no assurance the Panel will grant continued listing, and that delisting could reduce liquidity and affect the stock price.
How is the company's liquidity position?
Cash and investments totaled $210,414 thousand at September 30, 2002, down from $249,098 thousand. The company states that existing cash, operating cash flow and stock plan proceeds should be sufficient through at least 2003. In the first quarter of 2003 it received a U.S. federal income tax refund of $48.2 million and made a $10.6 million pension contribution. The filing also warns that cash could be adversely affected if operating losses continue.
What is management's outlook?
Management states that spending in its sector is weak and in its view is likely to continue at disappointing levels for the next several quarters. Its growth depends on improved economic conditions, the success of Pro/ENGINEER Wildfire (with production shipments expected in the first calendar quarter of 2003), and adoption of its Windchill Link point solutions.

04—Continue

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