EXHIBIT 99 Certain Factors Regarding Future Results
Information provided by the Company or its spokespersons from
time to time may 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; 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; mix of
software license and maintenance and service revenue; personnel
changes; and general economic conditions. A substantial portion of
the Company's operating expenses is related to personnel,
facilities and marketing programs. The level of personnel and
personnel expenses cannot be adjusted quickly and is based, in
significant part, on the Company's expectation for future
revenues. 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. As a result, product revenues in any quarter
are substantially dependent on orders booked and shipped in the
latter part of that quarter, and revenues for any future quarter
are not predictable with any significant degree of accuracy.
Stock Market 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 computer industry or the securities markets
in general.
In addition, a large percentage of the Company's common stock is
held by institutional investors. Consequently, actions with
respect to the Company's common stock by certain of these
institutional investors could have a significant impact on the
market price for 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 to
industry changes on a timely basis, 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
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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 or warranty costs, any
of which could have a materially adverse effect upon the Company's
business, financial condition and results of operations.
Dependence on Distributors. The Company distributes its products
principally through its global network of 35 independent, regional
ANSYS Support Distributors ("ASDs"). The ASDs sell ANSYS products
and other noncompeting 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, ASDs' 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 ANSYS
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") market is intensely competitive. In the traditional CAE
market, the Company's primary competitors include MacNeal-
Schwendler Corporation, Hibbitt, Karlsson and Sorenson, Inc. and
MARC Analysis Research Corporation. 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 and Structural Dynamics Research
Corporation provide varying levels of design analysis and
optimization and verification capabilities as part of their
product offerings.
The entrance of new competitors would be likely to intensify
competition in all or a portion of the overall CAD, CAE and CAM
market. 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.
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Dependence on Senior Management and Key Technical Personnel. The
Company is highly dependent upon the ability and experience of its
senior executives, Peter J. Smith and Dr. John A. Swanson, and its
key technical and other management employees. Although the Company
has entered into employment agreements with Mr. Smith and Dr.
Swanson, the loss of either of these senior executives or a number
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
and growing 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 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.
Dependence on Proprietary Technology. The Company's success is
highly dependent upon its proprietary technology. The Company does
not have patents on any of its technology and 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
time-based licenses for its software products. 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.
Although lease license revenue currently represents a majority of
the Company's software license fee revenue, to the extent that
perpetual license revenue increases as a percent of total software
license fee revenue, the Company's revenue in any period will
increasingly depend on sales completed during that period.
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