Accelrys Announces First Quarter 2010 Financial Results

"This quarter was solid from a revenue, income and cash standpoint given the challenging economic environment," said Max Carnecchia, President and Chief Executive Officer of Accelrys. "Though I expect the economic climate to remain challenging in the short-term, my discussions with our customers and employees since my recent appointment as Accelrys' CEO further my belief in our value proposition. We have the unique ability to enable the world's science-based organizations to better utilize their vast reservoirs of scientific data in order to solve their scientific business problems. I am therefore enthusiastic about our long-term prospects."

First Quarter 2010 Financial Results:

-- Revenue for the quarter ended June 30, 2009 decreased 1% to $20.1 million from $20.3 million for the same quarter of the previous year.

-- Non-GAAP net income was $1.8 million, or $0.07 per diluted share, for the current quarter compared to non-GAAP net income of $2.2 million, or $0.08 per diluted share, for the same quarter of the previous year.

-- GAAP net income was $0.7 million, or $0.03 per diluted share, for the current quarter compared to GAAP net income of $0.1 million, or breakeven on a diluted per share basis, for the same quarter of the previous year.

Recent Business Highlights:

-- Appointed Mr. Max Carnecchia to serve as our President and Chief Executive Officer. Most recently, Mr. Carnecchia served as President of Interwoven and ran its day to day operations. Interwoven experienced 21 consecutive quarters of year over year revenue growth and operating margin expansion prior to its acquisition by Autonomy Corporation plc earlier this year.

-- Announced the release of Discovery Studio(R) 2.5, our advanced computational chemistry and biology software suite. Discovery Studio 2.5 includes enhanced functionality and expanded enterprise capabilities made possible through integration with Pipeline Pilot, our scientific informatics platform, in order to meet the enterprise-level needs of scientists within life science organizations.

Non-GAAP Financial Measures:

This press release describes financial measures for operating income, net income, and net income per diluted share that exclude stock-based compensation expense, purchased intangible assets amortization and restructuring charges (recoveries). These financial measures are not calculated in accordance with generally accepted accounting principles (GAAP) and are not based on any comprehensive set of accounting rules or principles.

Management believes these non-GAAP financial measures provide a useful measure of the Company's operating results, a meaningful comparison with historical results and with the results of other companies, and insight into the Company's ongoing operating performance. Further, management and the Board of Directors utilize these measures, in addition to GAAP measures, when evaluating and comparing the Company's operating performance against internal financial forecasts and budgets. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.

For additional information on the items excluded by the Company from its non-GAAP financial measures please refer to the Form 8-K regarding this release that was furnished today to the Securities and Exchange Commission.

The following table contains a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures (unaudited, amounts in thousands, except per share amounts, including footnotes):

                                             Three Months Ended
                                             June 30,
                                             2009          2008
GAAP Operating income                        $  1,078      $  142
Stock-based compensation expense(1)             788           879
Purchased intangible asset amortization(2)      381           381
Restructuring charges (recoveries)(3)           (91   )       842
Non-GAAP Operating income                    $  2,156      $  2,244
GAAP Net income                              $  744        $  86
Stock-based compensation expense                788           879
Purchased intangible asset amortization         381           381
Restructuring charges (recoveries)              (91   )       842
Non-GAAP Net income                          $  1,822      $  2,188
GAAP Diluted net income per share            $  0.03       $  0.00
Stock-based compensation expense                0.03          0.03
Purchased intangible asset amortization         0.01          0.01
Restructuring charges (recoveries)              (0.00 )       0.03
Non-GAAP Diluted net income per share(4)     $  0.07       $  0.08

(1) Stock-based compensation expense is included in our
condensed consolidated statements of operations as follows:
                                                 Three Months Ended
                                                 June 30,
                                                 2009          2008
        Cost of revenue                          $     63      $     98
        Product development                      222           223
        Sales and marketing                      166           156
        General and administrative               337           402
        Total stock-based compensation expense   $     788     $     879
(2) Purchased intangible asset amortization is included
in the cost of revenue line in our condensed consolidated
statements of operations.
(3 )Restructuring charges (recoveries) are included in
the restructuring charges (recoveries) line in our condensed
consolidated statements of operations.
(4) Earnings per share amounts for the three months ended
June 30, 2008 do not add due to rounding.

Conference Call Details:

At 5:00 p.m. ET, August 6, 2009, Accelrys will conduct a conference call to discuss its financial results. To participate, please dial (866) 393-7459 (+ (706) 643-4624 outside the United States) and enter the access code, 22019166, approximately 15 minutes before the scheduled start of the call. The conference call will also be accessible live on the Investor Relations section of the Accelrys website at www.accelrys.com.

A replay of the conference call will be available online at www.accelrys.com and via telephone by dialing (800) 642-1687 (+1 (706) 645-9291 outside the United States) and entering access code, 22019166, beginning 6:00 p.m. ET on August 6, 2009 through 11:59 p.m. ET on November 6, 2009.

About Accelrys:

Headquartered in San Diego, California, Accelrys develops scientific business intelligence software and solutions for the life sciences, energy, chemicals, aerospace, and consumer products industries. Our customers include many Fortune 500 companies and other commercial entities, as well as academic and government entities. We have a vast portfolio of computer-aided design modeling and simulation offerings which assist our customers in conducting scientific experiments 'in silico' in order to reduce the duration and cost of discovering and developing new drugs and materials. Our scientific business intelligence platform underlies most of our computer-aided design modeling and simulation offerings. Our platform can be used with our products, our competitors' products and our customers' proprietary predictive science products. Its flexibility, ease-of-use and advanced chemical, text and image analysis and reporting capabilities enable our customers to mine, aggregate, analyze and report scientific data from disparate sources, thereby better utilizing scientific data within their organizations. For more information about Accelrys, visit its website at http://accelrys.com/.

Forward-Looking Statements:

Statements contained in this press release relating to the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. Such forward-looking statements including, but not limited to, statements relating to the Company's long-term prospects are subject to a number of risks and uncertainties. These include risks that the Company will not achieve its anticipated results or growth plans, and/or that such growth will not occur due to, among other possibilities, an inability to withstand negative conditions in the global economy or a lack of demand for or market acceptance of the Company's products, as well as the risks and uncertainties that are contained from time to time in the Company's filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended March 31, 2009, quarterly reports on Form 10-Q and current reports on Form 8-K. The Company's actual results could differ materially from those projected in such forward-looking statements due to these risks and uncertainties, and the Company disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future events or otherwise.

ACCELRYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
                                                                       Three Months Ended
                                                                       June 30,
                                                                       2009            2008
Revenue                                                                $     20,141    $     20,300
Cost of revenue                                                              3,450           3,460
Gross profit                                                                 16,691          16,840
Operating expenses:
Product development                                                          3,903           4,278
Sales and marketing                                                          8,143           8,117
General and administrative                                                   3,658           3,461
Restructuring charges (recoveries)                                           (91    )        842
Total operating expenses                                                     15,613          16,698
Operating income                                                             1,078           142
Interest and other income and (expense), net                                 (5     )        273
Income before taxes                                                          1,073           415
Income tax expense                                                           329             329
Net income                                                             $     744       $     86
Basic and diluted net income per share                                 $     0.03      $     0.00
Weighted average shares used to compute basic and diluted net income
per share
Basic                                                                        27,290          26,890
Diluted                                                                      27,409          26,987

ACCELRYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                       June 30,           March 31,
                                                       2009               2009
Assets
Cash, cash equivalents, and marketable securities(1)   $        83,654    $        81,769
Trade receivables, net                                          10,389             21,860
Other assets, net(2)                                            57,097             56,985
Total assets                                           $        151,140   $        160,614
Liabilities and stockholders' equity
Current liabilities, excluding deferred revenue                 11,586             15,427
Total deferred revenue(3)                                       50,276             57,224
Noncurrent liabilities, excluding deferred revenue              7,452              7,204
Total stockholders' equity                                      81,826             80,759
Total liabilities and stockholders' equity             $        151,140   $        160,614
(1)Cash, cash equivalents, and marketable securities
consist of the following line items in our consolidated balance
sheet: Cash and cash equivalents; Marketable securities;
Marketable Securities, net of current portion; and Restricted cash
(2)Other assets, net, consists of the following line
items in our consolidated balance sheet: Prepaid expenses,
deferred tax assets and other current assets; Property and
equipment, net; Goodwill; Purchased intangible assets, net; and
Other assets
(3)Total deferred revenue consists of the following line
items in our consolidated balance sheet: Current portion of
deferred revenue; and Deferred revenue, net of current portion

SOURCE: Accelrys, Inc.

Accelrys, Inc. 
Rick Russo 
858-799-5200 
or 
Investor Relations 
MKR Group 
Charles Messman or Todd Kehrli 
323-468-2300 
accl@mkr-group.com