Ansoft Corporation Second Quarter Earnings Double
PITTSBURGH--Nov. 1, 20056, 2005--Ansoft Corporation today announced financial results for its second quarter of fiscal 2006 ended October 31, 2005.Revenue for the second quarter totaled $18 million, an increase of 13% compared to $15.9 million reported in the previous fiscal year's second quarter. On a non-GAAP basis, net income for the second quarter was $4.3 million, or $0.34 per diluted share, representing a 103% increase when compared to net income of $2.1 million, or $0.16 per diluted share in the previous fiscal year's second quarter. On a generally accepted accounting principles (GAAP) basis, net income for the second quarter was $4.1 million, or $0.32 per diluted share, compared to GAAP net income of $1.9 million, or $0.14 per diluted share in the previous fiscal year's second quarter.
During the quarter, the Company elected to claim a federal tax credit and refund related to foreign taxes previously paid. As a result, second quarter net income includes a tax benefit of $0.5 million for an expected refund of prior years federal tax payments. The Company anticipates utilizing excess foreign tax credits claimed during the current fiscal year. This would favorably impact the full year effective rate by approximately 7%.
"We are pleased to report that our earnings for the second quarter have more than doubled on continued strong revenue growth," said Nicholas Csendes, Ansoft's President and CEO. "For the balance of the fiscal year, we expect continued revenue growth of around 10-15% with earnings increasing around 25% over the last fiscal year."
Pro forma results represent non-GAAP financial measures and exclude the impact of amortization of intangible assets. A reconciliation of these amounts to the appropriate GAAP amounts, for the three months ended October 31, 2005 and 2004 is included with this press release.
Ansoft is a leading developer of high-performance electronic design automation (EDA) software. Engineers use Ansoft software to design state-of-the-art electronic products, such as cellular phones, Internet-access devices, broadband networking components and systems, integrated circuits (ICs), printed circuit boards (PCBs), automotive electronic systems and power electronics. Ansoft markets its products worldwide through its own direct sales force and has comprehensive customer-support and training offices throughout North America, Asia and Europe.
This press release contains forward-looking statements including those related to revenue, earnings growth and utilization of tax credits for the current fiscal year that are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially, including, but not necessarily limited to, management's ability to forecast revenues and control expenses and the size, timing and structure of significant licenses.
For further information regarding risks and uncertainties associated with Ansoft's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of Ansoft's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained at Ansoft's website at www.ansoft.com/about/investor/index.cfm.
All information in this release is as of November 16, 2005. Ansoft undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
ANSOFT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three months ended Six months ended
October 31, October 31,
2005 2004 2005 2004
------------- ------------ ------------ -----------
Revenue
License $9,123 $8,661 $15,943 $14,830
Service and other 8,905 7,285 16,875 13,794
------------- ------------ ------------ -----------
Total revenue 18,028 15,946 32,818 28,624
Costs of revenue
License 134 125 233 222
Service and other 322 356 651 660
------------- ------------ ------------ -----------
Total cost of
revenue 456 481 884 882
Gross profit 17,572 15,465 31,934 27,742
Operating Expenses
Sales and
marketing 7,321 7,601 14,464 15,098
Research and
development 4,129 4,048 8,189 8,026
General and
administrative 1,187 1,329 2,570 2,393
Amortization 369 384 738 793
------------- ------------ ------------ -----------
Total operating
expenses 13,006 13,362 25,961 26,310
------------- ------------ ------------ -----------
Income from
operations 4,566 2,103 5,973 1,432
Net realized gain
(loss) on sale of
securities - (27) (2) 732
Other income, net 140 647 480 601
------------- ------------ ------------ -----------
Income before
income taxes 4,706 2,723 6,451 2,765
Income tax expense 611 834 1,187 844
------------- ------------ ------------ -----------
Net income $4,095 $1,889 $5,264 $1,921
============= ============ ============ ===========
Net income per
share
Basic $0.35 $0.16 $0.44 $0.17
============= ============ ============ ===========
Diluted $0.32 $0.14 $0.41 $0.14
============= ============ ============ ===========
Weighted average shares used in
calculation
Basic 11,794 11,567 11,855 11,616
============= ============ ============ ===========
Diluted 12,892 13,238 12,945 13,275
============= ============ ============ ===========
ANSOFT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
October 31, April 30,
2005 2005
------------- -------------
Assets
Current assets
Cash and cash equivalents $7,864 $11,910
Accounts receivable, net 12,728 17,388
Deferred income taxes 229 229
Prepaid expenses and other assets 1,777 1,148
------------- -------------
Total current assets 22,598 30,675
Equipment and furniture, net 2,862 2,811
Marketable securities 30,697 28,496
Other assets 132 146
Deferred income taxes 6,177 6,177
Goodwill 1,239 1,239
Other intangible assets, net 3,160 3,877
------------- -------------
Total assets $66,865 $73,421
============= =============
Liabilities and stockholders' equity
Current liabilities
Accounts payable $412 $231
Accrued payroll 1,111 2,290
Other accrued expenses 1,892 3,076
Current portion of deferred revenue 14,980 17,500
------------- -------------
Total current liabilities 18,395 23,097
Long-term portion of deferred revenue 1,056 1,039
------------- -------------
Total liabilities 19,451 24,136
Stockholders' equity
Preferred stock , par value $0.01 per
share; 1,000 shares authorized, no shares
outstanding - -
Common stock , par value $0.01 per share;
25,000 shares authorized; issued 14,087
and 13,901 shares, respectively and
outstanding 11,877 and 12,083,
respectively 141 140
Additional paid-in capital 73,746 70,410
Treasury stock, 2,210 and 1,818 shares,
respectively (31,092) (21,762)
Accumulated other comprehensive loss, net (1,480) (338)
Retained earnings 6,099 835
------------- -------------
Total stockholders' equity 47,414 49,285
------------- -------------
Total liabilities and stockholders' equity $66,865 $73,421
============= =============
ANSOFT CORPORATION
RECONCILIATION OF GAAP NET INCOME TO PRO FORMA NET INCOME
(In thousands, except per share amounts)
(unaudited)
Pursuant to the requirement of Regulation G, the Company has provided
a reconciliation of the non-GAAP financial measure to the most
directly comparable GAAP financial measure. These measures differ from
GAAP in that they exclude the amortization of intangible assets. The
Company has provided these measurements in addition to GAAP financial
results because it believes they provide a consistent basis for
comparison between periods that is not influenced by certain non-cash
expenses and therefore are helpful to understanding the Company's
underlying operational results. These same measures are used by
management when evaluating the continuing operating results of the
Company.
Three months ended
October 31,
2005 2004
--------- --------
GAAP net income $4,095 $1,889
Amortization of intangibles (1) 229 238
--------- --------
Pro forma net income $4,324 $2,127
========= ========
Pro forma net income per diluted common share $0.34 $0.16
========= ========
Weighted average diluted shares used in calculation 12,892 13,238
========= ========
(1) Amortization expense net of a 38% tax rate.