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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): April 27, 2006
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ANSYS. INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-20853 04-3219960
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
275 Technology Drive, Canonsburg, PA 15317
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (724) 746-3304
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 27, 2006, ANSYS, Inc. issued an earnings release announcing its
financial results for the first quarter ended March 31, 2006. A copy of the
earnings release is attached as Exhibit 99.1
In accordance with General Instruction B.2 of Form 8-K, the information in
this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to
be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise subject to the liability of that
section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended,
or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press Release of the Registrant dated April 27, 2006
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
ANSYS, INC.
Date: April 27, 2006 By: /s/ MARIA T. SHIELDS
------------------------------------
Maria T. Shields - Chief Financial
Officer, VP of Finance and
Administration
(Ms. Shields is the Principal
Financial and Accounting Officer and
has been duly authorized to sign on
behalf of the Registrant)
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- ----------------------------------------------------
99.1 Press Release of the Registrant dated April 27, 2006
Exhibit 99.1
ANSYS Momentum Continues as Company Reports Strong First Quarter Results
SOUTHPOINTE, Pa., April 27 /PRNewswire-FirstCall/ -- ANSYS, Inc. (Nasdaq:
ANSS), a global innovator of simulation software and technologies designed to
optimize product development processes, today announced a new Company record for
first quarter operating results. ANSYS' 2006 first quarter GAAP (Generally
Accepted Accounting Principles) results, which include charges for stock-based
compensation in accordance with SFAS No. 123R, "Accounting for Stock-Based
Compensation," reflect:
- Total revenue of $46.0 million, as compared to $37.6 million in the
first quarter of 2005;
- Net income of $12.9 million, as compared to $9.7 million in the first
quarter of 2005;
- An operating profit margin of 38.7% as compared to 35.7% for the first
quarter of 2005; and
- Diluted earnings per share of $0.38 as compared to $0.29 for the first
quarter of 2005.
Excluding both acquisition-related amortization and stock-based
compensation, ANSYS' first quarter 2006 adjusted (non-GAAP) results include:
- An adjusted operating profit margin of 43.4% as compared to 38.6% for the
first quarter of 2005;
- Adjusted diluted earnings per share of $0.42 as compared to $0.31 for
the first quarter of 2005
"ANSYS is off to a strong start in 2006, as evidenced by our record first
quarter financial performance. We believe that our first quarter results are
further validation that we are headed in the right strategic direction and that
we must continue to focus on execution and delivery of our commitments for
continued success in the future. Our first quarter results include the further
expansion of a long-term customer relationship that contributed significant
incremental software revenues for the first quarter. I am very proud that the
ANSYS team was able to stay focused on delivering a solid quarter, while at the
same time engaging in planning and finalizing logistics related to the upcoming
closing of the Fluent acquisition, which is anticipated to occur on May 1,
2006," stated ANSYS President and CEO, Jim Cashman.
Cashman further commented, "We are encouraged that customers see the
tremendous value, as we expand our portfolio of advanced technologies by
bringing more powerful engineering simulation tools to more people in the
product development cycle. Next week we are hosting our 2006 International
Users' Conference and we are very pleased with the strong support and interest
that has been received from our customers and partners. We plan to demonstrate
how simulation has become a critical element of the product development process,
as well as how global, forward-thinking companies have put engineering
simulation at the forefront in producing innovative and successful products."
"We've had an exciting start to a milestone year for ANSYS with the
anticipated closing of a very strategic acquisition and our upcoming
conference," said Cashman. "Our results in the first quarter lay the groundwork
as we look forward to a strong 2006 and continued growth and progress on our
long-term strategy."
The adjusted results highlighted above, and the adjusted estimates for 2006
discussed below, represent non-GAAP financial measures. A reconciliation of
these measures to the appropriate GAAP measures, for the three months ended
March 31, is included in the condensed financial information included in this
release.
Adjustments to Reported GAAP Financial Results
- Acquisition-Related Amortization:
As previously disclosed, the Company completed its acquisition of both
Century Dynamics, Inc. and the assets of Harvard Thermal, Inc. in 2005. In
previous years, the Company also acquired other businesses. These acquisitions
have all been accounted for as purchases, resulting in the recording of a
significant amount of identifiable intangible assets.
- Stock-Based Compensation:
On January 1, 2006, the Company adopted SFAS No. 123R, "Accounting for
Stock-Based Compensation." Accordingly, the first quarter GAAP results for 2006
reflect charges for stock-based compensation. Because the Company elected
prospective adoption of SFAS No. 123R, as permitted by the standard, the 2005
results do not reflect charges for stock-based compensation.
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
acquisition-related amortization and stock-based compensation. The Company
believes that these non-GAAP measures supplement its consolidated GAAP financial
statements as they provide a consistent basis for comparison between reporting
periods 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 and underlying operational trends. Management uses these non-GAAP
financial measures internally to evaluate the Company's business performance and
plan for future periods; however, these measures are not intended to supersede
or replace the GAAP results. Non-GAAP financial measures should be considered in
addition to results prepared in accordance with GAAP. As such, a reconciliation
of GAAP and non-GAAP financial measures is provided in the financial statements
attached to this press release.
Recent Business Highlights - Acquisition of Fluent Inc.
- April 2006 -- Announced that the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, with respect to
ANSYS' pending acquisition of Fluent, a stock and cash transaction valued
at approximately $574 million, expired at 11:59 p.m. (Eastern Time) on
Wednesday, April 26, 2006. Under the terms of the agreement, ANSYS will
issue 6,000,000 shares of its common stock and pay approximately $300
million of net cash to acquire Fluent, subject to certain adjustments at
closing. After the anticipated May 1, 2006 closing, ANSYS expects the
acquisition to be immediately accretive to earnings, excluding
acquisition-related costs, amortization of intangibles, the impact of
deferred revenue purchase accounting treatment and expensing of stock
options. The Company will use a combination of existing cash and proceeds
from approximately $200 million of committed bank financing to fund the
transaction.
Management's Financial Outlook
The Company has provided its 2006 revenue and earnings per share guidance
below. The earnings per share guidance is provided on both a GAAP basis and an
adjusted basis. Adjusted diluted earnings per share excludes acquisition-
related amortization and the effects of stock-based compensation.
As required by FASB Statement 123(R) and recent guidance issued by the
Securities and Exchange Commission, effective January 1, 2006, the Company
records expenses and tax benefits related to stock-based compensation. As a
result, the GAAP estimates for earnings per share provided below reflect the
anticipated impact of stock-based compensation. The Company issues both
nonqualified and incentive stock options; however, incentive stock options
comprise a significant portion of outstanding stock options. The tax benefits
associated with incentive stock options are unpredictable, as they are
predicated upon an award recipient triggering an event that disqualifies the
award and which then results in a tax deduction to the Company. GAAP requires
that these tax benefits be recorded at the time of the triggering event. The
triggering events for each option holder are not easily projected. In order to
estimate the tax benefit related to incentive stock options, the Company makes
many assumptions and estimates, including the number of incentive stock options
that will be exercised during the period by U.S. employees, the number of
incentive stock options that will be disqualified during the period and the fair
market value of the Company's stock price on the exercise dates. Each of these
items is subject to significant uncertainty. Additionally, a significant portion
of the tax benefits related to disqualified incentive stock options are
accounted for as increases to equity (additional paid-in capital) rather than as
reductions in income tax expense, especially in the periods most closely
following the adoption date of Statement 123(R). Although all such benefits
continue to be realized through the Company's tax filings, this accounting
treatment has the effect of increasing tax expense and reducing net income. For
example, the Company realized a tax benefit of $1.9 million during the first
quarter related to disqualified incentive stock options; however, only $25,000
of such amount was recorded as a reduction in income tax expense. Because there
are significant limitations in estimating the impact of FASB Statement 123(R),
including those discussed above, the actual impact of stock-based compensation
on GAAP earnings per share may differ materially from the estimated amounts
included in the guidance below.
Second Quarter 2006 Guidance
The Company currently expects the following for the quarter ending June 30,
2006:
- Revenue of approximately $41 - $42 million
- GAAP diluted earnings per share of $0.30 - $0.31
- Adjusted (non-GAAP) diluted earnings per share of $0.35 - $0.36
Fiscal Year 2006 Guidance
The Company currently expects the following for the fiscal year ending
December 31, 2006:
- Revenue in the range of $178 - $180 million
- GAAP diluted earnings per share of $1.32 - $1.36
- Adjusted (non-GAAP) diluted earnings per share of $1.54 - $1.56
The above guidance excludes the impact of the acquisition of Fluent Inc.
announced in the first quarter of 2006. The Company intends to provide updated
financial guidance after the anticipated May 1, 2006 closing of the transaction.
Adjusted diluted earnings per share is a supplemental non-GAAP financial
measure and should not be considered as a substitute for, or superior to,
diluted earnings per share determined in accordance with GAAP.
ANSYS will hold a conference call at 10:30 a.m. Eastern Time on April 27,
2006 to discuss first quarter results. To participate in the live conference
call, dial 888-695-0612 or 719-457-2663 and enter the passcode "ANSYS" or
"26797". The call will be recorded and a replay will be available approximately
two hours after the call ends. The replay will be available for one week by
dialing 888-203-1112 or 719-457-0820 and entering the passcode "ANSYS" or
"26797". The archived webcast can be accessed, along with other financial
information, on ANSYS' website at http://www.ansys.com/corporate/investors.asp.
About ANSYS, Inc.
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. The Company 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.
The Company and its global network of channel partners provide sales, support
and training for customers. Headquartered in Canonsburg, Pennsylvania U.S.A.
with more than 25 strategic sales locations throughout the world, ANSYS, Inc.
and its subsidiaries employ approximately 600 people and distribute ANSYS
products through a network of channel partners in over 40 countries. Visit
http://www.ansys.com for more information.
Certain statements contained in the press release regarding matters that are
not historical facts, including, but not limited to, statements regarding our
projections for revenue growth and earnings per share (both basic and adjusted
to exclude acquisition-related amortization and stock option expense) for 2006,
statements regarding the impact of the pending acquisition, statements regarding
the focus of our energy and resources and statements regarding our expectation
that our proposed acquisition, if completed, will be immediately accretive are
"forward-looking" statements (as defined in the Private Securities Litigation
Reform Act of 1995). Because such statements are subject to risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. All forward- looking statements in
this press release are subject to risks and uncertainties, including, but not
limited to, the risk that the acquisition of Fluent may not be consummated or
may not be consummated on the timetable that ANSYS expects, that the business of
ANSYS and Fluent may not be integrated successfully or that such integration may
take longer or cost more to accomplish than expected, that potential
difficulties may arise in the assimilation of operations, strategies,
technologies and products of Fluent, that key personnel of Fluent may not stay
with ANSYS, and that management's attention may be diverted from other business
concerns. Additional risks include the risk of a general economic downturn in
one or more of ANSYS' primary geographic markets, the risk that the assumptions
underlying ANSYS' anticipated revenues and expenditures will change or prove
inaccurate, the risk that ANSYS has overestimated its ability to maintain growth
and profitability and control costs, uncertainties regarding the demand for
ANSYS' products and services in future periods, the risk that ANSYS has
overestimated the strength of the demand among its customers for its products,
risks of problems arising from customer contract cancellations, uncertainties
regarding customer acceptance of new products, the risk that ANSYS' operating
results will be adversely affected by possible delays in developing, completing,
or shipping new or enhanced products, risks that enhancements to the Company's
products may not produce anticipated sales, uncertainties regarding fluctuations
in quarterly results, including uncertainties regarding the timing of orders
from significant customers, and other factors that are detailed from time to
time in reports filed by ANSYS, Inc. with the Securities and Exchange
Commission, including ANSYS, Inc.'s 2005 Annual Report and Form 10-K. We
undertake no obligation to publicly update or revise any forward- looking
statements, whether changes occur as a result of new information or future
events, after the date they were made.
ANSYS, ANSYS Workbench, CFX, AUTODYN, and any and all ANSYS, Inc. product
and service names are registered trademarks or trademarks of ANSYS, Inc. or its
subsidiaries located in the United States or other countries. ICEM CFD is a
trademark licensed by ANSYS, Inc. All other trademarks or registered trademarks
are the property of their respective owners.
Reconciliation of Non-GAAP Measures
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 registrant; 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 operating profit margin and adjusted diluted earnings per share are
discussed in this earnings release because management uses this information in
evaluating the results of the continuing operations of the 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.
ANSYS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
Three months ended
---------------------------
March 31, March 31,
2006 2005
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Revenue:
Software licenses $ 26,752 $ 20,475
Maintenance and service 19,259 17,149
Total revenue 46,011 37,624
Cost of sales:
Software licenses 1,490 1,253
Amortization of software and
acquired technology 908 907
Maintenance and service 4,470 3,858
Total cost of sales 6,868 6,018
Gross profit 39,143 31,606
Operating expenses:
Selling and marketing 7,159 6,428
Research and development 9,357 7,313
Amortization 128 326
General and administrative 4,680 4,118
Total operating expenses 21,324 18,185
Operating income 17,819 13,421
Other income 1,698 613
Income before income tax provision 19,517 14,034
Income tax provision 6,604 4,351
Net income $ 12,913 $ 9,683
Earnings per share - basic:
Basic earnings per share $ 0.40 $ 0.31
Weighted average shares - basic 32,122 31,492
Earnings per share - diluted:
Diluted earnings per share $ 0.38 $ 0.29
Weighted average shares - diluted 34,165 33,766
ANSYS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
For the three months ended March 31, 2006
(in thousands, except per share data)
(Unaudited)
As Adjusted
Reported Adjustments Results
------------ ------------ ------------
Revenue:
Software licenses $ 26,752 - $ 26,752
Maintenance and service 19,259 - 19,259
Total revenue 46,011 - 46,011
Cost of sales:
Software licenses 1,490 (10)(b) 1,480
Amortization of software and
acquired technology 908 (794)(a) 114
Maintenance and service 4,470 (42)(b) 4,428
Total cost of sales 6,868 (846) 6,022
Gross profit 39,143 846 39,989
Operating expenses:
Selling and marketing 7,159 (415)(b) 6,744
Research and development 9,357 (297)(b) 9,060
Amortization 128 (128)(a) -
General and administrative 4,680 (459)(b) 4,221
Total operating expenses 21,324 (1,299) 20,025
Operating income 17,819 2,145 19,964
Other income 1,698 - 1,698
Income before income tax provision 19,517 2,145 21,662
Income tax provision 6,604 564 (c) 7,168
Net income $ 12,913 $ 1,581 $ 14,494
Earnings per share - basic:
Basic earnings per share $ 0.40 $ 0.45
Weighted average shares - basic 32,122 32,122
Earnings per share - diluted:
Diluted earnings per share $ 0.38 $ 0.42
Weighted average shares -
diluted 34,165 34,165
(a) Amount represents amortization expense associated with intangible assets
acquired in business acquisitions, including amounts primarily related to
acquired software, customer list and non-compete agreements.
(b) Amount represents the charge for stock-based compensation in accordance
with the Company's January 1, 2006 adoption of SFAS No. 123R, "Accounting
for Stock-Based Compensation."
(c) Amount represents the income tax impact of the amortization expense and
stock-based compensation adjustments referred to in (a) and (b) above.
ANSYS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
For the three months ended March 31, 2005
(in thousands, except per share data)
(Unaudited)
Adjusted
As Reported Adjustments Results
------------ ------------ ------------
Revenue:
Software licenses $ 20,475 - $ 20,475
Maintenance and service 17,149 - 17,149
Total revenue 37,624 - 37,624
Cost of sales:
Software licenses 1,253 - 1,253
Amortization of software
and acquired technology 907 (762)(a) 145
Maintenance and service 3,858 - 3,858
Total cost of sales 6,018 (762) 5,256
Gross profit 31,606 762 32,368
Operating expenses:
Selling and marketing 6,428 - 6,428
Research and development 7,313 - 7,313
Amortization 326 (326)(a) -
General and administrative 4,118 - 4,118
Total operating
expenses 18,185 (326) 17,859
Operating income 13,421 1,088 14,509
Other income 613 - 613
Income before income tax
provision 14,034 1,088 15,122
Income tax provision 4,351 381 (b) 4,732
Net income $ 9,683 $ 707 $ 10,390
Earnings per share - basic:
Basic earnings per share $ 0.31 $ 0.33
Weighted average shares -
basic 31,492 31,492
Earnings per share - diluted:
Diluted earnings per share $ 0.29 $ 0.31
Weighted average shares -
diluted 33,766 33,766
(a) Amount represents amortization expense associated with intangible assets
acquired in business acquisitions, including amounts primarily related to
acquired software, customer list and non-compete agreements.
(b) Amount represents the income tax impact of the amortization expense
adjustments referred to in (a) above.
ANSYS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
March 31, December 31,
2006 2005
-------------- --------------
ASSETS:
Cash & short-term investments $ 203,230 $ 194,232
Accounts receivable, net 22,491 19,134
Other assets 99,822 92,143
Total assets $ 325,543 $ 305,509
LIABILITIES & STOCKHOLDERS' EQUITY:
Deferred revenue $ 57,724 $ 49,894
Other liabilities 23,973 30,638
Stockholders' equity 243,846 224,977
Total liabilities &
stockholders' equity $ 325,543 $ 305,509
ANSYS, INC. AND SUBSIDIARIES
Reconciliation of Forward-Looking Guidance
Quarter Ending June 30, 2006
Earnings Per Share Range
- Diluted
------------------------
U.S. GAAP expectation $0.30 - $0.31
Adjustment to exclude acquisition-related
amortization $0.02
Adjustment to exclude stock-based compensation $0.03
Adjusted expectation $0.35 - $0.36
ANSYS, INC. AND SUBSIDIARIES
Reconciliation of Forward-Looking Guidance
Year Ending December 31, 2006
Earnings Per Share Range
- Diluted
------------------------
U.S. GAAP expectation $1.32 - $1.36
Adjustment to exclude acquisition-related
amortization $0.07
Adjustment to exclude stock-based compensation $0.13 - $0.15
Adjusted expectation $1.54 - $1.56
SOURCE ANSYS, Inc.
-0- 04/27/2006
/CONTACT: Lisa O'Connor of ANSYS, Inc., +1-724-514-1782, or
lisa.oconnor@ansys.com /
/Web site: http://www.ansys.com
http://www.ansys.com/corporate/investors.asp /