Acquisitions | 9 Months Ended |
Sep. 30, 2014 |
Acquisitions | ' |
Acquisitions |
SpaceClaim Corporation |
On April 30, 2014, the Company completed the acquisition of SpaceClaim Corporation ("SpaceClaim"), a leading provider of 3-D modeling technology. Under the terms of the agreement, ANSYS acquired SpaceClaim for a purchase price of $84.9 million, which was paid almost entirely in cash, plus retention vehicles and an adjustment for working capital. |
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 condensed consolidated financial statements from April 30, 2014, the date of acquisition. The operating results of the acquired business were not material to the Company's consolidated results of operations during the period from April 30, 2014 to September 30, 2014. |
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 | $ | 84,843 | |
|
ANSYS replacement stock options | 68 | |
|
Total consideration transferred at fair value | $ | 84,911 | |
|
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed: |
|
| | | |
(in thousands) | |
Cash | $ | 723 | |
|
Accounts receivable and other tangible assets | 1,857 | |
|
Developed technology (10-year life) | 15,800 | |
|
Customer relationships (6-year life) | 9,400 | |
|
Trade name (6-year life) | 1,300 | |
|
Contract backlog (6-year life) | 550 | |
|
Non-compete agreement (2-year life) | 300 | |
|
Net deferred tax assets | 5,257 | |
|
Accounts payable and other liabilities | (1,925 | ) |
Deferred revenue | (700 | ) |
Total identifiable net assets | $ | 32,562 | |
|
Goodwill | $ | 52,349 | |
|
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 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 value of deferred revenue from $0.5 million to $0.7 million and increased the fair values of net deferred tax assets from $4.1 million to $5.3 million, with the offset recorded as a $1.0 million decrease to goodwill. These adjustments were based on refinements to assumptions used in the preliminary valuation of deferred revenue 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 three and nine months ended September 30, 2014 was $0.8 million and $1.4 million, respectively. The expected impact on reported revenue is $0.6 million for the quarter ending December 31, 2014 and $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. |
The operating results of Reaction Design have been included in the Company's condensed 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. The operating results of Reaction Design are not material to the condensed consolidated financial statements. |
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 three and nine months ended September 30, 2014 was $0.4 million and $1.8 million, respectively. The expected impact on reported revenue is $0.3 million for the quarter ending December 31, 2014 and $0.3 million for the year ending December 31, 2015. |
EVEN - Evolutionary Engineering AG |
On April 2, 2013, the Company acquired EVEN - Evolutionary Engineering AG ("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. |