ENGINEERING

ANSYS, a global innovator of simulation software and technologies designed to optimize product development processes, today announced third quarter results. ANSYS' third quarter GAAP results include: - Total revenue of $32.3 million, as compared to $28.0 million in the third quarter of 2003; total revenue of $95.7 million in the first nine months of 2004 as compared to $80.3 million for the nine months ended September 30, 2003; - Diluted earnings per share of $0.23 for the third quarter of 2004 as compared to $0.17 for the third quarter of 2003; and diluted earnings per share of $0.68 through September 30, 2004 as compared to $0.45 through September 30, 2003; - Cash flows from operations of $13.4 million for the third quarter of 2004 and $39.7 million for the first nine months of 2004; and - Cash and short-term investment balances of $124.3 million, and no debt as of September 30, 2004. Excluding the adverse impact on reported software license revenue of purchase accounting adjustments related to the Company's February 2003 acquisition of CFX and acquisition-related amortization (see discussion below), ANSYS' third quarter adjusted (non-GAAP) results include: - Total adjusted revenue of $32.4 million, as compared to $28.9 million in the third quarter of 2003; total adjusted revenue of $95.9 million in the first nine months of 2004 as compared to $82.7 million for the first nine months of 2003; - An overall adjusted operating profit margin, excluding acquisition- related amortization, of 35% as compared to 34% for the third quarter of 2003; and an overall adjusted profit margin, excluding acquisition- related amortization, of 36% as compared to 30% for the first nine months of 2003; and - Adjusted diluted earnings per share of $0.25 as compared to $0.20 for the third quarter of 2003; and adjusted diluted earnings per share of $0.74 as compared to $0.55 for the nine-month period ended September 30, 2003. Jim Cashman, ANSYS President and CEO, stated, "We are pleased to report another strong quarter of results that exceeded our expectations. These results are a good illustration of our long-term strategy in action: leading the market in customer-focused R&D investment; reinvesting profits to expand our global sales and marketing reach; and integrating acquisitions that leverage our investment in business infrastructure to maximize shareholder return. This strategy has enabled us to deliver on our business and financial commitments and allows us to continue to build a foundation for future growth." Cashman further commented, "We have good momentum as we head into our most significant quarter of the year and are actively preparing for our next milestone with the upcoming launch of our latest releases of ANSYS, CFX and ICEM CFD integrated simulation solutions. Our dedicated employees and partners throughout the world are committed to working hard to deliver these solutions for our customers and another record year for ANSYS in 2004." The adjusted results highlighted above, and the adjusted estimates for 2004 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 nine months ended September 30, is included in the condensed financial information included in this release. A discussion of the impact of these items on the Company's outlook for the remainder of the year is included in the section below titled, "Management's 2004 Outlook." 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 - 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 2004 Outlook Based on anticipated revenues and expenditures for the remainder of the year, the Company currently projects that fourth quarter 2004 GAAP diluted earnings per share will be in the range of $0.24 - $0.26 and adjusted diluted earnings per share will be in the range of $0.26 - $0.28. The approximate $0.02 difference between the GAAP diluted earnings per share estimate and the adjusted diluted earnings per share estimate discussed above is primarily related to acquisition-related amortization. Based on the third quarter year to date results and fourth quarter estimates mentioned above, the Company currently projects that 2004 fiscal year GAAP diluted earnings per share will be in the range of $0.92 - $0.94 and adjusted diluted earnings per share will be in the range of $1.00 - $1.02. The approximate $0.08 difference between the GAAP diluted earnings per share estimate and the adjusted diluted earnings per share estimate discussed above includes an estimated $0.07 related to acquisition-related amortization and $0.01 related to the purchase accounting adjustment for acquired deferred revenue. ANSYS will hold a conference call at 10:30 Eastern Time on November 4, to discuss third quarter results as well as to provide guidance regarding business prospects. The dial in number is 888-942-8131 and the passcode is "ANSYS". A replay will be available until November 11, by dialing 866-441-8824. 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 http://www.ansys.com/newsrooms/investor.htm .