MFLO Moldflow Corp (MM)

Moldflow Corporation (NASDAQ: MFLO) today announced results from its continuing operations for the third quarter and first nine months of its 2008 fiscal year. Information Dissemination PLEASE NOTE: In light of the press release issued on May 1, 2008 announcing the signing of a definitive agreement relating to the acquisition of Moldflow Corporation by Autodesk, Inc., the conference call previously scheduled for 11:00 a.m. Eastern Time today to discuss the results of the third fiscal quarter of 2008 has been cancelled. Results from Continuing Operations for the Third Quarter and First Nine Months of Fiscal 2008: Revenue of $15.8 million for the third quarter, and $46.3 million year to date, was up 13% from the corresponding nine-month period of fiscal 2007. Total product revenue of $7.5 million for the third quarter, and $22.1 million year to date, was up 6% from the corresponding nine-month period of fiscal 2007. Total services revenue of $8.3 million for the third quarter, and $24.2 million year to date, was up 21% from the corresponding nine-month period of fiscal 2007. Non-GAAP operating margin of 18% for both the third quarter and year to date was up from 16% for the corresponding nine-month period of fiscal 2007. EBITDA of $3.5 million for the third quarter, and $10.0 million year to date, was up 25% from the corresponding nine-month period of fiscal 2007. Non-GAAP tax rate of 28% for the third quarter, and 21% for the first nine months of fiscal 2008, compare to a non-GAAP tax rate of 13% in the corresponding nine-month period of the prior fiscal year. GAAP tax rate of 95% for the third quarter, and 43% for the first nine months of fiscal 2008, which included a charge of $1.8 million recorded in connection with the Company�s ongoing efforts to settle its outstanding Australian tax audit, compare to a tax rate of 14%, which included the effect of a one-time benefit recorded during the corresponding nine-month period of the prior fiscal year. Non-GAAP net income from continuing operations of $2.8 million for the third quarter, and $9.2 million year to date, was up 18% from the corresponding nine-month period of fiscal 2007. Non-GAAP earnings per diluted share of $0.22 for the third quarter, and $0.74 year to date, up from $0.65 from the corresponding nine-month period of fiscal 2007. Net income from continuing operations as reported in accordance with GAAP was $151,000 or $0.01 per diluted share, and included a net charge of $529,000 for share-based compensation expense for the third quarter. Net income from continuing operations as reported in accordance with GAAP was $5.4 million or $0.45 per diluted share for the first nine months of fiscal 2008, and included total net charges of $1.6 million for share-based compensation expenses, and compared to a $6.6 million or $0.57 per diluted share, with net charges of $1.2 million for share-based compensation expense in the same nine-month period of the prior fiscal year, representing a decrease of 17% primarily related to the charge recorded in connection with the Company�s ongoing efforts to settle its outstanding Australian tax audit. Our operating activities from continuing operations generated $8.6 million of cash during the third quarter and $11.7 over the first nine months of fiscal 2008, which was up from $8.9 million generated the corresponding nine-month period of the prior year. �We are pleased with our results for the first nine-months of fiscal 2008, which produced revenue growth rates of 13% and EBITDA growth rates of 25% which were in line with the guidance we had been giving for the full fiscal 2008 year. During the quarter, we continued to see strong sales results in our Asia Pacific region and continued traction in sales of our Moldflow Plastics Insight � Enterprise Edition product,� commented Roland Thomas, Moldflow�s President and CEO. Thomas continued, �In contrast to our last fiscal year, the third quarter of fiscal 2008 brought a return to our normal seasonal revenue patterns, whereby our third quarter revenues typically decline from that of our second fiscal quarter. This seasonal impact, combined with an unusually robust result in the same period of prior year, contributed to a challenging year-over-year comparison for our third quarter. Focusing on the nine-month result, however, removes some of this seasonal volatility and highlights the overall progress of the business when compared to last year.� Thomas concluded, �On May 1, Moldflow and Autodesk, Inc. announced the signing of a definitive agreement for Autodesk to acquire Moldflow. We believe there are strong synergies between the two companies and we are very excited about the transaction. The combination of Moldflow and Autodesk product offerings will provide our customers with a wider range of solutions to address the challenges they face in the design and manufacture of their injection molded plastic products. The transaction is expected to close during our fourth fiscal quarter, pending the necessary regulatory approvals. Given the pending transaction, we have suspended our historic practice of providing guidance for future periods.� Use of Non-GAAP Financial Measures The Company has provided non-GAAP tax rate, non-GAAP net income from continuing operations, non-GAAP net income per diluted share from continuing operations and EBITDA as supplemental measures regarding the Company�s operating performance. Our non-GAAP tax rate, non-GAAP net income from continuing operations and non-GAAP net income per diluted share from continuing operations exclude the impact of share-based compensation expense, a tax provision related to the potential settlement of the Australian tax audit and certain non-operational professional fees and, therefore, have not been calculated in accordance with GAAP. EBITDA is defined as GAAP net income from continuing operations plus any interest expense, income taxes, depreciation, amortization, certain non-operational professional fees and share-based compensation expense less interest earned and, therefore, has not been calculated in accordance with GAAP. Moldflow is presenting these measures because management uses this information in evaluating the results of the Company�s operations and for internal planning and forecasting purposes and believes that this information provides additional insight into our operating results, as well as enables comparison of these results to prior periods. These measures should not be considered an alternative to measurements required by GAAP, such as net income from continuing operations and net income per diluted share from continuing operations, and should not be considered a measure of our liquidity. In addition, these non-GAAP financial measures may not be comparable to similar measures reported by other companies. With respect to the non-GAAP financial measures for the third quarter and first nine months of the 2008 fiscal year, the GAAP financial measures most directly comparable to each non-GAAP financial measure used or discussed in this press release and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included in this press release and can be found on the Investors page of the Moldflow Web site at http://www.moldflow.com/stp/english/investors/index.htm. Financial Results The unaudited condensed consolidated financial statements for the third quarter of fiscal 2008 follow. About Moldflow Corporation Moldflow (NASDAQ: MFLO) is the leading provider of plastics simulation software that empowers more users to optimize more designs across their enterprise from the earliest stages of new product development. For more information, visit www.moldflow.com Note to Editors: Moldflow and Moldflow Plastics Insight are trademarks or registered trademarks of Moldflow Corporation or its subsidiaries worldwide. All other trademarks are properties of their respective holders. Cautionary Statement Regarding Forward-Looking Information Pursuant to the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, the Company notes that any statements contained in this press release that are not historical facts are forward-looking statements. Such forward-looking statements include, but are not limited to, statements by Moldflow�s President and CEO and those regarding Moldflow's or management's intentions, hopes, beliefs, expectations, projections, plans for the future and estimates and statements regarding the proposed acquisition of the Company by Autodesk. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include the risk of failing to obtain any regulatory approvals or satisfy other conditions to the acquisition of the Company by Autodesk; the risk that the transaction will not close or that closing will be delayed; the risk that the Company�s business will suffer due to uncertainty related to the transaction; the risk that the Company�s sales cycle may lengthen due to uncertainty related to the transaction; the risk that the Company�s management will be distracted due to the transaction, the risk that the Company will continue to incur significant expenses related to the merger prior to its closing which must be paid even if the merger is not completed, as well as other risks and uncertainties which are detailed from time to time in reports filed by Moldflow with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended June 30, 2007 as well as its subsequent quarterly and annual filings. The tender offer for the outstanding common stock of Moldflow Corporation has not yet commenced. This document is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any securities. The solicitation and the offer to buy shares of Moldflow common stock will be made only pursuant to an offer to purchase and related materials that Autodesk intends to file with the SEC on Schedule TO. Moldflow also intends to file a solicitation/recommendation statement on Schedule 14D-9 with respect to the offer. Moldflow stockholders and other investors should read these materials carefully because they contain important information, including the terms and conditions of the offer. Moldflow stockholders and other investors will be able to obtain copies of these materials without charge from the SEC through the SEC's website at http://www.sec.gov, from Autodesk (with respect to documents filed by Autodesk with the SEC), or from Moldflow (with respect to documents filed by Moldflow with the SEC). Stockholders and other investors are urged to read carefully those materials prior to making any decisions with respect to the offer. Moldflow Corporation Unaudited Condensed Consolidated Statement of Operations (in thousands, except per share data) � � � � � Three Months Ended Year to date March 31, March 31, March 31, March 31, 2008 2007 2008 2007 � Revenue: Product $ 7,472 $ 8,123 $ 22,132 $ 20,846 Services � 8,359 � 6,653 � � 24,154 � � 19,982 � Total revenue � 15,831 � 14,776 � � 46,286 � � 40,828 � � Costs and operating expenses: Cost of product revenue 432 367 1,207 1,094 Cost of services revenue 1,440 1,123 4,096 3,359 Research and development 2,206 1,958 6,472 5,834 Selling and marketing 5,976 5,198 16,792 14,759 General and administrative � 3,867 � 3,481 � � 11,320 � � 10,467 � Total costs and operating expenses � 13,921 � 12,127 � � 39,887 � � 35,513 � � Income from continuing operations 1,910 2,649 6,399 5,315 � Interest income, net 887 788 3,004 2,355 Other income (loss), net � 151 � (5 ) � 149 � � 15 � � Income from continuing operations before income taxes 2,948 3,432 9,552 7,685 Provision for income taxes � 2,797 � 638 � � 4,109 � � 1,112 � � Net income from continuing operations $ 151 $ 2,794 � $ 5,443 � $ 6,573 � � Net loss from discontinued operations, net of income taxes - (10,615 ) - (10,932 ) Net loss on sale of discontinued operations, net of income taxes � - � - � � (236 ) � - � Net income (loss) $ 151 $ (7,821 ) $ 5,207 � $ (4,359 ) � Shares used in computing net income (loss) per share Basic 11,776 11,219 11,761 11,181 Diluted 12,051 11,739 12,087 11,668 � Net income per share from continuing operations: Basic $ 0.01 $ 0.25 $ 0.46 $ 0.59 Diluted $ 0.01 $ 0.24 $ 0.45 $ 0.57 Net loss per share from discontinued operations: Basic $ - $ (0.95 ) $ (0.02 ) $ (0.98 ) Diluted $ - $ (0.91 ) $ (0.02 ) $ (0.94 ) Net income (loss) per share: Basic $ 0.01 $ (0.70 ) $ 0.44 $ (0.39 ) Diluted $ 0.01 $ (0.67 ) $ 0.43 $ (0.37 ) Moldflow Corporation Unaudited Condensed Consolidated Balance Sheet (in thousands) � � � � � � � March 31, June 30, 2008 2007 � Assets Current assets: Cash and cash equivalents $ 80,739 $ 59,482 Marketable securities 9,841 13,163 Accounts receivable, net 14,654 11,878 Prepaid expenses and other current assets � 9,322 � � 16,977 � Total current assets 114,556 101,500 � Fixed assets, net 3,926 3,137 Goodwill 6,465 6,465 Other assets � 2,550 � � 2,659 � Total assets $ 127,497 � $ 113,761 � � Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 785 $ 876 Accrued expenses 11,866 11,489 Deferred revenue � 16,763 � � 14,095 � Total current liabilities 29,414 26,460 � Deferred revenue 2,419 1,582 Other long-term liabilities � 1,728 � � 305 � Total liabilities � 33,561 � � 28,347 � � Stockholders' equity: Common stock 126 124 Treasury stock (8,549 ) (8,018 ) Additional paid-in capital 89,140 85,358 Retained earnings 6,535 1,617 Accumulated other comprehensive income � 6,684 � � 6,333 � Total stockholders' equity � 93,936 � � 85,414 � � Total liabilities and stockholders' equity $ 127,497 � $ 113,761 � Moldflow Corporation Unaudited Condensed Consolidated Statement of Cash Flows (in thousands) � � � � � � � � � � Three Months Ended Year to Date March 31, March 31, March 31, March 31, 2008 2007 2008 2007 � � Cash provided by operating activities of continuing operations $ 8,628 $ 7,269 $ 11,680 $ 8,912 Cash provided by (used in) investing activities of continuing operations 725 286 7,844 (3,907 ) Cash provided by (used in) financing activities 518 (1,445 ) 1,478 (2,355 ) Effect of exchange rate changes on cash and cash equivalents � 306 � (66 ) � 491 � � 306 � Net increase in cash and cash equivalents of continuing operations 10,177 6,044 21,493 2,956 Cash provided by (used in) discontinued operations � - � (236 ) � (236 ) � (652 ) Net increase in cash and cash equivalents $ 10,177 $ 5,808 � $ 21,257 � $ 2,304 � Moldflow Corporation Non-GAAP Financial Measures Reconciliation (in thousands except for per share data, unaudited) � � � � � Three Months Ended Year to Date March 31, March 31, March 31, March 31, 2008 2007 2008 2007 � Net income (loss) -- GAAP basis $ 151 $ (7,821 ) $ 5,207 $ (4,359 ) � Non-cash share-based compensation 623 428 1,778 1,232 Tax effect of share-based compensation (94 ) - (162 ) (67 ) Tax provision related to Australian tax audit 1,799 - 1,799 - Non-operational professional fees 297 - 297 - Net loss from discontinued operations - 10,615 - 10,932 Net loss on sale of discontinued operations � - � � - � � 236 � � - � � Net income -- Non-GAAP basis $ 2,776 � $ 3,222 � $ 9,155 � $ 7,738 � � � Net income (loss) per diluted share - GAAP basis $ 0.01 $ (0.67 ) $ 0.43 $ (0.37 ) � Non-cash share-based compensation 0.05 0.04 0.14 0.10 Tax effect of share-based compensation (0.01 ) - (0.02 ) (0.01 ) Tax provision related to Australian tax audit 0.15 - 0.15 - Non-operational professional fees 0.02 - 0.02 - Net loss from discontinued operations - 0.90 - 0.93 Net loss on sale of discontinued operations � - � � - � � 0.02 � � - � � Net income per diluted share -- Non-GAAP basis $ 0.22 � $ 0.27 � $ 0.74 � $ 0.65 � � � � � � Three Months Ended Year to Date March 31, March 31, March 31, March 31, 2008 2007 2008 2007 � Provision for income taxes - GAAP basis $ 2,797 $ 638 $ 4,109 $ 1,112 � Tax effect of share-based compensation 94 - 162 67 Tax provision related to Australian tax audit � (1,799 ) � - � � (1,799 ) � - � � Provision for income taxes - Non-GAAP basis $ 1,092 � $ 638 � $ 2,472 � $ 1,179 � � � � � Three Months Ended Year to Date March 31, March 31, March 31, March 31, 2008 2007 2008 2007 � Income from continuing operations - GAAP basis $ 1,910 $ 2,649 $ 6,399 $ 5,315 � Non-cash share-based compensation 623 428 1,778 1,232 Non-operational professional fees � 297 � � - � � 297 � � - � � Non-GAAP income from continuing operations $ 2,830 � $ 3,077 � $ 8,474 � $ 6,547 � � Total revenue $ 15,831 $ 14,776 $ 46,286 $ 40,828 � Non-GAAP operating margin 18 % 21 % 18 % 16 % � � � Three Months Ended Year to Date March 31, March 31, March 31, March 31, 2008 2007 2008 2007 � Income from continuing operations before income taxes - GAAP basis $ 2,948 $ 3,432 $ 9,552 $ 7,685 � Non-cash share-based compensation 623 428 1,778 1,232 Non-operational professional fees � 297 � � - � � 297 � � - � � Non-GAAP income from continuing operations before income taxes $ 3,868 � $ 3,860 � $ 11,627 � $ 8,917 � � Provision for income taxes - Non-GAAP basis $ 1,092 $ 638 $ 2,472 $ 1,179 � Non-GAAP tax rate 28 % 17 % 21 % 13 % Moldflow Corporation Reconciliation of Net Income from continuing operations to EBITDA (in thousands) � � � � � � � � Three Months Ended Year to Date March 31, March 31, March 31, March 31, 2008 � 2007 2008 � 2007 � EBITDA is calculated as follows: � Net income from continuing operations - GAAP basis $ 151 $ 2,794 $ 5,443 $ 6,573 Share-based compensation 623 428 1,778 1,232 Non-operational professional fees 297 - 297 - Depreciation and amortization expenses 537 470 1,411 1,454 Tax provision 2,797 638 4,109 1,112 Interest income � (887 ) � (788 ) � (3,004 ) � (2,355 ) EBITDA $ 3,518 � $ 3,542 � $ 10,034 � $ 8,016 �