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Ansoft Corporation Reports Record Results

PITTSBURGH--May 23, 2006--Ansoft Corporation today announced financial results for its fourth quarter of fiscal 2006 ended April 30, 2006. All references to share and per share information, except shares authorized, included in this press release have been adjusted to reflect the two-for-one stock split effected in the form of a stock dividend that was declared on March 7, 2006 and distributed on May 9, 2006.

Revenue for the fourth quarter totaled $24.7 million, an increase of 14% compared to $21.7 million reported in the previous fiscal year's fourth quarter. On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter was $8.3 million, or $0.32 per diluted share, representing a 75% increase when compared to GAAP net income of $4.7 million, or $0.18 per diluted share in the previous fiscal year's fourth quarter. Results for the 2006 fourth quarter included a $1.0 million, or $0.04 per share, income tax benefit associated with the reversal of the Company's remaining valuation allowance for certain U.S. Federal net deferred tax assets.

Revenue for the fiscal year totaled $77.2 million, compared to $67.7 million reported in the previous fiscal year. On a generally accepted accounting principles (GAAP) basis, net income for the fiscal year was $17.8 million, or $0.69 per diluted share, representing an 89% increase when compared to GAAP net income of $9.4 million, or $0.36 per diluted share in the previous fiscal year. Results for the current fiscal year include $2.4 million, or $0.09 per share, of income tax benefit for a federal tax credit claim and refund related to foreign taxes previously paid and $1.0 million, or $0.04 per share, of income tax benefit associated with the reversal of the Company's remaining valuation allowance for certain U.S. Federal net deferred tax assets.

In addition to using GAAP results in evaluating the Company's business, management believes it is useful to measure results using a non-GAAP measure of net income, which excludes amortization of intangible assets and the related tax benefit. A reconciliation of the non-GAAP amounts to the appropriate GAAP amounts, for the three months and for the years ended April 30, 2006 and 2005 is included with this press release. The additional non-GAAP financial information presented should be considered in conjunction with, and not as a substitute for, or superior to, the financial information presented in accordance with GAAP.

On a non-GAAP basis, net income for the fourth quarter was $8.5 million, or $0.33 per diluted share, representing a 72% increase when compared to non-GAAP net income of $4.9 million, or $0.19 per diluted share in the previous fiscal year's fourth quarter.

On a non-GAAP basis, net income for the fiscal year was $18.7 million, or $0.72 per diluted share, representing an 80% increase when compared to non-GAAP net income of $10.4 million, or $0.40 per diluted share, in the previous fiscal year.

"We are pleased to report record revenue and earnings for the fourth quarter," said Nicholas Csendes, Ansoft's President and CEO. "For the next fiscal year, we anticipate continued revenue growth of around 10-15%."

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 May 23, 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 April 30, Fiscal Year ended April 30,
                   2006          2005          2006          2005
              -------------- ------------- ------------- -------------
Revenue
 License            $15,655       $14,310       $42,849       $39,322
 Service and
  other               9,083         7,356        34,362        28,348
              -------------- ------------- ------------- -------------
Total revenue        24,738        21,666        77,211        67,670
Costs of
 revenue
 License                167           142           535           505
 Service and
  other                 401           334         1,420         1,349
              -------------- ------------- ------------- -------------
Total cost of
 revenue                568           476         1,955         1,854
Gross profit         24,170        21,190        75,256        65,816
Operating
 Expenses
 Sales and
  marketing           9,029         8,586        31,506        31,108
 Research and
  development         4,639         4,671        17,016        16,901
 General and
  adminis-
  trative             1,368         1,269         5,060         4,861
 Amortization           359           344         1,467         1,552
              -------------- ------------- ------------- -------------
Total
 operating
 expenses            15,395        14,870        55,049        54,422
              -------------- ------------- ------------- -------------
Income from
 operations           8,775         6,320        20,207        11,394
Net realized
 gain (loss)
 on sale of
 securities               -             -            (2)          732
Other income,
 net                    648           499         1,397         1,474
              -------------- ------------- ------------- -------------
Income before
 income taxes         9,423         6,819        21,602        13,600
Income tax
 expense              1,150         2,083         3,805         4,159
              -------------- ------------- ------------- -------------
Net income           $8,273        $4,736       $17,797        $9,441
              ============== ============= ============= =============
Net income per
 share
    Basic             $0.35         $0.20         $0.75         $0.41
              ============== ============= ============= =============
    Diluted           $0.32         $0.18         $0.69         $0.36
              ============== ============= ============= =============
Weighted average shares used
 in calculation
    Basic            23,685        23,732        23,694        23,242
              ============== ============= ============= =============
    Diluted          25,811        26,128        25,851        25,892
              ============== ============= ============= =============


                          ANSOFT CORPORATION
                      CONSOLIDATED BALANCE SHEETS
               (In thousands, except per share amounts)

                                                  April 30,  April 30,
                                                    2006       2005
                                                 ---------- ----------

Assets
Current assets
Cash and cash equivalents                          $16,456    $11,910
Accounts receivable, net of allowance for
 doubtful accounts of $545 and $425, respectively   20,264     17,388
Deferred income taxes                                  164        229
Prepaid expenses and other assets                    1,938      1,148
                                                 ---------- ----------
Total current assets                                38,822     30,675

Equipment and furniture, net of accumulated
 depreciation of $6,249 and $6,961, respectively     2,599      2,811
Marketable securities                               33,621     28,496
Other assets                                           131        146
Deferred income taxes                                6,226      6,177
Goodwill                                             1,239      1,239
Other intangible assets, net                         2,442      3,877
                                                 ---------- ----------
Total assets                                       $85,080    $73,421
                                                 ========== ==========

Liabilities and stockholders' equity
Current liabilities
Accounts payable                                      $274       $231
Accrued payroll                                      3,027      2,290
Other accrued expenses                               4,537      3,076
Current portion of deferred revenue                 19,893     17,500
                                                 ---------- ----------
Total current liabilities                           27,731     23,097
Long-term portion of deferred revenue                1,088      1,039
                                                 ---------- ----------
Total liabilities                                   28,819     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; 50,000
 shares authorized; issued  28,576 and 27,802
 shares, respectively and outstanding 23,764 and
 24,166, respectively                                  286        280
Additional paid-in capital                          76,795     70,270
Treasury stock, 4,812 and 3,636 shares,
 respectively                                      (37,913)   (21,762)
Accumulated other comprehensive loss, net           (1,539)      (338)
Retained earnings                                   18,632        835
                                                 ---------- ----------
Total stockholders' equity                          56,261     49,285
                                                 ---------- ----------
 Total liabilities and stockholders' equity        $85,080    $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.
Management uses this non-GAAP financial measure for internal
managerial purposes, when publicly providing its business outlook, and
as a means to evaluate period-to-period comparisons. The Company has
provided this non-GAAP financial 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 software and service business
operations and a consistent basis for comparison between quarters not
influenced by certain non-cash items that are not used by management
when evaluating the Company's operating expenses (such as research and
development, sales and marketing, and general and administrative
expenses). The additional non-GAAP financial information presented
should be considered in conjunction with, and not as a substitute for,
or superior to, the financial information presented in accordance with
GAAP.

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 and the operational strength of the
Company. Finally, this same financial measure is used by management to
track the Company's performance relative to both internally and
externally communicated financial targets. The Company discloses this
information to the public to enable investors to more easily assess
the company's performance on the same basis applied by management and
to ease comparison on both a GAAP and non-GAAP basis among its
principal competitors that separately identify acquisition-related
amortization.

A limitation associated with this non-GAAP measure is that it does not
reflect the periodic costs of certain capitalized intangible assets 
used in generating revenues in the Company's business. Management 
evaluates the costs of such intangible assets in accordance with SFAS 
no. 141 "Business Combinations" which requires allocating the purchase
price in a business combination between intangible and tangible assets
based on the purchase method of accounting.

                                  Three months ended Fiscal year ended
                                       April 30,         April 30,
                                  ------------------ -----------------
                                    2006      2005     2006     2005
                                  --------- -------- -------- --------
GAAP net income                     $8,273    4,736  $17,797   $9,441
Amortization of intangibles (1)        223      213      910      962
                                  --------- -------- -------- --------
Non-GAAP net income                 $8,496   $4,949  $18,707  $10,403
                                  ========= ======== ======== ========
Non-GAAP net income per diluted
 common share                        $0.33    $0.19    $0.72    $0.40
                                  ========= ======== ======== ========
Weighted average diluted shares
 used in calculation                25,811   26,128   25,851   25,892
                                  ========= ======== ======== ========

(1) Amortization expense net of a 38% tax rate.