EXHIBIT 99 Certain Factors Regarding Future Results
Information provided by the Company or its spokespersons may from
time to time contain forward-looking statements concerning projected
financial performance, market and industry segment growth, product
development and commercialization or other aspects of future
operations. Such statements will be based on the assumptions and
expectations of the Company's management at the time such statements
are made. The Company cautions investors that its performance (and,
therefore, any forward-looking statement) is subject to risks and
uncertainties. Various important factors, including but not limited
to the following, may cause the Company's future results to differ
materially from those projected in any forward-looking statement.
Potential Fluctuations in Operating Results. The Company may
experience significant fluctuations in future quarterly operating
results. Fluctuations may be caused by many factors, including the
timing of new product releases or product enhancements by the
Company or its competitors; the size and timing of individual
orders, including a fluctuation in the demand for and the ability to
complete large contracts; software errors or other product quality
problems; competition and pricing; customer order deferrals in
anticipation of new products or product enhancements; reduction in
demand for the Company's products; changes in operating expenses;
changes in the mix of software license and maintenance and service
revenue; personnel changes and general economic conditions. A
substantial portion of the Company's operating expenses are related
to personnel, facilities and marketing programs. The level of
personnel and related expenses cannot be adjusted quickly and is
based, in significant part, on the Company's expectation for future
revenue. The Company does not typically experience significant
order backlog. Further, the Company has often recognized a
substantial portion of its revenue in the last month of a quarter,
with this revenue frequently concentrated in the last weeks or days
of a quarter. During certain quarterly periods, the Company has
been dependent upon receiving large orders of perpetual licenses
involving the payment of a single, up-front fee and, more recently,
has shifted the business emphasis of its products to provide a
collaborative solution to the Company's customers. This emphasis
has increased the Company's average order size and increased the
related sales cycle time for the larger orders and may have the
effect of increasing the volatility of the Company's revenue and
profit from period to period. The Company also depends upon
renewals and sales of noncancellable annual leases, for which a
portion of the annual license
fee is recognized as paid-up revenue upon renewal or inception of
the lease. As a result, product revenue in any quarter is
substantially dependent on sales completed in the latter part of
that quarter, and revenue for any future quarter is not predictable
with any significant degree of accuracy.
Stock Market and Stock Price Volatility. Market prices for
securities of software companies have generally been volatile. In
particular, the market price of the Company's common stock has been
and may continue to be subject to significant fluctuations as a
result of factors affecting the Company, the software industry or
the securities markets in general. Such factors include, but are not
limited to, declines in trading price that may be triggered by the
Company's failure to meet the expectations of securities analysts
and investors. The Company cannot provide assurance that in such
circumstances the trading price of the Company's common stock will
recover or that it will not experience a further decline. Moreover,
the trading price could be subject to additional fluctuations in
response to quarter-to-quarter variations in the Company's operating
results, material announcements made by the Company or its
competitors, conditions in the software industry generally or other
events and factors, many of which are beyond the Company's control.
In addition, a large percentage of the Company's common stock is
held by investment funds associated with TA Associates, Inc. and
various institutional investors. Consequently, actions with respect
to the Company's common stock by either TA Associates, Inc. or
certain of these institutional investors could have a significant
impact on the market price of the stock.
Rapidly Changing Technology; New Products; Risk of Product Defects.
The markets for the Company's products are generally characterized
by rapidly changing technology and frequent new product
introductions that can render existing products obsolete or
unmarketable. A major factor in the Company's future success will be
its ability to anticipate technological changes and to develop and
introduce in a timely manner enhancements to its existing products
and new products to meet those changes. If the Company is unable to
introduce new products and respond quickly to industry changes, its
business, financial condition and results of operations could be
materially adversely affected. The introduction and marketing of new
or enhanced products require the Company to manage the transition
from existing products in order to minimize disruption in customer
purchasing patterns. There can be no assurance that the Company will
be successful in developing and marketing, on a timely basis, new
products or product enhancements, that
its new products will adequately address the changing needs of the
marketplace or that it will successfully manage the transition from
existing products. Software products as complex as those offered by
the Company may contain undetected errors or failures when first
introduced or as new versions are released, and the likelihood of
errors is increased as a result of the Company's commitment to
accelerating the frequency of its product releases.
There can be no assurance that errors will not be found in new or
enhanced products after commencement of commercial shipments. Any
of these problems may result in the loss of or delay in market
acceptance, diversion of development resources, damage to the
Company's reputation or increased service and warranty costs, any of
which could have a materially adverse effect on the Company's
business, financial condition and results of operations.
Dependence on Distributors. The Company continues to distribute its
products principally through its global network of 29 independent,
regional ASDs. The ASDs sell ANSYS and DesignSpace products to new
and existing customers, expand installations within their existing
customer base, offer consulting services and provide the first line
of ANSYS technical support. The ASDs have more immediate contact
with most customers who use ANSYS software than does the Company.
Consequently, the Company is highly dependent on the efforts of the
ASDs. Difficulties in ongoing relationships with ASDs, such as
delays in collecting accounts receivable, failure to meet
performance criteria or to promote the Company's products as
aggressively as the Company expects and differences in the handling
of customer relationships could adversely affect the Company's
performance. Additionally, the loss of any major ASD for any
reason, including an ASD's decision to sell competing products
rather than the Company's products, could have a materially adverse
effect on the Company. Moreover, the Company's future success will
depend substantially on the ability and willingness of its ASDs to
continue to dedicate the resources necessary to promote the
Company's products and to support a larger installed base of the
Company's products. If the ASDs are unable or unwilling to do so,
the Company may be unable to sustain revenue growth.
Competition. The CAD, CAE and computer-aided manufacturing ("CAM")
markets are intensely competitive. In the traditional CAE market,
the Company's primary competitors include MSC.Software Corporation
and Hibbitt, Karlsson and Sorenson, Inc. The Company also faces
competition from smaller vendors of specialized analysis
applications in fields such as computational fluid dynamics. In
addition, certain integrated CAD suppliers such as Parametric
Technology Corporation, Structural
Dynamics Research Corporation and Dassault Systemes provide varying
levels of design analysis, optimization and verification
capabilities as part of their product offerings. The entrance of new
competitors would likely intensify competition in all or a portion
of the overall CAD, CAE and CAM markets. Some of the Company's
current and possible future competitors have greater financial,
technical, marketing and other resources than the Company, and some
have well established relationships with current and potential
customers of the Company. It is also possible that alliances among
competitors may emerge and rapidly acquire significant market share
or that competition will increase as a result of software industry
consolidation. Increased competition may result in price reductions,
reduced profitability and loss of market share, any of which would
materially adversely affect the Company's business, financial
condition and results of operations.
Dependence on Senior Management and Key Technical Personnel. The
Company is highly dependent upon the ability and experience of its
senior executives and its key technical and other management
employees. Although the Company has an employment agreement with
one executive, the loss of this employee, or any of the Company's
other key employees, could adversely affect the Company's ability to
conduct its operations.
Risks Associated with International Activities. A significant
portion of the Company's business comes from outside the United
States. Risks inherent in the Company's international business
activities include imposition of government controls, export license
requirements, restrictions on the export of critical technology,
political and economic instability, trade restrictions, changes in
tariffs and taxes, difficulties in staffing and managing
international operations, longer accounts receivable payment cycles
and the burdens of complying with a wide variety of foreign laws and
regulations. Effective patent, copyright and trade secret
protection may not be available in every foreign country in which
the Company sells its products. The Company's business, financial
condition and results of operations could be materially adversely
affected by any of these risks.
Additionally, countries in certain international regions have
continued to experience weaknesses in their currency, banking and
equity markets. These weaknesses could adversely affect consumer
demand for the Company's products and ultimately the Company's
financial position or results of operations.
Recently, the World Trade Organization ("WTO") ruled that tax
incentives provided to U.S.-based companies
that export their products via a foreign sales corporation are
prohibited tax subsidies. The United States has until October 1,
2000 to comply with the WTO decision. Any prospective changes
regarding tax benefits associated with a foreign sales corporation
may directly impact the Company's effective tax rate.
Dependence on Proprietary Technology. The Company's success is
highly dependent upon its proprietary technology. Although the
Company was recently awarded a patent by the U.S. Patent and
Trademark Office for its web-based reporting technology, the Company
generally relies on contracts and the laws of copyright and trade
secrets to protect its technology. Although the Company maintains a
trade secrets program, enters into confidentiality agreements with
its employees and distributors and limits access to and distribution
of its software, documentation and other proprietary information,
there can be no assurance that the steps taken by the Company to
protect its proprietary technology will be adequate to prevent
misappropriation of its technology by third parties, or that third
parties will not be able to develop similar technology
independently. Although the Company is not aware that any of its
technology infringes upon the rights of third parties, there can be
no assurance that other parties will not assert technology
infringement claims against the Company, or that, if asserted, such
claims will not prevail.
Increased Reliance on Perpetual Licenses. The Company has
historically maintained stable recurring revenue from the sale of
monthly lease licenses and noncancellable annual leases for its
software products. More recently, the Company has experienced an
increase in customer preference for perpetual licenses that involve
payment of a single up-front fee and that are more typical in the
computer software industry. While revenue generated from monthly
lease licenses and noncancellable annual leases currently represents
a portion of the Company's software license revenue, to the extent
that perpetual license revenue continues to increase as a percentage
of total software license revenue, the Company's revenue in any
period will increasingly depend on sales completed during that
period.
Risks Associated With Acquisitions. The Company has consummated and
may continue to consummate certain strategic acquisitions in order
to provide increased capabilities to its existing products, enter
new product and service markets or enhance its distribution
channels. The ability of the Company to integrate the acquired
businesses, including delivering sales and support, ensuring
continued customer commitment, obtaining further commitments and
challenges associated with expanding sales in
particular markets and retaining key personnel, will impact the
success of these acquisitions. If the Company is unable to properly
and timely integrate the acquired businesses, there could be a
materially adverse effect on the Company's business, financial
condition and results of operations.
General Contingencies. The Company is subject to various
investigations, claims and legal proceedings from time to time that
arise in the ordinary course of its business activities. Each of
these matters is subject to various uncertainties, and it is
possible that some of these matters may be resolved unfavorably to
the Company.