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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended: June 29, 2002
 
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
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
 
140 Kendrick Street, Needham, MA 02494
(Address of principal executive offices, including zip code)
 
(781) 370-5000
(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  ¨
 
There were 261,190,198 shares of our common stock outstanding on June 29, 2002.
 


Table of Contents
PARAMETRIC TECHNOLOGY CORPORATION
 
INDEX TO FORM 10-Q
 
For the Quarter Ended June 29, 2002
 
        
Page Number

Part I – FINANCIAL INFORMATION
    
Item 1.
 
  Financial Statements
    
      
1
      
2
      
3
      
4
      
5
Item 2.
    
9
Item 3.
    
28
Part II – OTHER INFORMATION
    
Item 6.
    
28
  
28

ii


Table of Contents
PART I – FINANCIAL INFORMATION
 
PARAMETRIC TECHNOLOGY CORPORATION
 
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
 
    
June 29,
2002

    
September 30, 2001

 
ASSETS
  
(unaudited)
        
Current assets:
                 
Cash and cash equivalents
  
$
177,519
 
  
$
217,369
 
Short-term investments
  
 
13,509
 
  
 
13,906
 
Accounts receivable, net of allowance for doubtful
accounts of $5,644 and $5,635
  
 
158,815
 
  
 
185,444
 
Other current assets and prepaid expenses
  
 
94,973
 
  
 
93,934
 
Income taxes
  
 
32,073
 
  
 
5,035
 
    


  


Total current assets
  
 
476,889
 
  
 
515,688
 
Marketable investments
  
 
12,827
 
  
 
17,823
 
Property and equipment, net
  
 
91,154
 
  
 
91,501
 
Goodwill and other intangible assets, net
  
 
65,199
 
  
 
92,838
 
Other assets
  
 
90,599
 
  
 
79,988
 
    


  


Total assets
  
$
736,668
 
  
$
797,838
 
    


  


LIABILITIES AND STOCKHOLDERS’ EQUITY
                 
Current liabilities:
                 
Accounts payable
  
$
28,357
 
  
$
28,640
 
Accrued expenses
  
 
49,998
 
  
 
55,016
 
Accrued compensation and severance
  
 
64,218
 
  
 
68,936
 
Deferred revenue
  
 
189,526
 
  
 
207,044
 
    


  


Total current liabilities
  
 
332,099
 
  
 
359,636
 
Other liabilities
  
 
44,090
 
  
 
38,500
 
Stockholders’ equity:
                 
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued
  
 
—  
 
  
 
—  
 
Common stock, $0.01 par value; 500,000 shares authorized; 276,053 shares issued
  
 
2,761
 
  
 
2,761
 
Additional paid-in capital
  
 
1,644,150
 
  
 
1,643,626
 
Treasury stock, at cost, 14,862 and 15,515 shares, respectively
  
 
(165,825
)
  
 
(173,504
)
Accumulated deficit
  
 
(1,095,658
)
  
 
(1,045,096
)
Accumulated other comprehensive loss
  
 
(24,949
)
  
 
(28,085
)
    


  


Total stockholders’ equity
  
 
360,479
 
  
 
399,702
 
    


  


Total liabilities and stockholders’ equity
  
$
736,668
 
  
$
797,838
 
    


  


 
The accompanying notes are an integral part of the consolidated financial statements.

1


Table of Contents
PARAMETRIC TECHNOLOGY CORPORATION
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
    
Three months ended

    
Nine months ended

 
    
June 29, 2002

    
June 30, 2001

    
June 29, 2002

    
June 30, 2001

 
Revenue:
                                   
License
  
$
56,215
 
  
$
86,502
 
  
$
177,565
 
  
$
295,222
 
Service
  
 
126,293
 
  
 
144,165
 
  
 
389,835
 
  
 
417,823
 
    


  


  


  


Total revenue
  
 
182,508
 
  
 
230,667
 
  
 
567,400
 
  
 
713,045
 
    


  


  


  


Costs and expenses:
                                   
Cost of license revenue
  
 
4,197
 
  
 
4,721
 
  
 
12,608
 
  
 
11,666
 
Cost of service revenue
  
 
48,615
 
  
 
62,596
 
  
 
152,081
 
  
 
186,785
 
Sales and marketing
  
 
83,321
 
  
 
98,881
 
  
 
252,420
 
  
 
284,470
 
Research and development
  
 
33,464
 
  
 
38,494
 
  
 
103,725
 
  
 
111,568
 
General and administrative
  
 
17,302
 
  
 
16,939
 
  
 
49,505
 
  
 
51,023
 
Amortization of goodwill and other intangible assets
  
 
8,820
 
  
 
9,450
 
  
 
27,019
 
  
 
28,401
 
Nonrecurring charges
  
 
18,392
 
  
 
3,816
 
  
 
24,481
 
  
 
9,961
 
    


  


  


  


Total costs and expenses
  
 
214,111
 
  
 
234,897
 
  
 
621,839
 
  
 
683,874
 
    


  


  


  


Operating income (loss)
  
 
(31,603
)
  
 
(4,230
)
  
 
(54,439
)
  
 
29,171
 
Other income (expense), net
  
 
(1,230
)
  
 
448
 
  
 
(1,927
)
  
 
3,015
 
Write-down of investments
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
(8,681
)
    


  


  


  


Income (loss) before income taxes
  
 
(32,833
)
  
 
(3,782
)
  
 
(56,366
)
  
 
23,505
 
Provision for (benefit from) income taxes
  
 
(8,263
)
  
 
(1,097
)
  
 
(13,562
)
  
 
6,815
 
    


  


  


  


Net income (loss)
  
$
(24,570
)
  
$
(2,685
)
  
$
(42,804
)
  
$
16,690
 
    


  


  


  


Earnings (loss) per share (Note 3):
                                   
Basic
  
$
(0.09
)
  
$
(0.01
)
  
$
(0.16
)
  
$
0.06
 
Diluted
  
$
(0.09
)
  
$
(0.01
)
  
$
(0.16
)
  
$
0.06
 
 
The accompanying notes are an integral part of the consolidated financial statements.

2


Table of Contents
PARAMETRIC TECHNOLOGY CORPORATION
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
    
Nine months ended

 
    
June 29, 2002

    
June 30, 2001

 
Cash flows from operating activities:
                 
Net income (loss)
  
$
(42,804
)
  
$
16,690
 
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
                 
Depreciation and amortization
  
 
54,688
 
  
 
57,151
 
Non-cash portion of nonrecurring charges and write-down of investments
  
 
—  
 
  
 
12,731
 
Changes in assets and liabilities which provided (used) cash:
                 
Accounts receivable
  
 
26,629
 
  
 
2,945
 
Accounts payable and accrued expenses
  
 
(8,397
)
  
 
3,783
 
Accrued compensation and severance
  
 
(4,718
)
  
 
1,003
 
Deferred revenue
  
 
(17,518
)
  
 
(20,532
)
Income taxes
  
 
(30,684
)
  
 
(2,384
)
Other current assets
  
 
481
 
  
 
(12,654
)
Other noncurrent assets and liabilities
  
 
(235
)
  
 
(3,897
)
    


  


Net cash provided (used) by operating activities
  
 
(22,558
)
  
 
54,836
 
    


  


Cash flows from investing activities:
                 
Additions to property and equipment
  
 
(25,953
)
  
 
(50,689
)
Additions to other intangible assets
  
 
(1,412
)
  
 
(1,661
)
Purchases of investments
  
 
(27,335
)
  
 
(23,174
)
Proceeds from sales and maturities of investments
  
 
32,843
 
  
 
51,128
 
    


  


Net cash used by investing activities
  
 
(21,857
)
  
 
(24,396
)
    


  


Cash flows from financing activities:
                 
Proceeds from issuance of common stock
  
 
4,919
 
  
 
18,711
 
Purchases of treasury stock
  
 
(4,998
)
  
 
(111,712
)
    


  


Net cash used by financing activities
  
 
(79
)
  
 
(93,001
)
    


  


Net effect of exchange rate changes on cash
  
 
4,644
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