MatrixOne Reports Strong Second Quarter Revenue Growth and Improved Bottom-Line Results


About MatrixOne

MatrixOne, Inc. (NASDAQ: MONE) is a recognized leader in delivering collaborative Product Lifecycle Management (PLM) solutions. We provide flexible solutions that unleash the creative power of global value chains to inspire innovations and speed them to market. MatrixOne's customers include global leaders in the aerospace and defense, automotive, consumer products, high technology, life sciences, machinery, and the process industries, including Agilent Technologies, General Electric, Honda, Johnson Controls, Philips, Procter & Gamble, Siemens, and Toshiba. MatrixOne ( www.matrixone.com) is headquartered in Westford, Massachusetts with locations throughout North America, Europe, and Asia/Pacific.

MatrixOne and the MatrixOne logo are registered trademarks, and "a leading provider of collaborative product lifecycle management (PLM) solutions for the value chain" is a trademark of MatrixOne, Inc. All other trademarks and service marks are the property of their respective owners.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Forward-looking statements in this release do not constitute guarantees of future performance. Such forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. Such statements may relate, among other things, to our position in the PLM market, our expected financial and operating results, our ability to build and grow the Company, the benefits of our product, and our ability to achieve our goals, plans and objectives. The risks and uncertainties that may affect forward-looking statements include, among others: difficulties in growing our customer base, difficulties leveraging market opportunities, difficulties providing solutions that meet the needs of customers, poor product sales, long sales cycles, difficulty developing new products, difficulty in relationships with vendors and partners, higher risk in international operations, difficulty assimilating acquisitions, difficulty managing rapid growth, and increased competition. For a more detailed discussion of the risks and uncertainties of our business, please refer to our periodic reports and registration statements filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended July 3, 2004, our Registration Statement on Form S-3 filed on September 29, 2004 as amended, and our Quarterly Report on Form 10-Q for the fiscal quarter ended October 2, 2004. We assume no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.
                            MATRIXONE, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)

                            Three Months Ended    Six Months Ended
                          --------------------- ----------------------
                          January 1, January 3, January 1,  January 3,
                             2005       2004       2005       2004
                          ---------- ---------- ----------  ---------
Revenues:
  Software license          $15,352     $9,384    $26,753    $15,498
  Service                    19,754     17,485     37,969     34,612
                          ---------- ---------- ----------  ---------
  Total revenues             35,106     26,869     64,722     50,110
                          ---------- ---------- ----------  ---------
Cost of Revenues:
  Software license            1,761      1,621      2,871      3,157
  Amortization of
   purchased technology         199         --        332         --
  Service                    12,462     12,103     24,109     23,137
                          ---------- ---------- ----------  ---------
  Total cost of revenues     14,422     13,724     27,312     26,294
                          ---------- ---------- ----------  ---------
Gross Profit                 20,684     13,145     37,410     23,816
                          ---------- ---------- ----------  ---------
Operating Expenses:
  Selling and marketing      11,666      9,031     21,470     17,960
  Research and development    7,143      5,432     13,424     11,436
  General and
   administrative             2,541      2,374      5,332      4,683
  Amortization of
   intangible assets            106         --        176         --
  Stock-based compensation       --        188         --        567
  Restructuring charges          --      1,884         --      1,884
  Asset impairment and
   disposal charges              --      1,680         --      1,680
                          ---------- ---------- ----------  ---------
  Total operating expenses   21,456     20,589     40,402     38,210
                          ---------- ---------- ----------  ---------
Loss from Operations           (772)    (7,444)    (2,992)   (14,394)
Other Income, Net               430        343        763        658
                          ---------- ---------- ----------  ---------
Loss Before Income Taxes       (342)    (7,101)    (2,229)   (13,736)
Provision for Income Taxes       57         50             108                103
                                                    ----------  ----------  ----------    ---------
Net  Loss                                            $(399)      $(7,151)      $(2,337)    $(13,839)
                                                    ==========  ==========  ==========    =========

Basic  and  Diluted  Net  Loss
  Per  Share                                      $(0.01)        $(0.15)        $(0.05)        $(0.29)
                                                    ==========  ==========  ==========    =========

Shares  Used  in  Computing
  Basic  and  Diluted  Net
  Loss  Per  Share                            51,378          48,210          50,836          48,086
                                                    ==========  ==========  ==========    =========

Reconciliation  of  Pro
  Forma  Net  Loss(1):
Net  Loss                                            $(399)      $(7,151)      $(2,337)    $(13,839)
Adjustments:
    Amortization  of
      purchased  technology                  199                  --                332                  --
    Amortization  of
      intangible  assets                        106                  --                176                  --
    Stock-based  compensation              --                188                  --                567
    Restructuring  charges                    --            1,884                  --            1,884
    Asset  impairment  and
      disposal  charges                            --            1,680                  --            1,680
                                                    ----------  ----------  ----------    ---------
Pro  Forma  Net  Loss(1)                    $(94)      $(3,399)      $(1,829)      $(9,708)
                                                    ==========  ==========  ==========    =========

Pro  Forma  Basic  and
  Diluted  Net  Loss  Per
  Share                                              $  0.00          $(0.07)        $(0.04)        $(0.20)
                                                    ==========  ==========  ==========    =========

Shares  Used  in  Computing
  Pro  Forma  Basic  and
  Diluted  Net  Loss  Per
  Share                                              51,378          48,210          50,836          48,086
                                                    ==========  ==========  ==========    =========

        (1)  The  Company  uses  the  financial  measure  "pro  forma  net  loss"  to
supplement  its  consolidated  financial  statements,  which  are  presented
in  accordance  with  accounting  principles  generally  accepted  in  the
United  States  ("GAAP").  The  presentation  of  pro  forma  net  loss  is  not
meant  to  be  a  substitute  for  "net  loss"  presented  in  accordance  with
GAAP  but  rather  should  be  evaluated  in  conjunction  with  net  loss.  The
Company's  management  believes  that  the  presentation  of  pro  forma  net
loss  provides  useful  information  to  investors  because  this  financial
measure  excludes  amortization  of  purchased  technology  and  intangible
assets,  which  are  fixed  acquisition-related  charges,  restructuring
charges  and  asset  impairment  and  disposal  charges,  which  are  charges
relating  to  an  unusual  event,  and  stock-based  compensation,  which  is  a
non-cash  charge  that  ended  during  the  three  month  period  ended  January
3,  2004.  For  the  three  and  six  month  periods  ended  January  1,  2005,
pro  forma  net  loss  excludes  amortization  of  purchased  technology  and
intangible  assets.  For  the  three  and  six  month  periods  ended  January
3,  2004,  pro  forma  net  loss  excludes  restructuring  charges,  asset
impairment  and  disposal  charges  and  stock-based  compensation.
Management  does  not  consider  amortization  of  purchased  technology  and
intangible  assets,  restructuring  charges,  asset  impairment  and
disposal  charges  and  stock-based  compensation  to  be  part  of  the
Company's  on-going  operating  activities  or  meaningful  in  evaluating
the  Company's  past  financial  performance  or  future  prospects.  In
addition,  pro  forma  net  loss  is  a  primary  financial  indicator  that  the
Company's  management  uses  to  evaluate  the  Company's  financial  results
and  forecast  anticipated  financial  results  for  future  periods.
Amortization  of  purchased  technology  and  intangible  assets  relates  to
the  amortization  of  identified  intangible  assets,  such  as  purchased
technology,  customer  relationships  and  trademarks  and  trade  names,
purchased  through  an  acquisition.  Restructuring  charges  and  asset
impairment  and  disposal  charges  are  material  costs  that  were  incurred
relating  to  an  unusual  event  to  align  the  Company's  operations  and
cost  structure  with  market  conditions.  Stock-based  compensation
represents  the  difference  between  the  stock  option  exercise  price  and
the  deemed  fair  value  of  the  Company's  common  stock  on  the  date  of
grant  and  relates  only  to  the  grant  of  certain  stock  options  to
employees  during  fiscal  2000  and  1999,  which  do  not  require  cash
settlement.  The  Company's  definition  of  pro  forma  net  loss  may  differ
from  similar  measures  used  by  other  companies  and  may  differ  from
period  to  period.


                                                        MATRIXONE,  INC.
                                  CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                        (in  thousands)

                                                                                            January  1,            July  3,
                                                                                                2005                      2004
                                                                                          ----------        -----------
                                    ASSETS
Current  Assets:
  Cash  and  cash  equivalents                                        $108,456              $118,414
  Accounts  receivable,  net                                              31,842                  25,274
  Prepaid  expenses  and  other  current  assets              4,088                    4,326
                                                                                          ----------        -----------
        Total  current  assets                                              144,386                148,014
Property  and  Equipment,  Net                                            6,600                    7,053
Goodwill                                                                                12,043                          --
Other  Intangible  Assets,  Net                                          8,072                          --
Other  Assets                                                                          2,178                    2,078
                                                                                          ----------        -----------
                                                                                            $173,279              $157,145
                                                                                          ==========        ===========
      LIABILITIES  AND  STOCKHOLDERS'  EQUITY
Current  Liabilities:
  Accounts  payable                                                              $5,268                  $4,561
  Accrued  expenses                                                              18,812                  15,666
  Deferred  revenue                                                              18,867                  20,039
                                                                                          ----------        -----------
        Total  current  liabilities                                      42,947                  40,266
                                                                                          ----------        -----------

Stockholders'  Equity:
  Common  stock                                                                            515                        487
  Additional  paid-in  capital                                        226,830                213,152
  Accumulated  deficit                                                    (101,711)              (99,374)
  Accumulated  other  comprehensive  income                    4,698                    2,614
                                                                                          ----------        -----------
        Total  stockholders'  equity                                  130,332                116,879
                                                                                          ----------        -----------
                                                                                            $173,279              $157,145
                                                                                          ==========        ===========
 





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