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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: August 30, 2000
ANSYS, Inc.
(Exact name of registrant as specified in charter)
Delaware 0-20853 04-3219960
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
275 Technology Drive, Canonsburg, Pennsylvania 15317
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (724) 746-3304
Page 1 of 28 Pages
Exhibit Index appears on Page 4
Portions Amended.
The registrant hereby amends Item 7 of its Current
Report on Form 8-K filed on September 13, 2000 to include
financial statements of businesses acquired and pro forma
financial information in accordance with Item 7(a)(4) within 60
days after the due date of the initial filing. Except as set
forth in Item 7 below, no other changes are made to the Current
Report on Form 8-K filed on September 13, 2000.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Attached as Exhibit 99.2 are the following items:
i) Audited consolidated financial
statements of Pacific Marketing and
Consulting, Inc. as of October 31, 1999
and for the year then ended and Report
of Independent Accountants of
PricewaterhouseCoopers LLP with respect
thereto.
ii) Unaudited condensed consolidated
interim financial statements of Pacific
Marketing and Consulting, Inc.as of
April 30, 2000 and for the six months
ended April 30, 2000 and 1999.
(b) Pro forma financial information.
Attached as Exhibit 99.3 are the following items:
i) Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of June 30, 2000
ii) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1999
iii) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the six months ended June 30, 2000
iv) Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated August 30,
2000, by and among ANSYS, Inc., GenesisOne
Acquisition Corporation, Pacific Marketing and
Consulting, Inc., Christine Schoefer, Michael
Hohmeyer, Wayne Christopher, Mary Jo Hamilton,
Michael Salari, Masoud Doroudian, Diane Poirier,
Devendra Rajwade, Jan Soreide, Vijay Shah, Akila
Diwakar, Philip Diwakar, Alan Magnuson, Forest
Rouse, Vladimir Griaznov, Xiaomin Wang, Jieyong
Xu, Jigen Zhou, Manfred Friedrichs, Carsten
Martens, Reimund Steberl and Armin Wulf.(1,2)
99.1 Press release, dated August 30, 2000(1)
99.2 Consolidated Financial Statements of Pacific
Marketing and Consulting, Inc.(3)
99.3 Unaudited Pro Forma Condensed Consolidated
Financial Statements(3)
(1) Previously filed.
(2) Certain exhibits and schedules to this
Exhibit were omitted in accordance with Item
601(b)(2) of Regulation S-K. A copy of any
omitted exhibit or schedule will be furnished to
the Commission upon request.
(3) Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned thereunto duly
authorized.
ANSYS, Inc.
/s/ James E. Cashman, III
By: ------------------------
James E. Cashman, III
President and CEO
Dated: November 7, 2000
EXHIBIT INDEX
Exhibit Description
2.1 Agreement and Plan of Merger, dated August 30,
2000, by and among ANSYS, Inc., GenesisOne Acquisition
Corporation, Pacific Marketing and Consulting, Inc.,
Christine Schoefer, Michael Hohmeyer, Wayne
Christopher, Mary Jo Hamilton, Michael Salari, Masoud
Doroudian, Diane Poirier, Devendra Rajwade, Jan
Soreide, Vijay Shah, Akila Diwakar, Philip Diwakar,
Alan Magnuson, Forest Rouse, Vladimir Griaznov, Xiaomin
Wang, Jieyong Xu, Jigen Zhou, Manfred Friedrichs,
Carsten Martens, Reimund Steberl and Armin Wulf.(1)
99.1 Press release, dated August 30, 2000(1)
99.2 Consolidated Financial Statements of Pacific
Marketing and Consulting, Inc.(2)
99.3 Unaudited Pro Forma Condensed Consolidated
Financial Statements(2)
(1) Previously filed.
(2) Filed herewith.
Exhibit 99.2
Pacific Marketing and Consulting, Inc. and Subsidiaries
Consolidated Financial Statements
As of October 31, 1999 and for the Year Then Ended
Report of Independent Accountants
To the Board of Directors and Stockholders of
Pacific Marketing and Consulting, Inc. and Subsidiaries
In our opinion, the accompanying consolidated balance sheet and
the related consolidated statement of operations, stockholders'
equity and cash flows present fairly, in all material respects,
the financial position of Pacific Marketing and Consulting, Inc.
and Subsidiaries at October 31, 1999, and the results of their
operations and their cash flows for the year then ended in
conformity with accounting principles generally accepted in the
United States of America. These consolidated financial statements
are the responsibility of the Company's management; our responsibility
is to express an opinion on these financial statements based on our
audit. We conducted our audit of these statements in accordance
with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the
opinion expressed above.
/s/ PricewaterhouseCoopers LLP
July 28, 2000, except for Notes 6 and 13,
which are dated August 30, 2000
Pacific Marketing and Consulting, Inc. and Subsidiaries
Consolidated Balance Sheet
October 31, 1999
Assets
Current assets:
Cash and cash equivalents $ 367,825
Accounts receivable 1,231,695
Note receivable (Note 3) 548,542
Prepaid expenses and other current assets 134,778
-----------
Total current assets 2,282,840
Property and equipment, net (Note 4) 549,748
Deferred income taxes (Note 8) 160,000
Capitalized software development costs, net of
accumulated amortization of $194,150 125,000
Other intangibles, net of accumulated amortization of
$1,097,186 3,840,175
Other assets 9,827
-----------
Total assets $ 6,967,590
-----------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 65,569
Accrued liabilities 76,374
Accrued income taxes 394,000
Deferred revenue 506,680
Deferred income taxes (Note 8) 648,000
Lines of credit (Note 5) 800,000
Current portion of long-term debt (Note 6) 2,974,395
-----------
Total current liabilities 5,465,018
Long-term debt, less current portion (Note 6) 88,484
-----------
Total liabilities 5,553,502
Commitments and contingencies (Note 10)
Minority interest 73,603
Stockholders' equity:
Class A voting common stock, no par value;
1,000,000 shares authorized; 1,120 shares issued
and outstanding 28,000
Class B voting common stock, no par value;
1,000,000 shares authorized; 120 shares issued and
outstanding 3,000
Retained earnings 1,335,225
Accumulated other comprehensive loss (Note 7) (25,740)
-----------
Total stockholders' equity 1,340,485
-----------
Total liabilities and stockholders' equity $ 6,967,590
-----------
The accompanying notes are an integral part of these consolidated
financial statements.
Pacific Marketing and Consulting, Inc. and Subsidiaries
Consolidated Statement of Operations
Year Ended October 31, 1999
Revenues:
Software licenses $ 4,052,918
Maintenance and service 2,701,946
------------
6,754,864
------------
Cost of revenues:
Software licenses 256,950
Maintenance and service 1,953,813
------------
2,210,763
------------
Gross profit 4,544,101
------------
Operating expenses:
Selling and marketing 1,343,823
Research and development 1,414,960
Amortization 1,247,398
General and administrative 328,021
-----------
Total operating expenses 4,334,202
-----------
Income from operations 209,899
Other income (expense), net:
Interest income 82,638
Interest expense (212,308)
Loss on disposal of equipment (1,322)
-----------
Income before income tax provision
and minority interest 78,907
Income tax provision (Note 8) 32,000
-----------
46,907
Minority interest 94,006
-----------
Net income $ 140,913
-----------
Net income per basic common share:
Basic earnings per share $ 114
Weighted average shares - basic 1,240
Net income per diluted common share:
Diluted earnings per share $ 114
Weighted average shares - diluted 1,240
The accompanying notes are an integral part of these consolidated
financial statements.
Pacific Marketing and Consulting, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
Year Ended October 31, 1999
Accumulated
Common Stock Other Total
------------- Retained Comprehensive Comprehensive
Shares Amount Earnings Income(Loss) Total Loss
------- ------- ----------- ---------- ----------- --------
Balance,
Oct. 31,1998 1,240 $31,000 $1,194,312 $ 34,443 $1,259,755
Net income for
the year - - 140,913 140,913 $140,913
Other
comprehensive
loss (60,183) (60,183) (60,183)
------- ------ -------- ----------- --------- ---------
Balance,
October 31,1999 1,240 $31,000 $1,335,225 $ (25,740) $1,340,485 $80,730
The accompanying notes are an integral part of these consolidated
financial statements.
Pacific Marketing and Consulting, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended October 31, 1999
Cash flows from operating activities:
Net income $ 140,913
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,549,889
Deferred income tax benefit (184,000)
Loss on disposal of equipment 1,322
Minority interest (94,006)
Foreign currency translation (60,183)
Changes in operating assets and liabilities:
Accounts receivable (207,215)
Prepaid expenses and other current assets (62,314)
Other assets 1,690
Accounts payable (323,078)
Accrued liabilities 225,948
Deferred revenue 241,387
----------
Net cash provided by operating activities 1,230,353
----------
Cash flows from investing activities:
Capital expenditures (140,401)
Capitalization of internally developed software costs (193,450)
Proceeds received under note receivable 576,583
----------
Net cash provided by investing activities 242,732
----------
Cash flows from financing activities:
Proceeds from lines of credit 300,000
Payments on long-term notes payable (1,921,149)
Proceeds from note payable 46,666
----------
Net cash used by financing activities (1,574,483)
----------
Decrease in cash and cash equivalents (101,398)
Cash and cash equivalents, beginning of year 469,223
----------
Cash and cash equivalents, end of year $ 367,825
----------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes $ 161
----------
Interest $ 212,308
----------
Supplemental noncash investing and financing
activities:
Assets acquired through long-term notes payable $ 4,937,361
----------
The accompanying notes are an integral part of these consolidated
financial statements.
Pacific Marketing and Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
October 31, 1999
1. Description of Business
Pacific Marketing and Consulting, Inc. (the Company)
develops, markets and supports software tools for
engineering applications such as computational fluid
dynamics and structural design and analysis. The Company's
products and services are marketed and sold to companies
principally in the United States and Europe that operate in
a variety of industries, including automotive, aerospace and
electronics.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of the Company and its 90% owned German
subsidiary, CFD and Structural Engineering GmbH, and its 99%
owned French subsidiary, ICEM CFD Engineering. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
Revenue Recognition
The Company's products are sold primarily through direct
sales in the United States and distributors who are
resellers with respect to the Company's products in foreign
locations. Revenue is derived principally from the licensing
of computer software products, either on an annual lease or
perpetual basis, and from related maintenance contracts.
Revenue from product licensing for perpetual licenses is
recognized upon delivery of the product, acceptance by the
customer and receipt of a signed contractual obligation,
provided that no significant Company obligations remain and
collection of the receivable is probable. A portion of the
license fee from noncancelable annual leases is recognized
as paid-up revenue upon inception of the lease. The
remaining portion is recognized ratably over the remaining
lease period. Revenue for monthly lease licenses is
recognized monthly, as earned, because the lease license
agreements can be cancelled by the customers with 30 days
notice. Revenue from maintenance contracts is recognized
ratably over the term of the contract. Costs related to
maintenance obligations are expensed as incurred. Revenue
from training, support and other services is recognized as
the services are performed.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents. Cash equivalents are recorded at cost, which
approximates fair value.
Property and Equipment
Property and equipment are recorded at cost and depreciated
on the straight-line method over the estimated useful lives
of the various classes of assets, which range from three to
five years.
Repairs and maintenance expenditures, which are not
considered betterments and do not extend the useful lives of
the property and equipment, are expensed as incurred. The
cost and related accumulated depreciation applicable to
property and equipment no longer in service are eliminated
from the accounts and any gain or loss is included in
operations.
Capitalized Software
Internally developed computer software costs and costs of
product enhancements are capitalized subsequent to the
determination of technological feasibility; such
capitalization continues until the product becomes available
for general release. Amortization of capitalized software
costs for internally developed software is computed on a
product-by-product basis over the estimated economic life of
the product, which is generally six months. Amortization is
the greater of the amount computed using: (i) the ratio of
the current year's gross revenue to the total current and
anticipated future gross revenue for that product or (ii)
the straight-line method over the estimated life of the
product.
Other Intangible Assets
Other intangible assets, which consists of purchased
software products and customer lists, are stated at cost and
are amortized on a straight-line basis over their estimated
useful lives of three years.
Impairments of Long-Lived Assets
The Company periodically reviews the carrying value of long-lived
assets and impairments are recognized in the results of operations
when the expected future undiscounted operating cash flow derived
from the assets is less than its carrying value.
Research and Development Costs
Research and developments costs are expensed as incurred.
Income Taxes
Deferred income taxes are recorded using the liability
method. Under this method, deferred tax assets and
liabilities are determined based on the temporary
differences between the financial statement and tax basis of
assets and liabilities, using enacted tax rates in effect in
the years in which the differences are expected to reverse.
Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be
realized.
Foreign Currency Translation
The Company's foreign subsidiaries use the local currency as
their functional currency. Assets and liabilities are
translated at year-end exchange rates. Items of income and
expense are translated at average exchange rates for the
year. Translation gains and losses are not included in
determining net income (loss) but are accumulated as a
separate component of stockholders' equity.
Segment Information
The Company follows the provisions of SFAS No.131
"Disclosures about Segments of an Enterprise and Related
Information." This statement establishes standards for
reporting information about operating segments, products and
services, geographic areas and major customers. The Company
manages and operates its business as one segment.
Earnings per share
Net income per basic common share is computed using the
weighted average number of common shares outstanding during
each period. Net income per diluted common share is
computed using the weighted average number of common and
common equivalent shares outstanding during each period.
Common equivalent shares are not included in the per share
calculations where their inclusion would be anti-dilutive.
Concentrations of Credit Risk and Other Risks and Uncertainties
Financial instruments, which potentially subject the Company
to concentrations of credit risk, consist principally of
cash and cash equivalents, trade receivables and note
receivable. The Company's cash and cash equivalents are
concentrated primarily in several domestic and foreign
banks. At times, such deposits may be in excess of insured
limits. The Company's products are principally sold to entities
in the automotive, aerospace and electronics industries in the
United States and Europe. Ongoing credit evaluations of customers'
financial condition are performed and collateral is generally not
required.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the
financial statements. Estimates also affect the reported
amounts of revenues and expenses during the reporting
periods. Actual results could differ from these estimates.
3. Notes Receivable
The Company had a note receivable with an unrelated third
party with an imputed interest rate of 8% and a balance of
$548,542 at October 31, 1999. The note was repaid in full
in December 1999.
4. Property and Equipment
Property and equipment at October 31, 1999 consists of the
following:
Computer and office equipment $ 1,058,095
Computer software 35,830
Furniture and fixtures 10,114
------------------
1,104,039
Less accumulated depreciation (554,291)
-----------------
$ 549,748
-----------------
Depreciation expense related to property and equipment was
$288,172 for the year ended October 31, 1999.
5. Commercial Credit Agreement
The Company had a commercial credit agreement with a
financial institution providing for borrowings under a
revolving line of credit and a non-revolving line of credit.
The revolving line of credit provided for maximum borrowings
of $250,000. Borrowings under the revolving line of credit,
which expired January 31, 2000, accrued interest at prime
(8.25% at October 31, 1999) plus 0.75%. At October 31,
1999, there was $250,000 outstanding under the revolving
line of credit. The non-revolving line of credit, which
expired January 5, 1999, provided for borrowings of
$500,000.
Borrowings under the commercial credit agreement were
secured by all the assets of the Company and guaranteed by
the Company's major stockholders. In addition, the
commercial credit agreement contained certain restrictive
covenants, the most restrictive of which included financial
ratios. At October 31, 1999, the Company was in violation
with one of these financial ratios. In November 1999, the
Company repaid the outstanding balance on the revolving line
of credit of $250,000.
In addition, the Company had a line of credit agreement with
a financial institution providing for maximum borrowings of
$550,000. Borrowings under the line accrued interest at
prime (8.25% at October 31, 1999) plus 0.75%. At October
31, 1999, there was $550,000 outstanding under the line of
credit. Borrowings under the agreement, which expired on
December 31, 1999, were secured by all the assets of the
Company and guaranteed by the Company's major stockholders.
In addition, the line of credit agreement contained certain
restrictive covenants, the most restrictive of which
included financial ratios. At October 31, 1999 , the
Company was in violation with one of these financial ratios.
In November 1999, the Company repaid the outstanding balance
on the $550,000.
6. Long-Term Debt
Long-term debt consisted of the following at October 31, 1999:
Term notes (A) $ 3,016,213
Promissory note with former stockholder (B) 46,666
-------------
3,062,879
Less current portion 2,974,395
-------------
$ 88,484
-------------
(A) On March 1, 1999, the Company entered into an agreement
with another company to purchase the right, title,
interests and copyrights in the intellectual property,
referred to as ICEM CFD for approximately $4,500,000.
In addition, the Company purchased customer lists and
contracts with resellers of ICEM CFD for approximately
$429,000. The Company issued two separate notes for
$4,508,014 and $429,347, respectively, in connection
with the purchase agreement. The notes accrue interest
at 7% and are payable through September 30, 2001 under
a specified payment schedule. On August 30, 2000, the
Company paid the remaining outstanding balances under
the notes of $2,375,396 and $216,596, respectively, and
accordingly, the entire balance of the notes at
October 31, 1999 are classified as current liabilities
in the accompanying balance sheet(see Note 13).
(B) On September 15, 1999, the Company entered into a promissory
note with the spouse of a deceased stockholder to purchase the
deceased stockholder's interest in CFD and Structural Engineering
GmbH.
7. Other Comprehensive Loss
Other comprehensive loss consisted of the following at
October 31, 1999:
Foreign currency translation $ (83,133)
Tax effect 22,950
--------------
Other comprehensive loss $ (60,183)
--------------
8. Income Taxes
The provision for income taxes for the year ended October
31, 1999 is comprised of the following:
Current:
Federal $ 338,000
State 41,000
Foreign (benefit) (163,000)
--------------
216,000
Deferred: --------------
Federal (146,000)
State (38,000)
--------------
(184,000)
--------------
Total $ 32,000
--------------
The reconciliation of the federal statutory tax rate to the
consolidated effective tax rate is as follows:
Federal statutory tax rate 34.0%
State income taxes, net of federal benefit 2.5
Other 4.1
---------------
40.6%
---------------
The components of deferred tax assets and liabilities are as
follows:
Deferred tax assets:
Capitalized software costs and other intangibles $ 223,000
---------
223,000
---------
Deferred tax liabilities:
Property and equipment 63,000
Cash basis accruals 648,000
---------
711,000
---------
Net deferred tax liabilities $ 488,000
---------
9. Royalty Agreements
The Company has entered into various renewable non-exclusive
license agreements under which the Company has been granted
access to the licensor's patent technology and the right to
sell the patent technology in the Company's product line.
Royalties are payable to developers of the software at
various rates and amounts generally based upon unit sales or
revenue. Royalty fees, which are included in cost of
revenues, were approximately $179,000 for the year ended
October 31, 1999.
10. Commitments and Contingencies
The Company leases office space under operating lease
agreements expiring at various dates through September 2003.
Total rent expense amounted to approximately $195,000 for
the year ended October 31, 1999.
Future minimum lease payments under the noncancelable
operating leases in effect at October 31, 1999 as follows:
2000 $ 210,000
2001 178,000
2002 146,000
2003 137,000
-----------
$ 671,000
-----------
11. Geographic Information
Revenues by geographic area is as follows:
United Other
States Germany Europe Total
Revenues $5,271,436 $1,189,891 $293,537 $6,754,864
Substantially all of the Company's long-lived assets are in the
United States.
12. Employee Benefit Plans
The Company maintains a 401(k) profit-sharing plan (the
Plan) for all qualifying full-time employees. Each eligible
employee may elect to contribute to the Plan up to 10% of
eligible compensation. The Company may make discretionary
matching contributions. The Company made no matching
contributions for the year ended October 31, 1999.
13. Subsequent Event
In May 2000, the Company executed a line of credit agreement
with a financial institution providing for maximum
borrowings of $250,000. Borrowings under the line accrue
interest at prime plus 2.00%. Borrowings under the
agreement, which expires on January 31, 2001, were secured
by all the assets of the Company and guaranteed by the
Company's major stockholders. In addition, the line of
credit agreement contains certain restrictive covenants, the
most restrictive of which include financial ratios.
In August 2000, ANSYS, Inc. loaned PMAC approximately $1,366,000,
which was used by PMAC to pay down a portion of the long-term debt
balance then outstanding.
On August 30, 2000, the Company entered into an agreement
with ANSYS, Inc. to sell the Company to ANSYS, Inc. for an
up-front purchase price of approximately $12,400,000, which
is comprised of both cash and common stock of ANSYS, Inc.
In addition, the agreement provides for future payments
contingent upon the attainment of certain performance
criteria.
Pacific Marketing & Consulting, Inc. and Subsidiaries
Unaudited Condensed Consolidated Financial Statements
As of April 30, 2000 and For the Six Months Ended April 30, 2000
and 1999
Pacific Marketing and Consulting, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
(in 000's,except share amounts)
April 30, 2000
Assets
Current assets:
Cash and cash equivalents $ 913
Accounts receivable 1,499
Prepaid expenses and other current assets 181
------------
Total current assets 2,593
Property and equipment, net 558
Capitalized software development costs, net 8
Other intangibles, net 3,027
Deferred income taxes 443
------------
Total assets $ 6,629
-------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 174
Accrued liabilities 1,386
Deferred revenue 664
Deferred income taxes 316
Lines of credit 175
Current portion of long-term debt 2,573
------------
Total current liabilities 5,288
Minority interest 75
Stockholders' equity:
Class A voting common stock, no par value;
1,000,000 shares authorized; 1,120 shares
issued and outstanding 28
Class B voting common stock, no par value;
1,000,000 shares authorized; 120 shares
issued and outstanding 3
Retained earnings 1,302
Accumulated other comprehensive loss (67)
------------
Total stockholders' equity 1,266
------------
Total liabilities and stockholders' equity $ 6,629
------------
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Pacific Marketing and Consulting, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(in 000's,except share amounts)
Six Months Ended April 30, 2000 and 1999
2000 1999
Revenues --------- -------
Software licenses $ 2,807 $ 1,758
Maintenance and service 1,726 1,297
--------- --------
4,533 3,055
--------- --------
Cost of revenues:
Software licenses 97 42
Maintenance and service 989 1,044
--------- --------
1,086 1,086
--------- --------
Gross profit 3,447 1,969
--------- --------
Operating expenses:
Selling and marketing 1,060 627
Research and development 984 733
Amortization 957 376
General and administrative 454 150
--------- --------
Total operating expenses 3,455 1,886
--------- --------
Income (loss) from operations (8) 83
Other income (expense), net:
Interest income 37 51
Interest expense (107) (61)
--------- --------
Income (loss) before income tax
provision and minority interest (78) 73
Income tax provision (benefit) (46) 27
--------- --------
(32) 46
Minority interest (1) 103
--------- --------
Net income (loss) $ (33) $ 149
--------- --------
Net income (loss) per basic common
share
Basic earnings per share $ (27) $ 120
Weighted average shares - basic 1,240 1,240
Net income (loss) per diluted common
share:
Diluted earnings per share $ (27) $ 120
Weighted average shares - diluted 1,240 1,240
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Pacific Marketing and Consulting, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(in 000's)
Six Months Ended April 30, 2000 and 1999
2000 1999
Cash flows from operating activities: ------- -------
Net income (loss) $ (33) $ 149
Adjustments to reconcile net
income (loss) to net cash provided by
operating activities:
Depreciation and amortization 1,032 585
Deferred income tax benefit (615) (164)
Minority interest 1 (103)
Foreign currency translation (41) 2
Changes in operating assets and
liabilities:
Accounts receivable (267) (408)
Prepaid expenses and other assets (36) 68
Accounts payable and accrued
liabilities 1,023 (225)
Deferred revenue 157 200
------- -------
Net cash provided by operating
activities 1,221 104
------- -------
Cash flows from investing activities:
Proceeds received under note receivable 548 1,140
Capitalization of internally developed
software costs - (64)
Capital expenditures (110) (62)
------- -------
Net cash provided by investing
activities 438 1,014
------- -------
Cash flows from financing activities:
Payments on lines of credit and notes
payable,net (1,114) (1,206)
------- -------
Cash used in financing activities (1,114) (1,206)
------- -------
Increase (decrease) in cash and cash 545 (88)
equivalents
Cash and cash equivalents, beginning of
period 368 469
------- -------
Cash and cash equivalents, end of period $ 913 $ 381
------- -------
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Income taxes $ -- $ --
Interest $ 107 $ 61
Supplemental noncash investing and
financing activities
Assets acquired through long-term
notes payable $ -- $ 4,937
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Pacific Marketing & Consulting, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements include the accounts of Pacific Marketing and
Consulting, Inc. and Subsidiaries (PMAC), and have been
prepared in accordance with accounting principles generally
accepted in the United States of America. In the opinion of
management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments,
consisting only of those of a normal, recurring nature
necessary for a fair presentation of the financial position,
results of operations and cash flows of PMAC at the date and
for the periods indicated. While management believes that
the disclosures presented are adequate to make the
information not misleading, these financial statements
should be read in conjunction with the audited financial
statements of PMAC for the year ended October 31, 1999
included elsewhere in this Form 8-K/A. Operating results
for the six months ended April 30, 2000 are not necessarily
indicative of the results that may be expected for the
fiscal year ended October 31, 2000.
2. SUBSEQUENT EVENT
In August 2000, ANSYS, Inc. loaned PMAC approximately
$1,366,000, which was used by PMAC to pay down a portion of
the long-term debt balance then outstanding.
The Company was sold to ANSYS, Inc. on August 31, 2000.
Exhibit 99.3
(b) PRO FORMA FINANCIAL INFORMATION
(1) Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of June 30, 2000.
(2) Notes to Unaudited Pro Forma Condensed Consolidated
Balance Sheet
(3) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1999.
(4) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Six Months Ended June 30, 2000.
(5) Notes to Unaudited Pro Forma Condensed Consolidated
Statements of Operations
ANSYS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated
financial statements have been prepared to give effect to the
acquisition of all the outstanding common stock of Pacific
Marketing and Consulting, Inc. and Subsidiaries ("PMAC") by ANSYS,
Inc. (the "Company"). These pro forma financial statements do not
purport to be indicative of the consolidated financial position
or results of operations for future periods or the results that
actually would have been realized had ANSYS, Inc. and PMAC been a
consolidated company during the specified periods.
The acquisition of PMAC was accounted for using the purchase
method of accounting pursuant to which the purchase price at
closing was allocated to the tangible and intangible assets and
liabilities assumed based on their estimated fair values. The purchase
allocations were made based upon valuations and other studies
that have not been completed but are not expected to differ
significantly from those presented herein.
The unaudited pro forma condensed consolidated financial
statements, including the notes thereto, are qualified in their
entirety by reference to, and should be read in conjunction with
the historical consolidated financial statements and the notes
thereto of the Company which were previously reported in the
Company's Annual Report on Form 10-K for the year ended December
31, 1999 and the Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2000 and June 30, 2000, which are hereby
incorporated by reference, and the consolidated financial
statements of PMAC for the year ended October 31, 1999 and for
the six months ended April 30, 2000 (unaudited), included
elsewhere in this Form 8-K/A.
The unaudited pro forma condensed consolidated balance sheet was
prepared as if the acquisition had occurred on June 30, 2000,
combining the Company's financial information as of June 30, 2000
and the PMAC financial information as of April 30, 2000. The
unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1999 and the six
months ended June 30, 2000 were prepared as if the acquisition
had occurred on January 1, 1999. To prepare the unaudited pro
forma condensed consolidated statement of operations for the
year ended December 31, 1999, the Company's statement of
operations for the year ended December 31, 1999 has been combined
with the PMAC statement of operations for the fiscal year ended
October 31, 1999. To prepare the unaudited pro forma condensed
consolidated statement of operations for the six months ended
June 30, 2000, the Company's statement of operations for the six
months ended June 30, 2000 was combined with the PMAC statement
of operations for the six months ended April 30, 2000.
ANSYS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (in 000's)
June 30, 2000
Pro Forma ANSYS,
ANSYS, PMAC Adjustments Inc. Pro
Inc. Forma
ASSETS --------- ------ ----------- --------
Current assets:
Cash and short-term
investments $ 58,579 $ 913 $ (7,942) (2) $ 51,550
Accounts receivable, less
allowance for doubtful
accounts 9,510 1,499 11,009
Other current assets 3,128 181 3,309
Deferred income taxes 477 - 477
--------- ------ ----------- --------
Total current assets 71,694 2,593 (7,942) 66,345
Long-term investment 375 - 375
Property and equipment,net 4,390 558 4,948
Capitalized software
costs,net 501 8 509
Goodwill, net 463 - 4,972 (3) 10,526
3,027 (5)
2,064 (6)
Other intangibles, net 1,464 3,027 8,242 (3) 9,706
(3,027) (5)
Deferred income taxes 6,456 443 (2,064) (6) 4,835
--------- ------ ----------- --------
Total assets $ 85,343 $6,629 $ 5,272 $ 97,244
========= ====== =========== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 89 $ 174 $ 263
Accrued bonuses 1,559 - 1,559
Other accrued expenses and
liabilities 4,062 1,386 5,448
Deferred income taxes - 316 316
Lines of credit - 175 175
Customer prepayments 131 - 131
Deferred revenue 13,819 664 14,483
Current portion of
long-term debt - 2,573 2,573
--------- ------ ----------- --------
Total current liabilities 19,660 5,288 24,948
Minority interest - 75 75
Total stockholders' equity 65,683 1,266 $ (1,266) (1) 72,221
6,538 (4)
--------- ------ ---------- --------
Total liabilities and
stockholders' equity $ 85,343 $6,629 $ 5,272 $ 97,244
========= ====== =========== ========
See accompanying notes
ANSYS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (in 000's)
APRIL 30, 2000
The unaudited pro forma condensed consolidated balance sheet gives effect
to the following unaudited pro forma adjustments:
1. Adjustment is for the elimination of PMAC's stockholders' equity
in connection with purchase accounting.
2. Adjustment is the amount of cash paid for the purchase of PMAC.
3. Adjustments reflect management's preliminary allocation of the
purchase price for PMAC of $14,480 consisting of $7,492 in
in cash and $6,538 in ANSYS, Inc. common stock, in accordance with the
purchase method of accounting as follows:
Net tangible assets of PMAC $ 1,266
Increase in other intangibles (Note 5) 8,242
Increase in goodwill (Note 5) 7,036
Decrease in deferred tax assets (2,064)
---------
$ 14,480
=========
4. Adjustment is the fair value of common stock paid for the purchase of
PMAC.
5. Adjustment is to eliminate PMAC's intangible assets existing as of the
assumed acquisition date with offset to goodwill. Such intangible
assets were separately valued as per note 3 above.
6. Adjustment is to record deferred tax liabilities associated with
identifiable intangible assets acquired. The deferred tax liabilities
arise from the amortization associated with these intangibles, which is
not deductible for income tax purposes.
ANSYS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in 000's, except per share amounts)
Year Ended December 31, 1999
Pro Forma ANSYS, Inc.
ANSYS, Inc. PMAC Adjustment Pro Forma
-------------- ------ ---------- ------------
Revenue $ 63,139 $ 6,755 $ 69,894
Operating expenses 45,896 6,545 $ 3,124 (1) 55,565
------------ -------- ---------- ------------
Operating income 17,243 210 (3,124) 14,329
Other income (expense) 2,626 (131) -- 2,495
------------ -------- ---------- ------------
Income before income tax
provision 19,869 79 (3,124) 16,824
Income tax provision
(benefit) 5,118 32 (429) (2) 4,721
Minority interest -- 94 -- 94
------------ -------- ---------- ------------
Net income $ 14,751 $ 141 $ (2,695) $ 12,197
============ ======== ========== ============
Net income per basic common
share:
Basic earnings per share $ .90 $ .72
Weighted average shares -
basic 16,366 16,985
Net income per diluted
common share:
Diluted earnings per share $ .88 $ .70
Weighted average shares -
diluted 16,689 17,308
See accompanying notes
ANSYS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in 000's, except per share amounts)
Six Months Ended June 30, 2000
Pro Forma ANSYS, Inc.
ANSYS, Inc. PMAC Adjustment Pro Form
------------ ------ ----------- -----------
Revenue $ 16,253 $ 4,533 $ 20,786
Operating expenses 11,464 4,541 $ 1,287 (1) 17,292
----------- ------- ---------- ---------
Operating income(loss) 4,789 (8) (1,287) 3,494
Other income(expense) 895 (70) -- 825
----------- ------- ---------- ---------
Income(loss) before income
tax provision 5,684 (78) (1,287) 4,319
Income tax
provision(benefit) 1,592 (46) (119) (2) 1,427
Minority Interest -- (1) -- (1)
----------- ------- ---------- ---------
Net income(loss) $ 4,092 $ (33) $ (1,168) $ 2,891
=========== ======= ========== =========
Net income per basic common
share:
Basic earnings per share $ .26 $ .18
Weighted average shares -
basic 15,815 16,434
Net income per diluted
common share:
Diluted earnings per share $ .25 $ .17
Weighted average shares -
diluted 16,272 16,891
See accompanying notes
ANSYS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in 000's)
YEAR ENDED DECEMBER 31, 1999 AND SIX MONTHS ENDED JUNE 30, 2000
The unaudited pro forma condensed consolidated statements of operations
give effect to the following unaudited pro forma adjustments:
1. Adjustment to reflect the additional amortization of identifiable
intangible assets of $5,215, which are being amortized over periods
ranging from three to five years, and goodwill of $10,063, which is
being amortized over five years.
2. Adjustment to reflect the deferred income tax benefit related to the
amortization of identifiable intangible assets.