Ansoft Corporation Third Quarter Earnings Increase More Than 50%

Ansoft Corporation (NASDAQ:ANST) today announced
financial results for its third quarter of fiscal 2006 ended January
31, 2006.
   Revenue for the third quarter totaled $19.7 million, an increase
of 13% compared to $17.4 million reported in the previous fiscal
year's third quarter. On a non-GAAP basis, net income for the third
quarter was $4.5 million, or $0.35 per diluted share, representing a
52% increase when compared to non-GAAP net income of $3.0 million, or
$0.23 per diluted share in the previous fiscal year's third quarter.
On a generally accepted accounting principles (GAAP) basis, net income
for the third quarter was $4.3 million, or $0.33 per diluted share,
compared to GAAP net income of $2.8 million, or $0.21 per diluted
share in the previous fiscal year's third quarter.
   Non-GAAP financial measures exclude the impact of
acquisition-related amortization. A reconciliation of these amounts to
the appropriate GAAP amounts, for the three months ended January 31,
2006 and 2005 is included with this press release.
   "We had an excellent quarter with more than 50% growth in
earnings," said Nicholas Csendes, Ansoft's President and CEO. "For the
fourth quarter, we expect record revenues and record earnings."
   Ansoft is a leading developer of high-performance electronic
design automation (EDA) software. Engineers use Ansoft software to
design state-of-the-art electronic products, such as cellular phones,
internet access devices, broadband networking components and systems,
integrated circuits (ICs), printed circuit boards (PCBs), automotive
electronic systems and power electronics. Ansoft markets its products
worldwide through its own direct sales force and has comprehensive
customer-support and training offices throughout North America, Asia
and Europe.
   This press release contains forward-looking statements including
those related to revenue and earnings growth for the current fiscal
year that are made pursuant to the safe harbor provisions of the
Private Securities Litigation Act of 1995. These forward-looking
statements are based on current expectations and assumptions that are
subject to risks and uncertainties that could cause actual results to
differ materially, including, but not necessarily limited to,
management's ability to forecast revenues and control expenses and the
amount, timing and structure of software licenses.
   For further information regarding risks and uncertainties
associated with Ansoft's business, please refer to the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" section of Ansoft's SEC filings, including, but not
limited to, its annual report on Form 10-K and quarterly reports on
Form 10-Q, copies of which may be obtained at Ansoft's website at
www.ansoft.com/about/investor/index.cfm.
   All information in this release is as of February 14, 2006. Ansoft
undertakes no duty to update any forward-looking statement to conform
the statement to actual results or changes in the Company's
expectations.
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                          ANSOFT CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except per share amounts)
                              (unaudited)


                               Three months ended  Nine months ended
                                   January 31,         January 31,
                                 2006      2005      2006      2005
                               --------- --------- --------- ---------
Revenue
  License                       $11,251   $10,182   $27,194   $25,012
  Service and other               8,404     7,198    25,279    20,992
                               --------- --------- --------- ---------
Total revenue                    19,655    17,380    52,473    46,004
Costs of revenue
  License                           135       141       368       363
  Service and other                 368       355     1,019     1,015
                               --------- --------- --------- ---------
Total cost of revenue               503       496     1,387     1,378
Gross profit                     19,152    16,884    51,086    44,626
Operating Expenses
  Sales and marketing             8,013     7,424    22,477    22,522
  Research and development        4,188     4,204    12,377    12,230
  General and administrative      1,122     1,199     3,692     3,592
  Amortization                      370       415     1,108     1,208
                               --------- --------- --------- ---------
Total operating expenses         13,693    13,242    39,654    39,552
                               --------- --------- --------- ---------
Income from operations            5,459     3,642    11,432     5,074
Net realized gain (loss) on
 sale of securities                   -         -        (2)      732
Other income, net                   269       374       749       975
                               --------- --------- --------- ---------
Income before income taxes        5,728     4,016    12,179     6,781
Income tax expense                1,468     1,232     2,655     2,076
                               --------- --------- --------- ---------
Net income                       $4,260    $2,784    $9,524    $4,705
                               ========= ========= ========= =========
Net income per share
    Basic                         $0.36     $0.24     $0.80     $0.41
                               ========= ========= ========= =========
    Diluted                       $0.33     $0.21     $0.73     $0.35
                               ========= ========= ========= =========
Weighted average shares used in calculation
  Basic                          11,849    11,490    11,852    11,574
                               ========= ========= ========= =========
  Diluted                        12,957    13,390    12,961    13,342
                               ========= ========= ========= =========


                          ANSOFT CORPORATION
                      CONSOLIDATED BALANCE SHEETS
               (In thousands, except per share amounts)
                              (unaudited)


                                                January 31,  April 30,
                                                   2006        2005
                                               ------------ ----------

Assets
Current assets
Cash and cash equivalents                          $10,498    $11,910
Accounts receivable, net of allowance for
 doubtful accounts of $525 and $425,
 respectively                                       12,660     17,388
Deferred income taxes                                  566        229
Prepaid expenses and other assets                    1,780      1,148
                                               ------------ ----------
Total current assets                                25,504     30,675

Equipment and furniture, net of accumulated
 depreciation of $7,764 and $6,961,
 respectively                                        2,696      2,811
Marketable securities                               31,365     28,496
Other assets                                           128        146
Deferred income taxes                                5,733      6,177
Goodwill                                             1,239      1,239
Other intangible assets, net                         2,800      3,877
                                               ------------ ----------
Total assets                                       $69,465    $73,421
                                               ============ ==========

Liabilities and stockholders' equity
Current liabilities
Accounts payable                                      $500       $231
Accrued payroll                                      1,429      2,290
Other accrued expenses                               2,522      3,076
Current portion of deferred revenue                 15,114     17,500
                                               ------------ ----------
Total current liabilities                           19,565     23,097
Long-term portion of deferred revenue                1,189      1,039
                                               ------------ ----------
Total liabilities                                   20,754     24,136

Stockholders' equity
Preferred stock, par value $0.01 per share;
 1,000 shares authorized, no shares outstanding          -          -
Common stock, par value $0.01 per share; 25,000
 shares authorized; issued 14,194 and 13,901
 shares, respectively and outstanding 11,833
 and 12,083, respectively                              142        140
Additional paid-in capital                          75,596     70,410
Treasury stock, 2,361 and 1,818 shares,
 respectively                                      (36,119)   (21,762)
Accumulated other comprehensive loss, net           (1,267)      (338)
Retained earnings                                   10,359        835
                                               ------------ ----------
Total stockholders' equity                          48,711     49,285
                                               ------------ ----------
 Total liabilities and stockholders' equity        $69,465    $73,421
                                               ============ ==========


                          ANSOFT CORPORATION
       RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
               (In thousands, except per share amounts)
                              (unaudited)

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   Pursuant to the requirement of Regulation G, the Company has
provided a reconciliation of the non-GAAP financial measure to the
most directly comparable GAAP financial measure. These measures differ
from GAAP in that they exclude acquisition-related amortization. The
Company has provided this measurement in addition to GAAP financial
results because it believes the non-GAAP financial measure provides
useful information to investors in that it provides additional insight
into our core operations and a consistent basis for comparison between
quarters not influenced by certain non-cash items. The Company does
not acquire businesses on a predictable cycle. As a result, management
has difficulty comparing the Company's profitability as measured by
net income on a period to period basis unless it excludes
acquisition-related amortization because it may appear in one period
but not in the comparable period. Further, management finds it useful
to exclude non-cash charges in order to more readily correlate the
Company's operating activities with the Company's ability to generate
cash from operations and more accurately predict liquidity
requirements. Finally, this same financial measure is used by
management to track the Company's performance relative to externally
communicated financial targets and to competitors' operating results.
The additional non-GAAP financial information presented should be
considered in conjunction with, and not as a substitute for, the
financial information presented in accordance with GAAP.
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                                                   Three months ended
                                                       January 31,
                                                  --------------------
                                                     2006      2005
                                                  ---------- ---------

GAAP net income                                      $4,260    $2,784
Amortization of intangibles (1)                         229       257
                                                  ---------- ---------
Non-GAAP net income                                  $4,489    $3,041
                                                  ========== =========
Non-GAAP net income per diluted common share          $0.35     $0.23
                                                  ========== =========
Weighted average diluted shares used in
 calculation                                         12,957    13,390
                                                  ========== =========

(1) Amortization expense net of a 38% tax rate. 
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