ANSS: ANSYS, Inc. Announces Continued Growth and Solid Operating Results for the Third Quarter

ANSYS, Inc. (Nasdaq: ANSS), a global innovator of simulation software and technologies designed to optimize product development processes, today announced a new Company record for quarterly non-GAAP operating results and an increase in its outlook for 2006 non-GAAP results. The Company has also provided its initial outlook for the 2007 fiscal year.

"We are proud to announce a record quarter for financial performance for both revenue and earnings, and are pleased with the efforts of the entire ANSYS team," said ANSYS President and CEO, Jim Cashman. "The Company continues to make substantial progress against its short-term integration and business execution priorities, in addition to its long-term strategic initiatives. We firmly believe that these results not only validate the initial enthusiastic customer response to our diversified portfolio of innovative product and service offerings, but also provide us with the business momentum that enables us to continue to focus, invest and drive our technology vision for the future."

ANSYS' third quarter and year-to-date 2006 financial results are presented below. ANSYS' 2006 year-to-date GAAP results are heavily impacted by a one- time charge of $28.1 million, which was recorded in the second quarter of 2006, and related to in-process research and development associated with the May 2006 acquisition of Fluent. The non-GAAP results exclude the income statement effects of stock-based compensation, purchase accounting for deferred revenue, acquisition-related amortization of intangible assets and the one-time acquired in-process research and development charge. Non-GAAP and GAAP results reflect:


Total non-GAAP revenue of $77.4 million in the third quarter of 2006 as compared to $39.0 million in the third quarter of 2005; total non-GAAP revenue of $191.6 million in the first nine months of 2006 as compared to $114.3 million in the first nine months of 2005; total GAAP revenue of $70.1 million in the third quarter of 2006 as compared to $39.0 million in the third quarter of 2005; total GAAP revenue of $178.4 million in the first nine months of 2006 as compared to $114.3 million in the first nine months of 2005;

A non-GAAP operating profit margin of 37.1% in the third quarter of 2006 as compared to 39.4% in the third quarter of 2005; a non-GAAP operating profit margin of 39.0% in the first nine months of 2006 as compared to 38.8% in the first nine months of 2005; a GAAP operating profit margin of 18.3% in the third quarter of 2006 as compared to 36.7% in the third quarter of 2005; a GAAP operating profit margin of 9.1% in the first nine months of 2006 as compared to 35.9% in the first nine months of 2005;

Non-GAAP net income of $18.2 million in the third quarter of 2006 as compared to $11.9 million in the third quarter of 2005; non-GAAP net income of $49.2 million in the first nine months of 2006 as compared to $32.8 million in the first nine months of 2005; GAAP net income of $8.4 million in the third quarter of 2006 as compared to GAAP net income of $11.2 million in the third quarter of 2005; GAAP net income of $1.9 million in the first nine months of 2006 as compared to GAAP net income of $30.6 million in the first nine months of 2005; and

Non-GAAP diluted earnings per share of $0.45 in the third quarter of 2006 as compared to $0.35 in the third quarter of 2005; non-GAAP diluted earnings per share of $1.31 in the first nine months of 2006 as compared to $0.97 in the first nine months of 2005; GAAP diluted earnings per share of $0.21 in the third quarter of 2006 as compared to GAAP diluted earnings per share of $0.33 in the third quarter of 2005; GAAP diluted earnings per share of $0.05 in the first nine months of 2006 as compared to GAAP diluted earnings per share of $0.91 in the first nine months of 2005.

The Company's GAAP results reflect stock-based compensation charges related to the January 1, 2006 adoption of SFAS No. 123R "Share-Based Payment" of approximately $1.2 million ($1.0 million after tax) or $0.03 diluted earnings per share for the third quarter of 2006 and approximately $3.7 million ($3.0 million after tax) or $0.08 diluted earnings per share for the first nine months of 2006. Because the Company elected prospective adoption of SFAS No. 123R, as permitted by SFAS No. 123R, the 2005 results do not reflect charges for stock-based compensation.

The non-GAAP financial results highlighted above, and the non-GAAP financial outlook for 2006 and 2007 discussed below, represent non-GAAP financial measures. A reconciliation of these measures to the appropriate GAAP measures, for the three months and nine months ended September 30, 2006 and 2005, and for the 2006 and initial 2007 financial outlook, is included in the condensed financial information included in this release.

"We believe that today's reported results highlight continued progress in the core business, as well as the positive impact of our integration efforts to date. They are also a clear indication that our dedication to customers and our focus on execution against a long-term strategy translates to sustained profitable growth and ultimately drives value for the benefit of our stockholders," Cashman stated.

Management's Remaining 2006 and Initial 2007 Financial Outlook

The Company has provided its 2006 and 2007 revenue and earnings per share guidance below. The revenue and earnings per share guidance is provided on both a GAAP basis and a non-GAAP basis. Non-GAAP revenue and non-GAAP diluted earnings per share exclude charges for stock-based compensation as well as the income statement effects of purchase accounting for deferred revenue, acquisition-related amortization of intangible assets and acquired in-process research and development

Fourth Quarter 2006 Guidance
The Company currently expects the following for the quarter ending December 31, 2006:


GAAP revenue in the range of $77 - $79 million
Non-GAAP revenue in the range of $82 - $84 million
GAAP diluted earnings per share of $0.24 - $0.27
Non-GAAP diluted earnings per share of $0.44 - $0.46

Fiscal Year 2006 Guidance
The Company currently expects the following for the fiscal year ending December 31, 2006:


GAAP revenue in the range of $255 - $257 million
Non-GAAP revenue in the range of $273 - $275 million
GAAP diluted earnings per share of $0.27 - $0.33
Non-GAAP diluted earnings per share of $1.74 - $1.76

Fiscal Year 2007 Guidance
The Company currently expects the following for the fiscal year ending December 31, 2007:


GAAP revenue in the range of $358 - $363 million
Non-GAAP revenue in the range of $360 - $365 million
GAAP diluted earnings per share of $1.31 - $1.41
Non-GAAP diluted earnings per share of $2.00 - $2.03

The above guidance includes the impact of the May 1, 2006 acquisition of Fluent from the date of acquisition. Non-GAAP revenue and diluted earnings per share are supplemental financial measures and should not be considered as a substitute for, or superior to, revenue and diluted earnings per share determined in accordance with GAAP.