Ansoft Corporation Third Quarter Earnings Increase More Than 50%
PITTSBURGH--Feb. 1, 20064, 2006--Ansoft Corporation today announced financial results for its third quarter of fiscal 2006 ended January 31, 2006.Revenue for the third quarter totaled $19.7 million, an increase of 13% compared to $17.4 million reported in the previous fiscal year's third quarter. On a non-GAAP basis, net income for the third quarter was $4.5 million, or $0.35 per diluted share, representing a 52% increase when compared to non-GAAP net income of $3.0 million, or $0.23 per diluted share in the previous fiscal year's third quarter. On a generally accepted accounting principles (GAAP) basis, net income for the third quarter was $4.3 million, or $0.33 per diluted share, compared to GAAP net income of $2.8 million, or $0.21 per diluted share in the previous fiscal year's third quarter.
Non-GAAP financial measures exclude the impact of acquisition-related amortization. A reconciliation of these amounts to the appropriate GAAP amounts, for the three months ended January 31, 2006 and 2005 is included with this press release.
"We had an excellent quarter with more than 50% growth in earnings," said Nicholas Csendes, Ansoft's President and CEO. "For the fourth quarter, we expect record revenues and record earnings."
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 and earnings growth 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 amount, timing and structure of software 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 February 14, 2006. 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 Nine months ended
January 31, January 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenue
License $11,251 $10,182 $27,194 $25,012
Service and other 8,404 7,198 25,279 20,992
--------- --------- --------- ---------
Total revenue 19,655 17,380 52,473 46,004
Costs of revenue
License 135 141 368 363
Service and other 368 355 1,019 1,015
--------- --------- --------- ---------
Total cost of revenue 503 496 1,387 1,378
Gross profit 19,152 16,884 51,086 44,626
Operating Expenses
Sales and marketing 8,013 7,424 22,477 22,522
Research and development 4,188 4,204 12,377 12,230
General and administrative 1,122 1,199 3,692 3,592
Amortization 370 415 1,108 1,208
--------- --------- --------- ---------
Total operating expenses 13,693 13,242 39,654 39,552
--------- --------- --------- ---------
Income from operations 5,459 3,642 11,432 5,074
Net realized gain (loss) on
sale of securities - - (2) 732
Other income, net 269 374 749 975
--------- --------- --------- ---------
Income before income taxes 5,728 4,016 12,179 6,781
Income tax expense 1,468 1,232 2,655 2,076
--------- --------- --------- ---------
Net income $4,260 $2,784 $9,524 $4,705
========= ========= ========= =========
Net income per share
Basic $0.36 $0.24 $0.80 $0.41
========= ========= ========= =========
Diluted $0.33 $0.21 $0.73 $0.35
========= ========= ========= =========
Weighted average shares used in calculation
Basic 11,849 11,490 11,852 11,574
========= ========= ========= =========
Diluted 12,957 13,390 12,961 13,342
========= ========= ========= =========
ANSOFT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
January 31, April 30,
2006 2005
------------ ----------
Assets
Current assets
Cash and cash equivalents $10,498 $11,910
Accounts receivable, net of allowance for
doubtful accounts of $525 and $425,
respectively 12,660 17,388
Deferred income taxes 566 229
Prepaid expenses and other assets 1,780 1,148
------------ ----------
Total current assets 25,504 30,675
Equipment and furniture, net of accumulated
depreciation of $7,764 and $6,961,
respectively 2,696 2,811
Marketable securities 31,365 28,496
Other assets 128 146
Deferred income taxes 5,733 6,177
Goodwill 1,239 1,239
Other intangible assets, net 2,800 3,877
------------ ----------
Total assets $69,465 $73,421
============ ==========
Liabilities and stockholders' equity
Current liabilities
Accounts payable $500 $231
Accrued payroll 1,429 2,290
Other accrued expenses 2,522 3,076
Current portion of deferred revenue 15,114 17,500
------------ ----------
Total current liabilities 19,565 23,097
Long-term portion of deferred revenue 1,189 1,039
------------ ----------
Total liabilities 20,754 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 14,194 and 13,901
shares, respectively and outstanding 11,833
and 12,083, respectively 142 140
Additional paid-in capital 75,596 70,410
Treasury stock, 2,361 and 1,818 shares,
respectively (36,119) (21,762)
Accumulated other comprehensive loss, net (1,267) (338)
Retained earnings 10,359 835
------------ ----------
Total stockholders' equity 48,711 49,285
------------ ----------
Total liabilities and stockholders' equity $69,465 $73,421
============ ==========
ANSOFT CORPORATION
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP 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 acquisition-related amortization. The Company has provided this measurement in addition to GAAP financial results because it believes the non-GAAP financial measure provides useful information to investors in that it provides additional insight into our core operations and a consistent basis for comparison between quarters not influenced by certain non-cash items. The Company does not acquire businesses on a predictable cycle. As a result, management has difficulty comparing the Company's profitability as measured by net income on a period to period basis unless it excludes acquisition-related amortization because it may appear in one period but not in the comparable period. Further, management finds it useful to exclude non-cash charges in order to more readily correlate the Company's operating activities with the Company's ability to generate cash from operations and more accurately predict liquidity requirements. Finally, this same financial measure is used by management to track the Company's performance relative to externally communicated financial targets and to competitors' operating results. The additional non-GAAP financial information presented should be considered in conjunction with, and not as a substitute for, the financial information presented in accordance with GAAP.
Three months ended
January 31,
--------------------
2006 2005
---------- ---------
GAAP net income $4,260 $2,784
Amortization of intangibles (1) 229 257
---------- ---------
Non-GAAP net income $4,489 $3,041
========== =========
Non-GAAP net income per diluted common share $0.35 $0.23
========== =========
Weighted average diluted shares used in
calculation 12,957 13,390
========== =========
(1) Amortization expense net of a 38% tax rate.