Announces Acquisition of SpaceClaim
Corporation and Updates FY 2014
Guidance
Highlights:
- GAAP revenue of $215.3 million and non-GAAP revenue of
$216.5 million
- GAAP diluted earnings per share of $0.60 and non-GAAP
diluted earnings per share of $0.76
- Operating cash flows of $131.6 million, a 38% increase
over Q1 2013
- GAAP operating profit margin of 36.7% and non-GAAP
operating profit margin of 47.2%
ANSYS, Inc. (Nasdaq:ANSS), today announced growth in both revenue
and diluted earnings per share for the first quarter of 2014. Total
GAAP and non-GAAP revenue each increased 9% over the first quarter
of 2013. GAAP net income and diluted earnings per share each
increased 11% over the first quarter of 2013, while non-GAAP net
income and diluted earnings per share increased by 6% and 7%,
respectively.
"There are two major themes to the start of our
fiscal year. First and foremost, the solid performance of our
organic business, and the second being another milestone in our
long history of adding strategic acquisitions. The major business
metrics for the quarter finished in the upper half of our outlook,
highlighted by continued strong margins and earnings, a deferred
revenue and backlog balance of $437 million, and record cash flows
from operations of $132 million," commented Jim Cashman, ANSYS
President and Chief Executive Officer. "During the quarter, we
continued to make important progress on both the sales hiring and
product fronts. These remain key areas of focus as we continue to
drive our long-term growth opportunity with on-going investments in
customer engagement and research and development initiatives."
Cashman further stated, "Today also marks yet
another milestone in achieving our vision of Simulation Driven
Product Development™ as we completed the acquisition of SpaceClaim.
The addition of SpaceClaim accelerates our collaboration and
ease-of-use initiatives by several years, helping ANSYS deliver
simulation tools to any engineer in any industry – at the earliest
stages of the design cycle – expanding ANSYS' user base from
analysts and expert users to include five million design and other
non-traditional users. It also launches us into a new paradigm for
innovation, creating an entrée for us into unconventional markets.
We welcome SpaceClaim's comprehensive team of talented people to
the ANSYS family."
ANSYS' first quarter financial results are presented below. The
2014 and 2013 non-GAAP results exclude the income statement effects
of acquisition adjustments to deferred revenue, the impact of
stock-based compensation and acquisition-related amortization of
intangible assets, as well as acquisition-related transaction
costs.
GAAP and non-GAAP results reflect:
- GAAP revenue of $215.3 million in the first quarter of 2014 as
compared to $197.7 million in the first quarter of 2013; non-GAAP
revenue of $216.5 million in the first quarter of 2014 as compared
to $199.5 million in the first quarter of 2013;
- A GAAP operating profit margin of 36.7% in the first quarter of
2014 as compared to 35.2% in the first quarter of 2013; a non-GAAP
operating profit margin of 47.2% in the first quarter of 2014 as
compared to 48.2% in the first quarter of 2013;
- GAAP net income of $56.5 million in the first quarter of 2014
as compared to $51.0 million in the first quarter of 2013; non-GAAP
net income of $71.9 million in the first quarter of 2014 as
compared to $67.8 million in the first quarter of 2013; and
- GAAP diluted earnings per share of $0.60 in the first quarter
of 2014 as compared to $0.54 in the first quarter of 2013; non-GAAP
diluted earnings per share of $0.76 in the first quarter of 2014 as
compared to $0.71 in the first quarter of 2013.
The Company's GAAP results reflect stock-based compensation
charges of approximately $7.5 million ($5.4 million after tax) or
$0.06 diluted earnings per share for the first quarter of 2014.
The non-GAAP financial results highlighted above, and the
non-GAAP financial outlook for 2014 discussed below, represent
non-GAAP financial measures. Reconciliations of these measures to
the appropriate GAAP measures for the three months ended March 31,
2014 and 2013, and for the 2014 financial outlook, are included in
the condensed financial information included in this release.
Management's Remaining 2014 Financial
Outlook
The Company has provided its second quarter and fiscal year 2014
revenue and earnings per share guidance below. The earnings per
share guidance is provided on both a GAAP and a non-GAAP basis.
Non-GAAP diluted earnings per share excludes charges for
stock-based compensation, the income statement effects of
acquisition accounting for deferred revenue, acquisition-related
amortization of intangible assets and acquisition-related
transaction costs.
Second Quarter and Fiscal Year 2014
Guidance
The Company currently expects the following for the quarter
ending June 30, 2014:
- GAAP revenue in the range of $224.0 - $232.5 million
- Non-GAAP revenue in the range of $226.0 - $234.0 million
- GAAP diluted earnings per share of $0.57 - $0.62
- Non-GAAP diluted earnings per share of $0.77 - $0.81
The Company currently expects the following for the fiscal year
ending December 31, 2014:
- GAAP revenue in the range of $932.5 - $958.5 million
- Non-GAAP revenue in the range of $939.0 - $964.0 million
- GAAP diluted earnings per share of $2.44 - $2.62
- Non-GAAP diluted earnings per share of $3.23 - $3.33
These statements are forward-looking and actual results may
differ materially. Non-GAAP diluted earnings per share is a
supplemental financial measure and should not be considered as a
substitute for, or superior to, diluted earnings per share
determined in accordance with GAAP.
Conference Call Information
ANSYS will hold a conference call at 10:30 a.m. Eastern Time on
May 1, 2014 to discuss first quarter results. The Company will
provide its prepared remarks on the Company's investor relations
homepage and as an exhibit in its Form 8-K in advance of the call
to provide shareholders and analysts with additional time and
detail for analyzing its results in preparation for the conference
call. The prepared remarks will not be read on the call – only
brief remarks will be made prior to the Q&A session.
To participate in the live conference call, dial 866-652-5200
(US) or 412-317-6060 (Canada & Int'l). The call will be
recorded and a replay will be available approximately one hour
after the call ends. The replay will be available for ten days by
dialing 877-344-7529 (US) or 412-317-0088 (Canada and Int'l) and
entering the passcode 10044371. The archived webcast can be
accessed, along with other financial information, on ANSYS' web
site at:
http://investors.ansys.com/events-and-presentations/events.aspx
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ANSYS, INC. AND
SUBSIDIARIES |
Condensed Consolidated
Balance Sheets |
(in
thousands) |
(Unaudited) |
|
|
|
|
March 31, |
December 31, |
|
2014 |
2013 |
|
|
|
ASSETS: |
|
|
|
|
|
Cash & short-term investments |
$ 858,243 |
$ 742,986 |
Accounts receivable, net |
83,418 |
97,845 |
Goodwill |
1,262,965 |
1,255,704 |
Other intangibles, net |
286,803 |
291,390 |
Other assets |
301,800 |
334,457 |
|
|
|
Total assets |
$ 2,793,229 |
$ 2,722,382 |
|
|
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LIABILITIES & STOCKHOLDERS'
EQUITY: |
|
|
|
|
|
Deferred revenue |
$ 332,143 |
$ 309,775 |
Other liabilities |
252,373 |
276,361 |
Stockholders' equity |
2,208,713 |
2,136,246 |
|
|
|
Total liabilities & stockholders'
equity |
$ 2,793,229 |
$ 2,722,382 |
|
|
|
|
|
|
ANSYS, INC. AND
SUBSIDIARIES |
Consolidated Statements
of Income |
(in thousands, except
per share data) |
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
March 31,
2014 |
March 31, 2013 |
|
|
|
Revenue: |
|
|
Software licenses |
$ 126,429 |
$ 118,875 |
Maintenance and service |
88,842 |
78,857 |
|
|
|
Total revenue |
215,271 |
197,732 |
|
|
|
Cost of sales: |
|
|
Software licenses |
7,144 |
6,965 |
Amortization |
9,315 |
9,874 |
Maintenance and service |
21,286 |
19,395 |
Total cost of sales |
37,745 |
36,234 |
|
|
|
Gross profit |
177,526 |
161,498 |
|
|
|
|
|
|
Operating expenses: |
|
|
Selling, general and administrative |
53,550 |
50,013 |
Research and development |
40,120 |
36,007 |
Amortization |
4,794 |
5,929 |
Total operating
expenses |
98,464 |
91,949 |
|
|
|
Operating income |
79,062 |
69,549 |
|
|
|
Interest expense |
(248) |
(371) |
Interest income |
841 |
732 |
Other expense, net |
(198) |
(321) |
|
|
|
Income before income tax provision |
79,457 |
69,589 |
|
|
|
Income tax provision |
22,915 |
18,566 |
|
|
|
Net income |
$ 56,542 |
$ 51,023 |
|
|
|
Earnings per share – basic: |
|
|
Basic earnings per share |
$ 0.61 |
$ 0.55 |
Weighted average shares - basic |
92,483 |
92,908 |
|
|
|
Earnings per share – diluted: |
|
|
Diluted earnings per share |
$ 0.60 |
$ 0.54 |
Weighted average shares - diluted |
94,949 |
95,166 |
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ANSYS, INC. AND
SUBSIDIARIES |
Reconciliation of
Non-GAAP Measures |
(Unaudited) |
(in thousands, except
percentages and per share data) |
|
|
|
|
|
|
|
|
Three Months
Ended |
|
March 31,
2014 |
March 31, 2013 |
|
|
|
|
|
|
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|
As |
|
Non-GAAP |
As |
|
Non-GAAP |
|
Reported |
Adjustments |
Results |
Reported |
Adjustments |
Results |
Total revenue |
$215,271 |
$ 1,224(1) |
$216,495 |
$197,732 |
$ 1,788(4) |
$199,520 |
|
|
|
|
|
|
|
Operating income |
79,062 |
23,101(2) |
102,163 |
69,549 |
26,556(5) |
96,105 |
|
|
|
|
|
|
|
Operating profit margin |
36.7% |
|
47.2% |
35.2% |
|
48.2% |
|
|
|
|
|
|
|
Net income |
$56,542 |
$15,378(3) |
$71,920 |
$51,023 |
$16,729(6) |
$67,752 |
|
|
|
|
|
|
|
Earnings per share - diluted: |
|
|
|
|
|
|
Diluted earnings per share |
$0.60 |
|
$0.76 |
$0.54 |
|
$0.71 |
Weighted average shares - diluted |
94,949 |
|
94,949 |
95,166 |
|
95,166 |
|
|
|
|
|
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|
(1) Amount represents the revenue
not reported during the period as a result of the acquisition
accounting adjustment associated with accounting for deferred
revenue in business combinations. |
|
|
|
|
|
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|
(2) Amount represents $14.1
million of amortization expense associated with intangible assets
acquired in business combinations, $7.5 million of stock-based
compensation expense, the $1.2 million adjustment to revenue as
reflected in (1) above and $0.3 million of acquisition-related
transaction expenses. |
|
|
|
|
|
|
|
(3) Amount represents the impact
of the adjustments to operating income referred to in (2) above,
adjusted for the related income tax impact of $7.7 million. |
|
|
|
|
|
|
|
(4) Amount represents the revenue
not reported during the period as a result of the acquisition
accounting adjustment associated with accounting for deferred
revenue in business combinations. |
|
|
|
|
|
|
|
(5) Amount represents $15.8
million of amortization expense associated with intangible assets
acquired in business combinations, $8.8 million of stock-based
compensation expense, the $1.8 million adjustment to revenue as
reflected in (4) above and $0.2 million of acquisition-related
transaction expenses. |
|
|
|
|
|
|
|
(6) Amount represents the impact
of the adjustments to operating income referred to in (5) above,
adjusted for the related income tax impact of $9.8 million. |
|
|
|
|
|
|
|
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|
ANSYS, INC.
AND SUBSIDIARIES |
|
Reconciliation of Forward-Looking Guidance |
|
Quarter
Ending June 30, 2014 |
|
|
|
|
Diluted Earnings Per Share
Range |
U.S. GAAP guidance |
$0.57 -- $0.62 |
Adjustment to exclude acquisition
accounting adjustment to deferred revenue |
$0.01 |
Adjustment to exclude
acquisition–related amortization |
$0.10 -- $0.11 |
Adjustment to exclude stock–based
compensation |
$0.08 |
|
Non-GAAP guidance |
$0.77 -- $0.81 |
|
|
ANSYS, INC.
AND SUBSIDIARIES |
Reconciliation of Forward-Looking Guidance |
Year Ending
December 31, 2014 |
|
|
|
Diluted Earnings Per Share
Range |
U.S. GAAP guidance |
$2.44 -- $2.62 |
Adjustment to exclude acquisition
accounting adjustment to deferred revenue |
$0.03 -- $0.05 |
Adjustment to exclude
acquisition–related amortization |
$0.39 -- $0.43 |
Adjustment to exclude stock–based
compensation |
$0.28 -- $0.30 |
Adjustment to exclude transaction
expenses |
$0.01 |
Non-GAAP guidance |
$3.23 -- $3.33 |
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Use of Non-GAAP Measures
The Company provides non-GAAP revenue, non-GAAP operating
income, non-GAAP operating profit margin, non-GAAP net income and
non-GAAP diluted earnings per share as supplemental measures to
GAAP regarding the Company's operational performance. These
financial measures exclude the impact of certain items and,
therefore, have not been calculated in accordance with GAAP. A
detailed explanation of each of the adjustments to such financial
measures is described below. This press release also contains a
reconciliation of each of these non-GAAP financial measures to its
most comparable GAAP financial measure.
Management uses non-GAAP financial measures (a) to evaluate the
Company's historical and prospective financial performance as well
as its performance relative to its competitors, (b) to set internal
sales targets and spending budgets, (c) to allocate resources, (d)
to measure operational profitability and the accuracy of
forecasting, (e) to assess financial discipline over operational
expenditures and (f) as an important factor in determining variable
compensation for management and its employees. In addition, many
financial analysts that follow our Company focus on and publish
both historical results and future projections based on non-GAAP
financial measures. We believe that it is in the best interest of
our investors to provide this information to analysts so that they
accurately report the non-GAAP financial information. Moreover,
investors have historically requested, and the Company has
historically reported, these non-GAAP financial measures as a means
of providing consistent and comparable information with past
reports of financial results.
While management believes that these non-GAAP financial measures
provide useful supplemental information to investors, there are
limitations associated with the use of these non-GAAP financial
measures. These non-GAAP financial measures are not prepared in
accordance with GAAP, are not reported by all of the Company's
competitors and may not be directly comparable to similarly titled
measures of the Company's competitors due to potential differences
in the exact method of calculation. The Company compensates for
these limitations by using these non-GAAP financial measures as
supplements to GAAP financial measures and by reviewing the
reconciliations of the non-GAAP financial measures to their most
comparable GAAP financial measures.
The adjustments to these non-GAAP financial measures, and the
basis for such adjustments, are outlined below:
Acquisition accounting for deferred revenue and its
related tax impact. Historically, the Company has
consummated acquisitions in order to support the Company's
strategic and other business objectives. In accordance with
the fair value provisions applicable to the accounting for business
combinations, acquired deferred revenue is often recorded on the
opening balance sheet at an amount that is lower than the
historical carrying value. Although this acquisition
accounting requirement has no impact on the Company's business or
cash flow, it adversely impacts the Company's reported GAAP revenue
in the reporting periods following an acquisition. In order to
provide investors with financial information that facilitates
comparison of both historical and future results, the Company
provides non-GAAP financial measures which exclude the impact of
the acquisition accounting adjustment. The Company believes that
this non-GAAP financial adjustment is useful to investors because
it allows investors to (a) evaluate the effectiveness of the
methodology and information used by management in its financial and
operational decision-making and (b) compare past and future reports
of financial results of the Company as the revenue reduction
related to acquired deferred revenue will not recur when related
annual lease licenses and software maintenance contracts are
renewed in future periods.
Amortization of intangibles from acquisitions and its
related tax impact. The Company incurs amortization of
intangibles, included in its GAAP presentation of amortization
expense, related to various acquisitions it has made in recent
years. Management excludes these expenses and their related tax
impact for the purpose of calculating non-GAAP operating income,
non-GAAP operating profit margin, non-GAAP net income and non-GAAP
diluted earnings per share when it evaluates the continuing
operational performance of the Company because these costs are
fixed at the time of an acquisition, are then amortized over a
period of several years after the acquisition and generally cannot
be changed or influenced by management after the acquisition.
Accordingly, management does not consider these expenses for
purposes of evaluating the performance of the Company during the
applicable time period after the acquisition, and it excludes such
expenses when making decisions to allocate resources. The Company
believes that these non-GAAP financial measures are useful to
investors because they allow investors to (a) evaluate the
effectiveness of the methodology and information used by management
in its financial and operational decision-making and (b) compare
past reports of financial results of the Company as the Company has
historically reported these non-GAAP financial measures.
Stock-based compensation expense and its related tax
impact. The Company incurs expense related to stock-based
compensation included in its GAAP presentation of cost of software
licenses, cost of maintenance and service, research and development
expense and selling, general and administrative expense. Although
stock-based compensation is an expense of the Company and viewed as
a form of compensation, management excludes these expenses for the
purpose of calculating non-GAAP operating income, non-GAAP
operating profit margin, non-GAAP net income and non-GAAP diluted
earnings per share when it evaluates the continuing operational
performance of the Company. Specifically, the Company excludes
stock-based compensation during its annual budgeting process and
its quarterly and annual assessments of the Company's and
management's performance. The annual budgeting process is the
primary mechanism whereby the Company allocates resources to
various initiatives and operational requirements. Additionally, the
annual review by the board of directors during which it compares
the Company's historical business model and profitability to the
planned business model and profitability for the forthcoming year
excludes the impact of stock-based compensation. In evaluating the
performance of senior management and department managers, charges
related to stock-based compensation are excluded from expenditure
and profitability results. In fact, the Company records
stock-based compensation expense into a stand-alone cost center for
which no single operational manager is responsible or
accountable. In this way, management is able to review, on a
period-to-period basis, each manager's performance and assess
financial discipline over operational expenditures without the
effect of stock-based compensation. The Company believes that these
non-GAAP financial measures are useful to investors because they
allow investors to (a) evaluate the Company's operating results and
the effectiveness of the methodology used by management to review
the Company's operating results, and (b) review historical
comparability in its financial reporting, as well as comparability
with competitors' operating results.
Transaction costs related to business
combinations. The Company incurs expenses for
professional services rendered in connection with business
combinations, which are included in its GAAP presentation of
selling, general and administrative expense. These expenses
are generally not tax-deductible. Management excludes these
acquisition-related transaction costs for the purpose of
calculating non-GAAP operating income, non-GAAP operating profit
margin, non-GAAP net income and non-GAAP diluted earnings per share
when it evaluates the continuing operational performance of the
Company, as it generally would not have otherwise incurred these
expenses in the periods presented as a part of its continuing
operations. The Company believes that these non-GAAP financial
measures are useful to investors because they allow investors to
(a) evaluate the Company's operating results and the effectiveness
of the methodology used by management to review the Company's
operating results, and (b) review historical comparability in its
financial reporting, as well as comparability with competitors'
operating results.
Non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles in the
United States. The Company's non-GAAP financial measures are not
meant to be considered in isolation or as a substitute for
comparable GAAP financial measures, and should be read only in
conjunction with the Company's consolidated financial statements
prepared in accordance with GAAP.
Pursuant to the requirements of Regulation G, the Company has
provided a reconciliation of the non-GAAP financial measures to the
most directly comparable GAAP financial measures as listed
below:
GAAP Reporting
Measure |
Non-GAAP Reporting
Measure |
|
|
Revenue |
Non-GAAP Revenue |
Operating Income |
Non-GAAP Operating Income |
Operating Profit Margin |
Non-GAAP Operating Profit Margin |
Net Income |
Non-GAAP Net Income |
Diluted Earnings Per Share |
Non-GAAP Diluted Earnings Per Share |
About ANSYS, Inc.
ANSYS brings clarity and insight to customers' most complex
design challenges through fast, accurate and reliable engineering
simulation. Our technology enables organizations ― no matter their
industry ― to predict with confidence that their products will
thrive in the real world. Customers trust our software to help
ensure product integrity and drive business success through
innovation. Founded in 1970, ANSYS employs over 2,600
professionals, many of them experts in engineering fields such as
finite element analysis, computational fluid dynamics, electronics
and electromagnetics, and design optimization. Headquartered south
of Pittsburgh, Pennsylvania, U.S.A., ANSYS has more than 75
strategic sales locations throughout the world with a network of
channel partners in 40+ countries. Visit www.ansys.com for more
information. ANSYS also has a strong presence on the major
social channels. To join the simulation conversation, please
visit: www.ansys.com/Social@ANSYS
Forward Looking Information
Certain statements contained in this press release regarding
matters that are not historical facts, including, but not limited
to, statements regarding our projections for revenue and earnings
per share for the second quarter of 2014 and fiscal year 2014 (both
GAAP and non-GAAP to exclude acquisition accounting adjustments to
deferred revenue, acquisition-related amortization and stock-based
compensation expense and acquisition-related transaction costs);
statements about management's views concerning the Company's
prospects and outlook for 2014, including statements and
projections relating to the impact of stock-based compensation,
statements regarding management's use of non-GAAP financial
measures, statements regarding our long-term growth opportunity,
statements regarding important progress on the sales hiring and
product fronts as key areas of focus, statements regarding on-going
investments in customer engagement and research and development
initiatives, statements regarding achieving our vision of
Simulation Driven Product Development and the democratization of
simulation, statements regarding our belief that the SpaceClaim
acquisition accelerates our collaboration and ease-of-use
initiatives by several years, statements regarding the benefits
associated with the SpaceClaim acquisition, including expanding
ANSYS' user base from analysts and expert users to include five
million design and other non-traditional users, launching us into a
new paradigm for innovation, and creating an entrée for us into
unconventional markets are "forward-looking" statements (as defined
in the Private Securities Litigation Reform Act of 1995). Because
such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by
such forward-looking statements. All forward-looking statements in
this press release are subject to risks and uncertainties
including, but not limited to, the risk that adverse conditions in
the global and domestic markets will significantly affect
ANSYS' customers' ability to purchase products from the Company at
the same level as prior periods or to pay for the Company's
products and services, the risk that declines in the ANSYS'
customers' business may lengthen customer sales cycles, the risk of
declines in the economy of one or more of ANSYS' primary geographic
regions, the risk that ANSYS' revenues and operating results will
be adversely affected by changes in currency exchange rates or
economic declines in any of the countries in which ANSYS conducts
transactions, the risk that the assumptions underlying ANSYS'
anticipated revenues and expenditures will change or prove
inaccurate, the risk that ANSYS has overestimated its ability to
maintain growth and profitability and control costs, uncertainties
regarding the demand for ANSYS' products and services in future
periods, the risk that ANSYS has overestimated the strength of the
demand among its customers for its products, uncertainties
regarding customer acceptance of new products, the risk that ANSYS'
operating results will be adversely affected by possible delays in
developing, completing or shipping new or enhanced products, the
risk that enhancements to the Company's products or products
acquired in acquisitions may not produce anticipated sales, the
risk that the Company may not be able to recruit and retain key
executives and technical personnel, the risk that third parties may
misappropriate the Company's proprietary technology or develop
similar technology independently, the risk of unauthorized access
to and distribution of the Company's source code, the risk of
difficulties in the relationship with ANSYS' independent regional
channel partners, the risk that ANSYS may not achieve the
anticipated benefits of its acquisitions or that the integration of
the acquired technologies or products with the Company's existing
product lines may not be successful, and other factors that are
detailed from time to time in reports filed by ANSYS, Inc. with the
Securities and Exchange Commission, including ANSYS, Inc.'s 2013
Annual Report and Form 10-K. We undertake no obligation to publicly
update or revise any forward-looking statements, whether changes
occur as a result of new information or future events, after the
date they were made.
ANSYS and any and all ANSYS, Inc. brand, product, service and
feature names, logos and slogans are registered trademarks or
trademarks of ANSYS, Inc. or its subsidiaries in the United States
or other countries. All other brand, product, service and
feature names or trademarks are the property of their respective
owners.
ANSS-F
CONTACT: Investors: Annette N. Arribas, CTP
724.514.1782
annette.arribas@ansys.com
Media: Tom Smithyman
724.514.3076
tom.smithyman@ansys.com
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