Agilysys (AGYS) 8-K Agilysys Reports Unaudited Fiscal 2006 Fourth-Quarter and Full-Year Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Agilysys Reports Unaudited Fiscal 2006 Fourth-Quarter and Full-Year Results

• Fourth-quarter Sales Increase 10.8% over Prior Year to $395 Million, with Net Income Increasing to 19 Cents Per Diluted Share vs. Eight Cent Loss in Prior Year

• Fiscal 2006 Sales Increase 7.4% to $1.74 Billion, with Net Income Increasing 44% to $28.1 Million, or 89 Cents Per Diluted Share

• Non-GAAP Fiscal 2006 Net Income Reaches $34.0 Million, or $1.08 Per Diluted Share

CLEVELAND — May 22, 2006 — Agilysys, Inc. (Nasdaq: AGYS), a leading provider of enterprise computer technology solutions, today announced fiscal 2006 unaudited fourth-quarter and full-year results for the periods ended March 31, 2006.

Consolidated sales for the fourth quarter were $394.7 million, an increase of 10.8% compared with sales of $356.2 million for the fourth quarter last year. The increase in revenues included sales growth across all of the company’s major product categories.

Fourth-quarter sales of hardware products were $304.7 million, up 3% from $295.5 million last year. Software sales were $68.2 million, up 52% from $44.9 million a year ago. Services sales were $21.8 million, up 38% from $15.8 million last year.

Gross margin for the quarter increased to 13.9% of sales, compared with 12.5% in last year’s fourth quarter. The improvement in gross margin is attributed to increases in supplier incentives (a component of gross margin), higher growth in direct sales to end-user customers and a sales mix shifting towards higher-margin software and services offerings.

Selling, general and administrative expenses for the fourth quarter were $44.4 million, or 11.2% of sales compared with $46.6 million, or 13.1% of sales, in the prior year. The improvement is the result of restructuring executed earlier this year, as well as a more favorable comparison due to a one-time adjustment to employee benefit plans and non-recurring professional fees in the fourth quarter last year.

Fourth-quarter net income was $6.0 million, or 19 cents per diluted share, compared with a net loss of $2.3 million, or a loss of eight cents per diluted share, in the fourth quarter last year.

Arthur Rhein, chairman, president and chief executive officer of Agilysys, said, “I am extremely pleased with the fourth-quarter and full-year results we reported today. Our highly-skilled and motivated people continue to dedicate themselves to providing customers more complete enterprise computer technology solutions and our focus on higher-value is evident in our performance.”

Fiscal 2006 Full-Year Results
For the fiscal year ended March 31, 2006, sales were $1.74 billion, an increase of 7.4% over the $1.62 billion in sales reported for the prior year.

Full-year sales of hardware products were $1.38 billion, up 4% year over year. Software sales were $260.5 million, up 18% and services sales were $104.2 million, up 31%.

Gross margin was 13.1% of sales, up from 12.8% in fiscal 2005. Selling, general and administrative expenses decreased to 9.6% of sales, from 10.1% in the prior year.

Net income increased to $28.1 million, or 89 cents per diluted share, compared with net income of $19.5 million, or 67 cents per diluted share, last year.

During the first half of fiscal 2006, Agilysys consolidated a portion of its operations to reduce costs and increase operating efficiencies. As a result of this initiative, Agilysys recorded a total of $5.3 million in restructuring charges during fiscal 2006.

In addition and as previously disclosed, in the first quarter of fiscal 2006, the company redeemed its 6.75% Convertible Trust Preferred Securities. Agilysys shareholders benefited from the elimination of the annual distribution on the Trust Preferred Securities, which amounted to approximately $5.2 million annually, net of tax, and the removal of 6.7 million shares of dilution.

Excluding $5.3 million in restructuring charges reported for fiscal 2006 and a non-recurring $4.8 million loss on redemption of the company’s Convertible Trust Preferred Securities in the first quarter, the company would have reported a 72% increase in non-GAAP net income to $34.0 million compared with non-GAAP net income of $19.8 million in the prior year, or $1.08 per diluted share versus 68 cents per diluted share in the prior year.

For the fiscal year Agilysys generated $50.0 million in cash flow from operations.

Use of Non-GAAP Financial Measures
The non-GAAP operating results provided are “non-GAAP financial measures” under the rules of the Securities and Exchange Commission. The company believes that the non-GAAP financial information is useful to investors to assist them in assessing and understanding the company’s financial performance and underlying trends in its business, as management considers the charges and losses referred to above to be outside the company’s core operating results. This non-GAAP financial information supplements, and is not intended to represent a measure of performance in accordance with U.S. GAAP. Accompanying this release is a tabular reconciliation of the differences between the non-GAAP financial measures with the most comparable financial measure calculated and presented in accordance with U.S. GAAP.

Business Outlook
For fiscal 2007, the company currently estimates sales growth of 6% to 8% over fiscal 2006 sales of $1.74 billion.

Full-year gross margin is expected to be approximately 12.9% of sales.

Selling, general and administrative expenses are anticipated to be approximately 9.6% of sales for fiscal 2007. Net income for fiscal 2007 is expected to be in the range of $1.15 to $1.22 per diluted share and includes estimated stock option expensing of approximately $2.9 million or six cents per diluted share.

Agilysys also expects to incur fiscal 2007 capital expenditures between $2 to $4 million and depreciation and amortization of approximately $10 million.

The company’s Senior Notes are due in August 2006, at which time Agilysys will use existing cash reserves to retire the outstanding obligations. Assuming no reinvestment of cash, interest income is expected to exceed interest expense by approximately $1.2 million.

Conference Call Information
A conference call to discuss the quarterly and full-year results is scheduled for 11 a.m. ET on Monday, May 22, 2006. The conference call will be broadcast live over the Internet and a replay will be accessible on the investor

relations page of the company’s Web site:www.agilysys.com. A taped replay of the conference call will be available at 1 p.m. ET on Monday, May 22, 2006, through midnight ET on Monday, June 5, 2006, accessible by dialing (877) 344-7529 or (412) 317-0088 (passcode #390939).

Forward-Looking Language
Portions of this release, particularly the statements made by management and those that are not historical facts, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current assumptions and expectations, and are subject to risks and uncertainties, many of which are beyond the control of Agilysys. Many factors could cause Agilysys actual results to differ materially from those anticipated by the forward-looking statements. These factors include those referenced in the Annual Report on Form 10-K or as may be described from time to time in Agilysys subsequent SEC filings.

Potential factors that could cause actual results to differ materially from those expressed or implied by such statements include, but are not limited to, those relating to Agilysys anticipated revenue gains, sales volume, margin improvements, cost savings, and new product introductions.

Other associated risks include geographic factors, political and economic risks, the actions of Agilysys competitors, changes in economic or industry conditions or in the markets served by Agilysys, and the ability to appropriately integrate acquisitions, strategic alliances, and joint ventures.

In addition, this release contains time-sensitive information and reflects management’s best analysis only as of the date of this release. Agilysys does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release. Information on the potential factors that could affect Agilysys actual results of operations is included in its filings with the Securities and Exchange Commission, including, but not limited to, its Annual Report on Form 10-K for the fiscal year ended March 31, 2005. Interested persons can obtain it free at the Securities and Exchange Commission’s Web site, www.sec.gov.

About Agilysys, Inc.
Agilysys is a leading provider of enterprise computer technology solutions consisting of complex server and storage hardware, software and services. The company serves a broad base of customers in a wide variety of industries as well as the public sector. Agilysys designs and implements tailored solutions to help end users resolve their most complicated information technology (IT) needs, and supports reseller partners in growing their businesses. By combining proprietary software and services with the products and services of leading suppliers, Agilysys serves as a critical link in the IT supply chain. The company also offers industry-specific expertise in markets such as retail and hospitality. Headquartered in Mayfield Heights, Ohio, Agilysys has sales offices throughout North America and in the Asia Pacific region. For more information, visitwww.agilysys.com.

Analysts/Investor Contact:	Martin Ellis Executive Vice President, Treasurer and Chief Financial Officer Agilysys, Inc. 440-720-8682martin.ellis@agilysys.com
Media Contact:	Julie Young Director, Corporate Communications Agilysys, Inc. 440-720-8602 julie.young@agilysys.com

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AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Twelve Months Ended
	March 31						March 31
(In thousands, except share and per share data)	2006			2005			2006			2005
	(Unaudited)			(Unaudited)			(Unaudited)
Net sales	$	394,682		$	356,159		$	1,742,460		$	1,622,925
Cost of goods sold		339,700			311,520			1,513,481			1,415,477
Gross margin		54,982			44,639			228,979			207,448
Operating expenses
Selling, general, and administrative expenses		44,375			46,591			167,779			164,470
Restructuring charges		217			107			5,337			515
Operating income (loss)		10,390			(2,059	)		55,863			42,463
Other (income) expenses
Other income, net		(881	)		(1,402	)		(1,389	)		(1,984	)
Interest income		(1,230	)		(1,364	)		(4,809	)		(3,310	)
Interest expense		1,646			1,724			6,557			6,517
Loss on redemption of Mandatorily Redeemable Convertible Trust Preferred Securities		—			—			4,811			—
Income (loss) before income taxes		10,855			(1,017	)		50,693			41,240
Provision for income taxes		4,751			(134	)		21,158			15,725
Distributions on Mandatorily Redeemable Convertible Trust Preferred Securities, net of taxes		—			1,064			900			5,153
Income (loss) from continuing operations		6,104			(1,947	)		28,635			20,362
Loss from discontinued operations, net of taxes		105			388			521			877
Net income (loss)	$	5,999		$	(2,335	)	$	28,114		$	19,485
Earnings (loss) per share – basic
Income (loss) from continuing operations	$	0.20		$	(0.07	)	$	0.96		$	0.72
Loss from discontinued operations		—			(0.01	)		(0.02	)		(0.03	)
Net income (loss)	$	0.20		$	(0.08	)	$	0.94		$	0.69
Earnings (loss) per share – diluted
Income (loss) from continuing operations	$	0.20		$	(0.07	)	$	0.91		$	0.69
Loss from discontinued operations		(0.01	)		(0.01	)		(0.02	)		(0.02	)
Net income (loss)	$	0.19		$	(0.08	)	$	0.89		$	0.67
Weighted average shares outstanding
Basic		30,357,151			28,229,738			29,935,200			28,100,612
Diluted		31,109,120			28,229,738			32,480,576			36,989,981
Cash dividends per share	$	0.03		$	0.03		$	0.12		$	0.12

AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31		March 31
(In thousands)	2006		2005
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	147,850	$	241,880
Accounts receivable, net		267,916		259,998
Inventories, net		53,004		47,305
Deferred income taxes		10,418		9,379
Prepaid expenses and other current assets		3,447		5,979
Assets of discontinued operations		437		702
Total current assets		483,072		565,243
Goodwill		191,854		173,774
Intangible assets, net		11,854		5,796
Investments in affiliated companies		18,821		19,785
Other non-current assets		28,311		20,241
Property and equipment, net		27,928		30,319
Total assets	$	761,840	$	815,158
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	238,493	$	228,775
Accrued liabilities		40,901		38,178
Mandatorily Redeemable Convertible Trust Preferred Securities		—		125,317
Current portion of long-term debt		59,587		—
Liabilities of discontinued operations		872		1,767
Total current liabilities		339,853		394,037
Long-term debt		99		59,624
Deferred income taxes		16,059		11,657
Other non-current liabilities		20,653		17,389
Shareholders’ equity		385,176		332,451
Total liabilities and shareholders’ equity	$	761,840	$	815,158

AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended March 31
(In thousands)	2006			2005
	(Unaudited)
Operating activities:
Net income	$	28,114		$	19,485
Add: Loss from discontinued operations		521			877
Income from continuing operations		28,635			20,362
Adjustments to reconcile income from continuing operations to net cash provided by operating activities (net of effects from business acquisitions):
Loss on redemption of Mandatorily Redeemable Convertible Trust Preferred Securities		4,811			—
Gain on redemption of investment in affiliated company		(622	)		—
Loss (gain) on disposal of plant and equipment		302			(12	)
Depreciation		3,412			4,178
Amortization		7,629			7,417
Deferred income taxes		753			5,157
Changes in working capital:
Accounts receivable		(2,906	)		31,179
Inventory		(5,196	)		4,931
Accounts payable		6,806			20,660
Accrued liabilities		3,468			(1,131	)
Other changes, net		3,510			36
Other non-cash adjustments		(652	)		(1,699	)
Total adjustments		21,315			70,716
Net cash provided by operating activities		49,950			91,078
Investing activities:
Acquisition of businesses, net of cash acquired		(27,964	)		—
Proceeds from redemption of investment in affiliated company		788			—
Purchase of marketable securities		(6,822	)		—
Proceeds from sale of property and equipment		—			105
Acquisition of property and equipment		(3,210	)		(1,951	)
Net cash used for investing activities		(37,208	)		(1,846	)
Financing activities:
Redemption of Mandatorily Redeemable Convertible Trust Preferred Securities		(107,536	)		—
Dividends paid		(3,608	)		(3,330	)
Proceeds from issuance of common stock		5,442			4,006
Other		(286	)		(374	)
Net cash (used for) provided by financing activities		(105,988	)		302
Effect of foreign currency fluctuations on cash		367			810
Cash flows (used for) provided by continuing operations		(92,879	)		90,344
Cash flows (used for) provided by discontinued operations		(1,151	)		1,633
Net (decrease) increase in cash		(94,030	)		91,977
Cash at beginning of period		241,880			149,903
Cash at end of period	$	147,850		$	241,880

AGILYSYS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)

	Three Months Ended						Twelve Months Ended
	March 31						March 31
(In thousands, except share and per share data)	2006			2005			2006			2005
Net income (loss), as reported	$	5,999		$	(2,335	)	$	28,114		$	19,485
Non-GAAP adjustments
Restructuring charges, net of taxes		122	(a)		93	(a)		3,110	(a)		319	(a)
Loss on redemption of Mandatorily Redeemable Convertible Trust Preferred Securities, net of taxes		—			—			2,803	(b)		—
Non-GAAP net income (loss)	$	6,121		$	(2,240	)	$	34,027		$	19,804
Earnings (loss) per share – diluted, as reported	$	0.19		$	(0.08	)	$	0.89		$	0.67
Non-GAAP adjustments
Restructuring charges		—			—			0.10			0.01
Loss on redemption of Mandatorily Redeemable Convertible Trust Preferred Securities		—			—			0.09			—
Non-GAAP earnings (loss) per share – diluted	$	0.19		$	(0.08	)	$	1.08	(c)	$	0.68	(c)

(a)	Restructuring charges, net of taxes of $94,321 and $14,094 for the three months ended March 31, 2006 and 2005, respectively, and $2,226,418 and $196,089 for the years ended March 31, 2006 and 2005, respectively.
(b)	Loss on redemption of Mandatorily Redeemable Convertible Trust Preferred Securities, net of taxes of $2,007,082 for the year ended March 31, 2006.
(c)	Diluted earnings per share includes the diluted effect of the Mandatorily Redeemable Convertible Trust Preferred Securities. Accordingly, distributions on the Securities have been added back to net income in 2006 and 2005 to arrive at the per share amounts.