INDUSTRY

MSC.Software Corporation today announced financial results for the first quarter ended March 31, 2007. Total revenue for the first quarter ended March 31, 2007 was $57.6 million compared to $67.4 million for the first quarter last year. Software revenue for the first quarter totaled $23.0 million compared to $29.3 million for the first quarter last year. The 2006 first quarter included $1.3 million of non-recurring PLM software revenue. The PLM business was sold in March 2006. For the first quarter ended March 31, 2007, maintenance revenue totaled $28.7 million and services revenue totaled $5.9 million, compared to $27.6 million of maintenance revenue and $10.5 million of services revenue for the first quarter last year. The 2006 quarter included $1.1 million of PLM services revenue. "Our transition to enterprise sales has presented some execution challenges to MSC as we move our key customers from purchasing engineering tools to implementing enterprise-wide simulation platforms," said Bill Weyand, CEO and Chairman of MSC.Software. "And these challenges continued to impact our financial performance in the first quarter as this transition is taking longer than expected. We are disappointed with the timing of large transactions and our ability to close and complete these larger deals. Although we are not satisfied with these results, we did see certain positive signs in our business in the first quarter." "The number of transactions greater than $100,000 increased both quarter over quarter and sequentially, and the average amount of such transactions increased as well," continued Mr. Weyand. "We are seeing positive signs with our new Enterprise Simulation products and did have a number of key wins in the quarter with customers including Kimberly Clark and GE, in the US, Nissan and Honda in Asia Pacific, and Airbus, Alenia, and VW in Europe." "MSC is beginning to get traction on evolving our customers from simulation tools to multi-discipline solutions as evidenced by Honda adopting MD Solutions for product development," continued Mr. Weyand. "In addition, winning IBM's Beacon Award for Global Solutions - Best Industry Solution further validates that our SimManager Enterprise product offering represents tremendous value to the customer with the potential for delivering up to a 75% engineering productivity gain." "We believe our simulation technology is best-in-class, our vertical end-markets are strong, and customer response to our enterprise simulation strategy is positive. We are now focusing on execution in order to improve our financial performance," added Mr. Weyand. REVENUE BY GEOGRAPHY Total revenue in the Americas for the first quarter ended March 31, 2007 was $18.4 million, compared to $22.6 million the first quarter last year. The 2006 first quarter included non-recurring software and services revenue totaling $2.4 million for the PLM business. Total revenue in EMEA for the first quarter was $19.7 million, compared to $23.7 million the first quarter last year. Excluding the effects of changes in the EURO during the 2007 quarter, total revenue in EMEA was $18.0 million. In the Asia Pacific region, revenue totaled $19.6 million, compared to $21.5 million for the first quarter last year. Excluding the effects of changes in the YEN during the 2007 quarter, total revenue in Asia Pacific was $20.0 million. RESULTS OF OPERATIONS AND EPS Total operating expenses for the first quarter ended March 31, 2007 were $59.4 million, compared to $43.2 million for the first quarter last year. Included in the 2007 first quarter was a $7.1 million restructuring charge. Included in the 2006 first quarter were $3.8 million of audit and non-recurring professional service fees incurred in connection with the accounting restatement, and $0.6 million of consulting fees related to the implementation of worldwide financial systems offset by a $4.4 million gain on sale of certain assets of our PLM business. The first quarter 2007 had an operating loss of ($13.4) million, compared to operating income of $5.6 million in the first quarter last year. For the 2007 first quarter, the loss from continuing operations totaled ($6.4) million or $(0.15) per diluted share, compared to income from continuing operations of $3.1 million or $0.08 per diluted share in the first quarter last year. GUIDANCE At this time the Company will not affirm or issue guidance. The Company will evaluate its decision to provide guidance in the future, as it continues to move through this transition period.