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PTC Annual Report, Year Ended Sep 30, 2006

Filing Date
Filed December 14, 2006
Period End
September 30, 2006
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 14, 2006. Cited figures are marked; the original filing is the authoritative source.

Parametric Technology Corporation (PTC) develops, markets and supports product lifecycle management (PLM) and enterprise content management (ECM) software and related services.

In fiscal 2006 (year ended September 30, 2006), total revenue was $854.9 milliona, up 19% from 2005, including license revenue of $263.5 million, up 26%. Net income was $60.9 million, or $0.54 per diluted share, compared with $83.6 million, or $0.75 per diluted share, in 2005. Operating income declined to $71.7 million from $85.8 million.

The filing attributes higher operating expenses mainly to the adoption of SFAS 123(R), which produced $40.5 millionb of stock-based compensation expense, and to acquisitions completed over the prior two years. Growth was driven by Enterprise Solutions revenue of $293.5 million, up 35%, and Desktop Solutions revenue of $561.4 million, up 12%. The company acquired Mathsoft for $64.4 million in cash in 2006 and ITEDO in October 2006 for approximately $17 million.

Cash and cash equivalents declined to $183.4 millionc at year-end, and the company had no borrowings under a $230 million revolving credit facility entered into in February 2006. The filing notes that a full valuation allowance of $134.3 million remains against deferred tax assets, and that management anticipates it may reverse some or all of the U.S. valuation allowance of $109 million during 2007, which would produce a significant one-time non-cash benefit to net income.

The company also reported a settlement of its lawsuit with Rand, a former largest distributor, with a $2.3 milliond charge recorded in general and administrative expense, and a $5.9 million net restructuring charge in 2006. Management concluded that internal control over financial reporting was effective as of September 30, 2006.

02—Key points

Key Highlights

  1. Total revenue of $854.9 million in fiscal 2006, up 19% from $720.7 million in 2005; license revenue of $263.5 million, up 26%.
  2. Net income of $60.9 million ($0.54 per diluted share) versus $83.6 million ($0.75) in 2005; operating income fell to $71.7 million from $85.8 million.
  3. Stock-based compensation expense rose to $40.5 million in 2006 from $15.5 million in 2005, following adoption of SFAS 123(R).
  4. Enterprise Solutions revenue grew 35% to $293.5 million; Desktop Solutions revenue grew 12% to $561.4 million.
  5. Acquired Mathsoft for $64.4 million in cash in 2006 and agreed to acquire ITEDO in October 2006 for approximately $17 million.
  6. Cash and cash equivalents of $183.4 million at September 30, 2006, down from $204.4 million; no borrowings under the $230 million revolving credit facility.
  7. U.S. valuation allowance of $109 million may be partly or fully reversed in 2007, which would create a significant one-time non-cash income tax benefit.

03—Questions

Frequently Asked Questions

  1. How did PTC's revenue and profitability change in fiscal 2006?

    Total revenue rose 19% to $854.9 million, but operating income fell to $71.7 million from $85.8 million and net income fell to $60.9 million from $83.6 million. The filing attributes the expense increase mainly to stock-based compensation under SFAS 123(R), amortization and charges from acquisitions, and planned spending to support revenue growth.

  2. What drove the growth in Enterprise and Desktop Solutions?

    Enterprise Solutions revenue increased 35% to $293.5 million, reflecting organic growth, Arbortext contributions, and Pro/INTRALINK 8.0 adoption. Desktop Solutions revenue increased 12% to $561.4 million, driven by entry-level Pro/ENGINEER packages and contributions from Arbortext and Mathsoft products, partly offset by a decline in high-end Pro/ENGINEER packages, particularly in Japan.

  3. What is the potential impact of the U.S. valuation allowance reversal?

    The company had a valuation allowance of $109 million on U.S. deferred tax assets and anticipates it may reverse some or all of it during 2007 if financial performance continues to improve. The filing states this would produce a significant one-time non-cash income tax benefit to net income, after which the company would return to recording a full tax provision on U.S. profits, likely increasing its effective tax rate.

  4. What legal matters were resolved in the filing period?

    The lawsuit filed in 2003 by Rand A Technology Corporation and Rand Technologies Limited, formerly PTC's largest distributor, was settled in December 2006. PTC recorded a $2.3 million charge in general and administrative expense. Rand had initially claimed damages above $50 million, later quantified at $12 million.

  5. What liquidity resources does PTC have?

    Cash and cash equivalents were $183.4 million at September 30, 2006. The company had a $230 million multi-currency revolving credit facility dated February 21, 2006, expiring February 20, 2011, under which it had not borrowed. Management stated that existing cash and operating cash flow are expected to be sufficient for working capital and capital expenditure requirements for at least the next twelve months.

04—Continue

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