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12 May 2005

UGS Reports First Quarter 2005 Revenue of US$252.6 Million -- Performance Marks Seventh Consecutive Quarter of Total Revenue Growth for Product Lifecycle Management (PLM) Industry Leader

FOR RELEASE Thursday, May 12, 2005

 

PLANO, Texas– UGS Corp., a leading global provider of product lifecycle management (PLM) software and services, today announced financial results for the first quarter ended March 31, 2005.  The company signed 22enterprise contracts, which we define as contracts with total contract value of more than US$1 million each – nearly doubling the number of enterprise contracts signed during the same period a year earlier – driving 38.4 percent total revenue growth in cPDM and enabling UGS to expand its market share lead in this high-growth segment of the PLM industry.    

 

First quarter financial highlights include:

·        Total revenue increased to US$252.6 million, or 8 percent growth over the same period a year earlier.  The company saw an increase in total revenue in each geographic segment compared to the same period in 2004.  

·        Adjusted operating income, excluding amortization related to purchase accounting, was US$46.6 million.  Reported operating income was US$13.8 million and includes the impact of amortization related to purchase accounting of US$32.8 million.  In the same period a year prior, adjusted operating income was US$44.5 million excluding amortization related to purchase accounting of US$7.6 million, which when included resulted in reported operating income of US$36.9 million.  

·        Adjusted EBITDA (defined below) was US$56.9 million, which includes US$3.4 million of expense over the same period a year earlier for staffing infrastructure and marketing initiatives necessary for operation as an independent company.

·        UGS’ first quarter results do not include Tecnomatix Technologies Ltd., as the transaction closed on April 1, 2005.   

 

“We continue to see growth in the number of enterprise contracts as well as the number of non-traditional market contracts, which we believe reflects the growing visibility of PLM as a mission-critical enterprise strategy as well as the business value, open technology solutions and global scalability that only UGS can provide,” said Tony Affuso, chairman, CEO and president of UGS.  “UGS continues to gain steam as an independent company particularly in the cPDM space, where both we and a growing chorus of analysts believe the battle for PLM leadership will be won.” 

 

Business Highlights

  • The signing of 22 enterprise contracts with a total contract value of more than US$1 million each.  The large majority of these enterprise contracts included cPDM, with many – including two of the company’s three contracts in the quarter with total contract value exceeding US$5 million -- combining cPDM and CAx solutions.  The company expects the revenue generated from the 22 enterprise contracts signed in the quarter to be spread over several quarters going forward based on the services components of the underlying contracts.
  • The signing ofmultiple non-traditional contracts in industries such as consumer packaged goods, government, shipbuilding, media and retail and apparel.
  • The acquisition of Tecnomatix Technologies Ltd., the leader in Manufacturing Process Management (MPM) software solutions for the automotive, electronics, aerospace and other manufacturing and processing industries, which closed on April 1, 2005.  (UGS today separately announced a US$9.7 million, enterprise digital manufacturing contract with Comau, a world leading manufacturer of automotive production systems.  See separate release.)
  • The signing of the company’s first two major systems integrators agreements with HP and Capgemini.
  • The signing of a strategic alliance with Autodesk to extend collaboration across the supply chain for nearly 10 million users.
  • The announcement of the immediate availability of UGS’ JT2Go™ solution, a set of no-cost 3D viewing products enabling companies to globally share detailed 3D product and manufacturing data using the lightweight JT format – the world’s most widely-used 3D format.  The value and functionality of this capability for enterprise and supply chain collaboration have prompted more than 100 companies across the world – a 100 percent increase over the same time a year ago – to adopt the JT Open initiative. 

UGS will broadcast a conference call on its first quarter 2005 earnings with securities analysts live on the Internet at 10:30 a.m. Central time, Thursday, May 12, 2005.  See below for access information.  Participation will be listen-only mode through +1-630-395-0029, pass code: UGS, or athttps://e-meetings.mci.com,pass code: UGS.  

Please note, those joining the streaming audio online call must have Windows Media Player or Real Player to participate.  It is required that a person register by clicking on the Join An Event link under the Events tab on the landing page (simply follow specific instructions).

 

A replay of the UGS first quarter earnings conference call will be available until June 11, 2005 at  https://e-meetings.mci.com/nc/join.php?i=PA7005235&p=UGS&t=r.

 

Note:

Some of the statements made during the call may contain forward- looking information. Our actual results may differ materially from such statements and we advise you to read the discussion of the risks and uncertainties associated with our business and results of operations contained in our recently filed Registration Statement on S-4. We want to remind you that the company assumes no duty to update forward-looking statements.   Finally, this presentation contained pro forma, or non-GAAP, financial information, which we believe are meaningful in evaluating the company’s performance.  For detailed disclosures on pro forma metrics, adjusted financial results and their GAAP reconciliations, please refer to the financial data contained within this press release.

 

 

 

About UGS

UGS is a leading global provider of product lifecycle management (PLM) software and services with nearly 4 million licensed seats and 42,000 clients worldwide.  The company promotes openness and standardization and works collaboratively with its clients in creating enterprise solutions enabling them to transform their process of innovation and thus begin to capture the value of PLM. 

 

Note:  UGS and Teamcenter are registered trademarks of UGS Corp. or its subsidiaries in the United States and in other countries.  Tecnomatix, JT2GO and Open Manufacturing Backbone are trademarks of UGS Corp. or its subsidiaries in the United States and in other countries.  All other trademarks, registered trademarks or service marks belong to their respective holders.

 

The statements in this news release that are not historical statements, including statements regarding our business, results of operations expected financial performance and other statements identified by forward looking terms such as "may," "will," "expect," "plan," "anticipate" or "project," are forward-looking statements. These statements are subject to numerous risks and uncertainties which could cause actual results to differ materially from such statements, including, among others, risks relating to developments in the PLM industry, loss or downsizing of customers, competition, failure to innovate, international operations and exchange rate fluctuations, terrorist activities, acquisitions, changes in pricing models, intellectual property and losses of key employees. UGS has included a discussion of these and other pertinent risk factors in its registration statement on Form S-4 most recently filed with the SEC.  UGS disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

EBITDA represents net income (loss) before interest expense, income taxes, depreciation and amortization.  Adjusted EBITDA is defined as EBITDA further adjusted to give effect to certain items that are required in calculating covenant compliance under our senior secured credit facility entered into May 2004.  Adjusted EBITDA is calculated by subtracting from or adding to EBITDA items of income or expense as described below.  EBITDA and Adjusted EBITDA are not a recognized terms under generally accepted accounting principles, or GAAP.  EBITDA and Adjusted EBITDA do not represent net income, as that term is defined under GAAP, and should not be considered as an alternative to net income as an indicator of our operating performance.  Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow available for management or discretionary use as such measures do not consider certain cash requirements such as capital expenditures (including capitalized software expense), tax payments and debt service requirements. UGS Corp. considers EBITDA and Adjusted EBITDA to be key indicators of our ability to pay our debt.  We have included information concerning EBITDA and Adjusted EBITDA because we use such information in determining compensation of our management and in our review of the performance of our business.  EBITDA and Adjusted EBITDA as presented herein are not necessarily comparable to similarly titled measures.  The following is a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the GAAP measure we believe to be most directly comparable to EBITDA and Adjusted EBITDA.

 

 

Successor

 

 

Predecessor

Reconciliation of net (loss) income to EBITDA:

Three months

ended

March 31, 2005

 

 

Three months

ended

March 31, 2004

Net (loss) income

   $      (8,169)

 

 

   $     25,461

Interest expense

           21,163

 

 

             1,209

(Benefit) provision for income taxes

           (3,974)

 

 

           11,708

Depreciation and amortization

         37,534

 

 

         20,209

EBITDA

  $     46,554

 

 

  $     58,587

 

 

 

 

 

Reconciliation of EBITDA to Adjusted EBITDA:

 

 

 

 

EBITDA

   $     46,554

 

 

   $     58,587

Impact of revenue reduction resulting from purchase accounting (a)

             4,638

 

 

                

Other items (b)

             1,950

 

 

                

Currency translation impact (c)

           3,800

 

 

               

Adjusted EBITDA

  $     56,942

 

 

  $     58,587

 

 

 

 

 

(a) Removes the purchase accounting impact for the adjustment to deferred revenue.

(b) Represents the impact of management, consulting and advisory fees and related expenses paid to our parent companies and affiliates of each of our sponsors, as well as expenses associated with our retention incentive plan for certain members of management.

(c) Represents the net effect of unrealized gains and losses from revaluing the intercompany debt that resulted from the transaction in which the Company was acquired in 2004 and from hedging obligations used to offset foreign exchange currency balance sheet exposures.

 

 

 

 

 

 


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

 

 

Successor

 

 

Predecessor

 

UGS Corp.

 

 

UGS PLM

 

 

 

 

Solutions Inc.

 

 

 

 

 

 

Three months

 

 

Three months

 

ended

 

 

ended

 

March 31, 2005

 

 

March 31, 2004

Revenue:

 

 

 

 

Software

  $        73,119

 

 

  $        72,544

Maintenance

          111,607

 

 

          102,030

Services and other

           67,839

 

 

           60,069

Total revenue

         252,565

 

 

         234,643

Cost of revenue:

 

 

 

 

Software

              4,456

 

 

              5,646

Maintenance

            13,363

 

 

            14,401

Services and other

            55,996

 

 

            49,050

Amortization of capitalized software and acquired intangible assets

           26,186

 

 

           13,972

Total cost of revenue

         100,001

 

 

           83,069

Gross profit

         152,564

 

 

         151,574

Operating expenses:

 

 

 

 

Selling, general and administrative

            95,169

 

 

            79,540

Research and development

            35,981

 

 

            33,597

Amortization of other intangible assets

             7,570

 

Primární kontakt

Mendi Paschal
+1 972 987 3210
paschal@ugs.com

Doug Barnett -- Financial
1 972 987 3352
doug.barnett@ugs.com