Certain statements contained in the press release regarding matters that are not historical facts, including, but not limited to, the Company's views on future financial projections for revenue growth and diluted earnings per share (both GAAP and adjusted), the anticipated fair value of acquired deferred software license revenue, the estimated impact of accounting for share-based compensation and the estimated amount of one-time deal expenses, are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995). All forward-looking statements in this press release are subject to risks and uncertainties. Actual results could differ materially from those contained in the forward-looking statements and are based on current expectations that involve a number of risks and uncertainties, including, but not limited to, the risk that the businesses of ANSYS and Fluent may not be integrated successfully or that such integration may take longer or cost more to accomplish than expected, that potential difficulties may arise in the assimilation of operations, strategies, technologies and products of Fluent, that key personnel of Fluent may not stay with ANSYS, and that management's attention may be diverted from other business concerns during the integration process. Additional risks 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, uncertainties regarding fluctuations in quarterly results, 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 2005 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, FLUENT 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 press release contains non-GAAP financial measures as supplemental measures to GAAP regarding the Company's operational performance. The Company has historically reported similar financial measures to its investors and believes that the inclusion of comparative numbers provides consistency in its financial reporting.
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 registrant; 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. The GAAP measure most directly comparable to non-GAAP adjusted revenue is revenue and the GAAP measure most directly comparable to non-GAAP adjusted diluted earnings per share is diluted earnings per share.
Non-GAAP adjusted revenue and non-GAAP adjusted diluted earnings per share are discussed in this press release because management uses these financial measures in evaluating the results of the continuing operations of the business and to set internal plans. 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 that allows greater transparency to supplemental information used by management in its financial and operational decision making. In addition, the Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in the Company's industry, which present similar non-GAAP financial measures to investors. 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.
Non-GAAP adjusted revenue and non-GAAP adjusted diluted earnings per share reflect the actual revenue and diluted earnings per share without the effects of (a) purchase accounting adjustments to deferred revenue, (b) amortization expenses associated with intangible assets acquired in business acquisitions, including amounts related to acquired software, customer list and non-compete agreements, (c) stock-based compensation expense, (d) one-time deal-related costs and (e) the tax impact related to such adjustments.
The Company incurs purchase accounting adjustments to deferred revenue, amortization of intangibles and one-time deal costs related to various acquisitions it has made, and stock-based compensation expense as part of its ongoing operations, each of which are included in its GAAP presentation of revenue (as applicable) and diluted earnings per share. Management excludes these items, and their related tax impact, for the purposes of calculating non-GAAP adjusted revenue and non-GAAP adjusted diluted earnings per share when it evaluates the continuing operational performance of the Company. The Company believes that eliminating these items from the related financial measure is useful to investors because management believes the GAAP measure, alone, is not indicative of the Company's core operating performance. Management excludes purchase accounting adjustments to deferred revenue, the amortization of intangibles and one-time deal-related costs related to various acquisitions it has made, and the related tax impact even though such items have recurred in the past and may recur in future periods because they are driven by events (such as acquisitions) that occur sporadically. In addition, management believes that the exclusion of stock-based compensation expense allows investors to better track the performance of the Company without regard to distortive effects of, in the case of its stock options, the settlement of an obligation that will not be made in cash.
Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures.
ANSYS, INC. AND SUBSIDIARIES Reconciliation of Forward-Looking Guidance Quarter Ending June 30, 2006 Revenue (in millions) U.S. GAAP revenue guidance $57.0 - $60.0 Adjustment to exclude purchase accounting adjustments to deferred revenue 5.0 - 7.0 Adjusted revenue guidance $64.0 - $65.0 Earnings Per Share Range - Diluted U.S. GAAP diluted earnings per share guidance $0.07 - $0.15 Adjustment to exclude purchase accounting adjustments to deferred revenue, net of tax 0.09 - 0.11 Adjustment to exclude acquisition-related amortization, net of tax 0.10 - 0.14 Adjustment to exclude stock-based compensation, net of tax 0.02 - 0.03 Adjustment to exclude one-time deal-related costs, net of tax 0.01 Adjusted diluted earnings per share guidance $0.36 - $0.37 ANSYS, INC. AND SUBSIDIARIES Reconciliation of Forward-Looking Guidance Year Ending December 31, 2006 Revenue (in millions) U.S. GAAP revenue guidance $248.0 - $257.0 Adjustment to exclude purchase accounting adjustments to deferred revenue 17.0 - 20.0 Adjusted revenue guidance $268.0 - $274.0 Earnings Per Share Range - Diluted U.S. GAAP diluted earnings per share guidance $0.49 - $0.78 Adjustment to exclude purchase accounting adjustments to deferred revenue, net of tax 0.28 - 0.34 Adjustment to exclude acquisition-related amortization, net of tax 0.40 - 0.56 Adjustment to exclude stock-based compensation, net of tax 0.13 - 0.17 Adjustment to exclude one-time deal-related costs, net of tax 0.01 - 0.02 Adjusted diluted earnings per share guidance $1.58 - $1.60