10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________

FORM 10-Q

____________________________________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

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 incorporation or organization)	(I.R.S. Employer Identification Number)

140 Kendrick Street, Needham, MA 02494

(Address of principal executive offices, including zip code)

(781) 370-5000

(Registrant’s telephone number, including area code)

 ____________________________________________________

Indicate by check mark whether the registrant: (1) has 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 (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	þ	Accelerated filer	¨	Non-accelerated filer	¨	Smaller reporting company	¨
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

There were 119,575,472 shares of our common stock outstanding on May 4, 2012.

PARAMETRIC TECHNOLOGY CORPORATION

INDEX TO FORM 10-Q

For the Quarter Ended March 31, 2012

		Page Number
Part I—FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Financial Statements:
	Consolidated Balance Sheets as of March 31, 2012 and September 30, 2011	3
	Consolidated Statements of Operations for the three and six months ended March 31, 2012 and April 2, 2011	4
	Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2012 and April 2, 2011	5
	Consolidated Statements of Cash Flows for the six months ended March 31, 2012 and April 2, 2011	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	40
Part II—OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signature		44

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PART I—FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED FINANCIAL STATEMENTS

PARAMETRIC TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

	March 31, 2012			September 30, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	224,107		$	167,878
Accounts receivable, net of allowance for doubtful accounts of $3,313 and $3,902 at March 31, 2012 and September 30, 2011, respectively	204,437			230,220
Prepaid expenses	32,398			30,582
Other current assets	116,190			109,433
Deferred tax assets	54,128			54,151
Total current assets	631,260			592,264
Property and equipment, net	64,021			62,569
Goodwill	616,599			613,394
Acquired intangible assets, net	205,128			222,017
Deferred tax assets	112,092			98,064
Other assets	29,516			41,374
Total assets	$	1,658,616		$	1,629,682
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	17,961		$	16,974
Accrued expenses and other current liabilities	54,187			60,167
Accrued compensation and benefits	88,799			95,980
Accrued income taxes	17,094			11,895
Deferred tax liabilities	1,178			4,440
Deferred revenue	327,313			279,935
Total current liabilities	506,532			469,391
Revolving credit facility	160,000			200,000
Deferred tax liabilities	23,830			25,919
Deferred revenue	14,041			14,389
Other liabilities	96,220			97,293
Total liabilities	800,623			806,992
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued	—			—
Common stock, $0.01 par value; 500,000 shares authorized; 119,487 and 116,937 shares issued and outstanding at March 31, 2012 and September 30, 2011, respectively	1,195			1,169
Additional paid-in capital	1,810,964			1,805,021
Accumulated deficit	(893,043		)	(918,736		)
Accumulated other comprehensive loss	(61,123		)	(64,764		)
Total stockholders’ equity	857,993			822,690
Total liabilities and stockholders’ equity	$	1,658,616		$	1,629,682

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

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PARAMETRIC TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three months ended						Six months ended
	March 31, 2012			April 2, 2011			March 31, 2012			April 2, 2011
Revenue:
License	$	74,779		$	74,215		$	163,867		$	149,688
Service	226,346			194,974			455,534			386,053
Total revenue	301,125			269,189			619,401			535,741
Cost of revenue:
Cost of license revenue	7,824			6,558			15,483			12,512
Cost of service revenue	85,392			75,213			175,952			155,320
Total cost of revenue	93,216			81,771			191,435			167,832
Gross margin	207,909			187,418			427,966			367,909
Sales and marketing	90,962			81,163			188,740			165,684
Research and development	54,576			53,051			109,569			104,573
General and administrative	29,534			24,712			59,106			48,196
Amortization of acquired intangible assets	5,132			4,266			10,341			8,120
Restructuring charges	20,802			—			20,802			—
Total operating expenses	201,006			163,192			388,558			326,573
Operating income	6,903			24,226			39,408			41,336
Interest and other (expense) income, net	(2,967		)	(822		)	(5,610		)	(2,708		)
Income before income taxes	3,936			23,404			33,798			38,628
Provision for income taxes	367			4,387			8,106			6,351
Net income	$	3,569		$	19,017		$	25,692		$	32,277
Earnings per share—Basic	$	0.03		$	0.16		$	0.22		$	0.27
Earnings per share—Diluted	$	0.03		$	0.16		$	0.21		$	0.27
Weighted average shares outstanding—Basic	119,003			118,194			118,356			117,501
Weighted average shares outstanding—Diluted	121,401			121,502			120,985			121,317

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

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PARAMETRIC TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three months ended					Six months ended
	March 31, 2012		April 2, 2011			March 31, 2012		April 2, 2011
Net income	$	3,569	$	19,017		$	25,692	$	32,277
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax of $0 for all periods	7,849		11,264			2,779		8,273
Minimum pension liability adjustment, net of tax of $0.3 million for both the second quarter and first six months of 2012 and ($0.2) million and ($0.1) million for the second quarter and first six months of 2011, respectively	717		(385		)	862		(266		)
Other comprehensive income	8,566		10,879			3,641		8,007
Comprehensive income	$	12,135	$	29,896		$	29,333	$	40,284

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

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PARAMETRIC TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six months ended
	March 31, 2012			April 2, 2011
Cash flows from operating activities:
Net income	$	25,692		$	32,277
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,285			28,720
Stock-based compensation	26,074			20,898
Excess tax benefits from stock-based awards	(453		)	(530		)
Other non-cash costs, net	211			154
Changes in operating assets and liabilities:
Accounts receivable	38,698			15,899
Accounts payable and accrued expenses	(6,233		)	2,089
Accrued compensation and benefits	(7,635		)	(27,406		)
Deferred revenue	33,482			27,169
Accrued litigation	—			(52,129		)
Accrued income taxes	(11,901		)	(9,198		)
Other current assets and prepaid expenses	3,573			2,165
Other noncurrent assets and liabilities	(1,759		)	(9,870		)
Net cash provided by operating activities	133,034			30,238
Cash flows from investing activities:
Additions to property and equipment	(16,624		)	(11,560		)
Acquisitions of businesses	(1,170		)	—
Net cash used by investing activities	(17,794		)	(11,560		)
Cash flows from financing activities:
Borrowings under revolving credit facility	40,000			—
Repayments of borrowings under revolving credit facility	(80,000		)	—
Repurchases of common stock	(14,983		)	—
Proceeds from issuance of common stock	14,123			15,974
Excess tax benefits from stock-based awards	453			530
Payments of withholding taxes in connection with vesting of stock-based awards	(19,465		)	(21,956		)
Net cash used by financing activities	(59,872		)	(5,452		)
Effect of exchange rate changes on cash and cash equivalents	861			6,025
Net increase in cash and cash equivalents	56,229			19,251
Cash and cash equivalents, beginning of period	167,878			240,253
Cash and cash equivalents, end of period	$	224,107		$	259,504

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

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PARAMETRIC TECHNOLOGY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

General

The accompanying unaudited condensed 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 in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011. 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 statement 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 mean our fiscal year, which ends on September 30. The September 30, 2011 consolidated balance sheet included herein is derived from our audited consolidated financial statements.

The results of operations for the three and six months ended March 31, 2012 are not necessarily indicative of the results expected for the remainder of the fiscal year.

Recent Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2011-8, Intangibles-Goodwill and Other (Topic 350):Testing Goodwill for Impairment. Under the update, an entity has the option, but is not required, to first assess qualitative factors (“Qualitative Assessment” or QA”) to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after assessing facts and circumstances in the aggregate, an entity determines it does not fail the QA, then performing the traditional two-step impairment test is unnecessary. Otherwise, an entity is required to proceed to the first step of the goodwill impairment test as outlined in ASC Topic 350. The objective of the Update is to simplify the requirement to test goodwill for impairment and was issued in response to preparer concerns about the cost and complexity of performing the first step of the two-step goodwill impairment test. The Update can be applied for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted.

2. Deferred Revenue and Financing Receivables

Deferred Revenue

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, if not yet paid, the related customer receivable is included in other current assets. Billed but uncollected maintenance-related amounts included in other current assets at March 31, 2012 and September 30, 2011 were $105.4 million and $93.0 million, respectively.

Financing Receivables

We periodically provide extended payment terms for software purchases to credit-worthy customers with payment terms up to 24 months. The determination of whether to offer such payment terms is based on the size, nature and credit-worthiness of the customer, and the history of collecting amounts due, without concession, from the customer and customers generally. This determination is based on an internal credit assessment. In making this assessment, we use the Standard & Poor's (S&P) credit rating as our primary credit quality indicator, if available. If a customer, including both commercial and U.S. Federal government, has a S&P bond rating of BBB- or above, we designate the customer as a Tier 1. If a customer does not have a S&P bond rating, or has a S&P bond rating below BBB-, we base our assessment on an internal credit assessment which considers selected balance sheet, operating and liquidity measures, historical payment experience, and current business conditions within the industry or region. We designate these customers as Tier 2 or Tier 3, with Tier 3 being lower credit quality than Tier 2.

As of March 31, 2012 and September 30, 2011, amounts due from customers for contracts with original payment terms greater than twelve months (financing receivables) totaled $35.0 million and $57.7 million, respectively. Accounts receivable in

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the accompanying consolidated balance sheets included current receivables from such contracts totaling $26.4 million and $41.7 million at March 31, 2012 and September 30, 2011, respectively, and other assets in the accompanying consolidated balance sheets included long-term receivables from such contracts totaling $8.6 million and $16.0 million at March 31, 2012 and September 30, 2011, respectively. As of March 31, 2012, $1.0 million of these receivables were past due (of which $0.3 million was greater than 90 days past due). None of these receivables were past due as of September 30, 2011. Our credit risk assessment for financing receivables was as follows:

	March 31, 2012		September 30, 2011
	(in thousands)
S&P bond rating BBB-1 and above-Tier 1	$	22,143	$	36,639
Internal Credit Assessment-Tier 2	12,089		19,293
Internal Credit Assessment-Tier 3	809		1,798
Total financing receivables	$	35,041	$	57,730

We evaluate the need for an allowance for doubtful accounts for estimated losses resulting from the inability of these customers to make required payments. As of March 31, 2012 and September 30, 2011, we concluded that all financing receivables were collectible and no reserve for credit losses was recorded. We did not provide a reserve for credit losses or write off any uncollectible financing receivables in the six months ended March 31, 2012 and fiscal year 2011. We write off uncollectible trade and financing receivables when we have exhausted all collection avenues.

We periodically transfer future payments under certain of these contracts to third-party financial institutions on a non-recourse basis. We record such transfers as sales of the related accounts receivable when we surrender control of such receivables. We sold $1.2 million of financing receivables to third-party financial institutions in the six months ended March 31, 2012. We sold no financing receivables to third-party financial institutions in the six months ended April 2, 2011.

3. Restructuring Charges

In the second quarter of 2012, as part of our strategy to reduce costs and to realign our business, we implemented a restructuring of our business and recorded restructuring charges of $20.8 million. The restructuring charges included $20.0 million for severance and related costs associated with 168 employees notified of termination during the second quarter of 2012 and $0.8 million of charges related to excess facilities. The employee terminations triggered a curtailment of a non-U.S. pension plan and interim remeasurement of the pension plan's assets and liabilities. The remeasurement resulted in a decrease in the plan's net unrecognized losses of $1.2 million, which was recorded in accumulated other comprehensive income net of tax.

The following table summarizes restructuring accrual activity for the period ended March 31, 2012:

	Employee Severance and Related Benefits			Facility Closures and Related Costs			Total
	(in thousands)
Restructuring charge activity for the three months ended March 31, 2012
Charges to operations	$	19,953		$	849		$	20,802
Cash disbursements	(8,829		)	(68		)	(8,897		)
Foreign exchange impact	150			5			155
Accrual, March 31, 2012	$	11,274		$	786		$	12,060

The accrual for facility closures and related costs is included in accrued expenses in the consolidated balance sheet, and the accrual for employee severance and related benefits is included in accrued compensation and benefits in the consolidated balance sheet. The facility accrual remaining at March 31, 2012 is related to excess space in a facility representing a gross lease commitment of approximately $1.6 million, net of assumed replacement tenant income of approximately $0.8 million.

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4. Stock-based Compensation

We measure the cost of employee services received in exchange for restricted stock and restricted stock unit (RSU) awards based on the fair value of our common stock on the date of grant. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, RSUs and stock appreciation rights to employees, directors, officers and consultants. We award restricted stock and RSUs as the principal equity incentive awards, including certain performance-based awards that are earned based on achievement of performance criteria established by the Compensation Committee of our Board of Directors. Each RSU represents the contingent right to receive one share of our common stock.

Our equity incentive plans are described more fully in Note K to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

Restricted stock activity for the six months ended March 31, 2012	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock September 30, 2011	90		$	21.30
Granted	57		$	25.27
Vested	(63	)	$	21.13
Balance of outstanding restricted stock March 31, 2012	84		$	24.11
Restricted stock unit activity for the six months ended March 31, 2012	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock units September 30, 2011	5,490		$	17.75
Granted	1,926		$	19.82
Vested	(2,538	)	$	15.59
Forfeited or not earned	(293	)	$	18.56
Balance of outstanding restricted stock units March 31, 2012	4,585		$	19.77

Restricted stock and restricted stock unit grants in the first six months of 2012

	Restricted Stock		Restricted Stock Units
Grant Period	Performance-based	Time-based (1)	Performance-based (2)	Time-based (3)
	(in thousands)
	(Number of Shares)		(Number of Units)
First six months of 2012	—	57	780	1,146

_________________

(1) Of the time-based shares of restricted stock, 9,402 were issued to a non-employee director in connection with a consulting contract we entered into with him. The restrictions on these shares lapse in two substantially equal annual installments from the date of grant. The remaining 47,177 were issued to non-employee directors. The restrictions on these shares lapse one year from the date of grant.

(2) Of these performance-based RSUs, 11,899 will be eligible to vest on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which the performance criteria have been achieved and 425,698 will be eligible to vest in three substantially equal installments on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which performance criteria have been achieved, November 15, 2013 and November 15, 2014; and 309,976 are eligible to vest in two substantially equal installments on the later of each of November 15, 2013 and November 15, 2014 and the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved (RSUs not earned for 2013 may be earned for 2014 to the extent the cumulative performance criteria are achieved). The remaining 32,508 have been forfeited.

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(3) The time-based RSUs were issued to employees, including some of our executive officers. These time-based RSUs will vest in three substantially equal annual installments in November 2012, 2013 and 2014.

Compensation expense recorded for our stock-based awards was classified in our consolidated statements of operations as follows:

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)				(in thousands)
Cost of license revenue	$	7	$	3	$	12	$	6
Cost of service revenue	2,171		1,583		4,684		3,720
Sales and marketing	3,306		2,350		7,034		4,779
Research and development	2,240		1,749		4,789		4,142
General and administrative	4,968		4,186		9,555		8,251
Total stock-based compensation expense	$	12,692	$	9,871	$	26,074	$	20,898

5. Earnings per Share (EPS) and Common Stock

EPS

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

	Three months ended				Six months ended
Calculation of Basic and Diluted EPS	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands, except per share data)
Net income	$	3,569	$	19,017	$	25,692	$	32,277
Weighted average shares outstanding—Basic	119,003		118,194		118,356		117,501
Dilutive effect of employee stock options, restricted shares and restricted stock units	2,398		3,308		2,629		3,816
Weighted average shares outstanding—Diluted	121,401		121,502		120,985		121,317
Earnings per share—Basic	$	0.03	$	0.16	$	0.22	$	0.27
Earnings per share—Diluted	$	0.03	$	0.16	$	0.21	$	0.27

Stock options to purchase 0.2 million and 0.1 million shares for the second quarter and first six months of 2012, respectively, and 0.1 million shares for both the second quarter and first six months of 2011 were outstanding but were not included in the calculation of diluted EPS because the exercise prices per share 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.

Common Stock Repurchases

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $100 million worth of shares with cash from operations in the period October 1, 2011 through September 30, 2012. In the second quarter and first six months of 2012, we repurchased 0.6 million shares at a cost of $15.0 million. We did not repurchase any shares in the first six months of 2011. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

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6. Acquisitions

In 2011, we completed the acquisitions of MKS and 4CS described more fully in Note E to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011. The results of operations of these acquired businesses have been included in our consolidated financial statements beginning on their respective acquisition dates. These acquisitions added $22.3 million and $40.7 million to our revenue for the three and six months ended March 31, 2012, respectively.

Acquisition-related costs were $0.4 million and $2.5 million for the three and six months ended March 31, 2012, respectively, and include charges related to acquisition integration activities (i.e., severance and professional fees). These costs have been classified in general and administrative expenses in the accompanying consolidated statements of operations.

4CS

On September 2, 2011, we acquired all of the outstanding common stock of 4C Solutions, Inc. (4CS) for $14.9 million in cash (net of $0.1 million of cash acquired). 4CS's results of operations have been included in our consolidated financial statements beginning September 3, 2011. Our results of operations prior to this acquisition, if presented on a pro forma basis, would not differ materially from our reported results.

As of September 30, 2011, we had recorded a liability for an additional $1.2 million of contingent purchase price included in accrued expenses and other current liabilities on the consolidated balance sheet. In the six months ended March 31, 2012, this amount was fully earned and paid. Any further adjustments that could lower the purchase price in accordance with contingent provisions in the acquisition agreement are not anticipated to be material.

MKS

On May 31, 2011, we acquired all of the outstanding common stock of MKS Inc. (MKS) for $265.2 million, net of $33.2 million of cash acquired. MKS's results of operations have been included in our consolidated financial statements beginning May 31, 2011.

The unaudited financial information in the table below summarizes the combined results of operations of PTC and MKS, on a pro forma basis, as though the companies had been combined as of the beginning of PTC's fiscal year 2010. The pro forma information presented includes the effects of business combination accounting resulting from the acquisition, including amortization charges from acquired intangibles assets, stock-based compensation charges for unvested stock options, interest expense on borrowings in connection with the acquisition, and the related tax effects as though the acquisition had been consummated as of the beginning of 2010. These pro forma results exclude the impact of the purchase accounting adjustment to deferred revenue and the transaction costs included in the historical results and the related tax effects. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the results of operations that actually would have been achieved if the acquisition had taken place at the beginning of 2010. The pro forma financial information is based on PTC's results of operations for the three and six months ended April 2, 2011, combined with MKS's results of operations for the three and six months ended April 30, 2011 (due to differences in reporting periods).

	Three months ended		Six months ended
	April 2, 2011		April 2, 2011
	(in millions, except per share amounts)
Revenue	$	297.2	$	581.7
Net income	$	22.9	$	35.4
Earnings per share—Basic	$	0.19	$	0.30
Earnings per share—Diluted	$	0.19	$	0.29

7. Goodwill and Intangible Assets

We have two reportable segments: (1) software products and (2) services. As of March 31, 2012 and September 30, 2011, goodwill and acquired intangible assets in the aggregate attributable to our software products reportable segment was $792.9 million and $806.0 million, respectively, and attributable to our services reportable segment was $28.8 million and $29.4 million, respectively. Goodwill is tested for impairment at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting segment below its carrying value. We completed our most recent annual impairment review as of July 2, 2011 and concluded that no impairment charge was

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required as of that date. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

Goodwill and acquired intangible assets consisted of the following:

	March 31, 2012						September 30, 2011
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Goodwill (not amortized)					$	616,599					$	613,394
Intangible assets with finite lives (amortized) (1):
Purchased software	$	178,658	$	120,584	58,074		$	178,388	$	112,555	$	65,833
Capitalized software	22,877		22,877		—		22,877		22,877		—
Customer lists and relationships	229,175		84,735		144,440		227,961		75,050		152,911
Trademarks and trade names	11,079		8,587		2,492		11,035		7,967		3,068
Other	3,500		3,378		122		3,506		3,301		205
	$	445,289	$	240,161	$	205,128	$	443,767	$	221,750	$	222,017
Total goodwill and acquired intangible assets					$	821,727					$	835,411

(1) The weighted average useful lives of purchased software, customer lists and relationships, trademarks and trade names and other intangible assets with a remaining net book value are 8 years, 10 years, 6 years, and 4 years, respectively.

Goodwill

The changes in the carrying amounts of goodwill for the six months ended March 31, 2012 are due to foreign currency translation adjustments related to those asset balances that are recorded in non-U.S. currencies.

Changes in goodwill for the six months ended March 31, 2012, presented by reportable segment, are as follows:

	Software Products Segment		Services Segment			Total
	(in thousands)
Balance, September 30, 2011	$	588,443	$	24,951		$	613,394
Foreign currency translation adjustments	3,211		(6		)	3,205
Balance, March 31, 2012	$	591,654	$	24,945		$	616,599

Amortization of intangible assets

The aggregate amortization expense for intangible assets with finite lives recorded for the second quarter and first six months of 2012 and 2011 was classified in our consolidated statements of operations as follows:

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Amortization of acquired intangible assets	$	5,132	$	4,266	$	10,341	$	8,120
Cost of license revenue	3,931		3,339		8,034		6,702
Total amortization expense	$	9,063	$	7,605	$	18,375	$	14,822

The estimated aggregate future amortization expense for intangible assets with finite lives remaining as of March 31,

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2012 is $18.1 million for the remainder of 2012, $36.4 million for 2013, $34.3 million for 2014, $30.8 million for 2015, $23.2 million for 2016, $19.6 million for 2017 and $42.6 million thereafter.

8. Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Generally accepted accounting principles prescribe a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs that may be used to measure fair value:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

• Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our significant financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 and September 30, 2011 were as follows:

	March 31, 2012		September 30, 2011
	(in thousands)
Financial assets:
Cash equivalents—Level 1 (1)	$	67,650	$	36,018
Forward contracts—Level 2	197		5,510
	$	67,847	$	41,528

_________________

(1) Money market funds and time deposits.

9. Derivative Financial Instruments

Our foreign currency risk management strategy is principally designed to mitigate the future potential financial impact of changes in the value of transactions and balances denominated in foreign currency resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts with maturities of up to three months, to manage our exposure to fluctuations in foreign exchange rates that arise primarily from our foreign currency-denominated receivables and payables.

Generally, we do not designate foreign currency forward contracts as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, any gain or loss on the underlying foreign-denominated balance would be offset by the loss or gain on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in other income (expense), net.

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As of March 31, 2012 and September 30, 2011, we had outstanding forward contracts with notional amounts equivalent to the following:

Currency Hedged	March 31, 2012		September 30, 2011
	(in thousands)
Canadian Dollar / U.S. Dollar	$	64,274	$	92,748
Euro / U.S. Dollar	38,888		65,773
Canadian Dollar / Euro	4,781		—
Chinese Renminbi / U.S. Dollar	5,480		19,973
Japanese Yen / U.S. Dollar	22,150		13,676
Swiss Franc / U.S. Dollar	9,167		9,419
British Pound / Euro	5,706		3,993
All other	10,365		7,350
Total	$	160,811	$	212,932

The accompanying consolidated balance sheets as of March 31, 2012 and September 30, 2011 include a net asset of $0.2 million and $5.5 million, respectively, in other current assets related to the fair value of our forward contracts.

Net gains and losses on foreign currency exposures, including realized and unrealized gains and losses on forward contracts, included in foreign currency net losses, were net losses of $2.4 million and $4.6 million for the three and six months ended March 31, 2012, respectively, and $1.1 million and $3.3 million for the three and six months ended April 2, 2011, respectively. Excluding the underlying foreign currency exposure being hedged, net realized and unrealized gains and losses on forward contracts included in foreign currency net losses, were net losses of $1.7 million and $2.4 million for the three and six months ended March 31, 2012, respectively, and net losses of $6.5 million and $5.2 million for the three and six months ended April 2, 2011, respectively.

10. Segment Information

We operate within a single industry segment—computer software and related services. Operating segments as defined under GAAP are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. We have two operating and reportable segments: (1) Software Products, which includes license and related maintenance revenue (including updates and technical support) for all our products except training-related products; and (2) Services, which includes consulting, implementation, training, computer-based training products, including maintenance on these products, and other support revenue. In our consolidated statements of operations, maintenance revenue is included in service revenue. We do not allocate sales and marketing or administrative expenses to our operating segments as these activities are managed on a consolidated basis.

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The revenue and operating income attributable to our operating segments are summarized as follows:

	Three months ended						Six months ended
	March 31, 2012			April 2, 2011			March 31, 2012			April 2, 2011
	(in thousands)
Revenue:
Total Software Products segment revenue	$	221,653		$	203,156		$	458,616		$	405,066
Total Services segment revenue	79,472			66,033			160,785			130,675
Total revenue	$	301,125		$	269,189		$	619,401		$	535,741
Operating income: (1)
Software Products segment	$	128,343		$	125,205		$	280,302		$	251,724
Services segment (2)	7,959			4,896			15,854			3,492
Sales and marketing expenses	(98,248		)	(81,163		)	(196,025		)	(165,684		)
General and administrative expenses	(31,151		)	(24,712		)	(60,723		)	(48,196		)
Total operating income	$	6,903		$	24,226		$	39,408		$	41,336

(1) We recorded restructuring charges of $20.8 million in the second quarter of 2012. Software Products included $9.2 million; Services included $2.7 million; sales and marketing expenses included $7.3 million; and general and administrative expenses included $1.6 million of these restructuring charges.

(2) In the first quarter of 2011, we made a strategic decision to enter into a contract with a customer in the automotive industry, for which we expected our costs to exceed our revenue by approximately $5 million. Services segment operating income in the first three months of 2011 included immediate recognition of the approximately $5 million estimated loss on this contract.

We report revenue by product group, Desktop and Enterprise. Desktop revenue includes our CAD Solutions, primarily: Creo Parametric, Creo Elements/Direct, Mathcad and Arbortext authoring products. Enterprise revenue includes our PLM solutions, primarily: Windchill, Arbortext enterprise products, Creo View and Integrity.

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Revenue:
Desktop	$	147,751	$	154,839	$	301,614	$	300,800
Enterprise	153,374		114,350		317,787		234,941
Total revenue	$	301,125	$	269,189	$	619,401	$	535,741

Data for the geographic regions in which we operate is presented below.

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Revenue:
Americas (1)	$	109,483	$	94,399	$	226,973	$	194,492
Europe (2)	115,780		105,955		248,955		213,831
Pacific Rim	37,373		36,208		74,623		69,820
Japan	38,489		32,627		68,850		57,598
Total revenue	$	301,125	$	269,189	$	619,401	$	535,741

_________________

(1) Includes revenue in the United States totaling $102.3 million and $89.9 million for the three months ended March 31,

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2012 and April 2, 2011, respectively, and $213.0 million and $185.3 million for the six months ended March 31, 2012 and April 2, 2011, respectively.

(2) Includes revenue in Germany totaling $41.2 million and $38.5 million for the three months ended March 31, 2012 and April 2, 2011, respectively, and $97.4 million and $71.8 million for the six months ended March 31, 2012 and April 2, 2011, respectively.

11. Income Taxes

In the second quarter and first six months of 2012, our effective tax rate was a provision of 9% on pre-tax income of $3.9 million, and 24% on pre-tax income of $33.8 million, respectively, compared to a provision of 19% on pre-tax income of $23.4 million and 16% on pre-tax income of $38.6 million in the second quarter and first six months of 2011, respectively. In the first six months of 2012, our effective tax rate was lower than the 35% statutory federal income tax rate due primarily to our corporate structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate. Our provision includes the expiration on December 31, 2011 of the research and development (R&D) credit in the U.S. and a discrete non-cash charge of $1.5 million related to the impact of a Japanese legislative change, enacted in the first quarter, on our Japan entity's deferred tax assets. Additionally, we expect to make an R&D cost sharing prepayment by a foreign subsidiary to the U.S. at the same level as the prior year. If such prepayment is not ultimately paid within the fiscal year, the effective tax rate would be favorably impacted by up to $7.5 million. In the first six months of 2011, our effective tax rate was lower than the 35% statutory federal income tax rate due primarily to our corporate tax structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate and a $1.8 million tax benefit related to R&D credits in the U.S. triggered by a retroactive extension of the R&D tax credit enacted in the first quarter of 2011.

As of March 31, 2012 and September 30, 2011, we had unrecognized tax benefits of $17.4 million ($17.0 million net of state tax benefits) and $16.2 million ($15.9 million net of state tax benefits), respectively. If all of our unrecognized tax benefits as of March 31, 2012 were to become recognizable in the future, we would record a $16.3 million benefit to the income tax provision.

Our policy is to record estimated interest and penalties related to the underpayment of income taxes as a component of our income tax provision. In the first six months of 2012 and 2011 we included $0.1 million and $0.2 million of interest expense, respectively, and no tax penalty expense in our income tax provision. As of March 31, 2012 and September 30, 2011 we had accrued $2.1 million and $2.0 million, respectively, of estimated interest expense and we had no accrued tax penalties. Changes in our unrecognized tax benefits in the six months ended March 31, 2012 were as follows:

	(in millions)
Balance as of October 1, 2011	$	16.2
Tax positions related to current year	1.2
Tax positions related to prior years	—
Balance as of March 31, 2012	$	17.4

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits and accrued interest related to the resolution of multi-jurisdictional tax positions could be reduced by up to $7 million as audits close and statutes expire.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service in the United States. As of March 31, 2012, we remained subject to examination in the following major tax jurisdictions for the tax years indicated:

Major Tax Jurisdiction	Open Years
United States	2003, 2008 through 2011
Germany	2007 through 2011
France	2007 through 2011
Japan	2005 through 2011
Ireland	2006 through 2011

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12. Long Term Debt

Revolving Credit Agreement

We have a multi-currency bank revolving credit facility (the credit facility) with a syndicate of ten banks for which JPMorgan Chase Bank, N.A. acts as Administrative Agent. The credit facility matures on September 30, 2016, when all amounts will be due and payable in full. The credit facility does not require amortization of principal and may be paid before maturity in whole or in part at PTC’s option without penalty or premium. We expect to use the credit facility for general corporate purposes, including acquisitions of other businesses, and may also use it for working capital.

The credit facility consists of a $300 million revolving credit facility, which may be increased by up to an additional $150 million if the existing or additional lenders are willing to make such increased commitments (such increase may also be used, in whole or in part, for term loans). PTC is the sole borrower under the credit facility. The obligations under the credit facility are guaranteed by PTC’s material domestic subsidiaries and 65% of the voting equity interests of PTC’s material first-tier foreign subsidiaries are pledged as collateral for the obligations.

In May 2011, in connection with our acquisition of MKS, we borrowed $250 million under the credit facility at a variable interest rate which resets every 30 to 180 days, depending on the rate and period selected. From October 1, 2011 through November 21, 2011, the annual rate was 1.6875%. From November 22, 2011 through May 22, 2012 the annual rate is 1.875%, which will reset on May 22, 2012 to then current rates as defined below. As of March 31, 2012 and September 30, 2011 we had $160 million and $200 million, respectively, outstanding under the credit facility. During the three months ended December 31, 2011, we borrowed and then repaid $40 million under the credit facility for short term cash requirements. During the three months ended March 31, 2012, we repaid$40 million under the credit facility.

Interest rates on borrowings outstanding under the credit facility range from 1.25% to 1.625% above an adjusted LIBO rate for Eurodollar-based borrowings or would range from 0.25% to 0.625% above the defined base rate (the greater of the Prime Rate, the Federal Funds Effective Rate plus 0.005%, or an adjusted LIBO rate plus 1%) for base rate borrowings, in each case based upon PTC’s leverage ratio. Additionally, PTC may borrow certain foreign currencies at rates set in the same range above the respective London interbank offered interest rates for those currencies, based on PTC’s leverage ratio. A quarterly commitment fee on the undrawn portion of the credit facility is required, ranging from 0.20% to 0.30% per annum, based upon PTC’s leverage ratio.

The credit facility limits PTC’s and its subsidiaries’ ability to, among other things: incur additional indebtedness; incur liens or guarantee obligations; pay dividends (other than to PTC) and make other distributions; make investments and enter into joint ventures; dispose of assets; and engage in transactions with affiliates, except on an arms-length basis. Under the credit facility, PTC and its material domestic subsidiaries may not invest cash or property in, or loan to, PTC’s foreign subsidiaries in aggregate amounts exceeding $50 million for any purpose and an additional $75 million for acquisitions of businesses. In addition, under the credit facility, PTC and its subsidiaries must maintain the following financial ratios:

• a leverage ratio, defined as consolidated funded indebtedness to consolidated trailing four quarters EBITDA, of no greater than 2.50 to 1.00 at any time; and

• a fixed charge coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges, of no less than 1.25 to 1.00 at any time.

As of March 31, 2012, our leverage ratio was 0.65 to 1.00 and our fixed charge coverage ratio was 2.82 to 1.00. We were in compliance with all financial and operating covenants of the credit facility as of March 31, 2012.

Any failure to comply with the financial or operating covenants of the credit facility would prevent PTC from being able to borrow additional funds, and would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility and to terminate the credit facility. A change in control of PTC, as defined in the agreement, also constitutes an event of default, permitting the lenders to accelerate the indebtedness and terminate the credit facility.

13. Commitments and Contingencies

Legal and Regulatory Matters

China Investigation

We have undertaken an investigation of payments by certain business partners and expenses by certain employees in China that raise questions of compliance with laws, including the Foreign Corrupt Practices Act, and/or compliance with our

17

business policies. The termination of certain employees and business partners in China in connection with this matter may have an adverse impact on our level of sales in China until such replacements for those employees and business partners are in place and productive. Revenue from China has historically represented 6% to 7% of our total revenue. We have voluntarily disclosed the results of our investigation and associated remedial actions to the United States Department of Justice and the Securities and Exchange Commission and are cooperating to provide additional information as requested. We are unable to predict the outcome of this matter, which could include fines or other sanctions.

Other Legal Proceedings

We are subject to various legal proceedings and claims that arise in the ordinary course of business. We do not believe that resolving the legal proceedings and claims that we are currently subject to will have a material adverse impact on our financial condition, results of operations or cash flows. However, the results of legal proceedings cannot be predicted with certainty. Should any of these legal proceedings and claims be resolved against us, the operating results for a particular reporting period could be adversely affected.

Accruals

With respect to legal proceedings and claims, we record an accrual for a contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For legal proceedings and claims for which the likelihood that a liability has been incurred is more than remote but less than probable, we estimate the range of possible outcomes. As of both March 31, 2012 and September 30, 2011, we had a legal proceedings and claims accrual of $0.4 million.

Guarantees and Indemnification Obligations

We enter into standard indemnification agreements in the ordinary course of our business. Pursuant to such agreements with our business partners or customers, we indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our current products, as well as claims relating to property damage or personal injury resulting from the performance of services by us or our subcontractors. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and we accordingly believe the estimated fair value of these agreements is immaterial.

We warrant that our software products will perform in all material respects in accordance with our standard published specifications in effect at the time of delivery of the licensed products for a specified period of time. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these agreements is immaterial.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q about our future financial and growth expectations, the development of our products and markets, adoption of our solutions and future purchases by customers, and the expected impact of our strategic investments and product releases on our business are forward-looking statements that are subject to the inherent uncertainties in predicting future results and conditions. Risks and uncertainties that could cause actual results to differ materially from projected results include the following: our customers may not purchase our solutions when or at the rates we expect; we may not achieve the license, service or maintenance growth rates we expect, which could result in a different mix of revenue between license, service and maintenance and could adversely affect our profitability; the possibility that foreign currency exchange rates may vary from our expectations and thereby affect our reported revenue and expense; our strategic investments, including adding sales personnel, may not generate the revenue or have the effects we expect; we may be unable to attain or maintain a technology leadership position and any such leadership position may not generate the revenue we expect; the MKS and 4CS businesses may not generate the revenue we expect; our ability to successfully differentiate our products and services from those of our competitors and otherwise compete could be adversely affected by the relatively larger size and greater resources of several of the companies with which we compete; the possibility that remedial actions related to our previously announced investigation in China may have a material impact on our operations in China, as well as other risks and uncertainties described below throughout or referenced in Part II, Item 1A. Risk Factors of this report.

Our Business

Parametric Technology Corporation (PTC) develops, markets and supports solutions that span the entire product lifecycle, from engineering product design through supply chain and after-market services. Our software solutions provide our customers with an integral product development system that enables them to create digital product content, collaborate with others in the product development process, control product content, automate product development processes, configure products and product content, and communicate product information to people and systems across the extended enterprise and design chain.

Our solutions in the product lifecycle management, or PLM, market (product data management, collaboration and related solutions); the CAD market (computer-aided design solutions); and the application lifecycle management, or ALM, market (software development solutions within product development) help companies design products, manage product information and improve their product development processes. Our solutions in the supply chain management, or SCM, market (product sourcing, design and compliance solutions) and the service lifecycle management, or SLM, market (after-market service and support solutions) help companies manage product performance, reliability and safety and ensure that updates in product development are reflected in real-time service and spare parts information throughout a product's service lifecycle.

Our software solutions help customers increase innovation, improve product quality, decrease time to market, and reduce product development costs.

We generate revenue through the sale of:

• software licenses,

• maintenance services, which include technical support and software updates, and

• consulting and training services, which include implementation services for our software.

The markets we serve present different growth opportunities for us. We believe the markets among large businesses for PLM, ALM, SLM and SCM solutions (which we refer to as our “Enterprise Solutions”) present the greatest opportunity for revenue growth for us and that revenue from these markets will constitute an increasingly greater proportion of our revenue over time. We believe that the market for our CAD solutions (which we refer to as our “Desktop Solutions”) provides an opportunity for modest long-term growth as the market for these solutions is mature.

Our solutions are complemented by our experienced services and technical support organizations which provide consulting, implementation and training support services to customers worldwide. Resellers supplement this direct sales force to provide greater geographic and small- and medium-size account coverage, while other strategic partners provide product and/or service offerings that complement our solutions.

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Executive Overview

For the second quarter of 2012, our total revenue was $301 million (non-GAAP revenue was $302 million), a 12% year-over-year increase on both a reported and constant currency basis. Revenue during the quarter from our MKS and 4CS businesses, both acquired in the second half of fiscal 2011, was $22 million (non-GAAP revenue was $23 million). Excluding MKS and 4CS revenue, organic total revenue for the second quarter of 2012 was up 4% year over year. While our second quarter maintenance and consulting and training services revenues were in line with our expectations, our license revenue was below our expectations. Total license revenue for the second quarter of 2012 was $75 million, an increase of 1% year over year, but below our expectations. On an organic basis license revenue for the second quarter of 2012 was $67 million, a decrease of 10% year over year. We attribute our lower than expected license revenue to a large transaction in Europe that did not close and lower than expected sales in North America.

Our non-GAAP operating margin increased to 17% in the second quarter of 2012 from 16% in the second quarter of 2011 (decreased to 2% from 9% on a GAAP basis) due primarily to lower than planned operating expenses and improved services margins. On a GAAP basis, these improvements in operating margin were offset by $21 million of restructuring charges described below. Non-GAAP earnings per share in the second quarter of 2012 increased 15% to $0.30 from $0.26 in the second quarter of 2011 as a result of higher comparable revenue and profitability. On a GAAP basis, earnings per share in the second quarter of 2012 was $0.03 compared to $0.16 in the second quarter of 2011, reflecting the impact of the restructuring charges. Non-GAAP measures are reconciled to GAAP results under Results of Operations - Income and Margins; Earnings per Share below.

We ended the second quarter of 2012 with $224 million of cash, up from $187 million at the end of the first quarter of 2012 and $168 million at September 30, 2011, reflecting strong operating cash flow, $40 million used to repay our revolving credit facility and $15 million used for stock repurchases. We also have $140 million available under our revolving credit facility.

As part of our strategy to reduce costs and to realign our business, in the second quarter of 2012, we implemented a restructuring of our business and recorded restructuring charges of $21 million, primarily for severance and related costs associated with 168 employees (representing approximately 3% of our workforce) notified of termination during the quarter. We expect that these reductions will result in future operating expense savings of approximately $5 million per quarter. We realized approximately half of these operating expense savings in the second quarter of 2012. Cash expenditures of the restructuring charge are expected to be paid within the next twelve months, $9 million of which was paid in the second quarter.

We expect the near-term cost savings from this restructuring and the longer-term benefit of our organizational realignment will improve efficiencies within our sales and services organizations and improve our operating margins over the long term. 

Revenue, Operating Margin, Earnings per Share and Cash Flow from Operations

The following table shows the financial measures that we consider the most significant indicators of the performance of our business. In addition to providing operating income, operating margin, and diluted earnings per share as calculated under generally accepted accounting principles (“GAAP”), we also show non-GAAP operating income, operating margin, and diluted earnings per share for the reported periods. These non-GAAP measures exclude a fair value adjustment related to acquired deferred maintenance revenue, stock-based compensation, amortization of acquired intangible assets expense, acquisition-related charges, restructuring charges, one-time charges included in non-operating other income (expense) and the related tax effects of the preceding items, and any one-time tax items. Excluding those expenses and one-time items provides investors another view of our operating results which is aligned with management budgets and with performance criteria in our incentive compensation plans. Management uses, and investors should use, non-GAAP measures in conjunction with our GAAP results. We discuss the non-GAAP measures in detail under Results of Operations - Income and Margins; Earnings per Share below.

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	Three Months Ended						Percent Change 2011 to 2012				Six Months Ended						Percent Change 2011 to 2012
	March 31, 2012			April 2, 2011			Actual		Constant Currency		March 31, 2012			April 2, 2011			Actual		Constant Currency
	(dollar amounts in millions, except per share data)
License revenue	$	74.8		$	74.2		1	%	1	%	$	163.9		$	149.7		9	%	9	%
Consulting and training service revenue	75.8			63.0			20	%	21	%	151.4			122.7			23	%	23	%
Maintenance revenue	150.5			132.0			14	%	14	%	304.1			263.3			15	%	15	%
Total service revenue	226.3			195.0			16	%	16	%	455.5			386.0			18	%	17	%
Total revenue	301.1			269.2			12	%	12	%	619.4			535.7			16	%	15	%
Cost of license	7.8			6.6			19	%			15.5			12.5			24	%
Cost of service	85.4			75.2			14	%			175.9			155.3			13	%
Total cost of revenue	93.2			81.8			14	%			191.4			167.8			14	%
Gross margin	207.9			187.4			11	%			428.0			367.9			16	%
Operating expenses	201.0			163.2			23	%			388.6			326.6			19	%
Total costs and expenses (1)	294.2			245.0			20	%	21	%	580.0			494.4			17	%	17	%
Operating income (1)	$	6.9		$	24.2		(72	)%	(76	)%	$	39.4		$	41.3		(5	)%	(11	)%
Non-GAAP operating income (1)	$	50.6		$	42.3		20	%	18	%	$	109.4		$	77.7		41	%	38	%
Operating margin (1)	2		%	9		%					6		%	8		%
Non-GAAP operating margin (1)	17		%	16		%					18		%	15		%
Diluted earnings per share	$	0.03		$	0.16						$	0.21		$	0.27
Non-GAAP diluted earnings per share	$	0.30		$	0.26						$	0.65		$	0.48
Cash flow from operations (2)	$	96.5		$	78.3						$	133.0		$	30.2
(1) Costs and expenses in the second quarter of 2012 included $21 million of restructuring charges. In the first quarter of 2011, we entered into a strategic contract with an automotive customer for which we expected costs to exceed revenue by approximately $5 million. This loss was recorded in the first quarter of 2011 and resulted in a decrease in GAAP and non-GAAP operating income of approximately $5 million.
(2) In the first six months of 2011, we used $48 million, net, of cash in connection with the resolution of a litigation matter.

In the second quarter of 2012, compared to the second quarter of 2011, our total revenue was up 12%, reflecting revenue contribution from MKS and 4CS as well as the growth of our maintenance and services business. We acquired MKS Inc. on May 31, 2011 and 4C Solutions, Inc. on September 2, 2011. MKS and 4CS contributed $22.3 million and $40.7 million of revenue in the second quarter and first six months of 2012, respectively ($23.0 million and $43.0 million, respectively, on a non-GAAP basis). In the second quarter of 2012 organic revenue, excluding the impact of MKS and 4CS, increased 4% to $278.9 million while organic license revenue decreased 10% to $66.6 million compared to the second quarter of 2011. For the first six months of 2012 total revenue was up 8% on an organic basis compared to the first six months of 2011.

Our license revenue in the second quarter of 2012 was lower than expected due to a large transaction in Europe that did not close and lower than expected license revenue in North America. For the six months ended March 31, 2012, license revenue grew 1% on an organic basis. In the second quarter and first six months of 2012 compared to the second quarter and first six months of 2011, maintenance revenue was up 7% and 9%, respectively, on an organic basis and consulting and training service revenue was up 12% and 15%, respectively, on an organic basis. We have seen continued strength in maintenance and consulting services following strong license sales in both 2011 and 2010.

In the second quarter of 2012, license revenue from direct customers was down 7% year over year (19% on an organic basis), attributable to a decrease in the amount of revenue from large customers. We saw continued overall strength in the small- and medium-size business market in the second quarter of 2012, compared to the second quarter of 2011, with indirect license revenue and total indirect revenue up 18% and 13%, respectively (9% and 7% on an organic basis, respectively). This was our ninth consecutive quarter of year-over-year indirect license revenue and total indirect revenue growth. In the first six months of 2012, license revenue and total revenue from direct customers were up 8% and 17%, respectively, year over year

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(down 1% and up 9%, respectively, on an organic basis). In the first six months of 2012, license revenue and total revenue from indirect customers was up 13% and 12%, respectively, year over year (up 6% and 7%, respectively, on an organic basis).

Our GAAP and non-GAAP operating income improved due to higher margins, particularly in our services business, coupled with slower growth in operating expenses.

Future Expectations, Strategies and Risks

Based on the the first six months of 2012 and fiscal 2011 results, current economic conditions and spending patterns, the competitive strength of our products, additional sales capacity and a full year of revenue contribution from MKS, for fiscal year 2012 we are currently targeting non-GAAP and GAAP revenue growth of 8% to 10%. This reflects a decrease in our full year targets for 2012 from those projected at the end of the first quarter of 2012, reflecting lower than expected license revenue in the second quarter of 2012. Changes in foreign currency rates relative to the U.S. dollar can significantly impact our results. Our current plan assumes $1.30 USD to Euro rate. We expect MKS and 4CS to contribute approximately $90 million in revenue for the full year, including $3 million in non-GAAP revenue. For 2012, compared to 2011, we are expecting license revenue growth of approximately 5%, non-GAAP and GAAP maintenance revenue growth of approximately 9%, and consulting and training service revenue growth of approximately 14%.

Our commitment to operating margin expansion is a cornerstone of our financial strategy, which is reflected in our margin performance in the first six months of 2012 and our outlook for 2012 and beyond. Our goal is to improve non-GAAP operating margins by 130 basis points in 2012, from approximately 18% in 2011 to approximately 19% in 2012 (compared to approximately 10% on a GAAP basis), through operating leverage, impact of the restructuring, our on-going focus on operating margin improvements and cost efficiency, and improved services margins in our consulting and training services business. Our expectation for services revenue growth has increased due to continued momentum of our Enterprise solutions and demand for associated services. We are also anticipating that services margins will increase for the year due to increased revenue and expanded use of our strategic services partners.

We acknowledge that there continues to be significant uncertainty regarding the strength of the global economy. While we are continuing to add sales capacity to address our expanded market opportunities, at the same time we continue to be disciplined about broader staffing and spending plans.

Our results have been impacted, and we expect will continue to be impacted, by revenue from large customers. The amount of revenue, particularly license revenue, attributable to large transactions, and the number of such transactions, may vary significantly from quarter to quarter based on customer purchasing decisions and macroeconomic conditions. Our growth rates have become increasingly dependent on adoption of our Enterprise solutions among large direct customers. Such transactions tend to be larger in size and may have long lead times as they often follow a lengthy product selection and evaluation process. This may cause increased volatility in our results.

Impact of an Investigation in China

As previously disclosed, we have undertaken an investigation of payments by certain business partners and expenses by certain employees in China that raise questions of compliance with laws, including the Foreign Corrupt Practices Act, and/or compliance with our business policies. The termination of certain employees and business partners in China in connection with this matter may have an adverse impact on our level of sales in China until replacements for those employees and business partners are in place and productive. Revenue from China has historically represented 6% to 7% of our total revenue. We have voluntarily disclosed the results of our investigation and associated remedial actions to the United States Department of Justice and the Securities and Exchange Commission and are cooperating to provide additional information as requested. We are unable to predict the outcome of this matter, which could include fines or other sanctions.

Results of Operations

Acquisitions

We acquired MKS on May 31, 2011 and 4C Solutions, Inc. (4CS) on September 2, 2011. The results of operations of these acquired businesses have been included in our consolidated financial statements beginning on their respective acquisition dates. These acquisitions added $22.3 million and $40.7 million to our revenue for the three and six months ended March 31, 2012, respectively ($23.0 million and $43.0 million on a non-GAAP basis, respectively).

MKS revenue and 4CS revenue are classified as “Enterprise” revenue.

Impact of Foreign Currency Exchange on Results of Operations

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Approximately two-thirds of our revenue and half of our expenses are transacted in currencies other than the U.S. Dollar. Because we report our results of operations in U.S. Dollars, currency translation, particularly changes in the Euro and Yen, relative to the U.S. Dollar, affects our reported results. If actual reported results for the second quarter and first six months of 2012 had been converted into U.S. Dollars based on the foreign currency exchange rates in effect for the comparable 2011 periods, revenue would have been higher by $0.7 million and lower by $2.5 million in the second quarter and first six months of 2012, respectively, and expenses would have been higher by $1.7 million and $0.1 million, respectively. As a result, at foreign currency exchange rates consistent with the first six months of 2011, operating income in the second quarter and first six months of 2012 would have been lower by $1.0 million and $2.6 million, respectively. Revenue by line of business and revenue by geographic region in the tables that follow present both actual percentage changes year over year and percentage changes year over year on a constant currency basis, calculated by multiplying the actual results for the second quarter and first six months of 2012 by the exchange rates in effect for the comparable periods in 2011.

Revenue

Desktop revenue includes our CAD Solutions: Creo Parametric, Creo Elements/Direct, Arbortext authoring products and Mathcad. Enterprise revenue includes our PLM solutions: Windchill, Arbortext enterprise products, Creo View, and Integrity.

Direct revenue includes sales made primarily by our direct sales force to large businesses. Indirect revenue includes sales by our reseller channel, primarily to small- and medium-size businesses, as well as revenue from other accounts that we have classified as indirect. If the classification of a customer changes between direct and indirect, we reclassify the historical revenue associated with that customer to align with the current period classification. Such reclassifications were not material in the periods presented.

Enterprise maintenance revenue in the second quarter and first six months of 2012 includes a fair value adjustment related to acquired deferred MKS maintenance revenue of $0.7 million and $2.3 million, respectively. Non-GAAP revenue excludes this adjustment. Accordingly, non-GAAP revenue, non-GAAP Enterprise revenue, non-GAAP maintenance revenue and MKS non-GAAP revenue in the previous and following discussion are higher than the corresponding GAAP revenue figures by the amount of this adjustment.

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Revenue by Product Group and Distribution Channel - Three months ended March 31, 2012 and April 2, 2011
	Desktop Three Months Ended							Enterprise Three Months Ended						Total Revenue Three Months Ended
	March 31, 2012			April 2, 2011		Percent Change		March 31, 2012		April 2, 2011		Percent Change		March 31, 2012		April 2, 2011		Percent Change
	(Dollar amounts in millions)
Direct
License revenue	$	20.9		$	31.3	(33	)%	$	27.9	$	20.9	33	%	$	48.7	$	52.2	(7	)%
Service revenue:
Consulting and training	7.7			9.5		(19	)%	63.1		50.6		25	%	70.8		60.2		18	%
Maintenance	52.8			50.9		4	%	42.6		29.7		44	%	95.4		80.5		18	%
Total service revenue	60.5			60.4		—	%	105.7		80.3		32	%	166.2		140.7		18	%
Total revenue	$	81.4		$	91.6	(11	)%	$	133.5	$	101.2	32	%	$	214.9	$	192.9	11	%
Indirect
License revenue	$	19.0		$	17.8	7	%	$	7.0	$	4.2	66	%	$	26.0	$	22.0	18	%
Service revenue:
Consulting and training	1.4		1.6	1.6		(10	)%	3.6		1.3		176	%	5.0		2.9		74	%
Maintenance	45.9			44.1		4	%	9.2		7.4		26	%	55.2		51.4		7	%
Total service revenue	47.3			45.7		4	%	12.8		8.7		48	%	60.2		54.3		11	%
Total revenue	$	66.4		$	63.4	5	%	$	19.9	$	12.9	54	%	$	86.2	$	76.3	13	%
Total Revenue
License revenue	$	39.9		$	49.0	(19	)%	$	34.9	$	25.2	39	%	$	74.8	$	74.2	1	%
Service revenue:
Consulting and training	9.1			11.1		(17	)%	66.7		51.9		28	%	75.8		63.0		20	%
Maintenance	98.7			94.9		4	%	51.8		37.0		40	%	150.5		131.9		14	%
Total service revenue	107.9			106.0		2	%	118.5		89.0		33	%	226.3		195.0		16	%
Total revenue	$	147.8		$	155.1	(5	)%	$	153.4	$	114.1	34	%	$	301.1	$	269.2	12	%

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Revenue by Product Group and Distribution Channel - Six months ended March 31, 2012 and April 2, 2011
	Desktop Six Months Ended						Enterprise Six Months Ended						Total Revenue Six Months Ended
	March 31, 2012		April 2, 2011		Percent Change		March 31, 2012		April 2, 2011		Percent Change		March 31, 2012		April 2, 2011		Percent Change
	(Dollar amounts in millions)
Direct
License revenue	$	44.1	$	55.6	(21	)%	$	69.3	$	49.4	40	%	$	113.3	$	105.0	8	%
Service revenue:
Consulting and training	17.0		18.7		(10	)%	125.2		98.1		28	%	142.2		116.9		22	%
Maintenance	107.5		101.0		6	%	84.2		59.6		41	%	191.7		160.6		19	%
Total service revenue	124.5		119.8		4	%	209.4		157.7		33	%	333.9		277.5		20	%
Total revenue	$	168.6	$	175.4	(4	)%	$	278.7	$	207.1	35	%	$	447.2	$	382.4	17	%
Indirect
License revenue	$	36.7	$	34.7	6	%	$	13.8	$	10.0	38	%	$	50.6	$	44.7	13	%
Service revenue:
Consulting and training	2.8		2.9		(3	)%	6.5		3.0		117	%	9.3		5.9		58	%
Maintenance	93.6		88.4		6	%	18.8		14.3		31	%	112.4		102.7		9	%
Total service revenue	96.3		91.3		6	%	25.3		17.3		46	%	121.6		108.6		12	%
Total revenue	$	133.1	$	126.0	6	%	$	39.1	$	27.3	43	%	$	172.2	$	153.3	12	%
Total Revenue
License revenue	$	80.8	$	90.3	(10	)%	$	83.1	$	59.4	40	%	$	163.9	$	149.7	9	%
Service revenue:
Consulting and training	19.7		21.6		(9	)%	131.7		101.1		30	%	151.4		122.7		23	%
Maintenance	201.1		189.5		6	%	103.0		73.9		39	%	304.1		263.3		15	%
Total service revenue	220.8		211.1		5	%	234.7		175.0		34	%	455.5		386.1		18	%
Total revenue	$	301.6	$	301.3	—	%	$	317.8	$	234.4	36	%	$	619.4	$	535.7	16	%

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Revenue by Line of Business

	Three Months Ended				Six Months Ended
Revenue as a Percentage of Total Revenue	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
License	25	%	28	%	27	%	28	%
Consulting and training service	25	%	23	%	24	%	23	%
Maintenance	50	%	49	%	49	%	49	%
	100	%	100	%	100	%	100	%

Year over Year Percentage Changes in Revenue	Three months ended March 31, 2012 compared to three months ended April 2, 2011				Six months ended March 31, 2012 compared to six months ended April 2, 2011
	As Reported		Constant Currency		As Reported		Constant Currency
License	1	%	1	%	9	%	9	%
Consulting and training service	20	%	21	%	23	%	23	%
Maintenance	14	%	14	%	15	%	15	%
Total	12	%	12	%	16	%	15	%

License Revenue

License revenue of $74.8 million was below our expectations due to a large transaction in Europe that did not close and lower than expected sales in North America, particularly with respect to new large deals, resulting in year-over-year decreases in European license revenue and Americas license revenue of 6% and 4% respectively. Japan and Pacific Rim license revenue performance was solid in the second quarter with growth of 17% and 9%, respectively. See Revenue from Individual Customers below for further discussion.

Enterprise license revenue (which is driven primarily by PLM license sales), while negatively impacted by our European and North American performance, grew 39% on a year-over-year basis due primarily to MKS and to relatively low comparative revenue results in the second quarter of 2011. MKS contributed $8.0 million to Enterprise license revenue in the second quarter of 2012. On an organic basis, Enterprise license revenue increased 6% in the second quarter of 2012 compared to the second quarter of 2011. Desktop license revenue (primarily MCAD license sales) performance was solid in the quarter, particularly in our channel, though declined 19% on a year-over-year basis due in part to very strong comparative results in the second quarter of 2011.

The increase in overall license revenue in the first six months of 2012 was due primarily to growth in direct Enterprise license revenue which increased 40% ($19.9 million) due to higher sales on a year-to-date basis to our large commercial customers and revenue from MKS of $12.7 million. Additionally, we saw growth in license revenue from small- and medium-size customers, with increases in both indirect Desktop and Enterprise license revenue. Enterprise license revenue results reflect an increase in revenue from sales of Windchill, which were 26% ($10.9 million) higher in the first six months of 2012 than in the first six months of 2011.

Foreign currency exchange rate movements, relative to the comparative 2011 periods, did not have a significant impact on license revenue in the second quarter or first six months of 2012.

Consulting and Training Service Revenue

Consulting and training services engagements typically result from sales of new licenses, particularly of our Enterprise solutions. In the second quarter of 2012, compared to the second quarter of 2011, consulting revenue, which is primarily related to Windchill implementations among our direct Enterprise customers, was up 22% ($11.9 million) and training revenue, which typically represents about 15% of our total consulting and training services revenue, was up 10% ($0.8 million). In the first six months of 2012, compared to the first six months of 2011, consulting revenue was up 25% ($26.6 million) and training revenue was up 13% ($2.1 million). MKS and 4CS contributed $5.0 million and $10.6 million to Enterprise consulting and training service revenue in the second quarter and first six months of 2012, respectively. Excluding MKS and 4CS, consulting and training service revenue increased 12% ($7.7 million) and 15% ($18.1 million) in the second quarter and first six months of 2012, respectively, compared to the same periods in 2011.

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Foreign currency exchange rate movements unfavorably impacted consulting and training services revenue by $0.5 million in the second quarter of 2012 compared to the second quarter of 2011, and had no effect on revenue for the first six months of 2012.

Maintenance Revenue

Maintenance revenue is comprised of contracts to maintain new and/or previously purchased software. We saw steady growth in maintenance revenue in 2011, continuing in the first six months of 2012. In the second quarter and first six months of 2012, compared to the same periods in 2011, Desktop maintenance revenue was up 4% ($3.8 million) and 6% ($11.6 million), respectively, attributable in part to the launch of Creo in 2011, and Enterprise maintenance revenue was up 40% ($14.8 million) and 39% ($29.1 million), respectively. In the second quarter and first six months of 2012, MKS and 4CS contributed $9.1 million and $17.2 million, respectively, to Enterprise maintenance revenue. Excluding MKS and 4CS, Enterprise maintenance revenue increased 16% ($5.8 million) and 16% ($12.0 million) in the second quarter and first six months of 2012, respectively, compared to the second quarter and first six months of 2011. Creo and Windchill seats under maintenance increased 8% and 22%, respectively, as of the end of the second quarter of 2012, compared to the end of the second quarter of 2011.

Foreign currency exchange rate movements impacted maintenance revenue unfavorably by $0.1 million and favorably by $2.2 million in the second quarter and first six months of 2012, respectively, compared to the second quarter and first six months of 2011.

Revenue by Distribution Channel

We derive most of our revenue from products and services sold directly by our sales force to end-user customers (Direct Revenue). We also sell products and services through third-party resellers and other strategic partners (Indirect Revenue). Our sales force focuses on large accounts while our reseller channel provides a cost-effective means of covering the small- and medium-size business market. This enables our direct sales force to focus on larger sales opportunities and ensures greater coverage of all customer segments.

Our direct revenue typically comprises approximately 70% of our total revenue while our indirect revenue typically comprises approximately 30% of our total revenue. Our indirect sales have increased in part as a result of the release of Creo in June 2011 and in part due to improved economic conditions.

Revenue results by Distribution Channel can be found in the table Revenue by Product Group and Distribution Channel above.

Revenue from Individual Customers

We enter into customer contracts that may result in revenue being recognized over multiple reporting periods. Accordingly, revenue recognized in a current period may be attributable to contracts entered into during the current period or in prior periods. License and/or consulting and training service revenue of $1 million or more recognized from individual customers in a single quarter during the fiscal year from contracts entered into during that quarter and/or a prior quarter is shown in the table below. The amount of revenue, particularly license revenue, attributable to large transactions, and the number of such transactions, may vary significantly from quarter to quarter based on customer purchasing decisions, the completion of large services engagements commenced in previous quarters and macroeconomic conditions. In the first quarter of 2012, we instituted changes to our internal customer reporting that resulted in differences in our previously reported customer metrics. The historical information in the table below has been restated to conform to the current customer definitions.

For the second quarters of 2012 and 2011, there were 25 (9 in the Americas, 11 in Europe and 5 in Asia) and 26 (10 in the Americas, 9 in Europe and 7 in Asia) of these customers, respectively, with average revenue recorded of $2.3 million and $2.2 million.

Revenue from large customers in the second quarter of 2012, while flat as compared to the second quarter of 2011, reflects a lower mix of license revenue. The license revenue portion of this metric, which typically comprises approximately 50% to 60% of the total, was 30% in the second quarter of 2012, reflecting lower than expected license revenue contribution from large deals in Europe and North America.

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	Three months ended						Six months ended
	March 31, 2012			April 2, 2011			March 31, 2012			April 2, 2011
	(Dollar amounts in millions)
License and/or consulting and training service revenue greater than $1 million from individual customers in a quarter	$	56.4		$	56.3		$	125.2		$	114.4
% of total license and consulting and training service revenue	37		%	41		%	40		%	42		%
Revenue by product group:
Desktop	$	9.7		$	19.1		$	22.0		$	31.0
Enterprise	$	46.7		$	37.2		$	103.2		$	83.4

Revenue by Geographic Region

	Three months ended						Percent Change				Six months ended						Percent Change
	March 31, 2012			April 2, 2011			Actual		Constant Currency		March 31, 2012			April 2, 2011			Actual		Constant Currency
	(Dollar amounts in millions)										(Dollar amounts in millions)
Revenue by region:
Americas	$	109.5		$	94.4		16	%	16	%	$	227.0		$	194.5		17	%	17	%
Europe	$	115.8		$	106.0		9	%	12	%	$	249.0		$	213.8		16	%	17	%
Pacific Rim	$	37.4		$	36.2		3	%	4	%	$	74.6		$	69.8		7	%	7	%
Japan	$	38.5		$	32.6		18	%	11	%	$	68.9		$	57.6		20	%	12	%
Revenue by region as a % of total revenue:
Americas	36		%	35		%					37		%	36		%
Europe	38		%	39		%					40		%	40		%
Pacific Rim	12		%	14		%					12		%	13		%
Japan	13		%	12		%					11		%	11		%

Americas

The increase in revenue in the Americas in the second quarter of 2012 compared to the second quarter of 2011 consisted of an increase of 33% ($7.4 million) in consulting and training service revenue and an increase of 17% ($8.5 million) in maintenance revenue, partially offset by a decrease of 4% ($0.8 million) in license revenue. The increase in revenue in the Americas in the first six months of 2012 compared to the first six months of 2011 consisted of an increase of 35% ($15.1 million) in consulting and training service revenue and an increase of 17% ($17.2 million) in maintenance revenue while license revenue was relatively flat. Enterprise license revenue in the second quarter of 2012 decreased 14% over the second quarter of 2011, due primarily to lower PLM license sales to large customers. This decrease was offset in part by an increase in sales of MCAD products in the quarter.

Europe

The increase in revenue in Europe in the second quarter of 2012 compared to the second quarter of 2011 consisted of an increase in consulting and training service revenue of 21% ($5.2 million) and an increase in maintenance revenue of 12% ($6.3 million), offset by a decrease in license revenue of 6% ($1.7 million). Total Enterprise license revenue increased 33% ($2.9 million) in the second quarter of 2012 compared to the second quarter of 2011 while total Desktop license revenue decreased 25% ($4.6 million) over the same period, reflecting a decrease in license sales of Desktop products to large customers. The increase in revenue in the first six months of 2012 compared to the first six months of 2011 consisted of an increase in license revenue of 12% ($6.9 million), an increase in consulting and training service revenue of 25% ($12.6 million) and an increase in maintenance revenue of 15% ($15.6 million).

Changes in foreign currency exchange rates, particularly the Euro, unfavorably impacted revenue in Europe by $2.8 million and $1.5 million in the second quarter and first six months of 2012, respectively, as compared to the second quarter and

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first six months of 2011.

Pacific Rim

The increase in revenue in the Pacific Rim in the second quarter of 2012 compared to the second quarter of 2011 was due primarily to an increase of 9% ($1.4 million) in license revenue and an increase of 13% ($1.2 million) in maintenance revenue, partially offset by a decrease of 15% ($1.5 million) in consulting and training service revenue. The increase in revenue in the Pacific Rim in the first six months of 2012, compared to the first six months of 2011, was due primarily to an increase of 13% ($4.0 million) in license revenue and an increase of 14% ($2.7 million) in maintenance revenue, partially offset by a decrease of 9% ($1.8 million) in consulting and training service revenue. Revenue from China, which has historically represented 6% to 7% of our total revenue, decreased 10% and 5% in the second quarter and first six months of 2012, respectively, compared to the second quarter and first six months of 2011.

Changes in foreign currency exchange rates unfavorably impacted revenue in the Pacific Rim by $0.2 million and $0.3 million in the second quarter and first six months of 2012, respectively, as compared to the second quarter and first six months of 2011.

Japan

The increase in revenue in Japan in the second quarter of 2012 compared to the second quarter of 2011 included increases of 17% ($1.6 million) in license revenue, 31% ($1.6 million) in consulting and training service revenue and 15% ($2.6 million) in maintenance revenue. The increase in revenue in Japan in the first six months of 2012 compared to the first six months of 2011 included increases of 25% ($3.0 million) in license revenue, 30% ($2.9 million) in consulting and training service revenue and 15% ($5.3 million) in maintenance revenue.

Changes in the Yen to U.S. Dollar exchange rate favorably impacted revenue in Japan by $2.3 million and $4.4 million in the second quarter and first six months of 2012, respectively, as compared to the second quarter and first six months of 2011.

Gross Margin

	Three months ended								Six months ended
	March 31, 2012			April 2, 2011			Percent Change		March 31, 2012			April 2, 2011			Percent Change
	(Dollar amounts in millions)
Gross margin	$	207.9		$	187.4		11	%	$	428.0		$	367.9		16	%
Non-GAAP gross margin	214.8			192.3			12	%	443.0			378.3			17	%
Gross margin as a % of total revenue	69		%	70		%			69		%	69		%
Non-GAAP gross margin as a % of total revenue	71		%	71		%			71		%	71		%

Gross margin as a percentage of total revenue for the second quarter and first six months of 2012 was relatively comparable to the year-ago periods, reflecting higher services margins offset by a less favorable revenue mix. License revenue, which generates the highest gross margins, was 25% and 27% of total revenue in the second quarter and first six months of 2012, respectively, compared to 28% in both the second quarter and first six months of 2011.

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Costs and Expenses

	Three months ended							Six months ended
	March 31, 2012		April 2, 2011		Percent Change			March 31, 2012		April 2, 2011		Percent Change
	(Dollar amounts in millions)
Costs and expenses:
Cost of license revenue	$	7.8	$	6.6	19	%		$	15.5	$	12.5	24	%
Cost of service revenue	85.4		75.2		14	%		176.0		155.3		13	%
Sales and marketing	91.0		81.2		12	%		188.7		165.7		14	%
Research and development	54.6		53.0		3	%		109.6		104.6		5	%
General and administrative	29.5		24.7		20	%		59.1		48.2		23	%
Amortization of acquired intangible assets	5.1		4.3		20	%		10.3		8.1		27	%
Restructuring charges	20.8		—					20.8		—
Total costs and expenses	$	294.2	$	245.0	20	%	(1)	$	580.0	$	494.4	17	%	(1)
Total headcount at end of period	5,959		5,395

(1) On a constant currency basis, compared to the year-ago periods, total costs and expenses for the second quarter of and first six months of 2012 increased 21% and 17%, respectively.

Costs and expenses in the second quarter and first six months of 2012 compared to the second quarter and first six months of 2011 increased primarily as a result of:

• restructuring charges of $20.0 million related to severance and other related costs associated with the termination of 168 employees and $0.8 million related to excess facilities;

• higher cost of service in support of services revenue growth;

• investments in our direct sales force;

• an increase of approximately 500 employees (as of March 31, 2012) in connection with our acquisitions of MKS on May 31, 2011 and 4CS on September 2, 2011;

• company-wide merit pay increase effective on February 1, 2012 and 2011 (both merit pay increases were approximately $11 million on an annualized basis), which resulted in an increase in salary expense across all functional organizations; and

• acquisition-related costs associated with our acquisitions of MKS and 4CS of $0.4 million and $2.5 million for the three and six months ended March 31, 2012, respectively, (included in general and administrative).

Costs in the first six months of 2011 included the following:

• a contract loss of approximately $5 million recorded in the first quarter of 2011 related to estimated costs to be incurred in completing a services contract in excess of the corresponding revenue;

• higher sales and marketing expenses associated with events, including our Creo product launch in the first quarter of 2011; and

• severance and related expenses of approximately $3.0 million associated with 60 employees terminated in the second quarter of 2011, primarily in research and development.

Cost of License Revenue

	Three months ended								Six months ended
	March 31, 2012			April 2, 2011			Percent Change		March 31, 2012			April 2, 2011			Percent Change
	(Dollar amounts in millions)
Cost of license revenue	$	7.8		$	6.6		19	%	$	15.5		$	12.5		24	%
% of total revenue	3		%	2		%			2		%	2		%
% of total license revenue	10		%	9		%			9		%	8		%

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Our cost of license revenue consists of fixed and variable costs associated with reproducing and distributing software and documentation, as well as royalties paid to third parties for technology embedded in or licensed with our software products and amortization of intangible assets associated with acquired products. Cost of license revenue increased in the second quarter and first six months of 2012 due primarily to amortization of purchased software, which was $0.6 million and $1.3 million higher in the second quarter and first six months of 2012, respectively, compared to the second quarter and first six months of 2011. Cost of license revenue as a percent of license revenue can vary depending on product mix sold and the effect of fixed and variable royalties and the level of amortization of acquired software intangible assets.

Cost of Service Revenue

	Three months ended								Six months ended
	March 31, 2012			April 2, 2011			Percent Change		March 31, 2012			April 2, 2011			Percent Change
	(Dollar amounts in millions)
Cost of service revenue	$	85.4		$	75.2		14	%	$	176.0		$	155.3		13	%
% of total revenue	28		%	28		%			28		%	29		%
% of total service revenue	38		%	39		%			39		%	40		%
Service headcount at end of period	1,899			1,614			18	%

Our cost of service revenue includes costs such as salaries, benefits, and computer equipment and facilities for our training, customer support and consulting personnel; third-party subcontractor fees; and costs associated with the release of maintenance updates (including related royalty costs). Service margins can vary based on the product mix sold in the period. Margins on maintenance revenue are significantly higher than on consulting and training service revenue. Maintenance revenue comprised 67% and 68% of total service revenue in the second quarter and first six months of 2012 and 2011, respectively.

In the second quarter and first six months of 2012 compared to the second quarter and first six months of 2011 total compensation, benefit costs and travel expenses were 19% ($9.4 million) and 24% ($23.7 million) higher primarily due to increased headcount and the impact of merit pay increases. Cost of service headcount at the end of the second quarter of 2012 included approximately 190 employees added from MKS and 4CS.

In the first quarter of 2011, we made a strategic decision to enter into a contract with an important customer in the automotive industry, for which we expected our costs to exceed our revenue by approximately $5 million. Cost of service revenue in the first quarter of 2011 included immediate recognition of this loss of approximately $5 million.

Sales and Marketing

	Three months ended								Six months ended
	March 31, 2012			April 2, 2011			Percent Change		March 31, 2012			April 2, 2011			Percent Change
	(Dollar amounts in millions)
Sales and marketing	$	91.0		$	81.2		12	%	$	188.7		$	165.7		14	%
% of total revenue	30		%	30		%			30		%	31		%
Sales and marketing headcount at end of period	1,516			1,388			9	%

Our sales and marketing expenses primarily include salaries and benefits, sales commissions, advertising and marketing programs, travel and facility costs. Our compensation, benefit costs and travel expenses were higher by an aggregate of $7.5 million (11%) and $21.3 million (16%) in the second quarter and first six months of 2012, respectively, compared to the second quarter and first six months of 2011 due to higher headcount as a result of acquisitions and investments we have made in our direct sales force in support of revenue growth opportunities and the impact of merit pay increases. Sales and marketing headcount at the end of second quarter of 2012 included approximately 110 employees added from MKS and 4CS. Additionally, sales and marketing expenses were higher by $0.7 million and $1.5 million in the second quarter and first six months of 2012, respectively, compared to the prior year periods as a result of investments we are making in sales technology infrastructure. Sales meeting and marketing event expenses were higher by approximately $1.2 million in the first six months

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of 2011 compared to the first six months of 2012 primarily due to the Creo product launch in the first quarter of 2011.

Research and Development

	Three months ended								Six months ended
	March 31, 2012			April 2, 2011			Percent Change		March 31, 2012			April 2, 2011			Percent Change
	(Dollar amounts in millions)
Research and development	$	54.6		$	53.0		3	%	$	109.6		$	104.6		5	%
% of total revenue	18		%	20		%			18		%	20		%
Research and development headcount at end of period	1,952			1,839			6	%

Our research and development expenses consist principally of salaries and benefits, costs of computer equipment and facility expenses. Major research and development activities include developing new releases and updates of our software that enhance functionality and developing new products or features. Total compensation, benefit costs and travel expenses were higher in the second quarter and first six months of 2012 compared to the second quarter and first six months of 2011 by an aggregate of $1.8 million (4%) and $5.9 million (7%), respectively, due to increased headcount and the impact of merit pay increases. Research and development headcount at the end of the second quarter of 2012 included approximately 160 employees added from MKS and 4CS.

General and Administrative

	Three months ended								Six months ended
	March 31, 2012			April 2, 2011			Percent Change		March 31, 2012			April 2, 2011			Percent Change
	(Dollar amounts in millions)
General and administrative	$	29.5		$	24.7		20	%	$	59.1		$	48.2		23	%
% of total revenue	10		%	9		%			10		%	9		%
General and administrative headcount at end of period	579			542			7	%

Our general and administrative expenses include the costs of our corporate, finance, information technology, human resources, legal and administrative functions, as well as acquisition-related charges, bad debt expense and outside professional services, including accounting and legal fees. Acquisition-related costs were $0.4 million and $2.5 million for the second quarter and first six months of 2012, respectively, and include charges related to acquisition integration activities (i.e., severance and professional fees). Total compensation, benefit costs and travel costs were higher in the second quarter and first six months of 2012 by $2.5 million (13%) and $4.7 million (13%), respectively, due to increased headcount and the impact of merit pay increases. General and administrative headcount at the end of second quarter of 2012 included approximately 30 employees added from MKS and 4CS. Additionally, costs for outside professional services were higher by $2.0 million and $2.6 million in the second quarter and first six months of 2012, respectively, compared to the prior year periods.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets reflects the amortization of acquired non-product related intangible assets, primarily customer and trademark-related intangible assets, recorded in connection with completed acquisitions. The increase in amortization of acquired intangible assets in the second quarter and first six months of 2012 was primarily due to our acquisition of MKS.

Restructuring charges

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in millions)
Restructuring charges	$	20.8	$	—	$	20.8	$	—

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In the second quarter of 2012, as part of our strategy to reduce costs and to realign our business we implemented a restructuring of our business and recorded restructuring charges of $20.8 million, primarily for severance and related costs associated with 168 employees (representing approximately 3% of our workforce) notified of termination during the quarter. We expect that these reductions will result in future operating expense savings of approximately $5 million per quarter. We realized approximately half of these operating expense savings in the second quarter of 2012. Cash expenditures of the restructuring charge are expected to be paid within the next twelve months, $9 million of which was paid in the second quarter.

Interest and Other Income (Expense), net

	Three months ended						Six months ended
	March 31, 2012			April 2, 2011			March 31, 2012			April 2, 2011
	(in millions)
Interest income	$	0.7		$	0.9		$	1.5		$	1.7
Interest expense	(1.2		)	(0.4		)	(2.4		)	(0.8		)
Other income (expense), net	(2.5		)	(1.3		)	(4.7		)	(3.6		)
Total interest and other (expense) income, net	$	(3.0	)	$	(0.8	)	$	(5.6	)	$	(2.7	)

Interest and other income (expense), net includes interest income, interest expense, costs of hedging contracts, certain realized and unrealized foreign currency transaction gains or losses and exchange gains or losses resulting from the required period-end currency remeasurement of the financial statements of our subsidiaries that use the U.S. Dollar as their functional currency. A large portion of our revenue and expenses is transacted in foreign currencies. To reduce our exposure to fluctuations in foreign exchange rates, we engage in hedging transactions involving the use of foreign currency forward contracts, primarily in the Euro and Canadian Dollar. The increase in interest expense in the second quarter and first six months of 2012 compared to the prior year periods is due to amounts outstanding under our revolving credit facility. We had $160 million outstanding at March 31, 2012, $200 million outstanding at December 31, 2011 and September 30, 2011, and no amounts outstanding in the first six months of 2011. The increase in other income (expense), net in the second quarter and first six months of 2012 compared to the prior year periods was due primarily to foreign currency net losses which were $1.2 million higher in the second quarter of 2012 as compared to the second quarter of 2011.

Income Taxes

	Three months ended						Six months ended
	March 31, 2012			April 2, 2011			March 31, 2012			April 2, 2011
	(Dollar amounts in millions)
Pre-tax income	$	3.9		$	23.4		$	33.8		$	38.6
Tax provision	0.4			4.4			8.1			6.4
Effective income tax rate	9		%	19		%	24		%	16		%

In the second quarter and first six months 2012, our effective tax rate was lower than the 35% statutory federal income tax rate due primarily to our corporate structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate. Our provision includes the expiration on December 31, 2011 of the research and development (R&D) credit in the U.S. and a discrete non-cash charge of $1.5 million related to the impact of a Japanese legislative change, enacted in the first quarter, on our Japan entity's deferred tax assets. Additionally, we expect to make a research and development cost sharing prepayment by a foreign subsidiary to the U.S. at the same level as the prior year. If such prepayment is not ultimately paid within the fiscal year, the effective tax rate would be favorably impacted by up to $7.5 million. In the second quarter and first six months of 2011, our effective tax rate was lower than the 35% statutory federal income tax rate due primarily to our corporate tax structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate and a $1.8 million tax benefit related to research and development (R&D) triggered by a retroactive extension of the R&D tax credit enacted in the first quarter of 2011.

We have net deferred tax assets ($121.9 million as of September 30, 2011) primarily relating to our U.S. operations. We

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have concluded, based on the weight of available evidence, that our net deferred tax assets are more likely than not to be realized in the future. In arriving at this conclusion, we evaluated all available evidence, including our cumulative profitability on a pre-tax basis for the last three years (adjusted for permanent differences) which includes the results of taking certain tax planning actions. We have taken and will continue to take measures to improve core earnings in the U.S. If our U.S. results do not improve, a valuation allowance against the deferred tax assets may be required. We will continue to reassess our valuation allowance requirements each financial reporting period.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service (IRS) in the United States. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several foreign jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, limitations on net operating losses and tax credits. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in material changes in our estimates.

Our future effective income tax rate may be materially impacted by the amount of income taxes associated with our foreign earnings, which are taxed at rates different from the U.S. federal statutory income tax rate, as well as the timing and extent of the realization of deferred tax assets and changes in the tax law. Further, our tax rate may fluctuate within a fiscal year, including from quarter to quarter, due to items arising from discrete events, including settlements of tax audits and assessments, the resolution or identification of tax position uncertainties, expiration of statute of limitations and acquisitions of other companies.

Income and Margins; Earnings per Share

As shown in the table below, our operating income and operating margins in the second quarter and first six months of 2012 increased compared to the second quarter and first six months of 2011, primarily due to higher revenue and improved operating margins described in Revenue and Costs and Expenses above.

The non-GAAP measures presented in the discussion of our results of operations and the respective most directly comparable GAAP measures are:

• non-GAAP revenue—GAAP revenue

• non-GAAP operating income—GAAP operating income

• non-GAAP gross margin—GAAP gross margin

• non-GAAP net income—GAAP net income

• non-GAAP operating margin—GAAP operating margin

• non-GAAP diluted earnings per share—GAAP diluted earnings per share

The non-GAAP measures exclude a fair value adjustment related to MKS deferred maintenance revenue, stock-based compensation expense, amortization of acquired intangible assets expense, acquisition-related charges, restructuring charges, one-time charges included in non-operating other income (expense), net and the related tax effects of the preceding items, and any one-time tax items. These expenses and charges are normally included in the comparable measures calculated and presented in accordance with GAAP. Our management excludes these revenue and cost items when evaluating our ongoing performance and/or predicting our earnings trends, and therefore exclude them when presenting non-GAAP financial measures. Management uses, and investors should consider, non-GAAP measures in conjunction with our GAAP results.

Fair value of acquired MKS deferred maintenance revenue is a purchase accounting adjustment recorded to reduce acquired deferred maintenance revenue to the fair value of the remaining obligation.

Stock-based compensation expense is a non-cash expense relating to stock-based awards issued to executive officers, employees and outside directors, primarily consisting of restricted stock and restricted stock units.

Amortization of acquired intangible assets expense is a non-cash expense that is impacted by the timing and magnitude of our acquisitions.

Acquisition-related charges are costs that are included in general and administrative expenses and include direct costs of acquisitions and expenses related to acquisition integration activities, including transaction fees, due diligence costs, severance, and professional fees, including legal and accounting costs related to the acquisition and integration of the acquisition. These costs are not considered part of our normal operations as the occurrence and amount will vary depending on the timing and size of acquisitions and the level of integration activity undertaken.

Restructuring charges are costs incurred in a period related to strategies to reduce costs and to realign our business,

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including costs related to employee terminations and costs of excess facilities.

We use these non-GAAP measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provide a view of our operating results without items that are not, in our view, indicative of our core operating results. We believe that these non-GAAP measures help illustrate underlying trends in our business, and we use the measures to establish budgets and operational goals (communicated internally and externally) for managing our business and evaluating our performance. We believe that providing non-GAAP measures affords investors a view of our operating results that may be more easily compared to the results of peer companies. In addition, compensation of our executives is based in part on the performance of our business based on these non-GAAP measures.

The items excluded from the non-GAAP measures often have a material impact on our financial results and such items often recur. Accordingly, the non-GAAP measures included in this Quarterly Report should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with GAAP.

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The following tables reconcile each of these non-GAAP measures to its most closely comparable GAAP measure on our financial statements.

	Three months ended						Six months ended
	March 31, 2012			April 2, 2011			March 31, 2012			April 2, 2011
	(in millions, except per share amounts)
GAAP revenue	$	301.1		$	269.2		$	619.4		$	535.7
Fair value of acquired MKS deferred maintenance revenue	0.7			—			2.3			—
Non-GAAP revenue	$	301.9		$	269.2		$	621.7		$	535.7
GAAP gross margin	$	207.9		$	187.4		$	428.0		$	367.9
Fair value of acquired MKS deferred maintenance revenue	0.7			—			2.3			—
Stock-based compensation	2.2			1.6			4.7			3.7
Amortization of acquired intangible assets included in cost of license revenue	3.9			3.3			8.0			6.7
Non-GAAP gross margin	$	214.8		$	192.3		$	443.0		$	378.3
GAAP operating income	$	6.9		$	24.2		$	39.4		$	41.3
Fair value of acquired MKS deferred maintenance revenue	0.7			—			2.3			—
Stock-based compensation	12.7			9.9			26.1			20.9
Amortization of acquired intangible assets included in cost of license revenue	3.9			3.3			8.0			6.7
Amortization of acquired intangible assets	5.1			4.3			10.3			8.1
Acquisition-related charges included in general and administrative expenses	0.4			0.6			2.5			0.6
Restructuring charges	20.8			—			20.8			—
Non-GAAP operating income	$	50.6		$	42.3		$	109.4		$	77.7
GAAP net income	$	3.6		$	19.0		$	25.7		$	32.3
Fair value of acquired MKS deferred maintenance revenue	0.7			—			2.3			—
Stock-based compensation	12.7			9.9			26.1			20.9
Amortization of acquired intangible assets included in cost of license revenue	3.9			3.3			8.0			6.7
Amortization of acquired intangible assets	5.1			4.3			10.3			8.1
Acquisition-related charges included in general and administrative expenses	0.4			0.6			2.5			0.6
Restructuring charges	20.8			—			20.8			—
Non-operating foreign currency transaction loss (1)	—			—			0.8			0.7
Income tax adjustments (2)	(11.4		)	(5.8		)	(18.1		)	(11.7		)
Non-GAAP net income	$	35.9		$	31.3		$	78.4		$	57.6
GAAP diluted earnings per share	$	0.03		$	0.16		$	0.21		$	0.27
Stock-based compensation	0.10			0.08			0.22			0.17
Amortization of acquired intangible assets	0.07			0.06			0.15			0.12
Acquisition-related charges	—			0.01			0.02			0.01
Restructuring charges	0.17			—			0.17			—
Income tax adjustments	(0.09		)	(0.05		)	(0.15		)	(0.10		)
All other items identified above	0.02			—			0.03			0.01
Non-GAAP diluted earnings per share	$	0.30		$	0.26		$	0.65		$	0.48

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Operating margin impact of non-GAAP adjustments:

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
GAAP operating margin	2.3	%	9.0	%	6.4	%	7.7	%
Fair value of deferred maintenance revenue	0.2	%	—	%	0.4	%	—	%
Stock-based compensation	4.2	%	3.7	%	4.2	%	3.9	%
Amortization of acquired intangibles	3.0	%	2.8	%	3.0	%	2.8	%
Acquisition-related charges	0.1	%	0.2	%	0.4	%	0.1	%
Restructuring charges	6.9	%	—	%	3.4	%	—	%
Non-GAAP operating margin	16.8	%	15.7	%	17.6	%	14.5	%

(1) In the first quarter of 2012, we recorded $0.8 million of foreign currency transaction losses related to MKS legal entity mergers completed during the quarter. In the first quarter of 2011, we recorded $0.7 million of foreign currency losses related to a previously announced litigation settlement in Japan.

(2) Income tax adjustments reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above, as well as any atypical tax items. In the first quarter of 2012, income tax adjustments include a one-time non-cash charge of $1.4 million related to the impact of a reduction in the statutory tax rate in Japan on deferred tax assets from a litigation settlement.

Liquidity and Capital Resources

	March 31, 2012			April 2, 2011
	(in thousands)
Cash and cash equivalents	$	224,107		$	259,504
Amounts below are for the three months ended:
Cash provided by operating activities	$	133,034		$	30,238
Cash used by investing activities	(17,794		)	(11,560		)
Cash used by financing activities	(59,872		)	(5,452		)

Cash and cash equivalents

We invest our cash with highly rated financial institutions and in diversified domestic and international money market mutual funds. Cash and cash equivalents include highly liquid investments with original maturities of three months or less. At March 31, 2012 cash and cash equivalents totaled $224.1 million, up from $167.9 million at September 30, 2011 due primarily to $133.0 million of cash provided by operating activities in the first six months of 2012, offset by $40 million of cash used to repay borrowings under our revolving credit facility, $16.6 million of cash used for capital expenditures and $15 million of cash used to repurchase shares of our common stock.

Cash provided by operating activities

Cash provided by operating activities was $133.0 million in the first six months of 2012, compared to $30.2 million of cash provided by operating activities in the first six months of 2011. The first six months of 2011 included the resolution of a litigation matter that reduced our cash balance by approximately $48 million during that period, including $52.1 million paid to settle the matter. Excluding the impact of the litigation settlement in the first six months of 2011, cash provided by operations improved in the first six months of 2012 due primarily to collections on accounts receivables, which had a $23 million favorable impact in the first six months of 2012 as compared to the first six months of 2011, and improved profitability (non-GAAP operating income for the first six months of 2012 of $109.4 million compared to $77.7 million for the comparable prior year period), partially offset by $8.9 million of restructuring payments made during the second quarter of 2012. Accounts receivable days sales outstanding was 62 days at the end of the second quarter of 2012 compared to 62 days as of September 30, 2011 and 60 days at the end of the second quarter of 2011.

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Cash used by investing activities

	Six months ended
	March 31, 2012			April 2, 2011
	(in thousands)
Cash used by investing activities included the following:
Acquisitions of businesses	$	(1,170	)	$	—
Additions to property and equipment	(16,624		)	(11,560		)
	$	(17,794	)	$	(11,560	)

Our expenditures for property and equipment consist primarily of computer equipment, software, office equipment and facility improvements. In the first six months of 2012 we paid $1.2 million of contingent purchase price price related to our acquisition of 4CS.

Cash used by financing activities

	Six months ended
	March 31, 2012				April 2, 2011
	(in thousands)
Cash used by financing activities included the following:
Net repayments of borrowings under revolving credit facility	$	(40,000	)		$	—
Repurchases of common stock	(14,983		)	—	—
Payments of withholding taxes in connection with vesting of stock-based awards	(19,465		)		(21,956		)
Proceeds from issuance of common stock	14,123				15,974
Excess tax benefits from stock-based awards	453				530
	$	(59,872	)		$	(5,452	)

In the second quarter of 2012, we repaid $40 million under our credit facility and we repurchased 0.6 million shares of our common stock under our repurchase program. Stock option exercises in the first six months of 2012 totaled 1.4 million compared to 1.2 million in the first six months of 2011. As of March 31, 2012, we had approximately 1.5 million stock options outstanding. These options expire on various dates, including 0.1 million in 2012, 0.6 million in 2013 and 0.8 million in 2014. We expect substantially all of the options, including those held by our executives, to be exercised prior to their respective expiration dates.

Credit Facility

We have a revolving credit facility with a bank syndicate, under which we may borrow funds up to $300 million (with an accordion feature that allows us to borrow up to an additional $150 million if the existing or additional lenders agree), repay the same in whole or in part, and re-borrow at any time through September 30, 2016, when all amounts outstanding will be due and payable in full.

In 2011, in connection with our acquisition of MKS, we borrowed $250 million under the credit facility, $50 million of which we repaid in the fourth quarter of 2011. As of December 31, 2011 and September 30, 2011, we had $200 million outstanding under the revolving credit facility. During the first quarter of 2011, we borrowed an additional $40 million under the revolving credit facility for short-term cash requirements, including the payment of fiscal 2011 incentive compensation, which we repaid by the end of the first quarter. We repaid $40 million of borrowings outstanding under the credit facility in the second quarter of 2012 and had a remaining balance of $160 million outstanding as of March 31, 2012.

The credit facility limits PTC's and its subsidiaries' ability to, among other things: incur additional indebtedness; incur liens or guarantee obligations; pay dividends (other than to PTC) and make other distributions; make investments and enter into joint ventures; dispose of assets; and engage in transactions with affiliates, except on an arms-length basis. Under the credit facility, PTC and its material domestic subsidiaries may not invest cash or property in, or loan to, PTC's foreign subsidiaries in aggregate amounts exceeding $50 million for any purpose and an additional $75 million for acquisitions of businesses. In addition, under the credit facility, PTC and its subsidiaries must maintain the following financial ratios:

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• a leverage ratio, defined as consolidated funded indebtedness to consolidated trailing four quarters EBITDA, of no greater than 2.50 to 1.00 at any time; and

• a fixed charge coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges, of no less than 1.25 to 1.00 at any time.

As of March 31, 2012, our leverage ratio was 0.65 to 1.00 and our fixed charge coverage ratio was 2.82 to 1.00. We were in compliance with all financial and operating covenants of the credit facility as of March 31, 2012.

For a description of additional terms and conditions of the credit facility, including limitations on our ability to undertake certain actions, see Note 12. Long Term Debt in the Notes to Consolidated Financial Statements of this Form 10-Q.

Share Repurchases

Our Board of Directors has periodically authorized us to repurchase shares of our common stock. We are currently authorized to repurchase up to $100 million worth of shares with cash from operations in the period October 1, 2011 through September 30, 2012. We repurchased 0.6 million shares at a cost of $15 million in the second quarter of 2012. We did not repurchase any shares in the first six months of 2011. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued. Future repurchases of shares will reduce our cash balances.

Expectations for 2012

We believe that existing cash and cash equivalents, together with cash generated from operations, will be sufficient to meet our working capital (including the second quarter restructuring charge of $21 million, $9 million of which was paid in the second quarter of 2012) and capital expenditure requirements through at least the next twelve months and to meet our known long-term capital requirements. Capital expenditures for the remainder of 2012 are currently anticipated to be approximately $14 million. In addition, we expect to generate sufficient cash flow from operations in the remainder of 2012 to repurchase $40 million worth of shares of our common stock and to repay an additional $30 million of the amount outstanding under our revolving credit facility.

We have evaluated, and expect to continue to evaluate, possible strategic transactions on an ongoing basis and at any given time may be engaged in discussions or negotiations with respect to possible strategic transactions. Our expected uses of cash could change, our cash position could be reduced and we may incur additional debt obligations to the extent we complete any significant acquisitions.

At March 31, 2012, we had cash and cash equivalents of $89.3 million in Europe, $52.1 million in the United States, $63.1 million in the Pacific Rim (including India), $4.9 million in Japan and $14.7 million in other non-U.S. countries. As of March 31, 2012 and September 30, 2011, we had an outstanding intercompany loan receivable of $294.4 million and $334.5 million, respectively, owed to the U.S. from our top tier foreign subsidiary, primarily resulting from legal entity reorganizations completed in 2010 and 2011 in support of tax and cash planning. This amount can be repaid with cash generated by our foreign subsidiaries and repatriated to the U.S. without future tax cost.

Critical Accounting Policies and Estimates

The financial information included in Item 1 reflects no material changes in our critical accounting policies and estimates as set forth under the heading Critical Accounting Policies and Estimates in Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2011 Annual Report on Form 10-K. We did not make any changes to these policies or to these estimates during the quarter ended March 31, 2012.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our market risk exposure as described in Item 7A: Quantitative and Qualitative Disclosures about Market Risk of our 2011 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

Our management maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.

We evaluated, under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2012.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to various legal proceedings and claims that arise in the ordinary course of business. We currently believe that resolving these matters will not have a material adverse impact on our financial condition, results of operations or cash flows. However, the results of legal proceedings cannot be predicted with certainty. Should any of these legal matters be resolved against us, the operating results for a particular reporting period could be adversely affected.

ITEM 1A. RISK FACTORS

In addition to other information set forth in this report, you should carefully consider the factors described in Part I. Item 1A. Risk Factors in our 2011 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2011 Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM  2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below shows the shares of our common stock we repurchased in the second quarter of 2012.

ISSUER PURCHASES OF EQUITY SECURITIES

Period (1)	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly  Announced Plans or Programs	Approximate Dollar Value  of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1 - January 28, 2012	—	—		—	$100,000,000(2)
January 29 - February 25, 2012	—	$	—	—	$100,000,000(2)
February 26 - March 31, 2012	570,657	$	26.26	570,657	$85,017,146(2)
Total	570,657	$	26.26	570,657	$85,017,146(2)

(1) Periods are our fiscal months within the fiscal quarter.

(2) In September 2011, our Board authorized us to repurchase up to $100 million worth of our shares in the period October 1, 2011 through September 30, 2012, which repurchase program we announced on October 26, 2011.

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ITEM  5. OTHER INFORMATION

Item 5.02.     Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 7, 2012, C. Richard Harrison, our Executive Chairman, resigned from PTC's Board of Directors effective as of June 30, 2012.  In connection with such resignation, on May 8, 2012, we completed an agreement with Mr. Harrison that confirms the applicable benefits to be provided to Mr. Harrison upon the termination of his employment under his Executive Agreement with us dated May 7, 2010.  The agreement extends the period of his noncompetition obligations until November 30, 2014 and provides for the extension of the exercise period of vested options held by him until the options' expiration dates.  As contemplated by the Executive Agreement, all unvested restricted stock units held by him will become vested as of the termination date (June 30, 2012) and all salary amounts due to him for the remainder of the contract period (from the termination date through November 30, 2012) will be paid to him in a lump sum payment after the termination date.  As a condition to receiving such lump sum salary payment, Mr. Harrison has agreed to execute and deliver a release of claims against PTC and its affiliates as of the termination date. 

ITEM 6. EXHIBITS

3.1(a)	Restated Articles of Organization of Parametric Technology Corporation adopted February 4, 1993 (filed as Exhibit 3.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 1996 (File No. 0-18059) and incorporated herein by reference).
3.1(b)	Articles of Amendment to Restated Articles of Organization adopted February 9, 1996 (filed as Exhibit 4.1(b) to our Registration Statement on Form S-8 (Registration No. 333-01297) and incorporated herein by reference).
3.1(c)	Articles of Amendment to Restated Articles of Organization adopted February 13, 1997 (filed as Exhibit 4.1(b) to our Registration Statement on Form S-8 (Registration No. 333-22169) and incorporated herein by reference).
3.1(d)	Articles of Amendment to Restated Articles of Organization adopted February 10, 2000 (filed as Exhibit 3.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2000 (File No. 0-18059) and incorporated herein by reference).
3.1(e)	Certificate of Vote of Directors establishing Series A Junior Participating Preferred Stock (filed as Exhibit 3.1(e) to our Annual Report on Form 10-K for the fiscal year ended September 30, 2000 (File No. 0-18059) and incorporated herein by reference).
3.1(f)	Articles of Amendment to Restated Articles of Organization adopted February 28, 2006 (filed as Exhibit 3.1(f) to our Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2006 (File No. 0-18059) and incorporated herein by reference).
3.2	By-Laws, as amended and restated, of Parametric Technology Corporation (filed as Exhibit 3.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2009 (File No. 0-18059) and incorporated herein by reference).
10.1*	Agreement dated May 8, 2012 by and between C. Richard Harrison and PTC.
31.1	Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).
31.2	Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).
32**	Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350.
101***	The following materials from Parametric Technology Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2012 and September 30, 2011; (ii) Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2012 and April 2, 2011; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2012 and April 2, 2011; (iv) Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2012 and April 2, 2011; and (v) Notes to Condensed Consolidated Financial Statements.

_________________

* Indicates a management contract or compensatory plan or arrangement in which an executive officer or director of Parametric Technology Corporation participates.

** Indicates that the exhibit is being furnished with this report and is not filed as a part of it.

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*** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PARAMETRIC TECHNOLOGY CORPORATION
By:	/s/ JEFFREY D. GLIDDEN
	Jeffrey D. Glidden Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: May 9, 2012

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EX-10.1

PARAMETRIC TECHNOLOGY CORPORATION

140 Kendrick Street

Needham, MA 02494

C. Richard Harrison

[address]

[address]

Dear Dick:

This Agreement sets forth our mutual understanding with respect to the early termination of the Executive Agreement dated May 7, 2010 (the “2010 Agreement”) by and between Parametric Technology Corporation (together with all of its predecessors, successors and affiliated entities referred to herein collectively as the “Company”) and you (together withyour executors, heirs, administrators, agents, attorneys, administrators, beneficiaries and assigns referred to herein collectively as the “Executive”) and the termination of your employment thereunder. In addition, this Agreement confirms your irrevocable resignation as a member of the Company’s Board of Directors as of June 30, 2012.

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Executive agree that, unless the 2010 Agreement is terminated prior to the close of business on June 30, 2012 (the “Termination Date”):

1.Termination. The Executive’s employment with the Company shall terminate at the Termination Date.

2.Salary. As of the Termination Date, the Executive will be paid in full for any and all wages accrued through that date, including any accrued but unused vacation time. Provided that the Executive first signs and returns to the Company, on and as of the Termination Date, the general release attached as Appendix A hereto (the “Release”) and does not, and may no longer, revoke the Release, the Company shall also provide the Executive a lump sum payment equal to the amount of salary due to the Executive under the 2010 Agreement for the period from the Termination Date through November 30, 2012 (the “Severance Pay”), subject to any legally required and voluntarily authorized deductions.

3.Equity Awards. With respect to all equity awards issued by the Company and held by the Executive, at the Termination Date:

(a) all restrictions applicable to restricted stock issued by the Company and held by the Executive, other than any restriction the lapse of which is based upon achievement of performance goals, shall immediately lapse;

(b) all vesting conditions applicable to all stock options, stock appreciation rights, restricted stock units, and other equity awards granted to the Executive by the Company, other than any vesting conditions based upon achievement of performance goals, shall thereupon be deemed satisfied and, except to the extent of any such performance-based conditions, such awards shall become exercisable or distributable in full; and

(c) each outstanding stock option granted to the Executive by the Company shall remain exercisable following the Termination Date until the close of business on the last day of the original maximum term of such option.

4.Insurance and Other Benefits. Unless otherwise provided for by the following sentence or by applicable law, all benefits provided by the Company to the Executive under any and all plans will cease as of the Termination Date. If permitted by the terms of the respective plan or by law, the Executive shall have the option to continue discontinued benefits, at his expense, under COBRA or the applicable policy conversion options, subject at all times, to the terms and conditions of the applicable insurance plans and applicable law.

5.Return of Property. On or before the Termination Date, the Executive shall return all property belonging to the Company, including but not limited to computers, equipment, keys, access key tag/card, identification cards, credit cards, software, computer access codes and disks. Notwithstanding the foregoing, the Company agrees the Executive may retain his Company-issued iPad and mobile phone, provided that the Executive irretrievably deletes all Company information on such devices. The Executive shall also deliver all papers, files, reference guides and other documents belonging to the Company and the Executive shall not retain any copies, duplicates, reproductions or excerpts of any of the foregoing, whether in hardcopy or electronic format. To the extent the Executive has stored any Company property on a personal home computer or other personal electronic storage device, the Executive shall irretrievably delete all such Company property from any personal home computer and all other personal electronic storage devices on or before the Termination Date.

6.Non-Competition and Related Matters.

(a) The Executive acknowledges that his obligations under his Non-Disclosure, Non-Competition and Invention Agreement with the Company dated as of August 29, 2006 (the “Non-Disclosure and Non-Competition Agreement”) (including without limitation the obligation not to, directly or indirectly, disclose to any third party any proprietary or confidential information or use or assist any third party to use any such information) will continue to be binding after the Termination Date in accordance with its terms. The Executive and the Company agree that the two-year period referred to in the first sentence of Section 7 of the Non-Disclosure and Non-Competition Agreement is hereby extended until the close of business on November 30, 2014.

(b) The Executive agrees not to intentionally disparage or make negative statements about the Company or any of the Company’s officers, directors, employees, or programs. The Company agrees that it will not, and it will instruct its officersand directorsnot to, intentionally disparage or make negative statements about the Executive. Nothing in this Agreement shall bar the Company or the Executive from providing truthful testimony in any legal proceeding or making any truthful statement (i) in responding to any request from any governmental agency; (ii) as required by law, by court order or other legal process; or (iii) for any legitimate business reason.

7.Breach. The Executive agrees that the sole remedy available to the Executive shall be enforcement of the terms of this Agreement and/or a claim for damages resulting from the breach of this Agreement, and that in no circumstances shall the Executive be entitled to receive or collect any damages for claims that the Executive has released under this Agreement.     

8.Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company and the Executive and their respective successors and assigns.

9.Severability. Should any part, term or provision of this Agreement be determined by any tribunal, administrative agency or court of competent jurisdiction to be illegal, invalid or unenforceable, the validity of the remaining parts, terms or provisions shall not be affected thereby, and the illegal, invalid or unenforceable part, term or provision shall be deemed not to be part of this Agreement. If any provision of this Agreement is held to be excessively broad, it shall be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law.

10.Effect on Earlier Agreements.

(a) This Agreement, including Appendix A, and the Non-Competition Agreement constitute the entire understanding and agreement between the parties hereto with regard to the compensation payable to the Executive in the circumstances described herein, superseding all prior understandings and agreements, whether oral or written relating to the subject matter of this Agreement. The 2010 Agreement shall remain in full force and effect (subject to termination in accordance with its terms) until the Termination Date, whereupon this Agreement shall supersede the 2010 Agreement, which shall thereupon be terminated and of no further force and effect. The agreements evidencing any equity awards granted by the Company to the Executive are hereby and will be deemed amended to give effect to the provisions of Section 3 of this Agreement.

(b) The Executive acknowledges and agrees that the changes in his employment and compensation arrangements provided for in this Agreement shall not constitute “Good Reason” or other grounds for termination of the 2010 Agreement by the Executive.

11.Representations. The Executive acknowledges that the benefits afforded him under the terms of this Agreement exceed any legal obligation of the Company and provide valid consideration for the Release contained in this Agreement, and the parties attest that no other representations were made regarding this Agreement other than those contained herein.

12.Counterparts; Amendments. This Agreement may be executed in two or more counterparts, each of which when executed and delivered constitutes an original of this Agreement, but all the Counterparts shall together constitute one and the same agreement. This Agreement may be changed or amended only by agreement in writing signed by both parties.

13.Choice of Law. This Agreement shall be construed in accordance with the laws of the Commonwealth of Massachusetts, except any such laws that would render such choice of law ineffective. The parties hereby expressly consent to the personal jurisdiction of the state and federal courts located in Massachusetts for any lawsuit filed arising from or relating to this Agreement and expressly waive any and all objections to venue, including, without limitation, the inconvenience of such forum.

IN WITNESS WHEREOF, the Company and the Executive have duly executed this Agreement as of the dates written below.

PARAMETRIC TECHNOLOGY CORPORATION    C. RICHARD HARRISON

By:    /s/ James E. Heppelmann            /s/ C. Richard Harrison        

Name:        James E. Heppelmann        

Title:         President and CEO        

Date: May 8, 2012        Date:    May 4, 2012            

Appendix A

Form of Release

SEPARATION AGREEMENT AND GENERAL RELEASE

1.    Separation from Employment. My active employment with Parametric Technology Corporation (“PTC”) will cease as of June 30, 2012.

2.Consideration. I understand that, in consideration for my execution of this Separation Agreement and General Release (the “Agreement”) and my fulfillment of the promises made in this Agreement, PTC agrees to provide me with the compensation and other benefits (“Separation Benefits”) described in the Agreement between PTC and me executed by me on May 4, 2012 (the “Separation Agreement”).

3.    Conditions Applying to Payment of Benefits. I understand and agree that the Separation Benefits that I will receive pursuant to Section 2 above are subject to my compliance with the terms and conditions set forth in this Agreement and the additional separation documents I have received.

4.    General Release of Claims. I hereby voluntarily release PTC, and any and all of its subsidiaries, branches, divisions, affiliates, insurers, successors, assigns or related entities, as well as its or their present and former officers, directors, trustees, employees and agents, individually and in their official capacities, and their employee benefit plans and programs and their administrators and fiduciaries (collectively, the “Released Parties”), to the maximum extent permitted by law, of and from any and all claims, known and unknown, at law, in equity or mixed, that I, my heirs, executors, administrators, successors, and assigns, now have, ever had or may ever have arising out of any matter or thing that occurred prior to the time I execute this Agreement, including, but not limited to, claims concerning any of the following (all statutes as amended):

* Title VII of the Civil Rights Act of 1964;

* Sections 1981 through 1988 of Title 42 of the United States Code;

* The Employee Retirement Income Security Act of 1974;

* The Age Discrimination in Employment Act of 1967;

* The Immigration Reform Control Act;

* The Americans with Disabilities Act of 1990;

* The Workers Adjustment and Retraining Notification Act;

* The Sarbanes-Oxley Act;

* The Fair Credit Reporting Act;

* The Family and Medical Leave Act of 1993;

* The Equal Pay Act;

* The Genetic Information Nondiscrimination Act of 2008;

* The Massachusetts Fair Employment Practices Act;

* The Massachusetts State Wage and Hour Laws;

* The Massachusetts Occupational Safety and Health Laws;

* The Massachusetts Equal Rights Act;

* The Massachusetts Civil Rights Act;

* The Massachusetts Privacy Law;

* The Massachusetts Anti-Sexual Harassment Statute;

* The Massachusetts Consumer Protection Act;

* The Massachusetts Small Necessities Leave Act;

* Any other federal, state or local civil or human rights law or any other local, state or federal law, regulation or ordinance in any way relating to the rights of employees;

* Any claim that PTC or any of the Released Parties or any of their respective current or former managers, officers, owners, executives, employees, directors or supervisors, breached or interfered with any express or implied contract, duty, promise, term or condition towards me;

* Any claim for promissory estoppel, violation of public policy, infliction of emotional distress, loss of consortium, invasion of privacy, false light, fraud, intentional tort, breach of express or implied contract, defamation or any other claim arising under common law; and/or

* Any allegation for costs, fees, or other expenses including attorneys' fees incurred in these matters;

provided that the foregoing release shall not apply to any claims for indemnification to which I may be entitled under the charter or bylaws of PTC or any of its subsidiaries, or under any separate written agreement between me and any such entity, with respect to any threatened, pending or completed action, suit or proceeding to which I am a party or have been threatened to be made a party by reason of the fact that I am or was, or had agreed to become, a director or officer of PTC or such subsidiary, or am or was serving, or had agreed to serve, at the request of PTC, as a director or officer of, or in a similar capacity with, another organization or in any capacity with respect to any employee benefit plan of PTC.

Excepted from this promise not to sue are claims under The Age Discrimination in Employment Act of 1967, as amended, to the extent such an exception is required by law. Further excepted are any claims that cannot be waived by law, including the right to participate or cooperate in any investigation or proceeding conducted by the Massachusetts Commission Against Discrimination, the Equal Employment Opportunity Commission, or any other state or federal administrative agency, including with respect to a challenge to the General Release in this Agreement. However, in the event that a charge or complaint is filed against the Released Parties, or any of them, with any administrative agency or in the event of an authorized investigation, charge or lawsuit filed against the Released Parties, or any of them, by any administrative agency, I expressly waive and shall not accept any award or damages therefrom.

I expressly agree and understand that the release of Claims contained in this Agreement is a GENERAL RELEASE, and that any reference to specific Claims arising out of or in connection with my employment and/or its termination is not intended to limit the Release of Claims. I expressly agree and understand this GENERAL RELEASE means that I am releasing, remising and discharging the Released Parties from and with respect to all Claims (other than as expressly stated above), whether known or unknown, asserted or unasserted, and whether or not the Claims arise out of or in connection with my employment and/or its termination, or otherwise; provided, that this GENERAL RELEASE does not apply to any Claims concerning a breach of this Agreement or any Claims arising after I sign this Agreement.

5.    Affirmations. I affirm that I have not filed or caused to be filed, and that I am not presently a party to, any claim, complaint, charge or action against PTC or any of its affiliates in any forum or form. I further affirm that I have been paid and/or have received all compensation, wages, bonuses, commissions, and/or benefits to which I may be due and that no other compensation, wages, bonuses, commissions and/or benefits are due to me, except as provided in this Agreement and General Release. I affirm that all of the decisions by PTC regarding my pay and benefits were valid, legitimate and lawful, and were not discriminatory based on age, disability, race, color, sex, religion, national origin, ancestry, military status, genetic information or any other classification protected by law. I further affirm that I have no known workplace injuries and that I have been granted any leave to which I was entitled under the Family and Medical Leave Act or related state or local leave or disability accommodation laws. I also affirm that I have not been retaliated against by PTC or its officers.

6.    No Admission of Wrongdoing. I agree that neither this Agreement nor the furnishing of the consideration for the General Release set forth in this Agreement shall be deemed or construed at any time for any purpose as an admission by the Released Parties of any liability or unlawful conduct of any kind.

7.    Post Employment Obligations.     I acknowledge that my obligations to PTC stated in the Non-Disclosure, Non-Competition and Invention Agreement dated as of August 29, 2006 (the “Non-Disclosure and Non-Competition Agreement”) shall continue in effect following my separation from PTC as provided therein and as modified by Section 6(a) of the Separation Agreement.I hereby reaffirm my commitment to abide by the terms of my Non-Disclosure and Non-Competition Agreement which is incorporated herein by reference.

8.Governing Law and Interpretation. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts without regard to its conflict of laws provisions. Should any part, term or provision of this Agreement be determined by any tribunal, administrative agency or court of competent jurisdiction to be illegal, invalid or unenforceable, the validity of the remaining parts, terms or provisions shall not be affected thereby, and the illegal, invalid or unenforceable part, term or provision shall be deemed not to be part of this Agreement. If any provision of this Agreement is held to be excessively broad, it shall be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law.

9.Cooperation. I agree to cooperate fully with PTC in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of PTC or its affiliates relating to events or occurrences that transpired during my employment with PTC. My full cooperation in connection with such claims or actions shall include, but not be limited to, meeting with counsel to prepare for trial, cooperating in discovery and providing affidavits and testimony as may be required or deemed necessary by PTC. If it is necessary for me to travel in fulfilling my obligation to cooperate, PTC shall authorize reimbursement for all travel expenses, including lodging, which I incur, subject to my provision of all documentation requested by PTC.

10.Return of Company Property. As a condition of payment of the Separation Benefits hereunder, and except as provided in Section 5 of the Separation Agreement, I shall return to PTC all company information and related documents, reports, files (including data stored in computer memory or other storage media), memoranda and records; credit cards; palm pilot, blackberry, personal data assistants, portable computers and related business equipment; card-key passes; door and file keys; computer access codes; software and all other physical or personal property that is in my possession or control. I also agree that I have not retained and will not retain any copies, duplicates, reproductions or excerpts of the above items in any format, whether hardcopy, electronic or otherwise. To the extent I have stored any Company property on a personal home computer or other personal electronic storage device, I certify that I have irretrievably deleted all such Company property from any personal home computer and all other personal electronic storage devices.

11.Entire Agreement. This Agreement, the Separation Agreement, the Non-Disclosure and Non-Competition Agreement, and the Executive Agreement dated May 7, 2010 by and between PTC and me set forth the entire agreement between me and the Released Parties and shall supersede any and all prior agreements or understandings, whether written or oral, between the parties, except as otherwise specified in this Agreement. I acknowledge that I have not relied on any representations, promises, or agreements of any kind made to me in connection with my decision to sign this Agreement, except for those set forth in this Agreement.

12.Amendment. This Agreement may not be amended except by a written agreement signed by authorized representatives of both parties.

13.Right to Revoke. I understand that I have the right to revoke this Agreement at any time during the seven (7) day period following the date on which I first sign the Agreement. If I want to revoke, I must make a revocation in writing which states: “I hereby revoke my acceptance of the Separation Agreement and General Release.” This written revocation must be delivered by hand or sent by certified mail with a postmark dated before the end of the seven-day revocation period to: General Counsel, Parametric Technology Corporation, 140 Kendrick Street, Needham, MA 02494.

14.Effective Date. This Agreement shall not become effective or enforceable until the expiration of the 7-day revocation period described in Section 13 above.

I UNDERSTAND THAT MY RIGHT TO RECEIVE THE SEPARATION BENEFITS SET FORTH IN SECTION 2 ABOVE IS SUBJECT TO MY COMPLIANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT AND THAT I WOULD NOT RECEIVE SUCH SEPARATION BENEFITS BUT FOR MY EXECUTION OF THIS SEPARATION AGREEMENT AND GENERAL RELEASE.

I ALSO UNDERSTAND THAT BY SIGNING THIS SEPARATION AGREEMENT AND GENERAL RELEASE, I WILL BE WAIVING MY RIGHTS UNDER FEDERAL, STATE AND LOCAL LAW TO BRING ANY CLAIMS THAT I HAVE HAD OR MAY CURRENTLY HAVE AGAINST THE RELEASED PARTIES.

I ALSO UNDERSTAND THAT, BY RECEIVING AND READING THIS SEPARATION AGREEMENT AND GENERAL RELEASE, I AM HEREBY ADVISED IN WRITING THAT I HAVE TWENTY-ONE (21) CALENDAR DAYS TO CONSIDER THE MEANING AND EFFECT OF THIS SEPARATION AGREEMENT AND GENERAL RELEASE. IF I SIGN THIS AGREEMENT IN LESS THAN THAT TIME, I HAVE DONE SO VOLUNTARILY IN ORDER TO OBTAIN SOONER THE BENEFITS OF THIS AGREEMENT.

I AM ALSO ADVISED IN WRITING TO CONSULT WITH, AND HAVE BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH, AN ATTORNEY OF MY CHOICE PRIOR TO SIGNING THIS SEPARATION AGREEMENT AND GENERAL RELEASE.

IN WITNESS WHEREOF, I have knowingly and voluntarily executed this Separation Agreement and General Release as of the date set forth below.

Signed:

Name:

(Print Name)

Date:

Acknowledged and Accepted by:

PARAMETRIC TECHNOLOGY CORPORATION

By:

Name:

Title:

Date:

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, James E. Heppelmann, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Parametric Technology Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 9, 2012	/S/ JAMES E. HEPPELMANN
		James E. Heppelmann
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Jeffrey D. Glidden, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Parametric Technology Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 9, 2012	/S/ JEFFREY D. GLIDDEN
		Jeffrey D. Glidden
		Executive Vice President and Chief Financial Officer

EX-32

EXHIBIT 32

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Parametric Technology Corporation (the “Company”) certifies that, to his knowledge, the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 9, 2012	/S/ JAMES E. HEPPELMANN
		James E. Heppelmann President and Chief Executive Officer
Date:	May 9, 2012	/S/ JEFFREY D. GLIDDEN
		Jeffrey D. Glidden
		Executive Vice President and Chief Financial Officer

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Acquisition (Pro Forma Financial Information) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Apr. 02, 2011	Mar. 31, 2012
Business Combinations [Abstract]
Revenue	$ 297.2	$ 581.7
Net income	$ 22.9	$ 35.4
Earnings per share-Basic	$ 0.19	$ 0.30
Earnings per share-Diluted	$ 0.19	$ 0.29

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Long Term Debt (Details) (USD $)	3 Months Ended	6 Months Ended		3 Months Ended		1 Months Ended	2 Months Ended
	Mar. 31, 2012 banks	Mar. 31, 2012 banks	Apr. 02, 2011	Mar. 31, 2012 Maximum [Member]	Mar. 31, 2012 Minimum [Member]	May 31, 2011 MKS Inc [Member]	Nov. 22, 2011 MKS Inc [Member]	Mar. 31, 2012 MKS Inc [Member]	Sep. 30, 2011 MKS Inc [Member]
Debt Instrument [Line Items]
Revolving credit facility syndicate, number of participating banks	10	10
Credit facility amount	$ 300,000,000	$ 300,000,000
Revolving credit facility additional borrowing limit	150,000,000
Voting interest in foreign subsidiaries pledged against credit facility	65.00%
Revolving credit facility, additional borrowings	40,000,000					250,000,000
Borrowings outstanding								160,000,000	200,000,000
Repayment of line of credit	40,000,000	80,000,000	0
Credit facility interest rate				1.625%	1.25%		1.6875%
Credit facility, interest rate at period end	1.875%	1.875%
Basis spread over base rate				0.625%	0.25%
Basis spread on federal funds effective rate	0.005%
Basis spread on adjusted LIBOR	1.00%
Credit facility commitment fees percentage				0.30%	0.20%
Investment limit in foreign subsidiaries	50,000,000	50,000,000
Cash investment limit for acquisition of business	$ 75,000,000	$ 75,000,000
Maximum leverage ratio allowed under debt covenant	2.5	2.5
Minimum fixed charge coverage ratio allowed under debt covenant	1.25	1.25
Leverage ratio, actual	0.65	0.65
Fixed charge coverage ratio, actual	2.82	2.82

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Segment Information (Revenue By Product Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011
Revenue	$ 301,125	$ 269,189	$ 619,401	$ 535,741
Desktop [Member]
Revenue	147,751	154,839	301,614	300,800
Enterprise [Member]
Revenue	$ 153,374	$ 114,350	$ 317,787	$ 234,941

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Commitments and Contingencies Contingencies (Details) (USD $) In Millions, unless otherwise specified			12 Months Ended
	Mar. 31, 2012 Pending or Threatened Litigation [Member]	Sep. 30, 2011 Pending or Threatened Litigation [Member]	Sep. 30, 2011 CHINA
Loss Contingencies [Line Items]
Revenue from China as a percent of total revenue, minimum			6.00%
Revenue from China as a percent of total revenue, maximum			7.00%
Loss contingency accrual	$ 0.4	$ 0.4

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Derivative Financial Instruments (Notional Amounts Of Outstanding Forward Contracts) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Notional amounts of outstanding forward contracts	$ 160,811	$ 212,932
Canadian/U.S. Dollar [Member]
Notional amounts of outstanding forward contracts	64,274	92,748
Euro/U.S. Dollar [Member]
Notional amounts of outstanding forward contracts	38,888	65,773
Canadian Dollar/Euro [Member]
Notional amounts of outstanding forward contracts	4,781	0
Chinese Renminbi/U.S. Dollar [Member]
Notional amounts of outstanding forward contracts	5,480	19,973
Japanese Yen/U.S. Dollar [Member]
Notional amounts of outstanding forward contracts	22,150	13,676
Swiss Franc/U.S. Dollar [Member]
Notional amounts of outstanding forward contracts	9,167	9,419
British Pound/Euro [Member]
Notional amounts of outstanding forward contracts	5,706	3,993
All Other [Member]
Notional amounts of outstanding forward contracts	$ 10,365	$ 7,350

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Stock-Based Compensation (Schedule Of Restricted Stock And Restricted Stock Unit Activity) (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Sep. 30, 2011
Restricted Stock [Member]
Beginning Balance of outstanding restricted stock, Shares		90,000
Granted, Shares	57,000
Vested, Shares	(63,000)
Ending Balance of outstanding restricted stock, Shares	84,000	90,000
Weighted Average Grant Date Fair Value, Beginning Balance of outstanding restricted stock		$ 21.30
Weighted Average Grant Date Fair Value, Granted	$ 25.27
Weighted Average Grant Date Fair Value, Vested	$ 21.13
Weighted Average Grant Date Fair Value, Ending Balance of outstanding restricted stock	$ 24.11	$ 21.30
Restricted Stock Units [Member]
Beginning Balance of outstanding restricted stock, Shares		5,490,000
Granted, Shares	1,926,000
Vested, Shares	(2,538,000)
Forfeited or not earned, Shares	(293,000)
Ending Balance of outstanding restricted stock, Shares	4,585,000	5,490,000
Weighted Average Grant Date Fair Value, Beginning Balance of outstanding restricted stock		$ 17.75
Weighted Average Grant Date Fair Value, Granted	$ 19.82
Weighted Average Grant Date Fair Value, Vested	$ 15.59
Weighted Average Grant Date Fair Value, Forfeited or not earned	$ 18.56
Weighted Average Grant Date Fair Value, Ending Balance of outstanding restricted stock	$ 19.77	$ 17.75

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill And Acquired Intangible Assets

Goodwill and acquired intangible assets consisted of the following:

	March 31, 2012						September 30, 2011
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Goodwill (not amortized)					$	616,599					$	613,394
Intangible assets with finite lives (amortized) (1):
Purchased software	$	178,658	$	120,584	58,074		$	178,388	$	112,555	$	65,833
Capitalized software	22,877		22,877		—		22,877		22,877		—
Customer lists and relationships	229,175		84,735		144,440		227,961		75,050		152,911
Trademarks and trade names	11,079		8,587		2,492		11,035		7,967		3,068
Other	3,500		3,378		122		3,506		3,301		205
	$	445,289	$	240,161	$	205,128	$	443,767	$	221,750	$	222,017
Total goodwill and acquired intangible assets					$	821,727					$	835,411

(1) The weighted average useful lives of purchased software, customer lists and relationships, trademarks and trade names and other intangible assets with a remaining net book value are 8 years, 10 years, 6 years, and 4 years, respectively.

Schedule Of Goodwill

Changes in goodwill for the six months ended March 31, 2012, presented by reportable segment, are as follows:

	Software Products Segment		Services Segment			Total
	(in thousands)
Balance, September 30, 2011	$	588,443	$	24,951		$	613,394
Foreign currency translation adjustments	3,211		(6		)	3,205
Balance, March 31, 2012	$	591,654	$	24,945		$	616,599

Amortization Of Intangible Assets

The aggregate amortization expense for intangible assets with finite lives recorded for the second quarter and first six months of 2012 and 2011 was classified in our consolidated statements of operations as follows:

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Amortization of acquired intangible assets	$	5,132	$	4,266	$	10,341	$	8,120
Cost of license revenue	3,931		3,339		8,034		6,702
Total amortization expense	$	9,063	$	7,605	$	18,375	$	14,822

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Segment Information (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012 segments	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011
Segment Reporting Information [Line Items]
Charges to operations	$ 20,802	$ 0	$ 20,802	$ 0
Revenue, Net	301,125	269,189	619,401	535,741
Number of operating and reportable segments	2
Software Products Segment [Member]
Segment Reporting Information [Line Items]
Charges to operations	9,200
Revenue, Net	221,653	203,156	458,616	405,066
Services Segment [Member]
Segment Reporting Information [Line Items]
Charges to operations	2,700
Revenue, Net	79,472	66,033	160,785	130,675
Selling and Marketing Expense [Member]
Segment Reporting Information [Line Items]
Charges to operations	7,300
General and Administrative Expense [Member]
Segment Reporting Information [Line Items]
Charges to operations	1,600
Germany [Member]
Segment Reporting Information [Line Items]
Revenue, Net	41,200	38,500	97,400	71,800
United States [Member]
Segment Reporting Information [Line Items]
Revenue, Net	$ 102,300	$ 89,900	$ 213,000	$ 185,300

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Goodwill and Intangible Assets (Schedule Of Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Sep. 30, 2011
Goodwill [Roll Forward]
Balance, September 30, 2011		$ 613,394
Foreign currency translation adjustments	3,205
Balance, December 31, 2011	616,599	613,394
Software Products Segment [Member]
Goodwill [Roll Forward]
Balance, September 30, 2011		588,443
Foreign currency translation adjustments	3,211
Balance, December 31, 2011	591,654	588,443
Services Segment [Member]
Goodwill [Roll Forward]
Balance, September 30, 2011		24,951
Foreign currency translation adjustments	(6)
Balance, December 31, 2011	$ 24,945	$ 24,951

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Earnings Per Share (EPS) And Common Stock (Earnings Per Share Basic And Diluted) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011
Earnings Per Share and Common Stock
Net income	$ 3,569	$ 19,017	$ 25,692	$ 32,277
Weighted average shares outstanding-Basic	119,003	118,194	118,356	117,501
Dilutive effect of employee stock options, restricted shares and restricted stock units	2,398	3,308	2,629	3,816
Weighted average shares outstanding-Diluted	121,401	121,502	120,985	121,317
Earnings per share-Basic	$ 0.03	$ 0.16	$ 0.22	$ 0.27
Earnings per share-Diluted	$ 0.03	$ 0.16	$ 0.21	$ 0.27

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Income Taxes (Schedule Of Unrecognized Tax Benefit) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Sep. 30, 2011
Income Tax Expense (Benefit) [Abstract]
Balance as of October 1, 2011		$ 16.2
Tax positions related to current year	1.2
Tax positions related to prior years	0
Balance as of December 31, 2011	$ 17.4	$ 16.2

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Segment Information (Revenue And Operating Income) (Details) (USD $)	3 Months Ended				6 Months Ended
	Mar. 31, 2012		Apr. 02, 2011		Mar. 31, 2012		Apr. 02, 2011
Revenue	$ 301,125,000		$ 269,189,000		$ 619,401,000		$ 535,741,000
Operating income	6,903,000		24,226,000		39,408,000		41,336,000
Sales and marketing expenses	(98,248,000)		(81,163,000)		(196,025,000)		(165,684,000)
General and administrative expenses	(31,151,000)		(24,712,000)		(60,723,000)		(48,196,000)
Loss on services customer contract			5,000,000
Software Products Segment [Member]
Revenue	221,653,000		203,156,000		458,616,000		405,066,000
Operating income	128,343,000		125,205,000		280,302,000		251,724,000
Services Segment [Member]
Revenue	79,472,000		66,033,000		160,785,000		130,675,000
Operating income	$ 7,959,000	[1]	$ 4,896,000	[1]	$ 15,854,000	[1]	$ 3,492,000	[1]

[1] In the first quarter of 2011, we made a strategic decision to enter into a contract with a customer in the automotive industry, for which we expected our costs to exceed our revenue by approximately $5 million. Services segment operating income in the first three months of 2011 included immediate recognition of the approximately $5 million estimated loss on this contract.W

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Restructuring

6 Months Ended

Mar. 31, 2012

Restructuring [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

Restructuring Charges

In the second quarter of 2012, as part of our strategy to reduce costs and to realign our business, we implemented a restructuring of our business and recorded restructuring charges of $20.8 million. The restructuring charges included $20.0 million for severance and related costs associated with 168 employees notified of termination during the second quarter of 2012 and $0.8 million of charges related to excess facilities. The employee terminations triggered a curtailment of a non-U.S. pension plan and interim remeasurement of the pension plan's assets and liabilities. The remeasurement resulted in a decrease in the plan's net unrecognized losses of $1.2 million, which was recorded in accumulated other comprehensive income net of tax.

The following table summarizes restructuring accrual activity for the period ended March 31, 2012:

	Employee Severance and Related Benefits			Facility Closures and Related Costs			Total
	(in thousands)
Restructuring charge activity for the three months ended March 31, 2012
Charges to operations	$	19,953		$	849		$	20,802
Cash disbursements	(8,829		)	(68		)	(8,897		)
Foreign exchange impact	150			5			155
Accrual, March 31, 2012	$	11,274		$	786		$	12,060

The accrual for facility closures and related costs is included in accrued expenses in the consolidated balance sheet, and the accrual for employee severance and related benefits is included in accrued compensation and benefits in the consolidated balance sheet. The facility accrual remaining at March 31, 2012 is related to excess space in a facility representing a gross lease commitment of approximately $1.6 million, net of assumed replacement tenant income of approximately $0.8 million.

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Goodwill and Intangible Assets (Amortization Of Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of acquired intangible assets	$ 5,132	$ 4,266	$ 10,341	$ 8,120
Cost of license revenue	3,931	3,339	8,034	6,702
Total amortization expense	$ 9,063	$ 7,605	$ 18,375	$ 14,822

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2012

Income Tax Expense (Benefit) [Abstract]

Schedule Of Unrecognized Tax Benefit

Changes in our unrecognized tax benefits in the six months ended March 31, 2012 were as follows:

	(in millions)
Balance as of October 1, 2011	$	16.2
Tax positions related to current year	1.2
Tax positions related to prior years	—
Balance as of March 31, 2012	$	17.4

Summary Of Income Tax Examinations Years

As of March 31, 2012, we remained subject to examination in the following major tax jurisdictions for the tax years indicated:

Major Tax Jurisdiction	Open Years
United States	2003, 2008 through 2011
Germany	2007 through 2011
France	2007 through 2011
Japan	2005 through 2011
Ireland	2006 through 2011

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

Revenue And Operating Income

The revenue and operating income attributable to our operating segments are summarized as follows:

	Three months ended						Six months ended
	March 31, 2012			April 2, 2011			March 31, 2012			April 2, 2011
	(in thousands)
Revenue:
Total Software Products segment revenue	$	221,653		$	203,156		$	458,616		$	405,066
Total Services segment revenue	79,472			66,033			160,785			130,675
Total revenue	$	301,125		$	269,189		$	619,401		$	535,741
Operating income: (1)
Software Products segment	$	128,343		$	125,205		$	280,302		$	251,724
Services segment (2)	7,959			4,896			15,854			3,492
Sales and marketing expenses	(98,248		)	(81,163		)	(196,025		)	(165,684		)
General and administrative expenses	(31,151		)	(24,712		)	(60,723		)	(48,196		)
Total operating income	$	6,903		$	24,226		$	39,408		$	41,336

(1) We recorded restructuring charges of $20.8 million in the second quarter of 2012. Software Products included $9.2 million; Services included $2.7 million; sales and marketing expenses included $7.3 million; and general and administrative expenses included $1.6 million of these restructuring charges.

(2) In the first quarter of 2011, we made a strategic decision to enter into a contract with a customer in the automotive industry, for which we expected our costs to exceed our revenue by approximately $5 million. Services segment operating income in the first three months of 2011 included immediate recognition of the approximately $5 million estimated loss on this contract.

We report revenue by product group, Desktop and Enterprise. Desktop revenue includes o

Revenue By Product Segment

We report revenue by product group, Desktop and Enterprise. Desktop revenue includes our CAD Solutions, primarily: Creo Parametric, Creo Elements/Direct, Mathcad and Arbortext authoring products. Enterprise revenue includes our PLM solutions, primarily: Windchill, Arbortext enterprise products, Creo View and Integrity.

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Revenue:
Desktop	$	147,751	$	154,839	$	301,614	$	300,800
Enterprise	153,374		114,350		317,787		234,941
Total revenue	$	301,125	$	269,189	$	619,401	$	535,741

Data for the geographic regions in which we operate is presented below.

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Revenue:
Americas (1)	$	109,483	$	94,399	$	226,973	$	194,492
Europe (2)	115,780		105,955		248,955		213,831
Pacific Rim	37,373		36,208		74,623		69,820
Japan	38,489		32,627		68,850		57,598
Total revenue	$	301,125	$	269,189	$	619,401	$	535,741

_________________

(1) Includes revenue in the United States totaling

Revenue By Geographic Segment

Data for the geographic regions in which we operate is presented below.

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Revenue:
Americas (1)	$	109,483	$	94,399	$	226,973	$	194,492
Europe (2)	115,780		105,955		248,955		213,831
Pacific Rim	37,373		36,208		74,623		69,820
Japan	38,489		32,627		68,850		57,598
Total revenue	$	301,125	$	269,189	$	619,401	$	535,741

_________________

(1) Includes revenue in the United States totaling $102.3 million and $89.9 million for the three months ended March 31, 2012 and April 2, 2011, respectively, and $213.0 million and $185.3 million for the six months ended March 31, 2012 and April 2, 2011, respectively.

(2) Includes revenue in Germany totaling $41.2 million and $38.5 million for the three months ended March 31, 2012 and April 2, 2011, respectively

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Fair Value Measurements (Financial Assets And Liabilities Measured At Fair Value On Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012		Sep. 30, 2011
Financial assets:
Financial assets, fair value	$ 67,847		$ 41,528
Level 1 [Member]
Financial assets:
Cash equivalents-Level 1	67,650	[1]	36,018	[1]
Level 2 [Member]
Financial assets:
Forward contracts-Level 2	$ (197)		$ (5,510)

[1] Money market funds and time deposits.

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Deferred Revenue And Financing Receivables (Details) (USD $)	3 Months Ended	6 Months Ended		12 Months Ended
	Mar. 31, 2012 months	Mar. 31, 2012	Apr. 02, 2011	Sep. 30, 2011
Financing Receivable, Recorded Investment, Past Due	$ 1,000,000	$ 1,000,000		$ 0
Financing receivable	35,041,000	35,041,000		57,730,000
Maximum payment terms on software purchases for credit-worthy customers (in months)	24
Amounts due from customers for contracts with extended payment terms	35,000,000	35,000,000		57,700,000
Reserve for credit losses		0		0
Uncollectible financing receivables written off	0			0
Sale of finance receivable		1,200,000	0
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	300,000	300,000
Accounts Receivable [Member]
Current receivables from contracts	26,400,000	26,400,000		41,700,000
Other Assets [Member]
Billed but uncollected maintenance receivable	105,400,000	105,400,000		93,000,000
Long-term receivables from contracts	8,600,000	8,600,000		16,000,000
Corporate Credit Quality Indicator [Member]
Financing receivable	22,143,000	22,143,000		36,639,000
Internally Assigned Grade, Tier 2 [Member]
Financing receivable	12,089,000	12,089,000		19,293,000
Internally Assigned Grade, Tier 3 [Member]
Financing receivable	$ 809,000	$ 809,000		$ 1,798,000

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Restructuring (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012
Restructuring Cost and Reserve [Line Items]
Charges to operations	$ 20,802
Cash disbursements	(8,897)
Foreign exchange impact	155
Accrual, March 31, 2012	12,060
Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Charges to operations	849
Cash disbursements	(68)
Foreign exchange impact	5
Accrual, March 31, 2012	786
Employee Severance And Related Benefits [Member]
Restructuring Cost and Reserve [Line Items]
Charges to operations	19,953
Cash disbursements	(8,829)
Foreign exchange impact	150
Accrual, March 31, 2012	$ 11,274

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Deferred Revenue And Financing Receivables

6 Months Ended

Mar. 31, 2012

Deferred Revenue And Financing Receivables [Abstract]

Deferred Revenue And Financing Receivables

Deferred Revenue and Financing Receivables

Deferred Revenue

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, if not yet paid, the related customer receivable is included in other current assets. Billed but uncollected maintenance-related amounts included in other current assets at March 31, 2012 and September 30, 2011 were $105.4 million and $93.0 million, respectively.

Financing Receivables

We periodically provide extended payment terms for software purchases to credit-worthy customers with payment terms up to 24 months. The determination of whether to offer such payment terms is based on the size, nature and credit-worthiness of the customer, and the history of collecting amounts due, without concession, from the customer and customers generally. This determination is based on an internal credit assessment. In making this assessment, we use the Standard & Poor's (S&P) credit rating as our primary credit quality indicator, if available. If a customer, including both commercial and U.S. Federal government, has a S&P bond rating of BBB- or above, we designate the customer as a Tier 1. If a customer does not have a S&P bond rating, or has a S&P bond rating below BBB-, we base our assessment on an internal credit assessment which considers selected balance sheet, operating and liquidity measures, historical payment experience, and current business conditions within the industry or region. We designate these customers as Tier 2 or Tier 3, with Tier 3 being lower credit quality than Tier 2.

As of March 31, 2012 and September 30, 2011, amounts due from customers for contracts with original payment terms greater than twelve months (financing receivables) totaled $35.0 million and $57.7 million, respectively. Accounts receivable in the accompanying consolidated balance sheets included current receivables from such contracts totaling $26.4 million and $41.7 million at March 31, 2012 and September 30, 2011, respectively, and other assets in the accompanying consolidated balance sheets included long-term receivables from such contracts totaling $8.6 million and $16.0 million at March 31, 2012 and September 30, 2011, respectively. As of March 31, 2012, $1.0 million of these receivables were past due (of which $0.3 million was greater than 90 days past due). None of these receivables were past due as of September 30, 2011. Our credit risk assessment for financing receivables was as follows:

	March 31, 2012		September 30, 2011
	(in thousands)
S&P bond rating BBB-1 and above-Tier 1	$	22,143	$	36,639
Internal Credit Assessment-Tier 2	12,089		19,293
Internal Credit Assessment-Tier 3	809		1,798
Total financing receivables	$	35,041	$	57,730

We evaluate the need for an allowance for doubtful accounts for estimated losses resulting from the inability of these customers to make required payments. As of March 31, 2012 and September 30, 2011, we concluded that all financing receivables were collectible and no reserve for credit losses was recorded. We did not provide a reserve for credit losses or write off any uncollectible financing receivables in the six months ended March 31, 2012 and fiscal year 2011. We write off uncollectible trade and financing receivables when we have exhausted all collection avenues.

We periodically transfer future payments under certain of these contracts to third-party financial institutions on a non-recourse basis. We record such transfers as sales of the related accounts receivable when we surrender control of such receivables. We sold $1.2 million of financing receivables to third-party financial institutions in the six months ended March 31, 2012. We sold no financing receivables to third-party financial institutions in the six months ended April 2, 2011.

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Restructuring Restructuring (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2012 employees	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011
Restructuring [Abstract]
Charges to operations	$ 20,802,000	$ 0	$ 20,802,000	$ 0
Severance costs	20,000,000
Number of employees terminated	168
Other restructuring costs	800,000
Gross lease commitments related to restructured facilities	1,600,000
Defined benefit plan, curtailments	1,200,000
Sublease commitments related to restructured facilities	$ 800,000

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Goodwill and Intangible Assets (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2012 Software Products Segment [Member]	Sep. 30, 2011 Software Products Segment [Member]	Mar. 31, 2012 Services Segment [Member]	Sep. 30, 2011 Services Segment [Member]
Goodwill and acquired intangible assets		$ 792.9	$ 806.0	$ 28.8	$ 29.4
Estimated aggregate future amortization expense for intangible assets, Current Year	18.1
Estimated aggregate future amortization expense for intangible assets, Year One	36.4
Estimated aggregate future amortization expense for intangible assets, Year Two	34.3
Estimated aggregate future amortization expense for intangible assets, Year Three	30.8
Estimated aggregate future amortization expense for intangible assets, Year Four	23.2
Estimated aggregate future amortization expense for intangible assets, Year Five	19.6
Estimated aggregate future amortization expense for intangible assets, After Year Five	$ 42.6

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Income Taxes (Summary Of Income Tax Examinations Years) (Details)	3 Months Ended
	Mar. 31, 2012
United States [Member]
Income tax years subject to examination	2003, 2008 through 2011
Germany [Member]
Income tax years subject to examination	2007 through 2011
France [Member]
Income tax years subject to examination	2007 through 2011
Japan [Member]
Income tax years subject to examination	2005 through 2011
Ireland [Member]
Income tax years subject to examination	2006 through 2011

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
ASSETS
Cash and cash equivalents	$ 224,107	$ 167,878
Accounts receivable, net of allowance for doubtful accounts of $3,313 and $3,902 at March 31, 2012 and September 30, 2011, respectively	204,437	230,220
Prepaid expenses	32,398	30,582
Other current assets	116,190	109,433
Deferred tax assets	54,128	54,151
Total current assets	631,260	592,264
Property and equipment, net	64,021	62,569
Goodwill	616,599	613,394
Acquired intangible assets, net	205,128	222,017
Deferred tax assets	112,092	98,064
Other assets	29,516	41,374
Total assets	1,658,616	1,629,682
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	17,961	16,974
Accrued expenses and other current liabilities	54,187	60,167
Accrued compensation and benefits	88,799	95,980
Accrued income taxes	17,094	11,895
Deferred tax liabilities	1,178	4,440
Deferred revenue	327,313	279,935
Total current liabilities	506,532	469,391
Revolving credit facility	160,000	200,000
Deferred tax liabilities	23,830	25,919
Deferred revenue	14,041	14,389
Other liabilities	96,220	97,293
Total liabilities	800,623	806,992
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued	0	0
Common stock, $0.01 par value; 500,000 shares authorized; 119,487 and 116,937 shares issued and outstanding at March 31, 2012 and September 30, 2011, respectively	1,195	1,169
Additional paid-in capital	1,810,964	1,805,021
Accumulated deficit	(893,043)	(918,736)
Accumulated other comprehensive loss	(61,123)	(64,764)
Total stockholders' equity	857,993	822,690
Total liabilities and stockholders' equity	$ 1,658,616	$ 1,629,682

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Derivative Financial Instruments (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012 Other Current Assets [Member]	Sep. 30, 2011 Other Current Assets [Member]
Fair value of our forward contracts					$ 0.2	$ 5.5
Net losses on foreign currency exposures	2.4	1.1	4.6	3.3
Net realized and unrealized (gain) loss on forward contracts (excluding the underlying foreign currency exposure being hedged)	$ 1.7	$ (6.5)	$ 2.4	$ (5.2)

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Consolidated Statements Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011
Statement of Income and Comprehensive Income [Abstract]
Net income	$ 3,569	$ 19,017	$ 25,692	$ 32,277
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	7,849	11,264	2,779	8,273
Minimum pension liability adjustment	717	(385)	862	(266)
Other comprehensive loss	8,566	10,879	3,641	8,007
Comprehensive income	$ 12,135	$ 29,896	$ 29,333	$ 40,284

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Stock-Based Compensation (Schedule Of Classification Of Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011
Total stock-based compensation expense	$ 12,692	$ 9,871	$ 26,074	$ 20,898
Cost Of License Revenue [Member]
Total stock-based compensation expense	7	3	12	6
Cost Of Service Revenue [Member]
Total stock-based compensation expense	2,171	1,583	4,684	3,720
Sales And Marketing [Member]
Total stock-based compensation expense	3,306	2,350	7,034	4,779
Research And Development [Member]
Total stock-based compensation expense	2,240	1,749	4,789	4,142
General And Administrative [Member]
Total stock-based compensation expense	$ 4,968	$ 4,186	$ 9,555	$ 8,251

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2012

Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]

Schedule Of Restricted Stock And Restricted Stock Unit Activity

Restricted stock activity for the six months ended March 31, 2012	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock September 30, 2011	90		$	21.30
Granted	57		$	25.27
Vested	(63	)	$	21.13
Balance of outstanding restricted stock March 31, 2012	84		$	24.11
Restricted stock unit activity for the six months ended March 31, 2012	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock units September 30, 2011	5,490		$	17.75
Granted	1,926		$	19.82
Vested	(2,538	)	$	15.59
Forfeited or not earned	(293	)	$	18.56
Balance of outstanding restricted stock units March 31, 2012	4,585		$	19.77

Schedule Of Restricted Stock Unit Grants For The Period

Restricted stock and restricted stock unit grants in the first six months of 2012

	Restricted Stock		Restricted Stock Units
Grant Period	Performance-based	Time-based (1)	Performance-based (2)	Time-based (3)
	(in thousands)
	(Number of Shares)		(Number of Units)
First six months of 2012	—	57	780	1,146

_________________

(1) Of the time-based shares of restricted stock, 9,402 were issued to a non-employee director in connection with a consulting contract we entered into with him. The restrictions on these shares lapse in two substantially equal annual installments from the date of grant. The remaining 47,177 were issued to non-employee directors. The restrictions on these shares lapse one year from the date of grant.

(2) Of these performance-based RSUs, 11,899 will be eligible to vest on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which the performance criteria have been achieved and 425,698 will be eligible to vest in three substantially equal installments on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which performance criteria have been achieved, November 15, 2013 and November 15, 2014; and 309,976 are eligible to vest in two substantially equal installments on the later of each of November 15, 2013 and November 15, 2014 and the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved (RSUs not earned for 2013 may be earned for 2014 to the extent the cumulative performance criteria are achieved). The remaining 32,508 have been forfeited.

(3) The time-based RSUs were issued to employees, including some of our executive officers. These time-based RSUs will vest in three substantially equal annual installments in November 2012, 2013 and 2014.

Compensation expense

Schedule Of Classification Of Compensation Expense

Compensation expense recorded for our stock-based awards was classified in our consolidated statements of operations as follows:

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)				(in thousands)
Cost of license revenue	$	7	$	3	$	12	$	6
Cost of service revenue	2,171		1,583		4,684		3,720
Sales and marketing	3,306		2,350		7,034		4,779
Research and development	2,240		1,749		4,789		4,142
General and administrative	4,968		4,186		9,555		8,251
Total stock-based compensation expense	$	12,692	$	9,871	$	26,074	$	20,898

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Earnings Per Share (EPS) And Common Stock (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012	Sep. 30, 2011
Earnings Per Share and Common Stock
Stock option excluded from computation of EPS	0.2	0.1	0.1
Common stock, shares authorized	500		500	500
Stock authorized to repurchase	$ 100
Stock Repurchased During Period, Shares			0.6
Value of stock repurchased			$ 15.0

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Acquisition (Tables)

3 Months Ended

Mar. 31, 2012

Business Combinations [Abstract]

Pro Forma Financial Information

The unaudited financial information in the table below summarizes the combined results of operations of PTC and MKS, on a pro forma basis, as though the companies had been combined as of the beginning of PTC's fiscal year 2010. The pro forma information presented includes the effects of business combination accounting resulting from the acquisition, including amortization charges from acquired intangibles assets, stock-based compensation charges for unvested stock options, interest expense on borrowings in connection with the acquisition, and the related tax effects as though the acquisition had been consummated as of the beginning of 2010. These pro forma results exclude the impact of the purchase accounting adjustment to deferred revenue and the transaction costs included in the historical results and the related tax effects. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the results of operations that actually would have been achieved if the acquisition had taken place at the beginning of 2010. The pro forma financial information is based on PTC's results of operations for the three and six months ended April 2, 2011, combined with MKS's results of operations for the three and six months ended April 30, 2011 (due to differences in reporting periods).

	Three months ended		Six months ended
	April 2, 2011		April 2, 2011
	(in millions, except per share amounts)
Revenue	$	297.2	$	581.7
Net income	$	22.9	$	35.4
Earnings per share—Basic	$	0.19	$	0.30
Earnings per share—Diluted	$	0.19	$	0.29

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Basis Of Presentation

3 Months Ended

Mar. 31, 2012

Description Of Business And Basis Of Presentation [Abstract]

Basis Of Presentation

Basis of Presentation

General

The accompanying unaudited condensed 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 in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011. 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 statement 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 mean our fiscal year, which ends on September 30. The September 30, 2011 consolidated balance sheet included herein is derived from our audited consolidated financial statements.

The results of operations for the three and six months ended March 31, 2012 are not necessarily indicative of the results expected for the remainder of the fiscal year.

Recent Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2011-8, Intangibles-Goodwill and Other (Topic 350):Testing Goodwill for Impairment. Under the update, an entity has the option, but is not required, to first assess qualitative factors (“Qualitative Assessment” or QA”) to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after assessing facts and circumstances in the aggregate, an entity determines it does not fail the QA, then performing the traditional two-step impairment test is unnecessary. Otherwise, an entity is required to proceed to the first step of the goodwill impairment test as outlined in ASC Topic 350. The objective of the Update is to simplify the requirement to test goodwill for impairment and was issued in response to preparer concerns about the cost and complexity of performing the first step of the two-step goodwill impairment test. The Update can be applied for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 3,313	$ 3,902
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	119,487,000	116,937,000
Common stock, shares outstanding	119,487,000	116,937,000

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Income Taxes

3 Months Ended

Mar. 31, 2012

Income Tax Expense (Benefit) [Abstract]

Income Taxes

Income Taxes

In the second quarter and first six months of 2012, our effective tax rate was a provision of 9% on pre-tax income of $3.9 million, and 24% on pre-tax income of $33.8 million, respectively, compared to a provision of 19% on pre-tax income of $23.4 million and 16% on pre-tax income of $38.6 million in the second quarter and first six months of 2011, respectively. In the first six months of 2012, our effective tax rate was lower than the 35% statutory federal income tax rate due primarily to our corporate structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate. Our provision includes the expiration on December 31, 2011 of the research and development (R&D) credit in the U.S. and a discrete non-cash charge of $1.5 million related to the impact of a Japanese legislative change, enacted in the first quarter, on our Japan entity's deferred tax assets. Additionally, we expect to make an R&D cost sharing prepayment by a foreign subsidiary to the U.S. at the same level as the prior year. If such prepayment is not ultimately paid within the fiscal year, the effective tax rate would be favorably impacted by up to $7.5 million. In the first six months of 2011, our effective tax rate was lower than the 35% statutory federal income tax rate due primarily to our corporate tax structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate and a $1.8 million tax benefit related to R&D credits in the U.S. triggered by a retroactive extension of the R&D tax credit enacted in the first quarter of 2011.

As of March 31, 2012 and September 30, 2011, we had unrecognized tax benefits of $17.4 million ($17.0 million net of state tax benefits) and $16.2 million ($15.9 million net of state tax benefits), respectively. If all of our unrecognized tax benefits as of March 31, 2012 were to become recognizable in the future, we would record a $16.3 million benefit to the income tax provision.

Our policy is to record estimated interest and penalties related to the underpayment of income taxes as a component of our income tax provision. In the first six months of 2012 and 2011 we included $0.1 million and $0.2 million of interest expense, respectively, and no tax penalty expense in our income tax provision. As of March 31, 2012 and September 30, 2011 we had accrued $2.1 million and $2.0 million, respectively, of estimated interest expense and we had no accrued tax penalties. Changes in our unrecognized tax benefits in the six months ended March 31, 2012 were as follows:

	(in millions)
Balance as of October 1, 2011	$	16.2
Tax positions related to current year	1.2
Tax positions related to prior years	—
Balance as of March 31, 2012	$	17.4

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits and accrued interest related to the resolution of multi-jurisdictional tax positions could be reduced by up to $7 million as audits close and statutes expire.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service in the United States. As of March 31, 2012, we remained subject to examination in the following major tax jurisdictions for the tax years indicated:

Major Tax Jurisdiction	Open Years
United States	2003, 2008 through 2011
Germany	2007 through 2011
France	2007 through 2011
Japan	2005 through 2011
Ireland	2006 through 2011

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Document And Entity Information	6 Months Ended
	Mar. 31, 2012	May 04, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2012
Entity Registrant Name	PARAMETRIC TECHNOLOGY CORP
Entity Central Index Key	0000857005
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		119,575,472

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Long Term Debt

3 Months Ended

Mar. 31, 2012

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Long Term Debt

Revolving Credit Agreement

We have a multi-currency bank revolving credit facility (the credit facility) with a syndicate of ten banks for which JPMorgan Chase Bank, N.A. acts as Administrative Agent. The credit facility matures on September 30, 2016, when all amounts will be due and payable in full. The credit facility does not require amortization of principal and may be paid before maturity in whole or in part at PTC’s option without penalty or premium. We expect to use the credit facility for general corporate purposes, including acquisitions of other businesses, and may also use it for working capital.

The credit facility consists of a $300 million revolving credit facility, which may be increased by up to an additional $150 million if the existing or additional lenders are willing to make such increased commitments (such increase may also be used, in whole or in part, for term loans). PTC is the sole borrower under the credit facility. The obligations under the credit facility are guaranteed by PTC’s material domestic subsidiaries and 65% of the voting equity interests of PTC’s material first-tier foreign subsidiaries are pledged as collateral for the obligations.

In May 2011, in connection with our acquisition of MKS, we borrowed $250 million under the credit facility at a variable interest rate which resets every 30 to 180 days, depending on the rate and period selected. From October 1, 2011 through November 21, 2011, the annual rate was 1.6875%. From November 22, 2011 through May 22, 2012 the annual rate is 1.875%, which will reset on May 22, 2012 to then current rates as defined below. As of March 31, 2012 and September 30, 2011 we had $160 million and $200 million, respectively, outstanding under the credit facility. During the three months ended December 31, 2011, we borrowed and then repaid $40 million under the credit facility for short term cash requirements. During the three months ended March 31, 2012, we repaid$40 million under the credit facility.

Interest rates on borrowings outstanding under the credit facility range from 1.25% to 1.625% above an adjusted LIBO rate for Eurodollar-based borrowings or would range from 0.25% to 0.625% above the defined base rate (the greater of the Prime Rate, the Federal Funds Effective Rate plus 0.005%, or an adjusted LIBO rate plus 1%) for base rate borrowings, in each case based upon PTC’s leverage ratio. Additionally, PTC may borrow certain foreign currencies at rates set in the same range above the respective London interbank offered interest rates for those currencies, based on PTC’s leverage ratio. A quarterly commitment fee on the undrawn portion of the credit facility is required, ranging from 0.20% to 0.30% per annum, based upon PTC’s leverage ratio.

The credit facility limits PTC’s and its subsidiaries’ ability to, among other things: incur additional indebtedness; incur liens or guarantee obligations; pay dividends (other than to PTC) and make other distributions; make investments and enter into joint ventures; dispose of assets; and engage in transactions with affiliates, except on an arms-length basis. Under the credit facility, PTC and its material domestic subsidiaries may not invest cash or property in, or loan to, PTC’s foreign subsidiaries in aggregate amounts exceeding $50 million for any purpose and an additional $75 million for acquisitions of businesses. In addition, under the credit facility, PTC and its subsidiaries must maintain the following financial ratios:

• a leverage ratio, defined as consolidated funded indebtedness to consolidated trailing four quarters EBITDA, of no greater than 2.50 to 1.00 at any time; and

• a fixed charge coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges, of no less than 1.25 to 1.00 at any time.

As of March 31, 2012, our leverage ratio was 0.65 to 1.00 and our fixed charge coverage ratio was 2.82 to 1.00. We were in compliance with all financial and operating covenants of the credit facility as of March 31, 2012.

Any failure to comply with the financial or operating covenants of the credit facility would prevent PTC from being able to borrow additional funds, and would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility and to terminate the credit facility. A change in control of PTC, as defined in the agreement, also constitutes an event of default, permitting the lenders to accelerate the indebtedness and terminate the credit facility.

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Consolidated Statements Of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011
Revenue:
License	$ 74,779	$ 74,215	$ 163,867	$ 149,688
Service	226,346	194,974	455,534	386,053
Total revenue	301,125	269,189	619,401	535,741
Costs and expenses:
Cost of license revenue	7,824	6,558	15,483	12,512
Cost of service revenue	85,392	75,213	175,952	155,320
Total cost of revenue	93,216	81,771	191,435	167,832
Gross margin	207,909	187,418	427,966	367,909
Sales and marketing	90,962	81,163	188,740	165,684
Research and development	54,576	53,051	109,569	104,573
General and administrative	29,534	24,712	59,106	48,196
Amortization of acquired intangible assets	5,132	4,266	10,341	8,120
Restructuring charges	20,802	0	20,802	0
Total costs and expenses	201,006	163,192	388,558	326,573
Operating income	6,903	24,226	39,408	41,336
Interest and other (expense) income, net	(2,967)	(822)	(5,610)	(2,708)
Income before income taxes	3,936	23,404	33,798	38,628
Provision for income taxes	367	4,387	8,106	6,351
Net income	$ 3,569	$ 19,017	$ 25,692	$ 32,277
Earnings per share-Basic	$ 0.03	$ 0.16	$ 0.22	$ 0.27
Earnings per share-Diluted	$ 0.03	$ 0.16	$ 0.21	$ 0.27
Weighted average shares outstanding-Basic	119,003	118,194	118,356	117,501
Weighted average shares outstanding-Diluted	121,401	121,502	120,985	121,317

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Acquisition

3 Months Ended

Mar. 31, 2012

Business Combinations [Abstract]

Acquisition

Acquisitions

In 2011, we completed the acquisitions of MKS and 4CS described more fully in Note E to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011. The results of operations of these acquired businesses have been included in our consolidated financial statements beginning on their respective acquisition dates. These acquisitions added $22.3 million and $40.7 million to our revenue for the three and six months ended March 31, 2012, respectively.

Acquisition-related costs were $0.4 million and $2.5 million for the three and six months ended March 31, 2012, respectively, and include charges related to acquisition integration activities (i.e., severance and professional fees). These costs have been classified in general and administrative expenses in the accompanying consolidated statements of operations.

4CS

On September 2, 2011, we acquired all of the outstanding common stock of 4C Solutions, Inc. (4CS) for $14.9 million in cash (net of $0.1 million of cash acquired). 4CS's results of operations have been included in our consolidated financial statements beginning September 3, 2011. Our results of operations prior to this acquisition, if presented on a pro forma basis, would not differ materially from our reported results.

As of September 30, 2011, we had recorded a liability for an additional $1.2 million of contingent purchase price included in accrued expenses and other current liabilities on the consolidated balance sheet. In the six months ended March 31, 2012, this amount was fully earned and paid. Any further adjustments that could lower the purchase price in accordance with contingent provisions in the acquisition agreement are not anticipated to be material.

MKS

On May 31, 2011, we acquired all of the outstanding common stock of MKS Inc. (MKS) for $265.2 million, net of $33.2 million of cash acquired. MKS's results of operations have been included in our consolidated financial statements beginning May 31, 2011.

The unaudited financial information in the table below summarizes the combined results of operations of PTC and MKS, on a pro forma basis, as though the companies had been combined as of the beginning of PTC's fiscal year 2010. The pro forma information presented includes the effects of business combination accounting resulting from the acquisition, including amortization charges from acquired intangibles assets, stock-based compensation charges for unvested stock options, interest expense on borrowings in connection with the acquisition, and the related tax effects as though the acquisition had been consummated as of the beginning of 2010. These pro forma results exclude the impact of the purchase accounting adjustment to deferred revenue and the transaction costs included in the historical results and the related tax effects. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the results of operations that actually would have been achieved if the acquisition had taken place at the beginning of 2010. The pro forma financial information is based on PTC's results of operations for the three and six months ended April 2, 2011, combined with MKS's results of operations for the three and six months ended April 30, 2011 (due to differences in reporting periods).

	Three months ended		Six months ended
	April 2, 2011		April 2, 2011
	(in millions, except per share amounts)
Revenue	$	297.2	$	581.7
Net income	$	22.9	$	35.4
Earnings per share—Basic	$	0.19	$	0.30
Earnings per share—Diluted	$	0.19	$	0.29

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Earnings Per Share (EPS) And Common Stock

3 Months Ended

Mar. 31, 2012

Earnings Per Share and Common Stock

Earnings Per Share (EPS) And Common Stock

Earnings per Share (EPS) and Common Stock

EPS

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

	Three months ended				Six months ended
Calculation of Basic and Diluted EPS	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands, except per share data)
Net income	$	3,569	$	19,017	$	25,692	$	32,277
Weighted average shares outstanding—Basic	119,003		118,194		118,356		117,501
Dilutive effect of employee stock options, restricted shares and restricted stock units	2,398		3,308		2,629		3,816
Weighted average shares outstanding—Diluted	121,401		121,502		120,985		121,317
Earnings per share—Basic	$	0.03	$	0.16	$	0.22	$	0.27
Earnings per share—Diluted	$	0.03	$	0.16	$	0.21	$	0.27

Stock options to purchase 0.2 million and 0.1 million shares for the second quarter and first six months of 2012, respectively, and 0.1 million shares for both the second quarter and first six months of 2011 were outstanding but were not included in the calculation of diluted EPS because the exercise prices per share 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.

Common Stock Repurchases

Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $100 million worth of shares with cash from operations in the period October 1, 2011 through September 30, 2012. In the second quarter and first six months of 2012, we repurchased 0.6 million shares at a cost of $15.0 million. We did not repurchase any shares in the first six months of 2011. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued.

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Earnings Per Share (EPS) and Common Stock (Tables)

3 Months Ended

Mar. 31, 2012

Earnings Per Share and Common Stock

Earnings Per Share Basic and Diluted

	Three months ended				Six months ended
Calculation of Basic and Diluted EPS	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands, except per share data)
Net income	$	3,569	$	19,017	$	25,692	$	32,277
Weighted average shares outstanding—Basic	119,003		118,194		118,356		117,501
Dilutive effect of employee stock options, restricted shares and restricted stock units	2,398		3,308		2,629		3,816
Weighted average shares outstanding—Diluted	121,401		121,502		120,985		121,317
Earnings per share—Basic	$	0.03	$	0.16	$	0.22	$	0.27
Earnings per share—Diluted	$	0.03	$	0.16	$	0.21	$	0.27

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Commitments And Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

Commitments and Contingencies

Legal and Regulatory Matters

China Investigation

We have undertaken an investigation of payments by certain business partners and expenses by certain employees in China that raise questions of compliance with laws, including the Foreign Corrupt Practices Act, and/or compliance with our business policies. The termination of certain employees and business partners in China in connection with this matter may have an adverse impact on our level of sales in China until such replacements for those employees and business partners are in place and productive. Revenue from China has historically represented 6% to 7% of our total revenue. We have voluntarily disclosed the results of our investigation and associated remedial actions to the United States Department of Justice and the Securities and Exchange Commission and are cooperating to provide additional information as requested. We are unable to predict the outcome of this matter, which could include fines or other sanctions.

Other Legal Proceedings

We are subject to various legal proceedings and claims that arise in the ordinary course of business. We do not believe that resolving the legal proceedings and claims that we are currently subject to will have a material adverse impact on our financial condition, results of operations or cash flows. However, the results of legal proceedings cannot be predicted with certainty. Should any of these legal proceedings and claims be resolved against us, the operating results for a particular reporting period could be adversely affected.

Accruals

With respect to legal proceedings and claims, we record an accrual for a contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For legal proceedings and claims for which the likelihood that a liability has been incurred is more than remote but less than probable, we estimate the range of possible outcomes. As of both March 31, 2012 and September 30, 2011, we had a legal proceedings and claims accrual of $0.4 million.

Guarantees and Indemnification Obligations

We enter into standard indemnification agreements in the ordinary course of our business. Pursuant to such agreements with our business partners or customers, we indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our current products, as well as claims relating to property damage or personal injury resulting from the performance of services by us or our subcontractors. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and we accordingly believe the estimated fair value of these agreements is immaterial.

We warrant that our software products will perform in all material respects in accordance with our standard published specifications in effect at the time of delivery of the licensed products for a specified period of time. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these agreements is immaterial.

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Our foreign currency risk management strategy is principally designed to mitigate the future potential financial impact of changes in the value of transactions and balances denominated in foreign currency resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts with maturities of up to three months, to manage our exposure to fluctuations in foreign exchange rates that arise primarily from our foreign currency-denominated receivables and payables.

Generally, we do not designate foreign currency forward contracts as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, any gain or loss on the underlying foreign-denominated balance would be offset by the loss or gain on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in other income (expense), net.

As of March 31, 2012 and September 30, 2011, we had outstanding forward contracts with notional amounts equivalent to the following:

Currency Hedged	March 31, 2012		September 30, 2011
	(in thousands)
Canadian Dollar / U.S. Dollar	$	64,274	$	92,748
Euro / U.S. Dollar	38,888		65,773
Canadian Dollar / Euro	4,781		—
Chinese Renminbi / U.S. Dollar	5,480		19,973
Japanese Yen / U.S. Dollar	22,150		13,676
Swiss Franc / U.S. Dollar	9,167		9,419
British Pound / Euro	5,706		3,993
All other	10,365		7,350
Total	$	160,811	$	212,932

The accompanying consolidated balance sheets as of March 31, 2012 and September 30, 2011 include a net asset of $0.2 million and $5.5 million, respectively, in other current assets related to the fair value of our forward contracts.

Net gains and losses on foreign currency exposures, including realized and unrealized gains and losses on forward contracts, included in foreign currency net losses, were net losses of $2.4 million and $4.6 million for the three and six months ended March 31, 2012, respectively, and $1.1 million and $3.3 million for the three and six months ended April 2, 2011, respectively. Excluding the underlying foreign currency exposure being hedged, net realized and unrealized gains and losses on forward contracts included in foreign currency net losses, were net losses of $1.7 million and $2.4 million for the three and six months ended March 31, 2012, respectively, and net losses of $6.5 million and $5.2 million for the three and six months ended April 2, 2011, respectively.

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Goodwill And Intangible Assets

3 Months Ended

Mar. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill And Intangible Assets

Goodwill and Intangible Assets

We have two reportable segments: (1) software products and (2) services. As of March 31, 2012 and September 30, 2011, goodwill and acquired intangible assets in the aggregate attributable to our software products reportable segment was $792.9 million and $806.0 million, respectively, and attributable to our services reportable segment was $28.8 million and $29.4 million, respectively. Goodwill is tested for impairment at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting segment below its carrying value. We completed our most recent annual impairment review as of July 2, 2011 and concluded that no impairment charge was required as of that date. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

Goodwill and acquired intangible assets consisted of the following:

	March 31, 2012						September 30, 2011
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Goodwill (not amortized)					$	616,599					$	613,394
Intangible assets with finite lives (amortized) (1):
Purchased software	$	178,658	$	120,584	58,074		$	178,388	$	112,555	$	65,833
Capitalized software	22,877		22,877		—		22,877		22,877		—
Customer lists and relationships	229,175		84,735		144,440		227,961		75,050		152,911
Trademarks and trade names	11,079		8,587		2,492		11,035		7,967		3,068
Other	3,500		3,378		122		3,506		3,301		205
	$	445,289	$	240,161	$	205,128	$	443,767	$	221,750	$	222,017
Total goodwill and acquired intangible assets					$	821,727					$	835,411

(1) The weighted average useful lives of purchased software, customer lists and relationships, trademarks and trade names and other intangible assets with a remaining net book value are 8 years, 10 years, 6 years, and 4 years, respectively.

Goodwill

The changes in the carrying amounts of goodwill for the six months ended March 31, 2012 are due to foreign currency translation adjustments related to those asset balances that are recorded in non-U.S. currencies.

Changes in goodwill for the six months ended March 31, 2012, presented by reportable segment, are as follows:

	Software Products Segment		Services Segment			Total
	(in thousands)
Balance, September 30, 2011	$	588,443	$	24,951		$	613,394
Foreign currency translation adjustments	3,211		(6		)	3,205
Balance, March 31, 2012	$	591,654	$	24,945		$	616,599

Amortization of intangible assets

The aggregate amortization expense for intangible assets with finite lives recorded for the second quarter and first six months of 2012 and 2011 was classified in our consolidated statements of operations as follows:

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Amortization of acquired intangible assets	$	5,132	$	4,266	$	10,341	$	8,120
Cost of license revenue	3,931		3,339		8,034		6,702
Total amortization expense	$	9,063	$	7,605	$	18,375	$	14,822

The estimated aggregate future amortization expense for intangible assets with finite lives remaining as of March 31, 2012 is $18.1 million for the remainder of 2012, $36.4 million for 2013, $34.3 million for 2014, $30.8 million for 2015, $23.2 million for 2016, $19.6 million for 2017 and $42.6 million thereafter.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Generally accepted accounting principles prescribe a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs that may be used to measure fair value:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

• Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our significant financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 and September 30, 2011 were as follows:

	March 31, 2012		September 30, 2011
	(in thousands)
Financial assets:
Cash equivalents—Level 1 (1)	$	67,650	$	36,018
Forward contracts—Level 2	197		5,510
	$	67,847	$	41,528

_________________

(1) Money market funds and time deposits.

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Segment Information

3 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

Segment Information

Segment Information

We operate within a single industry segment—computer software and related services. Operating segments as defined under GAAP are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. We have two operating and reportable segments: (1) Software Products, which includes license and related maintenance revenue (including updates and technical support) for all our products except training-related products; and (2) Services, which includes consulting, implementation, training, computer-based training products, including maintenance on these products, and other support revenue. In our consolidated statements of operations, maintenance revenue is included in service revenue. We do not allocate sales and marketing or administrative expenses to our operating segments as these activities are managed on a consolidated basis.

The revenue and operating income attributable to our operating segments are summarized as follows:

	Three months ended						Six months ended
	March 31, 2012			April 2, 2011			March 31, 2012			April 2, 2011
	(in thousands)
Revenue:
Total Software Products segment revenue	$	221,653		$	203,156		$	458,616		$	405,066
Total Services segment revenue	79,472			66,033			160,785			130,675
Total revenue	$	301,125		$	269,189		$	619,401		$	535,741
Operating income: (1)
Software Products segment	$	128,343		$	125,205		$	280,302		$	251,724
Services segment (2)	7,959			4,896			15,854			3,492
Sales and marketing expenses	(98,248		)	(81,163		)	(196,025		)	(165,684		)
General and administrative expenses	(31,151		)	(24,712		)	(60,723		)	(48,196		)
Total operating income	$	6,903		$	24,226		$	39,408		$	41,336

(1) We recorded restructuring charges of $20.8 million in the second quarter of 2012. Software Products included $9.2 million; Services included $2.7 million; sales and marketing expenses included $7.3 million; and general and administrative expenses included $1.6 million of these restructuring charges.

(2) In the first quarter of 2011, we made a strategic decision to enter into a contract with a customer in the automotive industry, for which we expected our costs to exceed our revenue by approximately $5 million. Services segment operating income in the first three months of 2011 included immediate recognition of the approximately $5 million estimated loss on this contract.

We report revenue by product group, Desktop and Enterprise. Desktop revenue includes our CAD Solutions, primarily: Creo Parametric, Creo Elements/Direct, Mathcad and Arbortext authoring products. Enterprise revenue includes our PLM solutions, primarily: Windchill, Arbortext enterprise products, Creo View and Integrity.

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Revenue:
Desktop	$	147,751	$	154,839	$	301,614	$	300,800
Enterprise	153,374		114,350		317,787		234,941
Total revenue	$	301,125	$	269,189	$	619,401	$	535,741

Data for the geographic regions in which we operate is presented below.

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Revenue:
Americas (1)	$	109,483	$	94,399	$	226,973	$	194,492
Europe (2)	115,780		105,955		248,955		213,831
Pacific Rim	37,373		36,208		74,623		69,820
Japan	38,489		32,627		68,850		57,598
Total revenue	$	301,125	$	269,189	$	619,401	$	535,741

_________________

(1) Includes revenue in the United States totaling $102.3 million and $89.9 million for the three months ended March 31, 2012 and April 2, 2011, respectively, and $213.0 million and $185.3 million for the six months ended March 31, 2012 and April 2, 2011, respectively.

(2) Includes revenue in Germany totaling $41.2 million and $38.5 million for the three months ended March 31, 2012 and April 2, 2011, respectively, and $97.4 million and $71.8 million for the six months ended March 31, 2012 and April 2, 2011, respectively.

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Stock-Based Compensation (Schedule Of Restricted Stock Unit Grants For The Period) (Details)	3 Months Ended
	Mar. 31, 2012
Restricted Stock [Member]
Granted, shares	57,000
Restricted Stock Units [Member]
Granted, shares	1,926,000
Performance-Based [Member] | Restricted Stock [Member]
Granted, shares	0	[1]
Performance-Based [Member] | Restricted Stock Units [Member]
Granted, shares	780,000	[2]
Performance-Based [Member] | Vest on Later of November 15, 2012 and Date Specified by Compensation Committee [Member] | Restricted Stock Units [Member]
Granted, shares	11,899
Performance-Based [Member] | Later Of November Fifteenth Two Thousand Twelve Or Date Determined By Compensation Committee November Fifteenth Two Thousand Thirteen And November Fifteenth Two Thousand Fourteen Member | Restricted Stock Units [Member]
Granted, shares	425,698
Number of Equal Annual Installments	3
Performance-Based [Member] | Vest in Two Substantially Equal Installments on Each of November 15, 2013 and November 15, 2014 and the Date Determined by the Compensation Committee [Member] | Restricted Stock Units [Member]
Granted, shares	309,976
Number of Equal Annual Installments	2
Time-Based [Member] | Restricted Stock [Member]
Granted, shares	57,000	[1]
Time-Based [Member] | Restricted Stock Units [Member]
Granted, shares	1,146,000	[3]
Number of Equal Annual Installments	3
Director and Consultant [Member] | Restricted Stock [Member]
Granted, shares	9,402
Number of Equal Annual Installments	2
Director [Member] | Restricted Stock [Member]
Lapse of Restrictions, Period	1 year
Granted, shares	47,177
Forfeited [Member] | Performance-Based [Member] | Restricted Stock Units [Member]
Granted, shares	32,508

[1] time-based shares of restricted stock, 9,402 were issued to a non-employee director in connection with a consulting contract we entered into with him. The restrictions on these shares lapse in two substantially equal annual installments from the date of grant. Th

[2] Of these performance-based RSUs, 11,899 will be eligible to vest on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which the performance criteria have been achieved and 425,698 will be eligible to vest in three substantially equal installments on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which performance criteria have been achieved, November 15, 2013 and November 15, 2014; and 309,976 are eligible to vest in two substantially equal installments on the later of each of November 15, 2013 and November 15, 2014 and the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved (RSUs not earned for 2013 may be earned for 2014 to the extent the cumulative performance criteria are achieved). The remaining 32,508 have been forfeite

[3] The time-based RSUs were issued to employees, including some of our executive officers. These time-based RSUs will vest in three substantially equal annual installments in November 2012, 2013 and 2014.

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Income Taxes (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2012	Apr. 02, 2011	Mar. 31, 2012	Apr. 02, 2011	Sep. 30, 2011	Jan. 01, 2011
Income Tax Disclosure [Line Items]
Effective income tax rate	9.00%	19.00%	24.00%	16.00%
Income before income taxes	$ 3,900,000	$ 23,400,000	$ 33,800,000	$ 38,600,000
Statutory Federal income tax rate	35.00%	35.00%
Noncash charge related to Japanese legislative change and expiration of U.S. R&D tax credit	1,500,000
Tax benefit related to retroactive extension of R&D tax credit		1,800,000
Unrecognized tax benefit	17,400,000		17,400,000		16,200,000
Unrecognized tax benefits, net of state tax benefits	17,000,000				15,900,000
Income tax provision upon recognition of unrecognized tax benefit	16,300,000		16,300,000
Income tax interest expense		100,000	100,000	200,000
Income tax penalty	0	0
Income tax accrued interest	2,100,000		2,100,000		2,000,000
Income tax accrued penalty	0		0			0
Maximum amount of decrease in unrecognized tax benefits	7,000,000		7,000,000
Payment From Foreign Subsidiary [Member]
Income Tax Disclosure [Line Items]
Potential tax benefit from not receiving research and development cost sharing prepayment from foreign subsidiary	$ 7,500,000		$ 7,500,000

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Restructuring (Tables)

6 Months Ended

Mar. 31, 2012

Restructuring [Abstract]

Schedule of Restructuring Reserve by Type of Cost [Table Text Block]

The following table summarizes restructuring accrual activity for the period ended March 31, 2012:

	Employee Severance and Related Benefits			Facility Closures and Related Costs			Total
	(in thousands)
Restructuring charge activity for the three months ended March 31, 2012
Charges to operations	$	19,953		$	849		$	20,802
Cash disbursements	(8,829		)	(68		)	(8,897		)
Foreign exchange impact	150			5			155
Accrual, March 31, 2012	$	11,274		$	786		$	12,060

The accr

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

Our significant financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 and September 30, 2011 were as follows:

	March 31, 2012		September 30, 2011
	(in thousands)
Financial assets:
Cash equivalents—Level 1 (1)	$	67,650	$	36,018
Forward contracts—Level 2	197		5,510
	$	67,847	$	41,528

_________________

(1) Money market funds and time deposits.

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Segment Information (Revenue By Geographic Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Mar. 31, 2012		Apr. 02, 2011		Mar. 31, 2012		Apr. 02, 2011
Revenue	$ 301,125		$ 269,189		$ 619,401		$ 535,741
Americas [Member]
Revenue	109,483	[1]	94,399	[1]	226,973	[1]	194,492	[1]
Europe [Member]
Revenue	115,780	[2]	105,955	[2]	248,955	[2]	213,831	[2]
Pacific Rim [Member]
Revenue	37,373		36,208		74,623		69,820
Japan [Member]
Revenue	38,489		32,627		68,850		57,598
United States [Member]
Revenue	102,300		89,900		213,000		185,300
Germany [Member]
Revenue	$ 41,200		$ 38,500		$ 97,400		$ 71,800

[1] Includes revenue in the United States totaling $102.3 million and $89.9 million for the three months ended March 31, 2012 and April 2, 2011, respectively

[2] Includes revenue in Germany totaling $41.2 million and $38.5 million for the three months ended March 31, 2012 and April 2, 2011, respectively

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Goodwill and Intangible Assets (Goodwill And Acquired Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012 years		Sep. 30, 2011
Goodwill (not amortized), Net Book Value	$ 616,599		$ 613,394
Intangible assets with finite lives (amortized), Gross Carrying Amount	445,289	[1]	443,767	[1]
Intangible assets with finite lives (amortized), Accumulated Amortization	240,161	[1]	221,750	[1]
Intangible assets with finite lives (amortized), Net Book Value	205,128	[1]	222,017	[1]
Total goodwill and acquired intangible asset	821,727		835,411
Purchased Software [Member]
Intangible assets with finite lives (amortized), Gross Carrying Amount	178,658	[1]	178,388	[1]
Intangible assets with finite lives (amortized), Accumulated Amortization	120,584	[1]	112,555	[1]
Intangible assets with finite lives (amortized), Net Book Value	58,074	[1]	65,833	[1]
Acquired finite-lived intangible asset, weighted average useful life	8
Capitalized Software [Member]
Intangible assets with finite lives (amortized), Gross Carrying Amount	22,877	[1]	22,877	[1]
Intangible assets with finite lives (amortized), Accumulated Amortization	22,877	[1]	22,877	[1]
Intangible assets with finite lives (amortized), Net Book Value	0	[1]	0	[1]
Customer Lists and Relationships [Member]
Intangible assets with finite lives (amortized), Gross Carrying Amount	229,175	[1]	227,961	[1]
Intangible assets with finite lives (amortized), Accumulated Amortization	84,735	[1]	75,050	[1]
Intangible assets with finite lives (amortized), Net Book Value	144,440	[1]	152,911	[1]
Acquired finite-lived intangible asset, weighted average useful life	10
Trademarks And Trade Names [Member]
Intangible assets with finite lives (amortized), Gross Carrying Amount	11,079	[1]	11,035	[1]
Intangible assets with finite lives (amortized), Accumulated Amortization	8,587	[1]	7,967	[1]
Intangible assets with finite lives (amortized), Net Book Value	2,492	[1]	3,068	[1]
Acquired finite-lived intangible asset, weighted average useful life	6
Other [Member]
Intangible assets with finite lives (amortized), Gross Carrying Amount	3,500	[1]	3,506	[1]
Intangible assets with finite lives (amortized), Accumulated Amortization	3,378	[1]	3,301	[1]
Intangible assets with finite lives (amortized), Net Book Value	$ 122	[1]	$ 205	[1]
Acquired finite-lived intangible asset, weighted average useful life	4

[1] The weighted average useful lives of purchased software, customer lists and relationships, trademarks and trade names and other intangible assets with a remaining net book value are 8 years, 10 years, 6 years, and 4 years, respectively.

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Mar. 31, 2012	Apr. 02, 2011
Cash flows from operating activities:
Net income	$ 25,692	$ 32,277
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,285	28,720
Stock-based compensation	26,074	20,898
Excess tax benefits from stock-based awards	(453)	(530)
Other non-cash costs, net	211	154
Changes in operating assets and liabilities:
Accounts receivable	38,698	15,899
Accounts payable and accrued expenses	(6,233)	2,089
Accrued compensation and benefits	(7,635)	(27,406)
Deferred revenue	33,482	27,169
Accrued litigation	0	(52,129)
Accrued income taxes	(11,901)	(9,198)
Other current assets and prepaid expenses	3,573	2,165
Other noncurrent assets and liabilities	(1,759)	(9,870)
Net cash provided (used) by operating activities	133,034	30,238
Cash flows from investing activities:
Additions to property and equipment	(16,624)	(11,560)
Acquisitions of businesses	(1,170)	0
Net cash used by investing activities	(17,794)	(11,560)
Cash flows from financing activities:
Borrowings under revolving credit facility	40,000	0
Repayments of borrowings under revolving credit facility	(80,000)	0
Repurchases of common stock	(14,983)	0
Proceeds from issuance of common stock	14,123	15,974
Excess tax benefits from stock-based awards	453	530
Payments of withholding taxes in connection with vesting of stock-based awards	(19,465)	(21,956)
Net cash used by financing activities	(59,872)	(5,452)
Effect of exchange rate changes on cash and cash equivalents	861	6,025
Net increase (decrease) in cash and cash equivalents	56,229	19,251
Cash and cash equivalents, beginning of period	167,878	240,253
Cash and cash equivalents, end of period	$ 224,107	$ 259,504

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2012

Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]

Stock-Based Compensation

Stock-based Compensation

We measure the cost of employee services received in exchange for restricted stock and restricted stock unit (RSU) awards based on the fair value of our common stock on the date of grant. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, RSUs and stock appreciation rights to employees, directors, officers and consultants. We award restricted stock and RSUs as the principal equity incentive awards, including certain performance-based awards that are earned based on achievement of performance criteria established by the Compensation Committee of our Board of Directors. Each RSU represents the contingent right to receive one share of our common stock.

Our equity incentive plans are described more fully in Note K to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

Restricted stock activity for the six months ended March 31, 2012	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock September 30, 2011	90		$	21.30
Granted	57		$	25.27
Vested	(63	)	$	21.13
Balance of outstanding restricted stock March 31, 2012	84		$	24.11
Restricted stock unit activity for the six months ended March 31, 2012	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock units September 30, 2011	5,490		$	17.75
Granted	1,926		$	19.82
Vested	(2,538	)	$	15.59
Forfeited or not earned	(293	)	$	18.56
Balance of outstanding restricted stock units March 31, 2012	4,585		$	19.77

Restricted stock and restricted stock unit grants in the first six months of 2012

	Restricted Stock		Restricted Stock Units
Grant Period	Performance-based	Time-based (1)	Performance-based (2)	Time-based (3)
	(in thousands)
	(Number of Shares)		(Number of Units)
First six months of 2012	—	57	780	1,146

_________________

(1) Of the time-based shares of restricted stock, 9,402 were issued to a non-employee director in connection with a consulting contract we entered into with him. The restrictions on these shares lapse in two substantially equal annual installments from the date of grant. The remaining 47,177 were issued to non-employee directors. The restrictions on these shares lapse one year from the date of grant.

(2) Of these performance-based RSUs, 11,899 will be eligible to vest on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which the performance criteria have been achieved and 425,698 will be eligible to vest in three substantially equal installments on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which performance criteria have been achieved, November 15, 2013 and November 15, 2014; and 309,976 are eligible to vest in two substantially equal installments on the later of each of November 15, 2013 and November 15, 2014 and the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved (RSUs not earned for 2013 may be earned for 2014 to the extent the cumulative performance criteria are achieved). The remaining 32,508 have been forfeited.

(3) The time-based RSUs were issued to employees, including some of our executive officers. These time-based RSUs will vest in three substantially equal annual installments in November 2012, 2013 and 2014.

Compensation expense recorded for our stock-based awards was classified in our consolidated statements of operations as follows:

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)				(in thousands)
Cost of license revenue	$	7	$	3	$	12	$	6
Cost of service revenue	2,171		1,583		4,684		3,720
Sales and marketing	3,306		2,350		7,034		4,779
Research and development	2,240		1,749		4,789		4,142
General and administrative	4,968		4,186		9,555		8,251
Total stock-based compensation expense	$	12,692	$	9,871	$	26,074	$	20,898

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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2012

Derivative Financial Instruments [Abstract]

Notional Amounts Of Outstanding Forward Contracts

As of March 31, 2012 and September 30, 2011, we had outstanding forward contracts with notional amounts equivalent to the following:

Currency Hedged	March 31, 2012		September 30, 2011
	(in thousands)
Canadian Dollar / U.S. Dollar	$	64,274	$	92,748
Euro / U.S. Dollar	38,888		65,773
Canadian Dollar / Euro	4,781		—
Chinese Renminbi / U.S. Dollar	5,480		19,973
Japanese Yen / U.S. Dollar	22,150		13,676
Swiss Franc / U.S. Dollar	9,167		9,419
British Pound / Euro	5,706		3,993
All other	10,365		7,350
Total	$	160,811	$	212,932

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Acquisition (Narrative) (Details) (USD $)	3 Months Ended	6 Months Ended		0 Months Ended		0 Months Ended
	Mar. 31, 2012	Mar. 31, 2012	Apr. 02, 2011	Sep. 02, 2011 4C Solutions Inc [Member]	Sep. 30, 2011 4C Solutions Inc [Member]	May 31, 2011 MKS Inc [Member]
Revenue of acquirees since acquisition dates, actual	$ 22,300,000	$ 40,700,000
Acquisition-related cost	400,000	2,500,000
Cash paid to acquire business, net of cash acquired		1,170,000	0	14,900,000
Cash acquired from acquisition				100,000		33,200,000
Contingent purchase price included in accrued expenses and other current liabilities					1,200,000
Purchase price of acquired entity						$ 265,200,000

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Deferred Revenue and Financing Receivables Financing receivables credit quality indicators (Tables)

6 Months Ended

Mar. 31, 2012

Deferred Revenue And Financing Receivables [Abstract]

Financing Receivable Credit Quality Indicators [Table Text Block]

Our credit risk assessment for financing receivables was as follows:

	March 31, 2012		September 30, 2011
	(in thousands)
S&P bond rating BBB-1 and above-Tier 1	$	22,143	$	36,639
Internal Credit Assessment-Tier 2	12,089		19,293
Internal Credit Assessment-Tier 3	809		1,798
Total financing receivables	$	35,041	$	57,730