ANSYS Reports Q3 Revenue And Earnings Results

Certain statements contained in the press release regarding matters that are not historical facts, including statements regarding our current estimates for the fourth quarter and full year revenue growth and earnings per share, projections for 2006 and statements regarding the focus of our energy and resources are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements in this press release are subject to risks and uncertainties. These include the risk of a general economic downturn in one or more of ANSYS' primary geographic markets, the risk that the assumptions underlying ANSYS' anticipated revenues and expenditures will change or prove inaccurate, the risk that ANSYS has overestimated its ability to maintain growth and profitability and control costs, uncertainties regarding the demand for ANSYS' products and services in future periods, the risk that ANSYS has overestimated the strength of the demand among its customers for its products, risks of problems arising from customer contract cancellations, uncertainties regarding customer acceptance of new products, the risk that ANSYS' operating results will be adversely affected by possible delays in developing, completing, or shipping new or enhanced products, risks that enhancements to the Company's products may not produce anticipated sales, uncertainties regarding fluctuations in quarterly results, including uncertainties regarding the timing of orders from significant customers, and other factors that are detailed from time to time in reports filed by ANSYS, Inc. with the Securities and Exchange Commission, including ANSYS, Inc.'s 2004 Annual Report and Form 10-K. We undertake no obligation to publicly update or revise any forward- looking statements, whether changes occur as a result of new information or future events after the date they were made.

ANSYS, ANSYS Workbench, CFX, AUTODYN, and any and all ANSYS, Inc. product and service names are registered trademarks or trademarks of ANSYS, Inc. or its subsidiaries located in the United States or other countries. ICEM CFD is a trademark licensed by ANSYS, Inc. All other trademarks or registered trademarks are the property of their respective owners.

Reconciliation of Non-GAAP Measures

This earnings release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of the adjusted (non- GAAP) financial measures to the most directly comparable GAAP financial measures.

Adjusted operating profit margin and adjusted diluted earnings per share are discussed in this earnings release because management uses this information in evaluating the results of the continuing operations of the business and believes that this information provides the users of the financial statements a valuable insight into the operating results. Additionally, management believes that it is in the best interest of its investors to provide financial information that will facilitate comparison of both historical and future results and allows greater transparency to supplemental information used by management in its financial and operational decision making. Management encourages investors to review the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures that are provided within the financial information attached to this news release.



                         ANSYS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Income
                    (in thousands, except per share data)
                                 (Unaudited)

                                Three months ended         Nine months ended
                               Sept. 30,   Sept. 30,      Sept. 30,  Sept. 30,
                                  2005        2004           2005      2004
    Revenue:
      Software licenses         $20,978     $16,585        $61,247   $49,262
      Maintenance and service    18,057      15,733         53,068    46,390

           Total revenue         39,035      32,318        114,315    95,652

    Cost of sales:
      Software licenses           1,334       1,162          3,747     3,678
      Amortization of software
       and acquired technology      877         758          2,665     2,267
      Maintenance and service     3,822       3,521         11,476     9,649
           Total cost of sales    6,033       5,441         17,888    15,594

    Gross profit                 33,002      26,877         96,427    80,058

    Operating expenses:
      Selling and marketing       6,432       5,757         19,003    17,843
      Research and development    7,667       6,611         22,486    19,441
      Amortization                  298         285          1,009       857
      General and administrative  4,276       3,763         12,851    10,808

           Total operating
            expenses             18,673      16,416         55,349    48,949

    Operating income             14,329      10,461         41,078     31,109

        Other  income                                    1,141                  415                    2,800              791

        Income  before  income  tax
          provision                                      15,470            10,876                  43,878        31,900

        Income  tax  provision                    4,296              3,277                  13,246          9,584

        Net  income                                    $11,174            $7,599                $30,632      $22,316

        Earnings  per  share  -  basic:
            Basic  earnings  per  share        $0.35              $0.24                    $0.97          $0.72
            Weighted  average  shares
              -  basic                                      31,851            31,075                  31,670        30,835

        Earnings  per  share  -  diluted:
            Diluted  earnings  per  share    $0.33              $0.23                    $0.91          $0.68
            Weighted  average  shares
              -  diluted                                  33,922            33,231                  33,667        32,895



                                                  ANSYS,  INC.  AND  SUBSIDIARIES
                                          Reconciliation  of  Non-GAAP  Measures
                                For  the  three  months  ended  September  30,  2005
                                        (in  thousands,  except  per  share  data)
                                                                  (Unaudited)

                                                                      As                  Adjustments          Adjusted  Results
                                                                Reported
        Revenue:
            Software  licenses                  $20,978                            -                            $20,978
            Maintenance  and  service        18,057                            -                              18,057

                      Total  revenue                  39,035                            -                              39,035

        Cost  of  sales:
            Software  licenses                      1,334                            -                                1,334
            Amortization  of  software
              and  acquired  technology            877                      (745)(a)                            132
            Maintenance  and  service          3,822                            -                                3,822
                      Total  cost  of  sales        6,033                      (745)                              5,288

        Gross  profit                                  33,002                        745                              33,747

        Operating  expenses:
            Selling  and  marketing              6,432                            -                                6,432
            Research  and  development        7,667                            -                                7,667
            Amortization                                    298                      (298)(a)                                -
            General  and  administrative    4,276                            -                                4,276
                      Total  operating
                        expenses                          18,673                      (298)                            18,375

        Operating  income                          14,329                    1,043                              15,372

        Other  income                                    1,141                            -                                1,141

        Income  before  income  tax
          provision                                      15,470                    1,043                              16,513

        Income  tax  provision                    4,296                        364  (b)                        4,660

        Net  income                                    $11,174                      $679                            $11,853

        Earnings  per  share  -  basic:
            Basic  earnings  per  share        $0.35                                                              $0.37
            Weighted  average  shares
              -  basic                                      31,851                                                            31,851

        Earnings  per  share  -  diluted:
            Diluted  earnings  per  share    $0.33                                                              $0.35
            Weighted  average  shares
              -  diluted                                  33,922                                                            33,922

        (a)  Amount  represents  amortization  expense  associated  with  intangible
                assets  acquired  in  business  acquisitions,  including  amounts  primarily
                related  to  acquired  software,  customer  list  and  non-compete
                agreements.
        (b)  Amount  represents  the  income  tax  impact  of  the  amortization  expense
                adjustments  referred  to  in  (a)  above.



                                                  ANSYS,  INC.  AND  SUBSIDIARIES
                                          Reconciliation  of  Non-GAAP  Measures
                                For  the  three  months  ended  September  30,  2004
                                        (in  thousands,  except  per  share  data)
                                                                  (Unaudited)

                                                                        As  Reported        Adjustments            Adjusted
                                                                                                                                          Results
        Revenue:
            Software  licenses                              $16,585                            -                $16,585
            Maintenance  and  service                    15,733                            -                  15,733

                      Total  revenue                              32,318                            -                  32,318

        Cost  of  sales:
            Software  licenses                                  1,162                            -                    1,162
            Amortization  of  software
              and  acquired  technology                        758                      (610)(a)                148
            Maintenance  and  service                      3,521                            -                    3,521
                      Total  cost  of  sales                    5,441                      (610)                  4,831

        Gross  profit                                              26,877                        610                  27,487

        Operating  expenses:
            Selling  and  marketing                          5,757                            -                    5,757
            Research  and  development                    6,611                            -                    6,611
            Amortization                                                285                      (285)(a)                    -
            General  and  administrative                3,763                            -                    3,763
                      Total  operating  expenses        16,416                      (285)                16,131

        Operating  income                                      10,461                        895                  11,356

        Other  income                                                    415                            -                        415

        Income  before  income  tax
          provision                                                  10,876                        895                  11,771

        Income  tax  provision                                3,277                        314  (b)            3,591

        Net  income                                                  $7,599                      $581                  $8,180

        Earnings  per  share  -  basic:
            Basic  earnings  per  share                    $0.24                                                  $0.26
            Weighted  average  shares  -  basic    31,075                                                31,075

        Earnings  per  share  -  diluted:
            Diluted  earnings  per  share                $0.23                                                  $0.25
            Weighted  average  shares
              -  diluted                                              33,231                                                33,231

        (a)  Amount  represents  amortization  expense  associated  with  intangible
                assets  acquired  in  business  acquisitions,  including  amounts  primarily
                related  to  acquired  software,  customer  list  and  non-compete
                agreements.
        (b)  Amount  represents  the  income  tax  impact  of  the  amortization  expense
                adjustments  referred  to  in  (a)  above.



                                                  ANSYS,  INC.  AND  SUBSIDIARIES
                                          Reconciliation  of  Non-GAAP  Measures
                                  For  the  nine  months  ended  September  30,  2005
                                        (in  thousands,  except  per  share  data)
                                                                  (Unaudited)

                                                                      As  Reported          Adjustments            Adjusted
                                                                                                                                        Results
        Revenue:
            Software  licenses                            $61,247                          -                    $61,247
            Maintenance  and  service                  53,068                          -                      53,068

                      Total  revenue                          114,315                          -                    114,315

        Cost  of  sales:
            Software  licenses                                3,747                          -                        3,747
            Amortization  of  software
              and  acquired  technology                  2,665                (2,258)(a)                    407
            Maintenance  and  service                  11,476                          -                      11,476
                      Total  cost  of  sales                17,888                (2,258)                    15,630

        Gross  profit                                            96,427                  2,258                      98,685

        Operating  expenses:
            Selling  and  marketing                      19,003                          -                      19,003
            Research  and  development                22,486                          -                      22,486
            Amortization                                          1,009                (1,009)(a)                        -
            General  and  administrative            12,851                          -                      12,851

                      Total  operating  expenses      55,349                (1,009)                    54,340

        Operating  income                                    41,078                  3,267                      44,345

        Other  income                                              2,800                          -                        2,800

        Income  before  income  tax
          provision                                                43,878                  3,267                      47,145

        Income  tax  provision                            13,246                  1,143  (b)              14,389

        Net  income                                              $30,632                $2,124                    $32,756

        Earnings  per  share  -  basic:
            Basic  earnings  per  share                  $0.97                                                    $1.03
            Weighted  average  shares
              -  basic                                                31,670                                                  31,670

        Earnings  per  share  -  diluted:
            Diluted  earnings  per  share              $0.91                                                    $0.97
            Weighted  average  shares
              -  diluted                                            33,667                                                  33,667

        (a)  Amount  represents  amortization  expense  associated  with  intangible
                assets  acquired  in  business  acquisitions,  including  amounts  primarily
                related  to  acquired  software,  customer  list  and  non-compete
                agreements.
        (b)  Amount  represents  the  income  tax  impact  of  the  amortization  expense
                adjustments  referred  to  in  (a)  above.



                                                  ANSYS,  INC.  AND  SUBSIDIARIES
                                          Reconciliation  of  Non-GAAP  Measures
                                  For  the  nine  months  ended  September  30,  2004
                                        (in  thousands,  except  per  share  data)
                                                                  (Unaudited)

                                                                      As  Reported        Adjustments              Adjusted
                                                                                                                                        Results
        Revenue:
            Software  licenses                              $49,262                        -                    $49,262
            Maintenance  and  service                    46,390                        -                      46,390

                      Total  revenue                              95,652                        -                      95,652

        Cost  of  sales:
            Software  licenses                                  3,678                        -                        3,678
            Amortization  of  software
              and  acquired  technology                    2,267              (1,829)(a)                    438
            Maintenance  and  service                      9,649                        -                        9,649
                      Total  cost  of  sales                  15,594              (1,829)                    13,765

        Gross  profit                                              80,058                1,829                      81,887

        Operating  expenses:
            Selling  and  marketing                        17,843                        -                      17,843
            Research  and  development                  19,441                        -                      19,441
            Amortization                                                857                  (857)(a)                        -
            General  and  administrative              10,808                        -                      10,808

                      Total  operating  expenses        48,949                  (857)                    48,092

        Operating  income                                      31,109                2,686                      33,795

        Other  income                                                    791                        -                            791

        Income  before  income  tax
          provision                                                  31,900                2,686                      34,586

        Income  tax  provision                                9,584                    940  (b)              10,524

        Net  income                                                $22,316              $1,746                    $24,062

        Earnings  per  share  -  basic:
            Basic  earnings  per  share                    $0.72                                                  $0.78
            Weighted  average  shares  -  basic    30,835                                                30,835

        Earnings  per  share  -  diluted:
            Diluted  earnings  per  share                $0.68                                                  $0.73
            Weighted  average  shares
              -  diluted                                              32,895                                                32,895

        (a)  Amount  represents  amortization  expense  associated  with  intangible
                assets  acquired  in  business  acquisitions,  including  amounts  primarily
                related  to  acquired  software,  customer  list  and  non-compete
                agreements.
        (b)  Amount  represents  the  income  tax  impact  of  the  amortization  expense
                adjustments  referred  to  in  (a)  above.



                                                  ANSYS,  INC.  AND  SUBSIDIARIES
                                        Condensed  Consolidated  Balance  Sheets
                                                                (in  thousands)
                                                                  (Unaudited)

                                                                                                  September  30,        December  31,
                                                                                                          2005                          2004
        ASSETS:

        Cash  &  short-term  investments                                    $174,472                  $138,446
        Accounts  receivable,  net                                                  16,448                      18,792
        Other  assets                                                                          82,098                      82,408

              Total  assets                                                                $273,018                  $239,646

        LIABILITIES  &  STOCKHOLDERS'  EQUITY:

        Deferred  revenue                                                                $46,079                    $43,906
        Other  liabilities                                                                17,903                      20,271
        Stockholders'  equity                                                        209,036                    175,469

                  Total  liabilities  &  stockholders'  equity    $273,018                  $239,646
 





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