PTC, the Product Development Company, reported revenue of $216.7 million for the third fiscal quarter ended July 1, 2006, up 20% from $180.3 million for the same period last year. Total license revenue for the third quarter was $65.7 million, up 33% from the same period last year. PTC’s overall revenue growth was driven by accelerated organic license and service revenue across both Desktop and Enterprise Solutions categories, as well as revenue attributable to the acquired businesses of Arbortext and Mathsoft.
GAAP operating income for the third quarter was $13.5 million, compared with $26.5 million in the year-ago period. GAAP net income for the third quarter was $16.9 million, or $0.15 per diluted share, compared with GAAP net income of $26.7 million, or $0.24 per diluted share, in the year-ago period. PTC adopted SFAS 123(R) in the fourth quarter of fiscal year 2005 and, therefore, the GAAP results from the year-ago period do not include the cost of stock-based compensation in accordance with SFAS 123(R).
In the third quarter of 2006, PTC recorded stock-based compensation expense of $10.1 million, amortization of acquisition-related intangible assets of $2.8 million, a net restructuring charge of $5.9 million related to a previously announced cost-reduction program, a $2.1 million write-off of in-process research and development associated with the acquisition of Mathsoft, and a one-time tax benefit of $6.1 million due to the favorable resolution of IRS tax audits in the United States.
PTC recorded an unrelated tax benefit of $4.4 million in the third quarter of 2005 due to the favorable resolution of a foreign jurisdiction tax audit.
Non-GAAP operating income, which excludes stock-based compensation cost, amortization of acquisition-related intangible assets, in-process research and development write-offs associated with acquisitions, and restructuring charges, was $34.4 million for the third quarter, a 28% increase from $26.8 million in the year-ago period. Non-GAAP net income, which excludes the items excluded from non-GAAP operating income and the related tax effect of these items, as well as the effect of one-time tax items, was $29.5 million for the third quarter, or $0.26 per diluted share, compared to $22.5 million in the year-ago period, or $0.20 per diluted share. We have provided a reconciliation between GAAP and non-GAAP results in the attached financial tables.
Cash and cash equivalents were $174 million at the end of the third quarter, down from $224 million at the end of the second quarter. During the third quarter, PTC made a $63 million cash payment for the acquisition of Mathsoft and a $10 million cash payment related to the settlement of the aforementioned IRS audits in the United States.