UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXCHANGE ACT OF 1934
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 0-20853
ANSYS, Inc.
(exact name of registrant as specified in its charter)
| Delaware | 04-3219960 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
| 275 Technology Drive, Canonsburg, PA | 15317 | |
| (Address of principal executive offices) | (Zip Code) |
724-746-3304
(Registrant’s telephone number, including area code)
Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by a check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨
The number of shares of the Registrant’s Common Stock, par value $.01 per share, outstanding as of October 29, 2004 was 31,245,770 shares.
INDEX
ANSYS, ANSYS Workbench, CFX, and any and all ANSYS, Inc. product and service names are registered trademarks or trademarks of ANSYS, Inc. or its subsidiaries located in the United States or other countries. ICEM CFD is a trademark licensed by ANSYS, Inc. All other product names mentioned are trademarks or registered trademarks of their respective manufacturers.
2
PART I – UNAUDITED FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)
(Unaudited)
| September 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 114,280 | $ | 78,038 | ||||
| Short-term investments |
9,980 | 4,976 | ||||||
| Accounts receivable, less allowance for doubtful accounts of $1,805 and $2,110, respectively |
14,716 | 20,028 | ||||||
| Other current assets |
15,831 | 16,206 | ||||||
| Deferred income taxes |
3,035 | 3,311 | ||||||
| Total current assets |
157,842 | 122,559 | ||||||
| Property and equipment, net |
5,827 | 5,801 | ||||||
| Capitalized software costs, net |
864 | 959 | ||||||
| Goodwill |
35,265 | 35,151 | ||||||
| Other intangibles, net |
12,334 | 14,876 | ||||||
| Deferred tax asset |
747 | 1,213 | ||||||
| Total assets |
$ | 212,879 | $ | 180,559 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 774 | $ | 988 | ||||
| Accrued bonuses |
5,038 | 4,439 | ||||||
| Other accrued expenses and liabilities |
9,693 | 10,184 | ||||||
| Deferred revenue |
38,726 | 37,874 | ||||||
| Total current liabilities |
54,231 | 53,485 | ||||||
| Stockholders’ equity – Note 2: |
||||||||
| Preferred stock, $.01 par value; 2,000,000 shares authorized |
— | — | ||||||
| Common stock, $.01 par value; 50,000,000 shares authorized; 33,169,516 shares issued |
332 | 332 | ||||||
| Additional paid-in capital |
49,438 | 44,369 | ||||||
| Less treasury stock, at cost: 1,953,906 and 2,634,976 shares, respectively |
(18,853 | ) | (22,768 | ) | ||||
| Retained earnings |
123,018 | 100,701 | ||||||
| Accumulated other comprehensive income |
4,713 | 4,440 | ||||||
| Total stockholders’ equity |
158,648 | 127,074 | ||||||
| Total liabilities and stockholders’ equity |
$ | 212,879 | $ | 180,559 | ||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
| Three Months Ended |
Nine Months Ended | ||||||||||||
| September 30, 2004 |
September 30, 2003 |
September 30, 2004 |
September 30, 2003 | ||||||||||
| Revenue: |
|||||||||||||
| Software licenses |
$ | 16,585 | $ | 14,053 | $ | 49,262 | $ | 40,457 | |||||
| Maintenance and service |
15,733 | 13,985 | 46,390 | 39,824 | |||||||||
| Total revenue |
32,318 | 28,038 | 95,652 | 80,281 | |||||||||
| Cost of sales: |
|||||||||||||
| Software licenses |
1,162 | 1,226 | 3,678 | 3,873 | |||||||||
| Amortization of software and acquired technology |
758 | 871 | 2,267 | 2,302 | |||||||||
| Maintenance and service |
3,521 | 3,199 | 9,649 | 9,782 | |||||||||
| Total cost of sales |
5,441 | 5,296 | 15,594 | 15,957 | |||||||||
| Gross profit |
26,877 | 22,742 | 80,058 | 64,324 | |||||||||
| Operating expenses: |
|||||||||||||
| Selling and marketing |
5,757 | 5,646 | 17,843 | 17,254 | |||||||||
| Research and development |
6,611 | 5,879 | 19,441 | 17,609 | |||||||||
| Amortization |
285 | 276 | 857 | 774 | |||||||||
| General and administrative |
3,763 | 3,022 | 10,808 | 8,798 | |||||||||
| Total operating expenses |
16,416 | 14,823 | 48,949 | 44,435 | |||||||||
| Operating income |
10,461 | 7,919 | 31,109 | 19,889 | |||||||||
| Other income (expense) |
415 | (808 | ) | 791 | 498 | ||||||||
| Income before income tax provision |
10,876 | 7,111 | 31,900 | 20,387 | |||||||||
| Income tax provision |
3,277 | 1,750 | 9,584 | 6,275 | |||||||||
| Net income |
$ | 7,599 | $ | 5,361 | $ | 22,316 | $ | 14,112 | |||||
| Earnings per share – basic – Note 2: |
|||||||||||||
| Basic earnings per share |
$ | 0.24 | $ | 0.18 | $ | 0.72 | $ | 0.47 | |||||
| Weighted average shares – basic |
31,075 | 30,212 | 30,835 | 29,728 | |||||||||
| Earnings per share – diluted – Note 2: |
|||||||||||||
| Diluted earnings per share |
$ | 0.23 | $ | 0.17 | $ | 0.68 | $ | 0.45 | |||||
| Weighted average shares - diluted |
33,231 | 32,472 | 32,895 | 31,608 | |||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Nine Months Ended |
||||||||
| September 30, 2004 |
September 30, 2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 22,316 | $ | 14,112 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
5,621 | 5,239 | ||||||
| Deferred income tax provision |
604 | 309 | ||||||
| Provision for bad debts |
(19 | ) | 174 | |||||
| Loss on investment |
— | 686 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
5,285 | 4,629 | ||||||
| Other current assets |
815 | 2,967 | ||||||
| Accounts payable, accrued expenses and liabilities |
4,301 | (2,201 | ) | |||||
| Deferred revenue |
792 | 2,815 | ||||||
| Net cash provided by operating activities |
39,715 | 28,730 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(2,595 | ) | (1,473 | ) | ||||
| Capitalization of internally developed software costs |
(524 | ) | (550 | ) | ||||
| Purchases of short-term investments |
(20,103 | ) | (20,034 | ) | ||||
| Maturities of short-term investments |
15,000 | 30,000 | ||||||
| Acquisition of CFX, net of cash acquired |
— | (21,747 | ) | |||||
| Other acquisition payments |
— | (588 | ) | |||||
| Purchase of long-term investment |
— | (200 | ) | |||||
| Net cash used in investing activities |
(8,222 | ) | (14,592 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock under Employee Stock Purchase Plan |
485 | 408 | ||||||
| Proceeds from exercise of stock options |
4,121 | 6,306 | ||||||
| Cash provided by financing activities |
4,606 | 6,714 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
143 | 231 | ||||||
| Net increase in cash and cash equivalents |
36,242 | 21,083 | ||||||
| Cash and cash equivalents, beginning of period |
78,038 | 46,198 | ||||||
| Cash and cash equivalents, end of period |
$ | 114,280 | $ | 67,281 | ||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid during the period for income taxes |
$ | 4,334 | $ | 3,117 | ||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
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