ANSYS, Inc., a global innovator of simulation software and technologies designed to optimize product development processes, today announced new record highs for revenues, operating profit, net income and earnings per share for fourth quarter and annual 2004 results. ANSYS President and CEO, Jim Cashman, commenting on the Company's fourth quarter and 2004 results said, "We are extremely proud...." ANSYS' fourth quarter and 2004 GAAP results include: - Total revenue of $38.9 million, as compared to $33.3 million in the fourth quarter of 2003; total revenue of $134.5 million in 2004 as compared to $113.5 million in 2003; - Diluted earnings per share of $0.36 for the fourth quarter of 2004 as compared to $0.22 for the fourth quarter of 2003. The fourth quarter 2004 GAAP results include a one-time tax benefit of approximately $1.1 million, or $.03 per share, which is further described below; - Diluted earnings per share of $1.05 in 2004 as compared to $0.67 in 2003; - Cash flows from operations of $11.7 million for the fourth quarter of 2004 and $51.4 million for 2004; and - Cash and short-term investment balances of $138.4 million, and no debt, as of December 31, 2004. Excluding the adverse impact on reported software license revenue of purchase accounting adjustments related to the Company's February 2003 acquisition of CFX, acquisition-related amortization and the one-time tax benefit recorded in the 2004 fourth quarter, ANSYS' fourth quarter adjusted (non-GAAP) results include: - Total adjusted revenue of $39.0 million, as compared to $33.8 million in the fourth quarter of 2003; total adjusted revenue of $134.9 million in 2004 as compared to $116.5 million in 2003; - An overall adjusted operating profit margin, excluding acquisition- related amortization, of 41% as compared to 35% for the fourth quarter of 2003; and an overall adjusted profit margin, excluding acquisition- related amortization, of 37% in 2004 as compared to 32% for 2003; and - Adjusted diluted earnings per share of $0.35 (excluding the one-time tax benefit) as compared to $0.25 for the fourth quarter of 2003; and adjusted diluted earnings per share of $1.09 in 2004 as compared to $0.80 in 2003. ANSYS President and CEO, Jim Cashman, commenting on the Company's fourth quarter and 2004 results said, "We are extremely proud of the significant milestones that were reached this past quarter, and which contributed to our record financial performance. These include the expansion of several key, long-term customer relationships that contributed significant incremental software revenues for the quarter, as well as the release of ANSYS 9.0, an important stride in the evolution of Workbench as a leading-edge tool for simulation-driven, integrated product development." Cashman further added, "During 2004, our global team executed with confidence and reliability on a number of fronts that not only impacted our short-term business performance, but, more importantly, continued to expand the broad base and breadth of our business. These have been key elements to our long-term, consistent performance and continue to serve as a solid foundation for our future." In closing, Cashman stated, "In addition to our solid core business, we are also excited about our recent acquisition of Century Dynamics, Inc. ("CDI"). This technology will further strengthen our suite of engineering simulation offerings, expand our global market presence and enable us to address a larger percentage of the overall simulation needs of our existing and future customers' virtual product development processes." The adjusted results highlighted above, and the adjusted estimates for 2005 discussed below, represent non-GAAP (Generally Accepted Accounting Principles) financial measures. A reconciliation of these measures to the appropriate GAAP measures, for the three and twelve months ended December 31, is included in the condensed financial information." On August 5, 2004, the Company announced that its Board of Directors approved a 2-for-1 stock split of the Company's common shares. The stock split was payable in the form of a stock dividend and entitled each stockholder of record at the close of business on September 3, 2004, to receive one share of common stock for every outstanding share of common stock held on that date. The stock dividend was distributed on October 4, 2004. The share data and earnings per share data in this press release give effect to the stock split, applied retroactively, to all periods presented. Adjustments to Reported GAAP Financial Results - One-Time Fourth Quarter 2004 Tax Benefit The 2004 earnings include a one-time tax benefit in the fourth quarter related to the successful resolution of outstanding governmental income tax audits for the years 2001, 2002 and 2003. This benefit had the effect of increasing net income by approximately $1.1 million and diluted earnings per share by $0.03. - 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 business performance, however, these measures are not intended to supersede or replace the GAAP results. Management's 2005 Outlook Based on anticipated revenues and expenditures for 2005, the Company currently projects that full year 2005 diluted earnings per share, adjusted to exclude acquisition-related amortization and expenses related to stock-based compensation, will be in the range of $1.15 to $1.18. The Company's current outlook relative to a GAAP diluted earnings per share estimate will be in the range of $1.00 to $1.06. This range is wider than that provided for adjusted diluted earnings per share because the Company has not yet completed the purchase accounting for its most recent acquisition of Century Dynamics, Inc. The inherent imprecision in the expense estimates for stock-based compensation also affect this estimate. The Company expects to refine the estimate for GAAP diluted earnings per share during the first quarter and will provide an update in conjunction with its first quarter 2005 earnings release. ANSYS will hold a conference call at 10:30 Eastern Time on February 15, to discuss fourth quarter results as well as to provide guidance regarding business prospects. The dial in number is 888-552-9191 and the passcode is "ANSYS". A replay will be available until February 22, by dialing 800-283-3707. 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 www.ansys.com/corporate/investors.asp . Background: ANSYS, Inc., founded in 1970, develops and globally markets engineering simulation software and technologies widely used by engineers and designers across a broad spectrum of industries. ANSYS focuses on the development of open and flexible solutions that enable users to analyze designs directly on the desktop, providing a common platform for fast, efficient and cost- conscious product development, from design concept to final-stage testing and validation. Headquartered in Canonsburg, Pennsylvania U.S.A. with more than 25 strategic sales locations throughout the world, ANSYS, Inc. employs approximately 600 people and distributes its products through a network of channel partners in over 40 countries. Visit www.ansys.com for more information.