Realize Your Product Promise®
Fluids
Structures
Electronics
Systems
ANSYS, Inc.
www.ansys.com
ansysinfo@ansys.com
866.267.9724
ANSYS is dedicated exclusively to developing engineering simulation software that
fosters rapid and innovative product design. Our technology enables you to predict
with confidence that your product will thrive in the real world. For more than 40 years,
customers in the most demanding markets have trusted our solutions to help ensure
the integrity of their products and drive business success through innovation.
ANSYS and any and all ANSYS, Inc. brand, product, service and feature names, logos and slogans are registered
trademarks or trademarks of ANSYS, Inc. or its subsidiaries in the United States or other countries. All other
brand, product, service and feature names or trademarks are the property of their respective owners.
© 2014 ANSYS, Inc. All Rights Reserved.
MKT 87
LETTER TO STOCKHOLDERS
LEVERAGING OUR STRONG FOUNDATION
FOR CONTINUED GROWTH
On behalf of our more than 2,700 ANSYS employees world-
wide, I am extremely pleased to present our 2014 accom-
plishments and financial results, as well as outline our
opportunities for continued growth in the coming years.
By almost any measure, 2014 was an extraordinary year during
which we simultaneously drove strong operating performance,
made attractive acquisitions and returned capital to shareholders.
Operationally, we met or exceeded every financial target articulated
at our March 2014 Investor Day, recording revenue growth of 10%
(in constant currency), gross margins of 88%, operating margins of
48% and earnings per share of $3.43 (all on a non-GAAP basis), well
above the high end of the anticipated range for the year. We also
achieved a number of milestones including sales bookings in excess of $1 billion for the first time in
the Company’s history and record operating cash flows of $385 million.
Fundamental to our strong financial results for the year
were consistent operational execution across the organiza-
tion; strong investment in research and development; two
acquisitions which accelerated our product roadmap, strat-
egy and vision; and the expansion and repositioning of
our worldwide sales, support and consulting organizations
to drive long-term revenue growth. Indicative of these
investments, we extended our technological leadership
and deepened our relationship with clients worldwide. In
2014, we had seven long-standing clients commit to sales
bookings levels above $10 million. It was only three years
ago when we had our very first eight-figure customer.
During 2014 and early 2015, we acquired Reaction Design,
SpaceClaim and Newmerical Technologies. These three
acquisitions bolstered our simulation capabilities in
chemical reactions, geometry handling and in-flight icing,
respectively. Coupled with the January 2015 launch of
ANSYS® 16.0, we have further solidified our leadership
position in Simulation Driven Product DevelopmentTM.
ANSYS 16.0 delivers major advancements across the
Company’s entire portfolio, including structures, fluids,
electronics and systems engineering solutions – provid-
ing engineers with the ability to validate complete virtual
prototypes. Examples of the enhancements include 3-D
modeling of electronic components to design complex and
multi-functional electronic devices such as cellular phones,
modeling of thin materials and composites which are dif-
ficult to model due to their inhomogeneous properties and
their dependence on the manufacturing process, a reduc-
tion of up to 40 percent of fluid dynamics simulation time
for complex models and improvements in the aeronautical
domain which make ANSYS 16.0 the first simulation tool to
meet the new Federal Aviation Administration certification
requirements.
In addition, ANSYS 16.0 further enhances the Company’s
ability to meet burgeoning demand for simulation, while
simultaneously democratizing the use of simulation by
substantially enhancing its ease of use. It is upon this
foundation that we expect to continue to grow in the
future.
LETTER TO STOCKHOLDERS
As extraordinary as our growth has been over the past 15
years, we firmly believe that we have only just begun to
capitalize on our growth opportunities in what is a very
large and growing market. Historically, simulation tools
have been too complex and hard to learn and use, comput-
ers were too slow to process all the algorithms, engineers
worked in silos and not across disciplines with multi-
physics and simulation wasn’t employed to design a full
prototype. Each of these barriers to adoption are being
defeated.
Tomorrow’s engineers are learning on ANSYS software
today in colleges and universities worldwide. Along with
our installed base, they are benefitting from a completely
new and intuitive interface with features they have come
to expect from any electronic device including point, click,
drag, drop and the use of wizards and templates. The days
of learning and inputting code are now behind us. Much of
the engineering processes and solvers are now automated
and ANSYS 16.0 is the first simulation software platform
certified to run on 36,000 cores, taking full advantage of
high-performance computing and enabling our customers
to run far more simulations and product configurations
without affecting production and lead times.
In addition, with the new multi-physics capabilities, entire
systems can be designed and simulated without having
to build expensive prototypes for testing. This process
enables multi-disciplinary teams of engineers and product
designers to work together collaboratively and enhance
speed to market.
By breaking down the barriers to adoption, we are free to
pursue the three key drivers of growth for ANSYS – increas-
ing the number of users, increasing the density of usage
and increasing the intensity of usage.
We believe that, at present, fewer than 10% of the engi-
neers in our existing client base are using simulation and
that, in the next five years, we have the opportunity to
continue to increase the penetration rate. In addition, as
undergraduate and graduate level students enter the work-
force already trained on the ANSYS platform, employers
will seize upon their expertise and further drive adoption.
These factors are expected to drive significant growth in
the number of users over time.
Second, as our system has evolved to enable cross-disci-
pline teams to work collaboratively and use multi-physics,
the density of usage is expected to increase. Not only can
these teams begin to work together and explore full system
design, the introduction of new modules offers addi-
tional applications for those teams to pursue. To date, we
estimate that only one-third of our existing customer base
has begun to deploy multi-physics, so the opportunity to
continue to grow within that base is significant.
Third, we also expect the intensity of usage to increase
over time due to a number of factors. High-performance
computing, or the use of multiple computers to simultane-
ously process applications, is enjoying widespread adop-
tion. We believe that approximately 80% of our existing
customers have high-performance computing infrastruc-
ture, yet less than 10% are taking full advantage of it. In
addition, usage of cloud-based processing is also growing.
As a result, the implementation of our platform in those
environments enables our customers to process simula-
tions far more rapidly, while simultaneously equipping
them with the opportunity to tackle problems of increased
complexity of product design and full systems simulation.
Simply put, ANSYS 16.0 is the most robust simulation
software available in the market today, offering an unpar-
alleled breadth of tools and capabilities, and optimized
to run in high-performance computing and cloud environ-
ments.
2 / LETTER TO STOCKHOLDERS
During 2014, we also took additional steps to enhance
revenue growth for the long-term. In July, we undertook
an initiative to reposition our salesforce globally. A new
leader for Worldwide Sales and Support was named,
reporting directly to me. The sales force was then reframed
into three distinct groups responsible for major accounts,
named accounts and territory representatives. In addition,
a substantial investment was made to increase the size of
our direct sales force by over 15% in just six months. We
are already seeing the benefits from this enhanced sales
capacity and changes in our go-to-market strategy, and we
have entered 2015 with substantial momentum.
As a result of our strong execution and commitment to
stockholder returns, our Board of Directors authorized a
substantial increase in our share repurchase authoriza-
tion in 2014 and again in early 2015. We take enormous
pride in our ability to generate significant returns for our
stockholders.
In closing, I would like to take this opportunity to thank
our dedicated employees and partners worldwide for their
continued commitment to being the industry leader and
for successfully executing our vision of Simulation Driven
Product Development.
James E. Cashman III
President and Chief Executive Officer
In addition, we benefit from extremely high customer
retention rates and relationships that, in many cases, date
back for decades. These long-standing customer relation-
ships continue to burgeon into new opportunities for us
as we add functionality to our software suite. In a recent
example, one of our long-standing customers, Cummins
Inc., signed an enterprise-wide agreement enabling them
to standardize their engineering simulation worldwide on
the ANSYS portfolio of products. With more than 45,000
customers globally, including 96 of the top 100 industrial
companies, ANSYS has demonstrated its leadership in the
industry.
Looking forward over the next several years, our commit-
ment to significant and sustainable growth is unwavering.
We are extremely well positioned to execute against our
growth strategies and continue our strong track record
of financial achievements including top- and bottom-line
growth, and the generation of substantial cash flow. We
intend to continue investing in our business – both in
research and development and in support of our world
class sales and support organizations. Our organic growth
will be augmented by strategic acquisitions to maintain
and enhance our technological, industry-leading position.
Importantly, we fully intend to continue to drive stock-
holder returns and to return capital to stockholders in a
meaningful way.
3 / LETTER TO STOCKHOLDERS
At ANSYS, we bring clarity and insight
to your most complex phenomena through
fast, accurate and reliable simulation.
Every Product is a Promise
Every product you make is a promise to your customer. A promise to be functional
and efficient. To be safe and reliable. To perform better than any other design
on the market. At the end of the day, your products are all that matter.
ANSYS provides the engineering and design process insight to help you be
first to market with products that realize their promise and revolutionize
your business. We develop, market and support engineering simulation
software used to predict how products will behave and how manufacturing
processes will operate in real-world environments. We offer the most
comprehensive suite of simulation solvers in the world so that you can
confidently predict your product’s success. ANSYS simulation software,
coupled with our team of applications experts and global support network,
is the key to:
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Lower Development Costs
We’ll help you get to an accurate answer faster, so you
can do more in less time while using fewer resources
than ever before
Reduce Time to Market
Our software drastically shortens development time and
prototype iterations so you can be first to market with
tomorrow’s products, today
Optimize Product Performance
As the world leader in engineering simulation software,
we enable our customers to consistently perfect product
reliability, performance and safety
Outperform the Competition
Using simulation early and often, our customers gain an
unrivaled advantage in today’s competitive market
40 Years of Innovation
We are the largest engineering simulation
company in the world, serving more than
40,000 customers. Our steady growth and
financial strength reflect our commitment to
innovation and R&D. We reinvest 15 percent
of our revenues each year into research to
continually refine our software. That’s
why more leading organizations trust
ANSYS with their most difficult product
design challenges.
“Without simulation results on components, there’s a chance that
these components can have shortcomings. This can be very damaging
to a company’s reputation. It’s very costly. An entire market for that
component goes away. The airlines aren’t going to install a turbine
blade that is known to crack. Having ANSYS and the ability to evaluate
whether our components will perform is extremely valuable.”
Page Strohl
Senior Structures Engineer
Chromalloy Gas Turbine
Performance Improvements Achieved through Simulation
ANSYS technology helps drive dramatic improvements across our customers’ product
development processes, from reduced costs and shorter development times to improved
quality and reliability. Nearly half of all best-in-class companies use simulation
deliberately throughout the design process. These leading manufacturers realize
significantly lower product costs and up to three times higher profitability than
companies that use simulation only occasionally.
Performance Improvements Achieved Percent Change over Past 24 Months
-10% -5%
0% 5% 10% 15%
Product cost
-6%
3%
5%
15%
Source: Aberdeen Group, April 2010
Best-in-class
All others
Profit margins on products
less than two years old
Award-Winning Design
One of the most respected names in American design, Herman
Miller, used ANSYS structural analysis software to meet the complex
requirements of designing the Mirra® chair for a wide range of body
types and postures.
The Mirra’s TriFlex backrest,
which automatically adjusts to
each user, was developed as a single
composite plastic structure using
ANSYS software to determine the
coupled response of the back and
supporting spine.
•
1970
Swanson Analysis Systems Inc. is founded.
Westinghouse becomes our first client.
•
1971
ANSYS 2.0 is released, revolutionizing
simulation in materials, contact
dynamics and thermal effects.
•
1975
ANSYS introduces geometric and
thermoelectric elements—once
again leading the field in advanced
technologies.
Our technology enables you to predict
with confidence that your products will
thrive in the real world.
Fluids
Our CFD portfolio, which includes ANSYS Fluent® and ANSYS CFX®, is the most
trusted and widely used simulation suite the world over. With the industry’s
most advanced solvers, ANSYS fluid dynamics technology delivers the fast,
reliable simulations our customers require to design with confidence.
Applications
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Improve aerodynamics and ventilation in aircraft, cars and
buildings; cut energy costs and improve comfort and safety
Design more-efficient and longer-lasting turbines, from huge
hydroturbines to turbochargers and heart pumps
Create better-functioning solutions in alternative energy
such as wave power, wind turbines and fuel cells
Improve drug delivery for faster-to-market pharmaceuticals
Structures
ANSYS structural mechanics software brings together the largest
elements library with the most advanced structural simulation
capabilities available. This unified engineering environment helps
you streamline processes to optimize product reliability, safety and
functionality. Leveraging user-friendly tools in industry-standard
products, including ANSYS Mechanical,TM ANSYS Autodyn® and
others, your team will increase productivity, minimize physical
prototyping, and deliver better products in less time.
Lufthansa Saves Time, Reduces Costs
Lufthansa Technik AG leverages ANSYS simulation software
to gauge wear and tear of aircraft components. This prolongs
service intervals, saving time and maintenance costs. The
results are safer, less expensive flights for consumers and
a more profitable business for Lufthansa.
Dyson Drastically Improves Fan Design
Dyson needed to boost the performance of their
Air MultiplierTM fan. ANSYS enabled 10 times
the design variation analysis, resulting in a 250
percent improvement over the original design.
The end result: Dyson met its product deadline
schedule and won international recognition.
Applications
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Improve durability and decrease failure in automobile
and airplane components
Improve longevity and reliability of civil engineering
projects such as dams, bridges and high-rises
Reduce weight while maintaining integrity of air and
spacecraft; test reliability before failure, in fields in
which failure is not an option
Improve the accuracy and durability of scientific
instruments such as observatories and hadron colliders
Create better and more reliable marine and offshore
equipment; ensure functionality throughout the
lifespan of household appliances
•
1981
We become the first provider to introduce
workstations as an alternative to mainframes,
resulting in outstanding usability for our
customers.
•
1983
With the introduction of electro-
magnetic capabilities, we add
to our growing reputation as the
world leader in simulation.
•
1985
As the first provider to offer online help, as
well as the first to support parametric analysis
and structured optimization, we dramatically
improve the potential of simulation.
Electronics
Our software enables you to predict the behavior of complex electrical and
electromechanical systems — from mobile communication and internet devices
to automotive components and electronics equipment. The industry-leading
ANSYS HFSS™ and ANSYS Maxwell® solvers eliminate prototype iterations and
deliver your products to market faster.
Applications
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Improve equipment performance of smartphones, satellites,
batteries and hybrid vehicles
Design more-effective MRI machines, implantable defibrillators
and other medical devices
Create better electromechanical components for automobiles,
generators, transformers, power electronics and magnet design
Ensure the highest speed of computer chip and board design, and
optimize functionality of anything that uses a chip or circuit
Improve signal integrity for high-frequency technology such
as antennas, RF and microwave devices
Systems
In today’s competitive marketplace, it is crucial to consider all physical
phenomena when designing a new product. Leading manufacturers are increasing
the fidelity of their simulation models by coupling two or more physics in their
investigations. ANSYS expertise in multiphysics gives you the power to solve
complex, system-level challenges. Our unified engineering environment
seamlessly integrates systems, product teams and third-party technology.
Panasonic Eyes Faster
Development Cycles
Using ANSYS electronics
simulation software, Panasonic
improved signal integrity for
its remote surveillance camera.
By adopting a circuit and 3-D
electromagnetic cosimulation
approach, the design team
saved almost three months
in development time.
A Systems-Level Approach
Our collaborative simulation environment provides modeling scalability specifically for
evaluating entire systems that include 3-D high-fidelity models, circuit reduced-order
models or any combination of these:
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Accurate tracking of the interactive effects of components and
detailing how they will perform as a whole
The ability to address different dimensions of a system — from
physics, fidelity and state to scale and users
Modeling scalability for evaluating entire systems that include
any combination of high-fidelity 3-D and reduced-order models
Best-in-class core server technology coupled with an integrated
development environment
A collaborative environment for defining, executing and storing
results of system-level simulation projects for multiple users
At ANSYS, we’re seeing dramatic improvements
across our customers’ development processes,
from reduced costs and development time
to improved quality. We’re listening to our
customers and responding to their needs
for efficiency, robustness and accuracy.
•
1987
We introduce the first layered composite
solid element and become the first to
simulate electromagnetic phenomena.
•
1991
ANSYS introduces the first CFD solver for unstructured
grids and becomes the first simulation provider
to release tetrahedral meshing.
ANSYS expert training, services and
support help to ensure your success.
Whether you are new to engineering simulation or are a highly-skilled specialist,
ANSYS provides the training, services and support you need to create the next must-
have product. Live phone support and the customer web portal make it easy for you
to submit requests and concerns. So you have available services when and where
you need them most, and in the form that is most useful to your team.
Comprehensive Consulting Services
Our full suite of consulting services is designed to help customers realize the return
on every investment in ANSYS technology. We’ll help you maximize the value of our
tools by working with your team to develop and document methodologies and best
practices. And we’ll customize our simulation software to better fit into your specific
design processes. This enables you to be more efficient by reducing the time spent
performing simulations, and it gives you the ability to extend the software to
non-expert users.
Training Delivers Better Insight
ANSYS training solutions are designed to give you the best
insight for quickly solving your most difficult engineering
problems – from classroom training on basic physical
concepts to online courses and customized training at
your own site.
This wide range of training opportunities helps you to design
the ideal methodologies for addressing specific process or
application challenges, while also driving simulation use
throughout your organization.
“ANSYS enables us to understand not only what can be
done in a product in terms of features and performance,
but what should be done in the product to design for
reliability and manufacturability.”
Scott Parent
Vice President of Technology
Baker Hughes
•
•
1994
SASI becomes ANSYS, Inc.
ANSYS creates the world’s first iterative
solver for large structural problems.
•
•
1996
ANSYS launches DesignSpace with ANSYS
Workbench™ as its environment.
We create the first commercial CFD with
parallel processing as a standard feature.
•
1999
By adding multiphysics modeling to our
list of capabilities, ANSYS yet again raises
the bar — resulting in vastly more accurate,
effective simulation.
At ANSYS, we focus on digitally simulating performance across all physics
of complete systems and in their real-world environments. We’re helping
manufacturers worldwide streamline processes to accelerate innovation.
When simulation drives product development, anything is possible.
Cummins Puts Green Initiative into Overdrive
Cummins uses ANSYS software to design and test radical
improvements in its engines — reducing weight, improving fuel
economy and cutting emissions.
“The ANSYS Workbench environment provides access to the best multiphysics tools we need
to conduct many types of simulation and analysis. Whether our need is thermal, structural,
dynamic or static engineering analysis, ANSYS Workbench provides the flexibility and
versatility to accommodate our needs — as well as the multiphysics capabilities to link the
results of our various simulations.”
Bob Tickel
Director of Structural & Dynamic Analysis
Cummins Inc.
ST Ericsson Answers the Call to Lead
As a leading global provider for the wireless market, ST Ericsson relies on
ANSYS for comprehensive electronics simulation to stay competitive
in the ever-changing field of smartphones. With our tools, they reduce
risk in their designs, shorten lead times in development, and get successful
products to market faster.
“Today we’re working with ANSYS. We have a much more efficient design flow,
we know what part our components play in the design, and we know before
producing our boards that they will be functional. It’s a much better
starting point for our platform validation.”
Jonas Persson
Technical Manager
ST Ericsson
•
2001
We added design exploration to expand
the suite’s capabilities.
•
2003
ANSYS acquires CFX, cementing our place
as the industry leader in CFD tools.
•
2004
ANSYS becomes the first simulation
company to solve 100 million structural
degrees of freedom.
Our global reach, expert people
and proven strengths help you
realize your product promise.
Every product is a promise to live up to and surpass customer expectations. A promise
to be better than the competition. By simulating early and often with ANSYS software,
you can become faster, more cost-effective and more innovative. We are dedicated to
providing simulation solutions that enable our customers to excel in today’s competitive
market. We are the world’s most trusted and successful engineering simulation partner.
We’ll help you realize your product promise.
Red Bull Passes Competition
Using ANSYS CFD simulation, Red Bull Racing Team achieved reliable,
accurate analyses in record time — as well as a competitive edge in
performance before hitting the track.
“ANSYS simulation software is incredibly reliable and accurate. Simulation enables us to
drastically reduce lead times and get solutions to the circuit much, much quicker so that
we are more competitive race-to-race.”
Steve Nevey
Business Development Manager
Red Bull Technology
•
2006
ANSYS reaches another milestone, becoming the No. 1
CAE company in R&D investment. By acquiring Fluent,
ANSYS gains unmatched capabilities in fluid dynamics
simulation.
•
2008
ANSYS acquires Ansoft, adding high-performance
electronics and electromagnetics software to our
repertoire of simulation solutions.
•
2009
ANSYS launches its next generation of Workbench
and completes the world’s first commercial simulation
of more than 1 billion computational cells. Fortune
magazine names ANSYS on its list of “Fastest
Growing Companies.”
Simulation Optimizes Engine Performance
Mercury Marine, a leader in marine propulsion and pleasure boating,
uses ANSYS simulation software to develop new engines. Working
hand-in-hand with our application experts, Mercury Marine engineers
optimize their engine designs and deliver the best products to their
customers faster.
Our Reach
We have a presence in more than 40 countries and a powerful network of partners that
provide local, value-added service and support. So whether you’re a customer in Germany,
Brazil or South Korea, we have the global expertise and reach to meet your challenges
and speak your language. And we’ll deliver the resources to help you rapidly deploy and
efficiently manage your simulation processes and data.
Our People
We employ more than 2,600 professionals, including more master’s-
and PhD-level engineers in our service organization than any other
simulation provider. Our team of simulation experts will guide you
on how to more effectively use our software tools and maximize ROI.
We’re a recognized leader in all physics areas in addition to simulation.
And our team has extensive training in fields such as finite element
analysis, computational fluid dynamics, electronics and electromagnetics,
and design optimization.
At ANSYS, we’re relentlessly committed to your product
development success. We’re passionate about developing
and delivering world-class engineering simulation
software to address your current and future product
development needs.
Our Strengths
•
•
•
Focused
Simulation is all we do
Leading product technologies
in all physics areas
Largest development team
focused on simulation
Capable
2,000 employees
60 locations, 40 countries
•
•
Trusted
96 of top 100 FORTUNE 500
industrials use our software
ISO 9001 and NQA-1 certified
•
•
•
Proven
Recognized as one of the
world’s most innovative and
fastest-growing companies*
•
•
Independent
Long-term financial stability
CAD agnostic
*BusinessWeek, FORTUNE
•
2011
ANSYS acquires Apache, adding power
analysis and optimization platforms
for electronics applications.
•
2012
ANSYS acquires Esterel Technologies SA,
adding the capability to model embedded
software, the intelligence behind today’s
smart products.
•
2013
ANSYS acquires EVEN Evolutionary AG,
further broadening our composites
capabilities
Customers trust ANSYS simulation
software to help ensure the integrity
of their products and drive business
success through innovation.
We’ll help you realize your product promise.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2014
Commission File Number 0-20853
ANSYS, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
2600 ANSYS Drive, Canonsburg, PA
(Address of principal executive offices)
04-3219960
(I.R.S. Employer Identification No.)
15317
(Zip Code)
724-746-3304
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par value per share
(Title of each class)
The NASDAQ Stock Market, LLC
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by a check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
No
Indicate by a check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes
No
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
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
No
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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.
Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company (as defined in Exchange Act Rule 12b-2). (Check one):
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Indicate by a check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes
No
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 June 30, 2014 as reported on the NASDAQ Global Select Market, was $5,569,000,000. Shares of Common Stock held by
each officer, director and by each shareholder who owns 5% or more of the outstanding Common Stock have been excluded in that such
shareholders 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 February 20, 2015 was
90,023,551 shares.
Documents Incorporated By Reference:
Portions of the Proxy Statement for the Registrant’s 2015 Annual Meeting of Stockholders are incorporated by reference into Part III.
ANSYS, Inc.
ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 2014
Table of Contents
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Item 5.
Item 6.
Item 7.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accounting Fees and Services
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Exhibits and Financial Statement Schedules
SIGNATURES
3
10
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18
19
19
20
23
24
49
50
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Important Factors Regarding Future Results
Information provided by ANSYS, Inc. (hereafter the "Company" or "ANSYS"), in this Annual Report on Form 10-K, may
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 in Item 1A. Risk Factors, may cause the Company’s future results to differ materially from those projected in any
forward-looking statement. All information presented is as of December 31, 2014, unless otherwise indicated.
ITEM 1.
BUSINESS
PART I
ANSYS, a Delaware corporation formed in 1994, develops and globally markets engineering simulation software and services
widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia, including
aerospace, automotive, materials and chemical processing, turbomachinery, consumer products, electronics, biomedical, energy,
defense and others. Headquartered south of Pittsburgh, Pennsylvania, the Company and its subsidiaries employed
approximately 2,700 people as of December 31, 2014. The Company focuses on the development of open and flexible solutions
that enable users to analyze designs directly on the desktop, providing a common platform for fast, efficient and cost-conscious
product development, from design concept to final-stage testing and validation. The Company distributes its ANSYS suite of
simulation technologies through a global network of independent resellers and distributors (collectively, channel partners) and
direct sales offices in strategic, global locations. It is the Company's intention to continue to maintain this hybrid sales and
distribution model.
The Company's product portfolio consists of the following:
Simulation Platform: ANSYS® Workbench™
ANSYS Workbench is the framework upon which the Company's suite of advanced engineering simulation technologies is
built. The innovative project schematic view ties together the entire simulation process, guiding the user through complex
multiphysics analyses with drag-and-drop simplicity. With bi-directional computer-aided design ("CAD") connectivity,
powerful highly-automated meshing, a project-level update mechanism, pervasive parameter management and integrated
optimization tools, the ANSYS® Workbench™ platform delivers unprecedented productivity, enabling Simulation-Driven
Product Development™.
Simulation Process and Data Management
ANSYS Engineering Knowledge Manager™ ("ANSYS EKM") is a comprehensive solution for simulation-based process and
data management challenges. ANSYS EKM provides solutions and benefits to all levels of a company, enabling an
organization to address the critical issues associated with simulation data including backup and archival, traceability and audit
trail, process automation, collaboration and capture of engineering expertise, and intellectual property protection.
High-Performance Computing
The Company's high-performance computing ("HPC") product suite enables enhanced insight into product performance and
improves the productivity of the design process. The HPC product suite delivers cross-physics parallel processing capabilities
for the full spectrum of the Company's simulation software by supporting structures, fluids, thermal and electronics
simulations. This product suite decreases turnaround time for individual simulations, allowing users to consider multiple design
ideas and make the right design decisions early in the design cycle.
Geometry Interfaces
The Company offers comprehensive geometry handling solutions for engineering simulation in an integrated environment with
direct interfaces to all major CAD systems, support of additional readers and translators, and an integrated geometry modeler
exclusively focused on analysis.
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Meshing
Creating a mesh that transforms a physical model into a mathematical model is a critical and foundational step in almost every
engineering simulation study. Accurate meshing is especially challenging today with increasing product design complexity and
heightened expectations of product performance. The Company's meshing technology provides a means to balance these
requirements, obtaining the right mesh for each simulation in the most automated way possible. The technology is built on the
strengths of world-class leading algorithms that are integrated in a single environment to produce the most robust and reliable
meshing available.
Structures
The Company's structural analysis product suite offers simulation tools for product design and optimization that increase
productivity, minimize physical prototyping and help to deliver better and more innovative products in less time. These tools
tackle real-world analysis problems by making product development less costly and more reliable. In addition, these tools have
capabilities that cover a broad range of analysis types, elements, contacts, materials, equation solvers and coupled physics
capabilities all targeted toward understanding and solving complex design problems.
Explicit Dynamics
The Company's explicit dynamics product suite simulates events involving short-duration, large-strain, large-deformation,
fracture, complete material failure or structural problems with complex interactions. This suite is ideal for simulating physical
events that occur in a short period of time and may result in material damage or failure. Such events are often difficult or
expensive to study experimentally.
Composites
Composites blend two or more materials that possess very different properties. The Company's composite analysis and
optimization technology efficiently defines materials, plies and stacking sequences, and also offers a wide choice of state-of-
the-art failure criteria. The Company's composite software provides all necessary functionalities for finite element analysis of
layered composites structures.
Fluids
The Company's fluids product suite enables modeling of fluid flow and other related physical phenomena. Fluid flow analysis
capabilities provide all the tools needed to design and optimize new fluids equipment and to troubleshoot already existing
installations. The suite contains general-purpose computational fluid dynamics software and specialized products to address
specific industry applications.
Electronics
The Company's electronics product suite provides field simulation software for designing high-performance electronic and
electromechanical products. The software streamlines the design process and predicts performance of mobile communication
and internet-access devices, broadband networking components and systems, integrated circuits ("ICs") and printed circuit
boards ("PCBs"), as well as electromechanical systems such as automotive components and power electronics equipment, all
prior to building a prototype.
Low-Power Electronics
The Company's power analysis and optimization software suite manages the power budget, power delivery integrity and power-
induced noise in an electronic design, from initial prototyping to system sign-off. These solutions deliver accuracy with
correlation to silicon measurement; the capacity to handle an entire electronic system, including IC, package and PCB;
efficiency for ease-of-debug and fast turnaround time; and comprehensiveness to facilitate cross-domain communications and
electronic ecosystem enablement.
Systems
The Company delivers a unique and comprehensive system simulation capability that is ideal for the design of today's
increasingly automated products. This collaborative environment leverages the Company's multiphysics, multibody dynamics,
circuit and embedded software simulation capabilities, enabling users to simulate the complex interactions between
components, circuits and control software within a single environment. These technologies provide a complete view into
predicted product performance, which creates greater design confidence for engineers.
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Multiphysics
The Company's multiphysics product suite allows engineers and designers to create virtual prototypes of their designs operating
under real-world multiphysics conditions. As the range of need for simulation expands, companies must be able to accurately
predict how complex products will behave in real-world environments, where multiple types of physics interact in a coupled
way. ANSYS multiphysics software enables engineers and scientists to simulate the interactions between structures, heat
transfer, fluids and electronics all within a single, unified engineering simulation environment.
Embedded Software
The Company's SCADE® product suite is a comprehensive solution for embedded software simulation, code production and
automated certification. It has been developed specifically for use in critical systems with high dependability requirements,
including aerospace, rail transportation, nuclear, industrial applications and, more recently, automotive. SCADE® software
supports the entire development workflow, from requirements analysis and design, through verification, implementation and
deployment. SCADE® solutions easily integrate with each other and the rest of the ANSYS product suite, allowing for
development optimization and increased communication among team members.
3-D Direct Modeling
The Company's 3-D direct modeling technology provides a CAD-neutral environment to modify and prepare geometry for
simulation. This approach allows engineers to dramatically reduce the pre-processing step in simulation, and ultimately delivers
product design insights much faster in the earliest stages of development.
Academic
The Company's academic product suite provides a highly scalable portfolio of academic products based on several usage tiers:
associate, research and teaching. Each tier includes various noncommercial products that bundle a broad range of physics and
advanced coupled field solver capabilities. The academic product suite provides entry-level tools intended for class
demonstrations and hands-on instruction. It includes flexible terms of use and more complex analysis suitable for doctoral and
post-doctoral research projects. The Company also provides a low-cost product for simplified problems suitable for student use
away from the classroom.
PRODUCT DEVELOPMENT
The Company makes significant investments in research and development and emphasizes frequent, integrated product
releases. The Company's product development strategy centers on ongoing development and innovation of new technologies to
increase productivity and to provide engineering simulation solutions that customers can integrate into enterprise-wide product
lifecycle management ("PLM") systems. The Company's product development efforts focus on extensions of the full product
line with new functional modules, further integration with CAD, electronic CAD ("ECAD"), PLM products and the
development of new products. The Company's products run on the most widely used engineering computing platforms and
operating systems, including Windows, Linux and most UNIX workstations.
During the year ended December 31, 2014 and in the period from January 1, 2015 until the filing date, the Company completed
the following major product development activities and releases:
•
In January 2015, the Company announced the release of ANSYS® 16.0, with major advancements across the
Company's entire product portfolio.
The pervasive connectivity of electronic devices requires a higher standard for hardware and software reliability.
ANSYS 16.0 delivers capabilities to verify electronics reliability and performance throughout the design process.
Another important new feature in ANSYS 16.0 is the ability to create 3-D components and integrate them into larger
electronic assemblies. This modeling approach can facilitate the creation of wireless communication systems, which is
especially useful as these systems become more complex. Simulation-ready 3-D components are created and stored in
library files that can be added to larger system designs without the need to apply excitations, boundary conditions and
material properties.
ANSYS 16.0 accelerates the process for engineers to model thin materials, such as sheet metal and plate steel, and
define how parts are connected in a complete assembly. It provides new functionality for composite designs and
comprehensive tools for understanding the solution results. ANSYS 16.0 provides advanced solutions for elastomers,
such as rubber, which are often used in seals and vibration dampers, and features adaptive re-meshing, which refines
the mesh in highly distorted areas without the need for the user to stop the simulation manually.
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In addition, ANSYS 16.0 significantly reduces fluid dynamics preprocessing time for complex models.
Engineers designing turbomachinery equipment will benefit from significant simulation speed-up as a result of HPC
scalability extending to thousands of central processing unit cores. Furthermore, continued advances in modeling
transient blade row interaction will extend and improve engineers’ ability to simulate the complex, unsteady flow
phenomena found in such rotating machinery as aircraft engines and power generation turbines.
ANSYS 16.0 features extended modeling capabilities, enabling hardware and software engineers to define the
intricacies of a system's and its subsystems' operations. This is crucial because, as systems become more complex,
engineers need greater definition of their operations. Systems and software engineers can better collaborate on joint
projects, reducing development time and effort. ANSYS 16.0 addresses this need with the addition of behavioral
diagram modeling.
DO-178C, Software Considerations in Airborne Systems and Equipment Certification, is the new certification that
authorities such as the Federal Aviation Administration, the European Aviation Safety Agency and Transport
Canada will use to approve all commercial software-based aerospace systems. Within the aeronautics domain, ANSYS
16.0 provides a model-based approach that satisfies the requirements of DO-330, the tools qualification document
within DO-178C, for the highest levels of safety requirements. ANSYS 16.0 is the first tool to meet that new
certification requirement. ANSYS's SCADE® products provide a model-based approach that satisfies the requirements
of DO-330.
As part of the launch, ANSYS is introducing ANSYS AIMTM, an innovative, immersive simulation environment that
lowers the barrier to entry for multiphysics simulations. ANSYS AIM simulation uses proven ANSYS technology
packaged in a new intuitive environment, accessible to the entire engineering organization. Its guided simulation
process paradigm delivers high levels of automation and provides opportunities for customization to automate
engineering best practices.
•
In May 2014, the Company released the 2014 version of its RedHawkTM software. RedHawk 2014 delivers greater
performance, capacity and coverage, as well as sign-off accuracy required to meet the increasing complexity of
FinFET-based designs. The new software release incorporates technologies that enable the simulation of more than
100 million instances or over two billion node designs, while maintaining flat simulation accuracy for sign-off.
In addition, it introduces the industry’s first integrated chip-package co-simulation and co-analysis solution, increasing
the coverage and accuracy of power noise analysis, as well as streamlining the process. RedHawk 2014 is foundry
certified for IR-drop and electromigration analysis for the latest process technology.
The Company's total research and development expenses were $165.4 million, $151.4 million and $132.6 million in 2014, 2013
and 2012, respectively, or 17.7%, 17.6% and 16.6% of total revenue, respectively. As of December 31, 2014, the Company's
product development staff consisted of approximately 1,000 employees, most of whom hold advanced degrees and have
industry experience in engineering, mathematics, computer science or related disciplines. The Company has traditionally
invested significant resources in research and development activities and intends to continue to make investments in these
areas, particularly as it relates to expanding the capabilities of its flagship products and other products within its broad portfolio
of simulation software, the evolution of its ANSYS® Workbench™ platform, integrated multiphysics, expanding its HPC
capabilities, an immersive user interface, robust design and ongoing integration of acquired technology.
PRODUCT QUALITY
The Company's employees generally perform product development tasks according to predefined quality plans, procedures and
work instructions. Certain technical support tasks are also subject to a quality process. These plans define for each project the
methods to be used, the responsibilities of project participants and the quality objectives to be met. The majority of software
products are developed under a quality system that is certified to the ISO 9001:2008 standard. The Company establishes quality
plans for its products and services, and subjects product designs to multiple levels of testing and verification in accordance with
processes established under the Company's quality system.
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SALES AND MARKETING
The Company distributes and supports its products through a global network of independent channel partners, as well as
through its own direct sales offices. This channel partner network provides the Company with a cost-effective, highly
specialized channel of distribution and technical support. It also enables the Company to draw on business and technical
expertise from a global network, provides relative stability to the Company's operations to offset geography-specific economic
trends and provides the Company with an opportunity to take advantage of new geographic markets. The Company derived
24.9%, 25.3% and 26.0% of its total revenue through the indirect sales channel for the years ended December 31, 2014, 2013
and 2012, respectively.
The channel partners sell ANSYS 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 channel partner
certification process helps to ensure that each channel partner has the ongoing capability to adequately represent the Company's
expanding product lines and to provide an acceptable level of training, consultation and customer support.
The Company also has a direct sales management organization in place to develop an 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 channel partners and provides additional support in strategic locations through the presence of
direct sales offices.
During 2014, the Company continued to invest in its existing domestic and international strategic sales offices. In total, the
Company's direct sales offices comprise 1,300 employees who are responsible for the sales, technical support, consulting
services, marketing initiatives and administrative activities designed to support the Company's overall revenue growth and
expansion strategies.
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 5% of the Company's revenue in 2014, 2013 or 2012.
Information with respect to foreign and domestic revenue may be found in Note 17 to the consolidated financial statements in
Part IV, Item 15 of this Annual Report on Form 10-K and in the section entitled “Management's Discussion and Analysis of
Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report on Form 10-K.
STRATEGIC ALLIANCES AND MARKETING RELATIONSHIPS
The Company has established and continues to pursue strategic alliances with advanced technology suppliers, hardware
vendors, specialized application developers, and CAD, ECAD and PLM providers. The Company believes that these
relationships facilitate accelerated incorporation of advanced technology into the Company's products, provide access to new
customers, expand the Company's sales channels, develop specialized product applications and provide direct integration with
leading CAD, electronic design automation ("EDA"), product data management and PLM systems.
The Company has technical and marketing relationships with leading CAD vendors, such as Autodesk, Dassault Systèmes,
PTC and Siemens Product Lifecycle Management Software, to provide direct links between products. These links facilitate the
transfer of electronic data models between the CAD systems and ANSYS products.
Similarly, the Company maintains marketing and software development relationships with leading EDA software companies,
including Cadence, Synopsys, Mentor Graphics, Zuken and Agilent. These relationships support transfer of data between
electronics design and layout packages and the ANSYS electronics simulation portfolio.
The Company has strengthened relationships with leading suppliers of computer hardware, including Intel, AMD, Microsoft,
NVIDIA, Hewlett-Packard, IBM, Dell, Cray, Fujitsu and other leading regional resellers and system integrators. These
relationships provide the Company with joint marketing opportunities, such as advertising, public relations, editorial coverage
and customer events. In addition, these alliances provide the Company with early access and technical collaboration on new
and emerging computing technologies, ensuring that the Company's software products are certified to run effectively on the
most current hardware platforms. In 2014, an important engagement with Intel occurred in the area of accelerator technology,
and parallel scaling to 36,000 cores was demonstrated with Cray and the National Center for Supercomputing Applications.
The Company entered new partnerships with Amazon Web Services, Gompute, Nimbix, R Systems, Penguin Computing, CPU
24/7 and Atos, pursuing best practices for executing engineering simulation in the Cloud. Supporting this effort, new
certifications were introduced for the remote visualization solutions from Microsoft, OpenText, NICE SRL ("NICE") and
RealVNC.
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The Company's Enhanced Solution Partner Program actively encourages specialized developers of software solutions to use the
Company's technology as a development platform for their applications and provides customers with enhanced functionality
related to their use of the Company's software. With over 100 active enhanced solution partnerships, spanning a wide range of
technologies, including optimization, electronics, mechanical simulation, fluid simulation and CAD, this partner ecosystem
extends the depth and breadth of the Company's technology offerings. Important software engagements in 2014 included
extending a topology optimization-focused strategic partnership with Vanderplaats R&D, and expanding the deployment of the
Company’s development toolkits in response to growing demand from partners, including CoreTech System, Dassault
Systèmes, FunctionBay, VirtualMotion and others.
The Company has a software license agreement with Livermore Software Technology Corporation ("LSTC") whereby LSTC
has provided LS-DYNA software for explicit dynamics solutions used in applications such as crash test simulations in
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 royalties from sales
of the ANSYS/LS-DYNA combined product.
The Company has a software license agreement with HBM that provides the advanced fatigue capabilities of nCode
DesignLife™, a leading durability software from HBM. ANSYS® nCode DesignLife™ technology leverages the open
architecture of the ANSYS platform and enables mechanical engineers to more easily address complex product life and
durability issues before a prototype is built.
The Company has a software license agreement with NICE that targets the emerging paradigm of data-center-based
deployment of simulation. EngineFrame from NICE is bundled with ANSYS EKM and facilitates running interactive ANSYS
applications on remote data centers.
COMPETITION
The Company believes that the principal factors affecting sales of its software include ease of use, breadth and depth of
functionality, flexibility, quality, ease of integration with other software systems, file compatibility across computer platforms,
range of supported computer platforms, performance, price and total cost of ownership, customer service and support, company
reputation and financial viability, and effectiveness of sales and marketing efforts.
The Company continues to experience competition across all markets for its products and services. 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. The Company's current and
possible future competitors also include firms that have or may in the future elect to compete by means of open source
licensing. These competitive pressures may result in decreased sales volumes, price reductions and/or increased operating costs,
and could result in lower revenues, margins and net income.
PROPRIETARY RIGHTS AND LICENSES
The Company regards its software as proprietary and relies on a combination of trade secret, copyright, patent 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 products under software license agreements that grant customers
nonexclusive licenses, which are typically nontransferable, for the use of the Company's products. License agreements for the
Company's products are directly between the Company and end-users. Use of the licensed software product is restricted to
specified sites unless the customer obtains a multi-site license for its use of the software product. Software security measures
are also employed to prevent unauthorized use of the Company's software products and the licensed software is subject to terms
and conditions prohibiting unauthorized reproduction. Customers may purchase a perpetual license of the technology with the
right to annually purchase ongoing maintenance, technical support and upgrades, or may lease the product on a fixed-term basis
for a fee that includes the license, maintenance, technical support and upgrades.
The Company licenses its software products utilizing a combination of web-based and hard-copy license terms and forms. For
certain software products, the Company primarily relies on "click-wrapped" licenses. The enforceability of these types of
agreements under the laws of some 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 registration protection for ANSYS and other marks in the U.S. and foreign countries.
Additionally, the Company was awarded numerous patents by the U.S. Patent and Trademark Office, and has a number of
patent applications pending. To the extent the Company does not choose to seek patent protection for its intellectual property,
the Company primarily relies on the protection of its source code as a trade secret.
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Employees of the Company have signed agreements under which they have agreed not to disclose trade secrets or confidential
information and, where legally permitted, that restrict engagement in or connection with any business that 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 channel partners 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 and proprietary
information (including source code) will be prevented. Further, there can be no assurance that copyright, trademark, patent and
trade secret protection will be available for the Company's products in certain jurisdictions, or that restrictions on the ability of
employees and channel partners to engage in activities competitive with the Company will be enforceable. Costly and time-
consuming litigation could be necessary in the future to enforce the Company's rights to its trade secrets and proprietary
information or to enforce its patent rights and copyrights, and it is possible that, in the future, the Company's competitors may
be able to obtain the Company's trade secrets or to independently develop similar, unpatented technology.
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 also important to establishing and maintaining
technology leadership in addition to the various legal protections of its technology that may be available.
The Company does not believe 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 such infringement by the Company or its licensors or licensees with respect
to current or future products. The Company expects that software suppliers will increasingly be subject to the risk of such
claims as the number of products and suppliers continues to expand and the functionality of products continues to increase. Any
such claims, with or without merit, could be time consuming, result in costly litigation, cause product release 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.
SEASONAL VARIATIONS
The Company's business has experienced seasonality, including quarterly reductions in software sales resulting from
slowdowns of customer activities during the summer months, particularly in Europe, as well as from the seasonal purchasing
and budgeting patterns of the Company's global customers. The Company's revenue is typically highest in the fourth quarter.
DEFERRED REVENUE AND BACKLOG
Deferred revenue consists of billings made or payments received in advance of revenue recognition from software license and
maintenance agreements. The deferred revenue on the Company's consolidated balance sheets does not represent the total value
of annual or multi-year, noncancellable software license and maintenance agreements. The Company's backlog represents
installment billings for periods beyond the current quarterly billing cycle and customer orders received but not processed. The
Company's deferred revenue and backlog as of December 31, 2014 and 2013 consisted of the following:
(in thousands)
Deferred revenue
Backlog
Total
(in thousands)
Deferred revenue
Backlog
Total
Balance at December 31, 2014
Total
Current
Long-Term
345,305
122,985
468,290
$
$
332,664
41,390
374,054
$
$
12,641
81,595
94,236
Balance at December 31, 2013
Total
Current
Long-Term
317,730
91,786
409,516
$
$
309,775
33,446
343,221
$
$
7,955
58,340
66,295
$
$
$
$
Revenue associated with deferred revenue and backlog that will be recognized in the subsequent twelve months is classified as
current in the table above.
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EMPLOYEES
As of December 31, 2014, the Company and its subsidiaries had 2,700 employees. At that date, there were also contract
personnel and co-op students providing ongoing development services and technical support. Certain employees of the
Company are subject to collective bargaining agreements and have local work councils.
ACQUISITIONS
The Company makes targeted acquisitions in order to support its long-term strategic direction, accelerate innovation, provide
increased capabilities to its existing products, supply new products and services, expand its customer base and enhance its
distribution channels. The following table presents the Company's acquisitions from January 1, 2012 to December 31, 2014.
Date of closing
April 30, 2014
Company
SpaceClaim Corporation
January 3, 2014
Reaction Design
April 2, 2013
EVEN - Evolutionary
Engineering AG
August 1, 2012
Esterel Technologies, S.A.
Details
SpaceClaim Corporation ("SpaceClaim"), a leading provider of 3-D modeling
technology, was acquired for $85.0 million. SpaceClaim's software provides customers
with a powerful and intuitive 3-D direct modeling solution to author new concepts and
then leverage the power of simulation to rapidly iterate on these designs to drive
innovation.
Reaction Design, a leading developer of chemistry simulation software, was acquired
for $19.1 million in cash. Reaction Design's solutions enable transportation
manufacturers and energy companies to rapidly achieve their clean technology goals
by automating the analysis of chemical processes via computer simulation and
modeling solutions.
EVEN - Evolutionary Engineering AG ("EVEN"), a leading provider of composite
analysis and optimization technology relying on cloud computing, was acquired for
$8.1 million. The acquisition strengthens the Company's simulation solutions for
composites technology, which has become a standard in manufacturing in a wide range
of industries due to its combination of light weight, high strength and outstanding
flexibility.
Esterel Technologies, S.A. ("Esterel"), a leading provider of embedded software
simulation solutions for mission critical applications, was acquired for $58.2 million.
Esterel's software enables software and systems engineers to design, simulate and
automatically produce certified embedded software, which is the control code built
into the electronics in aircraft, rail transportation, automotive, energy systems, medical
devices and other industrial products that have central processing units.
For further information on the Company's business combinations, see Note 3 to the consolidated financial statements included
in Part IV, Item 15 of this Annual Report on Form 10-K.
AVAILABLE INFORMATION
The Company's website is www.ansys.com. The Company also maintains a presence on social media through its blog at
www.ansys-blog.com, Facebook page at www.facebook.com/ANSYSInc, Twitter account at www.twitter.com/ansys_inc and
LinkedIn page at www.linkedin.com/company/ansys-inc. The Company makes available on its website, free of charge, Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, interactive data files, Current Reports on Form 8-K, reports filed
pursuant to Section 16 and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, as soon as reasonably practicable after such materials are electronically filed or furnished
to the Securities and Exchange Commission ("SEC"). The Company's reports may also be obtained by accessing the EDGAR
database of the SEC's website at www.sec.gov. In addition, the Company has posted the charters for its Audit Committee,
Compensation Committee, Nominating and Corporate Governance Committee, and Strategy Committee, as well as the
Company's Code of Business Conduct and Ethics, Standard Business Practices and Corporate Governance Guidelines on its
website. Information posted on the Company's website or social media accounts is not incorporated by reference in this Annual
Report on Form 10-K.
ITEM 1A. RISK FACTORS
Information provided by the Company or its spokespersons, including information contained in this Annual Report on Form
10-K, may from time to time contain forward-looking statements concerning projected financial performance, market and
industry sector 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.
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Global Economic Conditions. The Company's operations and performance depend significantly on foreign and domestic
economic conditions. Uncertainty regarding economic conditions may negatively impact the Company as customers defer
spending in response to tighter credit, higher unemployment, financial market volatility, government austerity programs,
negative financial news, declining valuations of investments and other factors. In addition, certain of the Company's customers'
budgets may be constrained and they may be unable to purchase the Company's products at the same level as prior periods. The
Company's customers' ability to pay for the Company's products and services may also be impaired, which may lead to an
increase in the Company's allowance for doubtful accounts and write-offs of accounts receivable. Since the Company is
exposed to the majority of major world markets, uncertainty in any significant market may negatively impact the Company's
performance and results, particularly with respect to the Company's largest geographic customer bases. The Company is unable
to predict the likely duration and severity of the current economic conditions or the likelihood of additional uncertainty arising
in any of the Company's key markets. Should these conditions result in the Company not meeting its revenue growth
objectives, the Company's operating results, cash flows and financial condition could be adversely affected.
Decline in Customers' Businesses. The Company's sales are based significantly on end-user demand for products in key
industrial sectors. Many of these sectors periodically experience economic declines, which may be exacerbated by other
economic factors. These factors may also adversely affect the Company's business by extending sales cycles and reducing
revenue. These economic factors may cause the Company's customers to reduce the size of their workforce or cut back on
operations and may lead to a reduction in renewals of licenses or maintenance contracts with the Company. The Company's
customers may request discounts or extended payment terms on new products or seek to extend payment terms on existing
contracts, all of which may cause fluctuations in the Company's future operating results. The Company may not be able to
adjust its operating expenses to offset such fluctuations because a substantial portion of the Company's operating expenses is
related to personnel, facilities and marketing programs. The level of personnel and related expenses may not be able to be
adjusted quickly and is based, in significant part, on the Company's expectation for future revenue.
Risks Associated with International Activities. A majority of the Company's business comes from outside the United States
and the Company has customers that supply a wide spectrum of goods and services in virtually all of the world's major
economic regions. As the Company continues to expand its sales presence in international regions, the portion of its revenue,
expenses, cash, accounts receivable and payment obligations denominated in foreign currencies continues to increase. If any of
the foreign economies in which the Company does business deteriorate or suffer periods of uncertainty, the Company's business
and performance may be negatively impacted through reduced customer spending, changes in purchasing cycles or timing,
reduced access to credit for its customers, or other factors impacting the Company's international sales and collections.
As a result of its increasing international activities, the Company has revenue, expenses, cash, accounts receivable and payment
obligations denominated in foreign currencies. As a result, the Company is subject to currency exchange risk. The Company's
revenues and operating results are adversely affected when the U.S. Dollar strengthens relative to other currencies and are
positively affected when the U.S. Dollar weakens. As a result, changes in currency exchange rates will affect the Company's
financial position, results of operations and cash flows. In the event that there are economic declines in countries in which the
Company conducts transactions, the resulting changes in currency exchange rates may affect the Company's financial position,
results of operations and cash flows. The Company is most impacted by movements in and among the Japanese Yen, Euro,
British Pound, Korean Won, Indian Rupee, Russian Rouble and U.S. Dollar. The Company seeks to reduce these risks primarily
through its normal operating and treasury activities, but there can be no assurance that it will be successful in reducing these
risks.
Additional risks inherent in the Company's international business activities include imposition of government controls; export
license requirements; restrictions on the export of critical technology, products and services; the violation of anti-corruption
laws and regulations, which are applicable to the Company, by third parties in countries where such conduct may be
permissible or commonplace; 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, trademark and trade secret protection may not be
available in every foreign country in which the Company sells its products and services. The Company's business, financial
position, results of operations and cash flows could be materially, adversely affected by any of these risks.
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. 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 financial markets or the software industry generally, or other events and factors, many of which
are beyond the Company's control.
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Rapidly Changing Technology; New Products; Risk of Product Errors. The Company operates in an industry generally
characterized by rapidly changing technology and frequent new product introductions, which 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, products acquired in acquisitions and
new products to meet those changes. If the Company is unable to introduce new products and to respond quickly to industry
changes, its business, financial position, results of operations and cash flows 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 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 the
frequency of its product releases. There can be no assurance that errors will not be found in any new or enhanced products after
commencement of commercial shipments. Certain products require a higher level of sales and support expertise. The ability of
the Company's sales channel, particularly the indirect channel, to obtain this expertise and to sell the new product offerings
effectively could have an adverse impact on the Company's sales in future periods. Any of these problems may result in the loss
of or delay in customer acceptance, diversion of development resources, damage to the Company's reputation, or increased
service and warranty costs, any of which could have a material, adverse effect on the Company's business, financial position,
results of operations and cash flows.
Product Quality. The Company has separate quality systems and registrations under the ISO 9001:2008 standard, in addition to
other governmental and industrial regulations. The Company’s continued compliance with quality standards and favorable
outcomes in periodic examinations is important to retain current customers and vital to procure new sales. If the Company was
determined not to be compliant with various regulatory or ISO 9001/9000 standards, its certificates of registration could be
suspended, requiring remedial action and a time-consuming re-registration process. Product quality issues or failures could
result in the Company’s reputation becoming diminished, resulting in a material, adverse impact on revenue, operating margins,
net income, financial position and cash flows.
Competition. The Company continues to experience competition across all markets for its products and services. 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. The Company's
current and possible future competitors also include firms that have or may in the future elect to compete by means of open
source licensing. Parties among the Company's current or future strategic alliances may diminish or sever technical, software
development and marketing relationships with the Company for competitive purposes. These competitive pressures may result
in decreased sales volumes, price reductions and/or increased operating costs, and could result in lower revenues, margins and
net income.
Changes in the Company's Pricing Models. The intense competition the Company faces in the sales of its products and
services, and general economic and business conditions, can put pressure on the Company to adjust its prices. If the Company's
competitors offer deep discounts on certain products or services, or develop products that the marketplace considers more
valuable, the Company may need to lower prices or offer discounts or other favorable terms in order to compete successfully.
Any such changes may reduce operating margins and could adversely affect operating results. The Company's software license
updates and product support fees are generally priced as a percentage of its new software license fees. The Company's
competitors may offer lower percentage pricing on product updates and support that could put pressure on the Company to
further discount its new license or product support prices.
Any broad-based change to the Company's prices and pricing policies could cause new software license and service revenues to
decline or be delayed as its sales force implements and its customers adjust to the new pricing policies. Some of the Company's
competitors may bundle software products for promotional purposes or as a long-term pricing strategy or provide guarantees of
prices, product implementations or wider geographical license usage provisions. These practices could, over time, significantly
constrain the prices that the Company can charge for certain of its products. If the Company does not adapt its pricing models
to reflect changes in customer use of its products or changes in customer demand, the Company's new software license
revenues could decrease. Additionally, increased distribution of applications through application service providers, including
software-as-a-service providers, may reduce the average price for the Company's products or adversely affect other sales of the
Company's products, reducing new software license revenues unless the Company can offset price reductions with volume
increases. The increase in open source software distribution may also cause the Company to adjust its pricing models.
Dependence on Senior Management and Key Technical Personnel. The Company's success depends upon the continued
services of the Company's senior executives, key technical employees and other employees. Each of the Company's executive
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officers, key technical personnel and other employees could terminate his or her relationship with the Company at any time.
The loss of any of the Company's senior executives might significantly delay or prevent the achievement of the Company's
business objectives and could materially harm the Company's business and customer relationships.
In addition, because of the highly technical nature of the Company's products, the Company must attract and retain highly
skilled engineering and development personnel, many of whom are recruited from outside of the United States. The market for
this talent is highly competitive. The Company is limited in its ability to recruit internationally by restrictive domestic
immigration laws. If the Company has less success in recruiting and retaining key personnel, the Company's business,
reputation and operating results could be materially and adversely affected.
Dependence on Proprietary Technology. The Company's success is highly dependent upon its proprietary technology. The
Company generally relies on contracts and the laws of copyrights, patents, trademarks and trade secrets to protect its
technology. The Company maintains a trade secrets program, enters into confidentiality agreements with its employees and
channel partners, 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. Costly and time-consuming litigation could be necessary to enforce and determine the scope of trade secret
rights and related confidentiality and nondisclosure provisions. 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.
Risks Associated with Security of the Company's Products, Source Code and IT Systems. The Company makes significant
efforts to maintain and improve the security and integrity of its products, source code, computer systems and data. Despite
significant efforts to create security barriers to such programs, it is virtually impossible for the Company to entirely mitigate
this risk. There appears to be an increasing number of computer “hackers” developing and deploying a variety of destructive
software programs (such as viruses, worms, and the like) that could attack the Company's products and computer systems.
Because the techniques used to obtain unauthorized access to networks or to sabotage systems change frequently and generally
are not recognized until launched against a target, the Company may be unable to anticipate these techniques or to implement
adequate preventative measures. Like all software products, the Company's software is vulnerable to such attacks. The impact
of such an attack could disrupt the proper functioning of the Company's software products, cause errors in the output of its
customers' work, allow unauthorized access to sensitive, proprietary or confidential information of the Company or its
customers and other destructive outcomes. If this were to occur, the Company's reputation may suffer, customers may stop
buying its products, it could face lawsuits and potential liability and its financial performance could be negatively impacted.
There is also a danger of industrial espionage, cyber-attacks, misuse, theft of information or assets (including source code), or
damage to assets by people who have gained unauthorized access to the Company's facilities, systems or information. Such
cybersecurity breaches, misuse or other disruptions could lead to the disclosure of portions of the Company's product source
code or other confidential information, improper usage and distribution of its products without compensation, illegal usage of
its products which could jeopardize the security of information stored in and transmitted through its computer systems, and
theft, manipulation and destruction of private and proprietary data, resulting in defective products and production downtimes.
Although the Company actively employs measures to combat unlicensed copying, access and use of software and intellectual
property through a variety of techniques, preventing unauthorized use or infringement of the Company's rights is inherently
difficult. These events could adversely affect the Company's financial results or could result in significant claims for damages
against it. Participating in lawsuits to protect against any such unauthorized access to, usage of or disclosure of any of the
Company's products or any portion of the Company's product source code, or in prosecutions in connection with any such
cybersecurity breach, could be costly and time-consuming, and may divert management's attention, adversely affecting the
market's perception of the Company and its products.
Policing the unauthorized distribution and use of the Company's products is difficult, and software piracy (including online
piracy) is a persistent problem. The proliferation of technology designed to circumvent typical software protection measures
used in the Company's products, and the possibility that methods of circumventing the techniques it employs in its products,
may lead to an expansion in piracy or misuse of its products and intellectual property. As a result, and despite the Company's
efforts to prevent such activities and to prosecute instances of such activities, the Company may nonetheless lose significant
revenue due to illegal use of its software, and management's attention may be diverted to address specific instances of piracy or
misuse, or address piracy and misuse in general.
A number of the Company's core processes, such as software development, sales and marketing, customer service and financial
transactions, rely on its IT infrastructure and applications. The Company also relies upon third-party products, which are
exposed to various security vulnerabilities. Malicious software, sabotage and other cybersecurity breaches of the types
discussed above could cause an outage of the Company's infrastructure, which could lead to a substantial denial of service and
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ultimately to production downtime, recovery costs and customer claims. This could have a significant negative impact on the
Company's business, financial position, profit or cash flows.
The Company has implemented a number of measures designed to ensure the security of its information, IT resources and other
assets. Nonetheless, unauthorized users could gain access to its systems through cyber-attacks and steal, use without
authorization, and sabotage the Company's intellectual property and confidential data. Any breach of its IT security, misuse or
theft could lead to loss of production, recovery costs or litigation brought by employees, customers or business partners, which
could have a significant negative impact on the Company's business, financial position, profit, cash flows and reputation.
Dependence on Channel Partners. The Company continues to distribute a meaningful portion of its products through its global
network of independent, regional channel partners. The channel partners sell the Company's software products to new and
existing customers, expand installations within the existing customer base, offer consulting services and provide the first line of
technical support. Consequently, in certain geographies, the Company is highly dependent upon the efforts of the channel
partners. Difficulties in ongoing relationships with channel partners, such as 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 channel partner for any reason,
including a channel partner's decision to sell competing products rather than the Company's products, could have a material,
adverse effect on the Company. Moreover, the Company's future success will depend substantially on the ability and
willingness of its channel partners to continue to dedicate the resources necessary to promote the Company's portfolio of
products and to support a larger installed base of the Company's products. If the channel partners are unable or unwilling to do
so, the Company may be unable to sustain revenue growth.
During times of significant fluctuations in world currencies, certain channel partners may have solvency issues to the extent
that effective hedge transactions are not employed or there is not sufficient working capital. In particular, if the U.S. Dollar
strengthens relative to other currencies, certain channel partners who pay the Company in U.S. Dollars may have trouble
paying the Company on time or may have trouble distributing the Company's products due to the impact of the currency
exchange fluctuation on such channel partner's cash flows. This may impact the Company's ability to distribute its products into
certain regions and markets, and may have an adverse effect on the Company's results of operations and cash flows.
Reliance on Perpetual Licenses. Although the Company has historically maintained stable recurring revenue from the sale of
software lease licenses and software maintenance subscriptions, it also has relied on sales of 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
software lease licenses and software maintenance subscriptions currently represents a portion of the Company's revenue, to the
extent that perpetual license revenue continues to represent a significant percentage of total revenue, the Company's revenue in
any period will depend significantly on sales completed during that period. If customer purchasing patterns shift toward a
stronger preference for lease licenses and fewer perpetual licenses, there could be a short-term, adverse impact on the
Company's revenue and profitability.
In addition, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue
from Contracts with Customers (Topic 606), which supersedes most current revenue recognition guidance, including industry-
specific guidance. This update, which is effective for reporting periods beginning after December 15, 2016, could affect the
timing and amounts of revenue recognized for perpetual licenses, which could have an adverse impact on the Company's
revenue and results of operations.
Renewal Rates for Annual Lease and Maintenance Contracts. A substantial portion of the Company's license and
maintenance revenue is derived from annual lease and maintenance contracts. These contracts are generally renewed on an
annual basis and typically have a high rate of customer renewal. In addition to the recurring revenue base associated with these
contracts, a majority of customers purchasing new perpetual licenses also purchase related annual maintenance contracts. If the
rate of renewal for these contracts is adversely affected by economic or other factors, the Company's license and maintenance
growth will be adversely affected over the term that the revenue for those contracts would have otherwise been recognized. As
a result, the Company's business, financial position, results of operations and cash flows may also be adversely impacted during
those periods.
Risks Associated with Acquisitions. Historically, the Company has consummated acquisitions in order to support the
Company's long-term strategic direction, accelerate innovation, provide increased capabilities to existing products, supply new
products and services, expand its customer base and enhance its distribution channels. The Company has completed a number
of acquisitions in recent years and expects to make additional acquisitions in the future, but may not be able to identify suitable
acquisition candidates or, if suitable candidates are identified, the Company may not be able to complete the business
combination on commercially acceptable terms. The process of exploring and pursuing acquisition opportunities may result in
devotion of significant management and financial resources.
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Even if the Company is able to consummate acquisitions that it believes will be successful, such transactions present many
risks including, among others: failing to achieve anticipated synergies and revenue increases; difficulty incorporating and
integrating the acquired technologies or products with the Company's existing product lines; difficulty in coordinating,
establishing or expanding sales, distribution and marketing functions, as necessary; disruption of the Company's ongoing
business and diversion of management's attention to transition or integration issues; unanticipated and unknown liabilities; the
loss of key employees, customers, partners and channel partners of the Company or of the acquired company; and difficulties
implementing and maintaining sufficient controls, policies and procedures over the systems, products and processes of the
acquired company. If the Company does not achieve the anticipated benefits of its acquisitions as rapidly or to the extent
anticipated by the Company's management and financial or industry analysts, there could be a material, adverse effect on the
Company's stock price, business, financial position, results of operations or cash flows.
In addition, for companies acquired, limited experience will exist for several quarters following the acquisition relating to how
the acquired company's sales pipelines will convert into sales or revenues and the conversion rate post-acquisition may be quite
different than the historical conversion rate. Because a substantial portion of the Company's sales are completed in the latter
part of a quarter, and its cost structure is largely fixed in the short-term, revenue shortfalls may have a negative impact on the
Company's profitability. A delay in a small number of large, new software license transactions could cause the Company's
quarterly software license revenues to fall significantly short of its predictions.
Risks Associated with the SpaceClaim and Reaction Design Acquisitions. On April 30, 2014, the Company completed the
acquisition of SpaceClaim. Under the terms of the agreement, ANSYS acquired SpaceClaim for a purchase price of $85.0
million, which was paid almost entirely in cash. On January 3, 2014, the Company completed the acquisition of Reaction
Design. Under the terms of the agreement, ANSYS acquired Reaction Design for a purchase price of $19.1 million in cash. The
acquisitions are expected to accelerate development of new and innovative products to the marketplace while lowering design
and engineering costs for customers. The Company will need to meet significant challenges to realize the expected benefits and
synergies of the acquisitions. These challenges include:
•
•
•
•
•
integrating the management teams, strategies, cultures and operations of the companies;
retaining and assimilating the key personnel of each company;
retaining existing customers of each company;
developing new products and services that utilize the technologies and resources of the companies; and
creating uniform standards, controls, procedures, policies and information systems.
The accomplishment of these post-acquisition objectives will involve considerable risks, including:
•
•
•
•
•
the loss of key employees that are critical to the successful integration and future operations of the companies;
the potential disruption of each company's ongoing business and distraction of their respective management teams;
the difficulty and potential unanticipated expenses of incorporating acquired technology and rights into the Company's
products and services;
potential disruptions in each company's operations, loss of existing customers, loss of key information, expertise or
know-how, and unanticipated additional recruitment and training costs;
possible inconsistencies in standards, controls, procedures and policies that could adversely affect the Company's
ability to maintain relationships with customers and employees or to achieve the anticipated benefits of the
acquisitions; and
•
potential unknown liabilities associated with the acquisitions.
The market price of the Company’s common stock may decline as a result of the acquisitions for a number of reasons,
including:
•
•
the integration of SpaceClaim and Reaction Design by the Company may be unsuccessful; and
the Company may not achieve the perceived benefits of the acquisitions as rapidly as or to the extent anticipated by
financial or industry analysts.
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If the Company does not succeed in addressing these challenges or any other problems encountered in connection with the
acquisitions, its operating results and financial condition could be adversely affected.
Disruption of Operations or Infrastructure Failures. A significant portion of the Company's software development personnel,
source code and computer equipment is located at operating facilities in the United States, Canada, India, Japan and throughout
Europe. The occurrence of a natural disaster or other unforeseen catastrophe at any of these facilities could cause interruptions
in the Company's operations, services and product development activities. Additionally, if the Company experiences problems
that impair its business infrastructure, such as a computer virus, telephone system failure or an intentional disruption of its
information technology systems by a third party, these interruptions could have a material, adverse effect on the Company's
business, financial position, results of operations, cash flows and the ability to meet financial reporting deadlines. Further,
because the Company's sales are not generally linear during any quarterly period, the potential adverse effects resulting from
any of the events described above or any other disruption of the Company's business could be accentuated if it occurs close to
the end of a fiscal quarter.
Sales Forecasts. The Company makes many operational and strategic decisions based upon short- and long-term sales
forecasts. The Company's sales personnel continually monitor the status of all proposals, including the estimated closing date
and the value of the sale, in order to forecast quarterly sales. These forecasts are subject to significant estimation and are
impacted by many external factors, including global economic conditions and the performance of the Company's customers. A
variation in actual sales activity from that forecasted could cause the Company to plan or budget incorrectly and, therefore,
could adversely affect the Company's business, financial position, results of operations and cash flows. The Company's
management team forecasts macroeconomic trends and developments, and integrates them through long-range planning into
budgets, research and development strategies and a wide variety of general management duties. Global economic conditions,
and the effect those conditions and other disruptions in global markets have on the Company's customers, may have a
significant impact on the accuracy of the Company's sales forecasts. These conditions may increase the likelihood or the
magnitude of variations between actual sales activity and the Company's sales forecasts and, as a result, the Company's
performance may be hindered because of a failure to properly match corporate strategy with economic conditions. This, in turn,
may adversely affect the Company's business, financial position, results of operations and cash flows.
Risks Associated with Significant Sales to Existing Customers. A significant portion of the Company's sales includes follow-
on sales to existing customers that invest in the Company's broad suite of engineering simulation software and services. If a
significant number of current customers were to become dissatisfied with the Company's products and services, or choose to
license or utilize competitive offerings, the Company's follow-on sales, and recurring lease and maintenance revenues, could be
materially, adversely impacted, resulting in reduced revenue, operating margins, net income and cash flows.
Periodic Reorganization of Sales Force. The Company relies heavily on its direct sales force. From time to time, the Company
reorganizes and makes adjustments to its sales leadership and/or its sales force in response to such factors as management
changes, performance issues, market opportunities and other considerations. These changes may result in a temporary lack of
sales production and may adversely impact revenue in future quarters. There can be no assurance that the Company will not
restructure its sales force in future periods or that the transition issues associated with such a restructuring will not occur.
Income Tax Estimates. The Company makes significant estimates in determining its worldwide income tax provision. These
estimates involve complex tax regulations in a number of jurisdictions across the Company's global operations and are subject
to many transactions and calculations in which the ultimate tax outcome is uncertain. The final outcome of tax matters could be
different than the estimates reflected in the historical income tax provision and related accruals. Such differences could have a
material impact on income tax expense and net income in the periods in which such determinations are made.
The amount of income tax paid by the Company is subject to ongoing audits by federal, state and foreign tax authorities. These
audits can often result in additional assessments, including interest and penalties. The Company's estimate for liabilities
associated with uncertain tax positions is highly judgmental and actual future outcomes may result in favorable or unfavorable
adjustments to the Company's estimated tax liabilities, including estimates for uncertain tax positions, in the period the
assessments are made or resolved, audits are closed or when statutes of limitation on potential assessments expire. As a result,
the Company's effective tax rate may fluctuate significantly on a quarterly or annual basis.
The Company allocates a portion of its purchase price to goodwill and intangible assets. Impairment charges associated with
goodwill are generally not tax-deductible and will result in an increased effective income tax rate in the period the impairment
is recorded. The Company has recorded significant deferred tax liabilities related to acquired intangible assets that are not
deductible for tax purposes. These deferred tax liabilities are based on future statutory tax rates in the locations in which the
intangible assets are recorded. Any future changes in statutory tax rates would be recorded as an adjustment to the deferred tax
liabilities in the period the change is announced, and could have a material impact on the Company's effective tax rate during
that period.
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Regulatory Compliance. Like all other public companies, the Company is subject to the rules and regulations of the SEC,
including those that require the Company to report on and receive an attestation from its independent registered public
accounting firm regarding the Company's internal control over financial reporting. Compliance with these requirements causes
the Company to incur additional expenses and causes management to divert time from the day-to-day operations of the
Company. While the Company anticipates being able to fully comply with these requirements, if it is not able to comply with
the Sarbanes-Oxley reporting or attestation requirements relating to internal control over financial reporting, the Company may
be subject to sanctions by the SEC or NASDAQ. Such sanctions could divert the attention of the Company's management from
implementing its business plan and could have an adverse effect on the Company's business and results of operations.
As the Company's stock is listed on the NASDAQ Global Select Market, the Company is subject to the ongoing financial and
corporate governance requirements of NASDAQ. While the Company anticipates being able to fully comply with these
requirements, if it is not able to comply, the Company's name may be published on NASDAQ's daily Non-Compliant
Companies list until NASDAQ determines that it has regained compliance or the Company no longer trades on NASDAQ. If
the Company were unable to return to compliance with the governance requirements of NASDAQ, the Company may be
delisted from the NASDAQ Global Select Market, which could have an adverse effect on the market value of the Company's
equity securities and the ability to raise additional capital.
Governmental Revenue Sources. The Company's sales to the United States government must comply with Federal Acquisition
Regulations. Failure to comply with these regulations could result in penalties being assessed against the Company or an order
preventing the Company from making future sales to the United States government. Further, the Company's international
activities must comply with the export control laws of the United States and other countries, the Foreign Corrupt Practices Act,
the United Kingdom Bribery Act of 2010 and a variety of other laws and regulations of the United States and other countries in
which the Company operates. Failure to comply with any of these laws and regulations could adversely affect the Company's
business, financial position, results of operations and cash flows.
In certain circumstances, the United States government, state and local governments and their respective agencies, and certain
foreign governments may have the right to terminate contractual arrangements at any time, without cause. The United States,
European Union and certain other government contracts, as well as the Company's state and local level contracts, are subject to
the approval of appropriations or funding authorizations. Certain of these contracts permit the imposition of various civil and
criminal penalties and administrative sanctions, including, but not limited to, termination of contracts, refund of a portion of
fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government
business, any of which could have an adverse effect on the Company's results of operations and cash flows.
Contingencies. The Company is subject to various investigations, claims and legal proceedings that arise in the ordinary course
of business, including commercial disputes, labor and employment matters, tax audits, alleged infringement of intellectual
property rights and other matters. Each of these matters is subject to various uncertainties, and it is possible that an unfavorable
resolution of one or more of these matters could materially affect the Company's results of operations, cash flows or financial
position.
Changes in Existing Financial Accounting Standards. Changes in existing accounting rules or practices, new accounting
pronouncements, or varying interpretations of current accounting pronouncements could have a significant, adverse effect on the
Company's results of operations or the manner in which the Company conducts its business.
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from
Contracts with Customers (Topic 606) (ASU 2014-09). ASU 2014-09 supersedes most current revenue recognition guidance,
including industry-specific guidance. The Company is currently evaluating the effect that implementation of this update will have
on its financial results upon adoption. This update will impact the timing and amounts of revenue recognized, including a potential
impact on transactions completed prior to adoption, which could have a significant, adverse impact on the Company's results of
operations.
In addition, the Company could incur significant costs for changes to its business systems, processes and internal controls as a
result of the transition. These costs could have a significant, adverse impact on the Company's results of operations and cash flows.
The transition could also cause management to divert time from the day-to-day operations of the Company, which could impact
the Company's business. If the Company is unable to successfully transition its business systems, processes and internal controls
before the guidance effective date, it could impact the ability to meet financial reporting deadlines.
Changes in Tax Law. The Company's operations are subject to income and transaction taxes in the United States and in
multiple foreign jurisdictions. A change in the tax law in the jurisdictions in which the Company does business, including an
increase in tax rates, an adverse change in the treatment of an item of income or expense, or a decrease in tax rates in a
jurisdiction in which the Company has significant deferred tax assets, could result in a material increase in tax expense.
Currently, a substantial portion of the Company's revenue is generated from customers located outside the United States, and a
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substantial portion of assets are located outside the United States. United States income taxes and foreign withholding taxes
have not been provided on undistributed earnings for non-United States subsidiaries to the extent such earnings are considered
to be indefinitely reinvested in the operations of those subsidiaries. Changes in existing taxation rules or practices, new taxation
rules, or varying interpretations of current taxation practices could have a material, adverse effect on the Company's results of
operations or the manner in which the Company conducts its business.
The Company has significant operations in India. There have been court rulings concerning certain Indian tax laws that have
been inconsistent with tax positions taken by the Company and inconsistent with the advice provided to the Company by its tax
advisors.
An Indian subsidiary of the Company received a formal inquiry after a service tax audit was held in 2011. The Company could
incur tax charges and related liabilities, including those related to the service tax audit case, of approximately $6 million. The
service tax issues raised in the Company’s notice are very similar to the case, M/s Microsoft Corporation (I) (P) Ltd. Vs
Commissioner of Service Tax, New Delhi, wherein the Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT)
has passed a ruling favorable to Microsoft. The Company can provide no assurances on whether the Microsoft case’s favorable
ruling will be challenged in higher courts or on the impact that the Microsoft case’s decision will have on the Company’s audit
case. The Company is uncertain as to when the service tax audit will be completed.
Other court cases are pending in India that could have a material impact on the Company's financial position, results of
operations or cash flows if the ultimate outcome of those cases is similarly inconsistent with tax positions taken by the
Company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
The Company has received no written comments regarding our periodic or current reports from the staff of the SEC that were
issued 180 days or more preceding the end of our fiscal year 2014 and that remain unresolved.
ITEM 2.
PROPERTIES
The Company's executive offices and those related to certain domestic product development, marketing, production and
administration are located in a 186,000 square foot office facility in Canonsburg, Pennsylvania. On September 14, 2012, the
Company entered into a lease agreement for this facility, which serves as the Company's new headquarters. The lease was
effective as of September 14, 2012, but because the leased premises were under construction, the Company was not obligated
to pay rent until January 1, 2015. The term of the lease is 183 months, beginning on October 1, 2014.
The Company leases a 52,000 square foot office facility in San Jose, California. In June 2012, the Company entered into a new
lease for this property, with the lease term commencing July 1, 2012 and ending June 30, 2022.
The Company owns: a 94,000 square foot office facility in Lebanon, New Hampshire; a 60,000 square foot office building near
its current Canonsburg headquarters; and a 60,000 square foot facility in Pune, India.
The Company and its subsidiaries also lease office space in various locations throughout the world. The Company owns
substantially all equipment used in its facilities. Management believes that, in most geographic locations, its facilities allow for
sufficient space to support present and future foreseeable needs, including such expansion and growth as the business may
require. In other geographic locations, the Company expects that it will be required to expand capacity beyond that which it
currently owns or leases.
The Company's properties and equipment are in good operating condition and are adequate for the Company's current needs.
The Company does not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.
18
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ITEM 3.
LEGAL PROCEEDINGS
The Company is subject to various investigations, claims and legal proceedings that arise in the ordinary course of business,
including commercial disputes, labor and employment matters, tax audits, alleged infringement of intellectual property rights
and other matters. In the opinion of the Company, the resolution of pending matters is not expected to have a material, adverse
effect on the Company's consolidated results of operations, cash flows or financial position. However, each of these matters is
subject to various uncertainties and it is possible that an unfavorable resolution of one or more of these proceedings could, in
the future, materially affect the Company's results of operations, cash flows or financial position.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
19
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Company's common stock trades on the NASDAQ Global Select Market tier of the NASDAQ Stock Market under the
symbol: "ANSS". The following table sets forth the low and high sale price of the Company's common stock in each of the
Company's last eight fiscal quarters.
December 31
September 30
June 30
March 31
Fiscal Quarter Ended 2014
Fiscal Quarter Ended 2013
Low Sale
Price
High Sale
Price
Low Sale
Price
High Sale
Price
$
$
$
$
71.09
73.67
71.50
72.10
$
$
$
$
84.87
82.96
78.13
87.15
$
$
$
$
81.20
72.19
70.66
68.33
$
$
$
$
89.42
89.71
81.52
81.55
On January 15, 2015, there were 169 stockholders of record and 90,385 beneficial holders of the Company’s common stock.
The Company has not paid cash dividends on its common stock as it has retained earnings primarily for acquisitions, future
business opportunities and to repurchase stock when authorized by the Board of Directors and when such repurchase meets the
Company's objectives. The Company reviews 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.
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Performance Graph
Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on the
Company's common stock, based on the market price of the Company's common stock, with the total return of companies
included within the Russell 1000 Index, the NASDAQ Composite Stock Market Index and an industry peer group of four
companies (Autodesk, Inc., PTC Inc., Cadence Design Systems, Inc. and Synopsys, Inc.) selected by the Company pursuant to
Item 201(e) of Regulation S-K, for the period commencing January 1, 2010 and ending December 31, 2014. The calculation of
total cumulative returns assumes a $100 investment in the Company's common stock, the Russell 1000 Index, the NASDAQ
Composite Stock Market Index and the peer group on January 1, 2010, and the reinvestment of all dividends, and accounts for
all stock splits. The historical information set forth below is not necessarily indicative of future performance.
ASSUMES $100 INVESTED ON JANUARY 1, 2010
ASSUMES DIVIDENDS REINVESTED
FIVE FISCAL YEARS ENDING DECEMBER 31, 2014
21
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Equity Compensation Plan Information as of December 31, 2014
Plan Category
Equity Compensation Plans Approved by Security
Holders
1996 Stock Option and Grant Plan
Ansoft Corporation 2006 Stock Incentive Plan
Apache Design Solutions, Inc. 2001 Stock/Option
Issuance Plan
SpaceClaim Corporation 2005 Stock Incentive Plan
1996 Employee Stock Purchase Plan
Equity Compensation Plans Not Approved by Security
Holders
None
Total
(a)
(b)
(c)
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(excluding securities
reflected in column
(a))
4,455,436
288,669
171,417
16,936
$
$
$
$
50.73
37.62
19.08
23.26
(1)
(2)
3,537,029
—
—
—
265,488
4,932,458
3,802,517
(1) The number of shares issuable with respect to the current offering period is not determinable until the end of the period.
(2) The per share purchase price of shares issuable with respect to the current offering period is not determinable until the
end of the period.
Unregistered Sale of Equity Securities and Use of Proceeds
None.
Issuer Purchases of Equity Securities
Period
October 1 - October 31, 2014
November 1 - November 30, 2014
December 1 - December 31, 2014
Total
Total Number of
Shares Purchased
—
784,969
760,413
1,545,382
Average Price Paid
per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Maximum Number
of Shares that May
Yet Be Purchased
Under Plans or
Programs(1)
$
$
—
79.81
82.24
81.00
—
784,969
760,413
1,545,382
1,568,497
4,215,031
3,454,618
3,454,618
(1) The Company initially announced its stock repurchase program in February 2000, and subsequently announced various
amendments to the program. The most recent amendment to the program, which authorized an increase in the aggregate
number of shares available for repurchase to 5,000,000 shares, was approved by the Company's Board of Directors in February
2015. There is no expiration date to this amendment.
22
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ITEM 6.
SELECTED FINANCIAL DATA
The following table sets forth selected financial data as of and for the last five years. This selected financial data should be read
in conjunction with the consolidated financial statements and related notes included in Part IV, Item 15 of this Annual Report
on Form 10-K.
(in thousands, except per share data)
Total revenue
Operating income
Net income
Earnings per share – basic
Weighted average shares – basic
Earnings per share – diluted
Weighted average shares – diluted
Total assets
Working capital
Long-term liabilities
Stockholders’ equity
Cash provided by operating activities
$
$
$
$
$
$
$
$
2014
936,021
347,450
254,690
2.77
92,067
2.70
94,194
2,774,103
645,394
91,503
2,217,501
385,307
Year Ended December 31,
$
$
$
$
2013
861,260
321,863
245,327
2.65
92,691
2.58
95,139
2,722,382
627,165
145,705
2,136,246
332,983
$
$
$
$
2012
798,018
294,253
203,483
2.20
92,622
2.14
94,954
2,607,417
435,972
189,739
1,940,291
298,415
$
$
$
$
2011
691,449
265,559
180,675
1.96
92,120
1.91
94,381
2,448,470
301,282
255,246
1,754,473
307,661
2010
580,236
219,268
153,132
1.69
90,684
1.64
93,209
2,126,876
403,264
285,578
1,529,929
166,884
In the table above, the comparability of information among the years presented is impacted by the Company's acquisitions. The
operating results of the Company's acquisitions have been included in the results of operations since their respective acquisition
dates. For further information, see the “Acquisitions” section of Management’s Discussion and Analysis in Item 7 and Note 3 to
the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
23
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
ANSYS, Inc.’s results for the year ended December 31, 2014 reflect growth in revenue of 8.7%, operating income of 7.9% and
diluted earnings per share of 4.7% as compared to the year ended December 31, 2013. The Company experienced higher
revenue in 2014 from growth in both license and maintenance revenue. The increase in revenue was partially offset by
increased operating expenses, including higher salaries and additional operating expenses related to the Company's 2014
acquisitions. The net overall strengthening of the U.S. Dollar resulted in decreased revenue of $7.6 million and decreased
operating income of $5.1 million during the year ended December 31, 2014 as compared to the year ended December 31, 2013.
An $11.0 million tax benefit in 2013 did not recur in 2014, which adversely impacted earnings per share growth from 2013 to
2014.
The Company’s non-GAAP results for the year ended December 31, 2014 reflect growth in revenue of 8.7%, operating income
of 6.8% and diluted earnings per share of 4.9% as compared to the year ended December 31, 2013. The non-GAAP results
exclude the income statement effects of the acquisition accounting adjustment to deferred revenue, stock-based compensation,
acquisition-related amortization of intangible assets and transaction costs related to business combinations. For further
disclosure regarding non-GAAP results, see the section titled “Non-GAAP Results” immediately preceding the section titled
“Liquidity and Capital Resources”.
During the year ended December 31, 2014, the Company repurchased 2,976,885 shares of treasury stock for $233.8 million at
an average price of $78.54 per share. The Company's financial position includes $788.8 million in cash and short-term
investments, and working capital of $645.4 million as of December 31, 2014.
On April 30, 2014, the Company completed the acquisition of SpaceClaim, a leading provider of 3-D modeling technology.
Under the terms of the agreement, ANSYS acquired SpaceClaim for a purchase price of $85.0 million, which was paid almost
entirely in cash, plus retention vehicles and an adjustment for working capital. The operating results of SpaceClaim have been
included in the Company's consolidated financial statements since the date of acquisition.
In February 2014, the Company received a $26.8 million refund related to its 2009 and 2010 federal income tax returns. The
Company received notice from the Internal Revenue Service in 2013 that the Joint Committee on Taxation took no exception to
the Company's tax returns that were filed for 2009 and 2010.
On January 3, 2014, the Company completed the acquisition of Reaction Design, a leading developer of chemistry simulation
software, for a purchase price of $19.1 million in cash. The operating results of Reaction Design have been included in the
Company's consolidated financial statements from the date of acquisition.
ANSYS develops and globally markets engineering simulation software and services widely used by engineers, designers,
researchers and students across a broad spectrum of industries and academia, including aerospace, automotive, materials and
chemical processing, turbomachinery, consumer products, electronics, biomedical, energy, defense and others. Headquartered
south of Pittsburgh, Pennsylvania, the Company and its subsidiaries employed approximately 2,700 people as of December 31,
2014 and focus on the development of open and flexible solutions that enable users to analyze designs directly on the desktop,
providing a common platform for fast, efficient and cost-conscious product development, from design concept to final-stage
testing and validation. The Company distributes its ANSYS suite of simulation technologies through a global network of
independent channel partners and direct sales offices in strategic, global locations. It is the Company’s intention to continue to
maintain this hybrid sales and distribution model.
The Company licenses its technology to businesses, educational institutions and governmental agencies. Growth in the
Company’s revenue is affected by the strength of global economies, general business conditions, currency exchange rate
fluctuations, customer budgetary constraints and the competitive position of the Company’s products. Please see the sub-
sections entitled "Global Economic Conditions," "Decline in Customers' Businesses," "Risks Associated with International
Activities," "Rapidly Changing Technology; New Products; Risk of Product Defects" and "Competition" under Item 1A. Risk
Factors for a complete discussion of how these factors might impact the Company’s financial condition and operating results.
The Company believes that the features, functionality and integrated multiphysics capabilities of its software products are as
strong as they have ever been. However, the software business is generally characterized by long sales cycles. These long sales
cycles increase the difficulty of predicting sales for any particular quarter. The Company makes many operational and strategic
decisions based upon short- and long-term sales forecasts that are impacted not only by these long sales cycles, but also by
current global economic conditions. As a result, the Company believes that its overall performance is best measured by fiscal
year results rather than by quarterly results. Please see the sub-section entitled "Sales Forecasts" under Item 1A. Risk Factors
24
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for a complete discussion of the potential impact of the Company’s sales forecasts on the Company’s financial condition, cash
flows and operating results.
The Company's management considers the competition and price pressure that it faces in the short- and long-term by focusing
on expanding the breadth, depth, ease of use and quality of the technologies, features, functionality and integrated multiphysics
capabilities of its software products as compared to its competitors; investing in research and development to develop new and
innovative products and increase the capabilities of its existing products; supplying new products and services; focusing on
customer needs, training, consulting and support; and enhancing its distribution channels. From time to time, the Company also
considers acquisitions to supplement its global engineering talent, product offerings and distribution channels.
Geographic Trends
In North America, the Company's performance was primarily driven by the aerospace and defense, automotive, automotive
electronics and mobile electronics industries. This enabled North America to deliver 9% constant currency revenue growth for
the twelve months ended December 31, 2014. Electronics, efficiency and emissions continue to be the major trends driving
technology investments in the automotive and ground transportation industries. In addition, the Company continued to see
increased interest and investment in high-performance computing across the Company's customer base to accelerate workflows,
systems engineering and smart product initiatives across multiple industries. The Company's sales hiring, sales pipeline
building and customer engagement activities in North America remain strong, as demand for innovation continues to drive
simulation investments across a broad array of industries.
Despite ongoing economic and geo-political challenges, Europe delivered 7% constant currency revenue growth for the twelve
months ended December 31, 2014. From an industry perspective, the Company experienced growth from various chemicals
and metals companies, which are focusing on energy efficiency, sustainability, emissions controls and developing engineered
materials. The Company's sales hiring and pipeline-building activities continued to progress, and solid customer renewal rates
in Europe remained intact.
The Company's General International Area was the Company's strongest region with revenue growth of 13% in constant
currency for the twelve months ended December 31, 2014. Investments by chemicals and metals, commercial aerospace,
networking equipment, wireless, power electronics and smart medical device companies drove the performance. Throughout
the year, the Company continued to focus and make progress on sales leadership and internal sales improvement initiatives.
Note About Forward-Looking Statements
The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto
included elsewhere in this Annual Report on Form 10-K. The Company's discussion and analysis of its financial condition and
results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of these financial
statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates
its estimates, including those related to fair value of stock, bad debts, contract revenue, valuation of goodwill, valuation of
intangible assets, income taxes, and contingencies and litigation. The Company bases its estimates on historical experience,
market experience, estimated future cash flows and various other assumptions that management believes are reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates.
This Annual Report on Form 10-K 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, but not limited to, the following statements, as
well as statements that contain such words as "anticipates", "intends", "believes", "plans" and other similar expressions:
• The Company's intentions regarding its hybrid sales and distribution model.
• The Company's intentions related to investments in research and development, particularly as it relates to expanding
the capabilities of its flagship products and other products within its broad portfolio of simulation software, the
evolution of its ANSYS® Workbench™ platform, integrated multiphysics, expanding its HPC capabilities, an
immersive user interface, robust design and ongoing integration of acquired technology.
• The Company's expectations regarding the accelerated development of new and innovative products to the
marketplace while lowering design and engineering costs for customers as a result of the SpaceClaim and Reaction
Design acquisitions.
• The Company's statements regarding the impact of global economic conditions.
25
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• The Company's statement regarding increased exposure to volatility of foreign exchange rates.
• The Company's expectations regarding the outcome of its service tax audit case.
• The Company's expectation that it can renew existing leases as they expire or find alternative facilities without
difficulty, as needed.
• The Company's assessment of the ultimate liabilities arising from various investigations, claims and legal proceedings.
• The Company's statement regarding the strength of the features, functionality and integrated multiphysics capabilities
of its software products.
• The Company's estimates regarding the expected impact on reported revenue related to the acquisition accounting
treatment of deferred revenue.
• The Company's expectation that it will continue to make targeted investments in its global sales and marketing
organization and its global business infrastructure to enhance major account sales activities and to support its
worldwide sales distribution and marketing strategies, and the business in general.
• The Company's intention to repatriate previously taxed earnings and to reinvest all other earnings of its non-U.S.
subsidiaries.
• The Company's plans related to future capital spending.
• The sufficiency of existing cash and cash equivalent balances to meet future working capital and capital expenditure
requirements.
• The Company's belief that the best uses of its excess cash are to invest in the business and repurchase stock in order to
both offset dilution and return capital to stockholders in excess of its requirements with the goal of increasing
stockholder value.
• The Company's intentions related to investments in complementary companies, products, services and technologies.
• The Company's expectations regarding future claims related to indemnification obligations.
• The Company's estimates regarding total compensation expense associated with granted stock-based awards for future
years.
• The Company’s estimation that it is probable that all remaining payments will be made for contingent consideration
related to the EVEN acquisition.
• The Company's assessment of its ability to realize deferred tax assets.
• Except for the service tax audit discussed in Note 19 to the consolidated financial statements included in Part IV, Item
15 of this Annual Report on Form 10-K, the Company's expectation that foreign or state examinations will not result in
a material change to the consolidated financial statements.
Forward-looking statements should not be unduly relied upon because they involve known and unknown risks, uncertainties
and other factors, some of which are beyond the Company's control. The Company's actual results could differ materially from
those set forth in the forward-looking statements. Certain factors that might cause such a difference include risks and
uncertainties detailed in Item 1A. Risk Factors.
26
Table of Contents
Acquisitions
Date of closing
April 30, 2014
Company
SpaceClaim Corporation
January 3, 2014
Reaction Design
April 2, 2013
EVEN - Evolutionary
Engineering AG
August 1, 2012
Esterel Technologies, S.A.
Details
SpaceClaim, a leading provider of 3-D modeling technology, was acquired for $85.0
million. SpaceClaim's software provides customers with a powerful and intuitive 3-D
direct modeling solution to author new concepts and then leverage the power of
simulation to rapidly iterate on these designs to drive innovation.
Reaction Design, a leading developer of chemistry simulation software, was acquired
for $19.1 million in cash. Reaction Design's solutions enable transportation
manufacturers and energy companies to rapidly achieve their clean technology goals
by automating the analysis of chemical processes via computer simulation and
modeling solutions.
EVEN, a leading provider of composite analysis and optimization technology relying
on cloud computing, was acquired for $8.1 million. The acquisition strengthens the
Company's simulation solutions for composites technology, which has become a
standard in manufacturing in a wide range of industries due to its combination of light
weight, high strength and outstanding flexibility.
Esterel, a leading provider of embedded software simulation solutions for mission
critical applications, was acquired for $58.2 million. Esterel's software enables
software and systems engineers to design, simulate and automatically produce certified
embedded software, which is the control code built into the electronics in aircraft, rail
transportation, automotive, energy systems, medical devices and other industrial
products that have central processing units.
For further information on the Company's business combinations, see Note 3 to the consolidated financial statements included
in Part IV, Item 15 of this Annual Report on Form 10-K.
27
Table of Contents
Results of Operations
For purposes of the following discussion and analysis, the table below sets forth certain consolidated financial data for the
years 2014, 2013 and 2012. The operating results of the Company's acquisitions have been included in the results of operations
since their respective acquisition dates.
(in thousands)
Revenue:
Software licenses
Maintenance and service
Total revenue
Cost of sales:
Software licenses
Amortization
Maintenance and service
Total cost of sales
Gross profit
Operating expenses:
Selling, general and administrative
Research and development
Amortization
Total operating expenses
Operating income
Interest expense
Interest income
Other expense, net
Income before income tax provision
Income tax provision
Net income
Year Ended December 31,
2014
2013
2012
$
$
564,502
371,519
936,021
$
528,944
332,316
861,260
30,607
37,653
85,126
153,386
782,635
246,376
165,421
23,388
435,185
347,450
(779)
3,002
(1,534)
348,139
93,449
254,690
$
28,363
38,298
80,031
146,692
714,568
218,907
151,439
22,359
392,705
321,863
(1,169)
2,841
(1,046)
322,489
77,162
245,327
$
$
501,870
296,148
798,018
24,512
40,889
74,115
139,516
658,502
205,178
132,628
26,443
364,249
294,253
(2,661)
3,360
(1,405)
293,547
90,064
203,483
28
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Year Ended December 31, 2014 Compared to Year Ended December 31, 2013
Revenue:
(in thousands, except percentages)
Revenue:
Lease licenses
Perpetual licenses
Software licenses
Maintenance
Service
Maintenance and service
Total revenue
Year Ended December 31,
Change
2014
2013
Amount
%
$
318,041
$
297,658
$
246,461
564,502
346,698
24,821
371,519
231,286
528,944
309,085
23,231
332,316
$
936,021
$
861,260
$
20,383
15,175
35,558
37,613
1,590
39,203
74,761
6.8
6.6
6.7
12.2
6.8
11.8
8.7
The Company’s revenue increased 8.7% during the year ended December 31, 2014 as compared to the year ended
December 31, 2013, including increases in all major revenue categories. The growth was partially influenced by benefits from
the Company’s continued investment in its global sales and marketing organization. Revenue from lease licenses increased
6.8% as compared to the prior year due primarily to growth in lease license revenue of power analysis and electronics products.
Perpetual license revenue, which is derived primarily from new sales, increased 6.6% as compared to the prior year. Annual
maintenance contracts that were sold with new perpetual licenses, along with maintenance contracts sold with new perpetual
licenses in previous years, contributed to maintenance revenue growth of 12.2%.
With respect to revenue, on average for the year ended December 31, 2014, the U.S. Dollar was 1.6% stronger, when measured
against the Company’s primary foreign currencies, than for the year ended December 31, 2013. The net overall strengthening
resulted in decreased revenue of $7.6 million during the year ended December 31, 2014 as compared to the year ended
December 31, 2013. The impact on revenue was primarily driven by $9.8 million of adverse impact due to a weakening
Japanese Yen, partially offset by $1.9 million of favorable impact due to a strengthening British Pound. The net overall
strengthening of the U.S. Dollar also resulted in decreased operating income of $5.1 million during the year ended
December 31, 2014 as compared to the year ended December 31, 2013.
A substantial portion of the Company’s license and maintenance revenue is derived from annual lease and maintenance
contracts. These contracts are generally renewed on an annual basis and typically have a high rate of customer renewal. In
addition to the recurring revenue base associated with these contracts, a majority of customers purchasing new perpetual
licenses also purchase related annual maintenance contracts. As a result of the significant recurring revenue base, the
Company’s license and maintenance revenue growth rate in any period does not necessarily correlate to the growth rate of new
license and maintenance contracts sold during that period. To the extent the rate of customer renewal for lease and maintenance
contracts is high, incremental lease contracts, and maintenance contracts sold with new perpetual licenses, will result in license
and maintenance revenue growth. Conversely, if the rate of renewal for these contracts is adversely affected by economic or
other factors, the Company’s license and maintenance growth will be adversely affected over the term that the revenue for those
contracts would have otherwise been recognized.
International and domestic revenues, as a percentage of total revenue, were 65.8% and 34.2%, respectively, during the year
ended December 31, 2014, and 66.1% and 33.9%, respectively, during the year ended December 31, 2013. The Company
derived 24.9% and 25.3% of its total revenue through the indirect sales channel for the years ended December 31, 2014 and
2013, respectively.
In valuing deferred revenue on the balance sheets of the Company's recent acquisitions as of their respective acquisition dates,
the Company applied the fair value provisions applicable to the accounting for business combinations, resulting in a reduction
of deferred revenue as compared to its historical carrying amount. As a result, the Company's post-acquisition revenue will be
less than the sum of what would have otherwise been reported by ANSYS and its subsidiaries absent the acquisitions. The
impact on reported revenue for the year ended December 31, 2014 was $5.4 million. The expected impact on reported revenue
is $1.2 million for the year ending December 31, 2015.
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Cost of Sales and Gross Profit:
(in thousands, except percentages)
Cost of sales:
Software licenses
Amortization
Maintenance and service
Total cost of sales
Gross profit
Year Ended December 31,
2014
2013
Change
Amount
% of
Revenue
Amount
% of
Revenue
Amount
%
$
30,607
37,653
85,126
153,386
$
782,635
3.3
4.0
9.1
16.4
83.6
$
28,363
38,298
80,031
146,692
$
714,568
3.3
4.4
9.3
17.0
83.0
$
2,244
(645)
5,095
6,694
$
68,067
7.9
(1.7)
6.4
4.6
9.5
Software Licenses: The increase in costs of software licenses was primarily due to the following:
•
SpaceClaim-related costs of software licenses of $0.8 million for the period from the acquisition date (April 30, 2014)
through December 31, 2014.
•
Increased salaries of $0.6 million.
Amortization: The decrease in amortization expense was primarily due to a net decrease in amortization of acquired technology,
partially offset by an increase in trade name amortization.
Maintenance and Service: The increase in maintenance and service costs was primarily due to the following:
•
•
Increased salaries of $3.0 million.
Increased third-party technical support of $1.0 million.
The improvement in gross profit was a result of the increase in revenue offset by a smaller increase in related cost of sales.
30
Table of Contents
Operating Expenses:
(in thousands, except percentages)
Operating expenses:
Selling, general and
administrative
Research and development
Amortization
Total operating expenses
Year Ended December 31,
2014
2013
Change
Amount
% of
Revenue
Amount
% of
Revenue
Amount
%
$
246,376
165,421
23,388
26.3
17.7
2.5
$
218,907
151,439
22,359
$
25.4
17.6
2.6
27,469
13,982
1,029
$
435,185
46.5
$
392,705
45.6
$
42,480
12.5
9.2
4.6
10.8
Selling, General and Administrative: The increase in selling, general and administrative costs was primarily due to the
following:
•
•
Increased salaries, incentive compensation and other headcount-related costs of $9.8 million, primarily due to an
increase in headcount.
SpaceClaim-related selling, general and administrative costs of $4.6 million for the period from the acquisition date
(April 30, 2014) through December 31, 2014.
•
Increased severance costs of $3.2 million.
• Reaction Design-related selling, general and administrative costs of $2.3 million for the period from the acquisition
date (January 3, 2014) through December 31, 2014.
•
Increased third-party commissions of $2.1 million.
The Company anticipates that it will continue to make targeted investments in its global sales and marketing organization and
its global business infrastructure to enhance major account sales activities and to support its worldwide sales distribution and
marketing strategies, and the business in general.
Research and Development: The increase in research and development costs was primarily due to the following:
•
•
Increased salaries and other headcount-related costs of $5.9 million, primarily due to an increase in headcount.
SpaceClaim-related research and development costs of $2.3 million for the period from the acquisition date (April 30,
2014) through December 31, 2014.
• Reaction Design-related research and development costs of $2.3 million for the period from the acquisition date
(January 3, 2014) through December 31, 2014.
•
Increased stock-based compensation of $1.2 million.
The Company has traditionally invested significant resources in research and development activities and intends to continue to
make investments in this area, particularly as it relates to expanding the capabilities of its flagship products and other products
within its broad portfolio of simulation software, the evolution of its ANSYS® Workbench™ platform, integrated multiphysics,
expanding its HPC capabilities, an immersive user interface, robust design and ongoing integration of acquired technology.
Amortization: The increase in amortization expense was primarily due to a net increase in amortization of customer lists,
partially offset by a net decrease in amortization of contract backlog.
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Table of Contents
Interest Expense: The Company’s interest expense consists of the following:
(in thousands)
Discounted obligations
Term loan
Amortization of debt financing costs
Other
Total interest expense
$
$
Year Ended December 31,
2014
2013
628
$
722
230
149
68
$
1,169
—
—
151
779
Interest Income: Interest income for the year ended December 31, 2014 was $3.0 million as compared to $2.8 million during
the year ended December 31, 2013. Interest income increased as a result of an increase in the Company's average invested cash
balances.
Other Expense, net: The Company's other expense consists of the following:
(in thousands)
Foreign currency losses, net
Other income, net
Total other expense, net
Year Ended December 31,
2014
2013
$
$
(1,649) $
115
(1,534) $
(1,115)
69
(1,046)
Income Tax Provision: The Company recorded income tax expense of $93.4 million and had income before income taxes of
$348.1 million for the year ended December 31, 2014, representing an effective tax rate of 26.8%. During the year ended
December 31, 2013, the Company recorded income tax expense of $77.2 million and had income before income taxes of
$322.5 million, representing an effective tax rate of 23.9%.
In December 2013, the Company received notice from the IRS that the Joint Committee on Taxation took no exception to the
Company's tax returns that were filed for 2009 and 2010. An $11.0 million tax benefit was recognized in the Company's 2013
financial results as the Company had effectively settled uncertainty regarding the realization of refund claims filed in
connection with the 2009 and 2010 returns.
In the U.S., which is the largest jurisdiction where the Company receives such a tax credit, the availability of the research and
development credit expired at the end of the 2011 tax year. In January 2013, the U.S. Congress passed legislation that reinstated
the research and development credit retroactive to 2012. The income tax provision for the year ended December 31, 2013
includes approximately $2.3 million related to the reinstated research and development credit for 2012 activity. The research
and development credit also expired at the end of the 2013 tax year, but the U.S. Congress reinstated the credit in December
2014 for the 2014 tax year.
The increase in the effective tax rate from the prior year is primarily due to the release of an uncertain tax position and the
reinstatement of the U.S. research and development credit mentioned above impacting the prior year rate. When compared to
the federal and state combined statutory rate, the effective tax rates for the years ended December 31, 2014 and 2013 were
favorably impacted by the domestic manufacturing deduction and tax benefits associated with the merger of the Company’s
Japan subsidiaries in 2010. The rates were also favorably impacted by the recurring item of lower statutory tax rates in many of
the Company's foreign jurisdictions. The relative amount of income earned in foreign jurisdictions is expected to be fairly
consistent in the near term.
Net Income: The Company’s net income for the year ended December 31, 2014 was $254.7 million as compared to net income
of $245.3 million for the year ended December 31, 2013. Diluted earnings per share was $2.70 for the year ended
December 31, 2014 and $2.58 for the year ended December 31, 2013. The weighted average shares used in computing diluted
earnings per share were 94.2 million and 95.1 million for the years ended December 31, 2014 and 2013, respectively.
32
Table of Contents
Year Ended December 31, 2013 Compared to Year Ended December 31, 2012
Revenue:
(in thousands, except percentages)
Revenue:
Lease licenses
Perpetual licenses
Software licenses
Maintenance
Service
Maintenance and service
Total revenue
Year Ended December 31,
Change
2013
2012
Amount
%
$
297,658
$
279,283
$
231,286
528,944
309,085
23,231
332,316
222,587
501,870
275,498
20,650
296,148
$
861,260
$
798,018
$
18,375
8,699
27,074
33,587
2,581
36,168
63,242
6.6
3.9
5.4
12.2
12.5
12.2
7.9
The Company’s revenue increased 7.9% in 2013 as compared to 2012, including increases in all major revenue categories. The
Company's revenue included Esterel operations for the full year in 2013 of $18.8 million as compared to five months in 2012 of
$3.3 million. The growth was partially influenced by benefits from the Company’s continued investment in its global sales and
marketing organization. Annual maintenance contracts that were sold with new perpetual licenses, along with maintenance
contracts sold with new perpetual licenses in previous years, contributed to maintenance revenue growth of 12.2%. Revenue
from lease licenses increased 6.6% as compared to the prior year due to an increase in power-analysis-related lease license
revenue and growth in sales of other lease licenses. Perpetual license revenue, which is derived entirely from new sales during
the period, increased 3.9% as compared to the prior year, due to increased perpetual license sales across most product lines, as
well as a full year of Esterel activity in 2013 as compared to five months in 2012. Service revenue increased 12.5% as
compared to the prior year due to an increase in engineering consulting projects.
With respect to revenue, on average for the year ended December 31, 2013, the U.S. Dollar was 4.0% stronger, when measured
against the Company’s primary foreign currencies, than for the year ended December 31, 2012. The net overall strengthening,
primarily related to the Japanese Yen, resulted in decreased revenue and operating income during 2013, as compared to 2012,
of $17.6 million and $12.2 million, respectively.
International and domestic revenues, as a percentage of total revenue, were 66.1% and 33.9%, respectively, during the year
ended December 31, 2013, and 66.7% and 33.3%, respectively, during the year ended December 31, 2012. The Company
derived 25.3% and 26.0% of its total revenue through the indirect sales channel for the years ended December 31, 2013 and
2012, respectively.
In valuing deferred revenue on the Esterel and Apache Design, Inc. ("Apache") balance sheets as of their respective acquisition
dates, the Company applied the fair value provisions applicable to the accounting for business combinations, resulting in lower
amounts of revenue than Esterel and Apache would have recognized absent the acquisitions. The impact on reported revenue
for the year ended December 31, 2013 was $4.6 million.
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Table of Contents
Cost of Sales and Gross Profit:
(in thousands, except percentages)
Cost of sales:
Software licenses
Amortization
Maintenance and service
Total cost of sales
Gross profit
Year Ended December 31,
2013
2012
Change
Amount
% of
Revenue
Amount
% of
Revenue
Amount
%
$
28,363
38,298
80,031
146,692
$
714,568
3.3
4.4
9.3
17.0
83.0
$
24,512
40,889
74,115
139,516
$
658,502
3.1
5.1
9.3
17.5
82.5
$
3,851
(2,591)
5,916
7,176
$
56,066
15.7
(6.3)
8.0
5.1
8.5
Software Licenses: The increase in costs of software licenses was primarily due to the following:
•
•
•
Increased salaries and incentive compensation of $2.2 million.
Increased third-party royalties of $0.9 million.
Increased Esterel-related costs of $0.7 million, primarily as a result of a full year of Esterel activity in 2013 as
compared to five months of activity in 2012.
Amortization: The decrease in amortization expense was primarily due to a net decrease in amortization of acquired technology.
Maintenance and Service: The increase in maintenance and service costs was primarily due to the following:
•
•
•
Increased salaries and headcount-related costs of $2.6 million.
Increased third-party technical support of $1.4 million.
Increased Esterel-related costs of $0.6 million, primarily as a result of a full year of Esterel activity in 2013 as
compared to five months of activity in 2012.
•
Increased depreciation expense of $0.5 million.
The improvement in gross profit was a result of the increase in revenue offset by a smaller increase in related cost of sales.
34
Table of Contents
Operating Expenses:
(in thousands, except percentages)
Operating expenses:
Selling, general and
administrative
Research and development
Amortization
Total operating expenses
Year Ended December 31,
2013
2012
Change
Amount
% of
Revenue
Amount
% of
Revenue
Amount
%
$
218,907
151,439
22,359
25.4
17.6
2.6
$
205,178
132,628
26,443
25.7
16.6
3.3
$
392,705
45.6
$
364,249
45.6
$
$
13,729
18,811
(4,084)
28,456
6.7
14.2
(15.4)
7.8
Selling, General and Administrative: The increase in selling, general and administrative costs was primarily due to the
following:
•
•
Increased salaries of $4.9 million, primarily due to an increase in headcount.
Increased Esterel-related expenses of $4.5 million, primarily as a result of a full year of Esterel activity in 2013 as
compared to five months of activity in 2012.
•
Increased stock-based compensation of $1.6 million.
Research and Development: The increase in research and development costs was primarily due to the following:
•
•
•
•
Increased salaries, incentive compensation and other headcount-related costs of $11.0 million, primarily due to an
increase in headcount.
Increased Esterel-related expenses of $3.1 million, primarily as a result of a full year of Esterel activity in 2013 as
compared to five months of activity in 2012.
Increased facilities and IT-related maintenance costs of $1.7 million.
Increased stock-based compensation of $1.4 million.
• EVEN-related research and development costs of $1.4 million for the period from the acquisition date (April 2, 2013)
through December 31, 2013.
Amortization: The decrease in amortization expense was primarily due to a net decrease in amortization of acquired intangible
assets, including contract backlog and customer lists.
Interest Expense: The Company’s interest expense consists of the following:
(in thousands)
Discounted obligations
Term loan
Amortization of debt financing costs
Other
Total interest expense
Year Ended December 31,
2013
2012
$
722
230
149
68
1,169
$
546
1,342
698
75
2,661
$
$
Interest Income: Interest income for the year ended December 31, 2013 was $2.8 million as compared to $3.4 million during
the year ended December 31, 2012. Interest income decreased as a result of a decrease in the average rate of return on invested
cash balances.
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Table of Contents
Other Expense, net: The Company's other expense consists of the following:
(in thousands)
Foreign currency losses, net
Other income (expense), net
Total other expense, net
Year Ended December 31,
2013
2012
$
$
(1,115) $
69
(1,046) $
(1,401)
(4)
(1,405)
Income Tax Provision: The Company recorded income tax expense of $77.2 million and had income before income taxes of
$322.5 million for the year ended December 31, 2013, representing an effective tax rate of 23.9%. During the year ended
December 31, 2012, the Company recorded income tax expense of $90.1 million and had income before income taxes of
$293.5 million, representing an effective tax rate of 30.7%.
In December 2013, the Company received notice from the IRS that the Joint Committee on Taxation took no exception to the
Company's tax returns that were filed for 2009 and 2010. An $11.0 million tax benefit was recognized in the Company's 2013
financial results as the Company had effectively settled uncertainty regarding the realization of refund claims filed in
connection with the 2009 and 2010 returns.
In the U.S., which is the largest jurisdiction where the Company receives such a tax credit, the availability of the research and
development credit expired at the end of the 2011 tax year. In January 2013, the U.S. Congress passed legislation that reinstated
the research and development credit retroactive to 2012. The income tax provision for the year ended December 31, 2013
includes approximately $2.3 million related to the reinstated research and development credit for 2012 activity.
The decrease in the effective tax rate from the prior year is primarily due to the release of an uncertain tax position mentioned
above, the reinstatement of the U.S. research and development credit mentioned above, and cash repatriation activities. When
compared to the federal and state combined statutory rate, the effective tax rates for the years ended December 31, 2013 and
2012 were favorably impacted by lower statutory tax rates in many of the Company’s foreign jurisdictions, the domestic
manufacturing deduction and tax benefits associated with the merger of the Company’s Japan subsidiaries in 2010.
Net Income: The Company’s net income for the year ended December 31, 2013 was $245.3 million as compared to net income
of $203.5 million for the year ended December 31, 2012. Diluted earnings per share was $2.58 for the year ended
December 31, 2013 and $2.14 for the year ended December 31, 2012. The weighted average shares used in computing diluted
earnings per share were 95.1 million and 95.0 million for the years ended December 31, 2013 and 2012, respectively.
36
Table of Contents
Non-GAAP Results
The Company provides non-GAAP revenue, non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net
income and non-GAAP diluted earnings per share as supplemental measures to GAAP measures regarding the Company’s
operational performance. These financial measures exclude the impact of certain items and, therefore, have not been calculated
in accordance with GAAP. A detailed explanation and a reconciliation of each non-GAAP financial measure to its most
comparable GAAP financial measure are described below.
Year Ended December 31,
2014
2013
(in thousands, except percentages and per share
data)
Total revenue
Operating income
Operating profit margin
Net income
Earnings per share – diluted:
Diluted earnings per share
Weighted average shares – diluted
As
Reported
$936,021
347,450
37.1%
Adjustments
$
Non-GAAP
Results
5,421 (1) $941,442
451,853
104,403 (2)
As
Reported
Adjustments
Non-GAAP
Results
$ 861,260
$
4,632 (4) $ 865,892
321,863
101,232 (5)
423,095
48.0%
37.4%
48.9%
$254,690
$
68,719 (3) $323,409
$ 245,327
$
66,197 (6) $ 311,524
$
2.70
94,194
$
3.43
$
2.58
94,194
95,139
$
3.27
95,139
(1) Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment
associated with accounting for deferred revenue in business combinations.
(2) Amount represents $61.0 million of amortization expense associated with intangible assets acquired in business
combinations, $36.9 million of stock-based compensation expense, the $5.4 million adjustment to revenue as reflected
in (1) above and $1.1 million of transaction expenses related to business combinations.
(3) Amount represents the impact of the adjustments to operating income referred to in (2) above, adjusted for the related
income tax impact of $35.7 million.
(4) Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment
associated with accounting for deferred revenue in business combinations.
(5) Amount represents $60.7 million of amortization expense associated with intangible assets acquired in business
combinations, $35.3 million of stock-based compensation expense, the $4.6 million adjustment to revenue as reflected
in (4) above and $0.6 million of transaction expenses related to business combinations.
(6) Amount represents the impact of the adjustments to operating income referred to in (5) above, adjusted for the related
income tax impact of $35.0 million.
Note: The 2013 GAAP and non-GAAP net income and earnings per share data reflected above include $11.0 million of
incremental tax benefits, or $0.12 per diluted share, related to the notification received from the IRS that the Joint Committee
on Taxation took no exception to the Company's tax returns that were filed for 2009 and 2010, thus effectively settling the
uncertainty regarding refund claims filed in connection with those returns.
37
Table of Contents
(in thousands, except percentages and per share
data)
Total revenue
Operating income
Operating profit margin
Net income
Earnings per share – diluted:
Diluted earnings per share
Weighted average shares – diluted
Year Ended December 31,
2013
2012
As
Reported
Adjustments
Non-GAAP
Results
As
Reported
Adjustments
Non-GAAP
Results
$ 861,260
$
4,632 (1) $ 865,892
$ 798,018
$
9,636 (4) $ 807,654
321,863
101,232 (2)
423,095
294,253
110,290 (5)
404,543
37.4%
48.9%
36.9%
50.1%
$ 245,327
$
66,197 (3) $ 311,524
$ 203,483
$
73,304 (6) $ 276,787
$
2.58
95,139
$
3.27
$
2.14
95,139
94,954
$
2.91
94,954
(1) Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment
associated with accounting for deferred revenue in business combinations.
(2) Amount represents $60.7 million of amortization expense associated with intangible assets acquired in business
combinations, $35.3 million of stock-based compensation expense, the $4.6 million adjustment to revenue as reflected
in (1) above and $0.6 million of transaction expenses related to business combinations.
(3) Amount represents the impact of the adjustments to operating income referred to in (2) above, adjusted for the related
income tax impact of $35.0 million.
(4) Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment
associated with accounting for deferred revenue in business combinations.
(5) Amount represents $67.3 million of amortization expense associated with intangible assets acquired in business
combinations, $32.4 million of stock-based compensation expense, the $9.6 million adjustment to revenue as reflected
in (4) above and $0.9 million of transaction expenses related to the Esterel acquisition.
(6) Amount represents the impact of the adjustments to operating income referred to in (5) above, adjusted for the related
income tax impact of $37.0 million.
Note: The 2013 GAAP and non-GAAP net income and earnings per share data reflected above include $11.0 million of
incremental tax benefits, or $0.12 per diluted share, related to the notification received from the IRS that the Joint Committee
on Taxation took no exception to the Company's tax returns that were filed for 2009 and 2010, thus effectively settling the
uncertainty regarding refund claims filed in connection with those returns.
Non-GAAP Measures
Management uses non-GAAP financial measures (a) to evaluate the Company's historical and prospective financial
performance as well as its performance relative to its competitors, (b) to set internal sales targets and spending budgets, (c) to
allocate resources, (d) to measure operational profitability and the accuracy of forecasting, (e) to assess financial discipline over
operational expenditures and (f) as an important factor in determining variable compensation for management and its
employees. In addition, many financial analysts that follow the Company focus on and publish both historical results and future
projections based on non-GAAP financial measures. The Company believes that it is in the best interest of its investors to
provide this information to analysts so that they accurately report the non-GAAP financial information. Moreover, investors
have historically requested and the Company has historically reported these non-GAAP financial measures as a means of
providing consistent and comparable information with past reports of financial results.
While management believes that these non-GAAP financial measures provide useful supplemental information to investors,
there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are
not prepared in accordance with GAAP, are not reported by all of the Company’s competitors and may not be directly
comparable to similarly titled measures of the Company’s competitors due to potential differences in the exact method of
calculation. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to
GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable
GAAP financial measures.
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Table of Contents
The adjustments to these non-GAAP financial measures, and the basis for such adjustments, are outlined below:
Acquisition accounting for deferred revenue and its related tax impact. Historically, the Company has consummated
acquisitions in order to support its strategic and other business objectives. In accordance with the fair value provisions
applicable to the accounting for business combinations, acquired deferred revenue is often recorded on the opening balance
sheet at an amount that is lower than the historical carrying value. Although this purchase accounting requirement has no
impact on the Company’s business or cash flow, it adversely impacts the Company’s reported GAAP revenue in the reporting
periods following an acquisition. In order to provide investors with financial information that facilitates comparison of both
historical and future results, the Company provides non-GAAP financial measures which exclude the impact of the acquisition
accounting adjustment. The Company believes that this non-GAAP financial adjustment is useful to investors because it allows
investors to (a) evaluate the effectiveness of the methodology and information used by management in its financial and
operational decision-making, and (b) compare past and future reports of financial results of the Company as the revenue
reduction related to acquired deferred revenue will not recur when related annual lease licenses and software maintenance
contracts are renewed in future periods.
Amortization of intangibles from acquisitions and its related tax impact. The Company incurs amortization of intangibles,
included in its GAAP presentation of amortization expense, related to various acquisitions it has made in recent years.
Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP operating income,
non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted earnings per share when it evaluates the
continuing operational performance of the Company because these costs are fixed at the time of an acquisition, are then
amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management
after the acquisition. Accordingly, management does not consider these expenses for purposes of evaluating the performance of
the Company during the applicable time period after the acquisition, and it excludes such expenses when making decisions to
allocate resources. The Company believes that these non-GAAP financial measures are useful to investors because they allow
investors to (a) evaluate the effectiveness of the methodology and information used by management in its financial and
operational decision-making, and (b) compare past reports of financial results of the Company as the Company has historically
reported these non-GAAP financial measures.
Stock-based compensation expense and its related tax impact. The Company incurs expense related to stock-based
compensation included in its GAAP presentation of cost of software licenses; cost of maintenance and service; research and
development expense and selling, general and administrative expense. Although stock-based compensation is an expense of the
Company and viewed as a form of compensation, management excludes these expenses for the purpose of calculating non-
GAAP operating income, non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted earnings per share
when it evaluates the continuing operational performance of the Company. Specifically, the Company excludes stock-based
compensation during its annual budgeting process and its quarterly and annual assessments of the Company’s and
management’s performance. The annual budgeting process is the primary mechanism whereby the Company allocates
resources to various initiatives and operational requirements. Additionally, the annual review by the board of directors during
which it compares the Company's historical business model and profitability to the planned business model and profitability for
the forthcoming year excludes the impact of stock-based compensation. In evaluating the performance of senior management
and department managers, charges related to stock-based compensation are excluded from expenditure and profitability results.
In fact, the Company records stock-based compensation expense into a stand-alone cost center for which no single operational
manager is responsible or accountable. In this way, management is able to review, on a period-to-period basis, each manager’s
performance and assess financial discipline over operational expenditures without the effect of stock-based compensation. The
Company believes that these non-GAAP financial measures are useful to investors because they allow investors to (a) evaluate
the Company's operating results and the effectiveness of the methodology used by management to review the Company's
operating results, and (b) review historical comparability in the Company's financial reporting as well as comparability with
competitors' operating results.
Transaction costs related to business combinations. The Company incurs expenses for professional services rendered in
connection with business combinations, which are included in its GAAP presentation of selling, general and administrative
expense. These expenses are generally not tax-deductible. Management excludes these acquisition-related transaction expenses
for the purpose of calculating non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net income and
non-GAAP diluted earnings per share when it evaluates the continuing operational performance of the Company, as it generally
would not have otherwise incurred these expenses in the periods presented as a part of its continuing operations. The Company
believes that these non-GAAP financial measures are useful to investors because they allow investors to (a) evaluate the
Company's operating results and the effectiveness of the methodology used by management to review the Company's operating
results, and (b) review historical comparability in the Company's financial reporting as well as comparability with competitors'
operating results.
39
Table of Contents
Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. The Company's non-GAAP financial
measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be
read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.
The Company has provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP
financial measures as listed below:
GAAP Reporting Measure
Revenue
Operating Income
Operating Profit Margin
Net Income
Diluted Earnings Per Share
Non-GAAP Reporting Measure
Non-GAAP Revenue
Non-GAAP Operating Income
Non-GAAP Operating Profit Margin
Non-GAAP Net Income
Non-GAAP Diluted Earnings Per Share
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Table of Contents
Liquidity and Capital Resources
As of December 31,
Change
(in thousands)
Cash, cash equivalents and short-term investments
2014
$ 788,778
$ 742,986
2013
Amount
%
Working capital
$ 645,394
$ 627,165
Cash, cash equivalents and short-term investments
$
$
45,792
18,229
6.2%
2.9%
Cash and cash equivalents consist primarily of highly liquid investments such as money market mutual funds and deposits held
at major banks. Short-term investments consist primarily of deposits held by certain foreign subsidiaries of the Company with
original maturities of three months to one year. The following table presents the Company's foreign and domestic holdings of
cash, cash equivalents and short-term investments:
(in thousands)
Domestic
Foreign
Total
2014
556,328
232,450
788,778
$
$
As of December 31,
% of
Total
70.5% $
29.5%
$
2013
530,680
212,306
742,986
% of
Total
71.4%
28.6%
If the foreign balances were repatriated to the U.S., they would be subject to domestic tax, resulting in a tax obligation in the
period of repatriation. In general, it is the practice and intention of the Company to repatriate previously taxed earnings and to
reinvest all other earnings of its non-U.S. subsidiaries. The amount of cash, cash equivalents and short-term investments held
by foreign subsidiaries is subject to translation adjustments caused by changes in foreign currency exchange rates as of the end
of each respective reporting period, the offset to which is recorded in accumulated other comprehensive income on the
Company’s consolidated balance sheet.
Cash Flows from Operating Activities
(in thousands)
Net cash provided by operating activities
2014
$ 385,307
2013
2012
2014 vs. 2013
2013 vs. 2012
$ 332,983
$ 298,415
$
52,324
$
34,568
Year Ended December 31,
Change
Fiscal year 2014 as compared to fiscal year 2013
Cash flows from operations increased during the current fiscal year due to increased net cash flows from operating assets and
liabilities of $38.1 million, including a $26.8 million refund related to the Company's 2009 and 2010 federal income tax
returns, and increased net income (net of non-cash operating adjustments) of $14.2 million.
Fiscal year 2013 as compared to fiscal year 2012
Cash flows from operations increased during the prior fiscal year due to increased net income (net of non-cash operating
adjustments) of $39.3 million and decreased net cash flows from operating assets and liabilities of $4.8 million.
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Cash Flows from Investing Activities
(in thousands)
2014
2013
2012
2014 vs. 2013
2013 vs. 2012
Net cash used in investing activities
$ (129,270) $ (33,177) $ (68,956) $
(96,093) $
35,779
Year Ended December 31,
Change
Fiscal year 2014 as compared to fiscal year 2013
Cash used in investing activities increased during the current fiscal year due primarily to increased acquisition-related cash
outlays of $98.8 million related to the acquisitions of SpaceClaim and Reaction Design as discussed below, partially offset by
decreased capital spending of $2.8 million. The Company currently plans capital spending of $25 million to $30 million during
fiscal year 2015 as compared to $26.0 million that was spent in 2014. The level of spending will be dependent upon various
factors, including growth of the business and general economic conditions.
Fiscal year 2013 as compared to fiscal year 2012
Cash used in investing activities decreased during the prior fiscal year due primarily to decreased acquisition-related cash
outlays of $40.9 million and increased capital spending of $4.9 million.
Cash Flows from Financing Activities:
(in thousands)
2014
2013
2012
2014 vs. 2013
2013 vs. 2012
Net cash used in financing activities
$ (185,642) $ (129,759) $ (124,846) $
(55,883) $
(4,913)
Year Ended December 31,
Change
Fiscal year 2014 as compared to fiscal year 2013
Cash used in financing activities increased during the current fiscal year due primarily to increased treasury stock repurchases
of $117.7 million, partially offset by decreased principal payments on long-term debt of $53.1 million. The Company paid the
outstanding balance of its term loan at maturity on July 31, 2013.
Fiscal year 2013 as compared to fiscal year 2012
Cash used in financing activities increased during the prior fiscal year due primarily to increased treasury stock repurchases of
$20.7 million, decreased excess tax benefits from stock option exercises of $3.9 million and restricted stock withholding taxes
paid in lieu of issued shares of $4.3 million, partially offset by decreased principal payments on long-term debt of $21.3
million.
Other Cash Flow Information
On February 3, 2015, the Company acquired the assets of Newmerical Technologies International ("NTI"), a leading developer
of in-flight icing simulation software, for a purchase price of approximately $10.5 million in cash. The acquisition will be
accounted for as a business combination. The operating results of NTI will be included in the Company's consolidated financial
statements from the date of acquisition and, accordingly, NTI's operating results are not included in the financial results
presented in this annual report on Form 10-K.
On April 30, 2014, the Company completed the acquisition of SpaceClaim, a leading provider of 3-D modeling technology.
Under the terms of the agreement, ANSYS acquired SpaceClaim for a purchase price of $85.0 million, which was paid almost
entirely in cash. The operating results of SpaceClaim have been included in the Company's consolidated financial statements
since the date of acquisition.
On January 3, 2014, the Company completed the acquisition of Reaction Design, a leading developer of chemistry simulation
software, for a purchase price of $19.1 million in cash. The operating results of Reaction Design are included in the Company's
consolidated financial statements from the date of acquisition.
The Company believes that existing cash and cash equivalent balances of $788.1 million, together with cash generated from
operations, will be sufficient to meet the Company’s working capital and capital expenditure requirements through the next
twelve months. 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.
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Under the Company's stock repurchase program, the Company repurchased shares as follows:
(in thousands, except shares and per share data)
Number of shares repurchased
Average price paid per share
Total cost
Year Ended December 31,
2014
2,976,885
2013
2012
1,494,001
1,500,000
$
$
78.54
233,793
$
$
77.73
116,132
$
$
63.65
95,477
As of December 31, 2014, 3.5 million shares remained available for repurchase under the Company's stock repurchase
program. The Company repurchased an additional 0.9 million shares in January 2015, for a total cost of $75.2 million. In
February 2015, the Company's Board of Directors increased the number of shares authorized for repurchase to a total of 5.0
million shares under the program.
The Company continues to generate positive cash flows from operating activities and believes that the best uses of its excess
cash are to invest in the business and repurchase stock in order to both offset dilution and return capital to stockholders in
excess of its requirements with the goal of increasing stockholder value. Additionally, the Company has in the past, and expects
in the future, to acquire or make investments in complementary companies, products, services and technologies. Any future
acquisitions may be funded by available cash and investments, cash generated from operations, credit facilities, or the issuance
of additional securities.
Off-Balance-Sheet Arrangements
The Company does not have any special-purpose entities or off-balance-sheet financing.
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Contractual Obligations
The Company's significant contractual obligations as of December 31, 2014 are summarized below:
Payments Due by Period
(in thousands)
Global headquarters operating lease(1)
Other operating leases(2)
Unconditional purchase obligations(3)
Obligations related to uncertain tax positions,
including interest and penalties(4)
Other long-term obligations(5)
Total contractual obligations
Total
49,415
29,838
9,821
Within 1 year
4,278
$
10,397
5,259
209
29,861
119,144
$
209
9,206
29,349
$
$
$
$
2 – 3 years
4 – 5 years
8,556
12,100
4,562
—
13,378
38,596
$
$
After 5 years
28,025
$
2,738
—
8,556
4,603
—
—
3,611
16,770
$
—
3,666
34,429
(1) On September 14, 2012, the Company entered into a lease agreement for 186,000 square feet of rentable space located
in an office facility in Canonsburg, Pennsylvania, which serves as the Company's new headquarters. The lease was
effective as of September 14, 2012, but because the leased premises were under construction, the Company was not
obligated to pay rent until three months following the date that the leased premises were delivered to ANSYS, which
occurred on October 1, 2014. The term of the lease is 183 months, beginning on October 1, 2014. The Company shall
have a one-time right to terminate the lease effective upon the last day of the tenth full year following the date of
possession (December 31, 2024), by providing the landlord with at least 18 months' prior written notice of such
termination. The Company's lease for its prior headquarters expired on December 31, 2014.
(2) Other operating leases primarily include noncancellable lease commitments for the Company’s other domestic and
international offices as well as certain operating equipment.
(3) Unconditional purchase obligations primarily include software licenses and long-term purchase contracts for network,
communication and office maintenance services, which are unrecorded as of December 31, 2014.
(4) The Company has $17.3 million of unrecognized tax benefits, including estimated interest and penalties, that have been
recorded as liabilities in accordance with income tax accounting guidance for which the Company is uncertain as to if
or when such amounts may be settled. As a result, such amounts are excluded from the table above.
(5) Other long-term obligations primarily include deferred compensation of $18.5 million (including estimated imputed
interest of $300,000 within 1 year, $450,000 within 2-3 years and $90,000 within 4-5 years), pension obligations of
$6.3 million for certain foreign locations of the Company and contingent consideration of $2.8 million (including
estimated imputed interest of $270,000 within 1 year and $390,000 within 2-3 years).
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Critical Accounting Policies and Estimates
The Company believes that the following critical accounting policies affect the more significant judgments and estimates used
in the preparation of its consolidated financial statements.
Revenue Recognition: Revenue is derived principally from the licensing of computer software products and from related
maintenance contracts. Revenue from perpetual licenses is classified as license revenue and is recognized upon delivery of the
licensed product and the utility that enables the customer to access authorization keys, provided that acceptance has occurred
and a signed contractual obligation has been received, the price is fixed and determinable, and collectibility of the receivable is
probable. The Company determines the fair value of post-contract customer support ("PCS") sold together with perpetual
licenses based on the rate charged for PCS when sold separately. Revenue from PCS contracts is classified as maintenance and
service revenue and is recognized ratably over the term of the contract.
Revenue for software lease licenses is classified as license revenue and is recognized over the period of the lease contract.
Typically, the Company’s software leases include PCS which, due to the short term (principally one year or less) of the
Company’s software lease licenses, cannot be separated from lease revenue for accounting purposes. As a result, both the lease
license and PCS are recognized ratably over the lease period. Due to the short-term nature of the software lease licenses and the
frequency with which the Company provides major product upgrades (typically every 12–18 months), the Company does not
believe that a significant portion of the fee paid under the arrangement is attributable to the PCS component of the arrangement
and, as a result, includes the revenue for the entire arrangement within software license revenue in the consolidated statements
of income.
The Company's Apache products are typically licensed via longer term leases of 24–36 months. The Company recognizes
revenue for these licenses over the term of the lease contract. Because the Company does not have vendor-specific objective
evidence of the fair value of these leases, the Company also recognizes revenue from perpetual licenses over the term of the
lease contract during the infrequent occurrence of these licenses being sold with Apache leases in multiple-element
arrangements.
Revenue from training, support and other services is recognized as the services are performed. The Company applies the
specific performance method to contracts in which the service consists of a single act, such as providing a training class to a
customer, and the proportional performance method to other service contracts that are longer in duration and often include
multiple acts (for example, both training and consulting). In applying the proportional performance method, the Company
typically utilizes output-based estimates for services with contractual billing arrangements that are not based on time and
materials, and estimates output based on the total tasks completed as compared to the total tasks required for each work
contract. Input-based estimates are utilized for services that involve general consultations with contractual billing arrangements
based on time and materials, utilizing direct labor as the input measure.
The Company also executes arrangements through independent channel partners in which the channel partners are authorized
to market and distribute the Company’s software products to end-users of the Company’s products and services in specified
territories. In sales facilitated by channel partners, the channel partner bears the risk of collection from the end-user customer.
The Company recognizes revenue from transactions with channel partners when the channel partner submits a written purchase
commitment, collectibility from the channel partner is probable, a signed license agreement is received from the end-user
customer and delivery has occurred, provided that all other revenue recognition criteria are satisfied. Revenue from channel
partner transactions is the amount remitted to the Company by the channel partners. This amount includes a fee for PCS that is
compensation for providing technical enhancements and the second level of technical support to the end-user, which is based
on the rate charged for PCS when sold separately, and is recognized over the period that PCS is to be provided. The Company
does not offer right of return, product rotation or price protection to any of its channel partners.
Non-income related taxes collected from customers and remitted to governmental authorities are recorded on the consolidated
balance sheet as accounts receivable and accrued expenses. The collection and payment of these amounts are reported on a net
basis in the consolidated statements of income and do not impact reported revenues or expenses.
The Company warrants to its customers that its software will substantially perform as specified in the Company’s most current
user manuals. The Company has not experienced significant claims related to software warranties beyond the scope of
maintenance support, which the Company is already obligated to provide, and consequently, the Company has not established
reserves for warranty obligations.
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The Company’s agreements with its customers generally require it to indemnify the customer against claims that the
Company’s software infringes third-party patent, copyright, trademark or other proprietary rights. Such indemnification
obligations are generally limited in a variety of industry-standard respects, including the Company’s right to replace an
infringing product. As of December 31, 2014, the Company had not experienced any losses related to these indemnification
obligations and no claims with respect thereto were outstanding. The Company does not expect significant claims related to
these indemnification obligations, and consequently, the Company has not established any related reserves.
Allowance for Doubtful Accounts: The Company makes judgments as to its ability to collect outstanding receivables and
provides allowances for a portion of receivables when collection becomes doubtful. Provisions are made based upon a specific
review of all significant outstanding invoices from both value and delinquency perspectives. For those invoices not specifically
reviewed, provisions are provided at differing rates based upon the age of the receivable and the geographic area of origin. In
determining these percentages, the Company considers its historical collection experience and current economic trends in the
customer’s industry and geographic region. If the historical data used to calculate the allowance for doubtful accounts does not
reflect the future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and
future results of operations could be materially affected.
Income Taxes: The Company accounts for income taxes under the asset and liability method, which requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial
statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are
expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the
period of the enactment date.
The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. In
making such determination, the Company considers all available positive and negative evidence, including scheduled reversals
of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In the event
the Company determines that it will be able to realize deferred income tax assets in the future in excess of their net recorded
amount, an adjustment to the valuation allowance would be recorded that would reduce the provision for income taxes.
Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits
meet a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively
settled, which means that the statute of limitations has expired or the appropriate taxing authority has completed their
examination even though the statute of limitations remains open. The Company recognizes interest and penalties related to
income taxes within the income tax expense line in the consolidated statements of income. Accrued interest and penalties are
included within the related tax liability line in the consolidated balance sheets.
Goodwill and Indefinite-Lived Intangible Assets: The Company tests goodwill and indefinite-lived intangible assets for
impairment at least annually by performing a quantitative assessment of whether the fair value of each reporting unit or asset
exceeds its carrying amount. Goodwill is tested at the reporting unit level and indefinite-lived intangible assets are tested at the
individual asset level. This requires the Company to assess and make judgments regarding a variety of factors which impact the
fair value of the reporting unit or asset being tested, including business plans, anticipated future cash flows, economic
projections and other market data. Because there are inherent uncertainties involved in these factors, significant differences
between these estimates and actual results could result in future impairment charges and could materially impact the Company's
future financial results. During the first quarter of 2014, the Company completed the annual impairment test for goodwill and
indefinite-lived intangible assets and determined that these assets had not been impaired as of the test date, January 1, 2014.
Contingencies: The Company is involved in various investigations, claims and legal proceedings that arise in the ordinary
course of business, including commercial disputes, labor and employment matters, tax audits, alleged infringement of
intellectual property rights and other matters. The Company reviews the status of these matters, assesses its financial exposure
and records a related accrual if the potential loss from an investigation, claim or legal proceeding is probable and the amount is
reasonably estimable. Significant judgment is involved in the determination of probability and in the determination of whether
an exposure is reasonably estimable. As a result of the uncertainties involved in making these estimates, the Company may
have to revise its estimates as facts and circumstances change. The revision of these estimates could have a material impact on
the Company’s financial position and results of operations.
Stock-Based Compensation: The Company grants options and other stock awards to employees and directors under the
Company’s stock option and grant plan. Eligible employees can also purchase shares of the Company’s common stock at a
discount under the Company’s employee stock purchase plan. The benefits provided under these plans are share-based
payments subject to the provisions of share-based payment accounting guidance. The Company uses the fair value method to
apply the provisions of share-based payment accounting guidance. Stock-based compensation expense for 2014, 2013 and 2012
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was $36.9 million, $35.3 million and $32.4 million, respectively. As of December 31, 2014, total unrecognized estimated
compensation expense related to unvested stock options granted prior to that date was $21.3 million, which is expected to be
recognized over a weighted average period of 1.5 years.
The value of each stock option award was estimated on the date of grant, or date of acquisition for options issued in a business
combination, using the Black-Scholes option pricing model (“Black-Scholes model”). The determination of the fair value of
share-based payment awards using an option pricing model is affected by the Company’s stock price as well as assumptions
regarding a number of complex and subjective variables. These variables include the Company’s expected stock price volatility
over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and
expected dividends. The table below presents the weighted average input assumptions used and resulting fair values for options
granted or issued in business combinations during each respective year. The stock-based compensation expense for options is
recorded ratably over their requisite service period. The interest rate assumptions were determined by using the five-year U.S.
Treasury Note yield on the date of grant or date of acquisition.
Risk-free interest rate
Expected dividend yield
Expected volatility
Expected term
Weighted average fair value per share
Year Ended December 31,
2014
1.49% to 1.76%
—%
35%
5.7 years
$32.26
2013
0.68% to 1.48%
—%
37%
5.8 years
$29.85
2012
0.59% to 1.04%
—%
38%
6.0 years
$24.82
Prior to 2012, the Company issued both non-qualified and incentive stock options; however, the Company no longer issues
incentive stock options. The tax benefits associated with the outstanding incentive stock options are unpredictable, as they are
predicated upon an award recipient triggering an event that disqualifies the award and that then results in a tax deduction to the
Company.
Under the terms of the ANSYS, Inc. Long-Term Incentive Plan or in conjunction with an acquisition agreement, the Company
issues various restricted stock awards which may have a single or combination of a market condition, an operating performance
condition or a service condition. Restricted stock awards with a service condition or an operating performance condition are
valued based on the grant date fair value of the award. Stock compensation expense is recognized over the employee's requisite
service period for awards with only a service condition. For awards with an operating performance condition, stock-based
compensation expense is recorded from the service inception date through the conclusion of the measurement period based on
management’s estimates concerning the probability of vesting. Vesting of restricted stock awards with a market condition or a
portion thereof is based on the Company’s performance as measured by total shareholder return relative to the median
percentage appreciation of the NASDAQ Composite Index over a specified measurement period, subject to each participant’s
continued employment with the Company through the conclusion of the measurement period. The fair value of the restricted
stock units is estimated using a Monte Carlo simulation model. The determination of the fair value of the awards is affected by
the grant date and a number of variables, each of which has been identified in the chart below for awards granted during each
respective period. Share-based compensation expense based on the fair value of the award is being recorded from the grant date
through the conclusion of the measurement period.
Assumptions used in Monte Carlo lattice pricing model
Risk-free interest rate
Expected dividend yield
Expected volatility—ANSYS Stock Price
Expected volatility—NASDAQ Composite Index
Expected term
Correlation factor
Weighted average fair value per share
Year Ended December 31,
2014
0.70%
—%
25%
15%
2.8 years
0.70
$65.94
2013
0.35%
—%
25%
20%
2.8 years
0.70
$50.05
2012
0.16%
—%
28%
20%
2.8 years
0.75
$33.16
The Company also grants deferred stock units to non-affiliate Independent Directors, which are rights to receive shares of
common stock upon termination of service as a Director. The deferred stock units are issued in arrears and vest immediately.
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To the extent the Company changes the terms of its stock-based compensation programs, experiences market volatility in the
pricing of its common stock that increases the implied volatility assumption used in the Black-Scholes model, refines different
assumptions in future periods such as forfeiture rates that differ from current estimates, or assumes stock awards from acquired
companies that are different in nature than the Company's stock award arrangements, among other potential impacts, the stock-
based compensation expense recorded in future periods and the related tax benefits may differ significantly from what was
recorded in previous reporting periods.
Estimates of stock-based compensation expense are significant to the Company’s financial statements, but this expense is based
on the aforementioned option valuation models and will never result in the payment of cash by the Company. For this reason,
and because the Company does not view stock-based compensation as related to its operational performance, the Board of
Directors and management exclude stock-based compensation expense when evaluating the Company’s underlying business
performance.
Recent Accounting Guidance
For information regarding recent accounting guidance and the impact of this guidance on the Company’s consolidated financial
statements, see Note 2 to the consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Income Rate Risk. Changes in the overall level of interest rates affect the interest income that is generated from the
Company’s cash and short-term investments. For the year ended December 31, 2014, total interest income was $3.0 million.
Cash and cash equivalents consist primarily of highly liquid investments such as money market mutual funds and deposits held
at major banks.
Foreign Currency Transaction Risk. As the Company continues to expand its business presence in international regions, the
portion of its revenue, expenses, cash, accounts receivable and payment obligations denominated in foreign currencies
continues to increase. As a result, changes in currency exchange rates will affect the Company’s financial position, results of
operations and cash flows. The Company is most impacted by movements in and among the Japanese Yen, Euro, British Pound,
Korean Won, Indian Rupee, Russian Rouble and U.S. Dollar.
With respect to revenue, on average for the year ended December 31, 2014, the U.S. Dollar was 1.6% stronger, when measured
against the Company’s primary foreign currencies, than for the year ended December 31, 2013. The net overall strengthening
resulted in decreased revenue of $7.6 million during the year ended December 31, 2014 as compared to the year ended
December 31, 2013. The impact on revenue was primarily driven by $9.8 million of adverse impact due to a weakening
Japanese Yen, partially offset by $1.9 million of favorable impact due to a strengthening British Pound. The net overall
strengthening of the U.S. Dollar also resulted in decreased operating income of $5.1 million during the year ended
December 31, 2014 as compared to the year ended December 31, 2013.
The Company has foreign currency denominated liabilities. In order to provide a natural hedge to mitigate the foreign currency
exchange risk, the Company will purchase foreign currencies and hold these currencies in cash until the liabilities are settled.
The most significant currency impacts on revenue and operating income are typically attributable to U.S. Dollar exchange rate
changes against the British Pound, Euro and Japanese Yen. The exchange rates for these currencies are reflected in the charts
below:
As of
December 31, 2011
December 31, 2012
December 31, 2013
December 31, 2014
Twelve Months Ended
December 31, 2012
December 31, 2013
December 31, 2014
Period End Exchange Rates
GBP/USD
EUR/USD
USD/JPY
1.554
1.625
1.656
1.557
1.296
1.320
1.375
1.210
76.917
86.730
105.263
119.703
Average Exchange Rates
GBP/USD
EUR/USD
USD/JPY
1.580
1.565
1.648
1.286
1.328
1.329
79.794
97.463
105.592
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following tables set forth selected unaudited quarterly information. The Company believes that the amounts stated below
present fairly the results of such periods when read in conjunction with the consolidated financial statements and related notes
included in Part IV, Item 15 of this Annual Report on Form 10-K.
Other information required by this Item is included in Part IV, Item 15 of this Annual Report on Form 10-K.
(in thousands, except per share data)
Revenue
Gross profit
Operating income
Net income
Earnings per share – basic
Earnings per share – diluted
(in thousands, except per share data)
Revenue
Gross profit
Operating income
Net income
Earnings per share – basic
Earnings per share – diluted
December 31,
2014
September 30,
2014
June 30,
2014
March 31,
2014
Fiscal Quarter Ended
$
$
$
$
$
$
254,375
214,606
94,048
69,633
0.76
0.74
December 31,
2013
236,020
197,411
92,252
75,929
0.82
0.80
$
$
$
$
$
$
234,000
196,806
90,808
65,479
0.71
0.70
$
$
$
232,375
193,697
83,532
63,036
0.68
0.67
Fiscal Quarter Ended
September 30,
2013
June 30,
2013
212,658
177,489
81,637
62,430
0.67
0.66
$
$
$
214,850
178,170
78,425
55,945
0.60
0.59
$
$
$
$
$
$
215,271
177,526
79,062
56,542
0.61
0.60
March 31,
2013
197,732
161,498
69,549
51,023
0.55
0.54
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ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. As required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of
1934, as amended, or the Exchange Act, the Company has evaluated, with the participation of management, including the Chief
Executive Officer and the Chief Financial Officer, the effectiveness of the design and operation of its disclosure controls and
procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that such disclosure controls and procedures are effective, as defined in Rule 13a-15(e) of the
Exchange Act.
The Company has a Disclosure Review Committee to assist in the quarterly evaluation of the Company’s internal disclosure
controls and procedures and in the review of the Company’s periodic filings under the Exchange Act. The membership of the
Disclosure Review Committee consists of the Company’s Chief Executive Officer, Chief Financial Officer, Global Controller,
General Counsel, Director of Investor Relations and Global Insurance, Vice President of Worldwide Sales and Support, Vice
President of Human Resources and Chief Product Officer. This committee is advised by external counsel, particularly on SEC-
related matters. Additionally, other members of the Company’s global management team advise the committee with respect to
disclosure via a sub-certification process.
The Company believes, based on its knowledge, that the financial statements and other financial information included in this
report fairly present, in all material respects, the financial condition, results of operations and cash flows of the Company as of
and for the periods presented in this report. The Company is committed to both a sound internal control environment and to
good corporate governance.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
From time to time, the Company reviews the disclosure controls and procedures, and may periodically make changes to
enhance their effectiveness and to ensure that the Company’s systems evolve with its business.
Report on Internal Control over Financial Reporting. The Company’s management is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under
the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer
and Chief Financial Officer, the Company has conducted an evaluation of the effectiveness of its internal control over financial
reporting based upon the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, the Company’s Chief Executive Officer and Chief
Financial Officer have concluded that the Company’s internal control over financial reporting was effective at December 31,
2014.
Additionally, Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on the
Company’s internal control over financial reporting. This report is included in Item 15 of this Annual Report on Form 10-K.
Changes in Internal Controls. There were no changes in the Company’s internal controls over financial reporting that occurred
during the three months ended December 31, 2014 that materially affected, or were reasonably likely to materially affect, the
Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item is incorporated by reference to the Company’s 2015 Proxy Statement and is set forth
under “Our Board of Directors,” “Our Executive Officers” and “Ownership of Our Common Stock” therein.
PART III
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the Company’s 2015 Proxy Statement and is set forth
under “Our Board of Directors” and “Our Executive Officers” therein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated by reference to the Company’s 2015 Proxy Statement and is set forth
under “Ownership of Our Common Stock” therein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated by reference to the Company’s 2015 Proxy Statement and is set forth
under “Our Board of Directors” therein.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference to the Company’s 2015 Proxy Statement and is set forth
under “Independent Registered Public Accounting Firm” therein.
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
Documents Filed as Part of this Annual Report on Form 10-K:
PART IV
1.
Financial Statements: The following consolidated financial statements and reports of independent registered
public accounting firm are filed as part of this report:
-
-
-
-
-
-
-
-
Management's Report on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2014 and 2013
Consolidated Statements of Income for the years ended December 31, 2014, 2013 and 2012
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014,
2013 and 2012
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2014, 2013
and 2012
Notes to Consolidated Financial Statements
54
55
57
58
59
60
61
62
2.
Financial Statement Schedule: The following financial statement schedule is filed as part of this report and
should be read in conjunction with the consolidated financial statements.
-
Schedule II - Valuation and Qualifying Accounts
86
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.
3.
Exhibits: The Exhibits listed in the accompanying Exhibit Index immediately following the financial statement
schedule are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K.
(b)
Exhibits:
The Company hereby files as part of this Annual Report on Form 10-K the Exhibits listed in the exhibit index that
follows the Signatures page of this Annual Report on Form 10-K.
1.
Financial Statement Schedule
The Company hereby files as part of this Annual Report on Form 10-K the financial statement schedule listed in
Item 15(a)(2) as set forth above.
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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting for
the Company. In order to evaluate the effectiveness of internal control over financial reporting, management has conducted an
assessment, including testing, using the financial reporting criteria in the Internal Control—Integrated Framework (2013),
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
The Company’s system of internal control over financial reporting is designed to provide reasonable assurance to the
Company’s management and board of directors regarding the reliability of financial records used in preparation of the
Company’s published financial statements. As all internal control systems have inherent limitations, even systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Based on
its assessment, management has concluded that the Company maintained an effective system of internal control over financial
reporting as of December 31, 2014. Deloitte & Touche LLP, an independent registered public accounting firm, has audited the
Company’s internal control over financial reporting as of December 31, 2014, as stated in their report which appears in Part IV,
Item 15 of this Annual Report on Form 10-K.
/s/ JAMES E. CASHMAN III
James E. Cashman III
President and Chief Executive Officer
February 26, 2015
/s/ MARIA T. SHIELDS
Maria T. Shields
Chief Financial Officer
February 26, 2015
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of ANSYS, Inc.
Canonsburg, Pennsylvania
We have audited the accompanying consolidated balance sheets of ANSYS, Inc. and subsidiaries (the "Company") as of
December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial
statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards 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. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of ANSYS,
Inc. and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the Company's internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated February 26, 2015 expressed an unqualified opinion on the Company’s internal control over financial
reporting.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
February 26, 2015
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of ANSYS, Inc.
Canonsburg, Pennsylvania
We have audited the internal control over financial reporting of ANSYS, Inc. and subsidiaries (the "Company") as of
December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's
principal executive and principal financial officers, or persons performing similar functions, and effected by the company's
board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a
timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2014, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2014 of the
Company and our report dated February 26, 2015 expressed an unqualified opinion on those financial statements and financial
statement schedule.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
February 26, 2015
56
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, less allowance for doubtful accounts of $5,500 and $5,700,
respectively
Other receivables and current assets
Deferred income taxes
Total current assets
Property and equipment, net
Construction-in-progress - leased facility
Goodwill
Other intangible assets, net
Other long-term assets
Deferred income taxes
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued bonuses and commissions
Accrued income taxes
Deferred income taxes
Other accrued expenses and liabilities
Deferred revenue
Total current liabilities
Long-term liabilities:
Non-cash obligations for construction-in-progress - leased facility
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value; 2,000,000 shares authorized; zero shares issued or
outstanding
Common stock, $.01 par value; 300,000,000 shares authorized; 93,236,023 shares
issued
Additional paid-in capital
Retained earnings
Treasury stock, at cost: 2,470,675 and 917,937 shares, respectively
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
December 31,
2014
2013
$
788,064
714
$
742,486
500
101,229
192,308
28,178
1,110,493
64,643
—
1,312,182
259,312
6,187
21,286
2,774,103
3,421
47,001
7,127
24
74,862
332,664
465,099
—
37,390
54,113
91,503
$
$
97,845
200,734
26,031
1,067,596
60,538
18,136
1,255,704
291,390
10,586
18,432
2,722,382
7,939
43,992
9,333
49
69,343
309,775
440,431
18,136
66,899
60,670
145,705
—
—
932
904,825
1,539,508
(196,010)
(31,754)
2,217,501
2,774,103
$
932
926,031
1,284,818
(72,891)
(2,644)
2,136,246
2,722,382
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
57
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Revenue:
Software licenses
Maintenance and service
Total revenue
Cost of sales:
Software licenses
Amortization
Maintenance and service
Total cost of sales
Gross profit
Operating expenses:
Selling, general and administrative
Research and development
Amortization
Total operating expenses
Operating income
Interest expense
Interest income
Other expense, net
Income before income tax provision
Income tax provision
Net income
Earnings per share – basic:
Basic earnings per share
Weighted average shares – basic
Earnings per share – diluted:
Diluted earnings per share
Weighted average shares – diluted
Year Ended December 31,
2014
2013
2012
$
564,502
$
528,944
$
501,870
371,519
936,021
30,607
37,653
85,126
153,386
782,635
246,376
165,421
23,388
435,185
347,450
(779)
3,002
(1,534)
348,139
93,449
254,690
2.77
92,067
$
$
332,316
861,260
28,363
38,298
80,031
146,692
714,568
218,907
151,439
22,359
392,705
321,863
(1,169)
2,841
(1,046)
322,489
77,162
245,327
2.65
92,691
$
$
2.70
$
2.58
$
94,194
95,139
296,148
798,018
24,512
40,889
74,115
139,516
658,502
205,178
132,628
26,443
364,249
294,253
(2,661)
3,360
(1,405)
293,547
90,064
203,483
2.20
92,622
2.14
94,954
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Other comprehensive loss:
Foreign currency translation adjustments
Comprehensive income
Year Ended December 31,
2014
254,690
(29,110)
225,580
$
$
$
$
2013
2012
245,327
$
203,483
(11,295)
234,032
$
(3,225)
200,258
The accompanying notes are an integral part of the consolidated financial statements.
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Deferred income tax benefit
Provision for bad debts
Stock-based compensation expense
Excess tax benefits from stock-based compensation
Other
Changes in operating assets and liabilities:
Accounts receivable
Other receivables and current assets
Other long-term assets
Accounts payable, accrued expenses and current liabilities
Accrued income taxes
Deferred revenue
Other long-term liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Acquisitions, net of cash acquired
Capital expenditures
Purchases of short-term investments
Maturities of short-term investments
Year Ended December 31,
2014
2013
2012
$
254,690
$
245,327
$
203,483
81,924
(18,859)
2,104
36,861
(14,531)
868
(5,554)
(877)
(1,838)
8,208
12,102
35,548
(5,339)
385,307
(103,016)
(26,023)
(355)
124
80,701
(24,025)
1,465
35,298
(9,971)
73
(2,983)
(44,162)
(462)
15,737
11,876
42,105
(17,996)
332,983
(4,224)
(28,848)
(261)
156
85,422
(18,896)
938
32,415
(13,888)
69
(12,401)
(50,485)
5,027
9,548
14,616
47,748
(5,181)
298,415
(45,075)
(23,977)
(228)
324
Net cash used in investing activities
(129,270)
(33,177)
(68,956)
Cash flows from financing activities:
Principal payments on long-term debt
Principal payments on capital leases
Purchase of treasury stock
Restricted stock withholding taxes paid in lieu of issued shares
Contingent consideration payments
Proceeds from issuance of common stock under Employee Stock Purchase Plan
Proceeds from exercise of stock options
Excess tax benefits from stock-based compensation
Net cash used in financing activities
Effect of exchange rate fluctuations on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental disclosures of cash flow information:
Income taxes paid
Interest paid
Change in construction-in-progress - leased facility
—
(91)
(53,149)
(74,408)
—
(14)
(233,793)
(116,132)
(95,477)
(5,108)
(4,504)
3,629
39,694
14,531
(4,269)
(3,174)
2,987
34,007
9,971
—
(3,241)
2,446
31,960
13,888
(185,642)
(129,759)
(124,846)
(24,817)
(4,264)
45,578
742,486
788,064
118,004
643
$
$
$
165,783
576,703
742,486
97,706
736
(18,136) $
18,136
$
$
$
$
262
104,875
471,828
576,703
103,196
1,970
—
$
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
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ANSYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
Common Stock
Shares
Amount
Additional
Paid-in
Capital
Retained
Earnings
Treasury Stock
Shares
Amount
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity
Balance, January 1, 2012
92,652
$
927
$
905,662
$
836,008
— $
— $
11,876
$
1,754,473
Treasury shares acquired
Stock-based compensation
activity, including tax benefit
of $14,216
Issuance of common stock
under Employee Stock
Purchase Plan
Other comprehensive loss
Net income for the year
525
25
1,500
(95,477)
5
20,791
(939)
57,795
915
(25)
1,531
203,483
Balance, December 31, 2012
93,202
932
927,368
1,039,491
Treasury shares acquired
Stock-based compensation
activity, including tax benefit
of $10,033
Issuance of common stock
under Employee Stock
Purchase Plan
Other comprehensive loss
Net income for the year
34
(806)
(531)
245,327
Balance, December 31, 2013
93,236
932
926,031
1,284,818
536
1,494
(36,151)
(116,132)
(1,063)
75,874
(49)
3,518
(95,477)
78,591
2,446
(3,225)
203,483
1,940,291
(116,132)
75,068
2,987
(11,295)
245,327
(3,225)
8,651
(11,295)
Treasury shares acquired
Stock-based compensation
activity, including tax
benefit of $14,970
Issuance of common stock
under Employee Stock
Purchase Plan
Other comprehensive loss
Net income for the year
Acquisition-related activity
918
2,977
(72,891)
(233,793)
(2,644)
2,136,246
(233,793)
(20,113)
(1,372)
106,530
(515)
(578)
254,690
(52)
4,144
(29,110)
86,417
3,629
(29,110)
254,690
(578)
Balance, December 31, 2014
93,236
$
932
$
904,825
$ 1,539,508
2,471
$ (196,010) $
(31,754) $
2,217,501
The accompanying notes are an integral part of the consolidated financial statements.
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1. Organization
ANSYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
ANSYS, Inc. (hereafter the "Company" or "ANSYS") develops and globally markets engineering simulation software and
technologies widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia,
including aerospace, automotive, manufacturing, electronics, biomedical, energy and defense.
As defined by the accounting guidance, the Company operates as three segments. However, the Company determined that its
three operating segments are sufficiently similar and should be aggregated under the criteria provided in the related accounting
guidance.
Given the integrated approach to the multi-discipline problem-solving needs of the Company’s customers, a single sale of
software may contain components from multiple product areas and include combined technologies. The Company also has a
multi-year product and integration strategy that will result in new, combined products or changes to the historical product
offerings. As a result, it is impracticable for the Company to provide accurate historical or current reporting among its various
product lines.
2. Accounting Policies
Accounting Principles
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in
the United States.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.
All intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
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. Significant estimates included in these consolidated financial statements include:
• Allowances for doubtful accounts receivable
•
Income tax accruals
• Uncertain tax positions
• Tax valuation reserves
•
Fair value of stock-based compensation
• Contract revenue
• Useful lives for depreciation and amortization
• Valuations of goodwill and other intangible assets
• Contingent consideration
• Deferred compensation
• Loss contingencies
Actual results could differ from these estimates. Changes in estimates are recorded in the results of operations in the period that
the changes occur.
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Revenue Recognition
Revenue is derived principally from the licensing of computer software products and from related maintenance contracts.
Revenue from perpetual licenses is classified as license revenue and is recognized upon delivery of the licensed product and the
utility that enables the customer to access authorization keys, provided that acceptance has occurred and a signed contractual
obligation has been received, the price is fixed and determinable, and collectibility of the receivable is probable. The Company
determines the fair value of PCS sold together with perpetual licenses based on the rate charged for PCS when sold separately.
Revenue from PCS contracts is classified as maintenance and service revenue and is recognized ratably over the term of the
contract.
Revenue for software lease licenses is classified as license revenue and is recognized over the period of the lease contract.
Typically, the Company’s software leases include PCS which, due to the short term (principally one year or less) of the
Company’s software lease licenses, cannot be separated from lease revenue for accounting purposes. As a result, both the lease
license and PCS are recognized ratably over the lease period. Due to the short-term nature of the software lease licenses and the
frequency with which the Company provides major product upgrades (typically every 12–18 months), the Company does not
believe that a significant portion of the fee paid under the arrangement is attributable to the PCS component of the arrangement
and, as a result, includes the revenue for the entire arrangement within software license revenue in the consolidated statements
of income.
The Company's Apache products are typically licensed via longer term leases of 24–36 months. The Company recognizes
revenue for these licenses over the term of the lease contract. Because the Company does not have vendor-specific objective
evidence of the fair value of these leases, the Company also recognizes revenue from perpetual licenses over the term of the
lease contract during the infrequent occurrence of these licenses being sold with Apache leases in multiple-element
arrangements.
Revenue from training, support and other services is recognized as the services are performed. The Company applies the
specific performance method to contracts in which the service consists of a single act, such as providing a training class to a
customer, and the proportional performance method to other service contracts that are longer in duration and often include
multiple acts (for example, both training and consulting). In applying the proportional performance method, the Company
typically utilizes output-based estimates for services with contractual billing arrangements that are not based on time and
materials, and estimates output based on the total tasks completed as compared to the total tasks required for each work
contract. Input-based estimates are utilized for services that involve general consultations with contractual billing arrangements
based on time and materials, utilizing direct labor as the input measure.
The Company also executes arrangements through independent channel partners in which the channel partners are authorized
to market and distribute the Company’s software products to end-users of the Company’s products and services in specified
territories. In sales facilitated by channel partners, the channel partner bears the risk of collection from the end-user customer.
The Company recognizes revenue from transactions with channel partners when the channel partner submits a written purchase
commitment, collectibility from the channel partner is probable, a signed license agreement is received from the end-user
customer and delivery has occurred, provided that all other revenue recognition criteria are satisfied. Revenue from channel
partner transactions is the amount remitted to the Company by the channel partners. This amount includes a fee for PCS that is
compensation for providing technical enhancements and the second level of technical support to the end-user, which is based
on the rate charged for PCS when sold separately, and is recognized over the period that PCS is to be provided. The Company
does not offer right of return, product rotation or price protection to any of its channel partners.
Non-income related taxes collected from customers and remitted to governmental authorities are recorded on the consolidated
balance sheet as accounts receivable and accrued expenses. The collection and payment of these amounts are reported on a net
basis in the consolidated statements of income and do not impact reported revenues or expenses.
The Company warrants to its customers that its software will substantially perform as specified in the Company’s most current
user manuals. The Company has not experienced significant claims related to software warranties beyond the scope of
maintenance support, which the Company is already obligated to provide, and consequently the Company has not established
reserves for warranty obligations.
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Cash and Cash Equivalents
Cash and cash equivalents consist primarily of highly liquid investments such as deposits held at major banks and money
market mutual funds with original maturities of three months or less. Cash equivalents are carried at cost, which approximates
fair value. The Company’s cash and cash equivalents balances comprise the following:
(in thousands, except percentages)
Cash accounts
Money market mutual funds
Total
December 31, 2014
December 31, 2013
Amount
% of Total
Amount
% of Total
$
$
506,731
281,333
788,064
64.3
35.7
$
$
439,348
303,138
742,486
59.2
40.8
The Company's money market mutual fund balances are held in various funds of a single issuer.
Short-Term Investments
Short-term investments consist primarily of deposits held by certain foreign subsidiaries of the Company with original
maturities of three months to one year. The Company considers investments backed by government agencies or financial
institutions with maturities of less than one year to be highly liquid and classifies such investments as short-term investments.
Short-term investments are recorded at fair value. The Company uses the specific identification method to determine the
realized gain or loss upon the sale of such securities.
The Company is averse to principal loss and seeks to preserve invested funds by limiting default risk, market risk and
reinvestment risk by placing its investments with high-quality credit issuers.
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 40 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 operating income.
Research and Development
Research and development costs, other than certain capitalized software development costs, are expensed as incurred.
Software Development Costs
Internally developed software costs required to be capitalized as defined by the accounting guidance are not material to the
Company's consolidated financial statements.
Business Combinations
When the Company consummates an acquisition, the assets acquired and the liabilities assumed are recognized separately from
goodwill, at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of the fair value of
consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While
best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition date as
well as contingent consideration, where applicable, the Company's estimates are inherently uncertain and subject to refinement.
As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records
adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill based on refinements to
information regarding what was known and knowable as of the acquisition date. Upon the earlier of the conclusion of the
measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments
are recorded in the consolidated statements of income.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the consideration transferred over the fair value of net identifiable assets acquired. Other
intangible assets consist of trade names, customer lists, contract backlog, acquired software and technology, and a non-compete
agreement. Intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives, which
are generally two to fifteen years. Amortization expense for intangible assets was $61.0 million, $60.7 million and $67.3
million for the years ended December 31, 2014, 2013 and 2012, respectively.
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The Company tests goodwill and indefinite-lived intangible assets for impairment at least annually by performing a quantitative
assessment of whether the fair value of each reporting unit or asset exceeds its carrying amount. Goodwill is tested at the
reporting unit level and indefinite-lived intangible assets are tested at the individual asset level. This requires the Company to
assess and make judgments regarding a variety of factors which impact the fair value of the reporting unit or asset being tested,
including business plans, anticipated future cash flows, economic projections and other market data.
The Company performs its annual impairment tests for goodwill and indefinite-lived intangible assets on January 1 of each
year unless there is an indicator that would require a test during the year. The Company periodically reviews the carrying value
of other intangible assets and will recognize impairments when events or circumstances indicate that such assets may be
impaired.
Concentrations of Credit Risk
The Company has a concentration of credit risk with respect to revenue and trade receivables due to the use of certain
significant channel partners to market and sell the Company’s products. The Company performs periodic credit evaluations of
its customers’ financial condition and generally does not require collateral. The following table outlines concentrations of risk
with respect to the Company’s revenue:
(as a % of revenue)
Revenue from channel partners
Largest channel partner
2nd largest channel partner
Year Ended December 31,
2014
2013
2012
25%
4%
2%
25%
6%
2%
26%
6%
3%
No single customer accounted for more than 5% of the Company's revenue in 2014, 2013 or 2012.
In addition to the concentration of credit risk with respect to trade receivables, the Company’s cash and cash equivalents are
also exposed to concentration of credit risk. The Company's cash and cash equivalent accounts are insured through various
public and private bank deposit insurance programs, foreign and domestic; however, a significant portion of the Company's
funds are not insured. The following table outlines concentrations of risk with respect to the Company's cash and cash
equivalents:
(in thousands)
Cash and cash equivalents held domestically
Cash and cash equivalents held by foreign subsidiaries
Cash and cash equivalents held in excess of deposit insurance, foreign and domestic
Cash and cash equivalents held with one U.S. financial institution, foreign and domestic
$
As of December 31,
2014
2013
$
556,328
231,736
747,911
350,628
530,680
211,806
717,589
378,562
Allowance for Doubtful Accounts
The Company makes judgments as to its ability to collect outstanding receivables and provides allowances for a portion of
receivables when collection becomes doubtful. Provisions are made based upon a specific review of all significant outstanding
invoices from both value and delinquency perspectives. For those invoices not specifically reviewed, provisions are estimated
at differing rates based upon the age of the receivable and the geographic area of origin. In determining these percentages, the
Company considers its historical collection experience and current economic trends in the customer’s industry and geographic
region. The Company recorded provisions for doubtful accounts of $2.1 million, $1.5 million and $0.9 million for the years
ended December 31, 2014, 2013 and 2012, respectively.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period of the
enactment date.
The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. In
making such determination, the Company considers all available positive and negative evidence, including scheduled reversals
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of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In the event
the Company determines that it will be able to realize deferred income tax assets in the future in excess of their net recorded
amount, an adjustment to the valuation allowance would be recorded that would reduce the provision for income taxes.
Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits
meet a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively
settled, which means that the statute of limitations has expired or the appropriate taxing authority has completed their
examination even though the statute of limitations remains open. The Company recognizes interest and penalties related to
income taxes within the income tax expense line in the accompanying consolidated statements of income. Accrued interest and
penalties are included within the related tax liability line in the consolidated balance sheets.
Foreign Currencies
Certain of the Company’s sales and intercompany transactions are denominated in foreign currencies. These transactions are
translated to the functional currency at the exchange rate on the transaction date. Assets and liabilities denominated in a
currency other than the Company's or subsidiary's functional currency are translated at the effective exchange rate on the
balance sheet date. Gains and losses resulting from foreign exchange transactions are included in other expense. The Company
recorded net foreign exchange losses of $1.6 million, $1.1 million and $1.4 million for the years ended December 31, 2014,
2013 and 2012, respectively.
The financial statements of the Company’s foreign subsidiaries are translated from the functional (local) currency to U.S.
Dollars. Assets and liabilities are translated at the exchange rates on the balance sheet date. Results of operations are translated
at average exchange rates, which approximate rates in effect when the underlying transactions occur.
Accumulated Other Comprehensive Income
Accumulated other comprehensive income is composed entirely of foreign currency translation adjustments.
Earnings Per Share
Basic earnings per share ("EPS") amounts are computed by dividing earnings by the weighted average number of common
shares outstanding during the period. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive
equivalents outstanding. To the extent stock options are anti-dilutive, they are excluded from the calculation of diluted EPS.
The details of basic and diluted EPS are as follows:
(in thousands, except per share data)
Net income
Weighted average shares outstanding – basic
Dilutive effect of stock plans
Weighted average shares outstanding – diluted
Basic earnings per share
Diluted earnings per share
Anti-dilutive options
Stock-Based Compensation
Year Ended December 31,
2014
2013
2012
$
$
$
254,690
92,067
2,127
94,194
2.77
2.70
718
$
$
$
245,327
92,691
2,448
95,139
2.65
2.58
885
$
$
$
203,483
92,622
2,332
94,954
2.20
2.14
1,506
The Company accounts for stock-based compensation in accordance with share-based payment accounting guidance. The
guidance requires an entity to measure the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award. The cost is recognized over the period during which an employee is required to
provide service in exchange for the award, typically the vesting period.
Fair Value of Financial Instruments
The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to
fair value measurements and disclosures. The carrying values of cash, cash equivalents, accounts receivable, accounts payable,
accrued expenses, other accrued liabilities and short-term obligations are deemed to be reasonable estimates of their fair values
because of their short-term nature. The fair values of investments are based on quoted market prices for those or similar
investments.
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New Accounting Guidance
Revenue from contracts with customers: In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). ASU 2014-09 supersedes
most current revenue recognition guidance, including industry-specific guidance. Previous guidance requires an entity to
recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered,
the seller's price to the buyer is fixed or determinable, and collectibility is reasonably assured. Under the new guidance, an
entity is required to evaluate revenue recognition by identifying a contract with a customer, identifying the performance
obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in
the contract and recognizing revenue when (or as) the entity satisfies a performance obligation. This guidance will be effective
for annual periods beginning after December 15, 2016, including interim periods within that reporting period. Entities have the
option of using a full retrospective, cumulative effect or modified approach to adopt the guidance. This update will impact the
timing and amounts of revenue recognized. The Company is currently evaluating the effect that implementation of this update
will have on its financial results upon adoption.
3. Acquisitions
SpaceClaim Corporation
On April 30, 2014, the Company completed the acquisition of SpaceClaim, a leading provider of 3-D modeling technology.
Under the terms of the agreement, ANSYS acquired SpaceClaim for a purchase price of $85.0 million, which was paid almost
entirely in cash.
SpaceClaim's software provides customers with a powerful and intuitive 3-D direct modeling solution to author new concepts
and then leverage the power of simulation to rapidly iterate on these designs to drive innovation. The broad appeal of the
SpaceClaim technology can help the Company deliver simulation tools to any engineer in any industry. The complementary
combination is expected to accelerate development of new and innovative products to the marketplace while lowering design
and engineering costs for customers.
The operating results of SpaceClaim have been included in the Company's consolidated financial statements from April 30,
2014, the date of acquisition.
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The assets and liabilities of SpaceClaim have been recorded based upon management's estimates of their fair market values as
of the acquisition date. The following tables summarize the fair value of consideration transferred and the preliminary fair
values of identified assets acquired and liabilities assumed at the acquisition date:
Fair Value of Consideration Transferred:
(in thousands)
Cash
ANSYS replacement stock options
Total consideration transferred at fair value
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
(in thousands)
Cash
Accounts receivable and other tangible assets
Developed technology (10-year life)
Customer relationships (6-year life)
Trade name (6-year life)
Contract backlog (6-year life)
Non-compete agreement (2-year life)
Net deferred tax assets
Accounts payable and other liabilities
Deferred revenue
Total identifiable net assets
Goodwill
$
$
$
$
$
84,892
68
84,960
723
1,857
15,800
9,400
1,300
550
300
5,259
(2,011)
(700)
32,478
52,482
The goodwill, which is not tax-deductible, is attributed to intangible assets that do not qualify for separate recognition,
including the assembled workforce of the acquired business and the synergies expected to arise as a result of the acquisition of
SpaceClaim.
The fair values of the assets acquired and liabilities assumed are based on preliminary calculations and the estimates and
assumptions for these items are subject to change as additional information about what was known and knowable at the
acquisition date is obtained and assessed during the measurement period (up to one year from the acquisition date). During the
period since the SpaceClaim acquisition date, the Company increased the fair values of net deferred tax assets from $4.1
million to $5.3 million, increased the fair value of deferred revenue from $0.5 million to $0.7 million, and increased the fair
values of accounts payable and other liabilities from $1.9 million to $2.0 million, with the offset recorded as a $0.9 million
decrease to goodwill. These adjustments were based on refinements to assumptions used in the preliminary valuation of
deferred revenue, accounts payable and other liabilities, and information about what was known and knowable as of the
acquisition date in the calculation of the net deferred tax assets.
Pro forma results of operations have not been presented as the effects of the SpaceClaim business combination were not
material to the Company's consolidated results of operations.
In valuing deferred revenue on the SpaceClaim balance sheet as of the acquisition date, the Company applied the fair value
provisions applicable to the accounting for business combinations. Acquired deferred revenue with a historical carrying value
of $3.3 million was ascribed a fair value of $0.7 million on the opening balance sheet. As a result, the Company's post-
acquisition revenue will be less than the sum of what would have otherwise been reported by ANSYS and SpaceClaim absent
the acquisition. The impact on reported revenue for the twelve months ended December 31, 2014 was $2.0 million. The
expected impact on reported revenue is $0.6 million for the year ending December 31, 2015.
Reaction Design
On January 3, 2014, the Company completed the acquisition of Reaction Design, a leading developer of chemistry simulation
software. Under the terms of the agreement, ANSYS acquired Reaction Design for a purchase price of $19.1 million in cash.
Reaction Design's solutions enable transportation manufacturers and energy companies to rapidly achieve their clean
technology goals by automating the analysis of chemical processes via computer simulation and modeling solutions.
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The operating results of Reaction Design have been included in the Company's consolidated financial statements since the date
of acquisition, January 3, 2014. The total consideration transferred was allocated to the assets and liabilities of Reaction Design
based on management's estimates of the fair values of the assets acquired and the liabilities assumed. The allocation included
$7.0 million to identifiable intangible assets, including core technology, customer lists and trade names, to be amortized over
periods between two and eleven years, and $8.6 million to goodwill, which is not tax-deductible. The fair values of the assets
acquired and liabilities assumed are based on preliminary calculations and the estimates and assumptions for these items are
subject to change as additional information about what was known and knowable at the acquisition date is obtained and
assessed during the measurement period (up to one year from the acquisition date). During the period since the Reaction
Design acquisition date, the Company decreased the fair values of identifiable finite-lived intangible assets from $9.2 million to
$7.0 million and increased the fair values of net deferred tax assets from $2.3 million to $2.6 million, with the offset recorded
as an increase to goodwill of $1.3 million and a reduction in noncontrolling interest of $0.6 million. These adjustments were
based on refinements to assumptions used in the preliminary valuation of intangible assets and information about what was
known and knowable as of the acquisition date in the calculation of the net deferred tax assets.
Pro forma results of operations have not been presented as the effects of the Reaction Design business combination were not
material to the Company's consolidated results of operations.
In valuing deferred revenue on the Reaction Design balance sheet as of the acquisition date, the Company applied the fair value
provisions applicable to the accounting for business combinations. Acquired deferred revenue with a historical carrying value
of $2.3 million was ascribed no fair value on the opening balance sheet. As a result, the Company's post-acquisition revenue
will be less than the sum of what would have otherwise been reported by ANSYS and Reaction Design absent the acquisition.
The impact on reported revenue for the twelve months ended December 31, 2014 was $2.0 million. The expected impact on
reported revenue is $0.2 million for the year ending December 31, 2015.
EVEN - Evolutionary Engineering AG
On April 2, 2013, the Company acquired EVEN, a leading provider of composite analysis and optimization technology. Under
the terms of the agreement, ANSYS acquired EVEN for a purchase price of $8.1 million, which consisted of $4.5 million in
cash and an estimated $3.6 million of contingent consideration based on EVEN's achievement of certain technical milestones
during the three years following the acquisition date. The Company made its first contingent payment totaling $1.6 million in
March 2014.
The total consideration transferred was allocated to the assets and liabilities of EVEN based on management's estimates of the
fair values of the assets acquired and the liabilities assumed. The allocation included $2.6 million to identifiable intangible
assets, including customer lists and core technology, to be amortized over a period of five years, and $5.9 million to goodwill,
which is not tax-deductible. The fair values of the assets acquired and liabilities assumed are based on management's estimates
of their fair values as of the acquisition date.
Esterel Technologies, S.A.
On August 1, 2012, the Company completed its acquisition of Esterel, a leading provider of embedded software simulation
solutions for mission critical applications. Under the terms of the agreement, ANSYS acquired Esterel for a purchase price of
$58.2 million, which included $13.1 million in acquired cash. The agreement also includes retention provisions for key
members of Esterel's management and employees, which are accounted for outside of the business combination. The Company
funded the transaction entirely with existing cash balances. The operating results of Esterel have been included in the
Company's consolidated financial statements since the date of acquisition, August 1, 2012.
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The assets and liabilities of Esterel have been recorded based upon management's estimates of their fair market values as of the
acquisition date. The following tables summarize the fair value of consideration transferred and the fair values of identified
assets acquired and liabilities assumed at the acquisition date:
Fair Value of Consideration Transferred:
(in thousands)
Cash
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
(in thousands)
Cash
Accounts receivable and other tangible assets
Customer relationships (12-year life)
Developed software (10-year life)
Platform trade name (10-year life)
Accounts payable and other liabilities
Deferred revenue
Net deferred tax liabilities
Total identifiable net assets
Goodwill
$
$
$
$
58,150
13,075
4,737
21,421
10,717
2,695
(4,707)
(1,139)
(7,096)
39,703
18,447
The goodwill, which is not tax-deductible, is attributed to intangible assets that do not qualify for separate recognition,
including the assembled workforce of the acquired business and the synergies expected to arise as a result of the acquisition of
Esterel. During the one-year measurement period since the Esterel acquisition date, the Company decreased the value of net
deferred tax liabilities from $10.0 million to $7.1 million, with the offset recorded as a $2.9 million decrease to goodwill. This
adjustment was based on additional information regarding what was known and knowable in the calculation of the net deferred
tax liabilities as of the acquisition date.
In valuing deferred revenue on the Esterel balance sheet as of the acquisition date, the Company applied the fair value
provisions applicable to the accounting for business combinations. Acquired deferred revenue with a historical carrying value
of $12.1 million was ascribed a fair value of $1.1 million on the opening balance sheet. As a result, the Company's post-
acquisition revenue was less than the sum of what would have otherwise been reported by ANSYS and Esterel absent the
acquisition. The impact on reported revenue for the twelve months ended December 31, 2014 was $1.4 million.
4. Other Receivables and Current Assets
The Company's other receivables and current assets comprise the following balances:
(in thousands)
Receivables related to unrecognized revenue
Income taxes receivable, including overpayments and refunds
Prepaid expenses and other current assets
Total other receivables and current assets
December 31,
2014
152,830
$
December 31,
2013
$
140,051
18,276
21,202
42,357
18,326
$
192,308
$
200,734
Receivables for unrecognized revenue represent the current portion of billings made for annual lease licenses and software
maintenance that has not yet been recognized as revenue.
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5. Property and Equipment
Property and equipment consists of the following:
(in thousands)
Equipment
Computer software
Buildings
Leasehold improvements
Furniture
Land
Property and equipment, gross
Less: Accumulated depreciation and amortization
Property and equipment, net
Estimated Useful Lives
1-10 years
1-5 years
10-40 years
1-15 years
1-13 years
December 31,
2014
2013
$
$
75,500
30,007
24,526
10,368
8,475
2,140
151,016
(86,373)
64,643
$
$
68,970
27,647
24,325
8,125
4,973
2,178
136,218
(75,680)
60,538
Depreciation and amortization expense related to property and equipment, including the amounts acquired through capital lease
commitments, was $20.9 million, $19.9 million and $17.4 million for the years ended December 31, 2014, 2013 and 2012,
respectively.
6. Goodwill and Intangible Assets
Goodwill represents the excess of the fair value of the consideration transferred over the value of net tangible and identifiable
intangible assets of acquired businesses. Identifiable intangible assets acquired in business combinations are recorded based on
their fair values on the date of acquisition.
During the first quarter of 2014, the Company completed the annual impairment test for goodwill and indefinite-lived
intangible assets and determined that these assets had not been impaired as of the test date, January 1, 2014. No events occurred
or circumstances changed during the year ended December 31, 2014 that would indicate that the fair values of the Company’s
reporting units and indefinite-lived intangible assets are below their carrying amounts.
The Company’s intangible assets and estimated useful lives are classified as follows:
(in thousands)
Finite-lived intangible assets:
December 31, 2014
December 31, 2013
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Developed software and core technologies (3 – 11 years)
$
321,076
Customer lists and contract backlog (5 – 15 years)
Trade names (2 – 10 years)
Non-compete agreement (2 years)
Total
Indefinite-lived intangible assets:
Trade names
$ (227,298) $
(121,380)
(63,082)
(52)
300,493
237,173
102,651
—
221,159
114,432
300
$
$
656,967
$ (411,812) $
640,317
14,157
$
24,667
$ (203,236)
(119,368)
(50,990)
—
$ (373,594)
The decrease in unamortized trade names in the table above was due to the movement of certain trade names to amortized
intangible assets. Amortization expense for the intangible assets reflected above was $61.0 million, $60.7 million and $67.3
million for the years ended December 31, 2014, 2013 and 2012, respectively.
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As of December 31, 2014, estimated future amortization expense for the intangible assets reflected above is as follows:
(in thousands)
2015
2016
2017
2018
2019
Thereafter
Total intangible assets subject to amortization
Indefinite-lived trade names
Other intangible assets, net
The changes in goodwill during the years ended December 31, 2014 and 2013 are as follows:
(in thousands)
Beginning balance - January 1
Acquisitions
Currency translation and other
Ending balance - December 31
7. Long-Term Debt
$
$
56,576
46,979
43,824
30,235
16,817
50,724
245,155
14,157
259,312
2014
$ 1,255,704
2013
$ 1,251,247
61,103
(4,625)
$ 1,312,182
5,936
(1,479)
$ 1,255,704
The Company paid the outstanding balance on its term loan at maturity on July 31, 2013. For the years ended December 31,
2013 and 2012, the Company recorded interest expense related to the term loan at average interest rates of 1.04% and 1.22%,
respectively. The interest expense on the term loan and amortization related to debt financing costs are as follows:
(in thousands)
July 31, 2008 term loan
8. Fair Value Measurement
Year Ended December 31,
2013
2012
Interest
Expense
Amortization
Interest
Expense
Amortization
$
230
$
149
$
1,342
$
698
The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations
into three broad levels:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or
liability, either directly or indirectly through market corroboration, for substantially the full term of the financial
instrument; or
• Level 3: unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair
value.
A financial asset's or liability’s classification within the hierarchy is determined based on the lowest level input that is
significant to the fair value measurement.
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The following tables provide the assets and liabilities carried at fair value and measured on a recurring basis:
(in thousands)
Assets
Cash equivalents
Short-term investments
Liabilities
Contingent consideration
(in thousands)
Assets
Cash equivalents
Short-term investments
Liabilities
Contingent consideration
Deferred compensation
Fair Value Measurements at Reporting Date Using:
December 31,
2014
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
281,333
714
$
$
281,333
$
— $
— $
714
$
—
—
(2,621) $
— $
— $
(2,621)
Fair Value Measurements at Reporting Date Using:
December 31,
2013
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
303,138
500
$
$
303,138
$
— $
(7,389) $
(704) $
— $
— $
— $
500
$
— $
— $
—
—
(7,389)
(704)
$
$
$
$
$
$
$
The cash equivalents in the preceding tables represent money market mutual funds.
The short-term investments in the preceding tables represent deposits held by certain foreign subsidiaries of the Company. The
deposits have fixed interest rates with maturity dates ranging from three months to one year.
The contingent consideration in the table above represents potential future payments related to the EVEN and Apache
acquisitions in accordance with the respective agreements. The deferred compensation in the table above is attributable to a
retention agreement for a key member of Apache management, and was accounted for outside of that business combination.
The net present value calculations for the contingent consideration and deferred compensation include significant unobservable
inputs in the assumption that all remaining payments will be made, and therefore the liabilities were classified as Level 3 in the
fair value hierarchy.
The following table presents the changes during the years ended December 31, 2014 and 2013 in the Company’s Level 3
liabilities for contingent consideration and deferred compensation that are measured at fair value on a recurring basis:
(in thousands)
Balance as of January 1, 2013
EVEN contingent consideration
Contingent payments
Interest expense and foreign exchange activity included in earnings
Balance as of December 31, 2013
Contingent payments
Interest expense and foreign exchange activity included in earnings
Balance as of December 31, 2014
Fair Value Measurement Using
Significant Unobservable Inputs
Contingent
Consideration
Deferred
Compensation
6,436
$
1,394
3,597
(3,288)
644
7,389
(4,866)
98
$
2,621
$
—
(712)
22
704
(712)
8
—
$
$
$
The final payment related to the retention of a key member of Apache management was paid in the third quarter of 2014. As a
result of making this final payment, the Company no longer has a deferred compensation liability at December 31, 2014.
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The carrying values of cash, accounts receivable, accounts payable, accrued expenses, other accrued liabilities and short-term
obligations approximate their fair values because of their short-term nature.
9.
Income Taxes
Income before income taxes includes the following components:
(in thousands)
Domestic
Foreign
Total
The provision for income taxes is composed of the following:
(in thousands)
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
Total
Year Ended December 31,
2014
2013
2012
291,042
57,097
348,139
$
$
272,569
49,920
322,489
$
$
234,497
59,050
293,547
Year Ended December 31,
2014
2013
2012
80,620
7,192
24,495
(18,536)
(1,915)
1,593
93,449
$
$
69,268
7,197
24,722
(23,438)
(2,187)
1,600
77,162
$
$
79,028
7,886
22,046
(21,026)
(3,913)
6,043
90,064
$
$
$
$
The reconciliation of the U.S. federal statutory tax rate to the consolidated effective tax rate is as follows:
Federal statutory tax rate
State income taxes, net of federal benefit
Stock-based compensation
Net (benefit) tax of unrepatriated earnings
Foreign rate differential
Uncertain tax positions
Research and development credits
Domestic production activity benefit
Benefit from restructuring activities
Other
Year Ended December 31,
2014
2013
2012
35.0%
1.2
0.6
(0.3)
(0.7)
(0.9)
(1.1)
(3.5)
(4.1)
0.6
26.8%
35.0%
1.1
0.9
(0.9)
(0.9)
(3.7)
(2.0)
(3.3)
(2.8)
0.5
23.9%
35.0%
1.2
1.0
0.7
(1.9)
0.3
(0.1)
(3.3)
(3.1)
0.9
30.7%
In general, it is the practice and intention of the Company to repatriate previously taxed earnings and to reinvest all other
earnings of its non-U.S. subsidiaries. The Company has not made a provision for U.S. taxes on $216.0 million, representing the
excess of the amount for financial reporting over the tax bases of investments in foreign subsidiaries that are essentially
permanent in duration. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under
certain other circumstances. The residual U.S. tax cost associated with this difference is estimated to be $22.9 million.
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The components of deferred tax assets and liabilities are as follows:
(in thousands)
Deferred tax assets:
Net operating loss carryforwards
Stock-based compensation
Employee benefits
Uncertain tax positions
Deferred revenue
Research and development credits
Allowance for doubtful accounts
Other
Valuation allowance
Deferred tax liabilities:
Other intangible assets
Property and equipment
Unremitted foreign earnings
Net deferred tax assets (liabilities)
December 31,
2014
2013
$
42,060
23,331
20,034
8,545
6,533
4,349
1,806
2,892
(130)
109,420
(92,703)
(4,652)
(15)
(97,370)
12,050
$
26,204
20,006
18,824
7,977
7,816
2,331
2,014
3,521
(392)
88,301
(106,115)
(4,556)
(115)
(110,786)
(22,485)
$
$
As of December 31, 2014, the Company had federal net operating loss carryforwards of $45.3 million. These losses expire
between 2020 - 2034, and are subject to limitations on their utilization. Deferred tax assets of $1.1 million have been recorded
for state operating loss carryforwards. These losses expire between 2015 - 2034, and are subject to limitations on their
utilization. The Company had total foreign net operating loss carryforwards of $81.2 million, of which $29.9 million are not
currently subject to expiration dates. The remainder, $51.3 million, expires between 2019 - 2023. The Company had tax credit
carryforwards of $6.0 million, of which $4.2 million are subject to limitations on their utilization. Approximately $2.0 million
of these tax credit carryforwards are not currently subject to expiration dates. The remainder, $4.0 million, expires in various
years between 2015 - 2034.
In December 2013, the Company received notice from the Internal Revenue Service that the Joint Committee on Taxation took
no exception to the Company's tax returns that were filed for 2009 and 2010. An $11.0 million tax benefit was recognized in the
Company's 2013 financial results as the Company has effectively settled uncertainty regarding refund claims filed in
connection with these returns.
The following is a reconciliation of the total amounts of unrecognized tax benefits:
(in thousands)
Unrecognized tax benefit as of January 1
Acquired unrecognized tax benefit
Gross increases—tax positions in prior period
Gross decreases—tax positions in prior period
Gross increases—tax positions in current period
Reductions due to a lapse of the applicable statute of limitations
Changes due to currency fluctuation
Settlements
Unrecognized tax benefit as of December 31
Year Ended December 31,
2014
2013
2012
$
$
19,590
—
488
(3,715)
2,513
(1,924)
(610)
—
16,342
$
$
37,203
—
320
(18,058)
2,036
(1,734)
20
(197)
19,590
$
$
31,582
3,845
2,048
(2,167)
2,660
(1,314)
625
(76)
37,203
The Company believes that it is reasonably possible that approximately $2.5 million of uncertain tax positions may be resolved
within the next twelve months as a result of settlement with a taxing authority or a lapse of the statute of limitations. Of the
total unrecognized tax benefit as of December 31, 2014, $12.2 million would affect the effective tax rate, if recognized.
The Company recognizes interest and penalties related to income taxes as income tax expense. During the year ended
December 31, 2014, the Company recorded $0.1 million of interest expense and $0.1 million of penalties related to uncertain
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tax positions. As of both December 31, 2014 and 2013, the Company accrued a liability for penalties of $1.6 million and
interest of $2.7 million.
The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. The Company’s 2011, 2013 and
2014 tax years are open to examination by the Internal Revenue Service. The Company also has various foreign and state tax
filings subject to examination for various years. Except as discussed in Note 19 to the consolidated financial statements
included in Part IV, Item 15 of this Annual Report on Form 10-K, the Company does not expect foreign or state examinations to
result in a material change to the consolidated financial statements.
10. Pension and Profit-Sharing Plans
The Company has a 401(k)/profit-sharing plan for all qualifying salaried domestic employees that permits participants to make
contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code. The Company makes matching
contributions on behalf of each eligible participant in an amount equal to 100% of the first 3% and an additional 25% of the
next 5%, for a maximum total of 4.25% of the employee’s compensation. The Company may make a discretionary contribution
based on the participant’s eligible compensation, provided the employee is employed at the end of the year and has worked at
least 1,000 hours. The Company also maintains various defined contribution and defined benefit pension arrangements for its
international employees. The Company funds the foreign defined benefit and contribution plans based on the minimum
required deposits according to the local statutory requirements. The unfunded portion of the defined benefit obligation for each
plan is accrued in other long-term liabilities.
Expenses related to the Company’s retirement programs were $8.9 million in 2014, $8.0 million in 2013 and $7.1 million in
2012.
11. Non-Compete and Employment Agreements
Employees of the Company have signed agreements under which they have agreed not to disclose trade secrets or confidential
information and, where legally permitted, that restrict engagement in or connection with any business that 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 channel partners to enter into agreements not to disclose the Company’s trade secrets and
other proprietary information.
The Company had an employment agreement with the Chairman of its Board of Directors. The Chairman ceased to be an
employee of the Company on December 31, 2014. In connection with the end of his employment and pursuant to the terms of
his employment agreement, the former Chairman received a $300,000 lump sum severance payment and twelve months’
continued health coverage benefits.
The Company has an employment agreement with the Chief Executive Officer. This agreement provides for, among other
things, minimum severance payments equal to his base salary, target bonus and then-existing benefits through the earlier of the
second anniversary of the termination date if the Chief Executive Officer is terminated without cause or when he accepts other
employment. The Chief Executive Officer is subject to a two-year restriction on competition following termination of
employment under the circumstances described in the contract.
The Company also has employment agreements with several other employees, primarily in foreign jurisdictions. The terms of
these employment agreements generally include annual compensation, severance payment provisions and non-compete clauses.
12. Stock-Based Compensation
The Company has a stock option and grant plan—the Fourth Amended and Restated 1996 Stock Option and Grant Plan ("Stock
Plan"). The Stock Plan, as amended, authorizes the grant of up to 30,400,000 shares of the Company’s common stock in the
form of: (i) incentive stock options ("ISOs"), (ii) nonqualified stock options, (iii) common stock with or without vesting or
other restrictions, (iv) common stock upon the attainment of specified performance goals, (v) restricted stock awards, (vi) 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, (vii) deferred stock awards, (viii) stock appreciation rights and (ix) cash-based awards.
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The Stock Plan provides 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 Compensation
Committee of 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% criterion), payment terms and other provisions for each grant. The majority of
options granted have a four-year vesting period. Shares associated with unexercised options or reacquired shares of common
stock (except those shares withheld as a result of tax withholding or net issuance) become available for option grants and
common stock issuances under the 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 Stock Plan
may vest or be exercised.
In the event of a "sale event" as defined in the Stock Plan, all outstanding awards will be assumed or continued by the successor
entity, with appropriate adjustment in the awards to reflect the transaction. In such event, except as the Compensation
Committee may otherwise specify with respect to particular awards in the award agreements, if the service relationship of the
holder of an award is terminated without cause within 18 months after the sale event, then all awards held by such holder will
become fully vested and exercisable at that time. If there is a sale event in which the successor entity refuses to assume or
continue outstanding awards, then subject to the consummation of the sale event, all awards with time-based vesting conditions
will become fully vested and exercisable at the effective time of the sale event and all awards with performance-based vesting
conditions may become vested and exercisable in accordance with the award agreements at the discretion of the Compensation
Committee. If awards are not assumed or continued after a sale event, then all such awards will terminate at the time of the sale
event. In the event of the termination of stock options or stock appreciation rights in connection with a sale event, the
Compensation Committee may either make or provide for a cash payment to the holders of such awards equal to the difference
between the per share transaction consideration and the exercise price of such awards or permit each holder to have at least a
15-day period to exercise such awards prior to their termination.
The Company currently issues shares related to exercised stock options or vested awards from its existing pool of treasury
shares and has no specific policy to repurchase treasury shares as stock options are exercised or as awards vest. If the treasury
pool is depleted, the Company will issue new shares.
Total stock-based compensation expense recognized for the years ended December 31, 2014, 2013 and 2012 is as follows:
(in thousands, except per share amounts)
Cost of sales:
Software licenses
Maintenance and service
Operating expenses:
Selling, general and administrative
Research and development
Stock-based compensation expense before taxes
Related income tax benefits
Stock-based compensation expense, net of taxes
Net impact on earnings per share:
Basic earnings per share
Diluted earnings per share
Year Ended December 31,
2014
2013
2012
$
$
$
$
$
1,776
2,035
$
1,349
2,293
17,073
15,977
36,861
(10,927)
25,934
$
16,847
14,809
35,298
(11,096)
24,202
$
(0.28) $
(0.28) $
(0.26) $
(0.25) $
1,478
2,232
15,278
13,427
32,415
(8,509)
23,906
(0.26)
(0.25)
77
35.10
67.53
—
21.85
36.90
42.85
33.91
6.78
5.48
Table of Contents
Information regarding stock option transactions is summarized below:
(options in thousands)
Outstanding, beginning of year
Granted
Issued pursuant to SpaceClaim
acquisition
Exercised
Forfeited
Outstanding, end of year
Vested and Exercisable, end of year
Year Ended December 31,
2014
2013
2012
Weighted
Average
Exercise
Price
Options
Weighted
Average
Exercise
Price
Options
Weighted
Average
Exercise
Price
Options
6,166
150
$
$
$
21
(1,266) $
(139) $
$
4,932
$
3,958
44.77
81.09
23.26
31.36
61.11
48.76
44.22
7,122
103
$
$
— $
(993) $
(66) $
$
$
6,166
4,351
42.85
81.87
—
34.26
53.75
44.77
38.18
7,545
1,109
$
$
— $
(1,464) $
(68) $
$
$
7,122
4,094
Weighted Average Remaining Contractual Term (in years)
Outstanding
Vested and Exercisable
Aggregate Intrinsic Value (in thousands)
Outstanding
Vested and Exercisable
2014
2013
2012
5.53
5.00
5.99
5.13
$
$
163,932
149,536
$
$
261,601
213,304
$
$
174,383
136,851
Historical and future expected forfeitures have not been significant and, as a result, the outstanding option amounts reflected in
the tables above approximate the options expected to vest.
The fair value of each option grant is estimated on the date of grant, or date of acquisition for options issued in a business
combination, using the Black-Scholes option pricing model, which was developed for use in estimating the fair value of traded
options that have no vesting restrictions and are fully transferable. The Company’s options have characteristics significantly
different from those of traded options, and changes in input assumptions can materially affect the fair value estimates. The
interest rates used were determined by using the five-year Treasury Note yield at the date of grant or date of acquisition for
options issued in a business combination. The volatility was determined based on the historic volatility of the Company’s stock
during the preceding six years for 2014, 2013 and 2012.
The table below presents the weighted average input assumptions used and resulting fair values for options granted or issued in
business combinations during each respective year:
Risk-free interest rate
Expected dividend yield
Expected volatility
Expected term
Weighted average fair value per share
Year Ended December 31,
2014
1.49% to 1.76%
—%
35%
5.7 years
$32.26
2013
0.68% to 1.48%
—%
37%
5.8 years
$29.85
2012
0.59% to 1.04%
—%
38%
6.0 years
$24.82
As stock-based compensation expense recognized in the consolidated statements of income is based on awards ultimately
expected to vest, it must be reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those estimates. The effect of pre-vesting forfeitures on the
Company’s recorded expense has historically been negligible due to the relatively low turnover of stock option holders.
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The Company’s determination of fair value of share-based payment awards on the date of grant using an option pricing model
is affected by the Company’s stock price as well as assumptions regarding a number of variables. The total estimated grant date
fair values of stock options that vested during the years ended December 31, 2014, 2013 and 2012 were $19.5 million, $24.7
million and $23.3 million, respectively. As of December 31, 2014, total unrecognized estimated compensation cost related to
unvested stock options granted prior to that date was $21.3 million, which is expected to be recognized over a weighted
average period of 1.5 years. The total intrinsic values of stock options exercised during the years ended December 31, 2014,
2013 and 2012 were $60.6 million, $45.2 million and $64.7 million, respectively. As of December 31, 2014, 1.0 million
unvested options with an aggregate intrinsic value of $20.3 million are expected to vest and have a weighted average exercise
price of $67.22 and a weighted average remaining contractual term of 7.7 years. The Company recorded cash received from the
exercise of stock options of $39.7 million and tax benefits related to stock activity of $25.9 million for the year ended
December 31, 2014.
Information regarding stock options outstanding as of December 31, 2014 is summarized below:
(options in thousands)
Options Outstanding
Options Exercisable
Range of Exercise Prices
$5.91 - $28.40
$30.02 - $40.89
$41.33 - $58.67
$60.49 - $88.35
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price
3.52
3.81
6.15
7.81
$
$
$
$
24.51
39.60
53.92
70.37
Options
1,022
1,029
1,703
1,178
Weighted
Average
Exercise
Price
24.54
39.60
53.15
68.34
Options
998
1,029
1,460
471
$
$
$
$
Under the terms of the ANSYS, Inc. Long-Term Incentive Plan, the Company issues various restricted stock awards, which
may have a single or combination of a market condition, an operating performance condition or a service condition. In the first
quarters of 2014, 2013 and 2012, the Company granted 47,000, 94,300 and 100,000 performance-based restricted stock units
with a market condition, respectively. The percentage of the award that vests is based on the Company’s performance as
measured by total shareholder return relative to the median percentage appreciation of the NASDAQ Composite Index over a
specified measurement period, subject to each participant’s continued employment with the Company through the conclusion
of the measurement period. The measurement period for the restricted stock units granted pursuant to the Long-Term Incentive
Plan is a three-year period beginning January 1 of the year of the grant. Each restricted stock unit relates to one share of the
Company’s common stock. The weighted average fair value of each restricted stock unit granted in 2014, 2013 and 2012 was
estimated on the grant date to be $65.94, $50.05 and $33.16, respectively. The fair value of the restricted stock units was
estimated using a Monte Carlo simulation model. The determination of the fair value of the awards was affected by the grant
date and a number of variables, each of which has been identified in the chart below. Share-based compensation expense based
on the fair value of the award is being recorded from the grant date through the conclusion of the three-year measurement
period. Total compensation expense associated with the market condition awards recorded for the years ended December 31,
2014, 2013 and 2012 was $2.5 million, $3.6 million and $2.6 million, respectively.
Assumptions used in Monte Carlo lattice pricing model
Risk-free interest rate
Expected dividend yield
Expected volatility—ANSYS Stock Price
Expected volatility—NASDAQ Composite Index
Expected term
Correlation factor
Year Ended December 31,
2014
0.70%
—%
25%
15%
2.8 years
0.70
2013
0.35%
—%
25%
20%
2.8 years
0.70
2012
0.16%
—%
28%
20%
2.8 years
0.75
During 2014, the Company issued 20,667 restricted stock awards with defined operating metrics and a weighted average grant
date fair value of $81.52. The grant date fair value of the awards is being recorded from the grant date through the conclusion
of the measurement period associated with each operating metric based on management's estimates concerning the probability
of vesting. Total compensation expense associated with these awards recorded for the year ended December 31, 2014 was $0.1
million.
In addition, in 2014, the Company granted 364,150 restricted stock units that will vest over a four-year period with a weighted
average grant date fair value of $82.13. Total compensation expense is being recorded over the four-year service period and
was $5.8 million for the year ended December 31, 2014.
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In accordance with the Apache merger agreement, the Company granted performance-based restricted stock units to key
members of Apache management and employees. Vesting of the full award or a portion thereof was determined discretely for
each of the three fiscal years based on the achievement of certain revenue and operating income targets by the Apache
subsidiary, and the recipient's continued employment through the measurement period. The value of each restricted stock unit
on the August 1, 2011 grant date was $50.30, the closing price of ANSYS stock as of that date. Stock-based compensation
expense based on the fair value of the awards was recorded from the January 1, 2012 service inception date through the
conclusion of the three-year measurement period based on management’s estimates concerning the probability of vesting. The
performance targets were modified in March 2014 and the fair value of the modified restricted stock units was $82.39. Total
compensation expense associated with the awards recorded for the years ended December 31, 2014, 2013 and 2012, was $4.7
million, $3.8 million and $3.9 million, respectively. For the year ended December 31, 2014, employees earned 56,731
restricted stock units, which will be issued in the first quarter of 2015.
The Company grants deferred stock units to non-affiliate Independent Directors, which are rights to receive shares of common
stock upon termination of service as a Director. The deferred stock units are issued in arrears and vest immediately. As of
December 31, 2014, 160,642 deferred stock units have been earned with the underlying shares remaining unissued until the
service termination of the respective Director owners. Of this amount, 44,800 units were earned during the year ended
December 31, 2014. Total compensation expense associated with the awards recorded for the years ended December 31, 2014,
2013 and 2012, was $3.5 million, $2.5 million and $1.9 million, respectively.
13. Stock Repurchase Program
Under the Company's stock repurchase program, the Company repurchased shares as follows:
(in thousands, except shares and per share data)
Number of shares repurchased
Average price paid per share
Total cost
Year Ended December 31,
2014
2,976,885
2013
2012
1,494,001
1,500,000
$
$
78.54
233,793
$
$
77.73
116,132
$
$
63.65
95,477
As of December 31, 2014, 3.5 million shares remained available for repurchase under the Company's stock repurchase
program. The Company repurchased an additional 0.9 million shares in January 2015, for a total cost of $75.2 million. In
February 2015, the Company's Board of Directors increased the number of shares authorized for repurchase to a total of 5.0
million shares under the program.
14. 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. The stockholders approved an amendment to the
Purchase Plan on May 6, 2004 to increase the number of shares available for offerings to 1.6 million shares. The Purchase Plan
was amended and restated in 2007. The Purchase Plan is administered by the Compensation Committee. Offerings under the
Purchase Plan commence on each February 1 and August 1, 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 or her cash compensation during the offering period. The maximum number of shares that may be purchased
by any participating employee during any offering period is limited to 3,840 shares (as adjusted by the Compensation
Committee from time to time). Unless the employee has previously withdrawn from the offering, his or her accumulated
payroll deductions will be used to purchase common stock on the last business day of the period at a price equal to 90% 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. As of December 31,
2014, 1.3 million shares of common stock had been issued under the Purchase Plan. The total compensation expense recorded
under the Purchase Plan during the years ended December 31, 2014, 2013 and 2012 was $0.9 million, $0.8 million and $0.7
million, respectively.
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15. Leases
Office Space
The Company's executive offices and those related to certain domestic product development, marketing, production and
administration are located in a 186,000 square foot office facility in Canonsburg, Pennsylvania. The term of the lease is 183
months, beginning on October 1, 2014. Absent the exercise of options in the lease for additional rentable space or early lease
termination, the Company's base rent (inclusive of property taxes and certain operating expenses) will be $4.3 million per
annum for the first five years of the lease term, $4.5 million per annum for years six through ten and $4.7 million per annum for
years eleven through fifteen. The Company incurred $0.8 million in lease expense related to this facility during the year ended
December 31, 2014.
The Company's corporate headquarters was previously located in a separate office facility, also in Canonsburg, Pennsylvania.
The Company occupied this space until November 2014, and the lease term expired on December 31, 2014. Lease expense
related to this facility was $1.4 million in each of the years ended December 31, 2014, 2013 and 2012.
The Company leases a 52,000 square foot office facility in San Jose, California. In June 2012, the Company entered into a new
lease for this property, with the lease term commencing July 1, 2012 and ending June 30, 2022. Total remaining base rent
payments under the operating lease, absent the exercise of an early termination option, as of December 31, 2014 are $7.5
million, of which $0.9 million will be paid in 2015.
The Company has entered into various other noncancellable operating leases for office space.
Office space lease expense totaled $15.8 million, $14.1 million and $13.7 million for the years ended December 31, 2014, 2013
and 2012, respectively. Future minimum lease payments, including termination fees, under noncancellable operating leases for
office space in effect at December 31, 2014 are $13.7 million in 2015, $10.9 million in 2016, $9.0 million in 2017, $6.7 million
in 2018 and $6.4 million in 2019.
Sale-Leaseback Arrangement
The lease agreement terms for the new Canonsburg headquarters facility provide that the Company is responsible for paying
the cost of certain tenant improvements that exceed an allowance to be paid by the landlord. There is no cap to the Company's
obligation in excess of the landlord allowance. As a result, the Company was considered the owner of the building during the
construction period and the lease was subject to sale-leaseback treatment.
The building was completed and delivered to the Company on October 1, 2014. The Company determined that the lease does
not meet the criteria for capital lease treatment under the accounting guidance, and the Company does not have continuing
involvement in the lease. As a result, the construction-in-progress asset and liability have been removed from the consolidated
balance sheet as of December 31, 2014. The sale-leaseback treatment of the lease during the construction period did not have
any impact on the Company's results of operations or cash flows.
16. Royalty Agreements
The Company has entered into various renewable, nonexclusive license agreements under which the Company has been
granted access to the licensor’s technology and the right to sell the technology in the Company’s product line. Royalties are
payable to developers of the software at various rates and amounts, which generally are based upon unit sales or revenue.
Royalty fees are reported in cost of goods sold and were $11.5 million, $10.3 million and $9.3 million for the years ended
December 31, 2014, 2013 and 2012, respectively.
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17. Geographic Information
Revenue to external customers is attributed to individual countries based upon the location of the customer. Revenue by
geographic area is as follows:
(in thousands)
United States
Japan
Germany
Canada
Other European
Other international
Total revenue
Property and equipment by geographic area is as follows:
(in thousands)
United States
India
Europe
Other international
Total property and equipment
Year Ended December 31,
2014
$ 320,327
2013
2012
$ 292,323
$ 265,436
108,757
108,064
122,437
99,714
14,034
217,796
175,393
93,525
14,163
201,614
151,571
82,008
12,384
177,069
138,684
$ 936,021
$ 861,260
$ 798,018
December 31,
2014
2013
49,957
$
45,116
3,123
7,840
3,723
3,226
9,095
3,101
64,643
$
60,538
$
$
18. Unconditional Purchase Obligations
The Company has entered into various unconditional purchase obligations which primarily include software licenses and long-
term purchase contracts for network, communication and office maintenance services. The Company expended $2.9 million,
$3.3 million and $4.0 million related to unconditional purchase obligations that existed as of the beginning of each year for the
years ended December 31, 2014, 2013 and 2012, respectively. Future expenditures under these obligations in effect as of
December 31, 2014 are $5.3 million in 2015, $3.5 million in 2016 and $1.1 million in 2017.
19. Contingencies and Commitments
The Company is subject to various investigations, claims and legal proceedings that arise in the ordinary course of business,
including commercial disputes, labor and employment matters, tax audits, alleged infringement of intellectual property rights
and other matters. In the opinion of the Company, the resolution of pending matters is not expected to have a material, adverse
effect on the Company’s consolidated results of operations, cash flows or financial position. However, each of these matters is
subject to various uncertainties and it is possible that an unfavorable resolution of one or more of these proceedings could
materially affect the Company’s results of operations, cash flows or financial position.
An Indian subsidiary of the Company received a formal inquiry after a service tax audit was held in 2011. The Company could
incur tax charges and related liabilities, including those related to the service tax audit case, of approximately $6 million. The
service tax issues raised in the Company’s notice are very similar to the case, M/s Microsoft Corporation (I) (P) Ltd. Vs
Commissioner of Service Tax, New Delhi, wherein the Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT)
has passed a ruling favorable to Microsoft. The Company can provide no assurances on whether the Microsoft case’s favorable
ruling will be challenged in higher courts or on the impact that the Microsoft case’s decision will have on the Company’s audit
case. The Company is uncertain as to when the service tax audit will be completed.
The Company sells software licenses and services to its customers under proprietary software license agreements. Each license
agreement contains the relevant terms of the contractual arrangement with the customer, and generally includes certain
provisions for indemnifying the customer against losses, expenses and liabilities from damages that are incurred by or awarded
82
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against the customer in the event the Company’s software or services are found to infringe upon a patent, copyright or other
proprietary right of a third party. To date, the Company has not had to reimburse any of its customers for any losses related to
these indemnification provisions and no material claims asserted under these indemnification provisions are outstanding as of
December 31, 2014. For several reasons, including the lack of prior material indemnification claims, the Company cannot
determine the maximum amount of potential future payments, if any, related to such indemnification provisions.
20. Subsequent Events
On February 3, 2015, the Company acquired the assets of Newmerical Technologies International, a leading developer of in-flight
icing simulation software and associated design, testing and certification services, for a purchase price of approximately $10.5
million in cash. The acquisition will be accounted for as a business combination.
83
Table of Contents
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.
SIGNATURES
ANSYS, Inc.
Date: February 26, 2015
By:
/s/ JAMES E. CASHMAN III
James E. Cashman III
President and Chief Executive Officer
Date: February 26, 2015
By:
/s/ MARIA T. SHIELDS
Maria T. Shields
Chief Financial Officer,
Vice President, Finance and Administration
84
Table of Contents
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 Annual Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated below.
Signature
Title
Date
/s/ JAMES E. CASHMAN III
James E. Cashman III
President and Chief Executive Officer
(Principal Executive Officer)
February 26, 2015
/s/ MARIA T. SHIELDS
Maria T. Shields
Chief Financial Officer, Vice President, Finance and
Administration; (Principal Financial Officer and
Accounting Officer)
February 26, 2015
/s/ RONALD W. HOVSEPIAN
Ronald W. Hovsepian
Interim Non-Executive Chairman of the Board of
Directors
February 26, 2015
/s/ DR. AJEI GOPAL
Dr. Ajei Gopal
/s/ WILLIAM R. MCDERMOTT
William R. McDermott
/s/ BRADFORD C. MORLEY
Bradford C. Morley
/s/ BARBARA V. SCHERER
Barbara V. Scherer
/s/ PETER J. SMITH
Peter J. Smith
/s/ MICHAEL C. THURK
Michael C. Thurk
/s/ PATRICK J. ZILVITIS
Patrick J. Zilvitis
Director
February 26, 2015
Director
February 26, 2015
Director
February 26, 2015
Director
February 26, 2015
Director
February 26, 2015
Director
February 26, 2015
Director
February 26, 2015
85
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ANSYS, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
SCHEDULE II
(in thousands)
Description
Year ended December 31, 2014
Allowance for doubtful accounts
Year ended December 31, 2013
Allowance for doubtful accounts
Year ended December 31, 2012
Allowance for doubtful accounts
Balance at
Beginning
of Year
Additions–
Charges to Costs
and Expenses
Deductions–
Returns and
Write-Offs
Balance at
End
of Year
$
$
$
5,700
4,800
4,101
$
$
$
2,104
1,465
938
$
$
$
2,304
565
239
$
$
$
5,500
5,700
4,800
86
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Exhibit No.
3.1
Exhibit
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
3.3
3.4
3.5
3.6
3.7
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
Certificate of Amendment to the Company’s Restated Certificate of Incorporation as filed with the Secretary of
State of the State of Delaware (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed June 21,
2006, and incorporated herein by reference).
Certificate of Amendment to the Company’s Restated Certificate of Incorporation as filed with the Secretary of
State of the State of Delaware (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed May 17,
2011, and incorporated herein by reference).
Certificate of Amendment to the Company’s Restated Certificate of Incorporation as filed with the Secretary of
State of the State of Delaware (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed May 21,
2012, and incorporated herein by reference).
Second Amended and Restated By-laws of the Company (filed as Exhibit 3.1 to the Company’s Current Report
on Form 8-K, filed February 19, 2008 and incorporated herein by reference).
Amendment No. 1 to the Second Amended and Restated By-laws of the Company (filed as Exhibit 3.1 to the
Company’s Current Report on Form 8-K, filed July 23, 2008, and incorporated herein by reference).
Amendment No. 2 to the Second Amended and Restated By-laws of the Company (filed as Exhibit 3.1 to the
Company’s Current Report on Form 8-K, filed December 20, 2011, and incorporated herein by reference).
ANSYS, Inc. Second Amended and Restated Employee Stock Purchase Plan (filed as Exhibit 10.1 to the
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007 and incorporated herein by
reference).*
Employment Agreement between a subsidiary of the Company 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).*
Lease between National Build to Suit Washington County, L.L.C. and the Company 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).
First Amended Lease Agreement between Southpointe Park Corp. and ANSYS, Inc. (filed as Exhibit 10.2 to the
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2004 and incorporated herein by reference).
The Company’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).*
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).
Employment Agreement between the Registrant and James E. Cashman III dated as of April 21, 2003 (filed as
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and
incorporated herein by reference).*
Description of Executive Bonus Plan, Director Stock Option Program and Officer Stock Option Program,
including Forms of Option Agreements for Option Grants to Directors and Officers (filed as Exhibits 99.1 – 99.5
to the Company’s Current Report on Form 8-K, filed February 8, 2005, and incorporated herein by reference).*
Options Granted to Independent Directors Related to the 2005 Annual Meeting of Stockholders on May 10,
2005 (filed as disclosure in the Company’s Current Report on Form 8-K, filed May 13, 2005, and incorporated
herein by reference).*
Indemnification Agreement, dated February 9, 2006, between ANSYS, Inc. and Sheila S. DiNardo (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed February 15, 2006, and incorporated herein by
reference).
Amendment to Non-Affiliate Independent Director Compensation on February 9, 2006 (filed as disclosure in the
Company’s Current Report on Form 8-K, filed February 15, 2006, and incorporated herein by reference).*
Amended and Restated ANSYS, Inc. Cash Bonus Plan, adopted on March 2, 2006 (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed March 8, 2006, and incorporated herein by reference).*
87
Table of Contents
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
Form of Deferred Stock Unit Agreement under the Third Amended and Restated ANSYS, Inc. 1996 Stock
Option and Grant Plan (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed July 6, 2006,
and incorporated herein by reference).*
Deferred Stock Unit Agreement under the Third Amended and Restated ANSYS, Inc. 1996 Stock Option and
Grant Plan (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008 and incorporated herein by reference).*
Amended and Restated ANSYS, Inc. Cash Bonus Plan (filed as Exhibit 10.5 to the Company’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference).*
First Amendment of the Employment Agreement Between the Company and James E. Cashman III as of
November 6, 2008 (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008 and incorporated herein by reference).*
First Amendment of the Employment Agreement Between the Company and Peter J. Smith as of November 6,
2008 (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008 and incorporated herein by reference).*
Amendment to the Compensatory Arrangement for Peter J. Smith (filed as Item 5.02 to the Company’s Current
Report on Form 8-K, filed May 15, 2009, and incorporated herein by reference).*
ANSYS, Inc. Long-Term Incentive Plan, dated February 17, 2010 (filed as Exhibit 10.1 to the Company’s
Current Report on Form 8-K, filed February 23, 2010, and incorporated herein by reference).*
ANSYS, Inc. Executive Severance Plan, dated February 17, 2010 (filed as Exhibit 10.2 to the Company’s
Current Report on Form 8-K, filed February 23, 2010, and incorporated herein by reference).*
Form of Award Notice under the ANSYS, Inc. Long-Term Incentive Plan (filed as Exhibit 10.3 to the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and incorporated herein by
reference).*
ANSYS, Inc. Amended and Restated Long-Term Incentive Plan, dated August 2, 2010 (filed as Exhibit 10.1 to
the Company’s Current Report on Form 8-K, filed August 6, 2010, and incorporated herein by reference).*
Second Amendment of the Employment Agreement Between ANSYS, Inc. and James E. Cashman III dated
March 14, 2011 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed March 18, 2011, and
incorporated herein by reference).*
Form of Employee Incentive Stock Option Agreement under the Fourth Amended and Restated ANSYS, Inc.
Stock Option and Grant Plan (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed
March 18, 2011, and incorporated herein by reference).*
Form of Employee Non-Qualified Stock Option Agreement under the Fourth Amended and Restated ANSYS,
Inc. 1996 Stock Option and Grant Plan (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q,
filed May 2, 2013, and incorporated herein by reference).*
Form of Employee Director Non-Qualified Stock Option Agreement under the Fourth Amended and Restated
ANSYS, Inc. 1996 Stock Option and Grant Plan (filed as Exhibit 10.2 to the Company’s Quarterly Report on
Form 10-Q, filed May 2, 2013, and incorporated herein by reference).*
Form of Non-Employee Director Non-Qualified Stock Option Agreement under the Fourth Amended and
Restated ANSYS, Inc. 1996 Stock Option and Grant Plan (filed as Exhibit 10.3 to the Company's Quarterly
Report on Form 10-Q, filed May 2, 2013, and incorporated herein by reference).*
Form of Non-Qualified Option Transfer Acknowledgment under the Fourth Amended and Restated ANSYS, Inc.
1996 Stock Option and Grant Plan (filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q, filed
May 2, 2013, and incorporated herein by reference).*
Form of Indemnification Agreement between ANSYS, Inc. and Non-Employee Directors (filed as Exhibit 10.1
to the Company's Current Report on Form 8-K, filed March 20, 2013, and incorporated herein by reference).
First Amendment to Letter Agreement between ANSYS, Inc. and Maria T. Shields, dated March 14, 2011 (filed
as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed March 18, 2011, and incorporated herein
by reference).*
Consent of the Compensation Committee of the ANSYS, Inc. Board of Directors dated March 14, 2011 (filed as
Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed March 18, 2011, and incorporated herein by
reference).*
88
Table of Contents
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
14.1
21.1
23.1
24.1
31.1
31.2
32.1
32.2
Fourth Amended and Restated ANSYS, Inc. 1996 Stock Option and Grant Plan (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed May 17, 2011, and incorporated herein by reference).*
Indemnification Agreement, dated February 27, 2012, between ANSYS, Inc. and Ronald W. Hovsepian, a
director of the Company (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed February 29,
2012, and incorporated herein by reference).
Lease by and between ANSYS, Inc. and Quattro Investment Group, L.P., dated as of September 14, 2012 (filed
as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed September 18, 2012, and incorporated
herein by reference).
Form of Restricted Stock Unit Agreement under the Fourth Amended and Restated ANSYS, Inc. 1996 Stock
Option and Grant Plan (filed as Exhibit 10.39 to the Company's Annual Report on Form 10-K, filed February
27, 2014, and incorporated herein by reference).*
ANSYS, Inc. Second Amended and Restated Long-Term Incentive Plan, dated March 5, 2014 (filed as Exhibit
10.1 to the Company’s Current Report on Form 8-K, filed March 11, 2014, and incorporated herein by
reference).*
Form of Performance-Based Restricted Stock Unit (Total Shareholder Return) Award under the ANSYS, Inc.
Second Amended and Restated Long-Term Incentive Plan (filed as Exhibit 10.2 to the Company's Current
Report on Form 8-K, filed March 11, 2014, and incorporated herein by reference).*
Form of Performance-Based Restricted Stock Unit Award under the ANSYS, Inc. Fourth Amended and Restated
1996 Stock Option and Grant Plan (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K, filed
March 11, 2014, and incorporated herein by reference).*
Resignation Agreement by and between the Company and Joseph C. Fairbanks, Jr., dated July 11, 2014 (filed as
Exhibit 10.1 to the Company's Current Report on Form 8-K, filed July 14, 2014, and incorporated herein by
reference).*
Code of Business Conduct and Ethics (filed as Exhibit 14.1 to the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2003, filed March 12, 2004 and incorporated herein by reference).
Subsidiaries of the Registrant; filed herewith.
Consent of Deloitte & Touche LLP, independent registered public accounting firm.
Powers of Attorney. Contained on the Signatures page of the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2014 and incorporated herein by reference.
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
101.INS
XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase
101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
*
Indicates management contract or compensatory plan, contract or arrangement.
89
Subsidiaries of the Registrant
Jurisdiction of Incorporation
EXHIBIT 21.1
Reaction Design, Inc.
Esterel Technologies, Inc.
SpaceClaim Corporation
SAS IP, Inc.
Fluent China Holdings Limited
ANSYS Belgium, S.A.
ANSYS Canada Limited
2011767 Ontario Inc.
ANSYS France SAS
Apache Design Solutions Sarl.
Esterel Technologies, S.A.
ANSYS Germany GmbH
Apache Design Solutions GmbH
Esterel Technologies, GmbH
ANSYS Hong Kong Ltd.
ANSYS Software Private Limited
Fluent India Private Limited
Apache Design Solutions Private Ltd.
Sequence Design India Private Ltd.
Apache Power Solutions Israel Ltd.
ANSYS Italia, Srl.
ANSYS Japan K.K.
Apache Design Solutions K.K.
Reaction Design Japan, K.K.
SpaceClaim Japan, K.K.
Apache Design Solutions Yuhan Hoesa
California
California
Delaware
Wyoming
Barbados
Belgium
Canada
Canada
France
France
France
Germany
Germany
Germany
Hong Kong
India
India
India
India
Israel
Italy
Japan
Japan
Japan
Japan
Korea
ANSYS Luxembourg Holding Company Sarl.
Luxembourg
Fluent Software (Shanghai) Co., Limited
People's Republic of China
ANSYS-Fluent (Shanghai) Engineering Software Trading Co., Ltd.
People's Republic of China
Apache Science and Technology (Shanghai) Co. Ltd.
Apache Design Solutions, Inc.
ANSYS OOO
Apache Design Solutions Pte. Ltd.
ANSYS Iberia S.L.
ANSYS Sweden, AB
People's Republic of China
People's Republic of China
Russia
Singapore
Spain
Sweden
ANSYS Switzerland GmbH
Apache Design Solutions Inc.
ANSYS UK Limited
Century Dynamics, Limited
ANSYS UK Holding Company Limited
ANSYS UK Simulation Software Limited
Apache Design Solutions, Ltd.
Silver Nugget Limited
Switzerland
Taiwan
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-08613, 333-69506, 333-110728, 333-137274,
333-152765, 333-174670, 333-177030, and 333-196393 on Form S-8 of our reports dated February 26, 2015, relating to the
consolidated financial statements and financial statement schedule of ANSYS, Inc. and subsidiaries, and the effectiveness of
ANSYS, Inc. and subsidiaries' internal control over financial reporting, appearing in this Annual Report on Form 10-K of
ANSYS, Inc. and subsidiaries for the year ended December 31, 2014.
EXHIBIT 23.1
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
February 26, 2015
EXHIBIT 31.1
I, James E. Cashman III, certify that:
CHIEF EXECUTIVE OFFICER CERTIFICATION
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of ANSYS, Inc. (“ANSYS”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of ANSYS as of, and for, the periods
presented in this report;
ANSYS’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for ANSYS and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to ANSYS, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;
Evaluated the effectiveness of ANSYS’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
Disclosed in this report any change in ANSYS’s internal control over financial reporting that occurred during
ANSYS’s most recent fiscal quarter (ANSYS’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, ANSYS’s internal control over financial reporting;
and
5.
ANSYS’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to ANSYS’s auditors and the audit committee of ANSYS’s board of directors (or persons performing
the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect ANSYS’s ability to record, process, summarize and
report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in
ANSYS’s internal control over financial reporting.
Date: February 26, 2015
/s/ James E. Cashman III
James E. Cashman III
President and Chief Executive Officer
EXHIBIT 31.2
I, Maria T. Shields, certify that:
CHIEF FINANCIAL OFFICER CERTIFICATION
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of ANSYS, Inc. (“ANSYS”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of ANSYS as of, and for, the periods
presented in this report;
ANSYS’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for ANSYS and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to ANSYS, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;
Evaluated the effectiveness of ANSYS’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
Disclosed in this report any change in ANSYS’s internal control over financial reporting that occurred during
ANSYS’s most recent fiscal quarter (ANSYS’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, ANSYS’s internal control over financial reporting;
and
5.
ANSYS’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to ANSYS’s auditors and the audit committee of ANSYS’s board of directors (or persons performing
the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect ANSYS’s ability to record, process, summarize and
report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in
ANSYS’s internal control over financial reporting.
Date: February 26, 2015
/s/ Maria T. Shields
Maria T. Shields
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report of ANSYS, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2014
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James E. Cashman III, President
and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)
(2)
The Report fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended, and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, and shall not be deemed to be part of the Report or filed for any purpose whatsoever.
/s/ James E. Cashman III
James E. Cashman III
President and Chief Executive Officer
February 26, 2015
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with the Annual Report of ANSYS, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2014
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Maria T. Shields, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to my knowledge:
(1)
(2)
The Report fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended, and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, and shall not be deemed to be part of the Report or filed for any purpose whatsoever.
/s/ Maria T. Shields
Maria T. Shields
Chief Financial Officer
February 26, 2015
CORPORATE INFORMATION
Stockholder Information
Requests for information
about the Company
should be directed to:
Investor Relations
ANSYS, Inc.
Southpointe
2600 ANSYS Drive
Canonsburg, PA 15317
U.S.A.
Telephone: 724.820.3700
Stock Listing
Transfer Agent and Registrar
American Stock Transfer & Trust Company
6201 15th Ave
Brooklyn, NY 11219
Shareholder Services: 800.937.5449
718.921.8124
TTY: 718.921.8386
866.703.9077
info@amstock.com
www.amstock.com
Headquarters
ANSYS, Inc.
Southpointe
2600 ANSYS Drive
Canonsburg, PA 15317
U.S.A.
Telephone: 1.866.267.9724 or
724.746.3304
www.ansys.com
4 / LETTER TO STOCKHOLDERS
About ANSYS, Inc.
ANSYS, Inc., headquartered in Canonsburg, Pennsylvania, U.S.A., is committed
to innovation by improving the way our customers design and develop products
through Simulation-Driven Product Development.™ Whether developing
innovative performance modeling and simulation technologies, working
with customers to understand their needs, or delivering a successful solution
implementation at a customer site, ANSYS brings over four decades of
experience, talent and drive to every situation.
Founded in 1970, ANSYS has evolved from a small group of engineers to an
international corporation that employs more than 2,700 development, sales,
fi nance, marketing, administrative and management professionals. Dedicated
employees and visionary, responsible leadership — together with a large and
loyal customer base and a worldwide network of valued partners — have helped
ANSYS to create a global and infl uential engineering simulation community.
Clear vision, sound and consistent strategy, fi nancial stability, and an
unwavering focus on engineering simulation have led the Company’s growth and
success. The Company off ers an integrated, full-spectrum portfolio, re-investing
a signifi cant percentage of revenue back into research and development.
In addition, strategic alliances and acquisitions have helped ANSYS to build
capabilities to meet customer needs. Many customers are re-evaluating their
development processes and using engineering simulation to drive innovative
product designs, rather than traditional hardware prototyping and testing.
ANSYS looks forward to many more decades of innovations and to developing
technologies that will solve tomorrow’s complex problems in both mature and
emerging industries.
Forward-Looking Information
The Company cautions investors that its performance is subject to risks
and uncertainties. Some matters discussed in this document may constitute
forward-looking statements that involve risks and uncertainties that could
cause actual results to diff er materially from those projected. These risks and
uncertainties are discussed at length, and may be amended from time to time,
in the Company’s Annual Report to Stockholders and fi lings with the SEC,
including our most recent fi lings on Forms 10-K and 10-Q. We undertake no
obligation to publicly revise any forward-looking statements, whether changes
occur as a result of a new information update or for future events, after the date
they were made.
ANSYS, Inc. is an Equal Opportunity/Affi rmative Action Employer. It is the
Company’s policy to provide equal employment opportunity to employees
and applicants for employment and to prohibit discrimination on the basis of,
among other protected categories, race, color, religion, sex, age, national origin,
veteran status or being a qualifi ed individual with a disability in all aspects of
employment including recruiting, hiring, training or promoting personnel.
ANSYS and any and all ANSYS, Inc., brand, product, service and feature names,
logos and slogans are registered trademarks or trademarks of ANSYS, Inc.,
or its subsidiaries in the United States or other countries. All other brand,
product, service, and feature names or trademarks are the property of their
respective owners.
Realize Your Product Promise®
Fluids
Structures
Electronics
Systems
ANSYS, Inc.
www.ansys.com
ansysinfo@ansys.com
866.267.9724
ANSYS is dedicated exclusively to developing engineering simulation software that
fosters rapid and innovative product design. Our technology enables you to predict
with confidence that your product will thrive in the real world. For more than 40 years,
customers in the most demanding markets have trusted our solutions to help ensure
the integrity of their products and drive business success through innovation.
ANSYS and any and all ANSYS, Inc. brand, product, service and feature names, logos and slogans are registered
trademarks or trademarks of ANSYS, Inc. or its subsidiaries in the United States or other countries. All other
brand, product, service and feature names or trademarks are the property of their respective owners.
© 2014 ANSYS, Inc. All Rights Reserved.
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