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 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.
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
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 significant portion 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.