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: March 29, 2003
Commission File Number: 0-18059
Parametric Technology Corporation
(Exact name of registrant as specified in its charter)
| Massachusetts (State or other jurisdiction of incorporation or organization) |
04-2866152 (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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). YES x NO ¨
There were 264,500,527 shares of our common stock outstanding on March 29, 2003 and 264,448,089 shares of our common stock outstanding on May 6, 2003.
PARAMETRIC TECHNOLOGY CORPORATION
For the Quarter Ended March 29, 2003
| Page Number | ||||
| Part I—FINANCIAL INFORMATION |
||||
| Item 1. |
Unaudited Financial Statements: |
|||
| Consolidated Balance Sheets as of March 29, 2003 and September 30, 2002 |
1 | |||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||
| Item 3. |
39 | |||
| Item 4. |
39 | |||
| Part II—OTHER INFORMATION |
||||
| Item 1. |
40 | |||
| Item 4. |
40 | |||
| Item 6. |
41 | |||
| 41 | ||||
| 42 | ||||
i
PART I—FINANCIAL INFORMATION
PARAMETRIC TECHNOLOGY CORPORATION
(in thousands, except per share data)
| March 29, 2003 |
September 30, 2002 |
|||||||
| ASSETS |
|
(unaudited) |
|
|||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
173,963 |
|
$ |
178,825 |
| ||
| Short-term investments |
|
29,924 |
|
|
27,905 |
| ||
| Accounts receivable, net of allowance for doubtful accounts of $5,726 and $6,173, respectively |
|
161,849 |
|
|
157,522 |
| ||
| Prepaid expenses |
|
37,125 |
|
|
30,726 |
| ||
| Other current assets |
|
68,471 |
|
|
53,137 |
| ||
| Prepaid income taxes |
|
1,836 |
|
|
52,470 |
| ||
| Total current assets |
|
473,168 |
|
|
500,585 |
| ||
| Marketable investments |
|
1,650 |
|
|
3,684 |
| ||
| Property and equipment, net |
|
81,253 |
|
|
86,535 |
| ||
| Goodwill (Note 5) |
|
36,958 |
|
|
36,885 |
| ||
| Other intangible assets, net (Note 5) |
|
15,287 |
|
|
17,418 |
| ||
| Other assets |
|
38,354 |
|
|
29,852 |
| ||
| Total assets |
$ |
646,670 |
|
$ |
674,959 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
29,180 |
|
$ |
23,834 |
| ||
| Accrued expenses |
|
38,456 |
|
|
45,366 |
| ||
| Accrued compensation and severance |
|
43,010 |
|
|
49,194 |
| ||
| Deferred revenue |
|
198,650 |
|
|
197,303 |
| ||
| Total current liabilities |
|
309,296 |
|
|
315,697 |
| ||
| Other liabilities |
|
70,603 |
|
|
69,334 |
| ||
| Commitments and contingencies (Note 8) |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.01 par value; 5,000 shares authorized; none issued |
|
— |
|
|
— |
| ||
| Common stock, $0.01 par value; 500,000 shares authorized; 264,501 and 262,584 shares issued, respectively |
|
2,645 |
|
|
2,626 |
| ||
| Additional paid-in capital |
|
1,648,321 |
|
|
1,644,198 |
| ||
| Accumulated deficit |
|
(1,350,075 |
) |
|
(1,323,517 |
) | ||
| Accumulated other comprehensive loss |
|
(34,120 |
) |
|
(33,379 |
) | ||
| Total stockholders’ equity |
|
266,771 |
|
|
289,928 |
| ||
| Total liabilities and stockholders’ equity |
$ |
646,670 |
|
$ |
674,959 |
| ||
The accompanying notes are an integral part of the consolidated financial statements.
1
PARAMETRIC TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three months ended |
Six months ended |
|||||||||||||||
| March 29, 2003 |
March 30, 2002 |
March 29, 2003 |
March 30, 2002 |
|||||||||||||
| Restated Note 2 |
Restated Note 2 |
|||||||||||||||
| Revenue: |
||||||||||||||||
| License |
$ |
55,284 |
|
$ |
57,007 |
|
$ |
106,761 |
|
$ |
121,350 |
| ||||
| Service |
|
115,742 |
|
|
122,906 |
|
|
236,232 |
|
|
253,982 |
| ||||
| Total revenue |
|
171,026 |
|
|
179,913 |
|
|
342,993 |
|
|
375,332 |
| ||||
| Costs and expenses: |
||||||||||||||||
| Cost of license revenue |
|
1,978 |
|
|
4,047 |
|
|
4,623 |
|
|
8,411 |
| ||||
| Cost of service revenue |
|
50,694 |
|
|
51,865 |
|
|
99,324 |
|
|
103,466 |
| ||||
| Sales and marketing |
|
77,629 |
|
|
84,588 |
|
|
159,072 |
|
|
169,099 |
| ||||
| Research and development |
|
31,942 |
|
|
35,572 |
|
|
63,842 |
|
|
70,261 |
| ||||
| General and administrative |
|
16,654 |
|
|
16,833 |
|
|
32,177 |
|
|
32,203 |
| ||||
| Amortization of goodwill and other intangible assets (Note 5) |
|
1,460 |
|
|
9,034 |
|
|
2,941 |
|
|
18,199 |
| ||||
| Restructuring charges |
|
— |
|
|
— |
|
|
— |
|
|
6,089 |
| ||||
| Total costs and expenses |
|
180,357 |
|
|
201,939 |
|
|
361,979 |
|
|
407,728 |
| ||||
| Operating loss |
|
(9,331 |
) |
|
(22,026 |
) |
|
(18,986 |
) |
|
(32,396 |
) | ||||
| Other income (expense), net |
|
(887 |
) |
|
(952 |
) |
|
(1,452 |
) |
|
(697 |
) | ||||
| Loss before income taxes |
|
(10,218 |
) |
|
(22,978 |
) |
|
(20,438 |
) |
|
(33,093 |
) | ||||
| Provision for (benefit from) income taxes |
|
4,951 |
|
|
(4,510 |
) |
|
6,121 |
|
|
(8,585 |
) | ||||
| Net loss |
$ |
(15,169 |
) |
$ |
(18,468 |
) |
$ |
(26,559 |
) |
$ |
(24,508 |
) | ||||
| Loss per share (Note 4): |
||||||||||||||||
| Basic |
$ |
(0.06 |
) |
$ |
(0.07 |
) |
$ |
(0.10 |
) |
$ |
(0.09 |
) | ||||
| Diluted |
$ |
(0.06 |
) |
$ |
(0.07 |
) |
$ |
(0.10 |
) |
$ |
(0.09 |
) | ||||
The accompanying notes are an integral part of the consolidated financial statements.
2
PARAMETRIC TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Six months ended |
||||||||
| March 29, 2003 |
March 30, 2002 |
|||||||
| Restated Note 2 |
||||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ |
(26,559 |
) |
$ |
(24,508 |
) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: |
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