UGS Reports Year-End Revenue of $1.2 Billion; Growth of 8-Percent

PLANO, Texas – UGS Corp., a leading global provider of product lifecycle management (PLM) software and services, has announced fourth quarter 2006 and full year 2006 results.

Fourth quarter financial highlights include:

Total revenue increased to US$352.7 million, or 8 percent growth over the same period a year earlier. The company’s fourth quarter revenue included US$128.1 million in license revenue, or a 12 percent increase as compared to the fourth quarter 2005.
EBITDA (defined below) was US$110.6 million, a 19 percent growth over the same period a year earlier. Net income was US$22.7 million, a 76 percent increase over the same period a year earlier.
Operating income was US$51.3 million, a 9 percent increase as compared to the fourth quarter 2005.
License revenue for all product portfolios grew: Collaborative Product Development Management (cPDM) license revenue increased 22 percent, digital manufacturing license revenue increased 28 percent and UGS Velocity SeriesTM portfolio license revenue increased 30 percent over the same period a year earlier. CAx license revenue increased 2 percent 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 2006 revenues by US$0.1 million and 2005 revenues by US$1.1 million.

Financial highlights from the full year 2006 include:

Total revenue increased to US$1.2 billion, a 6 percent growth over the same period a year earlier. The company’s 2006 revenue included US$379.2 million in license revenue, an increase of 6 percent as compared to 2005.

Operating income was US$71.8 million, and represents a 14 percent decrease from the same period a year earlier, and includes the impact of total amortization expenses of US$190.8 million in 2006 compared to $160.8 million in 2005.

Within product portfolios, cPDM license revenue increased 11 percent, digital manufacturing license revenue increased 26 percent and UGS Velocity Series portfolio license revenue increased 19 percent 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 full year 2006 revenues by US$0.8 million and 2005 revenues by US$11.3 million.

“We are pleased with our strong performance in the quarter and that execution of our strategic plan delivered solid earnings and top-line organic revenue growth as planned, with 12 percent license revenue growth in the quarter,” said Tony Affuso, chairman, CEO and president of UGS. “Our vision continues to be supported by customers who are market leaders and invest in UGS PLM to further their global innovation networks. We look forward to more growth in 2007 driven by our world-class product portfolio to be enhanced with major releases of Teamcenter and NX.”