CIMdata PLM Industry Summary Online Archive
29 July 2004
Financial News
ANSYS Business Momentum Continues as Company Announces Solid Second Quarter Financial Results
ANSYS, Inc. announced second quarter results. ANSYS' second quarter GAAP results include:
• Total revenue of $32.0 million, as compared to $27.6 million in the second quarter of 2003; total revenue of $63.3 million in the first six months of 2004 as compared to $52.2 for the six months ended June 30, 2003;
• Diluted earnings per share of $0.46 as compared to $0.29 for the second quarter of 2003; and diluted earnings per share of $0.90 through June 30, 2004 as compared to $0.56 for the first six months of 2003;
• Cash flows from operations of $13.1 million for the second quarter of 2004 and $26.3 million for the first six months of 2004; and
• Cash and short-term investment balances of $109.4 million, and no debt as of June 30, 2004.
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 adjusted (non-GAAP) results include:
• Total adjusted revenue of $32.1 million, as compared to $28.8 million in the second quarter of 2003; total adjusted revenue of $63.5 million in the first six months of 2004 as compared to $53.8 million for the first six months of 2003;
• An overall adjusted operating profit margin, excluding acquisition-related amortization, of 36% as compared to 28% for the second quarter of 2003; and an overall adjusted profit margin, excluding acquisition-related amortization, of 36% as compared to 28% for the first six months of 2003; and
• Adjusted diluted earnings per share of $0.50 as compared to $0.37 for the second quarter of 2003; and adjusted diluted earnings per share of $0.97 compared to $0.69 for the six month period ended June 30, 2003.
Jim Cashman, ANSYS President and CEO, stated, "We are extremely pleased to report strong revenue, operating margins, earnings per share and cash flow results for the second quarter and first half of 2004. Over the past several quarters, the Company has worked hard to integrate our diversified product and service offerings, grow sales and continue to improve operational efficiencies, and we are clearly seeing the results of everyone's efforts."
Cashman further commented, "It is quite gratifying to be able to report solid results, coming on the heels of our 2004 International ANSYS Conference and the most recent release of our flagship solution, ANSYS 8.1, and our industry-leading CFD technology, CFX 5.7. We are convinced that the positive feedback that we have received from our customers and partners throughout the world is a testimony to the importance of our continued focus on our long-term mission. Our real success comes by continuing to focus on what we do best-creating the ultimate engineering simulation suite driven by the needs of our customers and partners."
In conclusion, Mr. Cashman said, "We believe that we have made great strides in delivering value to our stockholders as well as delivering industry-leading solutions that our customers demand."
Recent highlights for the Company include the following:
Product and Technology
• Released ANSYS 8.1 which features new high-end simulation capabilities, as well as design process enhancements that enable these advances to be applied more easily and accurately
• Broke simulation solution barrier by becoming the first engineering simulation company to solve a structural analysis model with more than 100 million degrees of freedom (DOF), making it possible for ANSYS customers to solve models of complete systems
• Released CFX-5.7 which continues the rapid advancement in CFD core technology development and leverages the ANSYS technology to increase integration into the engineering design cycle
• Advanced its meshing tool for CFD and structural analysis, ANSYS ICEM CFD AND AI*Environment 5.0, providing integration of the hex meshing and post-processing modules which enables users abundant control over geometry, mesh and solver setup
Special Activity
• Expanded strategic global CAE partnership with Autodesk, Inc., enabling Autodesk to license ANSYS simulation technologies and package them as an integral part of Autodesk Inventor Professional (AIP) 9.0 product and future releases
Adjustments to Reported GAAP Financial Results
* Purchase Accounting Adjustment for Acquired Deferred Revenue:
As announced February 26, 2003, ANSYS acquired CFX for approximately $22 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 has no impact on the Company's business or cash flow, it adversely impacted the Company's reported GAAP software license revenue primarily for the first twelve months post-acquisition. In order to provide investors with financial information that facilitates comparison of both historical and future results, the Company has provided adjusted financial information, which excludes the impact of the purchase accounting adjustment.
* Acquisition-Related Amortization:
As previously discussed, the Company completed its 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.
ANSYS is providing, and has historically provided, its current quarter GAAP results as well as financial results that have been adjusted for the impact of the items described above. The Company believes that these non-GAAP measures supplement its consolidated GAAP financial statements as they provide a consistent basis for comparison between quarters that are not influenced by certain non-cash items and are therefore useful to investors in helping them to better understand the Company's operating results. In certain instances, such as when intangibles are acquired through business acquisitions or become fully amortized, amortization expense associated with acquired intangibles also makes period-to-period comparisons difficult because amortization expense may appear in one period but not in the comparable period. Management uses these non-GAAP financial measures internally to evaluate the Company's core business performance, however, these measures are not intended to supersede or replace the GAAP results.
Management's 2004 Outlook
Based on the results of the second quarter and assumptions relating to currently anticipated revenues and expenditures for the remainder of the year, the Company currently projects that full year GAAP diluted earnings per share will be in the range of $1.75 - $1.79 and adjusted diluted earnings per share will be in the range of $1.90 - $1.94. Management previously forecasted adjusted diluted earnings per share in the range of $1.76 - $1.80 for 2004.
The approximate $0.15 difference between the GAAP diluted earnings per share estimate and the adjusted diluted earnings per share estimate discussed above includes an estimated $0.14 related to acquisition-related amortization and $0.01 related to the purchase accounting adjustment for acquired deferred revenue.
ANSYS will hold a conference call at 10:30 Eastern Time on July 29, to discuss second quarter results as well as to provide guidance regarding business prospects. The dial in number is 888-942-8131 and the passcode is "ANSYS". A replay will be available until August 5, by dialing 800-731-6045. The conference call will be webcast live as well as archived and can be accessed, along with other financial information, on ANSYS' website, located at http://www.ansys.com/newsrooms/investor.htm
Certain statements contained in the press release regarding matters that are not historical facts, including statements regarding our current estimates for full year earnings per share, are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995). Please see reports filed by ANSYS, Inc. with the Securities and Exchange Commission, including ANSYS, Inc.'s 2003 Annual Report and Form 10-K and the most recent quarterly report on Form 10-Q for more information.
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 and allows greater transparency to supplemental information used by management in its financial and operational decision making. Management encourages investors to review the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures that are provided within the financial information attached to this news release.
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