☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
04-3219960
|
|||
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|||
2600 ANSYS Drive,
|
Canonsburg,
|
PA
|
|
|
15317
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Securities registered pursuant to Section 12(b) of the Act:
|
||||
|
|
|
||
Title of each class
|
Trading Symbol(s)
|
Name of exchange on which registered
|
||
Common Stock, $0.01 par value per share
|
ANSS
|
The Nasdaq Global Select Market
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☐
|
|
|
|
ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|||||||
|
September 30,
2019 |
|
December 31,
2018 |
||||
(in thousands, except share and per share data)
|
(Unaudited)
|
|
(Audited)
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
732,684
|
|
|
$
|
777,139
|
|
Short-term investments
|
218
|
|
|
225
|
|
||
Accounts receivable, less allowance for doubtful accounts of $8,700 and $8,000, respectively
|
295,590
|
|
|
317,700
|
|
||
Other receivables and current assets
|
177,734
|
|
|
216,113
|
|
||
Total current assets
|
1,206,226
|
|
|
1,311,177
|
|
||
Long-term assets:
|
|
|
|
||||
Property and equipment, net
|
70,295
|
|
|
61,655
|
|
||
Operating lease right-of-use assets
|
104,160
|
|
|
—
|
|
||
Goodwill
|
1,771,862
|
|
|
1,572,455
|
|
||
Other intangible assets, net
|
267,378
|
|
|
211,272
|
|
||
Other long-term assets
|
134,757
|
|
|
82,775
|
|
||
Deferred income taxes
|
27,334
|
|
|
26,630
|
|
||
Total long-term assets
|
2,375,786
|
|
|
1,954,787
|
|
||
Total assets
|
$
|
3,582,012
|
|
|
$
|
3,265,964
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
8,172
|
|
|
$
|
7,953
|
|
Accrued bonuses and commissions
|
55,362
|
|
|
79,945
|
|
||
Accrued income taxes
|
7,278
|
|
|
8,726
|
|
||
Other accrued expenses and liabilities
|
111,633
|
|
|
99,559
|
|
||
Deferred revenue
|
291,385
|
|
|
328,584
|
|
||
Total current liabilities
|
473,830
|
|
|
524,767
|
|
||
Long-term liabilities:
|
|
|
|
||||
Deferred income taxes
|
31,201
|
|
|
30,077
|
|
||
Long-term operating lease liabilities
|
91,173
|
|
|
—
|
|
||
Other long-term liabilities
|
62,484
|
|
|
61,573
|
|
||
Total long-term liabilities
|
184,858
|
|
|
91,650
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $.01 par value; 2,000,000 shares authorized; zero shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value; 300,000,000 shares authorized; 93,236,023 shares issued
|
932
|
|
|
932
|
|
||
Additional paid-in capital
|
865,634
|
|
|
867,462
|
|
||
Retained earnings
|
3,204,854
|
|
|
2,919,411
|
|
||
Treasury stock, at cost: 9,072,210 and 9,601,670 shares, respectively
|
(1,057,955
|
)
|
|
(1,075,879
|
)
|
||
Accumulated other comprehensive loss
|
(90,141
|
)
|
|
(62,379
|
)
|
||
Total stockholders' equity
|
2,923,324
|
|
|
2,649,547
|
|
||
Total liabilities and stockholders' equity
|
$
|
3,582,012
|
|
|
$
|
3,265,964
|
|
ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands, except per share data)
|
September 30,
2019 |
|
September 30,
2018 |
|
September 30,
2019 |
|
September 30,
2018 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Software licenses
|
$
|
137,144
|
|
|
$
|
109,103
|
|
|
$
|
430,687
|
|
|
$
|
350,296
|
|
Maintenance and service
|
206,755
|
|
|
180,315
|
|
|
598,977
|
|
|
527,908
|
|
||||
Total revenue
|
343,899
|
|
|
289,418
|
|
|
1,029,664
|
|
|
878,204
|
|
||||
Cost of sales:
|
|
|
|
|
|
|
|
||||||||
Software licenses
|
5,708
|
|
|
4,291
|
|
|
16,620
|
|
|
12,301
|
|
||||
Amortization
|
4,762
|
|
|
5,530
|
|
|
14,064
|
|
|
23,403
|
|
||||
Maintenance and service
|
30,895
|
|
|
26,487
|
|
|
85,993
|
|
|
80,092
|
|
||||
Total cost of sales
|
41,365
|
|
|
36,308
|
|
|
116,677
|
|
|
115,796
|
|
||||
Gross profit
|
302,534
|
|
|
253,110
|
|
|
912,987
|
|
|
762,408
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
120,682
|
|
|
97,576
|
|
|
353,263
|
|
|
280,443
|
|
||||
Research and development
|
73,018
|
|
|
59,019
|
|
|
219,058
|
|
|
174,906
|
|
||||
Amortization
|
3,787
|
|
|
3,491
|
|
|
11,342
|
|
|
10,421
|
|
||||
Total operating expenses
|
197,487
|
|
|
160,086
|
|
|
583,663
|
|
|
465,770
|
|
||||
Operating income
|
105,047
|
|
|
93,024
|
|
|
329,324
|
|
|
296,638
|
|
||||
Interest income
|
3,188
|
|
|
3,213
|
|
|
9,610
|
|
|
7,674
|
|
||||
Other income (expense), net
|
594
|
|
|
(974
|
)
|
|
(1,498
|
)
|
|
(2,289
|
)
|
||||
Income before income tax provision
|
108,829
|
|
|
95,263
|
|
|
337,436
|
|
|
302,023
|
|
||||
Income tax provision
|
19,366
|
|
|
5,927
|
|
|
51,993
|
|
|
35,811
|
|
||||
Net income
|
$
|
89,463
|
|
|
$
|
89,336
|
|
|
$
|
285,443
|
|
|
$
|
266,212
|
|
Earnings per share – basic:
|
|
|
|
|
|
|
|
||||||||
Earnings per share
|
$
|
1.06
|
|
|
$
|
1.06
|
|
|
$
|
3.40
|
|
|
$
|
3.17
|
|
Weighted average shares
|
84,109
|
|
|
84,158
|
|
|
83,951
|
|
|
84,065
|
|
||||
Earnings per share – diluted:
|
|
|
|
|
|
|
|
||||||||
Earnings per share
|
$
|
1.04
|
|
|
$
|
1.04
|
|
|
$
|
3.34
|
|
|
$
|
3.09
|
|
Weighted average shares
|
85,733
|
|
|
86,043
|
|
|
85,570
|
|
|
86,060
|
|
ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 30,
2019 |
|
September 30,
2018 |
|
September 30,
2019 |
|
September 30,
2018 |
||||||||
Net income
|
$
|
89,463
|
|
|
$
|
89,336
|
|
|
$
|
285,443
|
|
|
$
|
266,212
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(20,762
|
)
|
|
(5,102
|
)
|
|
(27,762
|
)
|
|
(23,047
|
)
|
||||
Comprehensive income
|
$
|
68,701
|
|
|
$
|
84,234
|
|
|
$
|
257,681
|
|
|
$
|
243,165
|
|
ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|||||||
|
Nine Months Ended
|
||||||
(in thousands)
|
September 30,
2019 |
|
September 30,
2018 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
285,443
|
|
|
$
|
266,212
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and intangible assets amortization
|
42,216
|
|
|
47,341
|
|
||
Operating lease right-of-use assets amortization
|
13,912
|
|
|
—
|
|
||
Deferred income tax benefit
|
(13,221
|
)
|
|
(28,175
|
)
|
||
Provision for bad debts
|
2,559
|
|
|
1,389
|
|
||
Stock-based compensation expense
|
84,784
|
|
|
58,887
|
|
||
Other
|
2,560
|
|
|
2,039
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(12,610
|
)
|
|
32,356
|
|
||
Other receivables and current assets
|
37,773
|
|
|
23,207
|
|
||
Other long-term assets
|
(2,288
|
)
|
|
2,458
|
|
||
Accounts payable, accrued expenses and current liabilities
|
(37,289
|
)
|
|
(31,243
|
)
|
||
Accrued income taxes
|
(2,547
|
)
|
|
(2,581
|
)
|
||
Deferred revenue
|
(35,807
|
)
|
|
1,175
|
|
||
Other long-term liabilities
|
(5,000
|
)
|
|
(19,562
|
)
|
||
Net cash provided by operating activities
|
360,485
|
|
|
353,503
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Acquisitions, net of cash acquired
|
(294,987
|
)
|
|
(283,026
|
)
|
||
Capital expenditures
|
(25,781
|
)
|
|
(13,077
|
)
|
||
Other investing activities
|
(12,680
|
)
|
|
(5,510
|
)
|
||
Net cash used in investing activities
|
(333,448
|
)
|
|
(301,613
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Purchase of treasury stock
|
(59,116
|
)
|
|
(192,787
|
)
|
||
Restricted stock withholding taxes paid in lieu of issued shares
|
(37,936
|
)
|
|
(26,955
|
)
|
||
Proceeds from shares issued for stock-based compensation
|
28,633
|
|
|
37,398
|
|
||
Other financing activities
|
(1,617
|
)
|
|
(4,939
|
)
|
||
Net cash used in financing activities
|
(70,036
|
)
|
|
(187,283
|
)
|
||
Effect of exchange rate fluctuations on cash and cash equivalents
|
(1,456
|
)
|
|
(16,928
|
)
|
||
Net decrease in cash and cash equivalents
|
(44,455
|
)
|
|
(152,321
|
)
|
||
Cash and cash equivalents, beginning of period
|
777,139
|
|
|
881,501
|
|
||
Cash and cash equivalents, end of period
|
$
|
732,684
|
|
|
$
|
729,180
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Income taxes paid
|
$
|
73,561
|
|
|
$
|
74,086
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Treasury Stock
|
|
Accumulated
Other
Comprehensive (Loss)/Income
|
|
Total
Stockholders'
Equity
|
|||||||||||||||||
(in thousands)
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||
Balance, January 1, 2019
|
93,236
|
|
$
|
932
|
|
|
$
|
867,462
|
|
|
$
|
2,919,411
|
|
|
9,602
|
|
|
$
|
(1,075,879
|
)
|
|
$
|
(62,379
|
)
|
|
$
|
2,649,547
|
|
Treasury shares acquired
|
|
|
|
|
|
|
|
|
250
|
|
|
(44,856
|
)
|
|
|
|
(44,856
|
)
|
||||||||||
Stock-based compensation activity
|
|
|
|
|
(42,465
|
)
|
|
|
|
(494
|
)
|
|
43,483
|
|
|
|
|
1,018
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,558
|
)
|
|
(7,558
|
)
|
|||||||||||
Net income
|
|
|
|
|
|
|
86,230
|
|
|
|
|
|
|
|
|
86,230
|
|
|||||||||||
Balance, March 31, 2019
|
93,236
|
|
932
|
|
|
824,997
|
|
|
3,005,641
|
|
|
9,358
|
|
|
(1,077,252
|
)
|
|
(69,937
|
)
|
|
2,684,381
|
|
||||||
Treasury shares acquired
|
|
|
|
|
|
|
|
|
|
|
|
80
|
|
|
(14,260
|
)
|
|
|
|
|
(14,260
|
)
|
||||||
Stock-based compensation activity
|
|
|
|
|
|
14,699
|
|
|
|
|
|
(241
|
)
|
|
22,158
|
|
|
|
|
|
36,857
|
|
||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
558
|
|
|
558
|
|
||||||
Net income
|
|
|
|
|
|
|
|
|
109,750
|
|
|
|
|
|
|
|
|
|
|
|
109,750
|
|
||||||
Balance, June 30, 2019
|
93,236
|
|
932
|
|
|
839,696
|
|
|
3,115,391
|
|
|
9,197
|
|
|
(1,069,354
|
)
|
|
(69,379
|
)
|
|
2,817,286
|
|
||||||
Stock-based compensation activity
|
|
|
|
|
|
25,938
|
|
|
|
|
|
(125
|
)
|
|
11,399
|
|
|
|
|
|
37,337
|
|
||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,762
|
)
|
|
(20,762
|
)
|
||||||
Net income
|
|
|
|
|
|
|
|
|
89,463
|
|
|
|
|
|
|
|
|
|
|
|
89,463
|
|
||||||
Balance, September 30, 2019
|
93,236
|
|
$
|
932
|
|
|
$
|
865,634
|
|
|
$
|
3,204,854
|
|
|
9,072
|
|
|
$
|
(1,057,955
|
)
|
|
$
|
(90,141
|
)
|
|
$
|
2,923,324
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Treasury Stock
|
|
Accumulated
Other
Comprehensive (Loss)/Income
|
|
Total
Stockholders'
Equity
|
|||||||||||||||||
(in thousands)
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||
Balance, January 1, 2018
|
93,236
|
|
$
|
932
|
|
|
$
|
873,357
|
|
|
$
|
2,316,916
|
|
|
9,044
|
|
|
$
|
(907,530
|
)
|
|
$
|
(37,844
|
)
|
|
$
|
2,245,831
|
|
Cumulative effect of the ASC 606 adoption
|
|
|
|
|
|
|
183,132
|
|
|
|
|
|
|
|
|
183,132
|
|
|||||||||||
Treasury shares acquired
|
|
|
|
|
|
|
|
|
750
|
|
|
(117,831
|
)
|
|
|
|
(117,831
|
)
|
||||||||||
Stock-based compensation activity
|
|
|
|
|
(39,943
|
)
|
|
|
|
(492
|
)
|
|
43,648
|
|
|
|
|
3,705
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
8,243
|
|
|
8,243
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
84,280
|
|
|
|
|
|
|
|
|
84,280
|
|
|||||||||||
Balance, March 31, 2018
|
93,236
|
|
932
|
|
|
833,414
|
|
|
2,584,328
|
|
|
9,302
|
|
|
(981,713
|
)
|
|
(29,601
|
)
|
|
2,407,360
|
|
||||||
Stock-based compensation activity
|
|
|
|
|
3,910
|
|
|
|
|
(313
|
)
|
|
29,801
|
|
|
|
|
33,711
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,188
|
)
|
|
(26,188
|
)
|
|||||||||||
Net income
|
|
|
|
|
|
|
92,596
|
|
|
|
|
|
|
|
|
92,596
|
|
|||||||||||
Balance, June 30, 2018
|
93,236
|
|
932
|
|
|
837,324
|
|
|
2,676,924
|
|
|
8,989
|
|
|
(951,912
|
)
|
|
(55,789
|
)
|
|
2,507,479
|
|
||||||
Cumulative effect of the ASC 606 adoption
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
||||||
Treasury shares acquired
|
|
|
|
|
|
|
|
|
424
|
|
|
(74,956
|
)
|
|
|
|
(74,956
|
)
|
||||||||||
Stock-based compensation activity
|
|
|
|
|
|
13,292
|
|
|
|
|
|
(199
|
)
|
|
18,498
|
|
|
|
|
|
31,790
|
|
||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,102
|
)
|
|
(5,102
|
)
|
||||||
Net income
|
|
|
|
|
|
|
|
|
89,336
|
|
|
|
|
|
|
|
|
|
|
|
89,336
|
|
||||||
Balance, September 30, 2018
|
93,236
|
|
$
|
932
|
|
|
$
|
850,616
|
|
|
$
|
2,766,259
|
|
|
9,214
|
|
|
$
|
(1,008,370
|
)
|
|
$
|
(60,891
|
)
|
|
$
|
2,548,546
|
|
1.
|
Organization
|
2.
|
Accounting Policies
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||
(in thousands, except percentages)
|
Amount
|
|
% of Total
|
|
Amount
|
|
% of Total
|
||||
Cash accounts
|
$
|
431,624
|
|
|
58.9
|
|
$
|
331,084
|
|
|
42.6
|
Money market funds
|
301,060
|
|
|
41.1
|
|
446,055
|
|
|
57.4
|
||
Total
|
$
|
732,684
|
|
|
|
|
$
|
777,139
|
|
|
|
3.
|
Revenue from Contracts with Customers
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands, except percentages)
|
September 30, 2019
|
|
September 30, 2018
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Lease licenses
|
$
|
70,693
|
|
|
$
|
43,202
|
|
|
$
|
239,953
|
|
|
$
|
148,795
|
|
Perpetual licenses
|
66,451
|
|
|
65,901
|
|
|
190,734
|
|
|
201,501
|
|
||||
Software licenses
|
137,144
|
|
|
109,103
|
|
|
430,687
|
|
|
350,296
|
|
||||
Maintenance
|
193,189
|
|
|
171,463
|
|
|
559,768
|
|
|
500,962
|
|
||||
Service
|
13,566
|
|
|
8,852
|
|
|
39,209
|
|
|
26,946
|
|
||||
Maintenance and service
|
206,755
|
|
|
180,315
|
|
|
598,977
|
|
|
527,908
|
|
||||
Total revenue
|
$
|
343,899
|
|
|
$
|
289,418
|
|
|
$
|
1,029,664
|
|
|
$
|
878,204
|
|
|
|
|
|
|
|
|
|
||||||||
Direct revenue, as a percentage of total revenue
|
76.8
|
%
|
|
75.5
|
%
|
|
75.9
|
%
|
|
76.1
|
%
|
||||
Indirect revenue, as a percentage of total revenue
|
23.2
|
%
|
|
24.5
|
%
|
|
24.1
|
%
|
|
23.9
|
%
|
(in thousands)
|
2019
|
|
2018
|
||||
Beginning balance – January 1
|
$
|
343,174
|
|
|
$
|
299,730
|
|
Acquired deferred revenue
|
3,266
|
|
|
2,470
|
|
||
Deferral of revenue
|
991,524
|
|
|
868,522
|
|
||
Recognition of revenue
|
(1,029,664
|
)
|
|
(878,204
|
)
|
||
Currency translation
|
(4,985
|
)
|
|
(6,065
|
)
|
||
Ending balance – September 30
|
$
|
303,315
|
|
|
$
|
286,453
|
|
(in thousands)
|
|
||
Next 12 months
|
$
|
445,934
|
|
Months 13-24
|
122,932
|
|
|
Months 25-36
|
52,090
|
|
|
Thereafter
|
29,431
|
|
|
Total revenue allocated to remaining performance obligations
|
$
|
650,387
|
|
4.
|
Acquisitions
|
(in thousands)
|
Granta Design
|
|
Other Acquisitions
|
|
Total
|
||||||
Cash
|
$
|
208,736
|
|
|
$
|
102,737
|
|
|
$
|
311,473
|
|
(in thousands)
|
|
|
|
|
|
||||||
Cash
|
$
|
13,644
|
|
|
$
|
2,842
|
|
|
$
|
16,486
|
|
Accounts receivable and other tangible assets
|
7,023
|
|
|
8,653
|
|
|
15,676
|
|
|||
Developed software and core technologies (12-year weighted-average life)
|
32,445
|
|
|
17,761
|
|
|
50,206
|
|
|||
Customer lists (13-year weighted-average life)
|
20,016
|
|
|
14,180
|
|
|
34,196
|
|
|||
Trade names (10-year weighted-average life)
|
4,579
|
|
|
1,381
|
|
|
5,960
|
|
|||
Accounts payable and other liabilities
|
(6,403
|
)
|
|
(4,704
|
)
|
|
(11,107
|
)
|
|||
Deferred revenue
|
(1,426
|
)
|
|
(1,840
|
)
|
|
(3,266
|
)
|
|||
Net deferred tax liabilities
|
(9,822
|
)
|
|
(5,049
|
)
|
|
(14,871
|
)
|
|||
Total identifiable net assets
|
$
|
60,056
|
|
|
$
|
33,224
|
|
|
$
|
93,280
|
|
Goodwill
|
$
|
148,680
|
|
|
$
|
69,513
|
|
|
$
|
218,193
|
|
5.
|
Other Receivables and Current Assets and Other Long-Term Liabilities
|
(in thousands)
|
September 30,
2019 |
|
December 31,
2018 |
||||
Receivables related to unrecognized revenue
|
$
|
101,939
|
|
|
$
|
167,144
|
|
Income taxes receivable, including overpayments and refunds
|
32,921
|
|
|
13,709
|
|
||
Prepaid expenses and other current assets
|
42,874
|
|
|
35,260
|
|
||
Total other receivables and current assets
|
$
|
177,734
|
|
|
$
|
216,113
|
|
|
|
|
|
||||
Uncertain tax positions
|
$
|
33,105
|
|
|
$
|
29,279
|
|
Other long-term liabilities
|
29,379
|
|
|
32,294
|
|
||
Total other long-term liabilities
|
$
|
62,484
|
|
|
$
|
61,573
|
|
6.
|
Earnings Per Share
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands, except per share data)
|
September 30,
2019 |
|
September 30,
2018 |
|
September 30,
2019 |
|
September 30,
2018 |
||||||||
Net income
|
$
|
89,463
|
|
|
$
|
89,336
|
|
|
$
|
285,443
|
|
|
$
|
266,212
|
|
Weighted average shares outstanding – basic
|
84,109
|
|
|
84,158
|
|
|
83,951
|
|
|
84,065
|
|
||||
Dilutive effect of stock plans
|
1,624
|
|
|
1,885
|
|
|
1,619
|
|
|
1,995
|
|
||||
Weighted average shares outstanding – diluted
|
85,733
|
|
|
86,043
|
|
|
85,570
|
|
|
86,060
|
|
||||
Basic earnings per share
|
$
|
1.06
|
|
|
$
|
1.06
|
|
|
$
|
3.40
|
|
|
$
|
3.17
|
|
Diluted earnings per share
|
$
|
1.04
|
|
|
$
|
1.04
|
|
|
$
|
3.34
|
|
|
$
|
3.09
|
|
Anti-dilutive shares
|
25
|
|
|
—
|
|
|
8
|
|
|
—
|
|
7.
|
Goodwill and Intangible Assets
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||
(in thousands)
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||||
Developed software and core technologies
|
$
|
455,998
|
|
|
$
|
(325,583
|
)
|
|
$
|
410,680
|
|
|
$
|
(314,730
|
)
|
Customer lists and contract backlog
|
238,373
|
|
|
(127,770
|
)
|
|
209,031
|
|
|
(117,614
|
)
|
||||
Trade names
|
142,224
|
|
|
(116,221
|
)
|
|
137,225
|
|
|
(113,677
|
)
|
||||
Total
|
$
|
836,595
|
|
|
$
|
(569,574
|
)
|
|
$
|
756,936
|
|
|
$
|
(546,021
|
)
|
Indefinite-lived intangible asset:
|
|
|
|
|
|
|
|
||||||||
Trade name
|
$
|
357
|
|
|
|
|
$
|
357
|
|
|
|
(in thousands)
|
2019
|
|
2018
|
||||
Beginning balance – January 1
|
$
|
1,572,455
|
|
|
$
|
1,378,553
|
|
Acquisitions and adjustments(1)
|
219,009
|
|
|
204,271
|
|
||
Currency translation
|
(19,602
|
)
|
|
(7,257
|
)
|
||
Ending balance – September 30
|
$
|
1,771,862
|
|
|
$
|
1,575,567
|
|
8.
|
Fair Value Measurement
|
•
|
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
|
•
|
Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; or
|
•
|
Level 3: unobservable inputs based on the Company's own assumptions used to measure assets and liabilities at fair value.
|
|
|
|
Fair Value Measurements at Reporting Date Using:
|
||||||||||||
(in thousands)
|
September 30,
2019 |
|
Quoted Prices in
Active Markets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
301,060
|
|
|
$
|
301,060
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
$
|
218
|
|
|
$
|
—
|
|
|
$
|
218
|
|
|
$
|
—
|
|
Deferred compensation plan investments
|
$
|
4,193
|
|
|
$
|
4,193
|
|
|
$
|
—
|
|
|
$
|
—
|
|
9.
|
Leases
|
(in thousands)
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Lease liability cost
|
$
|
5,684
|
|
|
$
|
16,579
|
|
Variable lease cost not included in the lease liability(1)
|
1,126
|
|
|
2,847
|
|
||
Total lease cost
|
$
|
6,810
|
|
|
$
|
19,426
|
|
(in thousands)
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Cash paid for amounts included in the measurement of the lease liability:
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
(5,242
|
)
|
|
$
|
(14,551
|
)
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
6,155
|
|
|
$
|
29,262
|
|
(in thousands)
|
|
||
2019
|
$
|
16,354
|
|
2020
|
12,469
|
|
|
2021
|
10,177
|
|
|
2022
|
8,523
|
|
|
2023
|
6,809
|
|
|
Thereafter
|
14,267
|
|
|
Total
|
$
|
68,599
|
|
10.
|
Debt
|
11.
|
Stock Repurchase Program
|
|
Nine Months Ended
|
||||||
(in thousands, except per share data)
|
September 30,
2019 |
|
September 30,
2018 |
||||
Number of shares repurchased
|
330
|
|
|
1,174
|
|
||
Average price paid per share
|
$
|
179.41
|
|
|
$
|
164.14
|
|
Total cost
|
$
|
59,116
|
|
|
$
|
192,787
|
|
12.
|
Stock-Based Compensation
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands, except per share data)
|
September 30,
2019 |
|
September 30,
2018 |
|
September 30,
2019 |
|
September 30,
2018 |
||||||||
Cost of sales:
|
|
|
|
|
|
|
|
||||||||
Maintenance and service
|
$
|
2,422
|
|
|
$
|
1,438
|
|
|
$
|
6,024
|
|
|
$
|
3,880
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
16,774
|
|
|
13,484
|
|
|
44,408
|
|
|
33,288
|
|
||||
Research and development
|
12,666
|
|
|
8,061
|
|
|
34,352
|
|
|
21,719
|
|
||||
Stock-based compensation expense before taxes
|
31,862
|
|
|
22,983
|
|
|
84,784
|
|
|
58,887
|
|
||||
Related income tax benefits
|
(9,847
|
)
|
|
(8,611
|
)
|
|
(30,075
|
)
|
|
(30,311
|
)
|
||||
Stock-based compensation expense, net of taxes
|
$
|
22,015
|
|
|
$
|
14,372
|
|
|
$
|
54,709
|
|
|
$
|
28,576
|
|
Net impact on earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
(0.26
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.65
|
)
|
|
$
|
(0.34
|
)
|
Diluted earnings per share
|
$
|
(0.26
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(0.33
|
)
|
13.
|
Geographic Information
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands)
|
September 30,
2019 |
|
September 30,
2018 |
|
September 30,
2019 |
|
September 30,
2018 |
||||||||
United States
|
$
|
146,761
|
|
|
$
|
106,229
|
|
|
$
|
425,212
|
|
|
$
|
327,784
|
|
Japan
|
35,749
|
|
|
36,309
|
|
|
116,364
|
|
|
109,050
|
|
||||
Germany
|
37,541
|
|
|
27,831
|
|
|
93,847
|
|
|
97,262
|
|
||||
South Korea
|
16,902
|
|
|
12,943
|
|
|
72,833
|
|
|
45,468
|
|
||||
France
|
17,226
|
|
|
14,035
|
|
|
46,825
|
|
|
44,638
|
|
||||
China
|
18,057
|
|
|
14,568
|
|
|
43,904
|
|
|
38,616
|
|
||||
Other Europe, Middle East and Africa (EMEA)
|
44,860
|
|
|
45,602
|
|
|
142,337
|
|
|
136,719
|
|
||||
Other international
|
26,803
|
|
|
31,901
|
|
|
88,342
|
|
|
78,667
|
|
||||
Total revenue
|
$
|
343,899
|
|
|
$
|
289,418
|
|
|
$
|
1,029,664
|
|
|
$
|
878,204
|
|
(in thousands)
|
September 30,
2019 |
|
December 31,
2018 |
||||
United States
|
$
|
48,886
|
|
|
$
|
46,605
|
|
India
|
5,641
|
|
|
4,176
|
|
||
United Kingdom
|
3,696
|
|
|
1,238
|
|
||
Other EMEA
|
7,694
|
|
|
5,882
|
|
||
Other international
|
4,378
|
|
|
3,754
|
|
||
Total property and equipment, net
|
$
|
70,295
|
|
|
$
|
61,655
|
|
14.
|
Contingencies and Commitments
|
15.
|
Subsequent Events
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||||||
|
GAAP
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
|
||||
Revenue
|
18.8
|
%
|
|
17.9
|
%
|
|
17.2
|
%
|
|
17.0
|
%
|
Operating income
|
12.9
|
%
|
|
16.1
|
%
|
|
11.0
|
%
|
|
13.3
|
%
|
Diluted earnings per share
|
0.0
|
%
|
|
8.4
|
%
|
|
8.1
|
%
|
|
12.2
|
%
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||||||||||
(in thousands)
|
GAAP
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
|
||||||||
Revenue
|
$
|
(4,481
|
)
|
|
$
|
(4,543
|
)
|
|
$
|
(21,842
|
)
|
|
$
|
(22,110
|
)
|
Operating income
|
$
|
(2,051
|
)
|
|
$
|
(2,246
|
)
|
|
$
|
(9,210
|
)
|
|
$
|
(10,039
|
)
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||||||
|
GAAP
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
|
||||
Revenue
|
20.4
|
%
|
|
19.5
|
%
|
|
19.7
|
%
|
|
19.5
|
%
|
Operating income
|
15.1
|
%
|
|
17.9
|
%
|
|
14.1
|
%
|
|
15.8
|
%
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||
Americas
|
34.8
|
%
|
|
28.6
|
%
|
EMEA
|
19.0
|
%
|
|
7.1
|
%
|
Asia-Pacific
|
3.4
|
%
|
|
21.5
|
%
|
Total
|
20.4
|
%
|
|
19.7
|
%
|
•
|
The Company's expectations regarding the impacts of new accounting guidance.
|
•
|
The Company's expectations regarding the outcome of its service tax audit cases.
|
•
|
The Company's assessment of the ultimate liabilities arising from various investigations, claims and legal proceedings.
|
•
|
The Company's expectations regarding future claims related to indemnification obligations.
|
•
|
The Company's intentions regarding its hybrid sales and distribution model.
|
•
|
The Company's statement regarding the strength of the features, functionality and integrated multiphysics capabilities of its software products.
|
•
|
The Company's belief that its overall performance is best measured by fiscal-year results rather than by quarterly results.
|
•
|
The Company's expectations regarding increased lease license volatility due to an increased customer preference for time-based licenses.
|
•
|
The Company's estimates regarding the expected impact on reported revenue related to the acquisition accounting treatment of deferred revenue.
|
•
|
The Company's expectation that it will continue to make targeted investments in its global sales and marketing organizations and its global business infrastructure to enhance and support its revenue-generating activities.
|
•
|
The Company's intentions related to investments in research and development, particularly as it relates to expanding the ease of use and capabilities of its broad portfolio of simulation software products.
|
•
|
The Company's intention to repatriate previously taxed earnings in excess of working capital needs and to reinvest all other earnings of its non-U.S. subsidiaries.
|
•
|
The Company's plans related to future capital spending.
|
•
|
The sufficiency of existing cash and cash equivalent balances to meet future working capital and capital expenditure requirements.
|
•
|
The Company's belief that the best uses of its excess cash are to invest in the business and to repurchase stock in order to both offset dilution and return capital to stockholders, in excess of its requirements, with the goal of increasing stockholder value.
|
•
|
The Company's intentions related to investments in complementary companies, products, services and technologies.
|
•
|
The Company's expectation that changes in currency exchange rates will affect the Company's financial position, results of operations and cash flows.
|
•
|
The Company’s expectations regarding acquisitions and integrating such acquired companies to realize the benefits of cost reductions and other synergies relating thereto.
|
|
Three Months Ended September 30,
|
|
Change
|
||||||||||||
(in thousands, except percentages)
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|
Constant Currency %
|
||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Lease licenses
|
$
|
70,693
|
|
|
$
|
43,202
|
|
|
$
|
27,491
|
|
|
63.6
|
|
66.4
|
Perpetual licenses
|
66,451
|
|
|
65,901
|
|
|
550
|
|
|
0.8
|
|
2.1
|
|||
Software licenses
|
137,144
|
|
|
109,103
|
|
|
28,041
|
|
|
25.7
|
|
27.5
|
|||
Maintenance
|
193,189
|
|
|
171,463
|
|
|
21,726
|
|
|
12.7
|
|
14.0
|
|||
Service
|
13,566
|
|
|
8,852
|
|
|
4,714
|
|
|
53.3
|
|
54.7
|
|||
Maintenance and service
|
206,755
|
|
|
180,315
|
|
|
26,440
|
|
|
14.7
|
|
16.0
|
|||
Total revenue
|
$
|
343,899
|
|
|
$
|
289,418
|
|
|
$
|
54,481
|
|
|
18.8
|
|
20.4
|
(in thousands)
|
Three Months Ended September 30, 2019
|
||
Euro
|
$
|
(4,123
|
)
|
South Korean Won
|
(972
|
)
|
|
British Pound
|
(611
|
)
|
|
Taiwan Dollar
|
(87
|
)
|
|
Indian Rupee
|
(23
|
)
|
|
Japanese Yen
|
1,336
|
|
|
Other
|
(1
|
)
|
|
Total
|
$
|
(4,481
|
)
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||
2019
|
|
2018
|
|
Change
|
||||||||||||||
(in thousands, except percentages)
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
%
|
|||||||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Software licenses
|
$
|
5,708
|
|
|
1.7
|
|
$
|
4,291
|
|
|
1.5
|
|
$
|
1,417
|
|
|
33.0
|
|
Amortization
|
4,762
|
|
|
1.4
|
|
5,530
|
|
|
1.9
|
|
(768
|
)
|
|
(13.9
|
)
|
|||
Maintenance and service
|
30,895
|
|
|
9.0
|
|
26,487
|
|
|
9.2
|
|
4,408
|
|
|
16.6
|
|
|||
Total cost of sales
|
41,365
|
|
|
12.0
|
|
36,308
|
|
|
12.5
|
|
5,057
|
|
|
13.9
|
|
|||
Gross profit
|
$
|
302,534
|
|
|
88.0
|
|
$
|
253,110
|
|
|
87.5
|
|
$
|
49,424
|
|
|
19.5
|
|
•
|
Increased stock-based compensation of $1.0 million.
|
•
|
Increased salaries of $0.9 million.
|
•
|
Increased IT maintenance and software hosting costs of $0.7 million.
|
•
|
Increased consulting costs of $0.6 million.
|
•
|
Increased third-party technical support of $0.5 million.
|
•
|
Increased severance costs of $0.5 million.
|
|
Three Months Ended September 30,
|
|
|
|
|
||||||||||||
2019
|
|
2018
|
|
Change
|
|||||||||||||
(in thousands, except percentages)
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
%
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
$
|
120,682
|
|
|
35.1
|
|
$
|
97,576
|
|
|
33.7
|
|
$
|
23,106
|
|
|
23.7
|
Research and development
|
73,018
|
|
|
21.2
|
|
59,019
|
|
|
20.4
|
|
13,999
|
|
|
23.7
|
|||
Amortization
|
3,787
|
|
|
1.1
|
|
3,491
|
|
|
1.2
|
|
296
|
|
|
8.5
|
|||
Total operating expenses
|
$
|
197,487
|
|
|
57.4
|
|
$
|
160,086
|
|
|
55.3
|
|
$
|
37,401
|
|
|
23.4
|
•
|
Increased salaries, incentive compensation and other headcount-related costs of $12.8 million.
|
•
|
Increased stock-based compensation of $3.3 million.
|
•
|
Increased professional services of $2.8 million.
|
•
|
Increased business travel of $1.4 million.
|
•
|
Increased third-party commissions of $1.2 million.
|
•
|
Increased salaries, incentive compensation and other headcount-related costs of $7.5 million.
|
•
|
Increased stock-based compensation of $4.6 million.
|
|
Three Months Ended
|
||||||
(in thousands)
|
September 30,
2019 |
|
September 30,
2018 |
||||
Foreign currency gains (losses), net
|
$
|
826
|
|
|
$
|
(1,023
|
)
|
Other
|
(232
|
)
|
|
49
|
|
||
Total other income (expense), net
|
$
|
594
|
|
|
$
|
(974
|
)
|
|
Three Months Ended
|
||||||
(in thousands, except percentages)
|
September 30,
2019 |
|
September 30,
2018 |
||||
Income before income tax provision
|
$
|
108,829
|
|
|
$
|
95,263
|
|
Income tax provision
|
$
|
19,366
|
|
|
$
|
5,927
|
|
Effective tax rate
|
17.8
|
%
|
|
6.2
|
%
|
|
Three Months Ended
|
||||||
(in thousands, except per share data)
|
September 30,
2019 |
|
September 30,
2018 |
||||
Net income
|
$
|
89,463
|
|
|
$
|
89,336
|
|
Diluted earnings per share
|
$
|
1.04
|
|
|
$
|
1.04
|
|
Weighted average shares outstanding - diluted
|
85,733
|
|
|
86,043
|
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||
(in thousands, except percentages)
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|
Constant Currency %
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Lease licenses
|
$
|
239,953
|
|
|
$
|
148,795
|
|
|
$
|
91,158
|
|
|
61.3
|
|
|
64.7
|
|
Perpetual licenses
|
190,734
|
|
|
201,501
|
|
|
(10,767
|
)
|
|
(5.3
|
)
|
|
(3.5
|
)
|
|||
Software licenses
|
430,687
|
|
|
350,296
|
|
|
80,391
|
|
|
22.9
|
|
|
25.5
|
|
|||
Maintenance
|
559,768
|
|
|
500,962
|
|
|
58,806
|
|
|
11.7
|
|
|
14.1
|
|
|||
Service
|
39,209
|
|
|
26,946
|
|
|
12,263
|
|
|
45.5
|
|
|
48.8
|
|
|||
Maintenance and service
|
598,977
|
|
|
527,908
|
|
|
71,069
|
|
|
13.5
|
|
|
15.9
|
|
|||
Total revenue
|
$
|
1,029,664
|
|
|
$
|
878,204
|
|
|
$
|
151,460
|
|
|
17.2
|
|
|
19.7
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||
2019
|
|
2018
|
|
Change
|
||||||||||||||
(in thousands, except percentages)
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
%
|
|||||||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Software licenses
|
$
|
16,620
|
|
|
1.6
|
|
$
|
12,301
|
|
|
1.4
|
|
$
|
4,319
|
|
|
35.1
|
|
Amortization
|
14,064
|
|
|
1.4
|
|
23,403
|
|
|
2.7
|
|
(9,339
|
)
|
|
(39.9
|
)
|
|||
Maintenance and service
|
85,993
|
|
|
8.4
|
|
80,092
|
|
|
9.1
|
|
5,901
|
|
|
7.4
|
|
|||
Total cost of sales
|
116,677
|
|
|
11.3
|
|
115,796
|
|
|
13.2
|
|
881
|
|
|
0.8
|
|
|||
Gross profit
|
$
|
912,987
|
|
|
88.7
|
|
$
|
762,408
|
|
|
86.8
|
|
$
|
150,579
|
|
|
19.8
|
|
•
|
Increased stock-based compensation of $2.1 million.
|
•
|
Increased salaries of $2.1 million.
|
•
|
Increased third-party technical support of $1.1 million.
|
•
|
Increased consulting costs of $1.1 million.
|
•
|
Decreased costs related to foreign exchange translation of $1.9 million due to a stronger U.S. Dollar.
|
|
Nine Months Ended September 30,
|
|
|
|
|
||||||||||||
2019
|
|
2018
|
|
Change
|
|||||||||||||
(in thousands, except percentages)
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
%
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
$
|
353,263
|
|
|
34.3
|
|
$
|
280,443
|
|
|
31.9
|
|
$
|
72,820
|
|
|
26.0
|
Research and development
|
219,058
|
|
|
21.3
|
|
174,906
|
|
|
19.9
|
|
44,152
|
|
|
25.2
|
|||
Amortization
|
11,342
|
|
|
1.1
|
|
10,421
|
|
|
1.2
|
|
921
|
|
|
8.8
|
|||
Total operating expenses
|
$
|
583,663
|
|
|
56.7
|
|
$
|
465,770
|
|
|
53.0
|
|
$
|
117,893
|
|
|
25.3
|
•
|
Increased salaries, incentive compensation and other headcount-related costs of $44.7 million.
|
•
|
Increased stock-based compensation of $11.1 million.
|
•
|
Increased business travel of $5.2 million.
|
•
|
Increased professional fees of $4.0 million.
|
•
|
Increased consulting costs of $3.0 million.
|
•
|
Increased marketing expenses of $2.9 million.
|
•
|
Decreased costs related to foreign exchange translation of $6.5 million due to a stronger U.S. Dollar.
|
•
|
Increased salaries, incentive compensation and other headcount-related costs of $27.4 million.
|
•
|
Increased stock-based compensation of $12.6 million.
|
•
|
Decreased costs related to foreign exchange translation of $3.5 million due to a stronger U.S. Dollar.
|
|
Nine Months Ended
|
||||||
(in thousands)
|
September 30,
2019 |
|
September 30,
2018 |
||||
Foreign currency losses, net
|
$
|
(1,556
|
)
|
|
$
|
(2,346
|
)
|
Other
|
58
|
|
|
57
|
|
||
Total other expense, net
|
$
|
(1,498
|
)
|
|
$
|
(2,289
|
)
|
|
Nine Months Ended
|
||||||
(in thousands, except percentages)
|
September 30,
2019 |
|
September 30,
2018 |
||||
Income before income tax provision
|
$
|
337,436
|
|
|
$
|
302,023
|
|
Income tax provision
|
$
|
51,993
|
|
|
$
|
35,811
|
|
Effective tax rate
|
15.4
|
%
|
|
11.9
|
%
|
|
Nine Months Ended
|
||||||
(in thousands, except per share data)
|
September 30,
2019 |
|
September 30,
2018 |
||||
Net income
|
$
|
285,443
|
|
|
$
|
266,212
|
|
Diluted earnings per share
|
$
|
3.34
|
|
|
$
|
3.09
|
|
Weighted average shares outstanding - diluted
|
85,570
|
|
|
86,060
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||||||||||
(in thousands, except percentages and per share data)
|
GAAP Results
|
|
Adjustments
|
|
Non-GAAP
Results |
|
GAAP Results
|
|
Adjustments
|
|
Non-GAAP
Results |
||||||||||||
Total revenue
|
$
|
343,899
|
|
|
$
|
1,596
|
|
(1)
|
$
|
345,495
|
|
|
$
|
289,418
|
|
|
$
|
3,548
|
|
(4)
|
$
|
292,966
|
|
Operating income
|
105,047
|
|
|
44,675
|
|
(2)
|
149,722
|
|
|
93,024
|
|
|
35,889
|
|
(5)
|
128,913
|
|
||||||
Operating profit margin
|
30.5
|
%
|
|
|
|
43.3
|
%
|
|
32.1
|
%
|
|
|
|
44.0
|
%
|
||||||||
Net income
|
$
|
89,463
|
|
|
$
|
32,245
|
|
(3)
|
$
|
121,708
|
|
|
$
|
89,336
|
|
|
$
|
23,557
|
|
(6)
|
$
|
112,893
|
|
Earnings per share – diluted:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings per share
|
$
|
1.04
|
|
|
|
|
$
|
1.42
|
|
|
$
|
1.04
|
|
|
|
|
$
|
1.31
|
|
||||
Weighted average shares
|
85,733
|
|
|
|
|
85,733
|
|
|
86,043
|
|
|
|
|
86,043
|
|
(1)
|
Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment associated with the accounting for deferred revenue in business combinations.
|
(2)
|
Amount represents $31.9 million of stock-based compensation expense, $0.1 million of excess payroll taxes related to stock-based awards, $8.5 million of amortization expense associated with intangible assets acquired in business combinations, $2.5 million of transaction expenses related to business combinations and the $1.6 million adjustment to revenue as reflected in (1) above.
|
(3)
|
Amount represents the impact of the adjustments to operating income referred to in (2) above, decreased for the related income tax impact of $12.4 million.
|
(4)
|
Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment associated with the accounting for deferred revenue in business combinations.
|
(5)
|
Amount represents $23.0 million of stock-based compensation expense, $0.3 million of excess payroll taxes related to stock-based awards, $9.0 million of amortization expense associated with intangible assets acquired in business combinations and the $3.5 million adjustment to revenue as reflected in (4) above.
|
(6)
|
Amount represents the impact of the adjustments to operating income referred to in (5) above, decreased for the related income tax impact of $11.7 million, adjustments related to the transition tax associated with the Tax Cuts and Jobs Act of $0.5 million, and rabbi trust income of $0.1 million.
|
|
Nine Months Ended
|
||||||||||||||||||||||
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||||||||||
(in thousands, except percentages and per share data)
|
GAAP Results
|
|
Adjustments
|
|
Non-GAAP
Results |
|
GAAP Results
|
|
Adjustments
|
|
Non-GAAP
Results |
||||||||||||
Total revenue
|
$
|
1,029,664
|
|
|
$
|
6,249
|
|
(1)
|
$
|
1,035,913
|
|
|
$
|
878,204
|
|
|
$
|
6,897
|
|
(4)
|
$
|
885,101
|
|
Operating income
|
329,324
|
|
|
126,597
|
|
(2)
|
455,921
|
|
|
296,638
|
|
|
105,796
|
|
(5)
|
402,434
|
|
||||||
Operating profit margin
|
32.0
|
%
|
|
|
|
44.0
|
%
|
|
33.8
|
%
|
|
|
|
45.5
|
%
|
||||||||
Net income
|
$
|
285,443
|
|
|
$
|
84,841
|
|
(3)
|
$
|
370,284
|
|
|
$
|
266,212
|
|
|
$
|
65,591
|
|
(6)
|
$
|
331,803
|
|
Earnings per share – diluted:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings per share
|
$
|
3.34
|
|
|
|
|
$
|
4.33
|
|
|
$
|
3.09
|
|
|
|
|
$
|
3.86
|
|
||||
Weighted average shares
|
85,570
|
|
|
|
|
85,570
|
|
|
86,060
|
|
|
|
|
86,060
|
|
(1)
|
Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment associated with the accounting for deferred revenue in business combinations.
|
(2)
|
Amount represents $84.8 million of stock-based compensation expense, $4.5 million of excess payroll taxes related to stock-based awards, $25.4 million of amortization expense associated with intangible assets acquired in business combinations, $5.6 million of transaction expenses related to business combinations and the $6.2 million adjustment to revenue as reflected in (1) above.
|
(3)
|
Amount represents the impact of the adjustments to operating income referred to in (2) above, decreased for the related income tax impact of $39.7 million, adjustments related to the transition tax associated with the Tax Cuts and Jobs Act of $1.8 million, and rabbi trust income of $0.3 million.
|
(4)
|
Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment associated with the accounting for deferred revenue in business combinations.
|
(5)
|
Amount represents $58.9 million of stock-based compensation expense, $3.8 million of excess payroll taxes related to stock-based awards, $33.8 million of amortization expense associated with intangible assets acquired in business combinations, $2.4 million of transaction expenses related to business combinations and the $6.9 million adjustment to revenue as reflected in (4) above.
|
(6)
|
Amount represents the impact of the adjustments to operating income referred to in (5) above, decreased for the related income tax impact of $41.0 million and rabbi trust income of $0.1 million, and increased for adjustments related to the transition tax associated with the Tax Cuts and Jobs Act of $0.9 million.
|
(in thousands)
|
September 30,
2019 |
|
December 31,
2018 |
|
Change
|
||||||
Cash, cash equivalents and short-term investments
|
$
|
732,902
|
|
|
$
|
777,364
|
|
|
$
|
(44,462
|
)
|
Working capital
|
$
|
732,396
|
|
|
$
|
786,410
|
|
|
$
|
(54,014
|
)
|
(in thousands, except percentages)
|
September 30,
2019 |
|
% of Total
|
|
December 31,
2018 |
|
% of Total
|
||||
Domestic
|
$
|
502,706
|
|
|
68.6
|
|
$
|
616,249
|
|
|
79.3
|
Foreign
|
230,196
|
|
|
31.4
|
|
161,115
|
|
|
20.7
|
||
Total
|
$
|
732,902
|
|
|
|
|
$
|
777,364
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||
(in thousands)
|
2019
|
|
2018
|
|
Change
|
||||||
Net cash provided by operating activities
|
$
|
360,485
|
|
|
$
|
353,503
|
|
|
$
|
6,982
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||
(in thousands)
|
2019
|
|
2018
|
|
Change
|
||||||
Net cash used in investing activities
|
$
|
(333,448
|
)
|
|
$
|
(301,613
|
)
|
|
$
|
(31,835
|
)
|
|
Nine Months Ended September 30,
|
|
|
||||||||
(in thousands)
|
2019
|
|
2018
|
|
Change
|
||||||
Net cash used in financing activities
|
$
|
(70,036
|
)
|
|
$
|
(187,283
|
)
|
|
$
|
117,247
|
|
|
Nine Months Ended
|
||||||
(in thousands, except per share data)
|
September 30,
2019 |
|
September 30,
2018 |
||||
Number of shares repurchased
|
330
|
|
|
1,174
|
|
||
Average price paid per share
|
$
|
179.41
|
|
|
$
|
164.14
|
|
Total cost
|
$
|
59,116
|
|
|
$
|
192,787
|
|
(in thousands)
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Euro
|
$
|
(4,123
|
)
|
|
$
|
(13,919
|
)
|
South Korean Won
|
(972
|
)
|
|
(4,425
|
)
|
||
British Pound
|
(611
|
)
|
|
(1,958
|
)
|
||
Indian Rupee
|
(23
|
)
|
|
(833
|
)
|
||
Taiwan Dollar
|
(87
|
)
|
|
(626
|
)
|
||
Japanese Yen
|
1,336
|
|
|
314
|
|
||
Other
|
(1
|
)
|
|
(395
|
)
|
||
Total
|
$
|
(4,481
|
)
|
|
$
|
(21,842
|
)
|
|
Period-End Exchange Rates
|
||||||||||
As of
|
GBP/USD
|
|
EUR/USD
|
|
USD/JPY
|
|
USD/KRW
|
||||
September 30, 2018
|
1.303
|
|
|
1.161
|
|
|
113.714
|
|
|
1,110.371
|
|
December 31, 2018
|
1.276
|
|
|
1.147
|
|
|
109.589
|
|
|
1,115.325
|
|
September 30, 2019
|
1.229
|
|
|
1.090
|
|
|
108.085
|
|
|
1,200.048
|
|
|
Average Exchange Rates
|
||||||||||
Three Months Ended
|
GBP/USD
|
|
EUR/USD
|
|
USD/JPY
|
|
USD/KRW
|
||||
September 30, 2018
|
1.303
|
|
|
1.163
|
|
|
111.532
|
|
|
1,121.957
|
|
September 30, 2019
|
1.232
|
|
|
1.111
|
|
|
107.335
|
|
|
1,195.362
|
|
|
Average Exchange Rates
|
||||||||||
Nine Months Ended
|
GBP/USD
|
|
EUR/USD
|
|
USD/JPY
|
|
USD/KRW
|
||||
September 30, 2018
|
1.352
|
|
|
1.195
|
|
|
109.636
|
|
|
1,091.862
|
|
September 30, 2019
|
1.273
|
|
|
1.123
|
|
|
109.131
|
|
|
1,162.070
|
|
Exhibit No.
|
|
Exhibit
|
|
10.1
|
|
|
|
|
|
|
|
10.2
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
||
31.1
|
|
|
|
|
|
||
31.2
|
|
|
|
|
|
||
32.1
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
101.INS
|
|
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
|
|
|
||
101.SCH
|
|
|
Inline XBRL Taxonomy Extension Schema
|
|
|
||
101.CAL
|
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase
|
|
|
||
101.DEF
|
|
|
Inline XBRL Taxonomy Extension Definition Linkbase
|
|
|
||
101.LAB
|
|
|
Inline XBRL Taxonomy Extension Label Linkbase
|
|
|
||
101.PRE
|
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
|
|
||
104
|
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
*
|
Indicates management contract or compensatory plan, contract or arrangement.
|
|
|
ANSYS, Inc.
|
|
|
|
|
|
Date:
|
November 7, 2019
|
By:
|
/s/ Ajei S. Gopal
|
|
|
|
Ajei S. Gopal
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
Date:
|
November 7, 2019
|
By:
|
/s/ Maria T. Shields
|
|
|
|
Maria T. Shields
|
|
|
|
Chief Financial Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ANSYS, Inc. (“ANSYS”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of ANSYS as of, and for, the periods presented in this report;
|
4.
|
ANSYS’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for ANSYS and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to ANSYS, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of ANSYS’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in ANSYS’ internal control over financial reporting that occurred during ANSYS’ most recent fiscal quarter (ANSYS’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, ANSYS’ internal control over financial reporting; and
|
5.
|
ANSYS’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to ANSYS’ auditors and the audit committee of ANSYS’ board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect ANSYS’ ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in ANSYS’ internal control over financial reporting.
|
Date:
|
November 7, 2019
|
/s/ Ajei S. Gopal
|
|
|
Ajei S. Gopal
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ANSYS, Inc. (“ANSYS”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of ANSYS as of, and for, the periods presented in this report;
|
4.
|
ANSYS’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for ANSYS and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to ANSYS, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of ANSYS’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in ANSYS’ internal control over financial reporting that occurred during ANSYS’ most recent fiscal quarter (ANSYS’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, ANSYS’ internal control over financial reporting; and
|
5.
|
ANSYS’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to ANSYS’ auditors and the audit committee of ANSYS’ board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect ANSYS’ ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in ANSYS’ internal control over financial reporting.
|
Date:
|
November 7, 2019
|
/s/ Maria T. Shields
|
|
|
Maria T. Shields
|
|
|
Chief Financial Officer
|
(1)
|
The Report fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Ajei S. Gopal
|
Ajei S. Gopal
|
President and Chief Executive Officer
|
November 7, 2019
|
(1)
|
The Report fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Maria T. Shields
|
Maria T. Shields
|
Chief Financial Officer
|
November 7, 2019
|