SANTA ANA, Calif. -- MSC.Software Corp., the leading global provider of virtual product development (VPD) products including simulation software and services, today announced financial results for the third quarter ended September 30, 2003. Third Quarter Highlights: * Reported revenue from continuing operations was $62.1 million versus revenue from continuing operations of $61.6 million in the third quarter last year. * Reported income from continuing operations was $1.4 million or $0.04 per diluted share compared to a loss from continuing operations of $4.2 million or ($0.14) per diluted share last year. For the third quarter ended September 30, 2003, reported revenue from continuing operations was $62.1 million, compared to revenue from continuing operations of $61.6 million for the third quarter of 2002. For the third quarter ended September 30, 2003, reported income from continuing operations was $1.4 million or $0.04 per diluted share, compared to a loss from continuing operations of $4.2 million or ($0.14) per diluted share in the third quarter of 2002. During the third quarter of 2002, the Company recorded restructuring and impairment charges totaling $6.0 million. Income from continuing operations excluding these charges was $16,000 or $0.00 per diluted share. For the nine months ended September 30, 2003, reported revenue from continuing operations was $183.9 million, compared to reported revenue from continuing operations of $175.6 million for the nine months of 2002, up 5%. For the nine months ended September 30, 2003, the reported loss from continuing operations was $3.5 million or ($0.12) per diluted share, compared to a reported loss from continuing operations of $14.0 million or ($0.48) per diluted share in the nine months of 2002. During the first nine months of 2002, the Company recorded restructuring and other impairment charges of $13.8 million, a write off associated with the acquired in-process R&D of $2.4 million and a change in accounting principle of $39.3 million. The loss from continuing operations excluding these charges was $3.0 million or ($0.10) per diluted share. During the first nine months of 2003, the Company recorded restructuring and other impairment charges of $5.0 million, and refinancing charges included in Other Expenses of $6.1 million. Income from continuing operations excluding these charges was $3.3 million or $0.11 per diluted share, for the first nine months of 2003. The pro forma results discussed herein are a supplement to financial statements based on generally accepted accounting principles ("GAAP"). These pro forma results include adjustments for restructuring and other impairment charges, acquired in-process R&D, debt prepayment costs and a cumulative change in accounting. MSC.Software uses pro forma information to evaluate its on-going operating performance and believes this presentation provides investors with additional insight into its underlying operating results and business trends. A reconciliation between the pro forma and GAAP results is included in the accompanying financial data. "The third quarter results are a confirmation that the refocused MSC.Software strategy is gaining momentum and turning opportunity into revenue," said Frank Perna, chairman and CEO of MSC.Software. "We recently completed our 2003 Virtual Product Development conference in Michigan and I can say without hesitation that our VPD message and product strategy rings loud and clear with our customers in North America and abroad. Our customers understand that, to be successful in product development, they must increase their use of VPD technologies and MSC.Software is the partner that can help them achieve their goals. "We have undertaken a number of initiatives during the quarter, including providing new sales training for our worldwide staff and technical training for our support staff, that are making us a better solution selling organization and have enhanced the quality of our customer service. We have also made some significant strides in reducing our overhead costs related to facilities by combining offices, renegotiating leases and in some cases leasing office space to other companies. "My recent interaction with customers and staff at our conference has reconfirmed my enthusiasm that we will continue to succeed in this tough market and will perform even better when the economy turns around. The breadth and depth of our software and services product portfolio uniquely positions us in the market, and we are confident we can continue this momentum into the fourth quarter and into 2004."