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;
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 Company and software industry or 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 37 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, computer-aided engineering ("CAE") and
computer-aided manufacturing ("CAM") markets are 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 and its key technical and other management
employees. Although the Company has entered into employment
agreements with two executives, the loss of these, 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 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 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.