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[AGILYSYS LOGO]
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
AGILYSYS, INC. REPORTS FISCAL 2006 FIRST-QUARTER RESULTS
- Consolidated Sales
Increase 6 Percent to $410 Million
- Net Income of $0.01
per Diluted Share
- Non-GAAP Net Income
Reaches $0.15 per Diluted Share, Excluding
Restructuring and Loss on Redemption of Convertible Trust
Preferred
Securities
CLEVELAND - Aug. 4, 2005 - Agilysys, Inc.
(Nasdaq: AGYS), a leading provider of
enterprise computer technology solutions,
today announced fiscal 2006 unaudited
first-quarter results for the three months
ended June 30, 2005. Consolidated
sales for the first quarter were $410.0
million, an increase of 6.0 percent
compared with sales of $386.7 million for
the first quarter last year.
First-quarter sales of hardware products
were $329.8 million, up 4.7 percent
from $314.9 million last year. Software
sales were $58.9 million, up 14.4
percent from $51.5 million a year ago, and
services sales were $21.3 million, up
4.9 percent from $20.3 million last
year.
Gross margin for the first quarter was 12.4
percent of sales, compared with 12.6
percent in the first quarter last year.
Selling, general and administrative
expenses were $41.2 million, or 10.1
percent of sales, compared with $39.0
million, or 10.1 percent of sales, in the
prior year.
The company reported first-quarter net
income of $290,000, or $0.01 per diluted
share. Excluding a $2.4 million
restructuring charge and a non-recurring $4.8
million loss on redemption of the company's
Convertible Trust Preferred
Securities, the company would have reported
non-generally accepted accounting
principles (non-GAAP) net income of $4.6
million, or $0.15 per diluted share,
compared with non-GAAP net income of $4.0
million, or $0.14 per diluted share,
in the first quarter last year.
Arthur Rhein, chairman, president and chief
executive officer of Agilysys, said,
"I am pleased with our strong operating
performance in the first quarter of
fiscal 2006. Our results reflect sales
growth in each of our major product
categories, continued execution of our
strategic plan and a focus on improving
operational efficiency."
COMPANY REPORTS $2.4 MILLION RESTRUCTURING
CHARGE
During the quarter Agilysys initiated a
plan to consolidate a portion of its
operations to reduce costs and increase
future operating efficiencies. As part
of this restructuring effort, the company
initiated the exit of certain leased
facilities and headcount reduction. The
company also executed a senior
management consolidation of
responsibilities. Restructuring charges increased
$2.2 million during the quarter compared
with last year, which reflects
headcount reduction in the first quarter
this year. The company has not recorded
a liability for costs relating to the exit
of certain leased facilities since
the company had not ceased using such
properties as of June 30, 2005. The
company expects to record an additional
restructuring charge of approximately
$2.3 million in the second quarter ending
September 30, 2005.
Cost savings expected to be realized in
fiscal 2006 as a result of the
restructuring initiative are approximately
$6 million. None of these cost
savings were realized in the first quarter
of fiscal 2006.
REDEMPTION OF CONVERTIBLE TRUST PREFERRED
SECURITIES
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As part of its strategy to increase both
financial flexibility and shareholder
value, on June 15, 2005 the company
completed the redemption of its 6.75 percent
Convertible Trust Preferred Securities
("Trust Preferred Securities"). As of
March 31, 2005, the carrying value of the
Trust Preferred Securities was $125.3
million. Holders of the Trust Preferred
Securities were required to accept a
cash payment or to convert into common
shares of Agilysys by June 15, 2005.
Trust Preferred Securities with a carrying
value of $105.4 million were redeemed
for cash at a total cost of $109.0 million,
which included accrued interest of
$1.5 million and a 2.025 percent premium of
$2.1 million. Agilysys funded the
redemption with existing cash balances. In
addition, 398,324 Trust Preferred
Securities with a carrying value of $19.9
million were converted into common
shares of the company, resulting in the
issuance of 1.3 million common shares.
The company incurred a loss of $4.8 million
in the first quarter of fiscal 2006
as a result of the redemption of the Trust
Preferred Securities. As part of the
loss, the company wrote off deferred
financing fees of $2.7 million. The
financing fees, incurred at the time of
issuing the Trust Preferred Securities,
were being amortized over a 30-year period
ending on March 31, 2028, which was
the maturity date of the Trust Preferred
Securities. The write off of deferred
financing fees, together with the $2.1
million premium on redemption described
above, resulted in the loss of $4.8
million.
Agilysys shareholders will benefit by both
the elimination of the annual
distribution on the Trust Preferred
Securities, which amounted to approximately
$5.2 million annually, net of tax, and the
elimination of 6.7 million shares of
dilution. After the redemption and
conversion to common shares, Agilysys will
have approximately 30.4 million common
shares issued and outstanding.
ACQUISITION OF THE CTS CORPORATIONS
During the first quarter of fiscal 2006
Agilysys completed its acquisition of
The CTS Corporations for $27.5 million and
began the process of integrating CTS
into the company's professional services
operation. The transaction, which
closed on May 31, 2005, enhances the
Agilysys offering of comprehensive storage
solutions. The acquisition of CTS provides
Agilysys a strong foundation to
capitalize on current industry trends
around storage products and services.
USE OF NON-GAAP FINANCIAL MEASURES
The non-GAAP operating results provided
above are "non-GAAP financial measures"
under the rules of the Securities and
Exchange Commission. The company believes
that the non-GAAP financial information is
useful to investors to assist them in
assessing and understanding the company's
operating performance and underlying
trends in its business, as management
considers the charges and losses referred
to above to be outside the company's core
operating results. This non-GAAP
financial information supplements, and is
not intended to represent a measure of
performance in accordance with U.S. GAAP.
Accompanying this release is a tabular
reconciliation of the differences between
the non-GAAP measures with the most
comparable financial measure calculated and
presented in accordance with U.S.
GAAP.
UPDATED BUSINESS OUTLOOK
Agilysys also provided its business outlook
for fiscal 2006 including the
results of its Convertible Trust Preferred
Securities redemption.
For fiscal 2006, the company currently
estimates sales to grow approximately
five to seven percent over fiscal 2005
sales of $1.62 billion. Full-year gross
margin is expected to be approximately 12.4
percent of sales and selling,
general and administrative expenses are
anticipated to be approximately 9.5
percent of sales for fiscal 2006.
Fiscal 2006 net income is expected to be in
the range of $0.80 to $0.88 per
diluted share, including the impact of the
restructuring charges discussed above
and the loss on the Convertible Trust
Preferred Securities redemption and the
associated diluted share count impact.
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Agilysys also expects to incur fiscal 2006
capital expenditures between $2 and
$4 million, depreciation and amortization
of approximate