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<SEC-DOCUMENT>0000950132-01-000198.txt : 20010330
<SEC-HEADER>0000950132-01-000198.hdr.sgml : 20010330
ACCESSION NUMBER: 0000950132-01-000198
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010329
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ANSYS INC
CENTRAL INDEX KEY: 0001013462
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372]
IRS NUMBER: 043219960
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT:
SEC FILE NUMBER: 000-20853
FILM NUMBER: 1583683
BUSINESS ADDRESS:
STREET 1: 275 TECHNOLOGY DRIVE, SOUTHPOINTE
CITY: CANONSBURG
STATE: PA
ZIP: 15317
BUSINESS PHONE: 4127643304
MAIL ADDRESS:
STREET 1: 275 TECHNOLOGY DRIVE, SOUTHPOINTE
CITY: CANONSBURG
STATE: PA
ZIP: 15317
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10-K405
<TEXT>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-20853
ANSYS, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 04 -3219960
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
275 Technology Drive, Canonsburg, PA 15317
(Address of principal executive offices) (Zip Code)
724-746-3304
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None None
(Title of each class) (Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
(Title of class)
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in PART III of this Form 10-K, or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the closing sale price of the Common Stock on March
16, 2001 as reported on the NASDAQ National Market, was approximately
$159,473,105. Shares of Common Stock held by each officer and director and by
each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive determination for other
purposes.
The number of shares of the Registrant's Common Stock, par value $.01 per
share, outstanding as of March 16, 2001 was 14,231,568 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
December 31, 2000 are incorporated by reference into Parts I, II and IV.
Portions of the Proxy Statement for the Registrant's 2000 Annual Meeting of
Stockholders to be held on May 2, 2001 are incorporated by reference into Part
III.
<PAGE>
Important Factors Regarding Future Results
Information provided by ANSYS, Inc. (the "Company"), including information
contained in this Annual Report on Form 10-K, or by its spokespersons may from
time to time contain forward-looking statements concerning such matters as
projected financial performance, market and industry segment growth, product
development and commercialization, acquisitions or other aspects of future
operations. Such statements, made pursuant to the safe harbor established by
the securities laws, are based on the assumptions and expectations of the
Company's management at the time such statements are made. The Company cautions
investors that its performance (and, therefore, any forward-looking statement)
is subject to risks and uncertainties. Various important factors, including but
not limited to those discussed herein, may cause the Company's future results to
differ materially from those projected in any forward-looking statement.
Important information about the basis for those assumptions is contained in
"Important Factors Regarding Future Results" included in Item 7 "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
incorporated by reference to pages 12 through 21 of the Company's 2000 Annual
Report to Stockholders. All information presented is as of December 31, 2000,
unless otherwise indicated.
PART I
ITEM 1: BUSINESS
ANSYS, Inc. develops, markets and supports software solutions for design,
analysis and optimization. Engineering analysts and design engineers use the
Company's software to accelerate product time to market, reduce production
costs, improve engineering processes and optimize product quality and safety for
a variety of manufactured products. The ANSYS(R) product family features open,
flexible architecture that permits easy integration and collaboration within
customers' enterprise-wide engineering systems.
Since its founding in 1970 as Swanson Analysis Systems, Inc. ("Swanson
Analysis"), the Company has become a technology leader in the market for
computer-aided engineering ("CAE") analysis software. The Company has long-
standing relationships with customers in many industries, including automotive,
aerospace, consumer goods and electronics. Using the Company's products,
engineers can construct computer models of structures, compounds, components or
systems to simulate performance conditions and physical responses to varying
levels of stress, pressure, temperature and velocity. This helps reduce the time
and expense of physical prototyping and testing.
The Company's product line ranges from ANSYS/Multiphysics, a sophisticated
multi-disciplinary CAE tool for engineering analysts, to its DesignSpace(R)
products, innovative computer-aided design ("CAD") integrated design
optimization products for design engineers. The Company's individual design and
analysis software programs, all of which are included in the ANSYS/Multiphysics
program, are available as subsets or standalone products. The Company's
multiphysics products, and maintenance sold in connection with those products,
comprise the core of its business and accounted for a substantial portion of the
Company's revenue in 2000, 1999 and 1998. The Company's CAD integration
products provide design optimization tools for use directly within a particular
CAD product. CAD integration products are accessed from the graphical user
interface of, and operate directly on the geometry produced within, the CAD
product. The output from these programs may be read into any of the products in
the ANSYS product family. The Company's product family features a unified
database, a wide range of analysis functionality, a consistent, easy-to-use
graphical user interface, support for multiple hardware platforms and operating
systems (including Windows 98/2000, Windows NT and UNIX), effective user
customization tools and integration with leading CAD systems. The ANSYS
commercial software products are developed using the Company's ISO
9001-certified quality system.
During the year 2000, the Company acquired ICEM CFD Engineering (ICEM). ICEM
develops and markets software for pre- and post-processing of engineering
applications such as computational fluid dynamics (CFD) and structural analysis.
ICEM's major products include ICEM CFD, the leading software for 3-D grid
generation for CFD, and Icepak, an electronics cooling simulation system created
in collaboration with Fluent, Inc.
The Company distributes and supports its products principally through its global
network of 36 independent, regional ANSYS Support Distributors ("ASDs"), which
have 60 offices in 25 countries, as well as through certain direct sales offices
and an independent network of resellers and dealers.
2
<PAGE>
PRODUCT DEVELOPMENT
The Company makes significant investments in research and development and
emphasizes accelerated new product releases. The Company's product development
strategy centers on ongoing development and innovation of new technologies to
increase productivity and provide solutions that customers can integrate into
enterprise-wide engineering systems. The Company's product development efforts
focus on extensions of the full product line with new functional modules,
further integration with CAD products and the development of new products based
on object-oriented technology. The Company's products run on the most widely
used engineering computing platforms and operating systems, including Windows
98/2000, Windows NT and most UNIX workstations.
During 2000, the Company achieved the following with respect to major product
development activities and releases:
. The release of ANSYS 5.7, a new and enhanced version of the Company's
flagship multiphysics product, and all component products. This release
incorporates high frequency simulation enhancements for wireless
communications; a new, faster and more efficient thermal solver for
nonlinear transient simulation; enhanced fluid-structure simulation; a
new, patented HTML-based report generator for quick and easy reporting
of engineering simulation data; and a faster graphical postprocessing
tool that enables rapid visualization of very large 3-D models.
. The release of DesignSpace 5.0.2. This software release provides
enterprise level support for popular computer-aided design (CAD) systems
and engineering hardware platforms. Broader and more effective
communication capabilities for the patented engineering Web report
technology in DesignSpace Report(TM), including multilingual reporting
mechanisms, were also included in the release.
The Company's total research and development expense was $14.5 million, $13.5
million and $11.6 million in 2000, 1999 and 1998, or 19.5%, 21.3% and 20.6% of
total revenue, respectively. As of December 31, 2000, the Company's product
development staff consisted of 137 full time employees, most of whom hold
advanced degrees and have industry experience in engineering, mathematics,
computer science or related disciplines.
The Company uses multi-functional teams to develop its products and develops
them simultaneously on multiple platforms to reduce subsequent porting costs. In
addition to developing source code, these teams create and perform highly
automated software verification tests; develop on-line documentation and support
for the products; implement development enhancement tools, software
configuration management and product licensing processes; and conduct regression
tests of ANSYS products for all supported platforms.
PRODUCT QUALITY
During 2000, the Company continued to maintain ISO 9001 certification for its
quality system. This standard applies to all of the ANSYS commercial software
products and covers all product-related activities, from establishing product
requirements to customer service practices and procedures.
In accordance with the ISO 9001 certification for its quality system, the
Company's employees perform all product development and support tasks according
to predefined quality plans, procedures and work instructions. These plans
define for each project the methods to be used, the responsibilities of project
participants and the quality objectives to be met. To ensure that the Company
meets or surpasses the IS0 9001 standards, the Company establishes quality plans
for all products and services, subjects product designs to multiple levels of
testing and verification and selects development subcontractors in accordance
with processes established under the Company's quality system.
SALES AND MARKETING
The Company distributes and supports its ANSYS and DesignSpace product lines
through its global ASD and reseller network, as well as through its own
strategic direct sales offices. This network provides the Company with a cost-
effective, highly specialized channel of distribution and technical support.
The Company's ICEM CFD products are sold primarily through a direct sales force,
although a portion of ICEM's revenue is obtained through OEM agreements.
Approximately 62% of the Company's total revenue in 2000 was derived through the
ASD and reseller network.
3
<PAGE>
At December 31, 2000, the ASD network consisted of 36 independent distributors
in 60 locations in 25 countries, including 13 in North America, 7 in Europe and
16 throughout the Asia-Pacific region and the remainder of the world. The ASDs
sell ANSYS and DesignSpace products to new customers, expand installations
within the existing customer base, offer training and consulting services and
provide the first line of ANSYS technical support. The Company's ASD
certification process helps to ensure that each ASD has the ongoing capacity to
adequately represent the Company's product lines and provide an acceptable level
of training, consultation and support.
The Company also has a direct sales management infrastructure in place to
develop a more enterprise-wide focused sales approach and to implement a
worldwide major account strategy. The sales management organization also
functions as a focal point for requests to ANSYS from the ASD and reseller
channel, and provides additional support in strategic locations through the
presence of direct sales offices. As of December 31, 2000, the Company's sales
management organization was headed by a North American Vice President of Sales
and an International Vice President of Sales. In early 2001, a European Vice
President of Sales was added to the organization. These senior members of sales
management were supported by Regional Sales Directors, devoted to the overall
management of stated sales territories, and Strategic Account Managers, devoted
to specific major accounts within those territories.
During 2000, the Company continued to invest in its previously established
strategic sales offices in Minneapolis, Minnesota; Houston, Texas; New England;
the United Kingdom; and China. Additionally, the Company expanded its direct
sales presence in Japan via a joint venture with the Japanese ASD and
established a strategic sales office in Southern California in the latter part
of 2000. In total, the ANSYS direct sales offices employ 35 persons who are
responsible for the sales, marketing initiatives and administration in those
geographic areas designed to support the Company's overall revenue growth and
market share expansion strategies.
During 2000, the Company also continued to expand the reseller channel for both
its ANSYS and DesignSpace products. This channel complements the ASD network by
establishing a broader user base for the Company's products and services. As
of December 31, 2000, the Company had signed agreements with 185 resellers. The
resellers are required to have appropriately trained marketing and technical
personnel.
The Company's products have an installed base of approximately 68,000 seats at
commercial sites and approximately 122,000 seats at university sites worldwide.
The Company's products are utilized by organizations ranging in size from small
consulting firms to the world's largest industrial companies. No single
customer accounted for more than 10% of the Company's revenue in 2000.
Information with respect to foreign and domestic revenue may be found in Note 15
to the Consolidated Financial Statements and the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of the
Annual Report to Stockholders for the year ended December 31, 2000 ("2000 Annual
Report to Stockholders"), which financial statements are included in Exhibit
13.1 to this Annual Report on Form 10-K and incorporated herein by reference.
Additionally, certain countries and geographical regions have continued to
experience weaknesses in their currency, banking and equity markets. These
weaknesses could adversely affect consumer demand for the Company's products and
ultimately the Company's financial position or results of operations.
STRATEGIC ALLIANCES AND MARKETING RELATIONSHIPS
The Company has established and continues to pursue strategic alliances with
advanced technology suppliers and marketing relationships with hardware vendors,
specialized application developers and CAD providers. The Company believes these
relationships allow accelerated incorporation of advanced technology into the
ANSYS, DesignSpace and ICEM CFD product families, gain access to important new
markets, expand the Company's sales channels, develop specialized product
applications and provide direct integration with leading CAD systems.
The Company has technical and marketing relationships with leading CAD vendors,
such as Autodesk, Parametric Technology Corporation, Dassault Systemes and UGS
to provide direct links between products. These links facilitate the transfer of
electronic data models between the CAD system and ANSYS products.
To augment the partnerships with CAD vendors, in 2000 the Company increased its
capability for capturing and modifying geometry from CAD via a partnership with
International TechneGroup Inc. This partnership resulted in a bundled product,
CADfix for ANSYS, that interrogates geometry for its fitness to be received by
ANSYS products and further heals problem geometry by both automatic and manual
methods.
4
<PAGE>
The Company has established relationships with leading suppliers of computer
hardware, including Hewlett-Packard, Compaq, Silicon Graphics, Sun Microsystems,
IBM, Dell, Intel and various graphics card vendors. These relationships
typically provide the Company with joint marketing opportunities such as
advertising, events and internet links with the hardware partner's home page.
In addition, the Company receives reduced equipment costs and software porting
support to ensure that the Company's software products are certified to run on
various hardware configurations.
The Company's Enhanced Solution Partner ("ESP") Program actively encourages
specialized developers of niche software solutions to use ANSYS as a development
platform for their applications. In most cases, the sale of the Enhanced
Solution Partners' products is accompanied by the sale of an ANSYS product.
The Company partners with Inceciber, S.A. of Spain through the ESP program.
Inceciber has developed a set of high-end civil engineering simulation modules
that address the steel and concrete construction marketplace. The bundled
products are marketed worldwide as CivilFEM for ANSYS. The Company also
maintains a partnership with Mechanical Dynamics, Inc. ("MDI"), the goal of
which is to combine the structural analysis of DesignSpace with the motion
analysis of MDI's Dynamic Designer Motion software into one tightly integrated
modeling system.
The Company has a software license agreement with Livermore Software Corporation
("LSTC") under which LSTC has provided LS/DYNA software for explicit dynamics
solutions used in applications such as crash test simulation in the automotive
and other industries. Under this arrangement, LSTC assists in the integration of
the LS/DYNA software with the Company's pre- and post-processing capabilities
and provides updates and problem resolution in return for a share of revenue
from sales of ANSYS/LS-DYNA.
In the area of Micro Electro Mechanical Systems ("MEMS"), the Company formed an
alliance with MEMSCAP, S.A. of Grenoble, France. The ANSYS/MEMSCAP relationship
provides multiphysical products to a variety of industries that are developing
electrostatically driven miniature MEMS devices.
COMPETITION
The CAD, CAE and computer-aided manufacturing ("CAM") markets are intensely
competitive. In the traditional CAE market, the Company's primary competitors
include MSC.Software Corporation and Hibbitt, Karlsson and Sorensen, Inc. The
Company also faces competition from smaller vendors of specialized analysis
applications in fields such as computational fluid dynamics. In addition,
certain integrated CAD suppliers such as Parametric Technology Corporation, SDRC
and Dassault Systemes provide varying levels of design analysis, optimization
and verification capabilities as part of their product offerings. The entrance
of new competitors would likely intensify competition in all or a portion of the
overall CAD, CAE and CAM markets. Some of the Company's current and possible
future competitors have greater financial, technical, marketing and other
resources than the Company, and some have well-established relationships with
current and potential customers of the Company. It is also possible that
alliances among competitors may emerge and rapidly acquire significant market
share or that competition will increase as a result of software industry
consolidation. Increased competition may result in price reductions, reduced
profitability and loss of market share, any of which would materially adversely
affect the Company's business, financial condition and results of operations.
The Company believes that the principal competitive factors affecting its market
include ease of use; breadth and depth of functionality; flexibility; quality;
ease of integration into CAD systems; file compatibility across computer
platforms; range of supported computer platforms; performance; price and cost of
ownership; customer service and support; company reputation and financial
viability; and effectiveness of sales and marketing efforts. Although the
Company believes that it currently competes effectively with respect to such
factors, there can be no assurance that the Company will be able to maintain its
competitive position against current and potential competitors. There also can
be no assurance that CAD software companies will not develop their own analysis
software, acquire analysis software from companies other than the Company or
otherwise discontinue their relationships with the Company. If any of these
events occur, the Company's business, financial condition and results of
operations could be materially adversely affected.
5
<PAGE>
PROPRIETARY RIGHTS AND LICENSES
The Company regards its software as proprietary and relies on a combination of
trade secret, copyright and trademark laws, license agreements, nondisclosure
and other contractual provisions, and technical measures to protect its
proprietary rights in its products. The Company distributes its software under
software license agreements that grant customers nonexclusive licenses for the
use of the Company's products, which are typically nontransferable. Although the
Company distributes its products through the ASDs and the reseller channel,
license agreements for the Company's products are directly between the Company
and end users. Use of the licensed software is restricted to designated
computers at specified sites, unless the customer obtains a site license for its
use of the software. Software and hardware security measures are also employed
to prevent unauthorized use of the Company's software; and the licensed software
is subject to terms and conditions prohibiting unauthorized reproduction of the
software. Customers may either purchase a paid-up perpetual license of the
technology with the right to annually purchase ongoing maintenance, technical
support and updates, or may lease the product on an annual basis for a fee which
includes the license, maintenance, technical support and upgrades.
For certain software products such as ANSYS/ED, the Company primarily relies on
"click-wrapped" licenses. The enforceability of these types of agreements under
the laws of certain jurisdictions is uncertain.
The Company also seeks to protect the source code of its software as a trade
secret and as unpublished copyrighted work. The Company has obtained federal
trademark protection for ANSYS and DesignSpace. The Company has also obtained
trademark registrations of ANSYS and DesignSpace in a number of foreign
countries and is in the process of seeking such registration in other foreign
countries. Additionally, the Company was awarded a patent by the U.S. Patent
and Trademark Office for its web-based reporting technology.
The employees of the Company have signed a covenant agreement under which they
have agreed not to disclose trade secrets or confidential information, or to
engage in or become connected with any business which is competitive with the
Company anywhere in the world, while employed by the Company (and, in some
cases, for specified periods thereafter), and that any products or technology
created by them during their term of employment are the property of the Company.
In addition, the Company requires all ASDs and resellers to enter into
agreements not to disclose the Company's trade secrets and other proprietary
information.
Despite these precautions, there can be no assurance that misappropriation of
the Company's technology will not occur. Further, there can be no assurance that
copyright and trade secret protection will be available for the Company's
products in certain countries, or that restrictions on competition will be
enforceable.
The software development industry is characterized by rapid technological
change. Therefore, the Company believes that factors such as the technological
and creative skills of its personnel, new product developments, frequent product
enhancements, name recognition and reliable product maintenance are more
important to establishing and maintaining a technology leadership position than
the various legal protections of its technology which may be available.
The Company is not aware that any of its products infringe upon the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim in the future such infringement by the Company or its licensors
or licensees with respect to current or future products. The Company expects
that software product developers will increasingly be subject to such claims as
the number of products and competitors in the Company's market segment grow and
the functionality of products in different market segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require the Company to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company.
BACKLOG
The Company generally ships its products within 30 days after acceptance of an
order and execution of a software license agreement. Accordingly, the Company
does not believe that its backlog at any particular point in time is indicative
of future sales levels.
6
<PAGE>
EMPLOYEES
As of December 31, 2000, the Company had 368 full time employees. At that date,
there were also approximately 21 contract personnel and co-op students providing
ongoing development services and technical support. The Company believes that
its relationship with its employees is good.
ITEM 2: PROPERTIES
The Company's executive offices and those related to product development,
marketing, production and administration are located in a 107,000 square foot
office facility in Canonsburg, Pennsylvania, which is leased for an annual rent
of approximately $1,227,000. The Company also leases office space in various
locations throughout the world. ANSYS's subsidiaries lease office space for
their operations as well. The Company owns substantially all equipment used in
its facilities. Management believes that its facilities allow for sufficient
space to support not only its present needs, but also allow for expansion and
growth as the business may require in the foreseeable future.
ITEM 3: LEGAL PROCEEDINGS
The Company is subject to various legal proceedings from time to time that arise
in the ordinary course of business activities. Each of these matters is subject
to various uncertainties, and it is possible that these matters may be resolved
unfavorably to the Company.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 2000.
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is incorporated by reference to page 41
and the section captioned "Corporate Information" appearing in the Company's
2000 Annual Report to Stockholders.
ITEM 6: SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference to page 1 of
the Company's 2000 Annual Report to Stockholders.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is incorporated by reference to pages 12
through 21 of the Company's 2000 Annual Report to Stockholders, including the
Important Factors Regarding Future Results.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no long-term debt obligations. Less than 7% of the
Company's total assets as of December 31, 2000 were denominated in currencies
other than the U.S. Dollar. Accordingly, the Company has no material exposure
to foreign currency exchange risk. This materiality assessment is based on the
assumption that the foreign currency exchange rates could change unfavorably by
10%. The Company has no foreign currency exchange contracts.
Based on the nature of the Company's business, it has no direct exposure to
commodity price risk.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by reference to pages 22
through 39 of the Company's 2000 Annual Report to Stockholders.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
7
<PAGE>
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the Company's directors and executive officers
required by this Item is incorporated by reference to the Company's 2001 Proxy
Statement and is set forth under "Information Regarding Directors" and
"Information Regarding Executive Officers" therein.
ITEM 11: EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Company's 2001 Proxy Statement and is set forth under "Executive Compensation"
therein.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Company's 2001 Proxy Statement and is set forth under "Principal and Management
Stockholders" therein.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
Company's 2001 Proxy Statement and is set forth under "Certain Transactions"
therein.
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents Filed as Part of this Annual Report on Form 10-K:
1. Financial Statements: The following Consolidated Financial Statements
of ANSYS, Inc. and Report of PricewaterhouseCoopers LLP, Independent
Accountants, are incorporated by reference to pages 22 through 39 of
the Registrant's 2000 Annual Report to Stockholders:
- Report of PricewaterhouseCoopers LLP, Independent Accountants
- Consolidated Balance Sheets as of December 31, 2000 and 1999
- Consolidated Statements of Income for the years ended
December 31, 2000, 1999 and 1998
- Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998
- Consolidated Statements of Stockholders' Equity for the years
ended December 31, 2000, 1999 and 1998
- Notes to Consolidated Financial Statements
2. Financial Statement Schedules: The following financial statement
schedule for ANSYS, Inc. and report of PricewaterhouseCoopers LLP,
independent accountants, are filed on page 13 of this Annual Report and
should be read in conjunction with the Consolidated Financial
Statements of ANSYS, Inc.
Report of Independent Accountants on Financial Statement
Schedule
Schedule II - Valuation and Qualifying Accounts
Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set
forth therein is included in the Consolidated Financial Statements or
Notes thereto.
8
<PAGE>
3. Exhibits:
The Exhibits listed on the accompanying Exhibit Index immediately
following the financial statement schedule are filed as part
of, or incorporated by reference into, this Annual Report.
(b) Reports on Form 8-K:
The Registrant filed a Current Report on Form 8-K/A with the Securities and
Exchange Commission on November 8, 2000 to report financial statements and pro
forma information related to its August 31, 2000 acquisition of Pacific
Marketing and Consulting, Inc.
(c) Exhibits
The Company hereby files as part of this Annual Report on Form 10-K the Exhibits
listed in the attached Exhibit Index on page 11 of this Annual Report.
(d) Financial Statement Schedules
The Company hereby files as part of this Annual Report on Form 10-K the
financial statement schedule listed in Item 14 (a) 2 as set forth above.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ANSYS, Inc.
Date: March 23, 2001 By: /S/ James E. Cashman III
--------------------------------------.
James E. Cashman III
President and Chief Executive Officer
Date: March 23, 2001 By: /S/ Maria T. Shields
--------------------------------------.
Maria T. Shields
Chief Financial Officer,
Vice President, Finance and Administration
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James E. Cashman III, his or her attorney-in-
fact, with the power of substitution, for such person in any and all capacities,
to sign any amendments to this Report on Form 10-K, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/S/ James E. Cashman III President and Chief Executive Officer March 23, 2001
- ----------------------------- (Principal Executive Officer)
James E. Cashman III
/S/ Maria T. Shields Chief Financial Officer, Vice President, March 23, 2001
- ----------------------------- Finance and Administration; (Principal
Maria T. Shields Financial Officer and Accounting Officer)
/S/ Peter J. Smith Chairman of the Board of Directors March 23, 2001
- -----------------------------
Peter J. Smith
/S/ Jacqueline C. Morby Director March 23, 2001
- -----------------------------
Jacqueline C. Morby
/S/ Roger B. Kafker Director March 23, 2001
- -----------------------------
Roger B. Kafker
/S/ Roger J. Heinen, Jr. Director March 23, 2001
- -----------------------------
Roger J. Heinen, Jr.
/S/ John F. Smith Director March 23, 2001
- -----------------------------
John F. Smith
/S/ Patrick Zilvitis Director March 23, 2001
- -----------------------------
Patrick Zilvitis
/S/ Bradford C. Morley Director March 23, 2001
- -----------------------------
Bradford C. Morley
</TABLE>
10
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------------------------------------------------------------------------------------------
<S> <C>
3.1 Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1996 and incorporated
herein by reference).
3.2 By-laws of the Company (filed as Exhibit 3.3 to the Company's Registration Statement on
Form S-1 (File No. 333-4278) and incorporated herein by reference).
10.1 1994 Stock Option and Grant Plan, as amended (filed as Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (File No. 333-4278) and incorporated herein by
reference). *
10.2 1996 Stock Option and Grant Plan, as amended (filed as Exhibit 10.1 to the Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1996 and incorporated herein by
reference). *
10.3 1996 Employee Stock Purchase Plan, as amended (filed as Exhibit 10.2 to the Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1996 and incorporated herein by
reference). *
10.4 Employment Agreement between a subsidiary of the Registrant and Peter J. Smith dated as
of March 28, 1994 (filed as Exhibit 10.10 to the Company's Registration Statement on Form
S-1 (File No. 333-4278) and incorporated herein by reference). *
10.5 Lease between National Build to Suit Washington County, L.L.C. and the Registrant for the
Southpointe property (filed as Exhibit 10.19 to the Company's Registration Statement on
Form S-1 (File No. 333-4278) and incorporated herein by reference).
10.6 Registrant's Pension Plan and Trust, as amended (filed as Exhibit 10.20 to the Company's
Registration Statement on Form S-1 (File No. 333-4278) and incorporated herein by
reference). *
10.7 Form of Director Indemnification Agreement (filed as Exhibit 10.21 to the Company's
Registration Statement on Form S-1 (File No. 333-4278) and incorporated herein by
reference). *
10.8 Agreement and Plan of Merger among ANSYS, Inc., GenesisOne Acquisition Corporation,
Pacific Marketing and Consulting, Inc. (PMAC) and the PMAC stockholders (filed as Exhibit
2.1 to the Company's Current Report on Form 8-K, dated September 13, 2000 and
incorporated herein by reference).
13.1 Annual Report to Stockholders for the fiscal year ended December 31, 2000 (which is not
deemed to be "filed" except to the extent that portions thereof are expressly
incorporated by reference in this Annual Report on Form 10-K); filed herewith.
21 Subsidiaries of the Registrant; filed herewith.
23.1 Consent of PricewaterhouseCoopers LLP; filed herewith.
23.2 Consent of PricewaterhouseCoopers LLP for Form 11-K; filed herewith.
24.1 Powers of Attorney. Contained on page 10 of this Annual Report on Form 10-K and
incorporated herein by reference.
99 1996 Employee Stock Purchase Plan Annual Report on Form 11-K.
- -------------
* Indicates management contract or compensatory plan, contract or arrangement.
</TABLE>
11
<PAGE>
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors of
ANSYS, Inc. and Subsidiaries
Our audits of the consolidated financial statements referred to in our report
dated January 30, 2001 appearing in the 2000 Annual Report to Shareholders of
ANSYS, Inc. and Subsidiaries (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the financial statement schedule listed in Item 14(a)(2) of this
Form 10-K. In our opinion, this financial statement schedule presents fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/S/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
January 30, 2001
12
<PAGE>
SCHEDULE II
ANSYS, INC.
Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Balance at Deductions - Balance at End
Beginning Additions - Returns and of Year
Description of Year Provisions Write-Offs
- ---------------------------------- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 2000 $1,700,000 $ 739,000 $ 89,000 $2,350,000
Allowance for doubtful accounts
Year ended December 31, 1999 $1,900,000 $ 464,000 $ 664,000 $1,700,000
Allowance for doubtful accounts
accounts
Year ended December 31, 1998 $2,080,000 $1,309,000 $1,489,000 $1,900,000
Allowance for doubtful accounts
accounts
</TABLE>
13
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>SELECTED PAGES FROM THE 2000 ANNUAL REPORT
<TEXT>
<PAGE>
EXHIBIT 13.1
2000 ANNUAL REPORT TO STOCKHOLDERS
(See page 1 - Financial Highlights and pages 12 through inside back cover (page
41) of 2000 Annual Report to Shareholders)
<PAGE>
Financial Highlights
Year Ended December 31,
<TABLE>
<CAPTION>
(in thousands, except per share data) 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $74,467 $63,139 $56,553 $50,547 $47,066
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 19,579 17,243 15,206 10,731 3,674
- --------------------------------------------------------------------------------------------------------------------------------
Net income 16,310 14,751 11,349 7,400 1,304
- --------------------------------------------------------------------------------------------------------------------------------
Net income per
basic share after
extraordinary item 1.03 .90 .71 .47 .08
- --------------------------------------------------------------------------------------------------------------------------------
Weighted average
shares - basic 15,804 16,366 16,052 15,742 14,000
- --------------------------------------------------------------------------------------------------------------------------------
Net income per
diluted share after
extraordinary item 1.00 .88 .68 .45 .07
- --------------------------------------------------------------------------------------------------------------------------------
Weighted average
shares - diluted 16,269 16,689 16,581 16,518 14,906
- --------------------------------------------------------------------------------------------------------------------------------
Net income before acquisition-related
amortization and one-time charges 17,723 14,751 11,349 7,400 1,304
- --------------------------------------------------------------------------------------------------------------------------------
Adjusted earnings per share - diluted 1.09 .88 .68 .45 .07
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $94,225 $83,891 $67,998 $54,566 $43,431
- --------------------------------------------------------------------------------------------------------------------------------
Working capital 40,046 52,655 38,049 23,761 14,691
- --------------------------------------------------------------------------------------------------------------------------------
Long-term obligations - - - - -
- --------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity 69,364 65,631 52,367 40,414 32,974
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
2000 Financial Content
Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Report of Independent Accountants 22
Consolidated Balance Sheets 23
Consolidated Statements of Income 24
Consolidated Statements of Cash Flows 25
Consolidated Statements of Stockholders' Equity 26
Notes to Consolidated Financial Statements 28
Quarterly Financial Information (Unaudited) 40
Corporate Information 41
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview
ANSYS, Inc. (the "Company") is a leading international supplier of analysis
and engineering software for optimizing the design of new products. The Company
is committed to providing the most open and flexible analysis solutions to suit
customer requirements for engineering software in today's competitive
marketplace. In addition, the Company partners with leading design software
suppliers to develop state-of-the-art computer-aided design ("CAD") integrated
products. Sales, support and training for customers are provided primarily
through the Company's global network of independent ANSYS Support Distributors
("ASDs"). The Company distributes and supports its ANSYS(R), DesignSpace(R) and
ICEM CFD product lines through its ASDs, certain direct sales offices, as well
as a network of independent resellers and dealers. The following discussion
should be read in conjunction with the audited consolidated financial statements
and notes thereto included elsewhere in this Annual Report.
This Annual Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements which contain such words as
"anticipates," "intends," "believes," "plans" and other similar expressions. The
Company's actual results could differ materially from those set forth in the
forward-looking statements due to various risks and uncertainties which are
detailed in "Important Factors Regarding Future Results" beginning on page 18.
For purposes of the following discussion and analysis, the following table
sets forth certain consolidated financial data for the years 2000, 1999, and
1998.
<TABLE>
<CAPTION>
Year Ended December 31,
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands) 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------
Revenue:
- ---------------------------------------------------------------------------------------------------------
Software licenses $43,528 $37,675 $35,463
- ---------------------------------------------------------------------------------------------------------
Maintenance and service 30,939 25,464 21,090
- ---------------------------------------------------------------------------------------------------------
Total revenue 74,467 63,139 56,553
- ---------------------------------------------------------------------------------------------------------
Cost of sales:
- ---------------------------------------------------------------------------------------------------------
Software licenses 4,278 3,530 3,404
- ---------------------------------------------------------------------------------------------------------
Maintenance and service 4,407 3,088 2,661
- ---------------------------------------------------------------------------------------------------------
Total cost of sales 8,685 6,618 6,065
- ---------------------------------------------------------------------------------------------------------
Gross profit 65,782 56,521 50,488
- ---------------------------------------------------------------------------------------------------------
Operating expenses:
- ---------------------------------------------------------------------------------------------------------
Selling and marketing 17,950 15,326 13,137
- ---------------------------------------------------------------------------------------------------------
Research and development 14,502 13,475 11,627
- ---------------------------------------------------------------------------------------------------------
Amortization 2,234 855 884
- ---------------------------------------------------------------------------------------------------------
General and administrative 11,517 9,622 9,634
- ---------------------------------------------------------------------------------------------------------
Total operating expenses 46,203 39,278 35,282
- ---------------------------------------------------------------------------------------------------------
Operating income 19,579 17,243 15,206
- ---------------------------------------------------------------------------------------------------------
Other income 3,579 2,626 1,931
- ---------------------------------------------------------------------------------------------------------
Income before income tax provision 23,158 19,869 17,137
- ---------------------------------------------------------------------------------------------------------
Income tax provision 6,848 5,118 5,788
- ---------------------------------------------------------------------------------------------------------
Net income $16,310 $14,751 $11,349
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Acquisition of Pacific Marketing and Consulting, Inc.
On August 30, 2000, ANSYS, Inc. and GenesisOne Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of ANSYS, Inc., entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Pacific Marketing and
Consulting, Inc., a California corporation ("PMAC"), and its officers and
stockholders. The transactions contemplated by the Merger Agreement were
consummated on August 31, 2000 with the merger of PMAC with and into GenesisOne.
In the merger, holders of PMAC's Class A voting and Class B non-voting common
stock received initial merger consideration consisting of an aggregate of
618,992 shares of ANSYS common stock, valued for purposes of such issuance at
$10.01563 per share, and cash in an aggregate amount of $5,832,531. Holders of
PMAC's Class C non-voting common stock received initial merger consideration
aggregating $367,290 solely in cash. Of the total initial stock consideration,
an aggregate of 123,795 shares of ANSYS common stock were delivered into escrow,
to be released on August 31, 2001 or, if later, upon the resolution of any
outstanding indemnification claims secured by such shares. In addition,
$3,000,000 of the initial aggregate cash consideration was delivered into
escrow, to be released during the first quarter of 2001 upon and subject to the
determination of certain post-closing adjustments and claims.
The Merger Agreement also provides for certain additional future payments if
the acquired business achieves certain performance criteria. The total amount of
funds required to pay the initial aggregate cash consideration was $6,199,821,
which was obtained from the working capital of ANSYS. The aggregate merger
consideration was determined on the basis of arms' length negotiations between
representatives of ANSYS and PMAC.
The acquisition has been accounted for as a purchase and, accordingly, the
operating results of PMAC have been included in the Company's consolidated
financial statements since the date of acquisition, August 31, 2000. The total
purchase price was allocated to the assets and liabilities of PMAC based upon
their estimated fair market values. The allocation of the purchase price was
based on an independent valuation and included an allocation of $8,242,000 to
identifiable intangibles (including $2,700,000 to assembled workforce,
$2,345,000 to existing software, $1,790,000 to non-compete agreements and
$1,407,000 to customer list) and $9,501,000 to goodwill. The identified
intangibles and goodwill are being amortized over three to five years.
PMAC (hereafter, "ICEM CFD Engineering" or "ICEM CFD") is a leading supplier
of software for pre- and post-processing of computational fluid dynamics (CFD)
and other high-growth engineering applications. ICEM CFD Engineering sells these
products to a variety of market segments, including the electronics, automotive
and aerospace industries. Additional information related to the acquisition of
ICEM CFD is included in the Company's Current Report on Forms 8-K and 8-K/A,
filed on September 13, 2000 and November 8, 2000, respectively.
<PAGE>
Results of Operations
Year Ended December 31, 2000 Compared to Year Ended December 31, 1999
REVENUE: The Company's total revenue increased 17.9% from $63.1 million in 1999
to $74.5 million in the year 2000. The increase in total revenue was primarily
the result of increased sales of both paid-up licenses and related maintenance
contracts associated with the paid-up licenses, as well as contributions from
the acquisition of ICEM CFD.
Software license revenue totaled $43.5 million in 2000 as compared to $37.7
million in 1999, an increase of 15.5%. The increase was primarily the result of
increased sales of paid-up licenses related to the Company's ANSYS and
DesignSpace products, as well as approximately $2.7 million related to the
acquisition of ICEM CFD.
Maintenance and service revenue increased 21.5% from $25.5 million in 1999 to
$30.9 million in 2000. The increase primarily resulted from maintenance
contracts sold in association with the increased paid-up license sales discussed
above. Approximately $1.7 million in maintenance and service revenue from the
acquisition of ICEM CFD also contributed to the increase.
Of the Company's total revenue in 2000, approximately 51.6% and 48.4% were
attributable to international and domestic sales, respectively, as compared to
54.4% and 45.6% in 1999.
COSTS OF SALES AND GROSS PROFIT: The Company's total cost of sales increased
31.2% to $8.7 million, or 11.7% of total revenue, in 2000 from $6.6 million, or
10.5% of total revenue, in 1999. The increase was principally attributable to
higher salaries and related expenses associated with increased headcount to
support the growth in license and service sales, costs related to consulting
services provided by ICEM CFD, as well as increased royalty costs.
As a result of the foregoing, the Company's gross profit increased 16.4% to
$65.8 million in 2000 from $56.5 million in 1999.
SELLING AND MARKETING: Selling and marketing expenses increased 17.1% in 2000 to
$18.0 million, or 24.1% of total revenue, from $15.3 million, or 24.3% of total
revenue, in 1999. The increase was primarily the result of additional headcount
and facility costs associated with both the acquisition of ICEM CFD, as well as
the addition of personnel within the ANSYS direct sales organization. Increased
consulting costs related to sales training initiatives for both the direct and
indirect sales channels and costs associated with the Company's biennial
international users' conference also contributed to the increase. The Company
anticipates that it will continue to make significant investments in its global
sales and marketing organization to strengthen its competitive position, to
enhance major account sales activities and to support its worldwide sales
channels and marketing strategies.
RESEARCH AND DEVELOPMENT: Research and development expenses increased 7.6% in
2000 to $14.5 million, or 19.5% of total revenue, from $13.5 million, or 21.3%
of total revenue, in 1999. The increase in 2000 was principally the result of
development costs associated with the acquisition of ICEM CFD, as well as higher
consulting costs. These increases were partially offset by the capitalization of
approximately $213,000 of internal labor costs related to the commercial release
of ANSYS 5.7. The Company has traditionally invested significant resources in
research and development activities and intends to continue to make significant
investments in the future.
AMORTIZATION: Amortization expense increased to $2.2 million in 2000 compared to
$855,000 in 1999. The increase resulted from amortization associated with the
acquisition of ICEM CFD.
GENERAL AND ADMINISTRATIVE: General and administrative expenses increased 19.7%
in 2000 to $11.5 million, or 15.5% of total revenue, as compared to $9.6
million, or 15.2% of total revenue, in 1999. The increase resulted primarily
from additional headcount and facility costs, as well as increased professional
fees associated with the acquisition of ICEM CFD. Higher legal fees and bad debt
expense in connection with a dispute with a former distributor also contributed
to the increase.
OTHER INCOME: Other income increased to $3.6 million in 2000 as compared to $2.6
million in 1999. The increase was primarily attributable to a higher interest
rate environment as compared to the prior year and a $151,000 one-time gain
related to the sale of investment securities.
<PAGE>
INCOME TAX PROVISION: The Company's effective tax rate was 29.6% in 2000 as
compared to 25.8% in 1999. The 1999 rate was favorably impacted by a one-time
tax benefit related to an amended prior year tax return. These percentages are
less than the federal and state combined statutory rate as a result of the
utilization of a foreign sales corporation, as well as the generation of
research and experimentation credits. As a result of the acquisition of ICEM
CFD, the Company anticipates that the average effective tax rate will increase
to a rate in the range of 32% - 33% in 2001.
NET INCOME: The Company's net income increased 10.6% to $16.3 million, or $1.00
diluted earnings per share, in 2000 as compared to net income of $14.8 million,
or $.88 diluted earnings per share, in 1999. The weighted average common and
common equivalent shares used in computing diluted earnings per share were 16.3
million in 2000 compared with 16.7 million in 1999. Excluding the effects of
amortization and one-time charges associated with the acquisition of ICEM CFD,
net income increased 20.1% in 2000 to $17.7 million, or $1.09 diluted earnings
per share.
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
REVENUE: The Company's total revenue increased 11.6% in 1999 to $63.1 million
from $56.6 million in 1998. The increase in total revenue was attributable
primarily to an increase in revenue from paid-up licenses associated with
increased sales of new paid-up licenses and, to a lesser extent, the conversion
of existing leases to paid-up licenses. Higher maintenance and service revenue,
resulting from broader customer usage of such services and the Company's
continued emphasis on marketing these services, also contributed to the overall
revenue increase.
Software license revenue totaled $37.7 million in 1999 as compared to $35.5
million in 1998, an increase of 6.2%. The increase resulted principally from an
increase in sales of paid-up licenses. The paid-up license revenue increase was
partially offset by both a reduction in monthly lease license revenue and by a
reduction in noncancellable annual lease revenue that the Company believes was
principally the result of an increase in its annual lease price as compared to
the prior year.
Maintenance and service revenue increased 20.7% in 1999 to $25.5 million from
$21.1 million in 1998. The increase was primarily the result of maintenance
contracts sold in association with the increased paid-up license sales discussed
above, as well as broader customer usage of support services and the Company's
continued emphasis on marketing these services.
Of the Company's total revenue in both 1999 and 1998, approximately 54.4% and
45.6% were attributable to international and domestic sales, respectively.
COST OF SALES AND GROSS PROFIT: The Company's total cost of sales increased 9.1%
to $6.6 million, or 10.5% of total revenue, in 1999 from $6.1 million, or 10.7%
of total revenue, in 1998. The increase was principally attributable to higher
salaries and related expenses associated with increased headcount to support the
growth in software license and maintenance revenue.
As a result of the foregoing, the Company's gross profit increased 11.9% to
$56.5 million in 1999 from $50.5 million in 1998.
SELLING AND MARKETING: Selling and marketing expenses increased 16.7% in 1999 to
$15.3 million, or 24.3% of total revenue, from $13.1 million, or 23.2% of total
revenue, in 1998. The increase was primarily the result of additional headcount
and facility costs associated with the establishment of strategic direct sales
offices in Houston, Texas; Minneapolis, Minnesota and New England in the latter
part of fiscal 1998, as well as the Company's expanded presence in China and a
slightly revised sales model in Detroit. Higher commission costs associated with
several direct sales to major account customers also contributed to the
increase.
RESEARCH AND DEVELOPMENT: Research and development expenses increased 15.9% in
1999 to $13.5 million, or 21.3% of total revenue, from $11.6 million, or 20.6%
of total revenue, in 1998. The increase in 1999 resulted from additional
headcount and facility costs associated with the acquisition of Centric
Engineering Systems and, to a lesser extent, additional headcount within the
corporate product creation group. These increases were partially offset by the
capitalization of approximately $516,000 of internal labor costs related to new
commercial product releases in 1999.
AMORTIZATION: Amortization expense remained comparable at $855,000 and $884,000
in 1999 and 1998, respectively.
<PAGE>
GENERAL AND ADMINISTRATIVE: General and administrative expenses remained
relatively flat in 1999 at $9.6 million, or 15.2% of total revenue, as compared
to $9.6 million, or 17.0% of total revenue, in 1998. Decreases in bad debt
expense were offset by higher consulting costs and additional headcount and
related expenses. The increases in headcount resulted as the Company continued
to add internal information technology, financial and administrative resources
to support its global operations and infrastructure.
OTHER INCOME: Other income increased to $2.6 million in 1999 as compared to $1.9
million in 1998. The increase was primarily attributable to higher interest-
bearing cash and short-term investment balances in 1999.
INCOME TAX PROVISION: The Company's effective tax rate was 25.8% in 1999 as
compared to 33.8% in 1998. The decrease in the 1999 rate as compared to that of
1998 was a result of increased utilization of the Company's foreign sales
corporation, as well as increased generation of research and experimentation
credits. The 1999 rate was also favorably impacted by a one-time tax benefit
related to an amended prior year tax return. These percentages are less than the
federal and state combined statutory rate due primarily to the use of a foreign
sales corporation, as well as research and experimentation credits.
NET INCOME: The Company's net income increased 30.0% to $14.8 million, or $.88
diluted earnings per share, in 1999 as compared to net income of $11.3 million,
or $.68 diluted earnings per share, in 1998. The weighted average common and
common equivalent shares used in computing diluted earnings per share were 16.7
million in 1999 compared with 16.6 million in 1998.
<PAGE>
Liquidity and Capital Resources
As of December 31, 2000, the Company had cash, cash equivalents and short-term
investments totaling $47.5 million and working capital of $40.0 million, as
compared to cash, cash equivalents and short-term investments of $57.1 million
and working capital of $52.7 million at December 31, 1999. The short-term
investments are generally investment grade and liquid-type, which allows the
Company to minimize interest rate risk and to facilitate liquidity in the event
an immediate cash need arises.
The Company's operating activities provided cash of $22.9 million in 2000,
$18.3 million in 1999 and $15.6 million in 1998. The increase in cash generated
from operations in 2000 compared to 1999, as well as in 1999 compared to 1998,
was primarily the result of increased earnings after the effect of non-cash
expenses such as depreciation, amortization and deferred income taxes. Net cash
generated by operating activities provided sufficient resources to fund
increased headcount and capital needs, as well as to sustain share repurchase
activity under the Company's announced share repurchase program.
Cash used in investing activities was $7.4 million in 2000, $13.0 million in
1999 and $23.5 million in 1998. The Company's uses of cash in 2000 primarily
related to the acquisition of ICEM CFD and capital expenditures, including
hardware and software costs associated with the Company's investment in a
comprehensive customer relationship management system. In 1999 and 1998, the
Company's use of cash was primarily related to the purchase of short-term
investments and, to a lesser extent, the purchase of equipment and computer
hardware and software. The Company expects to spend approximately $2.5 million
for capital expenditures in the year 2001, principally for the acquisition of
computer hardware and software to support the continued growth of the Company's
development activities, as well as for investments in the Company's global sales
and customer support infrastructure.
Financing activities used cash of $19.6 million in 2000, $1.5 million in 1999,
and provided cash of $453,000 in 1998. In 2000 and 1999, cash outlays related to
the purchase of treasury stock were partially offset by proceeds from the
issuance of common stock under the employee stock purchase and option plans. In
1998, cash provided from financing activities was substantially related to
proceeds from the issuance of common stock under employee stock purchase and
option plans.
The Company believes that existing cash and cash equivalent balances, together
with cash generated from operations, will be sufficient to meet the Company's
working capital and capital expenditure requirements through at least the next
fiscal year. The Company's cash requirements in the future may also be financed
through additional equity or debt financings. There can be no assurance that
such financings can be obtained on favorable terms, if at all.
<PAGE>
Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which defines derivatives, requires that
all derivatives be carried at fair value and provides for hedge accounting when
certain conditions are met. The Standard was effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. In June 1999, the FASB delayed
the effective date of this Statement for one year through the issuance of
Statement No. 137, "Accounting for Derivative Instruments and Hedging Activities
- - Deferral of the Effective Date of SFAS No. 133 and an Amendment of SFAS No.
133." The Company implemented Statement No. 133 during the year 2000. The
adoption of this Statement did not have a material effect on the Company's
consolidated financial statements.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements,"
which provides guidance related to the recognition and disclosure of revenue in
the financial statements. SAB 101 was effective for the fourth quarter of 2000.
The adoption of SAB 101 did not have a material effect on the Company's
consolidated financial statements.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation." This Interpretation clarifies such issues as: (a) the definition
of employee for purposes of applying APB Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. This Interpretation was effective
July 1, 2000, but certain conclusions in the Interpretation cover specific
events that occurred after either December 15, 1998, or January 12, 2000. To the
extent that this Interpretation covers events occurring during the period after
December 15, 1998, or January 12, 2000, but before the effective date of July 1,
2000, the effects of applying this Interpretation are recognized on a
prospective basis from July 1, 2000. The adoption of this Interpretation did not
have a material impact on the Company's consolidated financial statements.
Important Factors Regarding Future Results
Information provided by the Company or its spokespersons, including
information contained in this Annual Report to Shareholders, may from time to
time contain forward-looking statements concerning projected financial
performance, market and industry segment growth, product development and
commercialization or other aspects of future operations. Such statements will be
based on the assumptions and expectations of the Company's management at the
time such statements are made. The Company cautions investors that its
performance (and, therefore, any forward-looking statement) is subject to risks
and uncertainties. Various important factors including, but not limited to, the
following may cause the Company's future results to differ materially from those
projected in any forward-looking statement.
POTENTIAL FLUCTUATIONS IN OPERATING RESULTS: The Company may experience
significant fluctuations in future quarterly operating results. Fluctuations may
be caused by many factors, including the timing of new product releases or
product enhancements by the Company or its competitors; the size and timing of
individual orders, including a fluctuation in the demand for and the ability to
complete large contracts; software errors or other product quality problems;
competition and pricing; customer order deferrals in anticipation of new
products or product enhancements; reduction in demand for the Company's
products; changes in operating expenses; changes in the mix of software license
and maintenance and service revenue; personnel changes and general economic
conditions. A substantial portion of the Company's operating expenses are
related to personnel, facilities and marketing programs. The level of personnel
and related expenses cannot be adjusted quickly and is based, in significant
part, on the Company's expectation for future revenue. The Company does not
typically experience significant order backlog. Further, the Company has often
recognized a substantial portion of its revenue in the last month of a quarter,
with this revenue frequently concentrated in the last weeks or days of a
quarter. During certain quarterly periods, the Company has been dependent upon
receiving large orders of perpetual licenses involving the payment of a single
up-front fee and, more recently, has shifted the business emphasis of its
products to provide a collaborative solution to the Company's customers. This
emphasis has increased the Company's average order size and increased the
related sales cycle time for the larger orders and may have the effect of
increasing the volatility of the Company's revenue and profit from period to
period. As a result, product revenue in any quarter is substantially dependent
on sales completed in the latter part of that quarter, and revenue for any
future quarter is not predictable with any significant degree of accuracy.
<PAGE>
STOCK MARKET AND STOCK PRICE VOLATILITY: Market prices for securities of
software companies have generally been volatile. In particular, the market price
of the Company's common stock has been and may continue to be subject to
significant fluctuations as a result of factors affecting the Company, the
software industry or the securities markets in general. Such factors include,
but are not limited to, declines in trading price that may be triggered by the
Company's failure to meet the expectations of securities analysts and investors.
The Company cannot provide assurance that in such circumstances the trading
price of the Company's common stock will recover or that it will not experience
a further decline. Moreover, the trading price could be subject to additional
fluctuations in response to quarter-to-quarter variations in the Company's
operating results, material announcements made by the Company or its
competitors, conditions in the software industry generally or other events and
factors, many of which are beyond the Company's control.
RAPIDLY CHANGING TECHNOLOGY; NEW PRODUCTS; RISK OF PRODUCT DEFECTS: The markets
for the Company's products are generally characterized by rapidly changing
technology and frequent new product introductions that can render existing
products obsolete or unmarketable. A major factor in the Company's future
success will be its ability to anticipate technological changes and to develop
and introduce in a timely manner enhancements to its existing products and new
products to meet those changes. If the Company is unable to introduce new
products and respond quickly to industry changes, its business, financial
condition and results of operations could be materially adversely affected. The
introduction and marketing of new or enhanced products require the Company to
manage the transition from existing products in order to minimize disruption in
customer purchasing patterns. There can be no assurance that the Company will be
successful in developing and marketing, on a timely basis, new products or
product enhancements, that its new products will adequately address the changing
needs of the marketplace or that it will successfully manage the transition from
existing products. Software products as complex as those offered by the Company
may contain undetected errors or failures when first introduced or as new
versions are released, and the likelihood of errors is increased as a result of
the Company's commitment to accelerating the frequency of its product releases.
There can be no assurance that errors will not be found in new or enhanced
products after commencement of commercial shipments. Any of these problems may
result in the loss of or delay in market acceptance, diversion of development
resources, damage to the Company's reputation or increased service and warranty
costs, any of which could have a materially adverse effect on the Company's
business, financial condition and results of operations.
DEPENDENCE ON DISTRIBUTORS: The Company continues to distribute its products
principally through its global network of 36 independent, regional ASDs. The
ASDs sell ANSYS and DesignSpace products to new and existing customers, expand
installations within their existing customer base, offer consulting services and
provide the first line of ANSYS technical support. The ASDs have more immediate
contact with most customers who use ANSYS software than does the Company.
Consequently, the Company is highly dependent on the efforts of the ASDs.
Difficulties in ongoing relationships with ASDs, such as delays in collecting
accounts receivable, failure to meet performance criteria or to promote the
Company's products as aggressively as the Company expects and differences in the
handling of customer relationships could adversely affect the Company's
performance. Additionally, the loss of any major ASD for any reason, including
an ASD's decision to sell competing products rather than the Company's products,
could have a materially adverse effect on the Company. Moreover, the Company's
future success will depend substantially on the ability and willingness of its
ASDs to continue to dedicate the resources necessary to promote the Company's
products and to support a larger installed base of the Company's products. If
the ASDs are unable or unwilling to do so, the Company may be unable to sustain
revenue growth.
COMPETITION: The CAD, CAE and computer-aided manufacturing ("CAM") markets are
intensely competitive. In the traditional CAE market, the Company's primary
competitors include MSC.Software Corporation and Hibbitt, Karlsson and Sorenson,
Inc. The Company also faces competition from smaller vendors of specialized
analysis applications in fields such as computational fluid dynamics. In
addition, certain integrated CAD suppliers such as Parametric Technology
Corporation, Structural Dynamics Research Corporation and Dassault Systemes
provide varying levels of design analysis, optimization and verification
capabilities as part of their product offerings. The entrance of new competitors
would likely intensify competition in all or a portion of the overall CAD, CAE
and CAM markets. Some of the Company's current and possible future competitors
have greater financial, technical, marketing and other resources than the
Company, and some have well established relationships with current and potential
customers of the Company. It is also possible that alliances among competitors
may emerge and rapidly acquire significant market share or that competition will
increase as a result of software industry consolidation. Increased competition
may result
<PAGE>
in price reductions, reduced profitability and loss of market share, any of
which would materially adversely affect the Company's business, financial
condition and results of operations.
DEPENDENCE ON SENIOR MANAGEMENT AND KEY TECHNICAL PERSONNEL: The Company is
highly dependent upon the ability and experience of its senior executives and
its key technical and other management employees. Although the Company has an
employment agreement with one executive, the loss of this employee, or any of
the Company's other key employees, could adversely affect the Company's ability
to conduct its operations.
RISKS ASSOCIATED WITH INTERNATIONAL ACTIVITIES: A significant portion of the
Company's business comes from outside the United States. Risks inherent in the
Company's international business activities include imposition of government
controls, export license requirements, restrictions on the export of critical
technology, political and economic instability, trade restrictions, changes in
tariffs and taxes, difficulties in staffing and managing international
operations, longer accounts receivable payment cycles and the burdens of
complying with a wide variety of foreign laws and regulations. Effective patent,
copyright and trade secret protection may not be available in every foreign
country in which the Company sells its products. The Company's business,
financial condition and results of operations could be materially adversely
affected by any of these risks.
Additionally, countries in certain international regions have continued to
experience weaknesses in their currency, banking and equity markets. These
weaknesses could adversely affect consumer demand for the Company's products and
ultimately the Company's financial condition or results of operations.
Recently, the World Trade Organization ruled that tax incentives provided to
U.S.-based companies that export their products via a foreign sales corporation
are prohibited tax subsidies. In September 2000, the House of Representatives
approved the FSC Repeal and Extraterritorial Income Exclusion Act (the "Act").
The Act generally repeals the foreign sales corporation and implements an
extraterritorial income tax benefit. The Act provides short-term and long-term
relief for foreign sales corporations in existence as of September 30, 2000. The
short-term transition rules permit foreign sales corporations to retain benefits
through December 31, 2001. Any prospective changes regarding tax benefits
associated with the Company's export sales may directly impact the Company's
effective tax rate.
DEPENDENCE ON PROPRIETARY TECHNOLOGY: The Company's success is highly dependent
upon its proprietary technology. Although the Company was awarded a patent by
the U.S. Patent and Trademark Office for its web-based reporting technology, the
Company generally relies on contracts and the laws of copyright and trade
secrets to protect its technology. Although the Company maintains a trade
secrets program, enters into confidentiality agreements with its employees and
distributors and limits access to and distribution of its software,
documentation and other proprietary information, there can be no assurance that
the steps taken by the Company to protect its proprietary technology will be
adequate to prevent misappropriation of its technology by third parties, or that
third parties will not be able to develop similar technology independently.
Although the Company is not aware that any of its technology infringes upon the
rights of third parties, there can be no assurance that other parties will not
assert technology infringement claims against the Company, or that, if asserted,
such claims will not prevail.
INCREASED RELIANCE ON PERPETUAL LICENSES: The Company has historically
maintained stable recurring revenue from the sale of monthly lease licenses and
noncancellable annual leases for its software products. More recently, the
Company has experienced an increase in customer preference for perpetual
licenses that involve payment of a single up-front fee and that are more typical
in the computer software industry. While revenue generated from monthly lease
licenses and noncancellable annual leases currently represents a portion of the
Company's software license revenue, to the extent that perpetual license revenue
continues to increase as a percentage of total software license revenue, the
Company's revenue in any period will increasingly depend on sales completed
during that period.
RISKS ASSOCIATED WITH ACQUISITIONS: The Company has consummated and may continue
to consummate certain strategic acquisitions in order to provide increased
capabilities to its existing products, enter new product and service markets or
enhance its distribution channels. The ability of the Company to integrate the
acquired businesses, including delivering sales and support, ensuring continued
customer commitment, obtaining further commitments and challenges associated
with expanding sales in particular markets and retaining key personnel, will
impact the success of these acquisitions. If the Company is unable to properly
and timely integrate the acquired businesses, there could be a materially
adverse effect on the Company's business, financial condition and results of
operations.
<PAGE>
On August 31, 2000, the Company acquired ICEM CFD Engineering. The Company
cannot guarantee that it will be able to fully realize the benefits or strategic
objectives it sought in acquiring ICEM CFD. The acquisition of ICEM CFD was
accounted for as a purchase and, as a result, a significant amount of goodwill
and other identifiable intangible assets were recorded, the amortization of
which will adversely affect the Company's results of operations in future
periods.
GENERAL CONTINGENCIES: The Company is subject to various investigations, claims
and legal proceedings from time to time that arise in the ordinary course of its
business activities. Each of these matters is subject to various uncertainties,
and it is possible that some of these matters may be resolved unfavorably to the
Company.
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of ANSYS, Inc. and Subsidiaries
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, stockholders' equity and cash flows present
fairly, in all material respects, the financial position of ANSYS, Inc. and its
subsidiaries at December 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2000, in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Pittsburgh, PA
January 30, 2001
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, December 31,
(in thousands, except share data) 2000 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
- ---------------------------------------------------------------------------------------------------------
Current assets:
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 6,313 $ 10,401
- --------------------------------------------------------------------------------------------------------
Short-term investments 41,227 46,731
- --------------------------------------------------------------------------------------------------------
Accounts receivable, less allowance for doubtful
accounts of $2,350 in 2000 and $1,700 in 1999 14,403 10,518
- --------------------------------------------------------------------------------------------------------
Other current assets 2,269 2,929
- --------------------------------------------------------------------------------------------------------
Deferred income taxes 695 336
- --------------------------------------------------------------------------------------------------------
Total current assets 64,907 70,915
- --------------------------------------------------------------------------------------------------------
Long-term investment 500 -
- --------------------------------------------------------------------------------------------------------
Securities available for sale - 182
- --------------------------------------------------------------------------------------------------------
Property and equipment, net 5,152 3,529
- --------------------------------------------------------------------------------------------------------
Capitalized software costs, net 574 676
- --------------------------------------------------------------------------------------------------------
Goodwill, net 9,227 428
- --------------------------------------------------------------------------------------------------------
Other intangibles, net 8,970 1,518
- --------------------------------------------------------------------------------------------------------
Deferred income taxes 4,895 6,643
- --------------------------------------------------------------------------------------------------------
Total assets $ 94,225 $ 83,891
- --------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------
Current liabilities:
- --------------------------------------------------------------------------------------------------------
Accounts payable $ 459 $ 222
- --------------------------------------------------------------------------------------------------------
Accrued bonuses 4,869 2,882
- --------------------------------------------------------------------------------------------------------
Other accrued expenses and liabilities 6,429 3,750
- --------------------------------------------------------------------------------------------------------
Customer prepayments 202 140
- --------------------------------------------------------------------------------------------------------
Deferred revenue 12,902 11,266
- --------------------------------------------------------------------------------------------------------
Total current liabilities 24,861 18,260
- --------------------------------------------------------------------------------------------------------
Stockholders' equity:
- --------------------------------------------------------------------------------------------------------
Preferred stock, $.01 par value; 2,000,000 shares authorized - -
- --------------------------------------------------------------------------------------------------------
Common stock, $.01 par value; 50,000,000 shares
authorized; 16,584,758 shares issued 166 166
- --------------------------------------------------------------------------------------------------------
Additional paid-in capital 37,588 37,543
- --------------------------------------------------------------------------------------------------------
Less treasury stock, at cost: 1,451,692 shares held
in 2000 and 339,358 shares held in 1999 (15,127) (2,375)
- --------------------------------------------------------------------------------------------------------
Retained earnings 46,737 30,427
- --------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income - 120
- --------------------------------------------------------------------------------------------------------
Note receivable from stockholder - (250)
- --------------------------------------------------------------------------------------------------------
Total stockholders' equity 69,364 65,631
- --------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 94,225 $ 83,891
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Consolidated Statements of Income
<TABLE>
<CAPTION>
(in thousands, except per share data) 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
- ---------------------------------------------------------------------------------------------------------------------------
Software licenses $43,528 $37,675 $35,463
- ---------------------------------------------------------------------------------------------------------------------------
Maintenance and service 30,939 25,464 21,090
- ---------------------------------------------------------------------------------------------------------------------------
Total revenue 74,467 63,139 56,553
- ---------------------------------------------------------------------------------------------------------------------------
Cost of sales:
- ---------------------------------------------------------------------------------------------------------------------------
Software licenses 4,278 3,530 3,404
- ---------------------------------------------------------------------------------------------------------------------------
Maintenance and service 4,407 3,088 2,661
- ---------------------------------------------------------------------------------------------------------------------------
Total cost of sales 8,685 6,618 6,065
- ---------------------------------------------------------------------------------------------------------------------------
Gross profit 65,782 56,521 50,488
- ---------------------------------------------------------------------------------------------------------------------------
Operating expenses:
- ---------------------------------------------------------------------------------------------------------------------------
Selling and marketing 17,950 15,326 13,137
- ---------------------------------------------------------------------------------------------------------------------------
Research and development 14,502 13,475 11,627
- ---------------------------------------------------------------------------------------------------------------------------
Amortization 2,234 855 884
- ---------------------------------------------------------------------------------------------------------------------------
General and administrative 11,517 9,622 9,634
- ---------------------------------------------------------------------------------------------------------------------------
Total operating expenses 46,203 39,278 35,282
- ---------------------------------------------------------------------------------------------------------------------------
Operating income 19,579 17,243 15,206
- ---------------------------------------------------------------------------------------------------------------------------
Other income 3,579 2,626 1,931
- ---------------------------------------------------------------------------------------------------------------------------
Income before income tax provision 23,158 19,869 17,137
- ---------------------------------------------------------------------------------------------------------------------------
Income tax provision 6,848 5,118 5,788
- ---------------------------------------------------------------------------------------------------------------------------
Net income $16,310 $14,751 $11,349
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Net income per basic common share:
- ---------------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ 1.03 $ .90 $ .71
- ---------------------------------------------------------------------------------------------------------------------------
Weighted average shares - basic 15,804 16,366 16,052
- ---------------------------------------------------------------------------------------------------------------------------
Net income per diluted common share:
- ---------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 1.00 $ .88 $ .68
- ---------------------------------------------------------------------------------------------------------------------------
Weighted average shares - diluted 16,269 16,689 16,581
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(in thousands) 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
- ------------------------------------------------------------------------------------------------------------------------------
Net income $ 16,310 $ 14,751 $ 11,349
- ------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net
cash provided by operating activities:
- ------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 4,333 2,762 2,710
- ------------------------------------------------------------------------------------------------------------------------------
Deferred income tax provision (69) 855 1,357
- ------------------------------------------------------------------------------------------------------------------------------
Provision for bad debts 739 464 1,309
- ------------------------------------------------------------------------------------------------------------------------------
Changes in operating assets and liabilities:
- ------------------------------------------------------------------------------------------------------------------------------
Accounts receivable (2,574) (2,039) (2,151)
- ------------------------------------------------------------------------------------------------------------------------------
Other current assets 891 (1,081) 63
- ------------------------------------------------------------------------------------------------------------------------------
Accounts payable, accrued expenses and
liabilities and customer prepayments 2,279 735 265
- ------------------------------------------------------------------------------------------------------------------------------
Deferred revenue 941 1,894 744
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 22,850 18,341 15,646
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
- ------------------------------------------------------------------------------------------------------------------------------
Cash paid for business acquisition, net of cash acquired (7,481) - -
- ------------------------------------------------------------------------------------------------------------------------------
Acquisition-related loan (1,366) - -
- ------------------------------------------------------------------------------------------------------------------------------
Capital expenditures (3,173) (1,758) (917)
- ------------------------------------------------------------------------------------------------------------------------------
Capitalization of internally developed software costs (213) (591) (322)
- ------------------------------------------------------------------------------------------------------------------------------
Other acquisition payments (400) (100) -
- ------------------------------------------------------------------------------------------------------------------------------
Purchases of short-term investments (32,688) (38,331) (28,533)
- ------------------------------------------------------------------------------------------------------------------------------
Maturities of short-term investments 38,191 27,738 6,248
- ------------------------------------------------------------------------------------------------------------------------------
Repayment of stockholder loan 250 - 24
- ------------------------------------------------------------------------------------------------------------------------------
Purchase of long-term investment (500) - -
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (7,380) (13,042) (23,500)
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
- ------------------------------------------------------------------------------------------------------------------------------
Proceeds from issuance of common stock under
Employee Stock Purchase Plan 163 159 168
- ------------------------------------------------------------------------------------------------------------------------------
Proceeds from exercise of stock options 1,814 872 290
- ------------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock (21,588) (2,550) (5)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (19,611) (1,519) 453
- ------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate fluctuations 53 32 -
- ------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (4,088) 3,812 (7,401)
- ------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 10,401 6,589 13,990
- ------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 6,313 $ 10,401 $ 6,589
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
- ------------------------------------------------------------------------------------------------------------------------------
Cash paid during the year for:
- ------------------------------------------------------------------------------------------------------------------------------
Income taxes $ 4,615 $ 3,894 $ 3,245
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Accumulated
Other Notes Total Total
Common Stock Additional Treasury Stock Compre- Receivable Stock- Compre-
-------------- Paid-in -------------- Retained hensive from holders' hensive
(in thousands) Shares Amount Capital Shares Amount Earnings Income Stockholders Equity Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1997 16,359 $164 $36,089 69 $ (12) $ 4,327 $ 120 $ (274) $ 40,414
- -----------------------------------------------------------------------------------------------------------------------------------
Treasury stock acquired - - - 15 (5) - - - (5)
- -----------------------------------------------------------------------------------------------------------------------------------
Exercise of stock
options 27 - 401 (70) 15 - - - 416
- -----------------------------------------------------------------------------------------------------------------------------------
Issuance of common
stock under Employee
Stock Purchase Plan 10 - 167 (14) 2 - - - 169
- -----------------------------------------------------------------------------------------------------------------------------------
Repayment of note
receivable from
stockholder - - - - - - - 24 24
- -----------------------------------------------------------------------------------------------------------------------------------
Net income for the year - - - - - 11,349 - - 11,349 $11,349
- -----------------------------------------------------------------------------------------------------------------------------------
Other comprehensive
income - - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31,
1998 16,396 164 36,657 - - 15,676 120 (250) 52,367 11,349
- -----------------------------------------------------------------------------------------------------------------------------------
Treasury stock acquired - - - 382 (2,550) - - - (2,550)
- -----------------------------------------------------------------------------------------------------------------------------------
Exercise of stock
options 168 2 727 (43) 175 - - - 904
- -----------------------------------------------------------------------------------------------------------------------------------
Issuance of common
stock under Employee
Stock Purchase Plan 21 - 159 - - - - - 159
- -----------------------------------------------------------------------------------------------------------------------------------
Net income for the year - - - - - 14,751 - 14,751 14,751
- -----------------------------------------------------------------------------------------------------------------------------------
Other comprehensive
income - - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31,
1999 16,585 166 37,543 339 (2,375) 30,427 120 (250) 65,631 14,751
- -----------------------------------------------------------------------------------------------------------------------------------
Treasury stock acquired - - - 2,010 $(21,588) - - - (21,588)
- -----------------------------------------------------------------------------------------------------------------------------------
Acquisition of PMAC - - (106) (619) 6,644 - - - 6,538
- -----------------------------------------------------------------------------------------------------------------------------------
Exercise of stock
options - - 124 (259) 2,056 - - - 2,180
- -----------------------------------------------------------------------------------------------------------------------------------
Issuance of common
stock under Employee
Stock Purchase Plan - - 27 (19) 136 - - - 163
- -----------------------------------------------------------------------------------------------------------------------------------
Repayment of note
receivable from
stockholder - - - - - - - 250 250
- -----------------------------------------------------------------------------------------------------------------------------------
Net income for the year - - - - - 16,310 - - 16,310 16,310
- -----------------------------------------------------------------------------------------------------------------------------------
Other comprehensive
income - - - - - - (120) - (120) (120)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31,
2000 16,585 $166 $37,588 1,452 $(15,127) $46,737 - - $ 69,364 $16,190
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Notes to Consolidated Financial Statements
1. Organization
ANSYS, Inc. (the "Company") develops, markets and supports a family of
mechanical computer-aided engineering software products. The Company's products
are marketed and sold to companies throughout the world that operate in many
industries, including automotive, aerospace and electronics.
2. Summary of Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
REVENUE RECOGNITION: The Company's products are sold primarily through
distributors, who are resellers with respect to the Company's products. Revenue
is derived principally from the licensing of computer software products and from
related maintenance contracts. Revenue from software licenses is recognized upon
delivery of the product, acceptance by the customer and receipt of a signed
contractual obligation, provided that no significant Company obligations remain
and collection of the receivable is probable. Revenue from maintenance contracts
is recognized ratably over the term of the contract. Costs related to
maintenance obligations are expensed as incurred. Revenue from training, support
and other services is recognized as the services are performed.
CASH EQUIVALENTS: For purposes of the consolidated statements of cash flows, the
Company considers highly liquid deposits in money market funds to be cash
equivalents. Cash equivalents are recorded at cost, which approximates fair
value.
SHORT-TERM INVESTMENTS: The Company considers investments backed by government
agencies or U.S. financial institutions and which have a maturity or renewal
option between thirty days and up to one year from the date of purchase to be
short-term investments. Short-term investments are recorded at cost, which
approximates fair value.
SECURITIES AVAILABLE FOR SALE: The Company follows the provisions of Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," which addresses the classification, accounting
and disclosure of investments in debt and equity securities. At December 31,
1999, the Company had investments in marketable equity securities that were
classified as available-for-sale and, accordingly, were carried at fair value,
with the unrealized gains and losses, net of tax, reported in a separate
component of stockholders' equity.
PROPERTY AND EQUIPMENT: Property and equipment is stated at cost. Depreciation
is computed on the straight-line method over the estimated useful lives of the
various classes of assets, which range from one to seven years. Repairs and
maintenance are charged to expense as incurred. Gains or losses from the sale or
retirement of property and equipment are included in the results of operations.
CAPITALIZED SOFTWARE: Internally developed computer software costs and costs of
product enhancements are capitalized subsequent to the determination of
technological feasibility; such capitalization continues until the product
becomes available for general release. Amortization of capitalized software
costs, both for internally developed as well as for purchased software products,
is computed on a product-by-product basis over the estimated economic life of
the product, which is generally three years. Amortization is the greater of the
amount computed using: (i) the ratio of the current year's gross revenue to the
total current and anticipated future gross revenue for that product or (ii) the
straight-line method over the estimated life of the product.
The Company periodically reviews the carrying value of capitalized software
and impairments are recognized in the results of operations when the expected
future undiscounted operating cash flow derived from the capitalized software is
less than its carrying value.
<PAGE>
RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed as
incurred.
GOODWILL AND OTHER INTANGIBLE ASSETS: Intangible assets consist of the excess of
the purchase cost over the fair value of net assets acquired ("goodwill"), the
ANSYS trade name, non-compete agreements, customer list, assembled workforce and
acquired software. These assets are being amortized on the straight-line method
over their estimated useful lives. The Company periodically evaluates the
carrying value of goodwill based on whether the goodwill is recoverable from
expected future undiscounted operating cash flows of the related business. The
Company periodically reviews the carrying value of other intangible assets and
will recognize impairments when the expected future operating cash flow derived
from such intangible assets is less than their carrying value.
CONCENTRATIONS OF CREDIT RISK: The Company invests its excess cash primarily in
deposits, money market funds and commercial paper with commercial banks. The
Company has not experienced any losses to date on its invested cash.
The Company has a concentration of credit risk with respect to trade
receivables because of the limited number of distributors through which the
Company sells its products. The Company performs periodic credit evaluations of
its customers' financial condition and generally does not require collateral.
During 2000, sales by distributors comprised approximately 62% of the
Company's total revenue, with two distributors accounting for approximately 11%
and 10% of total revenue. During 1999, sales by distributors comprised
approximately 70% of the Company's total revenue, with two distributors
accounting for approximately 12% and 11% of total revenue. During 1998, sales by
distributors comprised approximately 82% of the Company's total revenue, with
two distributors accounting for approximately 13% and 10% of total revenue.
INCOME TAXES: Deferred tax assets and liabilities are determined based on
temporary differences between the financial statement and tax bases of assets
and liabilities, using enacted tax rates in effect in the years in which the
differences are expected to reverse. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
FOREIGN CURRENCY TRANSACTIONS: Certain of the Company's sales transactions are
denominated in foreign currencies. These transactions are translated to U.S.
dollars at the exchange rate on the transaction date. Accounts receivable in
foreign currencies at year-end are translated at the effective exchange rate on
that date. Gains and losses resulting from foreign exchange transactions are
included in the results of operations.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the amounts of revenue and expenses during the
reported periods. Actual results could differ from these estimates.
EARNINGS PER SHARE: Net income per basic common share is computed using the
weighted average number of common shares outstanding during each period. Net
income per diluted common share is computed using the weighted average number of
common and common equivalent shares outstanding during each period. Common
equivalent shares are not included in the per share calculations where their
inclusion would be anti-dilutive.
RECLASSIFICATIONS: Certain reclassifications have been made to the 1999 and 1998
financial statements to conform to the 2000 presentation.
3. Acquisition of Pacific Marketing and Consulting, Inc.
On August 30, 2000, ANSYS, Inc. and GenesisOne Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of ANSYS, Inc., entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Pacific Marketing and
Consulting, Inc., a California corporation ("PMAC"), and its officers and
stockholders. The transactions contemplated by the Merger Agreement were
consummated on August 31, 2000 with the merger of PMAC with and into GenesisOne.
In the merger, each share of common stock of PMAC outstanding at the time of
the Merger ceased to be outstanding and each such share was converted into the
right to receive the initial merger consideration provided for under the Merger
Agreement. Holders of PMAC's Class A voting and Class B non-voting common stock
received initial merger consideration consisting of an aggregate of 618,992
shares of ANSYS common stock, valued for purposes of
<PAGE>
such issuance at $10.01563 per share, and cash in an aggregate amount of
$5,832,531. Holders of PMAC's Class C non-voting common stock received initial
merger consideration aggregating $367,290 solely in cash. Of the total initial
stock consideration, an aggregate of 123,795 shares of ANSYS common stock were
delivered into escrow, to be released on August 31, 2001 or, if later, upon the
resolution of any outstanding indemnification claims secured by such shares. In
addition, $3,000,000 of the initial aggregate cash consideration was delivered
into escrow, to be released during the first quarter of 2001 upon and subject to
the determination of certain post-closing adjustments and claims.
The Merger Agreement also provides for certain additional future payments if
the acquired business achieves certain performance criteria. Such additional
contingent consideration will be paid to the former holders of PMAC Class A and
Class B common stock 48.4737% in cash and 51.5263% in shares of ANSYS common
stock, valued for such purposes at the average closing price for the twenty
consecutive trading days preceding the date of such payment. The total amount of
funds required to pay the initial aggregate cash consideration was $6,199,821,
which was obtained from the working capital of ANSYS. The aggregate merger
consideration was determined on the basis of arms' length negotiations between
representatives of ANSYS and PMAC.
The acquisition has been accounted for as a purchase and, accordingly, the
operating results of PMAC have been included in the Company's consolidated
financial statements since the date of acquisition, August 31, 2000. The total
purchase price was allocated to the assets and liabilities of PMAC based upon
their estimated fair market values. The allocation of the purchase price was
based on an independent valuation and included an allocation of $8,242,000 to
identifiable intangibles (including $2,700,000 to assembled workforce,
$2,345,000 to existing software, $1,790,000 to non-compete agreements and
$1,407,000 to customer list) and $9,501,000 to goodwill. The identified
intangibles and goodwill are being amortized over three to five years.
The following unaudited pro forma information presents the results of
operations of the Company as if the acquisition had occurred on January 1, 2000
and 1999. The unaudited pro forma consolidated results are not necessarily
indicative of results that would have occurred had the acquisition been in
effect for the years presented, nor are they necessarily indicative of future
results.
<TABLE>
<CAPTION>
(in thousands) Year ended December 31, 2000 Year ended December 31, 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total revenue $80,405 $70,875
- ----------------------------------------------------------------------------------------------------------
Net income 13,837 12,508
- ----------------------------------------------------------------------------------------------------------
Net income per share
- ----------------------------------------------------------------------------------------------------------
Basic .85 .74
- ----------------------------------------------------------------------------------------------------------
Diluted .83 .72
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Supplemental cash flow information with respect to the aquisition of PMAC is
as follows:
<TABLE>
<CAPTION>
(in thousands)
- -------------------------------------------------------------------------------------
<S> <C>
Fair value of assets acquired, net of cash acquired $20,599
- -------------------------------------------------------------------------------------
Fair value of liabilities assumed (6,580)
- -------------------------------------------------------------------------------------
Fair value of common stock issued (6,538)
- -------------------------------------------------------------------------------------
Cash paid for acquisition $ 7,481
- -------------------------------------------------------------------------------------
</TABLE>
4. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<CAPTION>
(in thousands) December 31, 2000 December 31, 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Equipment $ 7,995 $ 6,106
- ---------------------------------------------------------------------------------------------------
Computer software 3,556 2,562
- ---------------------------------------------------------------------------------------------------
Furniture 993 923
- ---------------------------------------------------------------------------------------------------
Leasehold improvements 845 829
- ---------------------------------------------------------------------------------------------------
13,389 10,420
- ---------------------------------------------------------------------------------------------------
Less: accumulated depreciation and amortization (8,237) (6,891)
- ---------------------------------------------------------------------------------------------------
$ 5,152 $ 3,529
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Depreciation and amortization expense related to property and equipment was
approximately $1,994,000, $1,907,000 and $2,040,000 for the years ended December
31, 2000, 1999, and 1998, respectively.
5. Other Intangible Assets
Other intangible assets consists of the following:
<TABLE>
<CAPTION>
(in thousands) Estimated Useful Lives December 31, 2000 December 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Trade name 10 years $ 1,824 $ 1,824
- ------------------------------------------------------------------------------------------------------------------------
Non-compete agreements 5-8 years 3,090 1,000
- ------------------------------------------------------------------------------------------------------------------------
Customer list 5 years 1,407 -
- ------------------------------------------------------------------------------------------------------------------------
Assembled workforce 3 years 2,700 -
- ------------------------------------------------------------------------------------------------------------------------
Acquired software 3 years 2,345 -
- ------------------------------------------------------------------------------------------------------------------------
11,366 2,824
- ------------------------------------------------------------------------------------------------------------------------
Less: accumulated amortization (2,396) (1,306)
- ------------------------------------------------------------------------------------------------------------------------
$ 8,970 $ 1,518
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. Income Taxes
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
(in thousands) December 31, 2000 December 31, 1999 December 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
- ----------------------------------------------------------------------------------------------------------------------------
Federal $5,701 $3,297 $3,357
- ----------------------------------------------------------------------------------------------------------------------------
State 246 90 220
- ----------------------------------------------------------------------------------------------------------------------------
Foreign 942 876 854
- ----------------------------------------------------------------------------------------------------------------------------
Deferred:
- ----------------------------------------------------------------------------------------------------------------------------
Federal (34) 869 1,235
- ----------------------------------------------------------------------------------------------------------------------------
State (7) (14) 122
- ----------------------------------------------------------------------------------------------------------------------------
Total $6,848 $5,118 $5,788
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The reconciliation of the federal statutory tax rate to the consolidated
effective tax rate is as follows:
<TABLE>
<CAPTION>
December 31, 2000 December 31, 1999 December 31, 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 34.0%
- --------------------------------------------------------------------------------------------------------------------------
State income taxes, net of federal benefit 0.7 0.3 0.8
- --------------------------------------------------------------------------------------------------------------------------
Research and experimentation credit (1.7) (2.0) (1.2)
- --------------------------------------------------------------------------------------------------------------------------
Other (4.4) (7.5) .2
- --------------------------------------------------------------------------------------------------------------------------
29.6% 25.8% 33.8%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The components of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
(in thousands) December 31, 2000 December 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
- ---------------------------------------------------------------------------------------------------------------------------
Goodwill $3,578 $3,762
- ---------------------------------------------------------------------------------------------------------------------------
Capitalized software 3,831 3,948
- ---------------------------------------------------------------------------------------------------------------------------
Allowance for doubtful accounts 827 638
- ---------------------------------------------------------------------------------------------------------------------------
Accrued expenses and liabilities 81 89
- ---------------------------------------------------------------------------------------------------------------------------
Other 716 817
- ---------------------------------------------------------------------------------------------------------------------------
9,033 9,254
- ---------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
- ---------------------------------------------------------------------------------------------------------------------------
Accounts receivable mark-to-market 206 390
- ---------------------------------------------------------------------------------------------------------------------------
Property and equipment 88 62
- ---------------------------------------------------------------------------------------------------------------------------
Acquisition-related intangible assets 1,198 -
- ---------------------------------------------------------------------------------------------------------------------------
Other 1,951 1,823
- ---------------------------------------------------------------------------------------------------------------------------
3,443 2,275
- ---------------------------------------------------------------------------------------------------------------------------
Net deferred tax assets $5,590 $6,979
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Based upon the Company's current and historical taxable income and the
anticipated level of future taxable income, management believes it is more
likely than not that all of the deferred tax assets will be realized.
Accordingly, no valuation allowance has been established against the deferred
tax assets.
7. Pension and Profit-Sharing Plans
The Company maintains both a money purchase pension plan (the "Pension Plan")
and a 401(k)/profit-sharing plan (the "Profit-Sharing Plan") for all qualifying
full-time employees. The Pension Plan is a noncontributory plan and requires the
Company to contribute 5% of each participant's eligible compensation. The 401(k)
feature of the Profit Sharing Plan permits employee contributions up to 10% of
eligible compensation. The Company makes matching contributions on behalf of
each participant in an amount equal to 100% of the employee contribution up to a
maximum of 5% of employee compensation. There is a five year graduated vesting
schedule for employer contributions. Under the profit-sharing provisions of the
plan, the Company contribution is determined annually by the Board of Directors,
subject to a maximum limitation of 5% of eligible compensation.
Total expense related to the Pension and Profit-Sharing plans was $1,712,000
in 2000, $1,266,000 in 1999 and $1,144,000 in 1998.
8. Non-Compete and Employment Agreements
During 1997, the Company exercised an option for a non-compete agreement
related to activities in the Company's United Kingdom and Netherlands
territories. The agreement precludes the former ASD from engaging in any
competitive business activities previously undertaken pursuant to the former ASD
agreement.
In accordance with the acquisition of Pacific Marketing and Consulting, Inc.
(see Note 3), the existing stockholders of PMAC agreed to non-competition
clauses restricting certain competitive business activities for periods of two
or five years, depending on the involvement of each stockholder in the daily
operations of PMAC.
The Company has entered into an employment agreement with the Chairman of the
Board of Directors. In the event the Chairman is terminated without cause, his
employment agreement provides for severance at the annual rate of $300,000 for
the later of a period of one year after termination or when he accepts other
employment. The Chairman is subject to a one-year restriction on competition
following termination of employment under the circumstances described in the
contract.
<PAGE>
9. Stock Option and Grant Plans
The Company has two stock option and grant plans - the 1994 Stock Option and
Grant Plan ("1994 Stock Plan") and the 1996 Stock Option and Grant Plan ("1996
Stock Plan"). The 1994 and 1996 Stock Plans authorize the grant of up to 868,110
and 3,250,000 shares, respectively, of the Company's common stock in the form
of: (i) incentive stock options ("ISOs"), (ii) nonqualified stock options or
(iii) the issuance or sale of common stock with or without vesting or other
restrictions. Additionally, the 1996 Stock Plan permits the grant of common
stock upon the attainment of specified performance goals and the grant of the
right to receive cash dividends with the holders of the common stock as if the
recipient held a specified number of shares of the common stock. No further
grants may be made under the 1994 Stock Plan.
The 1994 and 1996 Stock Plans provide that: (i) the exercise price of an ISO
must be no less than the fair value of the stock at the date of grant and (ii)
the exercise price of an ISO held by an optionee who possesses more than 10% of
the total combined voting power of all classes of stock must be no less than
110% of the fair market value of the stock at the time of grant. The Board of
Directors has the authority to set expiration dates no later than ten years from
the date of grant (or five years for an optionee who meets the 10% criteria),
payment terms and other provisions for each grant. Shares associated with
unexercised options or repurchased shares of common stock become available for
options or issuances under the 1996 Stock Plan. The Compensation Committee of
the Board of Directors may, at its sole discretion, accelerate or extend the
date or dates on which all or any particular award or awards granted under the
1994 and 1996 Stock Plans may vest or be exercised. In the event of a merger,
liquidation or sale of substantially all of the assets of the Company, the Board
of Directors has the discretion to accelerate the vesting of the options granted
under the 1994 and 1996 Stock Plans, except that options granted to Independent
Directors vest automatically. Under certain scenarios, other optionees may also
automatically vest upon the occurrence of such an event. In addition, the 1994
and 1996 Stock Plans and the grants issued thereunder terminate upon the
effectiveness of any such transaction or event, unless a provision is made in
connection with such transaction for the assumption of grants theretofore made.
Under the 1996 Stock Plan, at the discretion of the Compensation Committee, any
option may include a "reload" feature. Such feature allows an optionee
exercising an option to receive, in addition to the number of shares of common
stock due on the exercise, an additional option with an exercise price equal to
the fair market value of the common stock on the date such additional option is
granted.
In addition, the 1996 Stock Plan provides for the automatic grant of non-
qualified options to Independent Directors. Under such provisions, options to
purchase that number of shares of common stock determined by dividing $200,000
by the option exercise price will be granted to each individual when he or she
first becomes a member of the Board of Directors, provided that he or she is not
an employee of the Company. In addition, in 1998 the Board of Directors amended
the 1996 Stock Plan to provide that on the date five business days following
each annual meeting of stockholders of the Company, each Independent Director
who is then serving will be granted an option to purchase 12,000 shares of
common stock at the option exercise price. Options granted to Independent
Directors under the foregoing provisions will vest in annual installments over
four years, commencing with the date of grant, and will expire ten years after
the grant, subject to earlier termination if the optionee ceases to serve as a
director. The exercisability of these options will be accelerated upon the
occurrence of a merger, liquidation or sale of substantially all of the assets
of the Company.
<PAGE>
Restricted stock purchases, grants and option activity under the 1994 and 1996
Stock Plans, and the issuance of restricted stock to members of the Board of
Directors under separate agreements, are summarized as follows:
<TABLE>
<CAPTION>
1994 Stock Option and Grant Plan Restricted Stock Stock Options
- --------------------------------------------------------------------------------------------------------------------------------
Number of Range of Number of Range of
(in thousands, except for range of issue price) Shares Issue Price Options Issue Price
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at December 31, 1997 1,367 $.01-2.40 654 $.40-11.00
- --------------------------------------------------------------------------------------------------------------------------------
Issued/granted - - - -
- --------------------------------------------------------------------------------------------------------------------------------
Exercised (507) .01-.40 (56) .40-1.275
- --------------------------------------------------------------------------------------------------------------------------------
Repurchased/cancelled (23) .10-.40 (72) .40-10.00
- --------------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1998 837 .01-2.40 526 .40-11.00
- --------------------------------------------------------------------------------------------------------------------------------
Issued/granted - - - -
- --------------------------------------------------------------------------------------------------------------------------------
Exercised (815) .10-2.40 (143) .40-2.40
- --------------------------------------------------------------------------------------------------------------------------------
Repurchased/cancelled (18) .01-.40 (33) .40-10.00
- --------------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1999 4 .40 350 .40-11.00
- --------------------------------------------------------------------------------------------------------------------------------
Issued/granted - - - -
- --------------------------------------------------------------------------------------------------------------------------------
Exercised (4) .40 (101) .40-10.00
- --------------------------------------------------------------------------------------------------------------------------------
Repurchased/cancelled - - (9) 10.00
- --------------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2000 - - 240 $.40-11.00
- --------------------------------------------------------------------------------------------------------------------------------
Exercisable at:
- --------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 90 292
- --------------------------------------------------------------------------------------------------------------------------------
December 31, 1999 - 286
- --------------------------------------------------------------------------------------------------------------------------------
December 31, 2000 - 240
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1996 Stock Option and Grant Plan Stock Options
- ----------------------------------------------------------------------------------------------------------------------------
(in thousands, except for range of issue price) Number of Options Range of Issue Price
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at December 31, 1997 1,027 $ 6.25-13.125
- ----------------------------------------------------------------------------------------------------------------------------
Issued/granted 919 6.00-11.313
- ----------------------------------------------------------------------------------------------------------------------------
Exercised (40) 6.25-9.625
- ----------------------------------------------------------------------------------------------------------------------------
Repurchased/cancelled (157) 6.25-13.00
- ----------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1998 1,749 6.00-13.13
- ----------------------------------------------------------------------------------------------------------------------------
Issued/granted 697 6.88-11.00
- ----------------------------------------------------------------------------------------------------------------------------
Exercised (68) 6.00-9.625
- ----------------------------------------------------------------------------------------------------------------------------
Repurchased/cancelled (261) 6.00-13.00
- ----------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1999 2,117 6.00-13.13
- ----------------------------------------------------------------------------------------------------------------------------
Issued/granted 805 9.875-11.875
- ----------------------------------------------------------------------------------------------------------------------------
Exercised (158) 6.00-11.75
- ----------------------------------------------------------------------------------------------------------------------------
Repurchased/cancelled (241) 6.00-11.75
- ----------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2000 2,523 $ 6.00-13.13
- ----------------------------------------------------------------------------------------------------------------------------
Exercisable at:
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1998 270
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1999 577
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 2000 891
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The Company has elected to account for stock-based compensation arrangements
under the provisions of Accounting Principles Board Opinion No. 25, "Accounting
for Stock-Based Compensation." The Company has adopted the disclosure-only
provisions of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation." Accordingly, no compensation expense has been
recognized for restricted stock or options which have been issued under the 1994
and 1996 Stock Plans. Had compensation cost for the Company's two stock option
and grant plans been determined based upon the fair value at the grant date for
the option awards in 2000, 1999 and 1998, consistent with the provisions of SFAS
No. 123, the Company's net income and basic and diluted earnings per share would
have been reduced to the pro forma amounts indicated below:
<TABLE>
(in thousands, except per share data) 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income - as reported $16,310 $14,751 $11,349
- ----------------------------------------------------------------------------------------------------------------------------
Net income - pro forma 15,764 14,386 10,947
- ----------------------------------------------------------------------------------------------------------------------------
Net income per basic common share - as reported $ 1.03 $ .90 $ .71
- ----------------------------------------------------------------------------------------------------------------------------
Net income per basic common share - pro forma 1.00 .88 .68
- ----------------------------------------------------------------------------------------------------------------------------
Net income per diluted common share - as reported 1.00 .88 .68
- ----------------------------------------------------------------------------------------------------------------------------
Net income per diluted common share - pro forma .97 .86 .66
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The weighted-average fair value of options granted was $10.53 per share in
2000, $8.43 per share in 1999 and $8.83 per share in 1998.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the risk-free interest rates ranging
from a low of 5.22% to a high of 6.79%. The interest rates used were determined
by using the five year Treasury Note rate at the date of grant. The following
assumptions were also used to determine the fair value of each option grant:
dividend yields of 0%; expected volatility of 63% and expected term of five
years.
10. Stock Repurchase Plan
On February 8, 2000, the Company announced that its Board of Directors had
approved a share repurchase program. Under the repurchase program the Company
has repurchased two million shares which included one million shares approved in
February 2000 and an additional one million shares approved in July 2000. In
December 2000, the Board of Directors amended its common stock repurchase
program to permit the Company to acquire up to an additional one million shares,
or approximately 7% of the Company's outstanding common stock.
11. Employee Stock Purchase Plan
The Company's 1996 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors on April 19, 1996 and was subsequently
approved by the Company's stockholders. Up to 210,000 shares of common stock may
be issued under the Purchase Plan. The Purchase Plan is administered by the
Compensation Committee. The first offering under the Purchase Plan commenced on
August 1, 1996 and closed on January 31, 1997. Subsequent offerings commence on
each February 1 and August 1 thereafter, and have a duration of six months. An
employee who owns or is deemed to own shares of stock representing in excess of
5% of the combined voting power of all classes of stock of the Company may not
participate in the Purchase Plan.
During each offering, an eligible employee may purchase shares under the
Purchase Plan by authorizing payroll deductions of up to 10% of his cash
compensation during the offering period. The maximum number of shares which may
be purchased by any participating employee during any offering period is limited
to 960 shares (as adjusted by the Compensation Committee from time to time).
Unless the employee has previously withdrawn from the offering, his accumulated
payroll deductions will be used to purchase common stock on the last business
day of the period at a price equal to 85% of the fair market value of the common
stock on the first or last day of the offering period, whichever is lower. Under
applicable tax rules, an employee may purchase no more than $25,000 worth of
common stock in any calendar year. At December 31, 2000, 102,284 shares of
common stock had been issued under the Purchase Plan of which 82,654 were issued
as of December 31, 1999.
<PAGE>
12. Leases
In January 1996, the Company entered into a lease agreement with an unrelated
third party for a new corporate office facility, which the Company occupied in
February 1997. The lease agreement is for ten years, with an option for five
additional years, and includes a rental acceleration at the end of the fifth and
tenth years. The Company incurred lease rental expense related to this facility
of $1,227,000 in 2000, 1999 and 1998. Minimum lease payments for the next five
years under the facility lease are $1,227,000 in 2001, and $1,354,000 per annum
in 2002 through 2005.
The Company has also entered into various noncancellable operating leases for
equipment and sales offices. Lease rental expense related to these leases
totaled $908,000, $998,000 and $1,136,000 for the years ended December 31,
2000, 1999 and 1998, respectively. Future minimum lease payments under
noncancellable operating leases for equipment and sales offices in effect at
December 31, 2000 are $610,000 in 2001, $437,000 in 2002, $407,000 in 2003,
$164,000 in 2004 and $23,000 in 2005.
13. Royalty Agreements
The Company has entered into various renewable nonexclusive license agreements
under which the Company has been granted access to the licensor's patent
technology and the right to sell the patent technology in the Company's product
line. Royalties are payable to developers of the software at various rates and
amounts generally based upon unit sales or revenue. Royalty fees, which are
included in cost of sales, were approximately $884,000, $524,000 and $489,000
for the years ended December 31, 2000, 1999 and 1998, respectively.
14. Related Party Transactions
In connection with his initial employment, the Company's Chairman of the Board
of Directors purchased 626,000 restricted shares of common stock in July 1994
for a cash purchase price of $250,000 with proceeds from a loan from the Company
evidenced by a promissory note bearing interest at 8.23% and maturing on July 8,
2006. The promissory note is collateralized by a pledge of the shares purchased
with the proceeds of the loan. The shares purchased by the Chairman are fully
vested. The note and all related interest were repaid in full during 2000.
15. Geographic Information
Revenue by geographic area is as follows:
<TABLE>
<CAPTION>
Other
United Other Interna-
(in thousands) States Canada Germany Europe Japan tional Total
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended December 31, 2000 $34,304 $1,757 $8,595 $14,752 $8,843 $6,216 $74,467
- --------------------------------------------------------------------------------------------------------
Year ended December 31, 1999 27,673 1,151 7,091 14,924 7,678 4,622 63,139
- --------------------------------------------------------------------------------------------------------
Year ended December 31, 1998 24,282 1,509 5,704 13,986 7,565 3,507 56,553
- --------------------------------------------------------------------------------------------------------
</TABLE>
16. Contingencies
The Company had an outstanding irrevocable standby letter of credit for
$1,418,000 at December 31, 2000. This letter of credit was issued as a guarantee
for damages that could be awarded related to a legal matter in which the Company
was involved. The fair value of the letter of credit approximates the contract
value based on the nature of the fee arrangements with the issuing bank. No
material losses on this commitment have been incurred, nor are any anticipated.
17. Earnings Per Share
Basic earnings per common share ("EPS") amounts are computed by dividing
earnings by the average number of common shares outstanding. Diluted EPS amounts
assume the issuance of common stock for all potentially dilutive equivalents
outstanding.
<PAGE>
The details of basic and diluted earnings per common share are as follows:
<TABLE>
(in thousands, except per share data) 2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $16,310 $14,751 $11,349
- -----------------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding - basic (1) 15,804 16,366 16,052
- -----------------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ 1.03 $ .90 $ .71
- -----------------------------------------------------------------------------------------------------------------------------
Effect of dilutive securities:
- -----------------------------------------------------------------------------------------------------------------------------
Shares issuable upon exercise of dilutive 465 323 529
outstanding restricted stock and stock options
- -----------------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding - diluted 16,269 16,689 16,581
- -----------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 1.00 $ .88 $ .68
- -----------------------------------------------------------------------------------------------------------------------------
Anti-dilutive shares/options 201 570 1,200
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Weighted average shares outstanding - basic excludes unvested restricted
stock.
18. Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which defines derivatives, requires that
all derivatives be carried at fair value and provides for hedge accounting when
certain conditions are met. The Standard was effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. In June 1999, the FASB delayed
the effective date of this Statement for one year through the issuance of
Statement No. 137, "Accounting for Derivative Instruments and Hedging Activities
- - Deferral of the Effective Date of SFAS No. 133 and an Amendment of SFAS No.
133." The Company implemented Statement No. 133 during the year 2000. The
adoption of this Statement did not have a material effect on the Company's
consolidated financial statements.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements,"
which provides guidance related to the recognition and disclosure of revenue in
the financial statements. SAB 101 was effective for the fourth quarter of 2000.
The adoption of SAB 101 did not have a material effect on the Company's
consolidated financial statements.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation." This Interpretation clarifies such issues as: (a) the definition
of employee for purposes of applying APB Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. This Interpretation was effective
July 1, 2000, but certain conclusions in the Interpretation cover specific
events that occurred after either December 15, 1998, or January 12, 2000. To the
extent that this Interpretation covers events occurring during the period after
December 15, 1998, or January 12, 2000, but before the effective date of July 1,
2000, the effects of applying this Interpretation are recognized on a
prospective basis from July 1, 2000. The adoption of this Interpretation did not
have a material impact on the Company's consolidated financial statements.
<PAGE>
Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
Fiscal Quarter Ended
- ----------------------------------------------------------------------------------------------------------------------------
December 31, September 30, June 30, March 31,
(in thousands, except per share data) 2000 2000 2000 2000
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 24,152 $16,682 $16,253 $17,380
- ----------------------------------------------------------------------------------------------------------------------------
Gross profit 21,345 14,601 14,459 15,377
- ----------------------------------------------------------------------------------------------------------------------------
Operating income 5,751 3,805 4,789 5,234
- ----------------------------------------------------------------------------------------------------------------------------
Net income 4,459 3,272 4,092 4,487
- ----------------------------------------------------------------------------------------------------------------------------
Net income per basic share .28 .21 .26 .28
- ----------------------------------------------------------------------------------------------------------------------------
Net income per diluted share .27 .21 .25 .27
- ----------------------------------------------------------------------------------------------------------------------------
Net income per diluted share before
acquisition-related amortization & one-time charges .33 .24 - -
- ----------------------------------------------------------------------------------------------------------------------------
Common stock price per share(1):
- ----------------------------------------------------------------------------------------------------------------------------
High 12.06 12.44 11.88 14.31
- ----------------------------------------------------------------------------------------------------------------------------
Low 9.44 9.38 9.00 9.88
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Fiscal Quarter Ended
- ----------------------------------------------------------------------------------------------------------------------------
December 31, September 30, June 30, March 31,
(in thousands, except per share data) 1999 1999 1999 1999
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 17,598 $14,279 $15,394 $15,868
- ----------------------------------------------------------------------------------------------------------------------------
Gross profit 15,834 12,699 13,745 14,243
- ----------------------------------------------------------------------------------------------------------------------------
Operating income 4,858 3,928 3,883 4,574
- ----------------------------------------------------------------------------------------------------------------------------
Net income 4,125 3,366 3,543 3,717
- ----------------------------------------------------------------------------------------------------------------------------
Net income per basic share .25 .20 .22 .23
- ----------------------------------------------------------------------------------------------------------------------------
Net income per diluted share .25 .20 .21 .22
- ----------------------------------------------------------------------------------------------------------------------------
Common stock price per share(1):
- ----------------------------------------------------------------------------------------------------------------------------
High 11.88 10.38 10.25 10.94
- ----------------------------------------------------------------------------------------------------------------------------
Low 8.75 8.81 6.50 6.88
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company's common stock trades on the Nasdaq National Market tier of The
Nasdaq Stock Market under the symbol: ANSS. The common stock prices shown
are based on the Nasdaq daily closing stock price.
The Company has not paid cash dividends on its common stock as it has retained
earnings for use in its business. The Company intends to review its policy with
respect to the payment of dividends from time to time; however, there can be no
assurance that any dividends will be paid in the future.
On February 23, 2001, there were 266 shareholders of record and approximately
3,300 beneficial shareholders of the Company's common stock.
<PAGE>
Corporate Information
Shareholder Information
Requests for information about the Company should be directed to: Investor
Relations, ANSYS, Inc., Southpointe, 275 Technology Drive, Canonsburg, PA 15317.
Telephone: 724.514.1782.
Report on Form 10-K
Stockholders may obtain additional financial information about ANSYS, Inc.
from the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Copies are available from the Company without charge upon
written request.
Stock Listing
ANSS
Counsel
Goodwin Procter LLP, Boston, MA
Annual Meeting
The Annual Meeting of Stockholders will be held on May 2, 2001 at 2:00 p.m. at
the Southpointe Club, 360 Southpointe Blvd., Canonsburg, PA 15317.
Transfer Agent
Mellon Investor Services, Ridgefield Park, NJ
Independent Accountants
PricewaterhouseCoopers LLP, Pittsburgh, PA
ANSYS, Inc. is an Equal Opportunity Employer. As such, it is the Company's
policy to promote equal employment opportunity and to prohibit discrimination on
the basis of race, color, religion, sex, age, national origin, disability or
status as a veteran in all aspects of employment including recruiting, hiring,
training or promoting personnel. In fulfilling this commitment, the Company
shall comply with the letter and spirit of the laws, regulations and Executive
Orders governing equal opportunity in employment; including the Civil Rights Act
of 1964, Executive Order 11246, Revised Order Number 4 and amendments thereto.
ANSYS and DesignSpace are registered in the U.S. Patent and Trademark Office.
ANSYS/LS-DYNA, ANSYS/Mechanical and ANSYS/Multiphysics are trademarks of SAS IP,
Inc., a wholly-owned subsidiary of ANSYS, Inc. All other trademarks and
registered trademarks are the property of their respective owners.
<PAGE>
Headquarters
ANSYS, Inc.
ansysinfo@ansys.com
T 724.746.3304
F 724.514.9494
Toll Free USA and Canada:
1.800.WE.R.FEA.1
(1.800.937.3321)
Toll Free Mexico:
95.800.9373321
ICEM CFD Engineering
info@icemcfd.com
T 510.549.1890
F 510.841.8523
Regional Offices
North America
na.sales@ansys.com
T 724.514.3122
F 724.514.1990
International
int.sales@ansys.com
T 724.514.2991
F 724.514.1990
Europe
eu.sales@ansys.com
T 44.118.9880229
F 44.118.9880925
http://www.ansys.com
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>SUBSIDIARIES OF THE COMPANY
<TEXT>
<PAGE>
EXHIBIT 21
Subsidiaries of the Registrant
- ------------------------------
SAS IP, Inc., a Wyoming corporation
ASN Systems Limited, a UK Subsidiary
ANSYS Foreign Sales Corporation, a Barbados corporation
ANSYS Software Engineering Technology (Beijing) Co., Ltd., a China Wholly-Owned
Foreign Enterprise
ICEM CFD Engineering, Inc., a Delaware corporation
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>
<PAGE>
EXHIBIT 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-4278) of ANSYS, Inc. and Subsidiaries of our
report dated January 30, 2001 relating to the consolidated financial statements,
which appears in the Annual Report to Shareholders, which is incorporated in
this Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report dated January 30, 2001 relating to the financial
statement schedule, which appears in this Form 10-K.
/S/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
March 23, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>
<PAGE>
EXHIBIT 23.2
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8, (No. 333-4278) of ANSYS, Inc. and Subsidiaries of our
report dated March 23, 2001 relating to the financial statements of the 1996
Employee Stock Purchase Plan of ANSYS, Inc. and Subsidiaries, which appears in
this Form 11-K.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
March 23, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>FORM 11-K
<TEXT>
<PAGE>
EXHIBIT 99
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
As of January 31, 2001 and 2000
and for Each of the Three Years in the Period Ended January 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-20853
1996 EMPLOYEE STOCK PURCHASE PLAN
(Full title of Plan)
ANSYS, Inc.
Southpointe
275 Technology Drive
Canonsburg, PA 15317
(Name of issuer of securities held pursuant to
the plan and the address of its principal executive office)
<PAGE>
ANSYS, INC. AND SUBSIDIARIES
1996 Employee Stock Purchase Plan
Index of Financial Statements
Page No.
--------
Report of Independent Accountants 3
Statements of Financial Condition as of January 31, 2001 and 2000 4
Statements of Changes in Plan Equity for Each of the Three Years
in the Period Ended January 31, 2001 5
Notes to Financial Statements 6-7
Signature 8
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
Ansys Inc. and Subsidiaries:
In our opinion, the accompanying Statements of Financial Condition and related
Statements of Changes in Plan Equity present fairly, in all material respects,
the financial position of the 1996 Employee Stock Purchase Plan of ANSYS, Inc.
and Subsidiaries at January 31, 2001 and 2000, and the results of its
operations for each of the three years in the period ended January 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
- --------------------------------
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
March 23, 2001
<PAGE>
ANSYS, INC. AND SUBSIDIARIES
1996 EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF FINANCIAL CONDITION
January 31, 2001 and 2000
<TABLE>
<CAPTION>
2001 2001
---- ----
<S> <C> <C>
Assets:
Cash $101,848 $95,186
-----------------------------
Total assets $101,848 $95,186
=============================
Liabilities and Plan equity:
ANSYS, Inc. stock due
to participants $101,005 $93,736
-----------------------------
Total liabilities 101,005 93,736
Plan equity 843 1,450
-----------------------------
Total liabilities and Plan equity $101,848 $95,186
=============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
ANSYS, INC. AND SUBSIDIARIES
1996 EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF CHANGES IN PLAN EQUITY
for the Years Ended
<TABLE>
<CAPTION>
January 31, 2001 January 31, 2000 January 31, 1999
---------------------------------------------------------------
<S> <C> <C> <C>
ADDITIONS:
Contributions:
Employee $187,929 $176,006 $162,259
Employer 30,977 34,487 36,187
---------------------------------------------------------------
Total additions 218,906 210,493 198,446
DEDUCTIONS:
Stock distributions 206,511 191,043 186,845
Participant withdrawals 13,002 18,580 22,231
---------------------------------------------------------------
Total deductions 219,513 209,623 209,076
---------------------------------------------------------------
Net (decrease) increase in Plan equity (607) 870 (10,630)
Plan equity, beginning of year 1,450 580 11,210
---------------------------------------------------------------
Plan equity, end of year $ 843 $ 1,450 $ 580
===============================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
ANSYS, INC. AND SUBSIDIARIES
1996 EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN:
The purpose of the 1996 Employee Stock Purchase Plan of ANSYS, Inc. and
Subsidiaries (the "Plan"), which became effective August 1, 1996, is to provide
eligible employees of ANSYS, Inc. and certain of its subsidiaries (the
"Company") with opportunities to purchase shares of common stock upon favorable
terms. The aggregate maximum number of shares which may be issued under the
Plan is 210,000 shares of common stock, subject to adjustments for changes in
the Company's capitalization. The Plan is administered by the Compensation
Committee of the Board of Directors (the "Compensation Committee").
Participation in the Plan is voluntary. Offerings under the Plan commence on
each February 1 and August 1 and have a duration of six months. The
Compensation Committee may establish a different period of six months or less
for any offering. Generally, all employees who are employed for more than 20
hours per week as of the first day of the applicable offering period are
eligible to participate in the Plan. An employee who owns or is deemed to own
shares of stock representing in excess of 5% of the combined voting power of all
classes of stock of the Company may not participate in the Plan.
During each offering, an eligible employee may purchase shares under the Plan by
authorizing payroll deductions of up to 10% per pay period to be deducted from
such employee's total cash compensation. The maximum number of shares that may
be purchased by any participating employee during any offering period is limited
to 960 shares (as adjusted by the Compensation Committee from time to time).
Unless the employee has previously withdrawn from the offering, such employee's
accumulated payroll deductions will be used to purchase common stock at a price
equal to 85% of the fair market value of the common stock on the first or last
day of the offering period, whichever is lower. The Company will contribute the
remaining 15% of the fair market value of the common stock. Under applicable
tax rules, an employee may purchase no more than $25,000 worth of common stock
in any calendar year.
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
Administrative Expenses:
The Company pays all expenses incident to the operation of the Plan, including
the costs of record keeping, accounting fees, legal fees, the costs of delivery
of stock certificates to participants and the costs of shareholder
communications. The Company does not pay any expenses, broker or other
commissions, or taxes incurred in connection with the purchases of common stock,
or the sale of shares of common stock.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires the plan administrator to make estimates and
assumptions that affect certain reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements. Estimates may also affect the changes in Plan equity during the
reporting period. Actual results may differ from those estimates.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Board
of Directors of ANSYS, Inc. has duly caused this Annual Report to be signed on
behalf of the Plan by the undersigned hereunto duly authorized, on March 23,
2001.
ANSYS, INC. AND SUBSIDIARIES
1996 EMPLOYEE STOCK PURCHASE PLAN
Date: March 23, 2001 By: /S/ James E. Cashman III
-------------------------------------------------
James E. Cashman III
President and Chief Executive Officer
Date: March 23, 2001 By: /S/ Maria T. Shields
-------------------------------------------------
Maria T. Shields
Chief Financial Officer,
Vice President, Finance and Administration
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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