01—Abstract
Summary
Summary of the 10-K filed November 24, 2009. Cited figures are marked; the original filing is the authoritative source.
Parametric Technology Corporation (PTC) reported a sharp downturn in fiscal 2009 (year ended September 30, 2009) as customers reduced and delayed purchases amid the adverse global economic environment.
Total revenue was $938.2 milliona compared with $1,070.3 million in 2008, and license revenue fell 36% to $212.7 million. Operating income declined to $19.3 million from $125.2 million, and net income fell to $31.5 million from $79.7 million. Foreign currency movements, particularly the weaker Euro, reduced reported revenue by $39 million while lowering reported costs and expenses by $41 million.
Cash flow from operations was $69.7 millionb, down from $222.2 million, and the company held $235.1 million in cash and cash equivalents at year-end. Management cut costs through a hiring freeze, elimination of merit pay increases, reduced travel and marketing spending, and a workforce reduction that produced $22.7 million of restructuring charges.
The company nonetheless increased research and development spending to $188.5 millionc, and it expects license revenue to grow in fiscal 2010 while maintenance and services revenue remain roughly flat. Investors should also note an ongoing lawsuit by GE Financial Services Corporation seeking $47 million in U.S. damages, plus a Japanese claim of about $65 million, with $51.9 million of related revenue deferred as customer advances.
02—Key points
Key Highlights
- Total revenue declined 12% to $938.2 million in 2009 from $1,070.3 million in 2008, with license revenue down 36% to $212.7 million.
- Operating income fell to $19.3 million from $125.2 million, and net income declined to $31.5 million, or $0.27 per diluted share, from $79.7 million, or $0.68 per diluted share.
- Maintenance revenue was $499.1 million and consulting and training services revenue was $226.4 million; maintenance grew to 53% of total revenue in 2009 from 47% in 2008.
- Cash and cash equivalents were $235.1 million at September 30, 2009, with an additional $172 million available under the $230 million revolving credit facility.
- Cash provided by operating activities was $69.7 million, down $152 million from 2008, and the company repaid $32.0 million of revolver borrowings and repurchased $14.2 million of common stock.
- Restructuring and other charges were $22.7 million, covering severance for 382 employees notified of termination during 2009.
- A GE Financial Services lawsuit seeks $47 million in U.S. damages, trebled, plus a Japanese action seeking about $65 million; the company disputes the claims and has deferred $51.9 million of related revenue as customer advances.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed November 24, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $938.18M$1.07B | −12.3% |
| R&D Expenses | $188.50M$182.02M | +3.6% |
| Operating Expenses | $918.89M$945.09M | −2.8% |
| Operating Income | $19.30M$125.25M | −84.6% |
| Interest Expense | $3.20M$7.82M | −59.1% |
| Net Income | $31.52M$79.70M | −60.5% |
| EPS (Basic) | $0.27$0.70 | −61.4% |
| EPS (Diluted) | $0.27$0.68 | −60.3% |
| Shares Outstanding (Basic) | 114.95M113.70M | +1.1% |
| Shares Outstanding (Diluted) | 117.36M117.87M | −0.4% |
05—Questions
Frequently Asked Questions
How did PTC's revenue and profitability change in fiscal 2009?
Total revenue fell to $938.2 million from $1,070.3 million, driven mainly by a 36% decline in license revenue, and foreign currency movements reduced revenue by $39 million. Operating income dropped to $19.3 million from $125.2 million, and net income fell to $31.5 million from $79.7 million, helped by a $54 million decrease in the income tax provision.
What did management say about fiscal 2010?
Management expects the global economy to improve in fiscal 2010, leading to license revenue growth, with recovery in North America ahead of Europe and Asia-Pacific. Maintenance and services revenue are expected to be relatively flat with 2009, and the company plans modest increases in investments in research and development, its reseller channel, and its services business.
What is the status of the GEFS lawsuit?
GE Financial Services alleges PTC was fraudulently involved in financing transactions with Toshiba and seeks $47 million in U.S. damages, trebled, plus attorneys' fees, and a Japanese action seeks about $65 million. PTC disputes the claims and has not accrued any other liability, while $51.9 million of revenue previously recorded for the transactions remains deferred as customer advances.
How is the company's balance sheet and liquidity position?
At September 30, 2009, PTC had $235.1 million in cash and cash equivalents, total assets of $1.35 billion, and stockholders' equity of $761.6 million. Borrowings under the revolving credit facility were $57.9 million, and the company stated it was in compliance with all covenants, with a leverage ratio of 0.43 to 1.00.
Did PTC pay dividends or repurchase shares?
PTC does not pay cash dividends and retains earnings for its business. During 2009 it repurchased 1.2 million shares for $14.2 million, leaving $80.6 million remaining under a $100 million authorization that expires May 31, 2010.
06—Continue