ANSYS, Inc. Reports Record Revenue in Second Quarter 2011

Closes Apache Acquisition and Raises Guidance for 2011

(PRNewswire) — ANSYS, Inc. (NASDAQ: ANSS), today announced outstanding performance in revenue and in non-GAAP EPS for the second quarter of 2011. Revenue growth in the second quarter continued across all three major geographic regions, all major product lines and a broad array of industries. The strong revenue growth contributed to higher than planned margins and 24% non-GAAP earnings per share growth in the second quarter as compared to the second quarter of 2010.

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"The strong second quarter numbers are a reflection of continued momentum built upon our long-term foundation of technological leadership and sustained performance. Despite the macro-economic volatility, we focused our efforts on the things we can control and made considerable progress. Our diversified global business and unparalleled technical solutions continue to be key differentiators as we move ahead," commented Jim Cashman, ANSYS President and Chief Executive Officer.

"On August 1, 2011, we marked another milestone in achieving our vision of Simulation Driven Product Development™ as we completed the acquisition of Apache Design Solutions," said Mr. Cashman. "The addition of Apache builds on our formidable electronics base by adding a suite of power analysis and optimization software that is crucial in the design of power-efficient, high-performance, noise-immune integrated circuits. Our solutions position us to capitalize on the fast-growing market for mobile devices, as well as high-end electronics that are proliferating across many industries." Mr. Cashman continued, "This acquisition also adds a market-leading, comprehensive team of talented and dedicated employees, who we welcome to the ANSYS family."

ANSYS' second quarter and year-to-date financial results are presented below. The 2011 non-GAAP results exclude the income statement effects of stock-based compensation, acquisition-related amortization of intangible assets and transaction costs related to the Apache acquisition. The 2010 non-GAAP results exclude the income statement effects of stock-based compensation and acquisition-related amortization of intangible assets. GAAP and non-GAAP results reflect:

Total GAAP and non-GAAP revenue of $162.3 million in the second quarter of 2011 as compared to total GAAP and non-GAAP revenue of $137.8 million in the second quarter of 2010; total GAAP and non-GAAP revenue of $320.3 million in the first six months of 2011 as compared to total GAAP and non-GAAP revenue of $273.8 million in the first six months of 2010;
A GAAP operating profit margin of 39.9% in the second quarter of 2011 as compared to 38.0% in the second quarter of 2010; a GAAP operating profit margin of 39.7% in the first six months of 2011 as compared to 37.3% in the first six months of 2010; a non-GAAP operating profit margin of 51.5% in the second quarter of 2011 as compared to 50.2% in the second quarter of 2010; a non-GAAP operating profit margin of 50.7% in the first six months of 2011 as compared to 49.4% in the first six months of 2010;
GAAP net income of $45.4 million in the second quarter of 2011 as compared to $35.5 million in the second quarter of 2010; GAAP net income of $87.7 million in the first six months of 2011 as compared to $67.9 million in the first six months of 2010; non-GAAP net income of $58.6 million in the second quarter of 2011 as compared to $46.6 million in the second quarter of 2010; non-GAAP net income of $112.0 million in the first six months of 2011 as compared to $90.1 million in the first six months of 2010; and
GAAP diluted earnings per share of $0.48 in the second quarter of 2011 as compared to $0.38 in the second quarter of 2010; GAAP diluted earnings per share of $0.93 in the first six months of 2011 as compared to $0.73 in the first six months of 2010; non-GAAP diluted earnings per share of $0.62 in the second quarter of 2011 as compared to $0.50 in the second quarter of 2010; non-GAAP diluted earnings per share of $1.19 in the first six months of 2011 as compared to $0.97 in the first six months of 2010.

The Company's GAAP results reflect stock-based compensation charges of approximately $5.3 million ($4.0 million after tax) or $0.04 diluted earnings per share for the second quarter of 2011 and approximately $10.5 million ($8.0 million after tax) or $0.08 diluted earnings per share for the first six months of 2011.

The non-GAAP financial results highlighted above, and the non-GAAP financial outlook for 2011 discussed below, represent non-GAAP financial measures. Reconciliations of these measures to the appropriate GAAP measures, for the three months and six months ended June 30, 2011 and 2010, and for the 2011 financial outlook, are included in the condensed financial information included in this release.

Management's Remaining 2011 Financial Outlook

The Company has updated its 2011 revenue and earnings per share guidance below. The revenue and earnings per share guidance is provided on both a GAAP basis and a non-GAAP basis. The third quarter and fiscal year 2011 Non-GAAP diluted earnings per share excludes the income statement effects of acquisition accounting adjustments to deferred revenue, charges for stock-based compensation, acquisition-related amortization of intangible assets and acquisition-related expenses.

Third Quarter and Fiscal Year 2011 Guidance

The Company currently expects the following for the quarter ending September 30, 2011:

GAAP Revenue in the range of $166 – 174 million
Non-GAAP Revenue in the range of $172 - $178 million
GAAP diluted earnings per share of $0.40 - $0.47
Non-GAAP diluted earnings per share of $0.60 - $0.63

The Company currently expects the following for the fiscal year ending December 31, 2011:

GAAP Revenue in the range of $671 - $687 million
Non-GAAP Revenue in the range of $685 - $697 million
GAAP diluted earnings per share of $1.80 - $1.91
Non-GAAP diluted earnings per share of $2.47 - $2.52

These statements are forward-looking and actual results may differ materially. ANSYS is unable to predict the likely duration and severity of the current disruption in the domestic and global economies. Should these economic conditions continue to deteriorate further, it could result in ANSYS not meeting the guidance provided above and ANSYS' operating results and financial performance could be adversely affected. Non-GAAP diluted earnings per share is a supplemental financial measure and should not be considered as a substitute for, or superior to, diluted earnings per share determined in accordance with GAAP.

Conference Call Information

ANSYS will hold a conference call at 10:30 a.m. Eastern Time on August 4, 2011 to discuss second quarter results. To participate in the live conference call, dial 866-524-3160 (US), 866-605-3852 (Canada) or 412-317-6760 (Int'l). The call will be recorded and a replay will be available approximately two hours after the call ends. The replay will be available for seven days by dialing 877-344-7529 (US), or 412-317-0088 (Canada and Int'l) and entering the passcode 10002050. The archived webcast can be accessed, along with other financial information, on ANSYS' website at http://investors.ansys.com


ANSYS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)


		June 30, 2011	December 31, 2010

Cash & short-term investments		$ 630,260	$ 472,934
Accounts receivable, net		68,807	76,604
Goodwill		1,035,583	1,035,083
Other intangibles, net		257,388	278,320
Other assets		245,937	263,935

	Total assets	$ 2,237,975	$ 2,126,876


LIABILITIES & STOCKHOLDERS' EQUITY:

Deferred revenue		$ 231,719	$ 199,805
Long-term debt (including current portion)		148,840	159,525
Other liabilities		217,122	237,617
Stockholders' equity		1,640,294	1,529,929

Total liabilities & stockholders' equity		$ 2,237,975	$ 2,126,876


ANSYS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)

		Three Months Ended		Six Months Ended
		June 30, 2011	June 30, 2010	June 30, 2011	June 30, 2010
Revenue:
	Software licenses	$ 97,436	$ 81,744	$ 193,303	$ 163,330
	Maintenance and service	64,822	56,023	127,002	110,490

	Total revenue	162,258	137,767	320,305	273,820

Cost of sales:
	Software licenses	3,030	2,310	5,924	4,919
	Amortization of software and
	acquired technology	7,502	8,178	15,000	16,392
	Maintenance and service	17,531	13,652	33,721	27,482
	Total cost of sales	28,063	24,140	54,645	48,793

Gross profit		134,195	113,627	265,660	225,027

Operating expenses:
	Selling, general and administrative	40,130	35,979	80,606	71,207
	Research and development	25,182	21,390	49,880	43,977
	Amortization	4,070	3,875	8,087	7,837
	Total operating expenses	69,382	61,244	138,573	123,021

Operating income		64,813	52,383	127,087	102,006

Interest expense		(774)	(1,245)	(1,577)	(2,794)
Interest income		712	422	1,407	790
Other (expense) income, net		(108)	139	(622)	(368)

Income before income tax provision		64,643	51,699	126,295	99,634

Income tax provision		19,212	16,206	38,623	31,772

Net income		$ 45,431	$ 35,493	$ 87,672	$ 67,862

Earnings per share – basic:
	Basic earnings per share	$ 0.49	$ 0.39	$ 0.95	$ 0.75
	Weighted average shares – basic	91,940	90,614	91,854	90,289


Earnings per share - diluted:
	Diluted earnings per share	$ 0.48	$ 0.38	$ 0.93	$ 0.73
	Weighted average shares – diluted	94,188	93,146	94,179	92,960

ANSYS, INC. AND SUBSIDIARIES Reconciliation of Non-GAAP Measures *(Unaudited)* *(in thousands, except percentages and per share data)*
	Three Months Ended

	June 30, 2011			June 30, 2010

	As Reported	Non-GAAP Adjustments	Results	As Reported	Non-GAAP Adjustments	Results

Total revenue	$162,258		$162,258	$137,767		$137,767
Operating income	$ 64,813	$18,745(1)	$83,558	$52,383	$16,709(3)	$69,092
Operating profit margin	39.9%		51.5%	38.0%		50.2%
Net income	$45,431	$13,129(2)	$58,560	$35,493	$11,122(4)	$46,615
Earnings per share - diluted:
Diluted earnings per share	$0.48		$0.62	$0.38		$0.50
Weighted average shares - diluted	94,188		94,188	93,146		93,146
(1) Amount represents $11.6 million of amortization expense associated with intangible assets acquired in business acquisitions, including amounts primarily related to acquired software, customer lists, trademarks and non-compete agreements, $5.3 million of stock-based compensation expense and $1.9 million of transaction expenses related to the Apache acquisition. (2) Amount represents the impact of the adjustments to operating income referred to in (1) above, adjusted for the related income tax impact of $5.6 million. (3) Amount represents $12.1 million of amortization expense associated with intangible assets acquired in business acquisitions, including amounts primarily related to acquired software, customer lists, trademarks and non-compete agreements, as well as a $4.7 million charge for stock-based compensation. (4) Amount represents the impact of the adjustments to operating income referred to in (3) above, adjusted for the related income tax impact of $5.6 million.

ANSYS, INC. AND SUBSIDIARIES Reconciliation of Non-GAAP Measures *(Unaudited)* *(in thousands, except percentages and per share data)*
	Six Months Ended

	June 30, 2011			June 30, 2010

	As Reported	Non-GAAP Adjustments	Results	As Reported	Non-GAAP Adjustments	Results

Total revenue	$320,305		$320,305	$273,820		$273,820
Operating income	$127,087	$35,407(1)	$162,494	$102,006	$33,360(3)	$135,366
Operating profit margin	39.7%		50.7%	37.3%		49.4%
Net income	$87,672	$24,360(2)	$112,032	$67,862	$22,204(4)	$90,066
Earnings per share - diluted:
Diluted earnings per share	$0.93		$1.19	$0.73		$0.97
Weighted average shares - diluted	94,179		94,179	92,960		92,960
(1) Amount represents $23.1 million of amortization expense associated with intangible assets acquired in business acquisitions, including amounts primarily related to acquired software, customer lists, trademarks and non-compete agreements, $10.5 million of stock-based compensation expense and $1.9 million of transaction expenses related to the Apache acquisition. (2) Amount represents the impact of the adjustments to operating income referred to in (1) above, adjusted for the related income tax impact of $11.0 million. (3) Amount represents $24.2 million of amortization expense associated with intangible assets acquired in business acquisitions, including amounts primarily related to acquired software, customer lists, trademarks and non-compete agreements, as well as a $9.2 million charge for stock-based compensation. (4) Amount represents the impact of the adjustments to operating income referred to in (3) above, adjusted for the related income tax impact of $11.2 million.

ANSYS, INC. AND SUBSIDIARIES Reconciliation of Forward-Looking Guidance Quarter Ending September 30, 2011
	Earnings Per Share Range – Diluted

U.S. GAAP expectation	$0.40 - $0.47
Adjustment to exclude acquisition accounting adjustment to deferred revenue	$0.03 - $0.04
Adjustment to exclude acquisition–related amortization	$0.09 - $0.11
Adjustment to exclude stock–based compensation	$0.04 - $0.05

Non-GAAP expectation	$0.60 - $0.63

ANSYS, INC. AND SUBSIDIARIES Reconciliation of Forward-Looking Guidance Year Ending December 31, 2011
	Earnings Per Share Range – Diluted

U.S. GAAP expectation	$1.80 - $1.91
Adjustment to exclude acquisition accounting adjustment to deferred revenue	$0.07 - $0.09
Adjustment to exclude acquisition–related amortization	$0.35 - $0.38
Adjustment to exclude stock–based compensation	$0.17 - $0.18
Adjustment to exclude acquisition-related transaction costs	$0.02

Non-GAAP expectation	$2.47 - $2.52

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