SAN FRANCISCO -- Parametric Tech (PMTC) beat Wall Street earnings expectations Wednesday and announced the acquisition of a German software company.

The engineering software company reported revenue of $266.7 million, up 8.6% from $245.5 million a year earlier. Analysts were expecting $246 million, according to Thomson Financial.

Net income rose to $36.1 million, or 31 cents a share, from $28.1 million , or 24 cents a share, a year earlier.

Excluding items, EPS was 38 cents. Analysts were expecting 26 cents a share.

Operating cash flow rose to $127 million from $65 million for the same quarter of 2006.

The stock was recently up $1.31, or 7.4%, to $19.03 in recent trading.

The company expects first-quarter revenue of $230 million to $240 million and EPS, excluding items, of 20 cents to 25 cents. Analysts were looking for a top line of $236.7 million and 23 cents a share.

For the full fiscal year, the company projects revenue of $1 billion, in line with analysts expectations, and EPS, less items, of $1.05 to $1.15. Analysts were expecting $1.05.

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As PTC continues to offshore sales and marketing, it fired 262 employees during the quarter.

The company announced it will acquire

CoCreate Software

for $250 million, or about three times that company's revenue. The company had approximately $80 million in revenue for the trailing 12 months. About 65% of its revenue comes from maintenance fees.

The acquisition brings Parametric 4,000 new electronics accounts, primarily in Europe and Japan, CEO Richard Harrison said on a conference call.

The Needham, Mass.-based company also expects to restate financials for 2001 to 2006 due to transactions with client

Toshiba

that "appear to have been related to an allegedly fraudulent scheme conducted by a Toshiba employee," Parametric said in a statement. The restatement is expected to reduce fiscal 2006 revenue by $8 million.