ANSYS Reports Record Quarter and Raises 2007 Outlook

Acquired in-process research and development. The Company incurs in- process research and development expenses when technological feasibility for acquired technology has not been established and no future alternative use for such technology exists. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs do not relate to the Company's ongoing operations and generally cannot be changed or influenced by management at the time of or after the acquisition. Accordingly, management does not consider these expenses for purposes of evaluating the performance of the Company during the applicable time period after the acquisition, and it excludes such expenses when making decisions to allocate resources. The Company believes that this non-GAAP financial adjustment is useful to investors because it allows investors to (a) evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making and (b) to compare past and future reports of financial results of the Company as the expense related to in-process research and development is a one-time item recorded on the date of acquisition.

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 financial measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.

Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures as listed below:

     GAAP Reporting Measure        Non-GAAP Reporting Measure

     Revenue                       Non-GAAP Revenue
     Operating Profit              Non-GAAP Operating Profit
     Operating Profit Margin       Non-GAAP Operating Profit Margin
     Net Income                    Non-GAAP Net Income
     Diluted Earnings Per Share    Non-GAAP Diluted Earnings Per Share

About ANSYS, Inc.

ANSYS, Inc., founded in 1970, develops and globally markets engineering simulation software and technologies widely used by engineers and designers across a broad spectrum of industries. The Company focuses on the development of open and flexible solutions that enable users to analyze designs directly on the desktop, providing a common platform for fast, efficient and cost- conscious product development, from design concept to final-stage testing and validation. The Company and its global network of channel partners provide sales, support and training for customers. Headquartered in Canonsburg, Pennsylvania U.S.A. with more than 40 strategic sales locations throughout the world, ANSYS, Inc. and its subsidiaries employ approximately 1,400 people and distribute ANSYS products through a network of channel partners in over 40 countries. Visit http://www.ansys.com for more information.

Certain statements contained in the press release regarding matters that are not historical facts, including, but not limited to, statements regarding our projections for revenue and earnings per share for the third quarter and fiscal year 2007 (both GAAP and non-GAAP to exclude purchase accounting for deferred revenue, acquisition-related amortization and stock-based compensation expense), statements about management's views concerning the Company's prospects in the remainder of 2007 and subsequent years, including the possibility of 2007 being a record year for company results and the most successful year in the Company's history, statements and projections relating to the impact of stock-based compensation, statements regarding management's use of non-GAAP financial measures, statements regarding the strength of our diversified global business, statements regarding our momentum, statements regarding our progress during the recent quarter and first half of 2007, statements regarding the strength of combining the ANSYS and Fluent businesses, statements regarding the unprecedented nature of our engineering simulation solutions, statements regarding our continued focus on strengthening our margins and balance sheet, statements regarding record cash flows from operations, and statements regarding our positioning to drive 2007 to be the most successful year in the Company's history, 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, including, but not limited to, the risk of a general economic downturn in one or more of ANSYS' primary geographic regions, 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 2007 Annual Report and Form 10-K, as amended. 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, AUTODYN, CFX, FLUENT and any and all ANSYS, Inc. brand, product, service and feature names, logos and slogans are registered trademarks or trademarks of ANSYS, Inc. or its subsidiaries in the United States or other countries. All other brand, product, service and feature names or trademarks are the property of their respective owners.


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


                            Three Months Ended         Six Months Ended
                           June 30,     June 30,     June 30,     June 30,
                              2007         2006         2007         2006
    Revenue:
      Software licenses    $59,412      $34,763     $116,624      $61,515
      Maintenance and
       service              32,799       27,501       63,446       46,760

        Total revenue       92,211       62,264      180,070      108,275

    Cost of  sales:
            Software  licenses            2,308                1,700                4,520                3,190
            Amortization  of
              software  and
              acquired  technology      5,382                3,739              10,724                4,647
            Maintenance  and
              service                            11,241                8,014              22,567              12,484
                Total  cost
                  of  sales                      18,931              13,453              37,811              20,321

        Gross  profit                        73,280              48,811            142,259              87,954
        Operating  expenses:
            Selling,  general
              and  administrative      27,095              22,020              53,986              33,859
            Research  and
              development                    13,576              11,622              26,648              20,979
            Amortization                      2,213                1,576                4,408                1,704
            In-process  research
              and  development                      -              28,100                        -              28,100
                Total  operating
                  expenses                      42,884              63,318              85,042              84,642

        Operating  income  (loss)  30,396            (14,507)            57,217                3,312

        Interest  expense                (1,966)            (2,179)            (3,949)            (2,183)
        Interest  income                    1,113                1,260                1,975                2,776
        Other  expense                          (482)                (263)                (398)                  (77)

        Income  before  income
          tax  provision                    29,061            (15,689)            54,845                3,828

        Income  tax  provision        10,805                3,704              20,438              10,308

        Net  income  (loss)            $18,256          $(19,393)          $34,407            $(6,480)

        Earnings  per  share  -
          basic(a):
            Basic  earnings
              per  share                          $0.24              $(0.27)              $0.44              $(0.09)
            Weighted  average
              shares  -  basic              77,611              72,612              77,488              68,428

        Earnings  per  share  -
          diluted(a):
            Diluted  earnings  (loss)
              per  share                          $0.23              $(0.27)              $0.43              $(0.09)

            Weighted  average
                shares  -  diluted        80,886              72,612              80,809              68,428


        (a)    The  share  data  and  earnings  per  share  data  in  this  press  release  give
                  effect  for  the  two-for-one  stock  split,  applied  retroactively,  to  all
                  periods  presented.


                                                    ANSYS,  INC.  AND  SUBSIDIARIES
                                          Reconciliation  of  Non-GAAP  Measures
                                      For  the  three  months  ended  June  30,  2007
                        (in  thousands,  except  percentages  and  per  share  data)
                                                                  (Unaudited)

                                                                As  Reported          Adjustments      Non-GAAP  Results
        Total  revenue:                                    $92,211                  $  69(1)              $92,280
        Operating  income                                  30,396                9,671(2)                40,067
        Operating  profit  margin                        33.0%                                                  43.4%
        Net  income                                          $  18,256              $6,365(3)              $24,621

        Earnings  per  share  -  diluted(a):
            Diluted  earnings  per  share            $0.23                                                  $0.30
            Weighted  average  shares
              -  diluted                                          80,886                                                80,886


        (1)    Amount  represents  the  revenue  not  reported  during  the  period  as  a
                  result  of  the  purchase  accounting  adjustment  associated  with
                  EITF  01-3,  "Accounting  in  a  Business  Combination  for  Deferred  Revenue
                  of  an  Acquiree."
        (2)    Amount  represents  $7.5  million  of  amortization  expense  associated
                  with  intangible  assets  acquired  in  business  acquisitions,  including
                  amounts  primarily  related  to  acquired  software,  customer  list  and
                  non-compete  agreements,  a  $2.1  million  charge  for  stock-based
                  compensation  in  accordance  with  SFAS  No.  123R,  "Share-Based  Payment,"
                  as  well  as  the  $69,000  adjustment  to  revenue  as  reflected  in  (1)
                  above.
        (3)    Amount  represents  the  impact  of  the  adjustments  to  operating  income
                  referred  to  in  (2)  above,  adjusted  for  the  related  income  tax  impact
                  of  $3.3  million.


                                                    ANSYS,  INC.  AND  SUBSIDIARIES
                                          Reconciliation  of  Non-GAAP  Measures
                                      For  the  three  months  ended  June  30,  2006
                                        (in  thousands,  except  per  share  data)
                                                                  (Unaudited)

                                                                As  Reported          Adjustments      Non-GAAP  Results
        Total  revenue:                                    $62,264              $5,939(1)              $68,203
        Operating  (loss)  income                  (14,507)            40,480(2)                25,973
        Operating  profit  margin                    (23.3%)                                                  38.1%
        Net  (loss)  income                            $(19,393)          $35,850(3)              $16,457

        Earnings  per  share  -  diluted(a):
            Diluted  (loss)
              earnings  per  share                        $(0.27)                                                $0.21
            Weighted  average  shares
              -  diluted                                          72,612                4,208(4)                76,820


        (1)    Amount  represents  the  revenue  not  reported  during  the  period  as  a
                  result  of  the  purchase  accounting  adjustment  associated  with
                  EITF  01-3,  "Accounting  in  a  Business  Combination  for  Deferred  Revenue
                  of  an  Acquiree."
        (2)    Amount  represents  $5.2  million  of  amortization  expense  associated
                  with  intangible  assets  acquired  in  business  acquisitions,  including
                  amounts  primarily  related  to  acquired  software,  customer  list  and
                  non-compete  agreements,  a  $1.2  million  charge  for  stock-based
                  compensation,  $28.1  million  of  acquired  in-process  research  and
                  development  expense  that  was  purchased  in  the  Fluent  acquisition  and
                  immediately  expensed,  as  well  as  the  $5.9  million  adjustment  to
                  revenue  as  reflected  in  (1)  above.
        (3)    Amount  represents  the  impact  of  the  adjustments  to  operating  income
                  referred  to  in  (2)  above,  adjusted  for  the  related  income  tax  impact
                  of  $4.6  million.
        (4)    Amount  represents  common  stock  equivalents  that  are  dilutive  in  the
                  calculation  of  non-GAAP  diluted  earnings  per  share.


                                                    ANSYS,  INC.  AND  SUBSIDIARIES
                                          Reconciliation  of  Non-GAAP  Measures
                                        For  the  six  months  ended  June  30,  2007
                        (in  thousands,  except  percentages  and  per  share  data)
                                                                  (Unaudited)

                                                                As  Reported          Adjustments      Non-GAAP  Results
        Total  revenue:                                  $180,070              $1,829(1)            $181,899
        Operating  income                                  57,217              21,013(2)                78,230
        Operating  profit  margin                      31.8%                                                  43.0%
        Net  income                                            $34,407            $13,667(3)              $48,074

        Earnings  per  share  -  diluted(a):
            Diluted  earnings  per  share            $0.43                                                  $0.59
            Weighted  average  shares
              -  diluted                                          80,809                                                80,809


        (1)    Amount  represents  the  revenue  not  reported  during  the  period  as  a
                  result  of  the  purchase  accounting  adjustment  associated  with
                  EITF  01-3,  "Accounting  in  a  Business  Combination  for  Deferred  Revenue
                  of  an  Acquiree."
        (2)    Amount  represents  $14.9  million  of  amortization  expense  associated
                  with  intangible  assets  acquired  in  business  acquisitions,  including
                  amounts  primarily  related  to  acquired  software,  customer  list  and
                  non-compete  agreements,  a  $4.3  million  charge  for  stock-based
                  compensation  in  accordance  with  SFAS  No.  123R,  "Share-Based  Payment,"
                  as  well  as  the  $1.8  million  adjustment  to  revenue  as  reflected  in  (1)
                  above.
        (3)    Amount  represents  the  impact  of  the  adjustments  to  operating  income
                  referred  to  in  (2)  above,  adjusted  for  the  related  income  tax  impact
                  of  $7.3  million.


                                                    ANSYS,  INC.  AND  SUBSIDIARIES
                                          Reconciliation  of  Non-GAAP  Measures
                                        For  the  six  months  ended  June  30,  2006
                                        (in  thousands,  except  per  share  data)
                                                                  (Unaudited)

                                                                As  Reported          Adjustments      Non-GAAP  Results
        Total  revenue:                                  $108,275              $5,939(1)            $114,214
        Operating  income                                    3,312              42,625(2)                45,937
        Operating  profit  margin                          3.1%                                                  40.2%
        Net  (loss)  income                              $(6,480)          $37,432(3)              $30,952

        Earnings  per  share  -  diluted(a):
            Diluted  (loss)
              earnings  per  share                        $(0.09)                                                $0.43
            Weighted  average  shares
              -  diluted                                          68,428                4,106(4)                72,534


        (1)    Amount  represents  the  revenue  not  reported  during  the  period  as  a
                  result  of  the  purchase  accounting  adjustment  associated  with
                  EITF  01-3,  "Accounting  in  a  Business  Combination  for  Deferred  Revenue
                  of  an  Acquiree."
        (2)    Amount  represents  $6.1  million  of  amortization  expense  associated
                  with  intangible  assets  acquired  in  business  acquisitions,  including
                  amounts  primarily  related  to  acquired  software,  customer  list  and
                  non-compete  agreements,  a  $2.5  million  charge  for  stock-based
                  compensation,  $28.1  million  of  acquired  in-process  research  and
                  development  expense  that  was  purchased  in  the  Fluent  acquisition  and
                  immediately  expensed,  as  well  as  the  $5.9  million  adjustment  to
                  revenue  as  reflected  in  (1)  above.
        (3)    Amount  represents  the  impact  of  the  adjustments  to  operating  income
                  referred  to  in  (2)  above,  adjusted  for  the  related  income  tax  impact
                  of  $5.2  million.
        (4)    Amount  represents  common  stock  equivalents  that  are  dilutive  in  the
                  calculation  of  non-GAAP  diluted  earnings  per  share.


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

                                                                                                          June  30,      December  31,
                                                                                                                2007                      2006
        ASSETS:
        Cash  &  short-term  investments                                      $137,971              $104,486
        Accounts  receivable,  net                                                    41,079                  37,341
        Goodwill                                                                                  431,624                428,959
        Other  intangibles,  net                                                      189,723                204,115
        Other  assets                                                                          106,394                103,142

            Total  assets                                                                    $906,791              $878,043

        LIABILITIES  &  STOCKHOLDERS'  EQUITY:

        Deferred  revenue                                                                $124,660              $101,226
        Long-term  debt  (including  current  portion)                98,459                123,320
        Other  liabilities                                                                104,277                118,704
        Stockholders'  equity                                                          579,395                534,793

            Total  liabilities  &  stockholders'  equity            $906,791              $878,043


                                                  ANSYS,  INC.  AND  SUBSIDIARIES
                                    Reconciliation  of  Forward-Looking  Guidance
                                            Quarter  Ending  September  30,  2007


                                                                                                                  Earnings  Per  Share
                                                                                                                      Range  -  Diluted
        U.S.  GAAP  expectation                                                                      $0.18  -  $0.20
        Adjustment  to  exclude  purchase  accounting
          adjustments  to  deferred  revenue                                                            -
        Adjustment  to  exclude  acquisition-related
          amortization                                                                                      $0.05  -  $0.06
        Adjustment  to  exclude  stock-based  compensation                            $0.02

        Non-GAAP  expectation                                                                        $0.26  -  $0.27


                                                  ANSYS,  INC.  AND  SUBSIDIARIES
                                    Reconciliation  of  Forward-Looking  Guidance
                                                Year  Ending  December  31,  2007


                                                                                                                  Earnings  Per  Share
                                                                                                                      Range  -  Diluted
        U.S.  GAAP  expectation                                                                      $0.79  -  $0.84
        Adjustment  to  exclude  purchase  accounting
          adjustments  to  deferred  revenue                                                $0.01  -  $0.02
        Adjustment  to  exclude  acquisition-related
          amortization                                                                                      $0.22  -  $0.23
        Adjustment  to  exclude  stock-based
          compensation                                                                                      $0.09  -  $0.10

        Non-GAAP  expectation                                                                        $1.14  -  $1.16

 

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