UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended: September 30, 1997 ------------------ Commission File Number: 0-18059 ------- PARAMETRIC TECHNOLOGY CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 04-2866152 - ------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 128 Technology Drive, Waltham, MA 02154 --------------------------------------- (Address of principal executive offices, including zip code) (781) 398-5000 --------------------------------------- (Registrant's telephone number, including area code) Securities registered pursuant to Securities registered pursuant to Section 12(b) of the Act: Section 12(g) of the Act: None Common Stock, $.01 par value per share -------------------------------------- (Title of Class) Indicate by check mark whether the registrant has (i) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (ii) has been subject to such filing requirements for the past 90 days. YES X NO ---------- ---------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by nonaffiliates of the registrant as of October 31, 1997 was $4,478,147,410. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value per share 127,936,236 -------------------------------------- ---------------------- Class Outstanding at October 31, 1997 DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report to Stockholders for the fiscal year ended September 30, 1997 ("1997 Annual Report to Stockholders") are incorporated by reference into Parts I and II. Portions of the definitive Proxy Statement in connection with the Annual Meeting of Stockholders to be held February 12, 1998 ("1998 Proxy Statement") are incorporated by reference into Part III.
Important Factors Regarding Future Results Information provided by the Company, including information contained in this Annual Report on Form 10-K, or by its spokespersons from time to time may contain forward-looking statements concerning projected financial performance, market and industry segment growth, product development and commercialization, or other aspects of future operations. Such statements are based on the assumptions and expectations of management at the time such statements are made. The Company cautions investors that its performance (and, therefore, any forward-looking statement) is subject to risks and uncertainties. Various important factors, including but not limited to those discussed herein, may cause the Company's future results to differ materially from those projected in any forward-looking statement. Important information about such factors and the basis for those assumptions is contained in "Proposed Acquisition" and "Important Factors Regarding Future Results" included in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section in the 1997 Annual Report to Stockholders, which section is incorporated herein by reference, and in the "Risk Factors" section of the Company's Registration Statement on Form S-4 filed with the Securities and Exchange Commission on November 12, 1997. PART I ITEM 1: Business General Parametric Technology Corporation (the "Company") develops, markets and supports Pro/ENGINEER(R) Solutions, a family of software products that automate the complete product development process within the mechanical computer-aided design, manufacturing and engineering ("CAD/CAM/CAE") industry. The Company's Pro/ENGINEER product line includes industrial design; mechanical design; functional simulation; production applications; information technology applications and implementation solutions. The Company focuses its marketing and sales efforts primarily on the electronic, aerospace, automotive, consumer products, medical equipment, industrial equipment, heavy equipment and telecommunications industries. Mechanical CAD/CAM/CAE is a complex process which encompasses a broad spectrum of engineering disciplines essential to the development of virtually all manufactured products, ranging from consumer products to jet aircraft. Manufacturers compete on the basis of cost, time to market and product performance criteria, which are significantly affected by the quality and length of the product development process. The Company's mechanical CAD/CAM/CAE products offer a high-performance, fully integrated solution which enables end-users to reduce the time to market and manufacturing costs for their products and to improve product quality by easily evaluating multiple design alternatives. The Company believes that its Pro/ENGINEER product line offers better price/performance, greater ease of use and more complete integration of multiple engineering disciplines than other available mechanical CAD/CAM/CAE products. The Company's Pro/ENGINEER product line is based on an innovative software architecture that incorporates a unique parametric, feature-based solid modeling technology. The Company's Pro/ENGINEER software uses a single data structure to capture changes made in any stage of the product development process and to automatically update designs and all engineering deliverables. The single data structure allows all changes to be propagated automatically throughout the product development process, enabling users to integrate multiple engineering activities in the mechanical design process and conduct them on a concurrent basis. In addition, as a result of the data structure of the Company's products, engineers can create, process, modify and store designs quickly and easily, in a highly efficient manner. The Pro/ENGINEER product line runs on all major UNIX(R) and Microsoft(R) Windows NT(TM) and Windows(R) 95 Operating System platforms, and is hardware-independent. The product is written in "C" programming language, which allows for portability from one standard workstation to another. 2
Proposed Acquisition On November 4, 1997, the Company announced that it had entered into an agreement to acquire Computervision Corporation ("Computervision") in a stock-for-stock transaction. Based on the November 3, 1997 closing price of the Company's common stock, the aggregate equity value of the transaction is approximately $260,000,000. The Company will also assume approximately $240,000,000 in debt from Computervision, and expects to use cash and short-term investment balances to repay a substantial portion of such debt. Under the terms of the proposed transaction, each share of Computervision common stock will be exchanged for .0866 shares of the Company's common stock. The transaction is intended to be accounted for as a pooling of interests and to qualify as a tax-free reorganization. Upon closing, Computervision will become a wholly owned subsidiary of the Company. The transaction is subject to approval of Computervision's shareholders at a meeting called for January 12, 1998 and is expected to close promptly after such approval. The Company expects to recognize a non-recurring charge of approximately $75,000,000 to $95,000,000 related to certain merger-related, debt prepayment, consolidation and integration expenses during the quarter in which the transaction closes. The Company expects that the acquisition of Computervision will expand its business presence and make it more competitive in the high-end of the computer-aided design market in the automotive and aerospace industries. Computervision's products are also expected to broaden the Company's data management product offerings and permit it to offer enterprise-wide data management products that address the requirements of larger customers. Except where explicitly noted, the discussion in this Report does not give effect to the acquisition of Computervision. Product Development The mechanical CAD/CAM/CAE industry is characterized by rapid technological advances. The Company's ability to develop new products rapidly is facilitated by the modular structure of its software code, which enables functional subroutines used in existing products to be accessed and utilized by new software modules, thereby reducing the amount of new code required to develop additional products. The major benefit of this approach is rapid development of new functionality. There can be no assurance, however, that the Company will be successful in developing and marketing product enhancements or new products and modules that respond to technological changes by others, or that its new products will adequately address the needs of the marketplace. The Company works closely with its customers to define improvements and enhancements, which are then integrated into the products. Using this approach, customers become involved in the product design process to validate feasibility and to influence functionality early in the product's life-cycle. In addition, the Company's Cooperative Software Program ("CSP") provides the mechanisms and environment to facilitate the integration of complementary products with the Pro/ENGINEER product line. Through the Company's open software toolkit, the CSP members can build tightly integrated solutions that satisfy various requirements of the Company's customers. During the years ended September 30, 1997, 1996 and 1995, the Company incurred expenses of $53,236,000, $39,476,000 and $25,591,000, respectively, on research and development. Sales The Company derives most of its revenue from products distributed directly to its customers and the remainder through third-party distributors. The Company's sales force manages the activities of all distribution channels within a geographic area. As of September 30, 1997, the Company's sales and marketing organization consisted of 800 employees in the United States and 1,293 employees abroad. The Company has sales and/or support offices throughout the United States and in 34 foreign countries. Since inception, the Company has licensed software products for nearly 101,500 seats to more than 15,000 companies. A seat of software generally consists of the Company's core product, Pro/ENGINEER, together with several other software 3
modules, configured to serve the needs of a single end-user. End-users of the Company's products range from small companies to some of the world's largest manufacturing organizations. No single customer accounted for more than 10% of the Company's revenue in fiscal 1997 or prior years. Information with respect to foreign and domestic operations and export sales, and the risks thereof, may be found in Note L to the Consolidated Financial Statements and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the 1997 Annual Report to Stockholders, which financial statements and section are included in Exhibit 13.1 to this Annual Report on Form 10-K and incorporated herein by reference. Competition The Company competes most directly with the CADAM(R) and CATIA(R) products developed by Dassault and marketed by IBM(R), the UNIGRAPHICS(R) product marketed by EDS, the I/EMS(TM) product marketed by Intergraph Corporation and the I-DEAS Master Series(TM) product marketed by Structural Dynamics Research Corporation. The Company believes that the principal bases for competition in its markets are product functionality, price/performance characteristics, product portability, ease of product use, sales and marketing strength, support services and corporate reputation. The Company is aware of ongoing efforts by competitors, some of whom have greater resources than the Company, to develop technically equivalent or superior technology and market these products at lower prices. Should a competitor successfully bring such a product to market and be able to sell it at a lower price in the future, the Company's operating results could be materially adversely affected. The Company's future success will depend in a large part on its ability to license and sell additional products and services to its existing customer base as well as the installed customer bases of traditional mechanical CAD/CAM/CAE suppliers. Proprietary Rights The Company regards its software products as proprietary and attempts to protect its intellectual property rights by relying on copyrights, trademarks, patents and common law safeguards, including trade secret protection, as well as restrictions on disclosures and transferability in its agreements with other parties. The Company typically distributes its products under software license agreements, which grant customers perpetual licenses to, rather than ownership of, the Company's products and which contain provisions protecting the Company's ownership of and the confidentiality of the underlying technology. The Company also limits access to and distribution of its software, documentation and other proprietary information. The source code of the Company's products is protected as a trade secret and as an unpublished copyright work. Despite these precautions, it may be possible to copy or otherwise obtain and use the Company's products or technology without authorization. In addition, effective copyright and trade secret protection may be unavailable or limited in certain foreign countries. The Company believes that, due to the rapid pace of innovation within its industry, factors such as the technological and creative skills of its personnel are more important to establishing and maintaining a technology leadership position within the industry than are the various legal protections surrounding its technology. The Company believes that its products and technology do not infringe any existing proprietary rights of others, although there can be no assurance that third parties will not assert infringement claims in the future. Parametric Technology Corporation, Pro/ENGINEER, and Pro/MECHANICA are registered trademarks of the Company in the United States and other countries. Parametric Technology, PTC, the PTC logo and all product names in the PTC product family are trademarks of the Company in the United States and other countries. Backlog The Company generally ships its products within 30 days after acceptance of a customer purchase order and execution of a software license agreement. Accordingly, the Company does not believe that its backlog at any particular point in time is indicative of future sales levels. Employees As of September 30, 1997, the Company had 3,432 employees, including 2,093 in sales, marketing and support activities; 567 in customer support, training and consulting; 310 in management, finance and administration; and 462 in product development. Of these employees, 1,707 were located throughout the United States and 1,725 were located in foreign countries. 4
ITEM 2: Properties The Company's executive offices are located in approximately 307,000 square feet of office space in Waltham, Massachusetts. The Company also leases 216 additional sales and/or support offices and development offices throughout the United States and, through its wholly owned subsidiaries, abroad. The Company believes that its facilities are adequate for its present needs, but will continue to evaluate the need for additional space, as the growth of the business requires. ITEM 3: Legal Proceedings None. ITEM 4: Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the last quarter of fiscal 1997. EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers are: <TABLE> <CAPTION> Name Age Position ---- --- --------- <S> <C> <C> Steven C. Walske 45 Chairman of the Board of Directors and Chief Executive Officer C. Richard Harrison 42 President and Chief Operating Officer Edwin J. Gillis 48 Executive Vice President of Finance and Administration, Chief Financial Officer and Treasurer John D. McMahon 42 Executive Vice President of Worldwide Sales Martha L. Durcan 38 Vice President, Corporate Counsel and Clerk James F. Kelliher 38 Senior Vice President of Finance John G. Mokas 38 Director of Treasury and Finance and Assistant Treasurer </TABLE> Mr. Walske has been Chairman of the Board of Directors since August 1994 and Chief Executive Officer and a director of the Company since he joined the Company in December 1986. Mr. Walske was President of the Company from December 1986 to August 1994 and Clerk of the Company from December 1986 to February 1993. Mr. Harrison has been President and Chief Operating Officer since August 1994. Prior to that, Mr. Harrison served as Senior Vice President of Sales and Distribution from September 1991 until August 1994 and as Vice President of Sales and Distribution from May 1987 to September 1991. Mr. Gillis has been Executive Vice President of Finance and Administration since October 1996 and Chief Financial Officer and Treasurer since October 1995. Mr. Gillis served as Senior Vice President of Finance and Administration from October 1995 to September 1996. Prior to joining the Company, Mr. Gillis was Senior Vice President of Finance and Operations and Chief Financial Officer at Lotus Development Corporation from August 1991 until September 1995. Mr. McMahon has been Executive Vice President of Worldwide Sales since April 1997. Prior to that, Mr. McMahon served as Senior Vice President of European Sales from October 1996 to March 1997, Vice President of North American Operations from October 1994 to September 1996, Vice President of Western Operations from November 1993 to September 1994, and Vice President International Operations from October 1991 to October 1993. Ms. Durcan has served as Vice President since October 1993, Corporate Counsel since joining the Company in March 1992 and as Clerk since February 1993. Mr. Kelliher has been Senior Vice President of Finance since June 1997. Prior to that, Mr. Kelliher had served as Vice President of Finance from December 1994 until June 1997, Director of Corporate Finance from November 1994 to December 1994, Chief Financial Officer of Europe from May 1993 to November 1994, Manager of Finance and Assistant International Controller from February 1992 to May 1993, and Manager of Budget and Analysis from October 1991 to February 1992. 5
Mr. Mokas has been Director of Treasury and Finance and Assistant Treasurer since February 1997. Prior to that, Mr. Mokas served as Controller from August 1993 until February 1997. Prior to joining the Company, Mr. Mokas was a manager at Coopers & Lybrand L.L.P. from May 1988 to July 1993. PART II ITEM 5: Market for Registrant's Common Equity and Related Stockholder Matters Information with respect to this item may be found in the sections captioned "Quarterly Financial Information" and "Supplemental Financial Information" appearing in the 1997 Annual Report to Stockholders. Such information is incorporated herein by reference. ITEM 6: Selected Financial Data Information with respect to this item may be found in the section captioned "Five Year Summary of Selected Financial Data" appearing in the 1997 Annual Report to Stockholders. Such information is incorporated herein by reference. ITEM 7: Management's Discussion and Analysis of Financial Condition and Results of Operations Information with respect to this item may be found in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing in the 1997 Annual Report to Stockholders. Such information is incorporated herein by reference. ITEM 8: Financial Statements and Supplementary Data Information with respect to this item may be found on pages 31 through 45 and in the section entitled "Quarterly Financial Information" appearing in the 1997 Annual Report to Stockholders. Such information is incorporated herein by reference. ITEM 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure On November 17, 1995, the Board of Directors of the Company, upon recommendation of its Audit Committee, approved a change in the Company's independent accountants from Price Waterhouse LLP to Coopers & Lybrand L.L.P. effective for the fiscal year ended September 30, 1996. Price Waterhouse LLP served as the Company's independent accountants for fiscal years 1992 through 1995. During these periods, the Company did not have any disagreements with Price Waterhouse LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, nor did any reports issued by Price Waterhouse LLP contain an adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles. PART III ITEM 10: Directors and Executive Officers of the Registrant Information with respect to directors of the Company may be found in the sections captioned "Election of Directors" appearing in the 1998 Proxy Statement. Such information is incorporated herein by reference. Information with respect to Executive Officers of the Company may be found under the section captioned "Executive Officers of the Registrant" in Part I of this Annual Report on Form 10-K. ITEM 11: Executive Compensation Information with respect to this item may be found in the sections captioned "Director Compensation" and "Compensation of Executive Officers" appearing in the 1998 Proxy Statement. Such information is incorporated herein by reference. 6
ITEM 12: Security Ownership of Certain Beneficial Owners and Management Information with respect to this item may be found in the section captioned "Principal Stockholders" appearing in the 1998 Proxy Statement. Such information is incorporated herein by reference. ITEM 13: Certain Relationships and Related Transactions Information with respect to this item may be found under the headings "Certain Business Relationships" and "Compensation Committee Interlocks and Insider Trading" in the section captioned "Compensation of Executive Officers" appearing in the 1998 Proxy Statement. Such information is incorporated herein by reference. 7
PART IV ITEM 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Documents Filed as Part of Form 10-K 1. Financial Statements -Consolidated Balance Sheet as of September 30, 1997 and 1996* -Consolidated Statement of Income for the years ended September 30, 1997, 1996 and 1995* -Consolidated Statement of Stockholders' Equity for the years ended September 30, 1997, 1996 and 1995* -Consolidated Statement of Cash Flows for the years ended September 30, 1997, 1996 and 1995* -Notes to Consolidated Financial Statements* -Reports of Independent Accountants for the years ended September 30, 1997*, 1996* and 1995 2. Financial Statement Schedules -Reports of Independent Accountants for the years ended September 30, 1997, 1996 and 1995 -Schedule II - Valuation and Qualifying Accounts -Schedules other than the one listed above have been omitted since they are either not required, not applicable, or the information is otherwise included. 3. Listing of Exhibits The Exhibits filed as part of this Annual Report on Form 10-K are listed in the Exhibit Index immediately preceding such Exhibits, and are incorporated herein by reference. (b) Reports on Form 8-K None. (c) Exhibits The Company hereby files as part of this Annual Report on Form 10-K the Exhibits listed in the attached Exhibit Index. (d) Financial Statement Schedules The Company hereby files as part of this Annual Report on Form 10-K the financial statement schedule listed in Item 14(a)2 as set forth above. - ---------- * Referenced information is contained in the 1997 Annual Report to Stockholders, filed as Exhibit 13.1 hereto. 8
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 24th day of December, 1997. PARAMETRIC TECHNOLOGY CORPORATION By /S/ Steven C. Walske ---------------------------- Steven C. Walske, Chairman and Chief Executive Officer POWER OF ATTORNEY ----------------- We, the undersigned officers and directors of Parametric Technology Corporation, hereby severally constitute Edwin J. Gillis and Martha L. Durcan, Esq., and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below any and all subsequent amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below on the 24th day of December, 1997. <TABLE> <CAPTION> Signature Title - --------- ----- <S> <C> /S/ Steven C. Walske Chief Executive Officer and Chairman of the Board - --------------------------- (Principal Executive Officer) Steven C. Walske /S/ C. Richard Harrison President, Chief Operating Officer and Director - --------------------------- C. Richard Harrison /S/ Edwin J. Gillis Executive Vice President of Finance and Administration, - --------------------------- Chief Financial Officer and Treasurer Edwin J. Gillis (Principal Financial Officer and Principal Accounting Officer) /S/ Robert N. Goldman Director - --------------------------- Robert N. Goldman /S/ Donald K. Grierson Director - --------------------------- Donald K. Grierson /S/ Oscar B. Marx, III Director - --------------------------- Oscar B. Marx, III Director - --------------------------- Michael E. Porter /S/ Noel G. Posternak Director - --------------------------- Noel G. Posternak </TABLE> 9
EXHIBIT INDEX ------------- Exhibit Number - ------- 2.1 - Agreement and Plan of Reorganization dated as of November 3, 1997 by and among the Company, PTC Acquisition Corporation, and Computervision Corporation (filed as Exhibit 2.1 to the Current Report on Form 8-K dated November 4, 1997 and incorporated herein by reference). 3.1(a) - Restated Articles of Organization of the Company (filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 1996 and incorporated herein by reference). 3.1(b) - Articles of Amendment to Restated Articles of Organization (filed as Exhibit 4.1(b) to the Company's Registration Statement on Form S-8 (File No. 333-22169) and incorporated herein by reference). 3.2 - By-Laws, as amended and restated, of the Company (filed as Exhibit 3.2 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference). 10.1* - 1997 Incentive Stock Option Plan of the Company (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 1997 and incorporated herein by reference). 10.2* - 1987 Incentive Stock Option Plan of the Company, as amended (filed as Exhibit 10.2 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference). 10.3 - Lease dated May 22, 1987 by and between the Company and the Trustees of 128 Technology Trust (filed as Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 33-31620) and incorporated herein by reference). 10.4* - Employment Letter with Steven C. Walske dated October 17, 1986 (filed as Exhibit 10.12 to the Company's Registration Statement on Form S-1 (File No. 33-31620) and incorporated herein by reference). 10.5* - Amended and Restated Severance Agreement with Steven C. Walske dated February 13, 1997 (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 1997 and incorporated herein by reference). 10.6 - Lease Amendment dated November 8, 1989 by and between the Company and the Trustees of 128 Technology Trust (filed as Exhibit 10.8 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference). 10.7 - Lease Amendment dated January 21, 1991 by and between the Company and the Trustees of 128 Technology Trust; filed herewith. 10.8* - Parametric Technology Corporation 1992 Director Stock Option Plan, as amended (filed as Exhibit 10.10 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference). 10.9 - Lease Amendment dated March 6, 1992 by and between the Company and the Trustees of 128 Technology Trust (filed as Exhibit 10.18 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1992 and incorporated herein by reference). - ---------- *Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of the Company participates. 10
10.10 - Lease Amendment dated November 18, 1992 by and between the Company and the Trustees of 128 Technology Trust (filed as Exhibit 10.19 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1992 and incorporated herein by reference). 10.11 - Lease Amendment dated June 8, 1993 by and between the Company and the Trustees of 128 Technology Trust (filed as Exhibit 10.21 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1993 and incorporated herein by reference). 10.12* - Severance Agreement with Michael E. McGuinness dated May 15, 1997 (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1997 and incorporated herein by reference). 10.13* - Amended and Restated Severance Agreement with C. Richard Harrison dated February 13, 1997 (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 1997 and incorporated herein by reference). 10.14 - Lease Amendment dated April 14, 1994 by and between the Company and the Trustees of 128 Technology Trust (filed as Exhibit 10.22 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.15 - Lease Amendment dated January 19, 1995 by and between the Company and the Trustees of 128 Technology Trust (filed as Exhibit 10.23 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference). 10.16* - Amended and Restated Severance Agreement with Edwin J. Gillis dated February 13, 1997 (filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 1997 and incorporated herein by reference). 10.17* - Parametric Technology Corporation 1996 Directors Stock Option Plan, as amended (filed as Exhibit 10.20 to the Annual Report on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference). 10.18* - Severance agreement with John D. McMahon dated May 15, 1997 (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1997 and incorporated herein by reference). 10.19* - Consulting Agreement with Michael E. Porter dated November 17, 1995, and Amendment #1 thereto dated May 15, 1997 (filed as Exhibits 10.3 and 10.4, respectively, to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1997 and incorporated herein by reference). 10.20* - Employment Agreement with Michael E. McGuinness dated November 17, 1997; filed herewith. 13.1 - Annual Report to Stockholders for the fiscal year ended September 30, 1997 (which is not deemed to be "filed" except to the extent that portions thereof are expressly incorporated by reference in this Annual Report on Form 10-K); filed herewith. 16.1 - Letter from Price Waterhouse LLP (filed as Exhibit 16.1 to the Current Report on Form 8-K dated November 17, 1995 and incorporated herein by reference). 21.1 - Subsidiaries of the Company; filed herewith. 23.1 - Report of Coopers & Lybrand L.L.P.; filed herewith. 23.2 - Consent of Coopers & Lybrand L.L.P.; filed herewith. - ---------- * Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of the Company participates. 11
23.3 - Report of Price Waterhouse LLP; filed herewith. 23.4 - Report of Price Waterhouse LLP on Financial Statement Schedules; filed herewith. 23.5 - Consent of Price Waterhouse LLP; filed herewith. - ---------- * Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of the Company participates. 12
SCHEDULE II PARAMETRIC TECHNOLOGY CORPORATION Valuation and Qualifying Accounts <TABLE> <CAPTION> (in thousands) - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Column A Column B Column C Column D Column E - --------------------------------------------------------------------------------------------------------------------------------- Additions ----------------------------- Balance Charged to Balance at beginning costs and Charged to at end Description of period expenses other accounts Deductions (1) of period - --------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Year Ended September 30, 1997 Allowance for Doubtful Accounts. . . . . . $2,910 1,224 - (1,385) $2,749 Year Ended September 30, 1996 Allowance for Doubtful Accounts. . . . . . $2,733 1,404 - (1,227) $2,910 Year Ended September 30, 1995 Allowance for Doubtful Accounts. . . . . . $2,694 1,110 - (1,071) $2,733 </TABLE> - ---------------------------------------------- (1) Uncollectible accounts written off, net of recoveries. 13