FOR IMMEDIATE RELEASE
CONTACT:
Mark Ravenstahl
Ansoft Corporation
TEL: 412.261.3200
FAX: 412.471.9427
EMAIL: mravenstahl@ansoft.com
ANSOFT CORPORATION REPORTS RECORD RESULTS
PITTSBURGH, PA -- May 23, 2006 -- Ansoft Corporation (NASDAQ: ANST) todayannounced financial results for its fourth quarter of fiscal 2006 ended April 30, 2006. All references to share and per share information, except shares authorized, included in this press release have been adjusted to reflect the two-for-one stock split effected in the form of a stock dividend that was declared on March 7, 2006 and distributed on May 9, 2006.
Revenue for the fourth quarter totaled $24.7 million, an increase of 14% compared to $21.7 million reported in the previous fiscal year's fourth quarter. On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter was$8.3 million, or $0.32 per diluted share, representing a 75% increase when compared to GAAP net income of $4.7 million, or $0.18 per diluted share in the previous fiscal year's fourth quarter. Results for the 2006 fourth quarter included a $1.0 million, or $0.04 per share, income tax benefit associated with the reversal of the Company's remaining valuation allowance for certain U.S. Federal net deferred tax assets.
Revenue for the fiscal year totaled $77.2 million, compared to $67.7 million reported in the previous fiscal year. On a generally accepted accounting principles (GAAP) basis, net income for the fiscal year was$17.8 million, or $0.69 per diluted share, representing an 89% increase when compared to GAAP net income of $9.4 million, or $0.36 per diluted share in the previous fiscal year. Results for the current fiscal year include $2.4 million, or $0.09 per share, of income tax benefit for a federal tax credit claim and refund related to foreign taxes previously paid and $1.0 million, or $0.04 per share, of income tax benefit associated with the reversal of the Company's remaining valuation allowance for certain U.S. Federal net deferred tax assets.
In addition to using GAAP results in evaluating the Company's business, management believes it is useful to measure results using a non-GAAP measure of net income, which excludes amortization of intangible assets and the related tax benefit. A reconciliation of the non-GAAP amounts to the appropriate GAAP amounts, for the three months and for the years ended April 30, 2006 and 2005 is included with this press release. The additional non-GAAP financial information presented should be considered in conjunction with, and not as a substitute for, or superior to, the financial information presented in accordance with GAAP.
On a non-GAAP basis, net income for the fourth quarter was $8.5 million, or $0.33 per diluted share, representing a 72% increase when compared to non-GAAP net income of $4.9 million, or $0.19 per diluted share in the previous fiscal year's fourth quarter.
On a non-GAAP basis, net income for the fiscal year was $18.7 million, or $0.72 per diluted share, representing an 80% increase when compared to non-GAAP net income of $10.4 million, or $0.40 per diluted share, in the previous fiscal year.
"We are pleased to report record revenue and earnings for the fourth quarter," said Nicholas Csendes, Ansoft's President and CEO. "For the next fiscal year, we anticipate continued revenue growth of around 10-15%."
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.
Ansoft -- Page 2
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 May 23, 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.
ANSOFT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
| | | | | | | | | | |
| | | | Three months ended April 30, | | Fiscal Year ended April 30, |
| | | | 2006 | | 2005 | | 2006 | | 2005 |
Revenue | | | | | | | | |
| License | | $ 15,655 | | $ 14,310 | | $ 42,849 | | $ 39,322 |
| Service and other | 9,083 | | 7,356 | | 34,362 | | 28,348 |
Total revenue | 24,738 | | 21,666 | | 77,211 | | 67,670 |
Costs of revenue | | | | | | | |
| License | | 167 | | 142 | | 535 | | 505 |
| Service and other | 401 | | 334 | | 1,420 | | 1,349 |
Total cost of revenue | 568 | | 476 | | 1,955 | | 1,854 |
Gross profit | 24,170 | | 21,190 | | 75,256 | | 65,816 |
Operating Expenses | | | | | | | |
| Sales and marketing | 9,029 | | 8,586 | | 31,506 | | 31,108 |
| Research and development | 4,639 | | 4,671 | | 17,016 | | 16,901 |
| General and administrative | 1,368 | | 1,269 | | 5,060 | | 4,861 |
| Amortization | 359 | | 344 | | 1,467 | | 1,552 |
Total operating expenses | 15,395 | | 14,870 | | 55,049 | | 54,422 |
Income from operations | 8,775 | | 6,320 | | 20,207 | | 11,394 |
Net realized gain (loss) on sale of securities | - | | - | | (2) | | 732 |
Other income, net | 648 | | 499 | | 1,397 | | 1,474 |
Income before income taxes | 9,423 | | 6,819 | | 21,602 | | 13,600 |
Income tax expense | 1,150 | | 2,083 | | 3,805 | | 4,159 |
Net income | $ 8,273 | | $ 4,736 | | $ 17,797 | | $ 9,441 |
Net income per share | | | | | | | |
Basic | $ 0.35 | | $ 0.20 | | $ 0.75 | | $ 0.41 |
Diluted | $ 0.32 | | $ 0.18 | | $ 0.69 | | $ 0.36 |
Weighted average shares used in calculation | | | | | | |
| Basic | | 23,685 | | 23,732 | | 23,694 | | 23,242 |
| Diluted | | 25,811 | | 26,128 | | 25,851 | | 25,892 |
| | | | | | | | | | |
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Ansoft -- Page 3
ANSOFT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
| | | | | | |
| | | | April 30, | | April 30, |
| | | | 2006 | | 2005 |
| | | | |
Assets | | | | |
Current assets | | | |
Cash and cash equivalents | $ 16,456 | | $ 11,910 |
Accounts receivable, net of allowance for doubtful | | | |
accounts of $545 and $425, respectively | 20,264 | | 17,388 |
Deferred income taxes | 164 | | 229 |
Prepaid expenses and other assets | 1,938 | | 1,148 |
Total current assets | 38,822 | | 30,675 |
| | | | | | |
Equipment and furniture, net of accumulated depreciation | | | |
of $6,249 and $6,961, respectively | 2,599 | | 2,811 |
Marketable securities | 33,621 | | 28,496 |
Other assets | 131 | | 146 |
Deferred income taxes | 6,226 | | 6,177 |
Goodwill | 1,239 | | 1,239 |
Other intangible assets, net | 2,442 | | 3,877 |
Total assets | $ 85,080 | | $ 73,421 |
| | | | | | |
Liabilities and stockholders' equity | | | |
Current liabilities | | | |
Accounts payable | $ 274 | | $ 231 |
Accrued payroll | 3,027 | | 2,290 |
Other accrued expenses | 4,537 | | 3,076 |
Current portion of deferred revenue | 19,893 | | 17,500 |
Total current liabilities | 27,731 | | 23,097 |
Long-term portion of deferred revenue | 1,088 | | 1,039 |
Total liabilities | 28,819 | | 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; 50,000 shares | | | |
authorized; issued 28,576 and 27,802 shares, respectively | | | |
and outstanding 23,764 and 24,166, respectively | 286 | | 280 |
Additional paid-in capital | 76,795 | | 70,270 |
Treasury stock, 4,812 and 3,636 shares, respectively | (37,913) | | (21,762) |
Accumulated other comprehensive loss, net | (1,539) | | (338) |
Retained earnings | 18,632 | | 835 |
Total stockholders' equity | 56,261 | | 49,285 |
Total liabilities and stockholders' equity | $ 85,080 | | $ 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. Management uses this non-GAAP financial measure for internal managerial purposes, when publicly providing its business outlook, and as a means to evaluate period-to-period comparisons. The Company has provided this non-GAAP financial 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 software and service business operations and a consistent basis for comparison between quarters not influenced by certain non-cash items that are not used by management when evaluating the Company's operating expenses (such as research and development, sales and marketing, and general and ad ministrative expenses). The additional non-GAAP financial information presented should be considered in conjunction with, and not as a substitute for, or superior to, the financial information presented in accordance with GAAP.
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 and the operational strength of the Company. Finally, this same financial measure is used by management to track the Company's performance relative to both internally and externally communicated financial targets. The Company discloses this information to the public to enable investors to more easily assess the company's performance on the same basis applied by management and to ease comparison on both a GAAP and non-GAAP basis among its principal comp etitors that separately identify acquisition-related amortization.
A limitation associated with this non-GAAP measure is that it does not reflect the periodic costs of certain capitalized intangible assets used in generating revenues in the Company's business. Management evaluates the costs of such intangible assets in accordance with SFAS no. 141 "Business Combinations" which requires allocating the purchase price in a business combination between intangible and tangible assets based on the purchase method of accounting.
| | Three months ended April 30, | | Fiscal year ended April 30, |
| | 2006 | | 2005 | | 2006 | | 2005 |
| | | | | | | | |
GAAP net income | $ 8,273 | | 4,736 | | $ 17,797 | | $ 9,441 |
Amortization of intangibles (1) | 223 | | 213 | | 910 | | 962 |
Non-GAAP net income | $ 8,496 | | $ 4,949 | | $ 18,707 | | $ 10,403 |
Non-GAAP net income per diluted common share | $ 0.33 | | $ 0.19 | | $ 0.72 | | $ 0.40 |
Weighted average diluted shares used in calculation | 25,811 | | 26,128 | | 25,851 | | 25,892 |
(1) Amortization expense net of a 38% tax rate.
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