FOR IMMEDIATE RELEASE
CONTACT:
Mark Ravenstahl
Ansoft Corporation
TEL: 412.261.3200
FAX: 412.471.9427
EMAIL: mravenstahl@ansoft.com
ANSOFT CORPORATION THIRD QUARTER EARNINGS INCREASE
MORE THAN 50%
PITTSBURGH, PA -- February 14, 2006 -- Ansoft Corporation (NASDAQ: ANST) todayannounced financial results for its third quarter of fiscal 2006 ended January 31, 2006.
Revenue for the third quarter totaled $19.7 million, an increase of 13% compared to $17.4 million reported in the previous fiscal year's third quarter. On a non-GAAP basis, net income for the third quarter was $4.5 million, or $0.35 per diluted share, representing a 52% increase when compared to non-GAAP net income of $3.0 million, or $0.23 per diluted share in the previous fiscal year's third quarter. On a generally accepted accounting principles (GAAP) basis, net income for the third quarter was$4.3 million, or $0.33 per diluted share, compared to GAAP net income of $2.8 million, or $0.21 per diluted share in the previous fiscal year's third quarter.
Non-GAAP financial measures exclude the impact of acquisition-related amortization. A reconciliation of these amounts to the appropriate GAAP amounts, for the three months ended January 31, 2006 and 2005 is included with this press release.
"We had an excellent quarter with more than 50% growth in earnings," said Nicholas Csendes, Ansoft's President and CEO. "For the fourth quarter, we expect record revenues and record earnings."
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 and earnings growth 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 amount, timing and structure of software 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 February 14, 2006. 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 January 31, | | Nine months ended January 31, |
| | | | 2006 | | 2005 | | 2006 | | 2005 |
Revenue | | | | | | | | |
| License | | $ 11,251 | | $ 10,182 | | $ 27,194 | | $ 25,012 |
| Service and other | 8,404 | | 7,198 | | 25,279 | | 20,992 |
Total revenue | 19,655 | | 17,380 | | 52,473 | | 46,004 |
Costs of revenue | | | | | | | |
| License | | 135 | | 141 | | 368 | | 363 |
| Service and other | 368 | | 355 | | 1,019 | | 1,015 |
Total cost of revenue | 503 | | 496 | | 1,387 | | 1,378 |
Gross profit | 19,152 | | 16,884 | | 51,086 | | 44,626 |
Operating Expenses | | | | | | | |
| Sales and marketing | 8,013 | | 7,424 | | 22,477 | | 22,522 |
| Research and development | 4,188 | | 4,204 | | 12,377 | | 12,230 |
| General and administrative | 1,122 | | 1,199 | | 3,692 | | 3,592 |
| Amortization | 370 | | 415 | | 1,108 | | 1,208 |
Total operating expenses | 13,693 | | 13,242 | | 39,654 | | 39,552 |
Income from operations | 5,459 | | 3,642 | | 11,432 | | 5,074 |
Net realized gain (loss) on sale of securities | - | | - | | (2) | | 732 |
Other income, net | 269 | | 374 | | 749 | | 975 |
Income before income taxes | 5,728 | | 4,016 | | 12,179 | | 6,781 |
Income tax expense | 1,468 | | 1,232 | | 2,655 | | 2,076 |
Net income | $ 4,260 | | $ 2,784 | | $ 9,524 | | $ 4,705 |
Net income per share | | | | | | | |
Basic | $ 0.36 | | $ 0.24 | | $ 0.80 | | $ 0.41 |
Diluted | $ 0.33 | | $ 0.21 | | $ 0.73 | | $ 0.35 |
Weighted average shares used in calculation | | | | | | |
| Basic | | 11,849 | | 11,490 | | 11,852 | | 11,574 |
| Diluted | | 12,957 | | 13,390 | | 12,961 | | 13,342 |
| | | | | | | | | | |
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Ansoft -- Page 3
ANSOFT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
| | | | | | |
| | | | January 31, | | April 30, |
| | | | 2006 | | 2005 |
| | | | |
Assets | | | | |
Current assets | | | |
Cash and cash equivalents | $ 10,498 | | $ 11,910 |
Accounts receivable, net of allowance for doubtful | | | |
accounts of $525 and $425, respectively | 12,660 | | 17,388 |
Deferred income taxes | 566 | | 229 |
Prepaid expenses and other assets | 1,780 | | 1,148 |
Total current assets | 25,504 | | 30,675 |
| | | | | | |
Equipment and furniture, net of accumulated depreciation | | | |
of $7,764 and $6,961, respectively | 2,696 | | 2,811 |
Marketable securities | 31,365 | | 28,496 |
Other assets | 128 | | 146 |
Deferred income taxes | 5,733 | | 6,177 |
Goodwill | 1,239 | | 1,239 |
Other intangible assets, net | 2,800 | | 3,877 |
Total assets | $ 69,465 | | $ 73,421 |
| | | | | | |
Liabilities and stockholders' equity | | | |
Current liabilities | | | |
Accounts payable | $ 500 | | $ 231 |
Accrued payroll | 1,429 | | 2,290 |
Other accrued expenses | 2,522 | | 3,076 |
Current portion of deferred revenue | 15,114 | | 17,500 |
Total current liabilities | 19,565 | | 23,097 |
Long-term portion of deferred revenue | 1,189 | | 1,039 |
Total liabilities | 20,754 | | 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 14,194 and 13,901 shares, respectively | | | |
and outstanding 11,833 and 12,083, respectively | 142 | | 140 |
Additional paid-in capital | 75,596 | | 70,410 |
Treasury stock, 2,361 and 1,818 shares, respectively | (36,119) | | (21,762) |
Accumulated other comprehensive loss, net | (1,267) | | (338) |
Retained earnings | 10,359 | | 835 |
Total stockholders' equity | 48,711 | | 49,285 |
Total liabilities and stockholders' equity | $ 69,465 | | $ 73,421 |
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Ansoft -- Page 4
ANSOFT CORPORATION
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP 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 acquisition-related amortization. The Company has provided this measurement in addition to GAAP financial results because it believes the non-GAAP financial measure provides useful information to investors in that it provides additional insight into our core operations and a consistent basis for comparison between quarters not influenced by certain non-cash items. The Company does not acquire businesses on a predictable cycle. As a result, management has difficulty comparing the Company's profitability as measured by net income on a period to period basis unless it excludes acquisition-related amortization because it may appear in one period but not in the comparable period. Further, management finds it useful to exclude non-cash charges in order to more readily correlate the Company's operating activities with the Company's ability to generate cash from operations and more accurately predict liquidity requirements. Finally, this same financial measure is used by management to track the Company's performance relative to externally communicated financial targets and to competitors' operating results. The additional non-GAAP financial information presented should be considered in conjunction with, and not as a substitute for, the financial information presented in accordance with GAAP.
| | Three months ended January 31, |
| | 2006 | | 2005 |
| | | | |
GAAP net income | $ 4,260 | | $ 2,784 |
Amortization of intangibles (1) | 229 | | 257 |
Non-GAAP net income | $ 4,489 | | $ 3,041 |
Non-GAAP net income per diluted common share | $ 0.35 | | $ 0.23 |
Weighted average diluted shares used in calculation | 12,957 | | 13,390 |
(1) Amortization expense net of a 38% tax rate.
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