View:
Room 4561
May 10, 2006
James E. Cashman, III
President and Chief Executive Officer
Ansys, Inc.
275 Technology Drive
Canonsburg, PA 15317
Re: Ansys, Inc.
Form 10-K/A for the Fiscal Year Ended December 31, 2005
Filed March 31, 2006
Form 8-K Filed April 27, 2006
File no. 0-20853
Dear Mr. Cashman:
We have reviewed the above referenced filings and have the
following comments. Please note that we have limited our review
to
the matters addressed in the comments below. Where indicated, we
think you should revise your document in response to these
comments.
If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary. Please be
as
detailed as necessary in your explanation. In some of our
comments,
we may ask you to provide us with supplemental information so we
may
better understand your disclosure. After reviewing this
information,
we may or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K/A for the Fiscal Year Ended December 31, 2005
Item 9A: Controls and Procedures, page 17
1. We note your disclosure that your "Chief Executive Officer and
Chief Financial Officer have concluded that such disclosure
controls
and procedures are effective in ensuring that material information
relating to the Company, including its consolidated subsidiaries,
is
made known to the certifying officers by others within the Company
and its consolidated subsidiaries during the period covered by
this
report." Tell us how your officers considered Exchange Act Rule
13a-
15(e) in concluding that your disclosure controls and procedures
are
also effective in ensuring that the information required to be
disclosed by the Company in your Annual Report on Form 10-K was
recorded, processed, summarized and reported within the time
periods
specified in Securities and Exchange Commission rules.
2. We also note your statement that "The Company cannot provide
assurance that new problems will not be found in the future, nor
does
it expect that its disclosure controls and procedures, or its
internal controls, will prevent all errors and all fraud because
no
system can provide absolute assurance that the objectives of the
control system are met. Because of the inherent limitations in
all
control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud within
ANSYS
have been detected." Tell us how you considered the requirements
of
Section II.F.4 of Management`s Reports on Internal Control Over
Financial Reporting and Certification of Disclosure in Exchange
Act
Periodic Reports, SEC Release No. 33-8238, available on our
website
at to indicate that
your
disclosure controls and procedures are designed to provide
reasonable
assurance of achieving their objectives and that your principal
executive officer and principal financial officer concluded that
your
disclosure controls and procedures are effective at that
reasonable
assurance level.
Notes to Consolidated Financial Statements
Note 1: Organization
Revenue Recognition
3. We note that the Company estimates the value of post contract
customer support ("pcs") sold together with perpetual licenses by
"reference to published price lists that generally represent the
prices at which customers could purchase renewal contracts for
such
services." The Company previously represented to the Staff (in
your
letter dated September 4, 2003) that the fee charged for pcs is
based
on a separate amount quoted in the price list. The Company also
believes that the willingness of customers to renew the pcs
arrangement and pay the pcs fee in subsequent years is vendor
specific objective evidence for the fair value of the pcs. Do the
pcs rates vary by product or customer class? Please explain the
breakdown of your price list. Tell us how the actual amounts paid
by
the customers compare to the published price list. If the pcs
amounts paid vary from customer to customer, then tell us how you
determined that the Company can reasonably estimate fair value.
Note 17: Subsequent Event
4. We note your disclosures in the Company`s Form 10-K as well as
in
several Forms 8-K with regards to the Fluent acquisition. Please
note that the Staff will review your Form 8-K/A that includes the
Article 3-05 and pro forma financial information of Fluent, when
filed, and we may have further comments.
Form 8-K Filed April 27, 2006
5. We note your use of non-GAAP measures under Item 9.01 of the
Form
8-K noted above which excludes a number of recurring items. Tell
us
how you considered Question 8 of Frequently Asked Questions
Regarding
the Use of Non-GAAP Financial Measures to include the following
disclosures for each of your non-GAAP measures (i.e. non-GAAP
operating profit margin and non-GAAP diluted earnings per share):
* the economic substance behind management`s decision to use such
a
measure;
* the material limitations associated with use of the non-GAAP
financial measure as compared to the use of the most directly
comparable GAAP financial measure;
* the manner in which management compensates for these limitations
when using the non-GAAP financial measure; and
* the substantive reasons why management believes the non-GAAP
financial measure provides useful information to investors.
In this regard, we believe you should further enhance your
disclosures to comply with Item 10(e)(1)(i)(C) and (D) of
Regulation S-K and Question 8 of the related FAQ to
demonstrate
the usefulness of your non-GAAP financial measures which
excludes
a number of recurring items, especially since these measures
appear
to be used to evaluate performance. Your current disclosures
regarding the reasons for presenting these non-GAAP measures
appear overly broad considering that companies and investors
may
differ as to which items warrant adjustment and what constitutes
core operating results.
6. Your Reconciliation of Non-GAAP Measures appear to include a
number of measures, such as non-GAAP cost of sales, non-GAAP
operating expenses and non-GAAP provision for income taxes, etc.,
for
which you have not included the disclosures required by Item
10(e)(1)
of Regulation S-K. Also, it is not clear to us whether the
presentation of a non-GAAP statement of operations would comply
with
Item 100(b) of Regulation G. Please explain.
As appropriate, please amend your filing and respond to these
comments within 10 business days or tell us when you will provide
us
with a response. Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T. You
may wish to provide us with marked copies of any amendment to
expedite our review. Please furnish a cover letter with any
amendment that keys your responses to our comments and provides
any
requested information. Detailed cover letters greatly facilitate
our
review. Please understand that we may have additional comments
after
reviewing any amendment and your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Kari Jin, Staff Accountant, at (202) 551-
3481
or me at (202) 551-3730 if you have questions regarding these
comments.
Sincerely,
Kathleen Collins
Accounting Branch Chief
Mr. James E. Cashman, III
Ansys, Inc.
May 10, 2006
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