ANST Ansoft Corp (MM)

Ansoft Corporation (NASDAQ:ANST) 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. -0- *T 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. *T