Workgroup Technology Corporation Reports First Quarter Financial Results.

Business/Technology

LEXINGTON, Mass.--(BUSINESS WIRE)--July 19, 2001

Workgroup Technology Corporation (WTC) (NASDAQ: WKGP), a provider of Web-based product data management software solutions, today announced its financial results for the first quarter of fiscal 2002 ending June 30, 2001.

For the first quarter of fiscal 2002, WTC reported revenue of $1,761,000 compared with $1,764,000 in the first quarter of fiscal 2001. The net loss for the first quarter of fiscal 2002 was $1,500,000 or $0.81 per share based on 1,843,445 weighted average shares outstanding, compared with a net loss of $1,063,000, or $0.53 per share based on 2,014,017 weighted average shares outstanding, for the first quarter of fiscal 2001. The foregoing per share calculations and all other references to WTC shares in this news release have been calculated after giving effect to the one-for-four reverse stock split which became effective on December 21, 2000.

Total revenue for the first quarter of fiscal 2002 remained relatively flat when compared to the same quarter of fiscal 2001. Total revenue for the first quarter of fiscal 2002 decreased $250,000 from the fourth quarter of fiscal 2001. Of this amount, software license revenue decreased $186,000, and the balance of the decrease, $64,000, was spread across consulting, training, and maintenance revenues.

The Company had an increase in net loss of $437,000 for the first quarter of fiscal 2002 when compared to the first quarter of fiscal 2001. The Company had an increase in net loss of $239,000 for the first quarter of fiscal 2002 when compared to the fourth quarter of fiscal 2001.

Patrick H. Kareiva, President and Chief Executive Officer, stated, "The decrease in software license revenue during the past quarter was substantially due to several of our current customers and major prospects delaying purchasing decisions until later this calendar year or into the next calendar year. The increase in net loss during the past year and in the last quarter was largely due to WTC's continued investment in its flagship PDM product, WTC ProductCenter. The Company intends to take appropriate action to manage its expenses commensurate with the level of sales expected. As of June 30, 2001, the Company had $4,755,000 of cash on hand."

Kareiva also noted that, "During the first quarter of fiscal 2002, the Company repurchased approximately 4,000 shares of its common stock on the open market. To date, approximately 333,000 shares of the previously authorized 437,500 shares have been repurchased." Kareiva further noted that, "As of June 30, 2001, with approximately 1,841,000 shares outstanding, the net book value of the Company's common stock was approximately $1.97 per share, and the book cash value of the Company's common stock was approximately $2.58 per share."

About Workgroup Technology Corporation

WTC develops, markets and supports WTC ProductCenter(TM), a web-enabled, extended enterprise collaborative product data management (PDM) solution that provides product content management and business process automation for optimizing product development. Based in Lexington, Massachusetts, the Company differentiates itself on the basis of its controlled and secure accessibility, enterprise integration, and quick adaptability of its software. Thousands of users at Global 2000 companies are in production and benefit from WTC products, including 3Com Corporation; ABB Flexible Automation; Alcatel USA; Arris Interactive; Eaton Corporation; General Electric Company; Honeywell; Millipore Corporation; Siemens Energy & Automation, Inc.; U.S. Army; and Whirlpool Corporation. The Company's Web site is located at www.workgroup.com.

The foregoing statements that are not historical fact are forward-looking statements. The forward-looking statements in this news release, including estimates and timing of future results, references to products in development, including WTC ProductCenter, the ability to generate revenue from WTC ProductCenter and its related maintenance and professional services, cash flow and other financial projections, and the estimates and timing of actions that the Company might take, or the results of such actions, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a wide range of risks and uncertainties. Among these risks are the continued acceptance of WTC's products, future acceptance of WTC ProductCenter, WTC's heightened name and product recognition, WTC's level of continued research and development expenditures, WTC's ability to develop enhanced functionality into its new and existing products in a timely fashion, WTC's ability to grow from the sales of its products, general competitive pressures in the marketplace, the continued overall growth of the PDM market, and the Company's ability to maintain compliance with NASDAQ's listing requirements for the SmallCap Market. Further information regarding factors that could affect WTC's results are included in WTC's Form 10-K for the 2001 fiscal year, which was filed with the Securities and Exchange Commission in June 2001.

WORKGROUP TECHNOLOGY CORPORATION
Consolidated Statements of Operations
(in thousands, except per share data)

                                             Three Months Ended
                                                  June 30,
                                            2001            2000
                                                 (unaudited)

Revenue:
     Software licenses                   $    289         $    334
     Maintenance and services               1,472            1,430
Total revenue                               1,761            1,764

     Cost of software licenses                 70               58
     Cost of  maintenance and services      1,023              590
Total cost of revenue                       1,093              648

Gross profit                                  668            1,116

Operating expenses:
     Selling and marketing                    762              644
     Research and development               1,017            1,156
     General and administrative               451              542
Total operating expenses                    2,230            2,342

Loss from operations                       (1,562)          (1,226)

     Interest and other income, net            62              163

Net loss                                 $ (1,500)        $ (1,063)

Basic and diluted net loss per common
 share                                   $  (0.81)        $  (0.53)

Weighted average basic and diluted
 shares outstanding                         1,843            2,014



WORKGROUP TECHNOLOGY CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
                                              June 30,      March 31,
ASSETS                                          2001          2001
                                                    (unaudited)
Current assets:
Cash and cash equivalents                    $ 4,755        $ 7,019
Accounts receivable, net                         580            556
Prepaid expenses and other current
 assets                                          224            123
     Total current assets                      5,559          7,698

Property and equipment, net                      920          1,084
     Total assets                            $ 6,479        $ 8,782

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued expenses          $ 930        $ 1,399
Deferred revenue                               1,917          2,247
Stockholders' equity                           3,632          5,136
     Total liabilities and stockholders'
      equity                                 $ 6,479        $ 8,782