UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

PARAMETRIC TECHNOLOGY CORPORATION

INDEX TO FORM 10-Q

For the Quarter Ended June 30, 2007

		Page
		Number
Part I FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements:
Consolidated Balance Sheets as of June 30, 2007 and September 30, 2006			1
Consolidated Statements of Operations for the three and nine months ended June 30, 2007 and July 1, 2006			2
Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2007 and July 1, 2006			3
Consolidated Statements of Comprehensive Income for the three and nine months ended June 30, 2007 and July 1, 2006			4
Notes to Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures About Market Risk			32
Item 4. Controls and Procedures			32
Part II OTHER INFORMATION
Item 1. Legal Proceedings			33
Item 1A. Risk Factors			33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			34
Item 6. Exhibits			34
Signature			35
Ex-31.1 Section 302 Certification of CEO
Ex-31.2 Section 302 Certification of CFO
Ex-32 Section 906 Certification of CEO & CFO

PART I—FINANCIAL INFORMATION

PARAMETRIC TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

		June 30,				September 30,
		2007				2006
ASSETS
Current assets:
Cash and cash equivalents		$	259,956			$	183,448
Accounts receivable, net of allowance for doubtful accounts of $4,007 and $4,900 at June 30, 2007 and September 30, 2006, respectively			171,764				181,008
Prepaid expenses			26,995				20,495
Other current assets (Note 1)			52,960				51,824
Deferred tax assets (Note 9)			23,283				1,341
Total current assets			534,958				438,116
Property and equipment, net			55,358				51,603
Goodwill (Note 6)			245,733				249,252
Acquired intangible assets, net (Note 6)			81,632				77,870
Deferred tax assets (Note 9)			63,694				3,205
Other assets			69,986				75,398
Total assets		$	1,051,361			$	895,444
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	19,004			$	17,109
Accrued expenses and other current liabilities			52,848				52,128
Accrued compensation and benefits			54,599				72,632
Accrued income taxes			9,816				7,066
Deferred revenue (Note 1)			223,151				197,769
Total current liabilities			359,418				346,704
Other liabilities (Note 2)			96,065				97,413
Deferred revenue (Note 1)			8,225				13,228
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued			—				—
Common stock, $0.01 par value; 500,000 shares authorized; 114,990 and 111,880 shares issued and outstanding at June 30, 2007 and September 30, 2006, respectively			1,150				1,119
Additional paid-in capital			1,751,907				1,723,570
Accumulated deficit			(1,122,912	)			(1,242,692	)
Accumulated other comprehensive loss			(42,492	)			(43,898	)
Total stockholders’ equity			587,653				438,099
Total liabilities and stockholders’ equity		$	1,051,361			$	895,444

The accompanying notes are an integral part of the consolidated financial statements.

PARAMETRIC TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

		Three months ended								Nine months ended
		June 30,				July 1,				June 30,				July 1,
		2007				2006				2007				2006
Revenue:
License		$	62,098			$	65,711			$	200,022			$	178,852
Service			162,998				150,993				474,837				430,564
Total revenue			225,096				216,704				674,859				609,416
Costs and expenses:
Cost of license revenue			4,084				2,995				11,855				8,187
Cost of service revenue			67,673				65,579				204,855				187,942
Sales and marketing			74,573				70,033				215,694				197,938
Research and development			39,798				36,905				117,935				107,477
General and administrative			16,855				18,038				56,489				55,706
Amortization of acquired intangible assets			1,764				1,646				5,440				4,292
Restructuring charges (Note 2)			—				5,947				—				5,947
In-process research and development (Note 5)			544				2,100				544				2,100
Total costs and expenses			205,291				203,243				612,812				569,589
Operating income			19,805				13,461				62,047				39,827
Other income (expense), net			2,268				840				4,396				2,743
Income before income taxes			22,073				14,301				66,443				42,570
(Benefit from) provision for income taxes			(65,155	)			(2,575	)			(53,337	)			7,427
Net income		$	87,228			$	16,876			$	119,780			$	35,143
Earnings per share—Basic (Note 4)		$	0.77			$	0.15			$	1.06			$	0.32
Earnings per share— Diluted (Note 4)		$	0.74			$	0.15			$	1.02			$	0.31
Weighted average shares outstanding—Basic			113,154				109,947				112,610				109,672
Weighted average shares outstanding—Diluted			117,500				112,871				117,423				112,930

The accompanying notes are an integral part of the consolidated financial statements.

PARAMETRIC TECHNOLOGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

		Nine months ended
		June 30,				July 1,
		2007				2006
Cash flows from operating activities:
Net income		$	119,780			$	35,143
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			28,882				24,809
Stock-based compensation			22,507				29,273
Other non-cash expenses, net			834				1,958
In-process research and development			544				2,100
Changes in deferred income taxes — release of valuation allowance			(65,516	)			—
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable			33,483				637
Accounts payable and accrued expenses			(5,201	)			(10,487	)
Accrued compensation and benefits			(20,798	)			(14,455	)
Deferred revenue			21,454				21,679
Accrued income taxes			(3,323	)			(24,572	)
Other current assets and prepaid expenses			(3,150	)			4,411
Other noncurrent assets and liabilities			(14,424	)			(17,135	)
Net cash provided by operating activities			115,072				53,361
Cash flows from investing activities:
Additions to property and equipment			(17,139	)			(13,065	)
Acquisitions of businesses, net of cash acquired			(24,546	)			(75,084	)
Acquisition of remaining equity interest in a controlled subsidiary			(3,972	)			—
Net cash used by investing activities			(45,657	)			(88,149	)
Cash flows from financing activities:
Proceeds from issuance of common stock			13,875				4,052
Payments of withholding taxes in connection with settlement of restricted stock units			(6,496	)			—
Repurchase of common stock			(1,809	)			—
Tax benefit from stock-based awards			292				—
Credit facility origination costs			—				(897	)
Payments of capital lease obligations			(369	)			(323	)
Net cash provided by financing activities			5,493				2,832
Effect of exchange rate changes on cash and cash equivalents			1,600				1,426
Net increase (decrease) in cash and cash equivalents			76,508				(30,530	)
Cash and cash equivalents, beginning of period			183,448				204,423
Cash and cash equivalents, end of period		$	259,956			$	173,893
Supplemental disclosures of cash flow information:
Property and equipment acquired under capital leases		$	—			$	260

The accompanying notes are an integral part of the consolidated financial statements.

PARAMETRIC TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

		Three months ended								Nine months ended
		June 30,				July 1,				June 30,				July 1,
		2007				2006				2007				2006
Net income		$	87,228			$	16,876			$	119,780			$	35,143
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of a tax benefit of $237 for the three and nine months ended June 30, 2007 and $0 for the three and nine months ended July 1, 2006			(441	)			1,470				2,139				1,044
Net unrealized gain (loss) on securities, net of tax of $0 for all periods			—				28				(680	)			(205	)
Impact of release of valuation allowance on U.S. net deferred tax assets			(53	)			—				(53	)			—
Other comprehensive income (loss)			(494	)			1,498				1,406				839
Comprehensive income		$	86,734			$	18,374			$	121,186			$	35,982

The accompanying notes are an integral part of the consolidated financial statements.

PARAMETRIC TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Parametric Technology Corporation (PTC) and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. While we believe that the disclosures presented are adequate to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006. A reclassification of $5.7 million from accounts payable to accrued expenses and other current liabilities has been made in the September 30, 2006 consolidated balance sheet for consistent presentation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair presentation of our financial position, results of operations and cash flows at the dates and for the periods indicated. Unless otherwise indicated, all references to a year reflect our fiscal year, which ends on September 30. The year-end consolidated balance sheet is derived from our audited financial statements.

Deferred revenue primarily relates to software maintenance agreements billed to customers for which the services have not yet been provided. The liability associated with performing these services is included in deferred revenue and the related customer receivable, if not yet paid, is included in other current assets. Billed but uncollected maintenance-related amounts included in other current assets at June 30, 2007 and September 30, 2006 were $45.9 million and $50.0 million, respectively.

The results of operations for the three and nine months ended June 30, 2007 are not necessarily indicative of the results expected for the remainder of the fiscal year.

2. Restructuring Charges

There were no restructuring charges recorded in the first nine months of 2007.

In the third quarter and first nine months of 2006, we recorded a net restructuring charge of $5.9 million. In the second quarter of 2006, we announced that we would undertake certain cost-reduction initiatives. These initiatives were substantially completed in the third quarter of 2006 and resulted in a restructuring charge of $7.4 million for severance and related costs associated with the termination of 91 employees in the third quarter of 2006, partially offset by a credit of $1.5 million primarily related to a plan to reoccupy a portion of our headquarters facility that was previously vacant and included in restructuring costs in prior periods. The headquarters space was available for sublease and was being marketed, but was reoccupied due to space requirements related to our acquisition of Mathsoft.

The following table summarizes restructuring accrual activity for the three and nine months ended June 30, 2007:

		Three months ended June 30, 2007												Nine months ended June 30, 2007
		Employee				Facility								Employee				Facility
		Severance				Closures								Severance				Closures
		and Related				and Other								and Related				and Other
		Benefits				Costs				Total				Benefits				Costs				Total
										(in thousands)
Beginning balance		$	302			$	18,451			$	18,753			$	1,084			$	21,293			$	22,377
Cash disbursements			(306	)			(1,469	)			(1,775	)			(1,127	)			(4,395	)			(5,522	)
Foreign exchange impact			4				25				29				43				109				152
Balance, June 30, 2007		$	—			$	17,007			$	17,007			$	—			$	17,007			$	17,007

As of June 30, 2007, of the $17.0 million remaining in accrued restructuring charges, $6.8 million was included in current liabilities and $10.2 million was included in other long-term liabilities, principally for facility costs to be paid out through 2014.

In determining the amount of the facilities accrual, we are required to estimate such factors as future vacancy rates, the time required to sublet properties and sublease rates. These estimates are reviewed quarterly based on known real estate market conditions and the credit-worthiness of subtenants, and may result in revisions to established facility reserves. We had accrued $16.5 million as of June 30, 2007 related to excess facilities (compared to $20.7 million at September 30, 2006), representing gross lease commitments with agreements expiring at various dates through 2014 of approximately $38.7 million, net of committed and estimated sublease income of approximately $21.8 million and a present value factor of $0.4 million. We have entered into signed sublease arrangements for approximately $19.4 million, with the remaining $2.4 million based on future estimated sublease arrangements, including $1.5 million for space currently available for sublease.

We are currently taking steps to improve operating margins and increase our strategic presence in emerging geographies. In the fourth quarter of 2007, we expect to terminate the employment of approximately 200 employees, which will result in a restructuring charge for severance and related costs of approximately $11 million in the fourth quarter of 2007. Additionally, we are evaluating other cost savings opportunities including optimizing the use of our leased facilities worldwide and relocating functions and additional workforce to lower-cost geographies. This process may result in additional restructuring costs in the fourth quarter of 2007 and in 2008.

3. Stock-based Compensation

We account for stock-based compensation under Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123(R). SFAS 123(R) requires us to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award using an option pricing model. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

Our equity incentive plans provide for grants of nonqualified and incentive stock options, common stock, restricted stock, restricted stock units and stock appreciation rights to employees, directors, officers and consultants. Until July 2005, we generally granted stock options. For those options, the option exercise price was typically the fair market value of our common stock at the date of grant and they generally vested over four years and expired ten years from the date of grant. Since our adoption of SFAS 123(R), we have awarded restricted stock and restricted stock units as the principal equity incentive awards, including performance-based awards that are earned based on achievement of performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date. Each restricted stock unit represents the contingent right to receive one share of our common stock. Our equity incentive plans are described more fully in Note J to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

We made the following restricted stock and restricted stock unit grants in the third quarter and first nine months of 2007 and 2006:

		Restricted Stock								Restricted Stock Units
Grant Period		Performance-based				Time-based				Performance-based				Time-based
		(Number of Shares)								(Number of Units)
Third quarter of 2007			—				—				—				420,740
First nine months of 2007			495,768				442,590				60,561				1,148,922
Third quarter of 2006			—				—				2,991				5,351
First nine months of 2006			515,617				434,800				338,858				1,297,629

Restricted Stock

Performance-based awards. In the first nine months of 2007 and 2006, we granted to our executive officers performance-based shares that are earned based on achievement of certain Company operating performance criteria specified by the Compensation Committee on or prior to the date of grant. With respect to the 2007 grants, in the third quarter of 2007, we reversed all compensation expense that we had recorded during the first six months of 2007 as we do not currently expect that these performance-based shares will be earned. With respect to the 2006 grants, because the specified performance criteria were achieved in full, the restrictions on 284,417 of the shares lapsed on November 9, 2006 and the restrictions on the remaining shares will lapse in equal installments on November 9, 2007 and 2008, provided that the holder of the award remains employed by us at those dates.

Time-based awards. In the second quarter of 2007, we granted 366,800 and 75,790 shares to our executive officers and members of our Board of Directors, respectively. The restrictions on the executive shares will lapse in substantially equal installments on February 15, 2008, 2009 and 2010, provided that the holder of the award remains employed by us at those dates. The restrictions on the shares granted to our directors will lapse in substantially equal installments on March 7, 2008, 2009 and 2010, provided that the holder of the award remains a director at those dates.

In the first quarter of 2006, we granted 346,800 shares to our executive officers. The restrictions on one-third of these shares lapsed on November 9, 2006 and those on the remaining shares will lapse in substantially equal installments on November 9, 2007 and 2008, provided that the holder of the award remains employed by us at those dates. In the second quarter of 2006, we issued 88,000 shares of restricted stock to our non-employee directors, of which the restrictions on one-third of the shares lapsed on February 15, 2007 and the restrictions on the remaining shares will lapse in substantially equal installments on each of February 15, 2008 and 2009, provided that the holder of the award remains a director of those dates.

Restricted Stock Units

Performance-based awards. In the first nine months of 2007, we granted 60,561 performance-based restricted stock units to employees in connection with our employee management incentive plans for the 2007 fiscal year. These shares will vest on the later of November 9, 2007 or the date the Compensation Committee determines the extent to which the performance criteria have been achieved, provided that the holder of the award remains employed by us at that date. In the third quarter of 2007, we reversed all compensation expense related to these restricted stock units that we had recorded during the first six months of 2007 as we do not currently expect that these performance-based restricted stock units will be earned. In the first nine months of 2006, we granted 338,858 performance-based restricted stock units to employees in connection with our employee management incentive plans for the 2006 fiscal year, which were earned in full on November 9, 2006 based on achievement of specified performance criteria established by the Compensation Committee.

Time-based awards. In the third quarter and first nine months of 2007, we granted 420,740 and 1,148,922 restricted stock units, respectively, to employees. The restricted stock units granted in the third quarter of 2007 will vest in three substantially equal installments on each of March 15, 2008, 2009 and 2010, provided that the holder of the award remains employed by us at those dates. The remaining 2007 awards will vest in substantially equal installments on each of the first three anniversaries of the date of grant, provided that the holder of the award remains employed by us at those dates. In the third quarter and first nine months of 2006, we granted 5,351 and 1,297,629 restricted stock units, respectively, to employees, which vest in three substantially equal installments on each of the first three anniversaries of the date of grant, provided that the holder of the award remains employed by us at those dates.

With respect to all types of equity awards, in the first nine months of 2007, the restrictions on 664,463 restricted shares lapsed and 1,101,133 restricted stock units vested. The fair value of restricted shares and restricted stock units

granted in the first nine months of 2007 was based on the fair market value of our common stock on the date of grant. The weighted average fair value per share of restricted shares and restricted stock units granted in the first nine months of 2007 was $18.55.

Stock-based compensation expense amounts presented below reflect the reversal in the third quarter of 2007 of $3.0 million recorded in the first six months of 2007 related to performance-based awards in connection with our executive and employee management incentive plans for the 2007 fiscal year. These performance-based awards would be earned based on achievement of operating performance targets which we currently do not believe will be met. The following table shows the classification of compensation expense recorded for our stock-based awards as reflected in our consolidated statements of operations:

		Three months ended								Nine months ended
		June 30,				July 1,				June 30,				July 1,
		2007				2006				2007				2006
						(in thousands)
Cost of license revenue		$	60			$	29			$	100			$	96
Cost of service revenue			993				1,969				4,671				5,830
Sales and marketing			2,035				2,547				5,926				7,241
Research and development			1,058				2,336				4,529				6,653
General and administrative			884				3,188				7,281				9,453
Total stock-based compensation expense		$	5,030			$	10,069			$	22,507			$	29,273

4. Common Stock and Earnings Per Share (EPS)

Earnings Per Share

Basic EPS is calculated by dividing net income by the weighted average number of shares outstanding during the period. Unvested restricted shares, although legally issued and outstanding, are not considered outstanding for purposes of calculating basic earnings per share. Diluted EPS is calculated by dividing net income by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding stock options, restricted shares and restricted stock units using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of unrecognized compensation expense and any tax benefits as additional proceeds.

The following table presents the calculation for both basic and diluted EPS:

		Three months ended								Nine months ended
		June 30,				July 1,				June 30,				July 1,
		2007				2006				2007				2006
						(in thousands, except per share data)
Net income		$	87,228			$	16,876			$	119,780			$	35,143
Weighted average shares outstanding—Basic			113,154				109,947				112,610				109,672
Dilutive effect of employee stock options, restricted shares and restricted stock units			4,346				2,924				4,813				3,258
Weighted average shares outstanding—Diluted			117,500				112,871				117,423				112,930
Earnings per share — Basic		$	0.77			$	0.15			$	1.06			$	0.32
Earnings per share — Diluted		$	0.74			$	0.15			$	1.02			$	0.31

Stock options to purchase 3.5 million shares for both the third quarter and first nine months of 2007 and 5.5 million and 4.4 million shares for the third quarter and first nine months of 2006, respectively, were outstanding but were not included in the calculation of diluted earnings per share because the exercise prices per share, plus the per share tax benefits and unamortized compensation relating thereto, were greater than the average market price of our common stock for those periods. These shares were excluded from the computation of diluted EPS as the effect would have been anti-dilutive.

Share Repurchase Authorization

In September 1998, our Board of Directors authorized the repurchase of up to 8.0 million shares of our common stock and in July 2000 increased the shares authorized for repurchase to 16.0 million. We had repurchased 12.5 million shares through the end of 2004 and did not repurchase any additional shares until the third quarter of 2007, when our Board of

Directors authorized us to resume repurchases within established parameters (described in Part II, Item 2 of this report). In the third quarter of 2007, we repurchased 100,000 shares for $1.8 million. Through the end of the third quarter of 2007, we had repurchased, at a cost of $368.6 million, a total of 12.6 million shares of the 16.0 million shares authorized for repurchase. In the fourth quarter of 2007 to date, we have repurchased an additional 457,000 shares for $8.2 million.

5. Acquisitions

NC Graphics

In the third quarter of 2007, we acquired NC Graphics (Cambridge) Limited, headquartered in England, for $7.2 million in cash, including $0.2 million of acquisition-related transaction costs. NC Graphics provided computer-aided manufacturing solutions for design and machining of molds, dies, prototypes, and other high-speed precision machining applications. Results of operations for NC Graphics have been included in the accompanying consolidated statements of operations since May 3, 2007. Our results of operations prior to this acquisition if presented on a pro forma basis, as if the companies had been combined since the beginning of fiscal 2006, would not differ materially from our reported results.

This acquisition was accounted for as a business combination. The purchase price allocation is preliminary pending the final valuation of the acquired assets and liabilities. The preliminary purchase price allocation resulted in goodwill of $1.5 million; intangible assets of $5.8 million (including purchased software of $4.3 million, customer relationships of $1.4 million, and other intangible assets of $0.1 million, which are being amortized over useful lives ranging from 1 to 9 years); other net assets of $0.8 million; and deferred tax liabilities of $1.4 million. In addition, the preliminary purchase price allocation resulted in a charge of $0.5 million for in-process research and development.

ITEDO

In the first quarter of 2007, we acquired ITEDO Software GmbH and ITEDO Software LLC (together, ITEDO), headquartered in Germany, for $16.7 million in cash, including $0.2 million of acquisition-related costs. In addition, we agreed to pay up to $0.5 million of additional cash consideration if specified product integration targets are achieved within three years of the acquisition date of which $0.3 million was paid in the third quarter of 2007. ITEDO provided software solutions for creating and maintaining technical illustrations to customers in multiple discrete manufacturing vertical markets such as automotive, aerospace and defense, and industrial equipment. ITEDO had approximately 30 employees and generated revenue of approximately $5 million for the twelve months ended July 31, 2006. Results of operations for ITEDO have been included in the accompanying consolidated statements of operations since October 19, 2006. Our results of operations prior to this acquisition if presented on a pro forma basis, as if the companies had been combined since the beginning of fiscal 2006, would not differ materially from our reported results.

This acquisition was accounted for as a business combination. The purchase price allocation resulted in goodwill of $11.5 million; intangible assets of $8.1 million (including purchased software of $6.2 million, customer relationships of $1.8 million, and other intangible assets of $0.1 million, which are being amortized over useful lives ranging from 4 to 10 years); other net liabilities of $1.0 million; restructuring accruals of $0.3 million related to our planned integration of ITEDO; deferred tax liabilities of $2.5 million, equal to the tax effect of the amount of the acquired intangible assets other than goodwill that are not deductible for income tax purposes; and, as a result of recording those deferred tax liabilities, a $1.2 million reduction in our valuation allowance recorded against our pre-acquisition deferred tax assets in the U.S. and a foreign jurisdiction. The goodwill and certain intangible assets are not deductible for tax purposes.

This transaction resulted in $11.5 million of purchase price that exceeded the estimated fair values of tangible and intangible assets and liabilities, all of which was allocated to goodwill. We believe that the high amount of goodwill relative to identifiable intangible assets was the result of several factors including the potential to sell ITEDO products into our traditional manufacturing customer base, including leveraging our direct and indirect sales force and our established presence in geographies not previously served by ITEDO; and our intention to integrate our ITEDO, Arbortext, Windchill and Pro/ENGINEER solutions to enhance our technical publications capabilities.

Mathsoft

In the third quarter of 2006, we acquired Mathsoft Corporate Holdings, Inc., including its wholly owned subsidiary Mathsoft Engineering & Education, Inc. (together, Mathsoft). Mathsoft’s primary product was Mathcad^® software, which helps engineering organizations create, automate, document and reuse engineering calculations in the product development process, and in other mathematics-driven processes. Mathsoft had approximately 120 employees in offices primarily in the U.S. and Europe and generated revenue of approximately $20 million for the twelve months ended March 31, 2006. Results of operations for Mathsoft have been included in the accompanying consolidated statement of operations since April 29, 2006. Our results of operations prior to this acquisition if presented on a pro forma basis, as if the companies had been combined since the beginning of fiscal 2006, would not differ materially from our reported results.

DENC and Cadtrain

In the first quarter of 2006, we acquired DENC AG and substantially all of the assets of Cadtrain, Inc. for an aggregate of $9.9 million in cash. In addition, we agreed to pay up to an aggregate of $2.0 million of additional