AUTOMOTIVE

"This quarter was a historic one for ANSYS and for all of our stockholders, employees, customers and partners, as we completed the transforming acquisition of Fluent," stated ANSYS President and CEO, Jim Cashman. "We are optimistic that this initial quarterly report today, which includes two months of operations as a combined company, is only the beginning as we continue to focus and execute on our integration plan and long-term strategy for the Company. Compared to a year ago, this quarter's non-GAAP revenues increased in excess of 80% while non-GAAP diluted earnings per share increased 29%. We continue to maintain a strong balance sheet, ending the quarter with a new all-time high deferred revenue balance of $95.4 million. As a result of the success of the quarter and the current prospects for the remainder of the year, I am pleased to also announce that we are increasing our non-GAAP guidance for 2006." ANSYS' second quarter and year-to-date 2006 financial results are presented below. ANSYS' 2006 second quarter GAAP results are heavily impacted by a one-time charge of $28.1 million related to in-process research and development associated with the recent acquisition of Fluent. The non-GAAP results include, for the first time, charges for stock-based compensation, and exclude the income statement effects of purchase accounting for deferred revenue, acquisition-related amortization of intangible assets and the one- time acquired in-process research and development charge. Non-GAAP and GAAP results reflect: - Total non-GAAP revenue of $68.2 million as compared to $37.7 million in the second quarter of 2005; total non-GAAP revenue of $114.2 million in the first six months of 2006 as compared to $75.3 million in the first six months of 2005; total GAAP revenue of $62.3 million as compared to $37.7 million in the second quarter of 2005; total GAAP revenue of $108.3 million in the first six months of 2006 as compared to $75.3 million in the first six months of 2005; - A non-GAAP operating profit margin of 36.3% as compared to 38.4% in the second quarter of 2005; a non-GAAP operating profit margin of 38.1% in the first six months of 2006 as compared to 38.5% in the first six months of 2005; a GAAP operating profit margin of (23.3)% as compared to 35.4% in the second quarter of 2005; a GAAP operating profit margin of 3.1% in the first six months of 2006 as compared to 35.5% in the first six months of 2005; - Non-GAAP net income of $15.4 million as compared to $10.5 million in the second quarter of 2005; non-GAAP net income of $29.0 million in the first six months of 2006 as compared to $20.9 million in the first six months of 2005; a GAAP net loss of $19.4 million as compared to GAAP net income of $9.8 million in the second quarter of 2005; a GAAP net loss of $6.5 million in the first six months of 2006 as compared to GAAP net income of $19.5 million in the first six months of 2005; and - Non-GAAP diluted earnings per share of $0.40 as compared to $0.31 in the second quarter of 2005; non-GAAP diluted earnings per share of $0.80 in the first six months of 2006 as compared to $0.62 in the first six months of 2005; a GAAP diluted loss per share of ($0.53) as compared to GAAP diluted earnings per share of $0.29 in the second quarter of 2005; a GAAP diluted loss per share of ($0.19) in the first six months of 2006 as compared to GAAP diluted earnings per share of $0.58 in the first six months of 2005. The Company's GAAP and non-GAAP results reflect stock-based compensation charges related to the January 1, 2006 adoption of SFAS No. 123R "Accounting for Stock-Based Compensation" of approximately $1.0 million or $0.03 diluted earnings per share for the second quarter of 2006 and approximately $2.0 million or $0.06 diluted earnings per share for the first six months of 2006. Because the Company elected prospective adoption of SFAS No. 123R, as permitted by SFAS No. 123R, the 2005 results do not reflect charges for stock- based compensation. The non-GAAP financial results highlighted above, and the non-GAAP financial outlook for 2006 discussed below, represent non-GAAP financial measures. A reconciliation of these measures to the appropriate GAAP measures, for the three months and six months ended June 30, is included in the condensed financial information included in this release. Commenting on the Company's integration of Fluent, Cashman stated, "I am very encouraged by our integration accomplishments in these first few months and wish to express my sincere appreciation to both teams for their tireless efforts, dedication and cooperation in this important effort as we continue to build upon the foundation for expanding our role as the global leader in engineering simulation." In addition to the May 2006 acquisition of Fluent, other recent partnership and industry recognition highlights for the Company include: - Being named among FORTUNE Small Business Fastest-Growing Companies for the third consecutive year. - Announcing collaboration with Granta Design Ltd., the leader in materials information management, to allow interoperability within ANSYS and Granta's systems to empower product design. - Being recognized for the fifth consecutive year in Business 2.0's Annual 'B2 100' Ranking of Fastest-Growing Tech Companies. - Announcing a partnership with MatWeb, allowing integration with ANSYS Workbench, which expands material property data available to ANSYS software users. "Looking ahead," Cashman stated, "as we continue to build on the momentum and strength of the first half results of 2006 and with the integration efforts well underway, we believe that we are poised for the next exciting phase in ANSYS' history and are increasing the Company's non-GAAP outlook for 2006. While we are excited for the second half of the year, we are even more optimistic about the opportunities for ANSYS in the years to come. We are committed to focusing our efforts and resources to respond to our customers' increasing needs and to building for the future." Third Quarter 2006 Guidance The Company currently expects the following for the quarter ending September 30, 2006: - GAAP revenue of approximately $68 - $69 million - Non-GAAP revenue of approximately $75 - $76 million - GAAP diluted earnings per share of $0.12 - $0.15 - 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: - GAAP revenue in the range of $252 - $257 million - Non-GAAP revenue of approximately $270 - $275 million - GAAP diluted earnings per share of $0.17 - $0.24 - Non-GAAP diluted earnings per share of $1.53 - $1.55