- Total revenue of $27.6 million, as compared to $22.7 million in the second quarter of 2002; total revenue of $52.2 million in the first six months of 2003 as compared to $44.0 million for the six months ended June 30, 2002; - Diluted earnings per share of $0.29 as compared to $0.30 for the second quarter of 2002; and diluted earnings per share of $0.56 through June 30, 2003 as compared to $0.55 for the first six months of 2002; - Cash flows from operations of $10.2 million in the second quarter and $21.6 million in the first six months of 2003.
Excluding the adverse impact on reported software license revenue of purchase accounting adjustments related to the Company's February 2003 acquisition of CFX and acquisition-related amortization (see discussion below), ANSYS' second quarter and year-to-date adjusted (non-GAAP) results include:
- Total adjusted revenue of $28.8 million, as compared to $22.7 million in the second quarter of 2002; total adjusted revenue of $53.8 million in the first six months of 2003 as compared to $44.0 million for the six months ended June 30, 2002; - An overall adjusted operating profit margin, excluding total amortization, of 29% as compared to 31% for the second quarter of 2002; and an overall adjusted operating profit margin, excluding total amortization, of 29% as compared to 30% for the first six months of 2002; - Adjusted diluted earnings per share of $0.37 compared to $0.32 in the second quarter of 2002; adjusted diluted earnings per share of $0.69 compared to $0.58 in the six month period ended June 30, 2002.
Jim Cashman, ANSYS President and CEO, stated, "We continued to work diligently this quarter to deliver solid results, in spite of ongoing global macro-economic issues. The strength of our business model continues to allow us to deliver positive business results, while at the same time investing for our future. We are very pleased with the progress that we have made in integrating the CFX acquisition and are encouraged by the positive contribution that it added to the second quarter's results. We are also very encouraged by the strong cash flow in the first six months of this year, which has resulted in cash and short-term investment balances exceeding those of December 31st, even with the first quarter acquisition of CFX."
Cashman further commented, "During the quarter, we were also able to strengthen our position as the global innovator of engineering simulation and technologies through the latest release of our flagship product, ANSYS 7.1, as well as the introduction of CFX 5.6. Both of these offerings continue to expand the high return on investment solutions that ANSYS is committed to deliver to address the increasingly complex needs of our customers."
The adjusted results highlighted above represent non-GAAP (Generally Accepted Accounting Principles) financial measures. A reconciliation of these measures to the appropriate GAAP measures is included in the condensed financial statements included in this release.
Adjustments to Reported GAAP Financial Results: - Purchase Accounting Adjustment for Acquired Deferred Revenue:
As announced February 26, 2003, ANSYS acquired CFX for approximately $21 million in cash. In accordance with the fair value provisions of EITF 01-3 "Accounting in a Business Combination for Deferred Revenue of an Acquiree," acquired deferred software license revenue of approximately $4.8 million was recorded on the opening balance sheet, which was approximately $3.4 million lower than the historical carrying value. Although this purchase accounting requirement will have no impact on the Company's business or cash flow, it will adversely impact the Company's reported GAAP software license revenue for the first twelve months post-acquisition. In order to provide investors with financial information that will facilitate comparison of both historical and future results, the Company will provide adjusted financial information, which excludes the impact of the purchase accounting adjustment, through this twelve-month period.
- Acquisition Related Amortization:
As previously discussed, the Company completed its recent acquisition of CFX in February 2003. Prior to that, the Company also acquired CADOE S.A. and ICEM CFD Engineering in November 2001 and August 2000, respectively. These acquisitions have all been accounted for as purchases, resulting in the recording of a significant amount of goodwill and identifiable intangible assets. As a result of the amortization associated with intangible assets related to these acquisitions, ANSYS' quarterly and year-to-date financial results are not comparable with prior periods.
To enable investors and other interested parties to compare 2003 financial results to historical and future periods, ANSYS is providing its 2003 second quarter and year-to-date reported GAAP results as well as financial results that have been adjusted for the impact of the items described above.
Second Quarter 2003 and Six Months Ended June 30, 2003 Reported GAAP Results:
ANSYS reported net income for the second quarter of $4.5 million, or $0.29 diluted earnings per share, based on 15.9 million weighted average shares outstanding. For the quarter ended June 30, 2002, ANSYS reported net income of $4.7 million, or $0.30 diluted earnings per share, based on 15.8 million weighted average shares outstanding. For the six months ended June 30, 2003, ANSYS reported net income of $8.8 million, or diluted earnings per share of $0.56, based on 15.7 million weighted average shares outstanding. For the six months ended June 30, 2002, ANSYS reported net income of $8.6 million, or diluted earnings per share of $0.55, based on 15.8 million weighted average shares outstanding. Cash and short-term investments at June 30, 2003 totaled $62.8 million and ANSYS remains debt free.
ANSYS will hold a conference call at 10:30 A.M. Eastern Time on July 31, 2003 to discuss second quarter results as well as to provide guidance regarding 2003 business prospects. The dial in number is 800-857-7001 and the passcode is "ANSYS". A replay will be available until August 2, 2003 by dialing 800-756-9736. The conference call will be webcast live and can be accessed, along with other financial information, on ANSYS' website, located at http://www.ansys.com/newsroom/investor .
Some matters discussed in this news release constitute forward looking statements under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These forward looking statements include statements with respect to our continuation of solid margins, positive cash flow from operations and positive earnings, the benefits of the CFX acquisition, including the access to new customers and markets, our future growth prospects, our strength in the marketplace despite difficult economic conditions and our ability to maintain technological leadership.
All forward looking statements in this press release are subject to risks and uncertainties, such as the risk of a general economic downturn in one or more of ANSYS' primary geographic markets, the risk that ANSYS has overestimated its ability to maintain growth and profitability and control costs in the current economic environment, the risk that the CFX business will not perform consistent with operations or that ANSYS will experience unforeseen difficulties integrating this newly-acquired business, the risk that ANSYS' sales will be adversely impacted at a later stage in the current economic downturn, 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 in an unstable economy, risks of problems arising from customer contract cancellations, uncertainties regarding customer acceptance of new products, the risk that ongoing pressure on customer spending will not allow investment in sales, technology innovation and development of key strategic partnerships, the risk that ANSYS' strategic plan will not increase shareholder value over the long run, the risk that ANSYS' operating results will be adversely affected by possible delays in developing, completing, or shipping new or enhanced products, the risk that changes in the price of our common stock or the existence of competing uses for available cash will affect our willingness to continue the stock repurchase program, uncertainties regarding fluctuations in quarterly results, including uncertainties regarding the timing of orders from significant customers and regional economies, 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 2002 Annual Report and Form 10-K and the most recent quarterly report on Form 10-Q.