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PTC Annual Report, Year Ended Sep 30, 2003

Filing Date
Filed December 24, 2003
Period End
September 30, 2003
Security
PTC
In the record · 2016–202610-K1010-Q338-K130

PTC filed 10 annual reports (10-K), 33 quarterly reports (10-Q) and 130 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Feb ’18Feb ’18
  2. Material agreement8-K · Feb ’20Feb ’20
  3. Deal closed8-K · May ’22May ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed December 24, 2003. Cited figures are marked; the original filing is the authoritative source.

Parametric Technology Corporation (PTC), headquartered in Needham, MA, reported a net loss of $98.3 milliona for fiscal 2003 (year ended September 30, 2003), compared with a net loss of $93.6 million in 2002 and $10.1 million in 2001.

Total revenue was $671.9 millionb in 2003, down from $742.0 million in 2002 and $937.5 million in 2001. The company attributes the decline to weak technology spending in the global manufacturing economy, customers' reluctance to make large enterprise-wide software purchases, and saturation and increased competition in the design solutions market. License revenue fell to $205.3 million, while service revenue was $466.6 million, or 69% of total revenue.

The company is shifting its focus from its traditional Pro/ENGINEER design software toward its Windchill-based collaboration and control solutions for product lifecycle management (PLM). Design solutions revenue declined to $498.4 millionc, while collaboration and control solutions revenue was $173.5 million. Management has begun cost-reduction initiatives aimed at lowering quarterly operating costs to approximately $150 million, excluding restructuring charges, by the end of fiscal 2004, and expects restructuring charges of $35 million to $45 million in 2004.

Cash and investments totaled $205.3 milliond at September 30, 2003, and the company has not paid cash dividends. The filing also discloses nine shareholder class action lawsuits alleging misrepresentation of financial results for fiscal 1999 through 2001, and a lawsuit by its former largest distributor, Rand A Technology Corporation.

Management believes the claims are without merit and intends to defend them vigorously. In addition, the company disclosed a software issue affecting Pro/ENGINEER that could cause inter-process communications to time out on January 10, 2004, for which corrective patches are being distributed.

02—Key points

Key Highlights

  1. Total revenue declined to $671.9 million in 2003 from $742.0 million in 2002 and $937.5 million in 2001.
  2. Net loss widened to $98.3 million in 2003 from $93.6 million in 2002; diluted loss per share was $0.37.
  3. License revenue fell to $205.3 million from $242.9 million in 2002; service revenue was $466.6 million, or 69% of total revenue.
  4. Design solutions revenue was $498.4 million, while collaboration and control solutions (Windchill-based) revenue was $173.5 million; Windchill Link solutions accounted for 52% of collaboration and control license revenue in 2003.
  5. Cost-reduction program targets quarterly operating costs of approximately $150 million, excluding restructuring, by the end of fiscal 2004, with expected 2004 restructuring charges of $35 million to $45 million.
  6. Cash and investments were $205.3 million at September 30, 2003, down from $210.4 million; operating cash flow was $6.5 million, aided by $53.3 million in net tax refunds.
  7. Nine shareholder class action lawsuits and a lawsuit from distributor Rand A Technology Corporation are pending; management believes the claims are without merit.

03—Questions

Frequently Asked Questions

  1. Why did PTC's revenue decline in fiscal 2003?

    The filing attributes the decline to continued weakness in technology spending in the global manufacturing economy, customers' reluctance to complete large enterprise-wide software purchases, and the relative saturation and increased competitiveness of the North American and European design solutions markets. Revenue in North America fell 20% in 2003 compared with 2002.

  2. What is PTC doing to improve profitability?

    The company began cost-cutting initiatives in 2003 designed to reduce quarterly operating costs to approximately $150 million, excluding restructuring charges, by the end of fiscal 2004. It recorded restructuring and other charges of $30.9 million in 2003 and expects $35 million to $45 million in additional restructuring charges in 2004, mainly for severance and excess facilities.

  3. What legal risks does PTC face?

    Nine class action lawsuits filed between February and April 2003 allege misrepresentation of financial results for fiscal 1999, 2000 and 2001, and seek unspecified damages. A separate suit by Rand A Technology Corporation, the company's largest distributor, alleges breach of distribution agreements and seeks substantial damages. The company believes the claims are without merit and cannot predict the outcome.

  4. Does PTC pay dividends, and what is its liquidity position?

    PTC has not paid cash dividends on its common stock and has historically retained earnings, though it intends to review its dividend policy from time to time. As of September 30, 2003, cash and investments totaled $205.3 million, and management believes existing resources will be sufficient to meet requirements through at least 2004.

04—Continue

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