Innoveda, (Nasdaq:INOV), provider of electronic product software and services, today reported financial results for the fourth quarter and year ended December 29, 2001, including a return to profitability as previously forecast. For the fourth quarter, revenue of $22.1 million and operating income, before amortization, of $2.6 million exceeded consensus street estimates. Net income for the quarter was $1.0 million, or $0.02 per share. For the same period last year, Innoveda reported revenue of $30.8 million, operating income, before amortization, of $4.9 million and a net loss of $1.2 million, or $0.03 per share.

Revenue for the year ended December 29, 2001 was $91.4 million and the operating loss, before amortization and unusual charges, was $2.1 million. Including amortization, restructuring charges and a non-cash asset impairment charge of $32.9 million, related to the restructuring completed in August 2001, the net loss for the year was $42.6 million, or $1.09 per share. For the comparable period last year, Innoveda reported revenue of $89.9 million, operating income of $10.1 million, before amortization and unusual charges, and a net loss of $11.2 million, or $0.40 per share.

"The economic challenges of 2001 impacted many electronic design automation (EDA) customers, causing them to reevaluate all spending decisions," said President and Chief Executive Officer William J Herman. "By taking action last August to restructure Innoveda and focus on customers' critical-path needs in key market segments, we created a business model for technology leadership and profitability."

During the fourth quarter, Innoveda launched a comprehensive strategic partner program and continued strengthening its worldwide sales organization. The company provided co-verification for Motorola host processors in its hardware/software co-design product. Innoveda also saw renewed interest in the area of PCB design. New releases of Innoveda's PowerPCB(TM) and DxDesigner(TM) solutions were successfully launched both in stand-alone and bundled versions with several large sales during the quarter. The company's electromechanical business continued to show solid growth, with significant orders for its TransDesign(TM) solution in Q4.

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"During 2001 we saw a change in our mix of business," added Herman. "Compared to 2000, our electromechanical business increased from 2 to 5% of total orders; our PCB business increased from 68 to 70% of total orders, driven by our high-speed design technology; and our system-level design business declined from 30 to 25% of total orders."

Business Outlook for Fiscal 2002 "As a result of our restructuring in August 2001, we resized the company to an annual revenue run rate of approximately $80 million," Herman said. "Based on current market conditions and the overall economic outlook, we are planning our business in a fiscally conservative manner for 2002. For the year, we expect revenue to grow from our current run rate by 10 to 12%, slightly exceeding industry growth forecasts. At this level, our goal is to achieve an operating margin of 12% before amortization and unusual charges. We are planning on revenue for the first quarter of the year of approximately $18 million and, by actively managing expenses, expect to generate modest operating income, before amortization and unusual charges."