| ANSYS, INC. AND SUBSIDIARIES | ||
| Reconciliation of Forward-Looking Guidance | ||
| Quarter Ending March 31, 2021 | ||
| Earnings Per Share - Diluted | ||
| U.S. GAAP expectation | $0.41 - $0.57 | |
| Exclusions before tax: | ||
| Acquisition adjustments to deferred revenue | $0.10 | |
| Acquisition-related amortization | $0.22 | |
| Stock-based compensation and related excess payroll tax | $0.46 - $0.52 | |
| Adjustment for income tax effect | ($0.45) - ($0.52) | |
| Non-GAAP expectation | $0.73 - $0.90 | |
| ANSYS, INC. AND SUBSIDIARIES | ||
| Reconciliation of Forward-Looking Guidance | ||
| Year Ending December 31, 2021 | ||
| Earnings Per Share - Diluted | ||
| U.S. GAAP expectation | $4.33 - $4.86 | |
| Exclusions before tax: | ||
| Acquisition adjustments to deferred revenue | $0.22 | |
| Acquisition-related amortization | $0.83 - $0.86 | |
| Stock-based compensation and related excess payroll tax | $1.80 - $1.96 | |
| Adjustment for income tax effect | ($0.79) - ($0.93) | |
| Non-GAAP expectation | $6.44 - $6.92 | |
Use of Non-GAAP Measures
We provide non-GAAP revenue, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted earnings per share as supplemental measures to GAAP regarding our operational performance. These financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. A detailed explanation of each of the adjustments to such financial measures is described below. This press release also contains a reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure.
We use non-GAAP financial measures (a) to evaluate our historical and prospective financial performance as well as our performance relative to our competitors, (b) to set internal sales targets and spending budgets, (c) to allocate resources, (d) to measure operational profitability and the accuracy of forecasting, (e) to assess financial discipline over operational expenditures and (f) as an important factor in determining variable compensation for management and employees. In addition, many financial analysts that follow us focus on and publish both historical results and future projections based on non-GAAP financial measures. We believe that it is in the best interest of our investors to provide this information to analysts so that they accurately report the non-GAAP financial information. Moreover, investors have historically requested, and we have historically reported, these non-GAAP financial measures as a means of providing consistent and comparable information with past reports of financial results.
While we believe that these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all our competitors and may not be directly comparable to similarly titled measures of our competitors due to potential differences in the exact method of calculation. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.
The adjustments to these non-GAAP financial measures, and the basis for such adjustments, are outlined below:
Acquisition accounting for deferred revenue. Historically, we have consummated acquisitions in order to support our strategic and other business objectives. In accordance with the fair value provisions applicable to the accounting for business combinations, acquired deferred revenue is often recorded on the opening balance sheet at an amount that is lower than the historical carrying value. Although this acquisition accounting requirement has no impact on our business or cash flow, it adversely impacts our reported GAAP revenue in the reporting periods following an acquisition. In order to provide investors with financial information that facilitates comparison of both historical and future results, we provide non-GAAP financial measures which exclude the impact of the acquisition accounting adjustment. We believe that this non-GAAP financial adjustment is useful to investors because it allows investors to (a) evaluate the effectiveness of the methodology and information used by us in our financial and operational decision-making, and (b) compare our past and future reports of financial results as the revenue reduction related to acquired deferred revenue will not recur when related lease licenses and software maintenance contracts are renewed in future periods.
