FOR IMMEDIATE RELEASE
CONTACT:
John Arnold
Ansoft Corporation
TEL: 412.261.3200
FAX: 412.471.9427
EMAIL: arnold@ansoft.com
ANSOFT CORPORATION SECOND QUARTER EARNINGS DOUBLE
PITTSBURGH, PA -- November 16, 2005 -- Ansoft Corporation (NASDAQ: ANST) todayannounced financial results for its second quarter of fiscal 2006 ended October 31, 2005.
Revenue for the second quarter totaled $18 million, an increase of 13% compared to $15.9 million reported in the previous fiscal year's second quarter. On a non-GAAP basis, net income for the second quarter was $4.3 million, or $0.34 per diluted share, representing a 103% increase when compared to net income of $2.1 million, or $0.16 per diluted share in the previous fiscal year's second quarter. On a generally accepted accounting principles (GAAP) basis, net income for the second quarter was$4.1 million, or $0.32 per diluted share, compared to GAAP net income of $1.9 million, or $0.14 per diluted share in the previous fiscal year's second quarter.
During the quarter, the Company elected to claim a federal tax credit and refund related to foreign taxes previously paid. As a result, second quarter net income includes a tax benefit of $0.5 million for an expected refund of prior years federal tax payments. The Company anticipates utilizing excess foreign tax credits claimed during the current fiscal year. This would favorably impact the full year effective rate by approximately 7%.
"We are pleased to report that our earnings for the second quarter have more than doubled on continued strong revenue growth," said Nicholas Csendes, Ansoft's President and CEO. "For the balance of the fiscal year, we expect continued revenue growth of around 10-15% with earnings increasing around 25% over the last fiscal year."
Pro forma results represent non-GAAP financial measures and exclude the impact of amortization of intangible assets. A reconciliation of these amounts to the appropriate GAAP amounts, for the three months ended October 31, 2005 and 2004 is included with this press release.
Ansoft is a leading developer of high-performance electronic design automation (EDA) software. Engineers use Ansoft software to design state-of-the-art electronic products, such as cellular phones, Internet-access devices, broadband networking components and systems, integrated circuits (ICs), printed circuit boards (PCBs), automotive electronic systems and power electronics. Ansoft markets its products worldwide through its own direct sales force and has comprehensive customer-support and training offices throughout North America, Asia and Europe.
This press release contains forward-looking statements including those related to revenue, earnings growth and utilization of tax credits for the current fiscal year that are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially, including, but not necessarily limited to, management's ability to forecast revenues and control expenses and the size, timing and structure of significant licenses.
For further information regarding risks and uncertainties associated with Ansoft's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of Ansoft's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained at Ansoft's website atwww.ansoft.com/about/investor/index.cfm.
All information in this release is as of November 16, 2005. Ansoft undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
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Ansoft -- Page 2
ANSOFT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
| | | | | | | | | | |
| | | | Three months ended October 31, | | Six months ended October 31, |
| | | | 2005 | | 2004 | | 2005 | | 2004 |
Revenue | | | | | | | | |
| License | | $ 9,123 | | $ 8,661 | | $ 15,943 | | $ 14,830 |
| Service and other | 8,905 | | 7,285 | | 16,875 | | 13,794 |
Total revenue | 18,028 | | 15,946 | | 32,818 | | 28,624 |
Costs of revenue | | | | | | | |
| License | | 134 | | 125 | | 233 | | 222 |
| Service and other | 322 | | 356 | | 651 | | 660 |
Total cost of revenue | 456 | | 481 | | 884 | | 882 |
Gross profit | 17,572 | | 15,465 | | 31,934 | | 27,742 |
Operating Expenses | | | | | | | |
| Sales and marketing | 7,321 | | 7,601 | | 14,464 | | 15,098 |
| Research and development | 4,129 | | 4,048 | | 8,189 | | 8,026 |
| General and administrative | 1,187 | | 1,329 | | 2,570 | | 2,393 |
| Amortization | 369 | | 384 | | 738 | | 793 |
Total operating expenses | 13,006 | | 13,362 | | 25,961 | | 26,310 |
Income from operations | 4,566 | | 2,103 | | 5,973 | | 1,432 |
Net realized gain (loss) on sale of securities | - | | (27) | | (2) | | 732 |
Other income, net | 140 | | 647 | | 480 | | 601 |
Income before income taxes | 4,706 | | 2,723 | | 6,451 | | 2,765 |
Income tax expense | 611 | | 834 | | 1,187 | | 844 |
Net income | $ 4,095 | | $ 1,889 | | $ 5,264 | | $ 1,921 |
Net income per share | | | | | | | |
Basic | $ 0.35 | | $ 0.16 | | $ 0.44 | | $ 0.17 |
Diluted | $ 0.32 | | $ 0.14 | | $ 0.41 | | $ 0.14 |
Weighted average shares used in calculation | | | | | | |
| Basic | | 11,794 | | 11,567 | | 11,855 | | 11,616 |
| Diluted | | 12,892 | | 13,238 | | 12,945 | | 13,275 |
| | | | | | | | | | |
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Ansoft -- Page 3
ANSOFT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
| | | | | | |
| | | | October 31, | | April 30, |
| | | | 2005 | | 2005 |
| | | | |
Assets | | | | |
Current assets | | | |
Cash and cash equivalents | $ 7,864 | | $ 11,910 |
Accounts receivable, net | 12,728 | | 17,388 |
Deferred income taxes | 229 | | 229 |
Prepaid expenses and other assets | 1,777 | | 1,148 |
Total current assets | 22,598 | | 30,675 |
| | | | | | |
Equipment and furniture, net | 2,862 | | 2,811 |
Marketable securities | 30,697 | | 28,496 |
Other assets | 132 | | 146 |
Deferred income taxes | 6,177 | | 6,177 |
Goodwill | 1,239 | | 1,239 |
Other intangible assets, net | 3,160 | | 3,877 |
Total assets | $ 66,865 | | $ 73,421 |
| | | | | | |
Liabilities and stockholders' equity | | | |
Current liabilities | | | |
Accounts payable | $ 412 | | $ 231 |
Accrued payroll | 1,111 | | 2,290 |
Other accrued expenses | 1,892 | | 3,076 |
Current portion of deferred revenue | 14,980 | | 17,500 |
Total current liabilities | 18,395 | | 23,097 |
Long-term portion of deferred revenue | 1,056 | | 1,039 |
Total liabilities | 19,451 | | 24,136 |
| | | |
Stockholders' equity | | | |
Preferred stock , par value $0.01 per share; 1,000 shares | | | |
authorized, no shares outstanding | - | | - |
Common stock , par value $0.01 per share; 25,000 shares | | | |
authorized; issued 14,087 and 13,901 shares, respectively | | | |
and outstanding 11,877 and 12,083, respectively | 141 | | 140 |
Additional paid-in capital | 73,746 | | 70,410 |
Treasury stock, 2,210 and 1,818 shares, respectively | (31,092) | | (21,762) |
Accumulated other comprehensive loss, net | (1,480) | | (338) |
Retained earnings | 6,099 | | 835 |
Total stockholders' equity | 47,414 | | 49,285 |
Total liabilities and stockholders' equity | $ 66,865 | | $ 73,421 |
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Ansoft -- Page 4
ANSOFT CORPORATION
RECONCILIATION OF GAAP NET INCOME TO PRO FORMA NET INCOME
(In thousands, except per share amounts)
(unaudited)
Pursuant to the requirement of Regulation G, the Company has provided a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. These measures differ from GAAP in that they exclude the amortization of intangible assets. The Company has provided these measurements in addition to GAAP financial results because it believes they provide a consistent basis for comparison between periods that is not influenced by certain non-cash expenses and therefore are helpful to understanding the Company's underlying operational results. These same measures are used by management when evaluating the continuing operating results of the Company.
| | Three months ended October 31, |
| | 2005 | | 2004 |
| | | | |
GAAP net income | $ 4,095 | | $ 1,889 |
Amortization of intangibles (1) | 229 | | 238 |
Pro forma net income | $ 4,324 | | $ 2,127 |
Pro forma net income per diluted common share | $ 0.34 | | $ 0.16 |
Weighted average diluted shares used in calculation | 12,892 | | 13,238 |
(1) Amortization expense net of a 38% tax rate.
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