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Nov 6, 2011

ANSYS, Inc. Reports Record Third Quarter Revenue Results That Drive Strong Margins and EPS Performance

Company Successfully Closes Apache Acquisition in Third Quarter, Increases 2011 Guidance and Provides Preliminary 2012 Outlook.

Highlights

GAAP revenue of $172.9 and Non-GAAP revenue of $177.9 million
GAAP diluted earnings per share of $0.48 and Non-GAAP diluted earnings per share of $0.66
Operating cash flows of $66.3 million
GAAP operating profit margin of 37.8% and Non-GAAP operating profit margin of 50.6%


ANSYS, Inc. (NASDAQ: ANSS) today announced third quarter 2011 results with total non-GAAP revenue up 27% as compared to Q3 2010, while non-GAAP net income increased 31%. Year-to-date non-GAAP revenue and net income increased 20% and 27%, respectively, compared to the first nine months of 2010. Non-GAAP earnings per share increased 29% for the quarter and 25% for the first nine months of 2011.

Commenting on the Company's third quarter 2011 performance, Jim Cashman, ANSYS president & CEO, stated, "The third quarter was another important milestone in our long history as we completed the acquisition of Apache Design Solutions. Our Q3 performance, which includes two months of Apache operations as part of the combined company, reflects our relevancy to customers, despite uncertainty that exists in today's global economy. It is also reflective of our longstanding, demonstrated ability to successfully acquire and assimilate new companies into the ANSYS family. We have a strong balance sheet, strong cash flows, solid fundamentals and a disciplined team that continues to execute. Our operating performance is a testimony to our belief that engineering simulation solutions remain a high priority for our expanding customer base. The business pressures on our customers to deliver innovative, high-quality products to market, with fewer resources, have never been greater. With the upcoming release of ANSYS® 14.0, our complete product portfolio is robust and we believe we are well-positioned to deliver long-term value to our customers and stockholders."

ANSYS' third quarter and year-to-date 2011 financial results are presented below. The 2011 non-GAAP results exclude the income statement effects of acquisition accounting adjustments to deferred revenue, as well as the impact of stock-based compensation, acquisition-related amortization of intangible assets and transaction costs related to the Apache acquisition. The 2010 non-GAAP results exclude the income statement effects of stock-based compensation and acquisition-related amortization of intangible assets.

GAAP and non-GAAP results reflect:

Total GAAP revenue of $172.9 million in the third quarter of 2011 as compared to $139.8 million in the third quarter of 2010; total GAAP revenue of $493.2 million in the first nine months of 2011 as compared to $413.7 million in the first nine months of 2010; total non-GAAP revenue of $177.9 million in the third quarter of 2011 as compared to $139.8 million in the third quarter of 2010; total non-GAAP revenue of $498.2 million in the first nine months of 2011 as compared to $413.7 million in the first nine months of 2010;

A GAAP operating profit margin of 37.8% in the third quarter of 2011 as compared to 37.1% in the third quarter of 2010; a GAAP operating profit margin of 39.0% in the first nine months of 2011 as compared to 37.2% in the first nine months of 2010; a non-GAAP operating profit margin of 50.6% in the third quarter of 2011 as compared to 49.2% in the third quarter of 2010; a non-GAAP operating profit margin of 50.7% in the first nine months of 2011 as compared to 49.4% in the first nine months of 2010;

GAAP net income of $45.5 million in the third quarter of 2011 as compared to $36.1 million in the third quarter of 2010; GAAP net income of $133.2 million in the first nine months of 2011 as compared to $104.0 million in the first nine months of 2010; non-GAAP net income of $62.1 million in the third quarter of 2011 as compared to $47.4 million in the third quarter of 2010; non-GAAP net income of $174.1 million in the first nine months of 2011 as compared to $137.5 million in the first nine months of 2010;

GAAP diluted earnings per share of $0.48 in the third quarter of 2011 as compared to $0.39 in the third quarter of 2010; GAAP diluted earnings per share of $1.41 in the first nine months of 2011 as compared to $1.12 in the first nine months of 2010; non-GAAP diluted earnings per share of $0.66 in the third quarter of 2011 as compared to $0.51 in the third quarter of 2010; non-GAAP diluted earnings per share of $1.85 in the first nine months of 2011 as compared to $1.48 in the first nine months of 2010; and

Operating cash flows of $66.3 million in the third quarter of 2011 as compared to $72.3 million in the third quarter of 2010; operating cash flows of $230.0 million in the first nine months of 2011 as compared to operating cash flows of $192.1 million in the first nine months of 2010.

The Company's GAAP results reflect stock-based compensation charges of approximately $6.1 million ($4.8 million after tax) or $0.05 diluted earnings per share for the third quarter of 2011 and approximately $16.6 million ($12.8 million after tax) or $0.14 diluted earnings per share for the first nine months of 2011. The non-GAAP financial results highlighted above, and the non-GAAP financial outlook for 2011 and 2012 discussed below, represent non-GAAP financial measures. Reconciliations of these measures to the appropriate GAAP measures for the three and nine months ended September 30, 2011 and 2010, and for the 2011 and 2012 financial outlook, are included in the condensed financial information included in this release.

Management's Remaining 2011 and Preliminary 2012 Financial Outlook
The Company is providing its 2011 revenue and earnings per share guidance below, as well as its preliminary outlook for 2012. The earnings per share guidance is provided on both a GAAP and a non-GAAP basis. Non-GAAP revenue and non-GAAP diluted earnings per share exclude charges for stock-based compensation, the income statement effects of acquisition accounting for deferred revenue, acquisition-related amortization of intangible assets and acquisition-related expenses.

Fourth Quarter 2011 Guidance
The Company currently expects the following for the quarter ending December 31, 2011:

GAAP Revenue in the range of $189.3 - $195.3 million
Non-GAAP Revenue in the range of $194 - $200 million
GAAP diluted earnings per share of $0.50 - $0.53
Non-GAAP diluted earnings per share of $0.69 - $0.71

Fiscal Year 2011 Guidance
The Company currently expects the following for the fiscal year ending December 31, 2011:

GAAP Revenue in the range of $682.5 - $688.5 million
Non-GAAP Revenue in the range of $692 - $698 million
GAAP diluted earnings per share of $1.91 - $1.95
Non-GAAP diluted earnings per share of $2.54 - $2.56

Fiscal Year 2012 Preliminary Outlook
The Company currently expects the following for the fiscal year ending December 31, 2012:

GAAP Revenue in the range of $814.6 - $836.6 million
Non-GAAP Revenue in the range of $818 - $840 million
GAAP diluted earnings per share of $2.06 - $2.20
Non-GAAP diluted earnings per share of $2.80 - $2.90

These statements are forward-looking and actual results may differ materially. Non-GAAP diluted earnings per share is a supplemental financial measure and should not be considered as a substitute for, or superior to, diluted earnings per share determined in accordance with GAAP.