UGS Corp., a leading global provider of product lifecycle management (PLM) software and services, today announced full year 2005 and fourth quarter 2005 results.
Financial highlights from the full year 2005 include:
* Total revenue increased to US$1.15 billion, or 18 percent growth over
the same period a year earlier, as the company saw an increase in total
revenue in each geographic region compared to the combined revenues of
Jan. 1, 2004 to May 26, 2004 (Predecessor) and May 27, 2004 to
Dec. 31, 2004 (Successor).
* Software revenue growth, which includes license and maintenance
revenues, increased 21 percent over the same period a year earlier.
* Collaborative Product Development Management (cPDM) revenue increased
58 percent including acquisitions, or 37 percent without acquisitions,
over the same period a year earlier.
* Operating income increased to US$83.5 million, or a 166 percent
increase over the same period a year earlier, and includes the impact
of acquisition-related intangible amortization costs of
US$150.8 million.
* EBITDA (defined below) was US$241.5 million, or a 37 percent increase
over the same period a year earlier.
* The acquisition of Tecnomatix Technologies Ltd. closed on April 1, 2005
and added US$68.4 million in overall revenue and US$52.2 million in
software revenue (including license and maintenance revenues).
* In the amounts presented above, the company has not made adjustments
for the impact of deferred revenues written off in connection with the
acquisition of the company and acquisitions by the company. These
write-offs had the effect of reducing full year 2005 revenues by
US$11.3 million and 2004 revenues by US$40.9 million.
Fourth quarter financial highlights include:
* Total revenue increased to US$326.7 million, or 15 percent growth over
the same period a year earlier. The company's fourth quarter revenue
included US$248.8 million in software revenue (including license and
maintenance revenues), or a 20 increase as compared to the fourth
quarter 2004. The company saw an increase in total revenue in each
geographic region compared to the same period in 2004.
* Operating income was US$47.1 million, a 93 percent increase as compared
to the fourth quarter 2004, and includes the impact of acquisition
related intangible amortization costs of US$39.2 million.
* EBITDA (defined below) was US$92.6 million, or 22 percent growth over
the same period a year earlier.
* cPDM revenue increased 47 percent including acquisitions, or 23 percent
without acquisitions, over the same period a year earlier.
* In the amounts presented above, the company has not made adjustments
for the impact of deferred revenues written off in connection with the
acquisition of the company and acquisitions by the company. These
write-offs had the effect of reducing fourth quarter 2005 revenues by
US$1.1 million and 2004 revenues by US$14.0 million.
"Today we celebrate our continued momentum and our first full calendar year as an independent company," said Tony Affuso, chairman, CEO and president of UGS. "In 2005, we claimed the number one spot in digital manufacturing and solidified our cPDM leadership. With our victory at Nissan, a hotly contested multi-year battle, we underscored our superior CAx technology and relentless focus on customer satisfaction. In 2005, we also highlighted the mission- critical nature of Global Innovation Networks through our new corporate vision, and launched our game-changing initiative bringing PLM to the mid- market."
Fourth Quarter Business Highlights
UGS' business highlights in the fourth quarter included:
* Nissan selected UGS to be the provider of the new global PLM system
that Nissan and its affiliates will deploy to design and build Nissan's
next generation of vehicles. Nissan will use UGS' NX(TM) computer
aided design (CAD) software to digitally design its vehicles on a
global basis and UGS' Teamcenter(R) cPDM software to digitally manage
product data and enable digital prototyping for all Nissan(R) vehicles
across the world. The company will deploy the software as part of a
fully integrated, common R&D infrastructure for use inside Nissan.
* Lockheed Martin Aeronautics Co. made the decision to deploy UGS'
Teamcenter(R) 2005 software, the latest version of the world's most
widely used PLM software portfolio, to manage all product data for its
entire, multi-national F-35 Joint Strike Fighter (JSF) program.
(see separate release)
* Hisense Group, a leader in China's home appliance industry, selected
Teamcenter software as the backbone for its three-phase PLM program.
Following an extensive evaluation, Hisense selected PLM software from
UGS and consulting and implementation services from HP Technology
Solutions Group, one of UGS' strategic alliance partners, to deliver an
integrated enterprise repository to engineers' desktops, provide
predictable output through repeatable controlled processes and
facilitate new product development through continuous verification of
end-user needs following product launch. (see separate release)
* Unilever, a leading, global, fast-moving consumer goods company, chose
NX as the next generation CAD software to deliver future packaging
design requirements for its Home and Personal Care (HPC) products.
Unilever chose UGS(R) software because it best met what the company
believed to be its future requirements based on a multi-year horizon.
* Jones Apparel Group, Inc., a Fortune 500 company and a leading
designer, marketer, wholesaler and retailer of branded apparel,
footwear and accessories, which signed an agreement with UGS in 2005 to
implement Teamcenter as its enterprise PLM application, was awarded
Apparel Magazine's 2005 All-Star Award for its innovation, excellence
in management, strong track record of growth and corporate goodwill
that reflects positively on the industry. Teamcenter, which will
manage all data and processes from design concept development into
production, provides Jones easy access to a single source of data,
enhancing enterprise-wide collaboration, including the supplier base,
and enabling the company to bring products to market more quickly and
efficiently.
* Schelde Naval Shipbuilding standardized on Teamcenter software,
selecting UGS as its cPDM system following an extensive evaluation
process which included the existing Agile(R) installation, which was
displaced, and SSA Baan(TM). (see separate release)
* In the area of mid-market where, in 2005, UGS launched its UGS Velocity
Series(TM) portfolio focused on delivering enterprise-level PLM
technology to the mid-market, results included:
-- Smart Engineering and Logistics Solutions Pty Ltd. (SEAL Solutions),
a leading Australian defense contractor, standardized on the UGS
Velocity Series portfolio, the industry's first comprehensive,
preconfigured portfolio of digital product design, analysis and data
management software for the PLM mid-market. (see separate release)
-- Mubea, a leading worldwide operating spring manufacturer, ordered
more than 100 licenses of Teamcenter Express software. Teamcenter
Express is the cPDM component of the new UGS Velocity Series
portfolio. (see separate release)
-- Teamcenter Express software became available to customers worldwide,
fulfilling UGS' commitment to bring PLM to the mid-market.
Teamcenter Express helps companies transform their process of
innovation by applying preconfigured best practices to everyday
engineering tasks and processes. Teamcenter Express is the first
mid-market offering to combine industry-proven digital product
development with the unparalleled technology of UGS' Teamcenter
software, the world's most widely used PLM portfolio and winner of
the IndustryWeek magazine's 2005 Technology of the Year Award.
-- The English version 9.1 of Femap(R) software was shipped to
customers worldwide. Femap is the finite element analysis (FEA)
component of UGS' new mid-market portfolio, UGS Velocity Series mid
market portfolio.
* Tecnomatix(TM) for Electronics Version 7 software, the company's first
integrated suite of digital manufacturing software solutions custom
designed for the global electronics industry, was launched. Designated
as "Version 7" to align it with the entire family of UGS' Tecnomatix
solutions, Tecnomatix for Electronics automates and streamlines all key
product planning and execution processes enabling global electronics
manufacturers to systematically enhance product delivery, cost and
quality in an increasingly competitive industry and challenging
regulatory environment. The Tecnomatix for Electronics suite combines
several digital manufacturing software products previously offered by
UGS as individual solutions for printed circuit board (PCB) assembly,
final assembly and manufacturing execution.
* Teamcenter for MRO, the set of Maintenance, Repair and Overhaul (MRO)
capabilities within the UGS Teamcenter solution, was launched. The
solution provides a rich set of core functionality enabling management
of product and process data applicable to commercial or military MRO
operations and provides a proven framework for logistics data
management. Teamcenter for MRO is designed to significantly reduce
maintenance cycle time and costs associated with servicing complex
products that require a significant capital investment, such as
aircraft, weapon systems, ships and power plants.
* I-deas(R) 12 NX Series software, one of the company's market-leading
integrated CAD, manufacturing and engineering analysis (CAD/CAM/CAE)
software solutions was made available during the fourth quarter.
I-deas NX Series, along with NX 4, is part of UGS' strategy to support
a unified offering representing the world's most advanced digital
product development solution.
The company expects to realize revenue from the contracts highlighted above over multiple quarters.
UGS will host its year-end and fourth quarter 2005 earnings call with securities analysts live on the Internet at 10:30 a.m. Central time, Friday, February 10, 2006. Presentation slides will be posted on http://www.ugs.com at 8:00 a.m. Central time. See below for webcast/teleconference access information.
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About UGS
UGS is a leading global provider of product lifecycle management (PLM) software and services with nearly 4 million licensed seats and 46,000 customers worldwide. Headquartered in Plano, Texas, UGS' vision is to enable a world where organizations and their partners collaborate through global innovation networks to deliver world-class products and services while leveraging UGS' open enterprise solutions, fulfilling the mission of enabling them to transform their process of innovation. For more information on UGS products and services, visit http://www.ugs.com .
Note: UGS, Femap, I-deas, NX, Teamcenter, Tecnomatix, Velocity Series and Transforming the process of innovation are trademarks or registered trademarks of UGS Corp. or its subsidiaries in the United States and in other countries. Nissan is a trademark or registered trademark of Nissan Motor Co. Ltd and/or Nissan North America, Inc. in the United States and in other countries. Agile is a trademark or registered trademark of Agile Software Corporation or its subsidiaries in the United States and in other countries. BAAN is a trademark of SSA Global Technologies, Inc. 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.
CONTACTS:
Doug Barnett - Financial Analysts
972-987-3352
barnettd@ugs.com
Mendi Paschal - Media
972-987-3210
paschal@ugs.com
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Successor
UGS Corp.
Three months Three months
ended ended
Dec. 31, 2005 Dec. 31, 2004
Revenue:
License $114,248 $101,006
Maintenance 134,575 107,062
Services and other 77,974 75,015
Total revenue 326,797 283,083
Cost of revenue:
License 6,052 6,275
Maintenance 14,094 14,620
Services and other 60,629 60,661
Amortization of capitalized software
and acquired intangible assets 34,074 25,763
Total cost of revenue 114,849 107,319
Gross profit 211,948 175,764
Operating expenses:
Selling, general and administrative 107,491 105,383
Research and development 48,494 38,405
Amortization of other intangible assets 8,820 7,567
Total operating expenses 164,805 151,355
Operating income 47,143 24,409
Interest expense and amortization of
deferred financing fees (26,161) (24,906)
Other (expense) income, net (3,345) 13,881
Income before income taxes 17,637 13,384
Provision for income taxes 4,744 5,001
Net income $12,893 $8,383
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Successor Predecessor
UGS Corp. UGS PLM
Solutions Inc.
Period of Period of
Year May 27, 2004 Jan. 1, 2004
ended through through
Dec. 31, 2005 Dec. 31, 2004 May 26, 2004
Revenue:
License $358,986 $213,366 $100,780
Maintenance 504,189 237,610 163,012
Services and other 291,446 169,203 94,011
Total revenue 1,154,621 620,179 357,803
Cost of revenue:
License 21,213 13,768 7,163
Maintenance 56,411 32,842 21,177
Services and other 241,777 136,165 81,259
Amortization of capitalized
software and acquired
intangible assets 123,357 60,224 23,540
Total cost of revenue 442,758 242,999 133,139
Gross profit 711,863 377,180 224,664
Operating expenses:
Selling, general and
administrative 420,873 226,282 136,817
Research and development 167,484 82,875 52,851
In-process research and
development 4,100 50,819 ---
Restructuring 1,774 --- ---
Amortization of other
intangible assets 34,147 18,365 2,500
Total operating expenses 628,378 378,341 192,168
Operating income (loss) 83,485 (1,161) 32,496
Interest expense and
amortization of deferred
financing fees (97,737) (55,314) (2,021)
Other (expense) income, net (17,671) 21,146 2,010
(Loss) income before
income taxes (31,923) (35,329) 32,485
Provision (benefit) for
income taxes (9,857) 5,807 10,092
Net (loss) income $(22,066) $(41,136) $22,393
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
Successor
Dec. 31, Dec. 31,
Assets: 2005 2004
Current assets
Cash and cash equivalents $61,532 $58,400
Accounts receivable, net 251,763 233,180
Prepaids and other 18,622 23,869
Deferred income taxes 26,471 62,890
Total current assets 358,388 378,339
Property and equipment, net 36,645 33,751
Goodwill 1,393,472 1,317,948
Capitalized and acquired software, net 464,994 435,816
Customer accounts, net 203,064 217,961
Other intangible assets, net 135,265 116,501
Other assets 39,623 42,696
Total assets $2,631,451 $2,543,012
Liabilities and Stockholder's Equity:
Current liabilities
Accounts payable and accrued liabilities $159,976 $150,290
Deferred revenue 133,027 110,027
Income taxes payable 3,528 337
Current portion of long-term debt --- 5,000
Total current liabilities 296,531 265,654
Other long-term liabilities 48,511 41,011
Deferred income taxes 152,040 217,122
Long-term debt 1,212,046 1,049,623
Stockholder's equity
Common stock, $ .01 par value, 3,000 shares
authorized; 100 issued and outstanding at
December 31, 2005 and 2004 --- ---
Additional paid-in capital 1,005,991 1,005,479
Retained deficit (63,202) (41,136)
Accumulated other comprehensive (loss)
income, net of tax (20,466) 5,259
Total stockholder's equity 922,323 969,602
Total liabilities and
stockholder's equity $2,631,451 $2,543,012
Adjusted operating income represents operating income (loss) adjusted for amortization of acquisition related intangible assets, restructuring charges, and charges for in-process research and development. Adjusted operating income is not a recognized term under generally accepted accounting principles, or GAAP. Adjusted operating income does not represent operating income (loss), as that term is defined under GAAP, and should not be considered as an alternative to operating income (loss) as an indicator of our operating performance. We have included information concerning adjusted operating income because we use such information when evaluating operating income to better evaluate the underlying performance of the Company. Adjusted operating income as presented herein is not necessarily comparable to similarly titled measures. The following is a reconciliation between adjusted operating income and operating income (loss), the GAAP measure we believe to be most directly comparable to adjusted operating income (in thousands).
Successor
Three months Three months
ended ended
Dec. 31, Dec. 31,
2005 2004
Reconciliation of operating income
to adjusted operating income:
Operating income $47,143 $24,409
Acquisition related intangible amortization 39,191 33,375
Adjusted operating income $86,334 $57,784
Successor Predecessor
Period of Period of
Year May 27, 2004 Jan. 1, 2004
ended through through
Dec. 31, 2005 Dec. 31, 2004 May 26, 2004
Reconciliation of operating
income (loss) to adjusted
operating income:
Operating income (loss) $83,485 $(1,161) $32,496
In-process research and
development 4,100 50,819 ---
Restructuring 1,774 --- ---
Acquisition related
intangible amortization 150,789 79,560 13,135
Adjusted operating income $240,148 $129,218 $45,631
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 (in thousands).
Successor
Three months Three months
ended ended
Dec. 31, Dec. 31,
2005 2004
Reconciliation of net income to EBITDA:
Net income $12,893 $8,383
Interest expense 26,161 24,906
Provision for income taxes 4,744 5,001
Depreciation and amortization 48,853 37,377
EBITDA $92,651 $75,667
Reconciliation of EBITDA to Adjusted EBITDA:
EBITDA $92,651 $75,667
Impact of revenue reduction resulting
from purchase accounting (A) 1,103 14,010
Other items (D) 2,022 3,191
Currency translation impact (E) 2,996 (11,666)
Adjusted EBITDA $98,772 $81,202
Successor Predecessor
Period of Period of
Year May 27, 2004 Jan. 1, 2004
ended through through
Dec. 31, 2005 Dec. 31, 2004 May 26, 2004
Reconciliation of net (loss)
income to EBITDA:
Net (loss) income $(22,066) $(41,136) $22,393
Interest expense 97,737 55,314 2,021
(Benefit) provision for
income taxes (9,857) 5,807 10,092
Depreciation and amortization 175,645 88,356 33,471
EBITDA $241,459 $108,341 $67,977
Reconciliation of EBITDA to
Adjusted EBITDA:
EBITDA $241,459 $108,341 $67,977
Impact of revenue reduction
resulting from purchase
accounting (A) 11,348 40,924 ---
Impact of in-process research
and development (B) 4,100 50,819 ---
Restructuring (C) 1,774 --- ---
Other items (D) 8,243 9,373 ---
Currency translation impact (E) 10,214 (16,578) ---
Adjusted EBITDA $277,138 $192,879 $67,977
(A) Removes the purchase accounting impact for the adjustment to deferred
revenue.
(B) Removes the impact of acquired in-process research and development
that resulted from the acquisition of UGS PLM Solutions Inc. for the
period of May 27, 2004 through December 31, 2004 and from the
acquisition of Tecnomatix Technologies, Ltd. for the nine months
ended December 31, 2005.
(C) Removes the impact of the restructuring charge.
(D) 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.
(E) Represents the net effect of unrealized gains and losses from
revaluing the intercompany debt that resulted from the acquisition of
UGS PLM Solutions Inc. and from hedging obligations used to offset
foreign exchange currency balance sheet exposures