UGS Announces First Quarter Revenue and Earnings

Company Re-branding, New Segment Initiatives and Significant Wins Highlight

Performance



Apr 23, 2001, 01:00 ET from UGS

    CYPRESS, Calif., April 23 /PRNewswire Interactive News Release/ -- UGS
 (NYSE:   UGS), a leading global supplier of collaborative product development
 solutions to the manufacturing industry, today announces financial results for
 the first quarter ended March 31, 2001.
     Unless otherwise noted, all financial figures in this press release are
 pro forma which exclude acquisition related goodwill amortization costs.
     For the first quarter, revenue grew 14% over the 2000 comparable period,
 excluding a planned 46% decline in hardware revenues.  Software revenue
 increased 4% quarter-over-quarter, reflecting lower demand -- the result of a
 slowing economy.  Operating income grew to $19.9 million from $18.3 million in
 the first quarter of 2000.  Net income was $9.8 million, or $0.27 per share,
 $0.03 above analyst consensus estimates.
     "We are quite pleased with our first quarter performance in a volatile
 business environment," says Tony Affuso, president and CEO of UGS.  "While we
 have been impacted a bit on the revenue growth side by the current adverse
 economic conditions, this is the twelfth straight quarter in which we have
 achieved or exceeded consensus estimates.  Moreover, to experience double-
 digit sales growth in this business climate is a tribute to the strength of
 our products and people."
     First quarter performance was highlighted by four strategic initiatives:
 
     -- a new corporate vision and strategy including a realignment of UGS
        expanded software and services offerings.  UGS will be the leading
        provider of "collaborative" product solutions for virtual enterprises.
     -- a re-branding of the company from "Unigraphics Solutions" to "UGS" and
        a new corporate logo, emphasizing the multiplying effect of UGS
        "Solution" and "Platform" technologies that together comprise our
        collaboration emphasis.
     -- the formation of a new e-Factory business unit focused on solutions for
        'virtual manufacturing' -- the ability to collaboratively create,
        validate and communicate an optimized manufacturing process plan.
        Additionally, expanded e-Factory functionality will dovetail with
        downstream software product capabilities such as supply chain
        management and customer relationship management.
     -- a marketing alliance with i2 Technologies, Inc., the leading provider
        of supply chain and marketplace solutions.  The alliance is designed to
        integrate the two companies' software offerings to create an expanded
        collaborative product development and product life cycle management
        platform.  The integrated solution will link product development and
        strategic sourcing activities and enhance UGS' collaborative platform
        for suppliers and partners.
 
     UGS continued to record major new contracts.  Among announced wins during
 the first quarter were:
 
     -- British American Racing, the Formula 1 Grand Prix motor racing team,
        signed a $3.5 million contract to include supply and implementation of:
        Unigraphics, the UGS high-end, fully integrated CAD/CAM/CAE software
        suite; i-Man, the internet-centric product content management
        application; Solid Edge, the powerful mechanical CAD solution; and
        ProductVision, the UGS advanced visualization and collaboration tool.
     -- Grob Werke, an international automotive supplier, selected UGS for the
        supply and implementation of 170 licenses of Unigraphics, as well as
        170 licenses of i-Man.
     -- Malaysia's Ministry of Human Resource's Manpower Department (JTR) chose
        UGS to supply $1 million worth of Unigraphics and Solid Edge software
        for use in the mechanical design and manufacturing curriculum of
        institutes throughout the nation, including the Advanced Technology
        Training Centers (ADTEC) and Industrial Training Institutes (ITI).
 
     UGS furthered its technology leadership by two first quarter
 announcements.  (1) The introduction of e-Vis Connect.  e-Vis Connect offers
 secure, enterprise-wide access to complex visual product data from multiple
 sources. This access is accomplished through an unprecedented level of
 integration with enterprise product-development solutions such as CAD/CAM/CAE
 and PDM (product data management) software.  e-Vis Connect offers robust
 visualization, analysis and collaboration tools that enable individuals to
 work together on the data in real time via the Internet.  (2) The rollout of
 Solid Edge Exchange.  Solid Edge Exchange is a new design collaboration portal
 powered by e-Vis visual collaboration technology and designed especially for
 the Solid Edge community.  The portal combines the power of Solid Edge with
 the proven e-Vis visual collaboration functionality already adopted by leading
 manufacturers and B2B exchanges including Covisint, the online marketplace for
 the automotive industry founded by Ford, General Motors, DaimlerChrysler and
 Renault/Nissan.
     "These announcements address specific customer needs," says Affuso.
 "Combined with the recent successful implementations of the i-Man Portal and
 the emergence of the e-Vis JT format as the industry standard 'backbone'
 lightweight model format, we are well positioned to provide solutions to
 address the product life cycle requirements of the companies we serve."
     For 2001, UGS expects to post revenues in the range of $610 million to
 $625 million, with pro forma EPS between  $1.75 and  $1.85. EPS projections
 are 20% greater than those achieved in the prior year.
     For the second quarter of 2001, the company is projecting revenues to be
 between $140 million and $145 million, and pro forma earnings per share to be
 between $0.31 and $0.36 per share.
 
     About UGS
     UGS (NYSE:   UGS) is one of the most successful software and services
 companies, dedicated to helping manufacturers optimize their product lifecycle
 process.  UGS' rich heritage and financial strength have been established by
 consistently providing the industry's best product development applications
 for over 25 years.  Today, UGS is distinguished as the leading supplier of
 Internet-based product life cycle collaboration solutions as well as the
 company that is creating the de facto industry standards for the digital
 product.  With offices in over 30 countries around the globe, UGS is the
 vendor of choice for open solutions that seamlessly weave into any environment
 and create unprecedented value for the world's most demanding customers.  In
 addition, UGS is the first company in its industry to earn the ISO 9001/TickIT
 certification.  For more information please contact UGS at (800) 498-5351 or
 via the World Wide Web at http://www.ugs.com .
 
     UGS, Unigraphics Solutions, Parasolid, Solid Edge, Unigraphics,
 ProductVision, iMAN, GRIP, managedServices, EAI, FactoryCAD, FactoryFlow,
 Sense8, VisFactory, VisConcept, VisConference, VisMockup, VisProducts, VisVSA,
 VSA, e-Vis, LightningStart and RAPIDiMAN are trademarks, registered trademarks
 or service marks of Unigraphics Solutions, Inc.  All other trademarks,
 registered trademarks or service marks belong to their respective holders.
 The information within is subject to change without notice and does not
 represent a commitment on the part of UGS.
 
                  UNIGRAPHICS SOLUTIONS INC. AND SUBSIDIARIES
 
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
               (in thousands, except per share and share amounts)
 
                                                     Three Months Ended
                                                         March 31,
                                                    2001            2000
 
     Revenue:
       Software                                   $55,220         $53,164
       Services                                    79,249          64,415
       Hardware                                     1,956           3,648
         Total revenue                            136,425         121,227
 
     Cost of revenue:
       Software
         Amortization                               7,513           2,523
         Royalties, distribution and other          5,106           7,593
       Services                                    33,231          28,864
       Hardware                                     1,371           2,481
         Total cost of revenue                     47,221          41,461
     Gross profit                                  89,204          79,766
 
     Operating expenses:
       Selling, general and administrative         51,932          44,635
       Research and development                    24,912          19,359
         Total operating expenses                  76,844          63,994
     Operating income                              12,360          15,772
     Other income (expense), net                   (4,778)            420
     Income before income taxes                     7,582          16,192
     Provision for income taxes                     4,404           5,829
     Net income                                    $3,178         $10,363
 
     Earnings per share:
       Basic                                        $0.09           $0.29
       Diluted                                      $0.09           $0.28
 
     Weighted average number of common
      shares outstanding:
       Basic                                   36,326,203      36,305,838
       Diluted                                 36,588,435      36,712,262
 
 
                  UNIGRAPHICS SOLUTIONS INC. AND SUBSIDIARIES
 
                             PRO FORMA RESULTS (A)
 
               (in thousands, except per share and share amounts)
 
                                                        Three Months Ended
                                                             March 31,
                                                      2001              2000
 
     Operating income                               $19,873           $18,295
     Net income                                      $9,812           $11,978
 
     Earnings per share:
       Basic and diluted                              $0.27             $0.33
 
     Weighted average number of
      common shares outstanding:
       Basic                                     36,326,203        36,305,838
       Diluted                                   36,588,435        36,712,262
 
     (A) The pro forma results exclude acquisition related goodwill
         amortization.
 
 
                  UNIGRAPHICS SOLUTIONS INC. AND SUBSIDIARIES
 
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 
               (in thousands, except per share and share amounts)
 
                                                    March            December
                                                   31, 2001          31, 2000
                                                                     (AUDITED)
     Assets
     Current assets
       Cash and cash equivalents                    $24,310           $22,782
       Accounts receivable, net of allowance
        for doubtful accounts of $5,485 and
        $4,544                                      144,085           147,428
       Prepaid expenses                               9,755            10,394
       Other current assets                           7,976             6,866
         Total current assets                       186,126           187,470
 
     Property and equipment, net                     48,097            49,291
 
     Other assets
       Goodwill, software and other
        intangibles, net                            177,607           183,681
       Deferred income taxes                         43,033            41,679
         Total other assets                         220,640           225,360
     Total assets                                  $454,863          $462,121
 
     Liabilities and Stockholders' Equity
     Current liabilities
       Accounts payable and accrued liabilities     $67,582           $77,584
       Deferred revenue                              30,588            23,203
       Income taxes payable                          21,626            16,266
         Total current liabilities                  119,796           117,053
 
     Intercompany credit agreements                 198,260           208,292
 
     Stockholders' equity
       Preferred stock, $.01 par value; authorized
        20,000,000 shares, none issued                   --                --
       Class A common stock, $.01 par value;
        168,735,000 shares authorized; 5,066,007
        and 5,054,574 shares issued and outstanding
        at March 31, 2001 and December 31, 2000,
        respectively                                     50                50
       Class B common stock, $.01 par value;
        31,265,000 shares authorized; 31,265,000
        issued and outstanding at March 31, 2001
        and December 31,2000                            313               313
       Additional paid-in capital                   148,762           148,765
       Accumulated deficit                           (4,425)           (7,603)
       Accumulated other comprehensive loss          (7,893)           (4,749)
       Total stockholders' equity                   136,807           136,776
     Total liabilities and stockholders' equity    $454,863          $462,121
 
 
                  UNIGRAPHICS SOLUTIONS INC. AND SUBSIDIARIES
 
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                 (in thousands)
 
                                                        Three Months Ended
                                                             March 31
                                                      2001              2000
 
     Net Cash Provided By Operating Activities      $17,182            $5,608
 
     Cash flows from investing activities
       Payments for purchases of property
        and equipment                                (2,738)           (4,383)
       Payments for purchases of software
        and other intangibles                        (2,645)             (865)
     Net cash used in investing activities           (5,383)           (5,248)
 
     Cash flows from financing activities
       Borrowings under intercompany credit
        agreements                                    5,282            19,452
       Payments on intercompany credit agreements   (15,550)               --
       Common stock activities                          101               (32)
     Net cash provided by (used in) financing
      activities                                    (10,167)           19,420
     Effect of exchange rate changes on
      cash and cash equivalents                        (104)               --
     Net increase in cash and cash equivalents        1,528            19,780
     Cash and cash equivalents at beginning of
      period                                         22,782            20,696
     Cash and cash equivalents at end of period     $24,310           $40,476
 
 
     CONTACT:  Investor Relations, Doug Barnett of UGS, 314-344-8448,
 doug@ugs.com.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X83055185
 
 

SOURCE UGS
    CYPRESS, Calif., April 23 /PRNewswire Interactive News Release/ -- UGS
 (NYSE:   UGS), a leading global supplier of collaborative product development
 solutions to the manufacturing industry, today announces financial results for
 the first quarter ended March 31, 2001.
     Unless otherwise noted, all financial figures in this press release are
 pro forma which exclude acquisition related goodwill amortization costs.
     For the first quarter, revenue grew 14% over the 2000 comparable period,
 excluding a planned 46% decline in hardware revenues.  Software revenue
 increased 4% quarter-over-quarter, reflecting lower demand -- the result of a
 slowing economy.  Operating income grew to $19.9 million from $18.3 million in
 the first quarter of 2000.  Net income was $9.8 million, or $0.27 per share,
 $0.03 above analyst consensus estimates.
     "We are quite pleased with our first quarter performance in a volatile
 business environment," says Tony Affuso, president and CEO of UGS.  "While we
 have been impacted a bit on the revenue growth side by the current adverse
 economic conditions, this is the twelfth straight quarter in which we have
 achieved or exceeded consensus estimates.  Moreover, to experience double-
 digit sales growth in this business climate is a tribute to the strength of
 our products and people."
     First quarter performance was highlighted by four strategic initiatives:
 
     -- a new corporate vision and strategy including a realignment of UGS
        expanded software and services offerings.  UGS will be the leading
        provider of "collaborative" product solutions for virtual enterprises.
     -- a re-branding of the company from "Unigraphics Solutions" to "UGS" and
        a new corporate logo, emphasizing the multiplying effect of UGS
        "Solution" and "Platform" technologies that together comprise our
        collaboration emphasis.
     -- the formation of a new e-Factory business unit focused on solutions for
        'virtual manufacturing' -- the ability to collaboratively create,
        validate and communicate an optimized manufacturing process plan.
        Additionally, expanded e-Factory functionality will dovetail with
        downstream software product capabilities such as supply chain
        management and customer relationship management.
     -- a marketing alliance with i2 Technologies, Inc., the leading provider
        of supply chain and marketplace solutions.  The alliance is designed to
        integrate the two companies' software offerings to create an expanded
        collaborative product development and product life cycle management
        platform.  The integrated solution will link product development and
        strategic sourcing activities and enhance UGS' collaborative platform
        for suppliers and partners.
 
     UGS continued to record major new contracts.  Among announced wins during
 the first quarter were:
 
     -- British American Racing, the Formula 1 Grand Prix motor racing team,
        signed a $3.5 million contract to include supply and implementation of:
        Unigraphics, the UGS high-end, fully integrated CAD/CAM/CAE software
        suite; i-Man, the internet-centric product content management
        application; Solid Edge, the powerful mechanical CAD solution; and
        ProductVision, the UGS advanced visualization and collaboration tool.
     -- Grob Werke, an international automotive supplier, selected UGS for the
        supply and implementation of 170 licenses of Unigraphics, as well as
        170 licenses of i-Man.
     -- Malaysia's Ministry of Human Resource's Manpower Department (JTR) chose
        UGS to supply $1 million worth of Unigraphics and Solid Edge software
        for use in the mechanical design and manufacturing curriculum of
        institutes throughout the nation, including the Advanced Technology
        Training Centers (ADTEC) and Industrial Training Institutes (ITI).
 
     UGS furthered its technology leadership by two first quarter
 announcements.  (1) The introduction of e-Vis Connect.  e-Vis Connect offers
 secure, enterprise-wide access to complex visual product data from multiple
 sources. This access is accomplished through an unprecedented level of
 integration with enterprise product-development solutions such as CAD/CAM/CAE
 and PDM (product data management) software.  e-Vis Connect offers robust
 visualization, analysis and collaboration tools that enable individuals to
 work together on the data in real time via the Internet.  (2) The rollout of
 Solid Edge Exchange.  Solid Edge Exchange is a new design collaboration portal
 powered by e-Vis visual collaboration technology and designed especially for
 the Solid Edge community.  The portal combines the power of Solid Edge with
 the proven e-Vis visual collaboration functionality already adopted by leading
 manufacturers and B2B exchanges including Covisint, the online marketplace for
 the automotive industry founded by Ford, General Motors, DaimlerChrysler and
 Renault/Nissan.
     "These announcements address specific customer needs," says Affuso.
 "Combined with the recent successful implementations of the i-Man Portal and
 the emergence of the e-Vis JT format as the industry standard 'backbone'
 lightweight model format, we are well positioned to provide solutions to
 address the product life cycle requirements of the companies we serve."
     For 2001, UGS expects to post revenues in the range of $610 million to
 $625 million, with pro forma EPS between  $1.75 and  $1.85. EPS projections
 are 20% greater than those achieved in the prior year.
     For the second quarter of 2001, the company is projecting revenues to be
 between $140 million and $145 million, and pro forma earnings per share to be
 between $0.31 and $0.36 per share.
 
     About UGS
     UGS (NYSE:   UGS) is one of the most successful software and services
 companies, dedicated to helping manufacturers optimize their product lifecycle
 process.  UGS' rich heritage and financial strength have been established by
 consistently providing the industry's best product development applications
 for over 25 years.  Today, UGS is distinguished as the leading supplier of
 Internet-based product life cycle collaboration solutions as well as the
 company that is creating the de facto industry standards for the digital
 product.  With offices in over 30 countries around the globe, UGS is the
 vendor of choice for open solutions that seamlessly weave into any environment
 and create unprecedented value for the world's most demanding customers.  In
 addition, UGS is the first company in its industry to earn the ISO 9001/TickIT
 certification.  For more information please contact UGS at (800) 498-5351 or
 via the World Wide Web at http://www.ugs.com .
 
     UGS, Unigraphics Solutions, Parasolid, Solid Edge, Unigraphics,
 ProductVision, iMAN, GRIP, managedServices, EAI, FactoryCAD, FactoryFlow,
 Sense8, VisFactory, VisConcept, VisConference, VisMockup, VisProducts, VisVSA,
 VSA, e-Vis, LightningStart and RAPIDiMAN are trademarks, registered trademarks
 or service marks of Unigraphics Solutions, Inc.  All other trademarks,
 registered trademarks or service marks belong to their respective holders.
 The information within is subject to change without notice and does not
 represent a commitment on the part of UGS.
 
                  UNIGRAPHICS SOLUTIONS INC. AND SUBSIDIARIES
 
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
               (in thousands, except per share and share amounts)
 
                                                     Three Months Ended
                                                         March 31,
                                                    2001            2000
 
     Revenue:
       Software                                   $55,220         $53,164
       Services                                    79,249          64,415
       Hardware                                     1,956           3,648
         Total revenue                            136,425         121,227
 
     Cost of revenue:
       Software
         Amortization                               7,513           2,523
         Royalties, distribution and other          5,106           7,593
       Services                                    33,231          28,864
       Hardware                                     1,371           2,481
         Total cost of revenue                     47,221          41,461
     Gross profit                                  89,204          79,766
 
     Operating expenses:
       Selling, general and administrative         51,932          44,635
       Research and development                    24,912          19,359
         Total operating expenses                  76,844          63,994
     Operating income                              12,360          15,772
     Other income (expense), net                   (4,778)            420
     Income before income taxes                     7,582          16,192
     Provision for income taxes                     4,404           5,829
     Net income                                    $3,178         $10,363
 
     Earnings per share:
       Basic                                        $0.09           $0.29
       Diluted                                      $0.09           $0.28
 
     Weighted average number of common
      shares outstanding:
       Basic                                   36,326,203      36,305,838
       Diluted                                 36,588,435      36,712,262
 
 
                  UNIGRAPHICS SOLUTIONS INC. AND SUBSIDIARIES
 
                             PRO FORMA RESULTS (A)
 
               (in thousands, except per share and share amounts)
 
                                                        Three Months Ended
                                                             March 31,
                                                      2001              2000
 
     Operating income                               $19,873           $18,295
     Net income                                      $9,812           $11,978
 
     Earnings per share:
       Basic and diluted                              $0.27             $0.33
 
     Weighted average number of
      common shares outstanding:
       Basic                                     36,326,203        36,305,838
       Diluted                                   36,588,435        36,712,262
 
     (A) The pro forma results exclude acquisition related goodwill
         amortization.
 
 
                  UNIGRAPHICS SOLUTIONS INC. AND SUBSIDIARIES
 
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 
               (in thousands, except per share and share amounts)
 
                                                    March            December
                                                   31, 2001          31, 2000
                                                                     (AUDITED)
     Assets
     Current assets
       Cash and cash equivalents                    $24,310           $22,782
       Accounts receivable, net of allowance
        for doubtful accounts of $5,485 and
        $4,544                                      144,085           147,428
       Prepaid expenses                               9,755            10,394
       Other current assets                           7,976             6,866
         Total current assets                       186,126           187,470
 
     Property and equipment, net                     48,097            49,291
 
     Other assets
       Goodwill, software and other
        intangibles, net                            177,607           183,681
       Deferred income taxes                         43,033            41,679
         Total other assets                         220,640           225,360
     Total assets                                  $454,863          $462,121
 
     Liabilities and Stockholders' Equity
     Current liabilities
       Accounts payable and accrued liabilities     $67,582           $77,584
       Deferred revenue                              30,588            23,203
       Income taxes payable                          21,626            16,266
         Total current liabilities                  119,796           117,053
 
     Intercompany credit agreements                 198,260           208,292
 
     Stockholders' equity
       Preferred stock, $.01 par value; authorized
        20,000,000 shares, none issued                   --                --
       Class A common stock, $.01 par value;
        168,735,000 shares authorized; 5,066,007
        and 5,054,574 shares issued and outstanding
        at March 31, 2001 and December 31, 2000,
        respectively                                     50                50
       Class B common stock, $.01 par value;
        31,265,000 shares authorized; 31,265,000
        issued and outstanding at March 31, 2001
        and December 31,2000                            313               313
       Additional paid-in capital                   148,762           148,765
       Accumulated deficit                           (4,425)           (7,603)
       Accumulated other comprehensive loss          (7,893)           (4,749)
       Total stockholders' equity                   136,807           136,776
     Total liabilities and stockholders' equity    $454,863          $462,121
 
 
                  UNIGRAPHICS SOLUTIONS INC. AND SUBSIDIARIES
 
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                 (in thousands)
 
                                                        Three Months Ended
                                                             March 31
                                                      2001              2000
 
     Net Cash Provided By Operating Activities      $17,182            $5,608
 
     Cash flows from investing activities
       Payments for purchases of property
        and equipment                                (2,738)           (4,383)
       Payments for purchases of software
        and other intangibles                        (2,645)             (865)
     Net cash used in investing activities           (5,383)           (5,248)
 
     Cash flows from financing activities
       Borrowings under intercompany credit
        agreements                                    5,282            19,452
       Payments on intercompany credit agreements   (15,550)               --
       Common stock activities                          101               (32)
     Net cash provided by (used in) financing
      activities                                    (10,167)           19,420
     Effect of exchange rate changes on
      cash and cash equivalents                        (104)               --
     Net increase in cash and cash equivalents        1,528            19,780
     Cash and cash equivalents at beginning of
      period                                         22,782            20,696
     Cash and cash equivalents at end of period     $24,310           $40,476
 
 
     CONTACT:  Investor Relations, Doug Barnett of UGS, 314-344-8448,
 doug@ugs.com.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X83055185
 
 SOURCE  UGS