ANSYS Delivers Solid Results for Second Quarter 2003
[ Back ]   [ More News ]   [ Home ]
ANSYS Delivers Solid Results for Second Quarter 2003

SOUTHPOINTE, Pa., July 31 /PRNewswire-FirstCall/ -- ANSYS Inc. , a global innovator of simulation software and technologies aimed at optimizing customers' product development processes, today announced second quarter 2003 results. ANSYS' second quarter and year-to-date GAAP results include:

   - 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.

ANSYS Inc. is committed to providing the most open and flexible analysis solutions to meet customer requirements for engineering software in today's competitive marketplace. ANSYS Inc. partners with leading design software suppliers to develop state-of-the-art CAD-integrated products. ANSYS and its global network of ANSYS Support Distributors provide sales, support and training for customers. Information about ANSYS Inc. and its products can be found on the Worldwide Web at http://www.ansys.com/ .

Note to editors: ANSYS, ANSYS*EMAX, ANSYS*Environment, CADOE and DesignSpace are Trademarks or registered Trademarks of subsidiaries of ANSYS Inc. located in the United States or other countries. All other trademarks and 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 software license revenue, adjusted operating profit margin, adjusted net income and adjusted diluted earnings per share are presented in this earnings release because management uses this information in evaluating the results of the continuing operations of 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.

                       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,
                           2003           2002          2003         2002
  Revenue:
     Software licenses   $13,962       $11,778      $26,404       $23,108
     Maintenance and
      service             13,681        10,956       25,839        20,891
        Total revenue     27,643        22,734       52,243        43,999

  Cost of sales:
     Software licenses     1,468           915        2,647         1,952
     Maintenance and
      service              3,689         1,894        6,583         3,708
        Total cost of
         sales             5,157         2,809        9,230         5,660

  Gross profit            22,486        19,925       43,013        38,339

  Operating expenses:
     Selling and
      marketing            6,096         5,241       11,608        10,402
     Research and
      development          6,074         4,938       11,730         9,757
     Amortization          1,181           568        1,929         1,167
     General and
      administrative       3,132         2,710        5,776         5,040
        Total operating
         expenses         16,483        13,457       31,043        26,366

  Operating income         6,003         6,468       11,970        11,973

  Other income               772           323        1,306           494

  Income before income
   tax provision           6,775         6,791       13,276        12,467

  Income tax provision     2,303         2,071        4,525         3,859

  Net income              $4,472        $4,720       $8,751        $8,608

  Earnings per share -
   basic:
      Basic earnings per
       share               $0.30         $0.32        $0.59         $0.59
      Weighted average
       shares - basic     14,859        14,670       14,743        14,629

  Earnings per share -
   diluted:
      Diluted earnings
       per share           $0.29         $0.30        $0.56         $0.55
      Weighted average
       shares - diluted   15,904        15,829       15,679        15,776


                       ANSYS INC. AND SUBSIDIARIES
                   Reconciliation of Non-GAAP Measures
                 For the three months ended June 30, 2003
                  (in thousands, except per share data)
                               (Unaudited)

                                As Reported      Adjustments   Adjusted
                                                                Results
  Revenue:
     Software licenses            $13,962          $1,116(a)    $15,078
     Maintenance and service       13,681               -        13,681

        Total revenue              27,643           1,116        28,759

  Cost of sales:
     Software licenses              1,468               -         1,468
     Maintenance and service        3,689               -         3,689
        Total cost of sales         5,157               -         5,157

  Gross profit                     22,486           1,116        23,602

  Operating expenses:
     Selling and marketing          6,096               -         6,096
     Research and development       6,074               -         6,074
     Amortization                   1,181            (955)(b)       226
     General and administrative     3,132               -         3,132
        Total operating expenses   16,483            (955)       15,528

  Operating income                  6,003           2,071         8,074

  Other income                        772               -           772

  Income before income tax
   provision                        6,775           2,071         8,846

  Income tax provision              2,303             724(c)      3,027

  Net income                       $4,472          $1,347        $5,819

  Earnings per share - basic:
     Basic earnings per share       $0.30                        $ 0.39
     Weighted average shares -
      basic                        14,859                        14,859

  Earnings per share - diluted:
     Diluted earnings per share     $0.29                        $ 0.37
     Weighted average shares -
      diluted                      15,904                        15,904

    (a) 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."
   (b) 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.
   (c) Amount represents the income tax impact of the revenue and
       amortization expense adjustments referred to in (a) and (b) above.


                       ANSYS INC. AND SUBSIDIARIES
                   Reconciliation of Non-GAAP Measures
                 For the three months ended June 30, 2002
                  (in thousands, except per share data)
                               (Unaudited)

                                As Reported      Adjustments   Adjusted
                                                                Results
  Revenue:
     Software licenses            $11,778             $-        $11,778
     Maintenance and service       10,956              -         10,956

        Total revenue              22,734              -         22,734

  Cost of sales:
     Software licenses                915              -            915
     Maintenance and service        1,894              -          1,894
        Total cost of sales         2,809              -          2,809

  Gross profit                     19,925              -         19,925

  Operating expenses:
     Selling and marketing          5,241              -          5,241
     Research and development       4,938              -          4,938
     Amortization                     568           (435)(a)        133
     General and administrative     2,710              -          2,710
        Total operating expenses   13,457           (435)        13,022

  Operating income                  6,468            435          6,903

  Other income                        323              -            323

  Income before income tax
   provision                        6,791            435          7,226

  Income tax provision              2,071            152(b)       2,223

  Net income                       $4,720           $283         $5,003

  Earnings per share - basic:
     Basic earnings per share       $0.32                         $0.34
     Weighted average shares -
      basic                        14,670                        14,670


  Earnings per share - diluted:
     Diluted earnings per share     $0.30                         $0.32
     Weighted average shares -
      diluted                      15,829                        15,829

   (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
       adjustment referred to in (a) above.


                       ANSYS INC. AND SUBSIDIARIES
                   Reconciliation of Non-GAAP Measures
                  For the six months ended June 30, 2003
                  (in thousands, except per share data)
                               (Unaudited)

                                As Reported     Adjustments    Adjusted
                                                                Results
  Revenue:
     Software licenses            $26,404          $1,570(a)    $27,974
     Maintenance and service       25,839               -        25,839

        Total revenue              52,243           1,570        53,813

  Cost of sales:
     Software licenses              2,647               -         2,647
     Maintenance and service        6,583               -         6,583
     Total cost of sales            9,230               -         9,230

  Gross profit                     43,013           1,570        44,583

  Operating expenses:
     Selling and marketing         11,608               -        11,608
     Research and development      11,730               -        11,730
     Amortization                   1,929          (1,576)(b)       353
     General and administrative     5,776               -         5,776
        Total operating expenses   31,043          (1,576)       29,467

  Operating income                 11,970           3,146        15,116

  Other income                      1,306               -         1,306

  Income before income tax
   provision                       13,276           3,146        16,422

  Income tax provision              4,525           1,100(c)      5,625

  Net income                       $8,751          $2,046       $10,797

  Earnings per share - basic:
     Basic earnings per share       $0.59                         $0.73
     Weighted average shares -
      basic                        14,743                        14,743


  Earnings per share - diluted:
     Diluted earnings per share     $0.56                         $0.69
     Weighted average shares -
      diluted                      15,679                        15,679

   (a) 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."
   (b) 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.
   (c) Amount represents the income tax impact of the revenue and
       amortization expense adjustments referred to in (a) and (b) above.


                       ANSYS INC. AND SUBSIDIARIES
                   Reconciliation of Non-GAAP Measures
                  For the six months ended June 30, 2002
                  (in thousands, except per share data)
                               (Unaudited)

                                As Reported    Adjustments     Adjusted
                                                               Results
  Revenue:
     Software licenses            $23,108             $-        $23,108
     Maintenance and service       20,891              -         20,891

        Total revenue              43,999              -         43,999

  Cost of sales:
     Software licenses              1,952              -          1,952
     Maintenance and service        3,708              -          3,708
        Total cost of sales         5,660              -          5,660

  Gross profit                     38,339              -         38,339

  Operating expenses:
     Selling and marketing         10,402              -         10,402
     Research and development       9,757              -          9,757
     Amortization                   1,167           (871)(a)        296
     General and administrative     5,040              -          5,040
        Total operating expenses   26,366           (871)        25,495

  Operating income                 11,973            871         12,844

  Other income                        494              -            494

  Income before income tax
   provision                       12,467            871         13,338

  Income tax provision              3,859            305(b)       4,164

  Net income                       $8,608           $566         $9,174

  Earnings per share - basic:
     Basic earnings per share       $0.59                         $0.63
     Weighted average shares -
      basic                        14,629                        14,629

  Earnings per share - diluted:
     Diluted earnings per share     $0.55                         $0.58
     Weighted average shares -
      diluted                      15,776                        15,776

   (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
       adjustment referred to in (a) above.


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

                                                  June 30,      December 31,
                                                    2003           2002
  ASSETS:

  Cash & short-term investments                    $62,832        $61,132
  Accounts receivable, net                          16,035         15,875
  Other assets                                      76,815         49,994

     Total assets                                 $155,682       $127,001

  LIABILITIES & STOCKHOLDERS' EQUITY:

  Current liabilities                              $47,177        $35,608
  Stockholders' equity                             108,505         91,393

     Total liabilities & stockholders' equity     $155,682       $127,001

CONTACT: Lisa M. O'Connor, Treasurer of ANSYS, Inc., +1-724-514-1782

Web site: http://www.ansys.com/
http://www.ansys.com/newsroom/investor