ANSYS Reports Q3 Revenue And Earnings Results

Company Raises Outlook for 2005

SOUTHPOINTE, Pa., Nov. 3 /PRNewswire-FirstCall/ -- ANSYS, Inc. (NASDAQ: ANSS), a global innovator of simulation software and technologies designed to optimize product development processes, today announced third quarter 2005 results. ANSYS' third quarter GAAP results include:

     - Total revenue of $39.0 million, as compared to $32.3 million in the
       third quarter of 2004; total revenue of $114.3 million in the first
       nine months of 2005 as compared to $95.7 million for the nine months
       ended September 30, 2004;
     - Net income of $11.2 million, as compared to $7.6 million in the third
       quarter of 2004; net income of $30.6 million in the first nine months
       of 2005 as compared to $22.3 million for the first nine months of 2004;
     - An operating profit margin of 36.7% as compared to 32.4% for the third
       quarter of 2004; an operating profit margin of 35.9% as compared to
       32.5% for the first nine months of 2004;
     - Diluted earnings per share of $0.33, as compared to $0.23 for the third
       quarter of 2004; diluted earnings per share of $0.91 through September
       30, 2005 as compared to $0.68 for the first nine months of 2004;
     - Cash flows from operations of $14.2 million for the third quarter of
       2005 and $47.1 million for the first nine months of 2005; and
     - Cash and short-term investment balances totaling $174.5 million as of
       September 30, 2005.

Excluding acquisition-related amortization, ANSYS' third quarter adjusted (non-GAAP) results include:

     - An adjusted operating profit margin of 39.4% as compared to 35.1% for
       the third quarter of 2004; an adjusted operating profit margin of 38.8%
       as compared to 35.3% for the first nine months of 2004; and
     - Adjusted diluted earnings per share of $0.35 as compared to $0.25 for
       the third quarter of 2004; and adjusted diluted earnings per share of
       $0.97 as compared to $0.73 for the nine-month period ended
       September 30, 2004.

    Third Quarter 2005 Tax Benefit:

The GAAP and adjusted results summarized above include a third quarter tax benefit of $500,000 related to the completion and filing of the Company's 2004 federal and state tax returns. This benefit had the effect of increasing net income by approximately $500,000 in the 2005 third quarter and year-to-date results.

"This quarter marked yet another period of strong revenue and earnings growth for the Company," said ANSYS President and CEO Jim Cashman. "As a leader in our industry, we remain focused on the overall direction and health of the business. Looking ahead, our energy and resources will be dedicated to expanding our global markets at a significant pace and striving to develop and deliver innovative engineering simulation solutions to our customers."

Mr. Cashman continued, "Our growth in the third quarter continued to be spread across all major geographic regions and among a broad array of industries. We believe that our success is a result of the mounting competitive and market pressures that our customers and businesses, in general, are facing. Our solutions enable customers who are driven to find new ways to create more innovative, higher quality products, to deliver them to market faster and to minimize development and warranty costs."

During the third quarter of 2005, ANSYS repurchased approximately 115,000 shares at a total cost of $4.4 million. As of September 30, 2005, 2.0 million shares remain authorized for repurchase under the Company's stock repurchase program.

The adjusted results highlighted above, and the adjusted estimates for 2005 discussed below, represent non-GAAP (Generally Accepted Accounting Principles) financial measures. A reconciliation of these measures to the appropriate GAAP measures, for the three months and nine months ended September 30, is included in the condensed financial information included in this release.

Adjustments to Reported GAAP Financial Results

- Acquisition-Related Amortization:

As previously announced, the Company completed its acquisition of Century Dynamics, Inc. in January 2005. In previous years, the Company also acquired CFX, CADOE S.A. and ICEM CFD Engineering. These acquisitions have all been accounted for as purchases, resulting in the recording of a significant amount of identifiable intangible assets.

ANSYS is providing, and has historically provided, its current quarter GAAP results as well as financial results that have been adjusted for the impact of acquisition-related amortization. The Company believes that these non-GAAP measures supplement its consolidated GAAP financial statements as they provide a consistent basis for comparison between quarters that are not influenced by certain non-cash items and are therefore useful to investors in helping them to better understand the Company's operating results. In certain instances, such as when intangibles are acquired through business acquisitions or become fully amortized, amortization expense associated with acquired intangibles also makes period-to-period comparisons difficult because amortization expense may appear in one period but not in the comparable period. Management uses these non-GAAP financial measures internally to evaluate the Company's business performance; however, these measures are not intended to supersede or replace the GAAP results.

Management's Remainder 2005 and Initial 2006 Outlook

Based on anticipated revenues and expenditures for the remainder of 2005, the Company currently projects that fourth quarter 2005 diluted earnings per share, adjusted to exclude acquisition-related amortization, will be in the range of $0.35 to $0.36 based on revenues of $40 to $42 million. The Company's current outlook relative to 2005 fourth quarter GAAP diluted earnings per share estimate will be in the range of $0.33 to $0.34.

The Company currently projects that 2006 fiscal year adjusted diluted earning per share will be in the range of $1.45 to $1.47 based on revenues of $175 to $178 million. The preceding estimates do not reflect expenses associated with employee stock options. The Company expects to begin recording stock option expense effective January 1, 2006 in accordance with recent guidance issued by the Securities and Exchange Commission.

Adjusted diluted earnings per share is a supplemental non-GAAP financial measure. Due to the ongoing implementation of Statement of Financial Accounting Standards 123R and the uncertainties related to the magnitude of the Company's equity-based compensation expense during fiscal 2006, we are not able to estimate at this time the magnitude of the impact of equity-based compensation expense on our adjusted diluted earnings per share for the 2006 fiscal year. Adjusted diluted earnings per share should not be considered as a substitute for net income per diluted share determined in accordance with GAAP.

ANSYS will hold a conference call at 10:30 Eastern Time on November 3, 2005 to discuss third quarter results as well as to provide guidance regarding business prospects. The dial in number is 800-811-8830 or 913-981-4904 and the passcode is "ANSYS." A replay will be available until August 10, by dialing 888-203-1112 or 719-457-0820 and the passcode is "ANSYS" or "26797". The conference call will be webcast live as well as archived and can be accessed, along with other financial information, on ANSYS' website, located at http://www.ansys.com/corporate/investors.asp .

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 25 strategic sales locations throughout the world, ANSYS, Inc. and its subsidiaries employ approximately 600 people and distribute ANSYS products through a network of channel partners in over 40 countries. Visit http://www.ansys.com for more information.

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