AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 19, 1996     
                                            REGISTRATION STATEMENT NO. 333-4278
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                ---------------
                                
                             AMENDMENT NO. 3     
 
                                      TO
 
                                   FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
                                ---------------
                                  ANSYS, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

         DELAWARE                                        7372                         04-3219960
                                                                              
(STATE OR OTHER JURISDICTION OF             (PRIMARY STANDARD INDUSTRIAL           (I.R.S. EMPLOYER 
INCORPORATION OR ORGANIZATION)               CLASSIFICATION CODE NUMBER)          IDENTIFICATION NO.) 

                                                        

                                ---------------
                               201 JOHNSON ROAD 
                       HOUSTON, PENNSYLVANIA 15342-1300 
                                (412) 746-3304
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
 
                                ---------------
                                PETER J. SMITH 
               CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER 
                                 ANSYS, INC. 
                               201 JOHNSON ROAD 
                       HOUSTON, PENNSYLVANIA 15342-1300 
                                (412) 746-3304
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)
 
                                ---------------
                                  COPIES TO:
      JOHN R. LECLAIRE, P.C.                    RICHARD C. TILGHMAN, JR., ESQ. 
     JEFFREY D. PLUNKETT, ESQ.                     STEPHEN A. RIDDICK, ESQ. 
    GOODWIN, PROCTER & HOAR LLP                     PIPER & MARBURY L.L.P. 
          EXCHANGE PLACE                           36 SOUTH CHARLES STREET
    BOSTON, MASSACHUSETTS 02109                BALTIMORE, MARYLAND 21201-3018 
          (617) 570-1000                                (410) 539-2530
 
                                ---------------
  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
 
  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
 
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_] 333-
 
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] 333-
 
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
 
                                ---------------
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
 
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- -------------------------------------------------------------------------------

                                  ANSYS, INC.
 
             CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
                 OF INFORMATION REQUIRED BY ITEMS OF FORM S-1

      FORM S-1 ITEM NUMBER OF CAPTION                                        LOCATION OR HEADING IN PROSPECTUS
      -------------------------------                                        ---------------------------------
                                                                    
  1. Forepart of Registration Statement and Outside Front Cover of
      Prospectus....................................................   Outside Front Cover Page; Front Page of Prospectus
  2. Inside Front and Outside Back Cover Pages of Prospectus........   Inside Front Cover Page and Outside Back Cover
                                                                        Page of Prospectus
  3. Summary Information, Risk Factors and Ratio of Earnings to
      Fixed Charges.................................................   Prospectus Summary; Risk Factors
  4. Use of Proceeds................................................   Use of Proceeds
  5. Determination of Offering Price................................   Underwriting
  6. Dilution.......................................................   Dilution
  7. Selling Security Holders.......................................   Principal and Selling Stockholders
  8. Plan of Distribution...........................................   Underwriting
  9. Description of Securities to be Registered.....................   Outside Front Cover Page; Prospectus Summary;
                                                                        Description of Capital Stock
 10. Interests of Named Experts and Counsel.........................   Not applicable
 11. Information with Respect to the Registrant:
     (a)Description of Business.....................................   Prospectus Summary; Management's Discussion and
                                                                        Analysis of Financial Condition and Results of
                                                                        Operations; Business
     (b)Description of Property.....................................   Business--Facilities
     (c) Legal Proceedings..........................................   Business--Legal Proceedings
     (d) Market Price and Dividends on Registrant's Common
          Equity and Related Stockholder Matters....................   Dividend Policy; Description of Capital Stock
     (e) Financial Statements.......................................   Financial Statements
     (f) Selected Financial Data....................................   Prospectus Summary; Selected Consolidated Financial
                                                                        Data
     (g) Supplementary Financial Information........................   Not applicable
     (h) Management's Discussion and Analysis of
          Financial Condition and Results of Operations.............   Management's Discussion and Analysis of Financial
                                                                        Condition and Results of Operations
     (i) Changes in and Disagreements With Accountants on
         Accounting and Financial Disclosure........................   Not applicable
     (j) Directors and Executive Officers...........................   Management
     (k) Executive Compensation.....................................   Management--Executive Compensation
     (l) Security Ownership of Certain Beneficial Owners
         and Management.............................................   Principal and Selling Stockholders
     (m) Certain Relationships and Related Transactions.............   Certain Transactions
 12. Disclosure of Commission Position on Indemnification for
      Securities Act Liabilities....................................   Not applicable

 
                                                           SUBJECT TO COMPLETION
                                                                 
                                                              JUNE 19, 1996     
 
                                3,550,000 Shares
                                   
                       [LOGO OF ANSYS APPEARS HERE]    
 
                                  Common Stock
 
                                   --------
 
  Of the 3,550,000 shares of Common Stock (the "Common Stock") offered hereby,
3,500,000 shares are being sold by ANSYS, Inc. (the "Company") and 50,000
shares are being sold by a stockholder of the Company (the "Selling
Stockholder"). See "Principal and Selling Stockholders." The Company will not
receive any proceeds from the sale of shares by the Selling Stockholder. Prior
to this offering, there has been no public market for the Common Stock. It is
currently estimated that the initial public offering price per share will be
between $12.00 and $14.00. See "Underwriting" for information relating to the
factors to be considered in determining the initial public offering price. The
Company has applied for quotation of the Common Stock on the Nasdaq Stock
Market (National Market) upon completion of this offering under the trading
symbol "ANSS."
 
                                   --------
 
   THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
                     FACTORS" COMMENCING ON PAGE 7 HEREOF.
 
                                   --------
 
THESE SECURITIES  HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE  SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
  AND EXCHANGE COMMISSION OR ANY  STATE SECURITIES COMMISSION PASSED UPON THE
  ACCURACY  OR  ADEQUACY  OF  THIS  PROSPECTUS.  ANY  REPRESENTATION  TO  THE
   CONTRARY IS A CRIMINAL OFFENSE.
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                   PRICE   UNDERWRITING    PROCEEDS  PROCEEDS TO
                                    TO       DISCOUNTS        TO       SELLING
                                  PUBLIC  AND COMMISSIONS COMPANY(1) STOCKHOLDER
- --------------------------------------------------------------------------------
                                                         
Per Share........................  $           $            $           $
- --------------------------------------------------------------------------------
Total(2)......................... $           $            $           $
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) Before deducting expenses payable by the Company estimated at $850,000.
(2) Certain stockholders of the Company have granted to the Underwriters a 30-
    day option to purchase up to 532,500 additional shares of Common Stock
    solely to cover over-allotments, if any. To the extent the option is
    exercised, the Underwriters will offer the additional shares at the Price
    to Public shown above. If the option is exercised in full, the total Price
    to Public, Underwriting Discounts and Commissions and Proceeds to Selling
    Stockholder will be $    , $     and $    , respectively. See
    "Underwriting."
 
                                   --------
 
  The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject
to the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the
offices of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about
    , 1996.
 
Alex. Brown & Sons
  INCORPORATED
 
            Cowen & Company
 
                     Wessels, Arnold & Henderson
 
                                                                   Parker/Hunter
                                                      INCORPORATED
 
                   THE DATE OF THIS PROSPECTUS IS     , 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH JURISDICTION.

 
                       Behind it all, there's ANSYS/(R)/

[GRAPHIC DEPICTING ANSYS PRODUCTS]                ANSYS products help
                                                  reduce the time and cost
                                                  of development as well
                                                  as improve product
                                                  design and quality. The
                                                  family of ANSYS
                                                  products ranges from
                                                  ANSYS/AutoFEA for
                                                  design optimization to
                                                  ANSYS/Multiphysics
                                                  for advanced design
                                                  verification.
                                                  Biomedical
[PHOTO OF MEDICAL IMPLANTS]
DePuy Inc. engineers use ANSYS
technology to develop reliable and
durable medical implants and the
surgical instruments used to install
them. The software also allows
DePuy to shorten its new product
development cycle by reducing the
number of prototypes required for
testing.
                                                  Marine Habitats
[PHOTO OF UNDERSEA MARINE EXHIBIT]
Reynolds Polymer is a global
provider of aquarium systems and
acrylic components for undersea
habitats and marine parks.
Reynolds engineers build attractive
and interactive exhibits using
developments in glass and acrylics,
combined with the use of ANSYS
analysis software to ensure product
safety and cost effectiveness.

 
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE; SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.

                               PROSPECTUS SUMMARY
 
  The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and the Consolidated Financial
Statements, including the Notes thereto, appearing elsewhere in this
Prospectus.
 
                                  THE COMPANY
 
  ANSYS, Inc. (the "Company") develops, markets and supports software solutions
for design analysis and optimization. Engineering analysts and design engineers
use the Company's software to accelerate product time to market, reduce
production costs, improve engineering processes and optimize product quality
and safety for a variety of manufactured products, ranging from basic consumer
goods to satellite tracking systems. The ANSYS product family features open,
flexible architecture that permits easy integration into its customers'
enterprise-wide engineering systems and facilitates effective implementation of
process-centric engineering.
   
  Since its founding in 1970 as Swanson Analysis Systems, Inc. ("Swanson
Analysis"), the Company has become a technology leader in the market for
computer-aided engineering ("CAE") analysis software. The Company has long-
standing relationships with customers in many industries, including automotive,
aerospace and electronics. Using the Company's products, engineers can
construct computer models of structures, compounds, components or systems to
simulate performance conditions and physical responses to varying levels of
stress, pressure, temperature and velocity. This helps reduce the time and
expense of physical prototyping and testing.     
 
  The Company's software has been developed and enhanced to help customers meet
several of the major challenges faced by businesses today, including increasing
global competition and the need and ability to solve more complex product
design problems. The Company believes that these factors, combined with the
decreasing cost of computer hardware, are accelerating the demand for design
analysis software solutions and have created an expanding marketplace,
described by the Company as the design analysis and optimization market. This
market includes a base of engineering analysts who use the Company's CAE
analysis software to validate product design, as well as the broader group of
design engineers who use analysis tools integrated within their computer-aided
design ("CAD") systems to optimize and evaluate products much earlier in the
development cycle.
 
  The Company's objectives are to increase market share among the traditional
base of engineering analysts, to extend its product line to meet the demands of
the broader group of design engineers and to increase the adoption of its
products by new users, such as engineers in the biomedical and food processing
industries. The Company's strategy focuses on maintaining and enhancing its
technology leadership; offering an open and flexible software product family;
pursuing a customer driven sales, services and marketing approach; capitalizing
on its established global distribution and support network; and leveraging
strategic relationships with leading CAD suppliers and third party providers of
complementary hardware and software.
 
  The Company's product line ranges from ANSYS/Multiphysics, a sophisticated
multi-disciplinary CAE tool for engineering analysts, to AutoFEA, a CAD-
integrated design optimization product for design engineers. The Company's
product family features a unified database, a wide range of analysis
functionality, a consistent, easy-to-use graphical user interface, support for
multiple hardware platforms and operating systems (including Windows 95,
Windows NT and Unix), effective user customization tools and integration with
leading CAD systems. The Company's products are developed using the Company's
ISO 9001-certified quality system.
   
  The Company markets its products principally through its global network of 35
independent regional ANSYS Support Distributors, which have 68 offices in 27
countries. More than 4,000 companies throughout the world use ANSYS products,
including 61 of the Global Fortune Industrial 100 companies and each of the
top 10.     
 
                                       3

 
  On March 14, 1994, the Company acquired substantially all of the assets of
Swanson Analysis for approximately $48.0 million in cash (the "1994
Acquisition"). The 1994 Acquisition was funded through the incurrence of $28.0
million of senior secured indebtedness (the "1994 Loan") and $15.0 million of
10% Subordinated Notes (the "Subordinated Notes") and the issuance of $4.0
million of 10% Redeemable Preferred Stock (the "Redeemable Preferred Stock")
and approximately $1.0 million of Common Stock. The equity and subordinated
indebtedness funding was contributed principally by investment funds associated
with TA Associates, Inc., a private equity firm based in Boston, Massachusetts
(the "TA Investors"), Chestnut III Limited Partnership and Chestnut Capital
International III L.P. (collectively the "Chestnut Investors"), and Dr. John A.
Swanson, the founder of the Company. See "Certain Transactions." The
indebtedness and preferred stock issued to finance the 1994 Acquisition will be
repaid and redeemed with the net proceeds from this offering, and the goodwill
and capitalized software resulting from the 1994 Acquisition will be fully
amortized in March 1997. As a result, the Company's interest and amortization
expenses will decrease substantially.
 
  The Company was incorporated under the laws of the State of Delaware on
January 12, 1994. The Company's principal executive offices are located at 201
Johnson Road, Houston, Pennsylvania 15342-1300, and its telephone number is
(412) 746-3304.
 
                                  RISK FACTORS
 
  An investment in the Common Stock offered hereby involves a high degree of
risk. See "Risk Factors."
 
                                  THE OFFERING

                                                 
Common Stock offered by the Company...............  3,500,000 shares
Common Stock offered by the Selling Stockholder...  50,000 shares
Common Stock to be outstanding after the offering.  16,152,760 shares(1)
Use of proceeds...................................  To repay all existing senior secured and
                                                    subordinated indebtedness, to redeem all
                                                    outstanding shares of redeemable preferred
                                                    stock and for general corporate purposes.
Proposed Nasdaq National Market symbol............  ANSS

- --------
(1) Excludes (i) 868,110 shares of Common Stock issuable upon exercise of
    outstanding stock options at a weighted average exercise price of
    approximately $4.36 per share, substantially all of which are not
    exercisable as of the date of this Prospectus, and (ii) 2,250,000 and
    210,000 additional shares of Common Stock reserved for future issuance
    under the Company's 1996 Stock Option and Grant Plan (the "1996 Stock
    Plan") and 1996 Employee Stock Purchase Plan (the "Purchase Plan"),
    respectively. See "Management--Employee Stock and Other Benefit Plans--1996
    Stock Option and Grant Plan" and "--1996 Employee Stock Purchase Plan."
 
                                       4

                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION

                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                                       PRO FORMA
                                          PREDECESSOR COMPANY(1)        THE COMPANY    COMBINED             THE COMPANY
                                    ----------------------------------- ------------ ------------ --------------------------------
                                                                        PERIOD FROM
                                                                         MARCH 14,
                                                            PERIOD FROM     1994                               
                                                            JANUARY 1,    (DATE OF                             
                                                               1994     ACQUISITION)                           THREE MONTHS ENDED  
                                    YEAR ENDED DECEMBER 31,   THROUGH     THROUGH     YEAR ENDED   YEAR ENDED  -------------------  
                                    -----------------------  MARCH 13,  DECEMBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
                                     1991    1992    1993      1994         1994         1994         1995       1995      1996
                                    ------- ------- ------- ----------- ------------ ------------ ------------ --------- ---------
                                                                                              
CONSOLIDATED STATEMENTS          
 OF OPERATIONS DATA:             
 Revenue.................           $27,900 $30,458 $31,604   $6,569      $26,254      $32,823      $39,616     $ 8,226   $10,733
 Cost of sales...........             4,498   5,196   6,103      945        3,743        4,688        4,903       1,229     1,195
                                    ------- ------- -------   ------      -------      -------      -------     -------   -------
 Gross profit............            23,402  25,262  25,501    5,624       22,511       28,135       34,713       6,997     9,538
 Operating expenses:             
  Selling and marketing..             2,800   3,262   3,763      673        3,836        4,509        7,526       1,649     2,169
  Research and                   
    development..........             3,573   6,400   5,972    1,349        5,410        6,759        8,329       2,019     2,330
  Amortization...........               132     528     937      300        8,420        8,720       10,641       2,660     2,719
  General and                    
    administrative.......             6,000   5,369   7,181    1,234        4,606        5,840        6,857       1,493     1,850
                                    ------- ------- -------   ------      -------      -------      -------     -------   -------
   Total operating               
     expenses............            12,505  15,559  17,853    3,556       22,272       25,828       33,353       7,821     9,068
                                    ------- ------- -------   ------      -------      -------      -------     -------   -------
 Operating income (loss).            10,897   9,703   7,648    2,068          239        2,307        1,360        (824)      470
 Interest expense and            
  other income, net......               962     769     472      (22)      (2,945)      (2,967)      (3,733)       (956)     (797)
                                    ------- ------- -------   ------      -------      -------      -------     -------   -------
 Income (loss) before            
  income tax benefit.....            11,859  10,472   8,120    2,046       (2,706)        (660)      (2,373)     (1,780)     (327)
 Income tax benefit (2)..                --      --      --       --          917          917          793         595       126
                                    ------- ------- -------   ------      -------      -------      -------     -------   -------
 Net income (loss).......           $11,859 $10,472 $ 8,120   $2,046      $(1,789)     $   257      $(1,580)    $(1,185)  $  (201)
                                    ======= ======= =======   ======      =======      =======      =======     =======   =======
 Net income (loss)               
    applicable to common         
    stock................                                                                           $(2,025)    $(1,286)  $  (303)
                                                                                                    =======     =======   =======
 Net income (loss) per           
  common share (3).......                                                                           $ (0.17)    $ (0.11)  $ (0.02)
                                                                                                    =======     =======   =======
 Shares used in computing        
  per common share               
  amounts (3)............                                                                            12,261      12,279    12,457
                                                                                                    =======     =======   =======
 Pro forma data (4):             
 Pro forma net income            
  per common share.......                                                                           $  0.08               $  0.02
                                                                                                    =======               =======
 Pro forma shares used           
  in computing per               
  common share amounts...                                                                            15,451                15,647
                                                                                                    =======               =======

                                                                                                        MARCH 31, 1996
                                                                                                    -----------------------
                                                                                                    ACTUAL   AS ADJUSTED(5)
                                                                                                    -------  --------------
                                                                                                       
CONSOLIDATED BALANCE SHEET DATA:                                                           
  Cash and cash equivalents........................................................................ $ 5,577     $ 5,577
  Working capital..................................................................................   4,194       9,176
  Total assets.....................................................................................  41,998      41,607
  Long-term debt, less current portion.............................................................  31,704          --
  Redeemable preferred stock.......................................................................   4,994          --
  Total stockholders' equity (deficit).............................................................  (9,869)     31,205

 
                            (FOOTNOTES ON NEXT PAGE)
 
                                       5

- --------
(1) Presents consolidated financial data of the Company's predecessor for the
    periods prior to the Company's acquisition of substantially all of the
    assets and the assumption of certain liabilities of the predecessor,
    effective March 14, 1994. See "Certain Transactions." Because of such
    transactions, certain aspects of the consolidated results of operations for
    periods prior to the period beginning March 14, 1994 are not comparable
    with those for subsequent periods. Net income (loss) per share data are
    presented only for the year ended December 31, 1995 and the three months
    ended March 31, 1995 and 1996. Net income (loss) per common share for the
    year ended December 31, 1995 and the three months ended March 31, 1995 and
    1996 has been computed after deducting $446,000, $102,000 and $102,000,
    respectively, from net income (loss), which deductions represent preferred
    stock dividend accumulations.
 
(2) The Company's predecessor was an S Corporation and accordingly was not
    subject to federal or state income tax.
 
(3) For a description of the computation of the number of shares and the net
    income (loss) per share, see Note 2 of Notes to Consolidated Financial
    Statements.
   
(4) The pro forma data give effect to the sale of 3,500,000 shares of Common
    Stock offered by the Company hereby as if it occurred at January 1, 1995 or
    at January 1, 1996 for the three months ended March 31, 1996, and include
    (i) elimination of dividends resulting from the redemption of all
    Redeemable Preferred Stock; (ii) elimination of interest expense resulting
    from the repayment of the 1994 Loan and all Subordinated Notes; (iii)
    elimination of amortization of deferred loan fees and an interest rate cap;
    and (iv) adjustments to income taxes to reflect the tax effects of the
    items listed in (ii) and (iii) above.     
 
(5) Adjusted to give effect to the issuance of the 3,500,000 shares of Common
    Stock offered by the Company hereby (at an assumed initial public offering
    price of $13.00 per share) and the use of the net proceeds therefrom as set
    forth in "Use of Proceeds."
                                  ------------
 
  Except as otherwise indicated, information in this prospectus assumes no
exercise of the Underwriters' over-allotment option and has been adjusted to
reflect a 10-for-1 stock split, effected in the form of a stock dividend on
April 30, 1996, and the conversion of all outstanding shares of non-voting
Class A Common Stock into an equal number of shares of Common Stock upon
completion of this offering. See "Description of Capital Stock" and Notes 9 and
18 of Notes to Consolidated Financial Statements. Unless the context otherwise
requires, all references to the "Company" shall mean ANSYS, Inc., its
predecessor and all of its direct and indirect subsidiaries.
                                  ------------
 
  ANSYS, ANSYS/AutoFEA, ANSYS/ProFEA, COMPUFLO and FLOTRAN are registered
trademarks of the Company. DesignSpace, ANSYS/Multiphysics, ANSYS/Mechanical,
ANSYS/Thermal, ANSYS/LinearPlus, ANSYS/Emag, ANSYS/LS-DYNA, ANSYS/PrepPost and
ANSYS/ED are trademarks of the Company. All other trademarks, trade names or
service marks referred to in this Prospectus are the property of their
respective owners.
 
                                       6

                                 RISK FACTORS
 
  An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors, in addition to other information contained in this Prospectus,
in evaluating an investment in the shares of Common Stock offered hereby.
 
  Dependence on Core ANSYS Products. The Company currently derives
substantially all of its revenues from sales and maintenance of a core group
of analysis products derived primarily from its comprehensive
ANSYS/Multiphysics product. As a result, any factor adversely affecting sales
of the Company's core multiphysics products would have a materially adverse
effect on the Company. The Company's future performance will depend upon the
successful development, introduction and customer acceptance of new or
enhanced versions of its existing products and broader market acceptance of
these products. There can be no assurance that the Company will continue to be
successful in marketing the ANSYS family of products or any new or enhanced
products the Company may develop in the future. In addition, competitive
pressures or other factors may result in price erosion that could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Products."
 
  Sales of the Company's more recently introduced design optimization/CAD
integrated products represented less than 4% of revenue in 1995. The Company's
growth strategy emphasizes maintenance and growth of its market position
within its traditional base of engineering analysts while seeking increased
penetration of the broader group of design engineers by offering products that
are integrated directly within CAD products and facilitate design optimization
earlier in the development cycle. The Company's design products have been
introduced only recently, however, and no assurance can be given as to whether
they will achieve significant market penetration. Failure to execute the
Company's strategy successfully, particularly with respect to the introduction
of new design products, would adversely affect the Company's growth and cause
it to remain reliant upon the more traditional CAE market.
 
  Dependence on Proprietary Technology. The Company's success is highly
dependent upon its proprietary technology. The Company does not have patents
on any of its technology and relies on contracts and the laws of copyright and
trade secrets to protect its technology. Although the Company maintains a
trade secrets program, enters into confidentiality agreements with its
employees and distributors and limits access to and distribution of its
software, documentation and other proprietary information, there can be no
assurance that the steps taken by the Company to protect its proprietary
technology will be adequate to prevent misappropriation of its technology by
third parties, or that third parties will not be able to develop similar
technology independently. Although the Company is not aware that any of its
technology infringes upon the rights of third parties, there can be no
assurance that other parties will not assert technology infringement claims
against the Company, or that, if asserted, such claims will not prevail. See
"Business--Proprietary Rights and Licenses."
 
  Rapidly Changing Technology; New Products; Risk of Product Defects. The
markets for the Company's products are generally characterized by rapidly
changing technology and frequent new product introductions that can render
existing products obsolete or unmarketable. A major factor in the Company's
future success will be its ability to anticipate technological changes and to
develop and introduce in a timely manner enhancements to its existing products
and new products to meet those changes. If the Company is unable to introduce
new products and respond to industry changes on a timely basis, its business,
financial condition and results of operations could be materially adversely
affected. The introduction and marketing of new or enhanced products require
the Company to manage the transition from existing products in order to
minimize disruption in customer purchasing patterns. There can be no assurance
that the Company will be successful in developing and marketing, on a timely
basis, new products or product enhancements, that its new products will
adequately address the changing needs of the marketplace, or that it will
successfully manage the transition from existing products. Software products
as complex as those offered by the Company may contain undetected errors or
failures when first introduced or as new versions are released, and the
likelihood of errors is increased as a result of the Company's commitment to
accelerating the frequency of its product releases. There can be no assurance
that
 
                                       7

errors will not be found in new or enhanced products after commencement of
commercial shipments. Any of these problems may result in the loss of or delay
in market acceptance, diversion of development resources, damage to the
Company's reputation, or increased service or warranty costs, any of which
could have a materially adverse effect upon the Company's business, financial
condition and results of operations. See "Business--Products," "--Product
Development" and "--Competition."
 
  Dependence on Distributors. The Company distributes its products principally
through its global network of 35 independent, regional ANSYS Support
Distributors ("ASDs"), and 96.9% of the Company's revenue in 1995 resulted
from sales of ANSYS products by ASDs. The ASDs sell ANSYS products and other
noncompeting products to new and existing customers, expand installations
within their existing customer base, offer consulting services and provide the
first line of ANSYS technical support. The ASDs have more immediate contact
with most customers who use ANSYS software than does the Company.
Consequently, the Company is highly dependent on the efforts of the ASDs.
Difficulties in ongoing relationships with ASDs, such as delays in collecting
accounts receivable, ASDs' failure to meet performance criteria or to promote
the Company's products as aggressively as the Company expects, and differences
in the handling of customer relationships, could adversely affect the
Company's performance. The six largest ASDs accounted for approximately 48.1%
of the Company's revenue in 1995. The loss of any major ASD for any reason,
including an ASD's decision to sell competing products rather than ANSYS
products, could have a materially adverse effect on the Company. Moreover, the
Company's future success will depend substantially on the ability and
willingness of its ASDs to continue to dedicate the resources necessary to
promote the Company's products and to support a larger installed base of the
Company's products. If the ASDs are unable or unwilling to do so, the Company
may be unable to sustain revenue growth. See "Business--Sales and Marketing"
and "--Customer Support and Services."
 
  Competition. The CAD, CAE and computer-aided manufacturing ("CAM") market is
intensely competitive. In the traditional CAE market, the Company's primary
competitors include MacNeal-Schwendler Corporation, Hibbitt, Karlsson and
Sorensen, Inc. and MARC Analysis Research Corporation. The Company also faces
competition from smaller vendors of specialized analysis applications in
fields such as computational fluid dynamics. In addition, certain integrated
CAD suppliers such as Parametric Technology Corporation and Structural
Dynamics Research Corporation provide varying levels of design analysis and
optimization and verification capabilities as part of their product offerings.
 
  The entrance of new competitors would be likely to intensify competition in
all or a portion of the overall CAD, CAE and CAM market. Some of the Company's
current and possible future competitors have greater financial, technical,
marketing and other resources than the Company, and some have well established
relationships with current and potential customers of the Company. It is also
possible that alliances among competitors may emerge and rapidly acquire
significant market share or that competition will increase as a result of
software industry consolidation. Increased competition may result in price
reductions, reduced profitability and loss of market share, any of which would
materially adversely affect the Company's business, financial condition and
results of operations. See "Business--Competition."
 
  Increased Reliance on Perpetual Licenses. The Company has historically
maintained stable recurring revenue from the sale of time-based licenses for
its software products. Recently, the Company has experienced an increase in
customer preference for perpetual licenses that involve payment of a single
up-front fee and that are more typical in the computer software industry.
Although lease license revenue currently represents a majority of the
Company's software license fee revenue, to the extent that perpetual license
revenue increases as a percent of total software license fee revenue, the
Company's revenue in any period will increasingly depend on sales completed
during that period. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
 
  New Management Team and Strategies; Management of Growth. Since March 1994,
the Company has recruited and hired Peter J. Smith as its Chief Executive
Officer and most other key members of management, particularly in the areas of
sales, marketing and administration. The new management team has initiated a
series
 
                                       8

of strategies designed to accelerate the Company's growth. See "Business--
Strategy" and "Management." There can be no assurance that such new
initiatives will be successful. The Company has recently experienced a period
of revenue growth and a substantial increase in the number of orders,
customers and employees. This growth has placed, and will continue to place,
strains on the Company's management, operations and systems. The Company's
ability to compete effectively will depend, in large part, upon its ability to
expand, improve and effectively utilize its operating, management, marketing,
sales and financial systems as necessitated by changes in the Company's
business. Any failure by the Company's management to anticipate effectively,
implement and manage the changes required to sustain the Company's growth
would have a material adverse effect on the Company.
   
  International Activities. Revenues from international operations represented
54.7% and 53.6% of the Company's total revenue during 1995 and the three
months ended March 31, 1996, respectively. Risks inherent in the Company's
international business activities include imposition of government controls,
export license requirements, restrictions on the export of critical
technology, political and economic instability, trade restrictions, changes in
tariffs and taxes, difficulties in staffing and managing international
operations, longer accounts receivable payment cycles, and the burdens of
complying with a wide variety of foreign laws and regulations. Effective
copyright and trade secret protection may not be available in every foreign
country in which the Company sells its products. The Company's business,
financial condition and results of operations could be materially adversely
affected by any of these risks.     
   
  Potential Fluctuations in Quarterly Results. The Company may experience
significant fluctuations in future quarterly operating results. Fluctuations
may be caused by many factors, including the timing of new product releases or
product enhancements by the Company or its competitors; the size and timing of
individual orders; software errors or other product quality problems;
competition and pricing; customer order deferrals in anticipation of new
products or product enhancements; reduction in demand for the Company's
products; changes in operating expenses; mix of software license and
maintenance and service revenue; personnel changes; and general economic
conditions. For example, the expected release of ANSYS 5.3, an updated version
of the Company's core multiphysics product, scheduled for the second half of
1996, may result in delayed sales of existing ANSYS products prior to such
release, even though customers receive updated versions of the Company's
software as part of their lease, warranty or maintenance agreements. A
substantial portion of the Company's operating expenses is related to
personnel, facilities and marketing programs. The level of personnel and
personnel expenses cannot be adjusted quickly and is based, in significant
part, on the Company's expectation of future revenues. The Company does not
typically experience significant order backlog. Further, the Company has often
recognized a substantial portion of its revenue in the last month of a
quarter, with these revenues frequently concentrated in the last weeks or days
of a quarter. As a result, product revenues in any quarter are substantially
dependent on orders booked and shipped in the latter part of that quarter, and
revenues for any future quarter are not predictable with any significant
degree of accuracy. Also, the Company may experience lower first quarter
revenue relative to revenue in the prior quarter due in part to the effect of
incentive programs which the Company has in place to encourage overachievement
of annual dollar revenue goals by ASDs and the Company's internal sales
support personnel. For these reasons, the Company believes that period-to-
period comparisons of its prior results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."     
 
  Dependence Upon Senior Management and Key Technical Employees. The Company
is highly dependent upon the ability and experience of its senior executives,
Peter J. Smith and Dr. John A. Swanson, and its key technical and other
management employees. Although the Company has entered into employment
agreements with Mr. Smith and Dr. Swanson, the loss of either of these senior
executives or a number of the Company's other key employees could adversely
affect the Company's ability to conduct its operations. The Company maintains
"key executive" life insurance policies on Dr. Swanson and Mr. Smith in the
amounts of $5 million and $2 million, respectively. See "Management--Employee
Stock and Other Benefit Plans--Key Executive Life Insurance" and "--Employment
Agreements."

                                       9

  Losses; Accumulated Deficit. The Company acquired its business from Swanson
Analysis on March 14, 1994 and incurred net losses of $1.8 million and $1.6
million for the period from March 14, 1994 through December 31, 1994 and for
1995, respectively. The Company had a deficit in stockholders' equity of $6.0
million upon completion of the 1994 Acquisition, and net losses since then
have resulted in an accumulated deficit of $4.4 million and a deficit in total
stockholders' equity of $9.9 million at March 31, 1996. See "Capitalization"
and "Management's Discussion and Analysis of Financial Condition and Results
of Operations."
   
  Uncertainties Regarding Realization of Deferred Tax Assets. At March 31,
1996, the Company had recorded net deferred tax assets totaling $7.7 million,
reflecting differences between the financial statement and the tax basis of
assets and liabilities, principally related to the amortization of goodwill
and capitalized software costs. The realization of the net deferred tax assets
principally depends on the existence of future taxable income. Although the
Company incurred net losses for the period from March 14, 1994 through
December 31, 1994 and for 1995, the Company had taxable income during these
periods. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."     
 
  Material Benefit to Insiders. In March 1994, the Company acquired Swanson
Analysis in a leveraged buy-out for an aggregate cash purchase price of
approximately $48.0 million. In connection with the 1994 Acquisition, the TA
Investors, the Chestnut Investors and Dr. Swanson purchased from the Company
an aggregate $3.8 million of Redeemable Preferred Stock and $14.3 million of
Subordinated Notes. As required by the terms of the respective instruments,
the Company will redeem all of the Redeemable Preferred Stock (including
accumulated dividends) and repay all of the Subordinated Notes held by the TA
Investors, the Chestnut Investors and Dr. Swanson (including accrued and
unpaid interest through the date of payment) upon completion of this offering.
Of the net proceeds from the sale of the shares of Common Stock offered by the
Company hereby (assuming an initial public offering price of $13.00 per
share), 43.7% ($18.1 million) will be used for such purpose. In connection
with the organization of the Company and the 1994 Acquisition, the TA
Investors, the Chestnut Investors and Dr. Swanson purchased Common Stock of
the Company at effective purchase prices of approximately $.09 and $.14 per
share. See "Certain Transactions."
   
  Effective Control by Principal Stockholders. After giving effect to the sale
of the shares of Common Stock offered hereby, the TA Investors, the Chestnut
Investors and members of management and employees of the Company will
beneficially own in the aggregate approximately 43.0%, 3.2% and 26.0%,
respectively, of the outstanding Common Stock. As a result, these stockholders
will have the ability to control or exert significant influence over the
outcome of fundamental corporate transactions requiring stockholder approval,
including mergers and sales of assets and the election of the members of the
Company's Board of Directors. See "Certain Transactions," "Principal and
Selling Stockholders" and "Shares Eligible for Future Sale."     
 
  Shares Eligible for Future Sale. Sales of substantial amounts of Common
Stock in the public market after this offering could adversely affect the
market price of the Common Stock and could impair the Company's ability to
obtain additional capital through an offering of its equity securities. In
addition to the 3,550,000 shares of Common Stock offered hereby, up to
approximately 10,095,780 shares of Common Stock owned by current stockholders
of the Company will be eligible for sale in accordance with Rule 144 beginning
90 days after the date of this Prospectus. However, holders of substantially
all of these shares have agreed not to offer, sell or otherwise dispose of any
shares of Common Stock owned by them for 180 days from the date of this
Prospectus without the prior written consent of Alex. Brown & Sons
Incorporated. The holders of approximately 10,412,000 shares of Common Stock
have the right in certain circumstances to require the Company to register
their shares under the Securities Act of 1933, as amended (the "Securities
Act"), for resale to the public and holders of approximately 11,971,860 shares
have the right to include their shares in a registration statement filed by
the Company. See "Shares Eligible for Future Sale."
 
  Absence of Public Market; Offering Price; Possible Volatility of Stock
Price. Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active market will
 
                                      10

develop upon consummation of this offering. Consequently, the offering price
of the Common Stock will be determined by negotiations among the Company, the
Selling Stockholder and the Representatives of the Underwriters. See
"Underwriting" for a description of the factors to be considered in
determining the initial public offering price. In addition, the stock market
historically has experienced volatility which has particularly affected the
market prices of securities of many companies in the software industry and
which sometimes has been unrelated to the operating performance of such
companies.
 
  Anti-takeover Provisions. Certain provisions of the Company's Restated
Certificate of Incorporation and Amended and Restated By-laws, certain
sections of the Delaware General Corporation Law and the ability of the Board
of Directors to issue shares of preferred stock and to establish the voting
rights, preferences and other terms thereof, may have an anti-takeover effect
and may discourage takeover attempts not first approved by the Board of
Directors (including takeovers which certain stockholders may deem to be in
their best interests). These provisions and the ability of the Board of
Directors to issue preferred stock without further action by stockholders
could delay or frustrate the removal of incumbent directors or the assumption
of control by stockholders, even if such removal or assumption of control
might be beneficial to stockholders. These provisions also could discourage or
make more difficult a merger, tender offer or proxy contest, even if such
events would be beneficial, in the short term, to the interests of
stockholders. Such provisions include, among other things, a classified Board
of Directors serving staggered three-year terms, the elimination of
stockholder voting by consent, the removal of directors only for cause, the
vesting of exclusive authority in the Board of Directors to determine the size
of the Board and (subject to certain limited exceptions) to fill vacancies
thereon, the vesting of exclusive authority in the Board of Directors (except
as otherwise required by law) to call special meetings of stockholders, and
certain advance notice requirements for stockholder proposals and nominations
for election to the Board of Directors. The Company will be subject to Section
203 of the Delaware General Corporate Law which, in general, imposes
restrictions upon certain acquirors (including their affiliates and
associates) of 15% or more of the Company's Common Stock. See "Description of
Capital Stock--Certain Provisions of Certificate and By-laws" and "--Statutory
Business Combination Provision."
 
  Dilution. Purchasers of Common Stock in this offering will incur immediate
and substantial dilution in the net tangible book value per share of their
Common Stock. At the assumed initial public offering price of $13.00 per
share, investors in this offering will incur dilution of $11.80 per share. See
"Dilution."
 
                                      11

                                USE OF PROCEEDS
 
  The net proceeds from the sale of the 3,500,000 shares of Common Stock
offered by the Company hereby (at an assumed public offering price of $13.00
per share, after deducting underwriting discounts and commissions and
estimated offering expenses) are estimated to be approximately $41.5 million.
The Company intends to use the net proceeds as follows: (i) approximately
$18.5 million will be used to repay the 1994 Loan, including accrued and
unpaid interest; (ii) approximately $17.5 million will be used to repay all
Subordinated Notes, including accrued and unpaid interest; (iii) approximately
$5.1 million will be used to redeem all Redeemable Preferred Stock, including
accumulated dividends; and (iv) approximately $400,000 will be used for
general corporate purposes. See "Certain Transactions." Pending such uses, the
Company intends to invest the net proceeds of this offering received by it in
short-term, investment grade, interest-bearing obligations.
   
  The 1994 Loan matures in quarterly installments through March 1999 and bears
interest at a fluctuating rate based on the prime rate plus 1.0% or the
Eurodollar rate plus 3.0%. The Company has an interest rate cap agreement that
provides for a fixed rate of 9.0% on $14.0 million of the principal amount of
the 1994 Loan through March 31, 1997. The interest rate on the remaining
principal amount of the 1994 Loan at March 31, 1996 was approximately 8.4%.
One-half of the initial principal amount of the Subordinated Notes, plus
accrued and unpaid interest thereon to the date of repayment, is payable on
each of April 14, 1999 and April 14, 2000. The Subordinated Notes bear
interest at 10.0% per annum and are required to be redeemed upon completion of
this offering. Holders of the Redeemable Preferred Stock are entitled to
dividends in an amount per share equal to $1,000 per annum, payable annually
in arrears on January 1 of each year and accumulated for later payment if not
then paid. The Company is required to redeem all of the outstanding shares of
Redeemable Preferred Stock upon completion of this offering at a redemption
price per share equal to $10,000, together with any accumulated and unpaid
dividends.     
 
  The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholder.
 
                                DIVIDEND POLICY
 
  The Company has never paid cash dividends on its Common Stock. The Company
currently intends to retain earnings to finance the growth and development of
its business and does not anticipate paying cash dividends in the foreseeable
future. Payment of future dividends, if any, will be at the discretion of the
Company's Board of Directors after taking into account various factors,
including the Company's financial condition, operating results and current and
anticipated cash needs.
 
                                      12

                                CAPITALIZATION
 
  The following table sets forth the actual short-term debt and the
capitalization of the Company at March 31, 1996 and as adjusted to give effect
to the sale of the 3,500,000 shares of Common Stock offered by the Company
hereby at an assumed public offering price of $13.00 per share and application
of the net proceeds as described in "Use of Proceeds."

                                                           MARCH 31, 1996
                                                         --------------------
                                                         ACTUAL   AS ADJUSTED
                                                         -------  -----------
                                                           (IN THOUSANDS)
                                                            
Short-term debt (including current portion of long-term
debt)................................................... $ 5,250    $   483
                                                         -------    -------
Long-term debt:
  1994 Loan............................................. $14,500    $   --
  Subordinated notes....................................  17,204        --
                                                         -------    -------
   Total long-term debt.................................  31,704        --
                                                         -------    -------
Redeemable Preferred Stock, $.01 par value, 800 shares
 authorized and
 412 shares issued and outstanding; none authorized,
 issued or outstanding, as adjusted.....................   4,994        --
Stockholders' equity (deficit):
  Preferred Stock, $.01 par value, 2,000,000 shares
   authorized and none issued and outstanding...........     --         --
  Common Stock, $.01 par value, 17,000,000 shares
   authorized and 12,652,760 shares issued and
   outstanding; 50,000,000 shares authorized and
   16,152,760 shares issued and outstanding, as
   adjusted(1)..........................................     127        162
  Additional paid-in capital............................   1,761     36,181
  Adjustment for predecessor basis......................  (7,010)     --
  Retained earnings (deficit)...........................  (4,444)    (4,835)(2)
  Notes receivable from stockholders....................    (303)      (303)
                                                         -------    -------
  Total stockholders' equity (deficit)..................  (9,869)    31,205
                                                         -------    -------
    Total capitalization................................ $32,079    $31,688
                                                         =======    =======
    
- --------
(1) Excludes (i) 868,110 shares of Common Stock issuable upon exercise of
    outstanding stock options granted at a weighted average exercise price of
    approximately $4.36 per share, substantially all of which are not
    exercisable at the date of this Prospectus, and (ii) 2,250,000 and 210,000
    additional shares of Common Stock reserved for future issuance under the
    1996 Stock Plan and the Purchase Plan, respectively. See "Management--
    Employee Stock and Other Benefit Plans--1996 Stock Option and Grant Plan"
    and "--1996 Employee Stock Purchase Plan."
 
(2) Reflects the anticipated write-off of unamortized loan fees and interest
    rate cap of $391,000, net of the related tax effect.

                                      13

                                   DILUTION
 
  The deficit in net tangible book value of the Company's Common Stock at
March 31, 1996 was $22.1 million, or $(1.75) per share. Deficit in net
tangible book value per share represents the amount of the excess of total
liabilities over total tangible net assets, divided by the number of shares of
Common Stock outstanding. After giving effect to the sale of 3,500,000 shares
of Common Stock offered by the Company hereby (after deducting underwriting
discounts and commissions and estimated offering expenses) at an assumed
initial public offering price of $13.00 per share and application of the
estimated net proceeds therefrom as set forth in "Use of Proceeds," the net
tangible book value of the Company at March 31, 1996 would have been $19.3
million, or $1.20 per share, representing an immediate increase in the net
tangible book value of $2.95 per share to existing stockholders and an
immediate dilution of $11.80 per share to new investors purchasing shares in
this offering. The following table illustrates the resulting per share
dilution with respect to the shares of Common Stock offered hereby:

                                                                   
   Assumed initial public offering price per share..............         $13.00
     Deficit in net tangible book value per share before the
     offering................................................... $(1.75)
     Increase per share attributable to new investors...........   2.95
                                                                 ------
   Net tangible book value per share after the offering.........           1.20
                                                                         ------
   Dilution per share to new investors..........................         $11.80
                                                                         ======

  The table below summarizes the difference, at March 31, 1996, between the
existing stockholders and the new investors with respect to the number of
shares purchased from the Company, the total consideration paid and the
average price per share paid (based upon an assumed initial public offering
price of $13.00 per share and before deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company).

                                                                AVERAGE PRICE
                          SHARES PURCHASED  TOTAL CONSIDERATION   PER SHARE
                         ------------------ ------------------- -------------
                           NUMBER   PERCENT   AMOUNT    PERCENT
                         ---------- ------- ----------- -------
                                                 
Existing stockholders
(1)..................... 12,652,760   78.3%  $1,888,154    4.0%    $ 0.15
New investors...........  3,500,000   21.7   45,500,000   96.0      13.00
                         ----------  -----  -----------  -----
  Total................. 16,152,760  100.0% $47,388,154  100.0%
                         ==========  =====  ===========  =====

- --------
(1) The sale by the Selling Stockholder in this offering will cause the number
    of shares held by existing stockholders to be reduced to 12,602,760
    shares, or 78.0% of the total number of shares of Common Stock to be
    outstanding after this offering, and will increase the number of shares
    held by new investors to 3,550,000, or 22.0% of the total number of shares
    of Common Stock to be outstanding after this offering. See "Principal and
    Selling Stockholders."
   
  The foregoing tables assume no exercise of any outstanding stock options or
the Underwriters' over- allotment options. As of June 15, 1996, there were
outstanding options to purchase 868,110 shares of Common Stock at a weighted
average exercise price of approximately $4.36 per share, substantially all of
which are not exercisable as of the date of this Prospectus. See
"Underwriting" for information concerning the Underwriters' over-allotment
option. To the extent that the outstanding options, or any options granted in
the future, are exercised, there will be further dilution to new investors.
    
                                      14

                     SELECTED CONSOLIDATED FINANCIAL DATA
 
  The selected consolidated statements of operations data and balance sheet
data of the Company as of December 31, 1994 and 1995 and for the period March
14, 1994 (date of acquisition) through December 31, 1994 and the year ended
December 31, 1995 and of the Company's predecessor for the year ended December
31, 1993 and the period from January 1, 1994 through March 13, 1994 are
derived from the audited consolidated financial statements of the Company and
the Company's predecessor included elsewhere in this Prospectus. The selected
consolidated statements of operations data and balance sheet data of the
Company as of and for the three months ended March 31, 1995 and 1996 are
derived from the unaudited interim consolidated financial statements of the
Company included elsewhere in this Prospectus and, in the opinion of
management, have been prepared on the same basis as the audited consolidated
financial statements and include all adjustments, consisting only of normal
recurring adjustments, necessary for fair presentation of the results of the
interim periods. The selected consolidated balance sheet data of the Company
as of December 31, 1993 and the selected consolidated statements of operations
data and balance sheet data of the Company's predecessor as of and for the
years ended December 31, 1991 and 1992 are derived from audited consolidated
financial statements of the Company's predecessor not included in this
Prospectus. The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The pro forma combined statements of operations data for 1994
combine the audited results of operations of the Company's predecessor for the
period January 1, 1994 to March 13, 1994 and of the Company for the period
March 14, 1994 (date of acquisition) to December 31, 1994. The pro forma
combined statements of operations data for the year ended December 31, 1994 do
not purport to represent what the Company's consolidated results of operations
would have been if the 1994 Acquisition had actually occurred on January 1,
1994. The following selected consolidated statements of operations data and
balance sheet data should be read in conjunction with the Consolidated
Financial Statements and the related Notes thereto included elsewhere in this
Prospectus. All figures below are in thousands except per share data.
 
                                      15

                               (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                                                         PRO FORMA
                                                          PREDECESSOR COMPANY(1)           THE COMPANY    COMBINED
                                                    -------------------------------------- ------------ ------------
                                                                                           PERIOD FROM
                                                                                            MARCH 14,
                                                    YEAR ENDED DECEMBER 31,    PERIOD FROM     1994
                                                    -------------------------  JANUARY 1,    (DATE OF
                                                                                  1994     ACQUISITION)
                                                                                 THROUGH     THROUGH     YEAR ENDED
                                                                                MARCH 13,  DECEMBER 31, DECEMBER 31,
                                                     1991     1992     1993       1994         1994         1994
                                                    -------  -------  -------  ----------- ------------ ------------
                                                                                      
CONSOLIDATED STATEMENTS
 OF OPERATIONS DATA:
 Revenue:
 Software licenses.......                           $26,315  $28,437  $27,495    $5,984      $22,310      $28,294
 Maintenance and serv-
  ice....................                             1,585    2,021    4,109       585        3,944        4,529
                                                    -------  -------  -------    ------      -------      -------
  Total revenue..........                            27,900   30,458   31,604     6,569       26,254       32,823
 Cost of sales:
 Software licenses.......                             3,372    3,913    4,772       761        3,034        3,795
 Maintenance and serv-
  ice....................                             1,126    1,283    1,331       184          709          893
                                                    -------  -------  -------    ------      -------      -------
  Total cost of sales....                             4,498    5,196    6,103       945        3,743        4,688
                                                    -------  -------  -------    ------      -------      -------
 Gross profit............                            23,402   25,262   25,501     5,624       22,511       28,135
 Operating expenses:
 Selling and marketing...                             2,800    3,262    3,763       673        3,836        4,509
 Research and develop-
  ment...................                             3,573    6,400    5,972     1,349        5,410        6,759
 Amortization............                               132      528      937       300        8,420        8,720
 General and administra-
  tive...................                             6,000    5,369    7,181     1,234        4,606        5,840
                                                    -------  -------  -------    ------      -------      -------
  Total operating ex-
   penses................                            12,505   15,559   17,853     3,556       22,272       25,828
                                                    -------  -------  -------    ------      -------      -------
 Operating income (loss).                            10,897    9,703    7,648     2,068          239        2,307
 Interest expense........                              (239)    (318)    (306)      (62)      (3,091)      (3,153)
 Other income............                             1,201    1,087      778        40          146          186
                                                    -------  -------  -------    ------      -------      -------
 Income (loss) before in-
  come tax benefit.......                            11,859   10,472    8,120     2,046       (2,706)        (660)
 Income tax benefit (2)..                                --       --       --        --          917          917
                                                    -------  -------  -------    ------      -------      -------
 Net income (loss).......                           $11,859  $10,472  $ 8,120    $2,046      $(1,789)     $   257
                                           =======  =======  =======    ======      =======      =======
                                                              THE COMPANY
                                                    --------------------------------
                                                                 THREE MONTHS ENDED
                                                                 -------------------
                                                     YEAR ENDED
                                                    DECEMBER 31, MARCH 31, MARCH 31,
                                                        1995       1995      1996
                                                    ------------ --------- ---------
                                                                  
CONSOLIDATED STATEMENTS
 OF OPERATIONS DATA:
 Revenue:
 Software licenses.......                             $32,604     $ 7,104   $ 8,385
 Maintenance and serv-
  ice....................                               7,012       1,122     2,348
                                                    ------------ --------- ---------
  Total revenue..........                              39,616       8,226    10,733
 Cost of sales:
 Software licenses.......                               3,331         956       666
 Maintenance and serv-
  ice....................                               1,572         273       529
                                                    ------------ --------- ---------
  Total cost of sales....                               4,903       1,229     1,195
                                                    ------------ --------- ---------
 Gross profit............                              34,713       6,997     9,538
 Operating expenses:
 Selling and marketing...                               7,526       1,649     2,169
 Research and develop-
  ment...................                               8,329       2,019     2,330
 Amortization............                              10,641       2,660     2,719
 General and administra-
  tive...................                               6,857       1,493     1,850
                                                    ------------ --------- ---------
  Total operating ex-
   penses................                              33,353       7,821     9,068
                                                    ------------ --------- ---------
 Operating income (loss).                               1,360        (824)      470
 Interest expense........                              (3,983)       (995)     (888)
 Other income............                                 250          39        91
                                                    ------------ --------- ---------
 Income (loss) before in-
  come tax benefit.......                              (2,373)     (1,780)     (327)
 Income tax benefit (2)..                                 793         595       126
                                                    ------------ --------- ---------
 Net income (loss).......                             $(1,580)    $(1,185)  $  (201)
                                                    ============ ========= =========
 Net income (loss) appli-
  cable to common stock..
 Net income (loss) per
  common share (3).......
 Shares used in computing
  per common share
  amounts (3)............
 Pro forma data (4):
 Pro forma net income
  per common share.......
 Pro forma shares used
  in computing per com-
  mon share amounts......
- --------------------------------------------------
 Net income (loss) appli-
  cable to common stock..                             $(2,025)    $(1,286)  $  (303)
                                                    ============ ========= =========
 Net income (loss) per
  common share (3).......                             $ (0.17)    $ (0.11)  $ (0.02)
                                                    ============ ========= =========
 Shares used in computing
  per common share
  amounts (3)............                              12,261      12,279    12,457
                                                    ============ ========= =========
 Pro forma data (4):
 Pro forma net income
  per common share.......                             $  0.08               $  0.02
                                                    ============           =========
 Pro forma shares used
  in computing per com-
  mon share amounts......                              15,451                15,647
- --------------------------------------------------
                                                    ============           =========

                            PREDECESSOR COMPANY(1)         THE COMPANY
                            ----------------------- ----------------------------
                                 DECEMBER 31,         DECEMBER 31,     MARCH 31,
                            ----------------------- -----------------  ---------
                             1991    1992    1993    1994      1995      1996
                            ------- ------- ------- -------  --------  ---------
                                                     
CONSOLIDATED BALANCE SHEET
DATA:
 Cash and cash equiva-
  lents...................  $11,408 $ 8,650 $ 1,216 $ 4,300  $  8,091   $ 5,577
 Working capital..........   14,432  13,999  16,135   1,822     3,196     4,194
 Total assets.............   30,174  32,719  26,205  44,669    42,921    41,998
 Long-term debt, less cur-
  rent portion............    2,694   2,694   3,401  37,696    33,204    31,704
 Redeemable preferred
  stock...................       --      --      --   4,447     4,892     4,994
 Total stockholders' eq-
  uity (deficit)..........   24,845  25,919  19,515  (7,985)  (10,029)   (9,869)

                            (FOOTNOTES ON NEXT PAGE)
 
                                       16

- --------
(1) Presents consolidated financial data of the Company's predecessor for the
    periods prior to the Company's acquisition of substantially all of the
    assets and the assumption of certain liabilities of the predecessor
    effective March 14, 1994. See "Certain Transactions." Because of such
    transactions, certain aspects of the consolidated results of operations
    for periods prior to the period beginning March 14, 1994 are not
    comparable with those for subsequent periods. Net income (loss) per share
    data are presented only for the year ended December 31, 1995 and the three
    months ended March 31, 1995 and 1996. Net income (loss) per common share
    for the year ended December 31, 1995 and the three months ended March 31,
    1995 and 1996 has been computed after deducting $446,000, $102,000 and
    $102,000, respectively, from net income (loss) attributable to preferred
    stock dividend accumulation.
 
(2) The Company's predecessor was an S Corporation and accordingly was not
    subject to federal or state income tax.
 
(3) For a description of the computation of the number of shares and the net
    income (loss) per share, see Note 2 of Notes to Consolidated Financial
    Statements.
   
(4) The pro forma data give effect to the sale of 3,500,000 shares of Common
    Stock offered by the Company hereby as if it occurred at January 1, 1995
    or at January 1, 1996 for the three months ended March 31, 1996, and
    include (i) elimination of dividends resulting from the redemption of all
    Redeemable Preferred Stock; (ii) elimination of interest expense resulting
    from the repayment of the 1994 Loan and all Subordinated Notes; (iii)
    elimination of amortization of deferred loan fees and an interest rate
    cap; and (iv) adjustments to income taxes to reflect the tax effects of
    the items listed in (ii) and (iii) above.     

                                      17

  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                  OPERATIONS
 
OVERVIEW
   
  The Company develops, markets and supports software solutions for design
analysis and optimization. More than 4,000 companies throughout the world use
ANSYS products, with no customer accounting for more than 3% of the Company's
revenue for 1995. In 1995, international revenue accounted for 54.7% of the
Company's revenue. Substantially all of the Company's revenue is denominated
in United States dollars.     
 
  The Company derives its revenue principally from fees for licenses of its
software products and for maintenance, customer support and training services.
Software license revenue is derived from two types of license fees: paid-up
perpetual licenses and lease (time-based) licenses. Historically, software
lease revenue has comprised a substantial portion of the Company's software
license revenue. Although the Company expects revenue from the sale of lease
licenses to be relatively stable, the Company has experienced an increase in
customer preference for perpetual licenses of its products. Lease license
revenue is recognized on a monthly basis. Perpetual license revenue is
recognized in the period the sale is completed. Although lease license revenue
currently represents a majority of the Company's software license revenue, to
the extent that perpetual license revenue increases as a percent of total
software license revenue, the Company's revenue in any period will
increasingly depend on sales completed during that period. In addition,
revenue from maintenance contracts will increase to the extent that holders of
perpetual licenses purchase maintenance contracts in order to receive product
updates and support. The Company currently derives substantially all of its
revenue from products sold by its global network of 35 independent,
regionally-based ASDs. Both software license revenue and maintenance and
service revenue, which includes maintenance, program customization and
training revenue, are presented net of any applicable ASD commission.
 
  The Company licenses its software products using a per task pricing
structure, fixed to an individual computer or residing on a network, subject
to negotiated discounts on larger volume orders. The Company recognizes
revenue from software licenses after shipment of product, fulfillment of
acceptance terms, if any, and receipt of a signed contractual obligation. The
Company historically offered one year warranties in connection with its
domestic and international perpetual license sales. In the second half of
1995, the Company reduced its domestic warranties to 90 days and its
international warranties to 180 days. The Company is currently reviewing its
warranty policy regarding international sales. Reduction in warranty periods
results in a lesser amount of initial paid-up license fees being deferred to
future periods.
 
  Payments received in advance of delivery of products or services are
initially recorded as customer prepayments and recognized as revenue upon
shipment or fulfillment of significant contractual obligations. Consulting
services are priced by project, and customer training is priced by course.
Revenue from training, support and other services is recognized as the
services are performed. Maintenance revenue is recognized ratably over the
contract term, typically one year.
 
  Deferred revenue is recorded in connection with the Company's maintenance
contracts with customers and the warranty portion of paid-up licenses.
Deferred revenue increased in 1994 and 1995 and in the first quarter of 1996,
and the Company anticipates that it will continue to increase as a result of
increased sales of paid-up licenses and maintenance contracts.
   
  The Company's expenses consist principally of cost of sales for software
license revenue and maintenance and service revenue, operating expenses
including general and administrative, selling and marketing, research and
development and amortization, and interest expense. The Company's cost of
sales for software license revenue consists of costs associated with the
media, packaging, documentation and final porting of the Company's products,
and any applicable royalty expense for licensed software. The Company has
agreements with several software vendors to resell those vendors' products.
See "Business--Strategic Alliances and Marketing Relationships." The Company
expects to pay ongoing royalties in connection with these software licenses
and others the Company may choose to license in the future. Royalties payable
by the Company under these arrangements, which would constitute part of the
Company's cost of software license revenue, may adversely affect the Company's
gross profit. The Company's cost of sales for maintenance and services revenue
    
                                      18

includes personnel and related operating costs allocated to maintenance and
other customer support and training services. Selling and marketing expenses
consist primarily of personnel costs and include salaries, commissions paid to
internal sales and marketing personnel, promotional costs and related
operating expenses. Research and development expenses consist primarily of
personnel costs, as well as all costs associated with the development of new
products and enhancements to existing products. General and administrative
expenses consist primarily of personnel costs for finance, administrative and
general management personnel, as well as accounting and legal expenses.
 
  The Company's amortization and interest expenses since March 1994 have
resulted principally from the 1994 Acquisition. Amortization primarily relates
to intangible assets acquired in the 1994 Acquisition, including goodwill, the
ANSYS trade name and a non-competition agreement, which are being amortized on
the straight-line method over the estimated useful lives of these assets, as
described in the table below. Interest expense consists principally of
interest accruing on the 1994 Loan and the Subordinated Notes, which were
incurred to finance the 1994 Acquisition and will be repaid with net proceeds
from this offering.
 
  In connection with the 1994 Acquisition, the Company capitalized $925,000 of
debt issuance costs and $179,000 associated with an interest rate cap
agreement, the unamortized portion of which was $587,000 in the aggregate at
April 30, 1996. As a result of the early repayment of the 1994 Loan with a
portion of the net proceeds of this offering, the Company will write-off the
unamortized balance as an extraordinary non-cash charge in the quarter in
which the offering is closed.
 
  In accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," the Company capitalizes software development costs once the
technological feasibility of the product has been established and until the
product is available for commercial release. The amounts of software
development costs capitalized by the Company in 1994 and 1995 and the first
quarter of 1996 were immaterial. See Note 2 of Notes to Consolidated Financial
Statements.
 
  The 1994 Acquisition. The Company was formed in January 1994 and acquired
the assets of Swanson Analysis on March 14, 1994 for a cash purchase price of
approximately $48.0 million, the assumption of certain liabilities totaling
$4.9 million and acquisition costs of $273,000. The cash payment was financed
through the issuance of preferred and common stock, borrowings under the 1994
Loan and the issuance of Subordinated Notes. See "Certain Transactions." The
1994 Acquisition was accounted for using the purchase method of accounting. In
accounting for the 1994 Acquisition, the aggregate consideration was adjusted
downward to reflect the carryover of the 1994 basis of the seller's owner in
the net assets acquired, in accordance with generally accepted accounting
principles. The effect of this adjustment was to reduce, on the date of 1994
Acquisition, the value of the Company's stockholders' equity by approximately
$7.0 million and to preclude a write-up of a proportionate amount of the
assets acquired. Cost in excess of the fair value of the net tangible assets
was allocated to intangible assets. The following table sets forth the amounts
allocated, the asset lives (in years) assigned, and the resulting annual
amortization (also included in the table is the capitalized debt issuance
costs):

                                                     AMOUNT   ASSET    ANNUAL
                                                    ALLOCATED LIFE  AMORTIZATION
                                                    --------- ----- ------------
                                                       (DOLLARS IN MILLIONS)
                                                           
      Capitalized software.........................   $15.4      3     $ 5.1
      Goodwill.....................................    14.7      3       4.9
      Other intangible assets......................     3.9   3-10       0.6
                                                      -----            -----
                                                      $34.0            $10.6
                                                      =====            =====

  The 1994 Acquisition resulted in significant increases in amortization and
interest expense, starting in the second quarter of 1994. This has resulted in
net losses being recorded in most subsequent periods. Goodwill and capitalized
software resulting from the 1994 Acquisition will be fully amortized in March
1997.
 
  Following the 1994 Acquisition, the Company's new senior management team
initiated a series of new strategies designed to accelerate the Company's
growth and effectively anticipate, respond to and capitalize on the
opportunities presented by the changing marketplace. Among other initiatives,
the new management team (i)
 
                                      19

   
established a sales management structure to work with the ASDs and to bring a
more focused sales approach to the market; (ii) improved operating
efficiencies and customer service; and (iii) developed and began to implement
a strategy to enhance and extend the Company's product line to meet the
demands of existing and new markets. The Company believes that these efforts
have contributed significantly to the increases in revenue and results of
operations since the 1994 Acquisition.     
 
RESULTS OF OPERATIONS
 
  For purposes of the following discussion and analysis, the results of
operations of Swanson Analysis for the two and one-half months ended March 13,
1994 have been combined with the results of operations of the Company for the
nine and one-half months ended December 31, 1994, by adding corresponding
items without adjustment. This computation was done to permit useful
comparison between the results for 1993, 1994 and 1995.

                            YEAR ENDED       YEAR ENDED       YEAR ENDED            THREE MONTHS ENDED
                           DECEMBER 31,     DECEMBER 31,     DECEMBER 31,     ---------------------------------
                               1993             1994             1995         MARCH 31, 1995    MARCH 31, 1996
                          ---------------- ---------------- ----------------  ----------------  ---------------
                                    % OF             % OF             % OF              % OF             % OF
                          AMOUNT   REVENUE AMOUNT   REVENUE AMOUNT   REVENUE  AMOUNT   REVENUE  AMOUNT  REVENUE
                          -------  ------- -------  ------- -------  -------  -------  -------  ------  -------
                                                      (DOLLARS IN THOUSANDS)
                                                                          
 Revenue:
  Software licenses.....  $27,495    87.0% $28,294    86.2% $32,604    82.3%   $7,104    86.4%  $8,385    78.1%
  Maintenance and
    service.............    4,109    13.0    4,529    13.8    7,012    17.7     1,122    13.6    2,348    21.9
                          -------   -----  -------   -----  -------   -----   -------   -----   ------   -----
   Total revenue........   31,604   100.0   32,823   100.0   39,616   100.0     8,226   100.0   10,733   100.0
 Cost of sales:
  Software
    licenses(/1/).......    4,772    17.4    3,795    13.4    3,331    10.2       956    13.5      666     7.9
  Maintenance and
    service(/1/)........    1,331    32.4      893    19.7    1,572    22.4       273    24.3      529    22.5
                          -------   -----  -------   -----  -------   -----   -------   -----   ------   -----
   Total cost of sales..    6,103    19.3    4,688    14.3    4,903    12.4     1,229    14.9    1,195    11.1
                          -------   -----  -------   -----  -------   -----   -------   -----   ------   -----
 Gross profit...........   25,501    80.7   28,135    85.7   34,713    87.6     6,997    85.1    9,538    88.9
 Operating expenses:
  Selling and marketing.    3,763    11.9    4,509    13.7    7,526    19.0     1,649    20.1    2,169    20.2
  Research and
    development.........    5,972    18.9    6,759    20.6    8,329    21.0     2,019    24.6    2,330    21.8
  Amortization..........      937     3.0    8,720    26.6   10,641    26.9     2,660    32.3    2,719    25.3
  General and
    administrative......    7,181    22.7    5,840    17.8    6,857    17.3     1,493    18.1    1,850    17.2
                          -------   -----  -------   -----  -------   -----   -------   -----   ------   -----
   Total operating
    expenses............   17,853    56.5   25,828    78.7   33,353    84.2     7,821    95.1    9,068    84.5
                          -------   -----  -------   -----  -------   -----   -------   -----   ------   -----
 Operating income
(loss)..................    7,648    24.2    2,307     7.0    1,360     3.4      (824)  (10.0)     470     4.4
 Interest expense.......     (306)   (1.0)  (3,153)   (9.6)  (3,983)  (10.1)     (995)  (12.1)    (888)   (8.3)
 Other income...........      778     2.5      186     0.6      250     0.7        39     0.5       91     0.8
                          -------   -----  -------   -----  -------   -----   -------   -----   ------   -----
 Income (loss) before
   income tax benefit...    8,120    25.7     (660)   (2.0)  (2,373)   (6.0)   (1,780)  (21.6)    (327)   (3.1)
 Income tax benefit.....       --      --      917     2.8      793     2.0       595     7.2      126     1.2
                          -------   -----  -------   -----  -------   -----   -------   -----   ------   -----
 Net income (loss)......  $ 8,120    25.7% $   257     0.8% $(1,580)   (4.0)% $(1,185)  (14.4)% $ (201)   (1.9)%
                          =======   =====  =======   =====  =======   =====   =======   =====   ======   =====

- --------
(1)Computed as a percentage of the corresponding revenue category.
 
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995
 
  Revenue. The Company's revenue increased 30.5% for the 1996 quarter to $10.7
million from $8.2 million for the 1995 quarter. This increase was attributable
principally to increased domestic and international sales of paid-up licenses
and increased maintenance and services revenue, both of which resulted
primarily from the Company's increased marketing emphasis, market acceptance
of new product releases and broader customer usage of maintenance and support
services in response to accelerated frequency of product releases and the
Company's increased emphasis on marketing its maintenance services.
 
                                      20

   
  Software license revenue increased 18.0% for the 1996 quarter to $8.4
million from $7.1 million for the 1995 quarter, resulting principally from
increased sales of paid-up licenses in domestic and international markets.
Revenue from sales of paid-up licenses increased 29.2% for the 1996 quarter to
$3.6 million from $2.8 million for the 1995 quarter. The Company also
experienced a 10.8% increase in lease license revenue to $4.8 million for the
1996 quarter from $4.3 million for the 1995 quarter. Maintenance and service
revenue increased 109.3% for the 1996 quarter to $2.3 million from $1.1
million for the 1995 quarter, as a result of a substantial increase in the
sale of paid-up licenses, reduction in the warranty period, and broader
customer usage of maintenance and support services.     
 
  Of the Company's total revenue for the 1996 quarter, approximately 48.4% and
51.6%, respectively, were attributable to domestic and international sales, as
compared to 45.0% and 55.0%, respectively, for the 1995 quarter.
 
  Cost of Sales and Gross Profit. The Company's total cost of sales remained
relatively stable at $1.2 million for the 1996 and 1995 quarters, representing
11.1% and 14.9% of total revenue, respectively. The Company's cost of sales
for software license revenue decreased 30.3% for the 1996 quarter to $666,000,
or 7.9% of software license revenue, from $956,000, or 13.5% of software
license revenue, for the 1995 quarter. The decrease was due primarily to a
reduction of expenses through lower headcount and cost controls and
implementation of a more efficient multi-platform development environment for
the Company's product releases.
 
  The Company's cost of sales for maintenance and service revenue was $529,000
and $273,000, or 22.5% and 24.3% of maintenance and service revenue, for the
1996 and 1995 quarters, respectively, reflecting the substantial increase in
maintenance and service revenue in the 1996 quarter.
 
  As a result of the foregoing, the Company's gross profit increased 36.3% to
$9.5 million for the 1996 quarter from $7.0 million for the 1995 quarter.
 
  Selling and Marketing. Selling and marketing expenses increased 31.5% for
the 1996 quarter to $2.2 million, or 20.2% of total revenue, from $1.6
million, or 20.1% of total revenue, for the 1995 quarter. This growth was
attributable principally to increased personnel costs, including costs
associated with increased headcount and compensation expenses related to
building a sales and marketing organization, as well as increased commissions
associated with increased revenue.
 
  Research and Development. Research and development expenses increased 15.4%
for the 1996 quarter to $2.3 million, or 21.8% of total revenue, from $2.0
million, or 24.6% of total revenue, for the 1995 quarter. This increase
resulted primarily from employment of additional staff and independent
contractors to develop and enhance the Company's products, including a
dedicated team working on the development of the Company's DesignSpace product
(see "Business--Product Development"), costs associated with quality
assurance, and equipment costs to implement an enhanced multi-platform
development environment.
 
  Amortization. Amortization expense was $2.7 million in the first quarter in
both 1996 and 1995. Goodwill and capitalized software acquired in connection
with the 1994 Acquisition will be fully amortized in the first quarter of
1997.
 
  General and Administrative. General and administrative expenses increased
23.9% to $1.9 million, or 17.2% of total revenue, for the 1996 quarter from
$1.5 million, or 18.1% of total revenue, for the 1995 quarter. The Company has
maintained a relatively stable headcount while adding administrative support
services, such as computerized order fulfilment and corporate-wide information
technology systems, to support its future operations.
 
  Interest. Interest expense decreased 10.8% for the 1996 quarter to $888,000
from $995,000 for the 1995 quarter. This decrease was attributable to a
reduction in the outstanding principal of the 1994 Loan, as well as a
reduction in the effective interest rate from period to period. Interest
expense will decrease substantially upon completion of this offering as a
result of the repayment of the 1994 Loan and the Subordinated Notes as
described under "Use of Proceeds."

                                      21

  Income Tax Benefit. The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." The Company's income tax benefit consists principally of deferred
income tax benefit, net of current federal, state and foreign taxes. The
Company's effective rate of taxation was 38.5% for the 1996 quarter, as
compared to 33.4% for the 1995 quarter. These percentages are less than the
federal and state combined statutory rate of approximately 39.0% due primarily
to the utilization of research and experimentation credits.
 
  At March 31, 1996, the Company had recorded net deferred tax assets totaling
$7.7 million resulting from temporary differences in the recognition of
expenses for income tax and financial statement purposes, principally related
to goodwill and capitalized software cost. No valuation allowance was
established against the net deferred tax assets because management believes it
is more likely than not that the deferred tax assets will be fully realized
through future taxable income, taking into account, among other factors,
anticipated reductions in future interest and amortization expenses as
described herein, as well as the various risks inherent in the Company's
business as described under "Risk Factors."
 
  Net Loss. As a result of the foregoing, the Company's net loss decreased in
the first quarter of 1996 to $.2 million from a net loss of $1.2 million in
the 1995 quarter.
 
YEAR ENDED DECEMBER 31, 1995 COMPARED TO PRO FORMA YEAR ENDED DECEMBER 31,
1994
 
  Revenue. The Company's revenue increased 20.7% for 1995 to $39.6 million
from $32.8 million for 1994. This increase was attributable principally to
increased domestic and international sales of paid-up licenses, offset
partially by lower sales of lease licenses, and to increased maintenance and
service revenue. These increases resulted primarily from the Company's
increased marketing emphasis, market acceptance of new product releases and
related broader customer usage of maintenance and support services in response
to accelerated frequency of product releases and the Company's increased
emphasis on marketing its maintenance services.
 
  Software license revenue increased 15.2% for 1995 to $32.6 million from
$28.3 million for 1994. Revenue from sales of paid-up licenses increased 52.6%
for 1995 to $14.5 million from $9.5 million for 1994, while lease license
revenue declined 3.7% for 1995 to $18.1 million from $18.8 million for 1994. A
portion of the growth in revenue from paid-up licenses was due to a reduction
in the warranty period, effective in the second half of 1995. This reduction
in the warranty period resulted in a lesser amount of the initial paid-up
license fees being deferred to future periods. Maintenance and service revenue
increased 54.8% for 1995 to $7.0 million from $4.5 million for 1994, as a
result of a substantial increase in the sale of paid-up licenses, reduction in
the warranty period, and broader customer usage of maintenance and support
services. A substantial portion of this increase was due to increased
maintenance revenue.
 
  Of the Company's total revenue for 1995, approximately 47.3% and 52.7%,
respectively, were attributable to domestic and international sales, as
compared to 47.2% and 52.8%, respectively, for 1994.
 
  Cost of Sales and Gross Profit. The Company's total cost of sales increased
4.6% for 1995 to $4.9 million, or 12.4% of total revenue, from $4.7 million,
or 14.3% of total revenue, for 1994. The Company's cost of sales for software
license revenue decreased 12.2% for 1995 to $3.3 million, or 10.2% of software
license revenue, from $3.8 million, or 13.4% of software license revenue, for
1994. This decrease was primarily due to a reduction in expenses through lower
headcount and cost controls and implementation of a more efficient multi-
platform development environment for the Company's product releases.
 
  The Company's cost of sales for maintenance and service revenue increased
76.0% for 1995 to $1.6 million, or 22.4% of maintenance and service revenue,
from $893,000, or 19.7% of maintenance and service revenue, for 1994. This
increase resulted primarily from increased staffing to support anticipated
demand for customer services.
 
  As a result of the foregoing, the Company's gross profit increased 23.4% to
$34.7 million for 1995 from $28.1 million for 1994.
 
  Selling and Marketing. Selling and marketing expenses increased 66.9% for
1995 to $7.5 million, or 19.0% of total revenue, from $4.5 million, or 13.7%
of total revenue, for 1994. The increase in selling and marketing expenses
resulted primarily from increased personnel costs, including costs associated
with increased headcount and compensation expenses related to the
establishment of a sales force to support the Company's distribution network,
as well as increased commissions associated with increased revenue.

                                      22

  Research and Development. Research and development expenses increased 23.2%
for 1995 to $8.3 million, or 21.0% of total revenue, from $6.8 million, or
20.6% of total revenue, for 1994. This increase resulted primarily from
employment of additional staff and independent contractors to develop and
enhance the Company's products, including a dedicated team working on the
development of the Company's DesignSpace product, costs associated with
quality assurance and equipment costs to implement an enhanced multi-platform
development environment.
 
  Amortization. Amortization expense was $10.6 million for 1995 and $8.7
million for 1994. This amortization expense resulted from the 1994 Acquisition
and relates primarily to intangible assets, including goodwill, which are
being amortized from the date of the 1994 Acquisition, March 14, 1994. The
unamortized portion of the goodwill and capitalized software acquired in
connection with the 1994 Acquisition will be fully amortized in the first
quarter of 1997.
 
  General and Administrative. General and administrative expenses increased
17.4% for 1995 to $6.9 million, or 17.3% of total revenue, from $5.8 million,
or 17.8% of total revenue, for 1994. This increase resulted primarily from the
employment of additional staff as well as an increase in accounting and legal
expenses in support of the Company's increased level of operations. The
Company has maintained a relatively stable headcount while adding
administrative support services, such as computerized order fulfillment and
corporate-wide information technology systems, to support its future
operations.
 
  Interest. Interest expense increased 26.3% for 1995 to $4.0 million from
$3.2 million for 1994. This increase resulted from interest on indebtedness
incurred to finance the 1994 Acquisition for the full year of 1995 as compared
to nine and one-half months in 1994, as well as an increase in the weighted
average interest rate to 9.6% for 1995 from 8.4% for 1994. Interest expense
will substantially decrease upon completion of this offering as a result of
the repayment of the 1994 Loan and the Subordinated Notes as described under
"Use of Proceeds."
 
  Income Tax Benefit. The income tax benefit decreased to $793,000 for 1995
from $917,000 for 1994. For the portion of 1994 prior to the 1994 Acquisition,
the Company's predecessor was taxed as an S Corporation and as such was not
subject to federal or state income taxes. Excluding this period, the effective
tax rates were 33.4% for 1995 and 33.9% for 1994. These percentages are less
than the federal and state combined statutory rate of approximately 39.0% due
primarily to the utilization of research and experimentation credits.
 
  Net Loss. As a result of the foregoing, the Company reported a net loss of
$1.6 million in 1995, compared to net income of $257,000 in 1994.
 
PRO FORMA YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31,
1993
 
  Revenue. Revenue increased 3.9% for 1994 to $32.8 million from $31.6 million
for 1993. This increase resulted primarily from an increase in the number of
customers licensing the Company's software products and an increase in the
number of paid-up software licenses purchased.
   
  Software license revenue increased 2.9% for 1994 to $28.3 million from $27.5
million for 1993. Revenues from sales of paid-up licenses increased 43.9% for
1994 to $9.5 million for 1994 from $6.6 million for 1993, while lease license
revenue decreased 10.0% during the same year to $18.8 million from $20.9
million for 1993. Maintenance and service revenue increased 10.2% for 1994 to
$4.5 million from $4.1 million for 1993. This increase resulted from an
increase in the customer maintenance base.     
 
  Of the Company's total revenues for 1994, approximately 47.2% and 52.8%,
respectively, were attributable to domestic and international sales, as
compared to 48.8% and 51.2%, respectively, for 1993.
 
  Cost of Sales and Gross Profit. The Company's cost of sales for software
license revenue decreased 20.5% for 1994 to $3.8 million, or 13.4% of software
license revenue, from $4.8 million, or 17.4% of software license revenue for
1993. The decrease was due to decreased documentation and media expenses
incurred in 1993 in
 
                                      23

connection with a major software product release as well as an internal
reorganization that resulted in the transfer of a number of employees to a
newly created order fulfillment department, the expenses of which have been
subsequently included in general and administrative expenses. The primary
responsibilities of this new department include all ASD and contract related
administration, as well as data entry of contract information.
 
  The Company's cost of sales for maintenance and service revenue decreased
32.9% for 1994 to $893,000, or 19.7% of maintenance and service revenue, from
$1.3 million, or 32.4% of maintenance and service revenue, for 1993. This
increase resulted primarily from the transfer of several employees, primarily
to the research and development area.
 
  As a result of the foregoing, the Company's gross profit increased 10.3% to
$28.1 million for 1994 from $25.5 million for 1993.
 
  Selling and Marketing. Selling and marketing expenses increased 19.8% for
1994 to $4.5 million, or 13.7% of total revenue, from $3.8 million, or 11.9%
of total revenue, for 1993. The increase in selling and marketing expenses
resulted primarily from increased personnel costs, including costs associated
with increased headcount, compensation expenses related to the establishment
of a sales force to support the Company's distribution network, increased
commissions associated with increased revenue and expenses associated with the
Company's 1994 bi-annual users' conference.
 
  Research and Development. Research and development expenses increased 13.2%
for 1994 to $6.8 million, or 20.6% of total revenue, from $6.0 million, or
18.9% of revenue, for 1993. The increase resulted primarily from employment of
additional staff and independent contractors to develop and enhance the
Company's products and provide quality assurance.
 
  Amortization. Amortization expense was $8.7 million for 1994 as compared to
$937,000 for 1993. This increase resulted primarily from the 1994 Acquisition
and the related intangible assets, including goodwill, which are being
amortized over the estimated useful lives of the assets. Goodwill and
capitalized software acquired in connection with the 1994 Acquisition will be
fully amortized in March 1997.
 
  General and Administrative. General and administrative expenses decreased
18.7% for 1994 to $5.8 million, or 17.8% of total revenue, from $7.2 million,
or 22.7% of total revenue, for 1993. This decrease in general and
administrative expenses resulted primarily from the settlement of a legal
dispute amounting to approximately $1.6 million in legal fees and related
costs in 1993, partially offset by expenses related to the transfer of a
number of employees into a newly created department, the expenses of which
have been subsequently included in general and administrative expenses.
 
  Interest. Interest expense increased 930.4% to $3.2 million for 1994 from
$306,000 for 1993. The increase resulted from the Company's incurrence of
indebtedness in connection with the 1994 Acquisition.
 
  Income Tax Benefit. The Company's income tax benefit was $917,000 for 1994.
Because the predecessor company was taxed as an S Corporation, there was no
income tax provision or benefit for 1993.
 
  Net Income. As a result of the foregoing, the Company's net income decreased
to $257,000 in 1994 from $8.1 million in 1993.
 
QUARTERLY INFORMATION
 
  The following table presents unaudited quarterly operating results for each
of the Company's last eight quarters as well as the percentage of the
Company's revenue represented by each item. This information has been prepared
by the Company on a basis consistent with the Company's audited financial
statements and includes all adjustments (consisting only of normal recurring
adjustments) that management considers necessary for a fair presentation of
the data. These quarterly results are not necessarily indicative of future
results of operations. This information should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto included
elsewhere in this Prospectus.

                                      24

                                                         QUARTER ENDED
                          -----------------------------------------------------------------------------------
                          JUNE 30,   SEPT. 30,  DEC. 31,  MARCH 31,  JUNE 30,  SEPT. 30, DEC. 31,   MARCH 31,
                            1994       1994       1994      1995       1995      1995      1995       1996
                          ---------  ---------  --------  ---------  --------  --------- --------   ---------
                                                         (IN THOUSANDS)
                                                                            
Revenue:
 Software licenses......   $7,043     $ 6,612    $7,549    $ 7,104    $7,883    $8,536   $ 9,081     $ 8,385
 Maintenance and
service.................    1,285       1,167     1,245      1,122     1,455     1,987     2,448       2,348
                           ------     -------    ------    -------    ------    ------   -------     -------
   Total revenue........    8,328       7,779     8,794      8,226     9,338    10,523    11,529      10,733
Cost of sales:
 Software licenses......    1,032         896       918        956     1,015       726       634         666
 Maintenance and
service.................      238         217       217        273       334       342       623         529
                           ------     -------    ------    -------    ------    ------   -------     -------
   Total cost of sales..    1,270       1,113     1,135      1,229     1,349     1,068     1,257       1,195
Gross profit............    7,058       6,666     7,659      6,997     7,989     9,455    10,272       9,538
Operating expenses:
 Selling and marketing..    1,218       1,172     1,231      1,649     1,713     1,738     2,426       2,169
 Research and
development.............    1,687       1,684     1,740      2,019     2,045     1,982     2,283       2,330
 Amortization...........    2,659       2,660     2,660      2,660     2,660     2,663     2,658       2,719
 General and
administrative..........    1,431       1,393     1,566      1,493     1,502     1,660     2,202       1,850
                           ------     -------    ------    -------    ------    ------   -------     -------
   Total operating
expenses................    6,995       6,909     7,197      7,821     7,920     8,043     9,569       9,068
Operating income (loss).       63        (243)      462       (824)       69     1,412       703         470
Interest expense........     (932)       (975)     (996)      (995)   (1,021)     (978)     (989)       (888)
Other income............       22          59        56         39        46        82        83          91
                           ------     -------    ------    -------    ------    ------   -------     -------
Income (loss) before
 income tax benefit
 (provision)............     (847)     (1,159)     (478)    (1,780)     (906)      516      (203)       (327)
Income tax benefit
(provision).............      287         393       162        595       302      (173)       69         126
                           ------     -------    ------    -------    ------    ------   -------     -------
Net income (loss).......   $ (560)    $  (766)   $ (316)   $(1,185)   $ (604)   $  343   $  (134)    $  (201)
                           ======     =======    ======    =======    ======    ======   =======     =======

                                                         QUARTER ENDED
                          -----------------------------------------------------------------------------------
                          JUNE 30,   SEPT. 30,  DEC. 31,  MARCH 31,  JUNE 30,  SEPT. 30, DEC. 31,   MARCH 31,
                            1994       1994       1994      1995       1995      1995      1995       1996
                          ---------  ---------  --------  ---------  --------  --------- --------   ---------
                                                                            
Revenue:
 Software licenses......     84.6%       85.0%     85.8%      86.4%     84.4%     81.1%     78.8%       78.1%
 Maintenance and
service.................     15.4        15.0      14.2       13.6      15.6      18.9      21.2        21.9
                           ------     -------    ------    -------    ------    ------   -------     -------
   Total revenue........    100.0       100.0     100.0      100.0     100.0     100.0     100.0       100.0
Cost of sales:
 Software licenses (1)..     14.7        13.6      12.2       13.5      12.9       8.5       7.0         7.9
 Maintenance and
service (1).............     18.5        18.6      17.4       24.3      23.0      17.2      25.4        22.5
                           ------     -------    ------    -------    ------    ------   -------     -------
   Total cost of sales..     15.2        14.3      12.9       14.9      14.4      10.2      10.9        11.1
Gross profit............     84.8        85.7      87.1       85.1      85.6      89.8      89.1        88.9
Operating expenses:
 Selling and marketing..     14.6        15.1      14.0       20.1      18.3      16.5      21.0        20.2
 Research and
development.............     20.3        21.6      19.8       24.6      21.9      18.8      19.8        21.8
 Amortization...........     31.9        34.2      30.2       32.3      28.5      25.3      23.1        25.3
 General and
administrative..........     17.2        17.9      17.8       18.1      16.1      15.8      19.1        17.2
                           ------     -------    ------    -------    ------    ------   -------     -------
   Total operating ex-
 penses.................     84.0        88.8      81.8       95.1      84.8      76.4      83.0        84.5
Operating income (loss).      0.8        (3.1)      5.3      (10.0)      0.8      13.4       6.1         4.4
Interest expense........    (11.2)      (12.5)    (11.3)     (12.1)    (10.9)     (9.3)     (8.6)       (8.3)
Other income............      0.3         0.8       0.6        0.5       0.5       0.8       0.7         0.8
                           ------     -------    ------    -------    ------    ------   -------     -------
Income (loss) before
 income tax benefit
 (provision)............    (10.1)      (14.8)     (5.4)     (21.6)     (9.6)      4.9      (1.8)       (3.1)
Income tax benefit
(provision).............      3.4         5.1       1.8        7.2       3.2      (1.6)      0.6         1.2
                           ------     -------    ------    -------    ------    ------   -------     -------
Net income (loss).......     (6.7)%      (9.7)%    (3.6)%    (14.4)%    (6.4)%     3.3%     (1.2)%      (1.9)%
                           ======     =======    ======    =======    ======    ======   =======     =======

- --------
(1)Computed as a percentage of the corresponding revenue category.
  The Company believes that decreases in first quarter revenues in 1995 and
1996 relative to the immediately preceding quarter resulted in part from
incentive programs which the Company has in place to encourage overachievement
of annual dollar revenue goals by ASDs and the Company's internal sales
support personnel.
 
                                      25

LIQUIDITY AND CAPITAL RESOURCES
 
  Since the 1994 Acquisition, the Company has financed its operations,
including increases in accounts receivable, capital equipment acquisitions and
principal repayments on the senior secured indebtedness, primarily through
cash generated from operations.
 
  As of March 31, 1996, the Company had cash and cash equivalents of $5.6
million and working capital of $4.2 million, as compared to cash and cash
equivalents of $8.1 million and working capital of $3.2 million at December
31, 1995. The Company also has available to it a $1.0 million revolving line
of credit with a commercial bank under a credit facilities agreement, which is
available through June 1, 1997 and bears interest at the bank's prime rate
plus 1.0%. The Company has not initiated any borrowing to date under the line
of credit.
   
  The Company's operating activities provided cash of $9.7 million for 1993,
$9.1 million for 1994 and $10.8 million for 1995, and used cash of $1.6
million for the three months ended March 31, 1996. The Company's cash flow
from operations decreased in 1994 as compared to 1993 due to slightly lower
earnings before the effect of amortization. The increase in cash flow from
operations in 1995 as compared to 1994 is the result of increased earnings
before the effect of amortization and improved management of working capital.
The use of cash flow from operations for the 1996 quarter was due to increased
working capital requirements, primarily relating to an increase in accounts
receivable, resulting from the renewal of maintenance contracts, a significant
portion of which were renewed in the first quarter of the calendar year, and
an increase in the number of days of outstanding software license revenue
primarily attributable to transitional issues encountered with the conversion
to a new billing system implemented in the fourth quarter of 1995, as well as
the payment of 1995 management and employee bonuses and contributions to the
Company's pension and profit sharing plans. The transitional issues in
connection with the conversion to the new billing system primarily related to
the generation and distribution of invoices to the ASDs at a later time than
in prior periods, as well as a lack of familiarity with the new invoice format
on the part of the ASDs. These factors contributed to payments being received
later than in prior periods, thereby causing an increase in the number of days
of outstanding software license revenue. Management does not believe that
these issues will have a material adverse impact on the Company's future cash
flows or the collectability of its accounts receivable balances. In addition,
because a significant portion of maintenance contracts was received in the
first quarter, accounts receivable--maintenance and service at December 31,
1994 and 1995 were insignificant and, accordingly, not shown separately in the
Company's consolidated balance sheets for those dates.     
 
  Cash used in investing activities was $5.2 million for 1993, $48.2 million
for 1994, $2.0 million for 1995 and $79,000 for the 1996 quarter. The use of
cash in 1993 was due to the purchase of marketable securities and capital
expenditures. The use of cash in 1994 was primarily to fund the 1994
Acquisition, and to a lesser extent for capital expenditures. The Company's
use of cash in 1995 and the 1996 quarters was substantially related to capital
expenditures. The Company expects to spend approximately $2.0 million for
capital equipment in 1996, principally for the acquisition of computer
hardware, software and equipment.
 
  Financing activities used cash of $11.9 million for 1993, provided cash of
$42.6 million for 1994 and used cash of $5.0 million and $819,000 for 1995 and
the 1996 quarter, respectively. Cash used in 1993 was substantially
attributable to distributions to the stockholder of the Company's predecessor.
Cash provided for financing activities for 1994 was due primarily to bank
borrowings and the issuance of debt and equity securities related to the 1994
Acquisition. Cash used for 1995 and the 1996 quarter was the result of
principal repayments made on the 1994 Loan.
 
  The net proceeds from this offering will enable the Company to repay the
1994 Loan and the Subordinated Notes, including accrued and unpaid interest,
and retire all of the Redeemable Preferred Stock, including accumulated
dividends. The Company believes that the remaining net proceeds from this
offering, together with cash and cash generated from operations and available
borrowings, will be sufficient to fund its operations for at least the next
twelve months.

                                      26

  In connection with the Company's planned relocation (see "Business--
Facilities"), the Company expects to incur approximately $1.2 million in
capital expenditures, which is expected to be funded from cash from
operations. The Company's cash requirements in the future may also be financed
through additional equity or debt financings. There can be no assurance that
such financing can be obtained on favorable terms, if at all.
 
NEW ACCOUNTING PRONOUNCEMENTS
 
  In March 1995, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of."
The new standard is effective for fiscal year 1996. Management believes that
the implementation of the new standard will not have a material effect on its
consolidated financial statements.
 
  In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." The new standard, which is effective for fiscal year 1996,
requires the Company to adopt either a recognition method or a disclosure-only
approach of accounting for stock based employee compensation plans. Management
intends to adopt the disclosure-only approach and, as such, does not believe
that the implementation of the standard will have a material effect on its
consolidated financial statements.
 
                                      27

                                   BUSINESS
 
  ANSYS, Inc. (the "Company") develops, markets and supports software
solutions for design analysis and optimization. Engineering analysts and
design engineers use the Company's software to accelerate product time to
market, reduce production costs, improve engineering processes and optimize
product quality and safety for a variety of manufactured products, ranging
from basic consumer goods to satellite tracking systems. The ANSYS product
family features open, flexible architecture that permits easy integration into
its customers' enterprise-wide engineering systems and facilitates effective
implementation of process-centric engineering.
 
  The Company's software has been developed and enhanced to help customers
meet several of the major challenges faced by businesses today, including
increasing global competition and the need and ability to solve more complex
product design problems. The Company believes that these factors, combined
with the decreasing cost of computer hardware, are accelerating the demand for
design analysis software solutions and have created an expanding marketplace,
described by the Company as the design analysis and optimization market. This
market includes a base of engineering analysts who use the Company's CAE
analysis software to validate product design, as well as the broader group of
design engineers who use analysis tools integrated within their CAD systems to
optimize and evaluate products much earlier in the development cycle.
 
  The Company's objectives are to increase market share among the traditional
base of engineering analysts, to extend its product line to meet the demands
of the broader group of design engineers and to increase the adoption of its
products by new users, such as engineers in the biomedical and food processing
industries. The Company's strategy focuses on maintaining and enhancing its
technology leadership; offering an open and flexible software product family;
pursuing a customer driven sales, services and marketing approach;
capitalizing on its established global distribution and support network; and
leveraging strategic relationships with leading CAD suppliers and third party
providers of complementary hardware and software.
 
INDUSTRY BACKGROUND
 
  The market for software tools that automate the product development process
is evolving in response to the needs of manufacturers facing more intense
global competition to bring products to market quickly, at lower cost and with
higher quality. In addition, continuing technology advances in computing and
the associated reduction in the cost of computer hardware have made
engineering analysis solutions increasingly affordable and allow customers to
solve ever-larger analysis problems. The global CAD, CAE and CAM market for
software and services to support this automation is estimated at over $3.5
billion in 1996, with the Company's traditional CAE market estimated at over
$500 million. The Company believes that the broader functionality of design
analysis and optimization, which includes the Company's traditional CAE
market, represents a growing portion of this overall market.
 
  The traditional product design process can be characterized as sequential
and iterative. Each step in the product development process is discrete, with
design engineers performing conceptual and detailed design, and engineering
analysts performing testing and analysis after creation of a physical
prototype. The results of this analysis are then returned to the design
engineers so that modifications can be made and another physical prototype
built for testing. This design and analysis loop continues until the physical
prototype has been successfully tested, at which time the product is sent to
be manufactured. This process often results in substantial changes to product
design late in the process after significant investment has been made in up-
front product design. The resulting time and expense have led many
manufacturers to delay critical analysis until production has commenced and
design flaws have surfaced.
 
  Starting in the 1970s, software tools were introduced to automate the
traditional product design process. These early tools targeted discrete
functions in the process, with CAD tools for conceptual and detailed product
design, CAE tools for analysis and design verification and CAM tools to assist
in the automation of manufacturing. These tools have succeeded in enhancing
the productivity of individual engineers, but have
 
                                      28

important limitations. For example, these tools often produce data that are
incompatible with other steps in the design process, thereby limiting their
effectiveness. Of potentially greater significance, these tools did not change
the fundamentally sequential and iterative nature of the traditional product
design process.

            [GRAPHIC DEPICTING TRADITIONAL PRODUCT DESIGN PROCESS]     
 
  Limitations in the traditional product design process and associated tools
have led manufacturers during the 1990s increasingly to adopt an approach known
as process-centric engineering. Process-centric engineering involves
interdisciplinary teams of design, analysis and manufacturing engineers working
together in a highly collaborative and interactive way throughout the product
design-to-manufacturing process. To be effective, process-centric engineering
requires common data models and integrated, compatible software tools. In this
process, analysis tools are used earlier in the product design cycle and are
integrated with CAD software. Therefore, the traditional CAE tools are evolving
into what the Company describes more broadly as design analysis and
optimization. Parametric design has also emerged as a requirement of process-
centric engineering in order to allow for rapid, intuitive modification of the
product model without corruption of basic design concepts. The parametric
foundation of software that supports process-centric engineering facilitates
the integration of analysis and CAD software to enable dynamic product design
analysis and optimization.

                [GRAPHIC DEPICTING PROCESS-CENTRIC ENGINEERING]     

                                      29

  CAD, CAE and CAM software tools that were developed for the traditional
sequential product development process do not adequately support the
requirements of process-centric engineering. The tools are difficult to
integrate into enterprise-wide engineering solutions, are generally too
complex for all but dedicated users, require too large an investment in
training and specialization and cannot support a sufficiently broad range of
hardware platforms and operating systems. In short, they do not provide users
with the degree of flexibility needed to automate the process-centric
engineering process. Traditional CAE tools have been too focused on specific
disciplines, such as structural analysis, and most vendors who offer broader
functionality typically do not provide compatibility of data structures or
user interfaces across their product lines. In addition, most existing
analysis tools do not provide "coupled-field" analysis capabilities to permit
simultaneous analysis of the effects of two or more physical forces (for
example, structural and thermal).
 
  The Company believes that the increasing adoption of process-centric
engineering in the 1990s has resulted in accelerating demand for design
analysis software by both the historical base of engineering analysts solving
design verification problems and the broader group of design engineers who
require analysis tools that are integrated within their CAD systems for up-
front design optimization.
 
THE ANSYS SOLUTION
 
  The Company anticipated the change from sequential design to process-centric
engineering and recognized that this change would require a new generation of
CAE tools. The Company is a leading supplier of open, flexible design analysis
and optimization software that allows manufacturers to implement effectively
the process-centric engineering process. The Company's strategy emphasizes
maintaining market leadership in the traditional analysis sector while
leveraging its technology to address the evolving design optimization and CAD
integration requirements of process-centric engineering systems. The Company's
technology approach is to provide an integrated product family with a unified
database, a wide range of analysis functionality, a consistent, easy-to-use
graphical user interface, support for multiple hardware platforms and
operating systems, effective user customization tools and integration with
leading CAD systems.
 
  The ANSYS solution includes the following key elements:
 
  Integrated Product Family/Consistent User Interface. The Company has
developed and owns the core technologies that form the foundation for its
unified database and integrated product family. The Company's unified database
ensures data compatibility throughout its product family and is the foundation
for its coupled-field multiphysics analysis solutions. The Company provides a
single, consistent, easy-to-use graphical user interface across the entire
ANSYS product family. As a result, the Company is able to offer enterprise-
wide, process-centric engineering solutions in contrast to CAE suppliers of
point solutions that address only narrow market niches.
 
  Breadth and Depth of Product Line. The Company believes it is important to
offer customers both breadth and depth of analysis solutions. The ANSYS
product family offers solutions ranging from design optimization to
sophisticated design verification and virtual prototyping for multiple
engineering disciplines, and product capabilities ranging from simple linear
structural solvers to complex, non-linear multiphysics solvers. This allows
the Company to provide sole source analysis solutions to a wide range of
customers.
 
  Openness and Flexibility. The Company believes its product architecture
provides flexible support to manufacturers seeking to implement enterprise-
wide engineering systems comprised of "best-of-class" software from multiple
vendors. The Company's software products support industry data format
standards such as IGES and STEP for geometry transfer, support multiple
hardware platforms and operating systems, such as UNIX, Windows 95 and Windows
NT, and provide direct interfaces to many leading CAD systems. The Company
allows its customers to purchase only the level of functionality they require
on a per task basis.

                                      30

  Adaptability. The Company offers its customers the ability to customize
ANSYS products for their specific requirements through a set of user
customization tools including macros and an application procedural interface
("API") delivered as part of each ANSYS product. Sophisticated software
customization services are also available through the Company's Customer
Services Group and its global network of ASDs. The ASD network enables the
Company to provide localized, multilingual consulting and customization
services, which the Company believes is especially important in supporting
customers with multinational operations.
   
  CAD Integration. In 1993, the Company released ProFEA, the first independent
design analysis software to be fully integrated inside the user interface of
Parametric Technology's Pro/ENGINEER CAD product. In 1995, the Company
introduced AutoFEA, integrated inside the AutoCAD package from AutoDesk. In
1996, the Company introduced a service whereby ANSYS analysis software can be
integrated inside Computervision's CADDS application.     
 
STRATEGY
 
  The Company has historically focused on providing superior analysis and
optimization technology within a broad, data compatible product family. Since
the 1994 Acquisition, the new management team has added a more customer and
market driven approach to the Company's technology focus. The Company's
objectives are to be the leading global supplier of design analysis software
solutions and to accelerate its growth by:
 
  . increasing market share among the traditional base of engineering
    analysts,
 
  . extending its product line to meet the demands of the broader group of
    design engineers, and
 
  . increasing the adoption of its products by new users, such as engineers
    in the biomedical and food processing industries, where global
    competition is increasing pressure on design and development functions
    and where analysis tools have not been widely employed.
 
  The Company's strategy for achieving these objectives emphasizes the
following key elements:
 
  Maintain and Enhance Technology Leadership. The Company has been a
technology leader in analysis software throughout its 26 year history. It was
the first to offer analysis software for personal computers and the first to
offer independent design analysis software integrated within a CAD package.
The Company's high speed solvers and parallel processing capabilities, as well
as its coupled-field multiphysics capabilities, unified database and graphical
user interface, enable it to maintain leadership in providing coupled-field
multiphysics solutions. The Company is making significant investments in
research and development and is continuing its recent history of accelerated
new product releases. The Company's product development strategy also focuses
on extensions of the product family with new functional modules, further
integration with CAD products and the development of a new generation of
products based on object-oriented technology derived from the Company's core
multiphysics technology base.
 
  Maintain and Enhance Customer Services. The Company has a 26-year history of
providing its customers with high level technical support, training and
regular product releases. The Company is increasing its investment in service
personnel and support systems to enhance its customer service, support the
increasing frequency of product releases and improve coordination with its ASD
network.
   
  Maintain and Enhance Openness and Flexibility. The Company believes that
open and flexible software products allow customers to protect their
investments in engineering system hardware and software. The Company therefore
intends to remain a leading supplier of open and flexible design analysis
solutions that can be fully integrated into the enterprise-wide process-
centric engineering systems of its customers as they evolve. The Company is
continuing to produce products and provide services to directly integrate its
products with leading CAD systems. The Company's products support multiple
hardware and software systems while maintaining a unified database across all
platforms and products. The Company participates in industry standards
committees such as those for IGES, STEP and OLE for Design and Modeling.     
 
                                      31

  Expand Sales and Marketing Activities. The Company continues to strengthen
its domestic and international sales and marketing efforts. The Company's new
management team has added professionals in sales, marketing, product
management, public relations and communications, including regional sales
managers to work with the ASDs as part of a coordinated effort to increase
sales and marketing effectiveness, and account executives to coordinate global
and strategic accounts. The Company has recently deployed advanced marketing
tools, including database marketing systems, proactive Internet marketing and
multimedia sales tools.
 
  Continue Focus on Indirect Distribution Channels. The Company believes its
network of 35 ASDs allows it to provide superior support and service to
customers as well as more cost-effective sales and marketing of its core
products than could be achieved through a direct sales force. The Company's
ASDs have a direct knowledge of customer needs and provide a strong, local
presence when marketing and supporting the Company's product line.
 
  In addition to the ASD network, in 1995 the Company began to establish a
dealer channel for its CAD integrated products because these products are sold
primarily to design engineers rather than engineering analysts. The Company
believes that this dealer channel will complement the ASD network by
establishing a broader user base for its CAD integrated products, which the
Company expects will create new demand for its multiphysics products. As of
April 30, 1996, the Company had signed agreements with 27 dealers.
 
  Pursue Strategic Alliances and Marketing Relationships. The Company has
established strategic alliances with advanced technology suppliers and
marketing relationships with hardware vendors, specialized application
developers and CAD providers. The Company believes these relationships allow
it to accelerate the incorporation of advanced technology into the ANSYS
product family, gain access to important new markets, expand the Company's
sales channel, develop specialized product applications and provide direct
integration with leading CAD systems. For example, the Company has licensed
LS/DYNA, an advanced software program for explicit dynamics, which is used for
crash test simulation in the automotive and other industries. The Company also
has arrangements with leading CAD vendors, such as Parametric Technology,
Autodesk and Computervision, to provide direct linkages between their CAD
packages and the ANSYS product family.
 
                                      32

CUSTOMERS
   
  The Company's products have an estimated installed base of 8,200 licenses at
commercial sites and 8,100 licenses at university sites worldwide. The
Company's products are utilized by organizations ranging in size from small
consulting firms to the world's largest industrial companies. ANSYS customers
include 61 of the Global Fortune Industrial 100 companies, including the top
10. No customer accounted for more than 3% of the Company's revenue in 1995.
The following are examples of the wide range of companies using ANSYS
products:     

                                                
AEROSPACE                                         COMPUTERS, OFFICE EQUIPMENT
 AlliedSignal                                      Canon
 Lockheed Martin                                   Fujitsu
 United Technologies                               IBM
                                                   Seagate Technology
CONSUMER GOODS                                    
 Black & Decker                                   ELECTRONICS, ELECTRICAL      
 Corning                                           GEC                         
 Pellerin Milnor                                   General Electric            
 Snap-On Tools                                     Motorola                    
 Whirlpool                                         Siemens                     
                                                   Westinghouse Electric       
AUTOMOTIVE                                         
 Ford                                             GOVERNMENT, DEFENSE         
 General Motors                                    Bharat                      
 SAAB                                              Bofors                      
 Toyota                                            Harris                      
 Volvo                                             Raytheon                    
                                                   U.S. Department of the Army 
BIOMEDICAL, PHARMACEUTICALS                            
 Carbomedics                                      HEAVY EQUIPMENT             
 DePuy                                             Cummins                     
 Johnson & Johnson                                 Ishikawajiama-Harima        
 Showa Denko                                       John Deere                  
                                                   Komatsu                     
CHEMICALS                                          Mannesmann                  
 Akzo Nobel                                         
 BASF                                             METALS                       
 Bayer                                             Kobe                        
 Ciba-Geigy                                        Preussag                    
 Hoechst                                           Reynolds                     
                                                   Sumitomo                 
SCIENTIFIC, PHOTOGRAPHY                            Thyssen                  
 3M                         
 Eastman Kodak               
 Fuji                     

  The following case studies illustrate various uses of the Company's products.
 
 Motorola
 
  A division of Motorola designs and manufactures high-current semiconductor
units to efficiently control electric motors in industrial drives, commercial
products and electric vehicles. Motorola has adopted a product development
strategy that uses ANSYS, among other tools, to continuously analyze and
refine design concepts and product configuration. This coordinated approach,
which utilizes ANSYS products for coupled-field analysis, improves product
quality and shortens development times compared to the traditional sequential
product design process.

                                      33

 Black & Decker
 
  Black & Decker uses ANSYS technology in the design of its commercial and
household appliances, such as its SurgeXpress steam iron. Black & Decker
engineers used ANSYS design analysis capabilities to increase the steam rate
of the iron by 40% while reducing material costs by 20%, thereby creating a
lighter weight and more efficient product.
 
 Pratt & Whitney
 
  Pratt & Whitney engineers use ANSYS products to analyze the flight-
worthiness of critical components of NASA's Space Shuttle. Using ANSYS, Pratt
& Whitney engineers simulate the thermal response of parts throughout an
entire Space Shuttle flight mission, from pre-launch to shut down. For
example, using the results of heat transfer analysis, engineers simulated the
structural response of the Space Shuttle's oxygen turbo pump at five different
times. The analysis was completed within two months, a substantial time
savings compared to the time to build and test physical prototypes. Pratt &
Whitney's oxygen turbo pump made its first flight on the Space Shuttle
Discovery in July 1995 when it was installed on one of the three main engines.
 
 Rolls-Royce
 
  Rolls-Royce specializes in the design, development and manufacture of
aircraft engines and industrial power equipment. ANSYS collaborated with
Rolls-Royce and Computervision in the development of "ANSYS for CADDS," a
direct CAD software interface to Computervision's CADDS software that provides
designers and mechanical engineers with up-front design analysis tools
integrated inside the CADDS program.
 
 DePuy
 
  DePuy, a manufacturer of orthopedic implants and the surgical instruments
used to install them, uses ANSYS to help develop more reliable and durable
knee and hip prosthetic devices. ANSYS software is used to analyze individual
patient data from CAT scans to customize these devices to the specific needs
of individual patients.
 
  Although the Company believes that the foregoing case studies are
representative of the uses of the Company's products by its customers and the
types of results that may be achieved, there can be no assurance that each
customer using the Company's products will achieve the same types of results
as those described above.
 
PRODUCTS
 
  The ANSYS family of products consists of flexible, integrated analysis
software tools that address enterprise-wide engineering requirements. The
Company believes that ANSYS/Multiphysics, the Company's flagship program, is
the most comprehensive coupled-field multiphysics software currently
available. In addition, the Company's individual design and analysis software
programs, all of which are included in the ANSYS/Multiphysics program, are
available as subsets or stand-alone programs. All of the capabilities of the
ANSYS/Multiphysics program are available on a single CD. An authorization file
provided to customers at the time of purchase unlocks modules based on the
level of functionality purchased by the user. The Company's multiphysics
products comprise the core of its business and accounted for substantially all
of the Company's revenue in 1995 and the three months ended March 31, 1996.
See "Risk Factors--Dependence on Core ANSYS Products."
 
  The Company's CAD integration products provide design optimization tools for
use directly within a particular CAD product. CAD integration products are
accessed from the graphical user interface of, and operate directly on the
geometry produced within, the CAD product. The output from these programs may
be read into any of the products in the ANSYS product family. In addition to
the two products listed below, the Company has arrangements with many leading
CAD suppliers to provide direct linkages between the vendors' CAD packages and
the Company's products.
 
 Multiphysics Products
 
  ANSYS/Multiphysics. ANSYS/Multiphysics is the Company's most comprehensive,
parametric based, coupled-field, multidisciplinary analysis program. It
enables users to conduct simultaneous, interactive analysis
 
                                      34

across a range of engineering disciplines, including structural, thermal,
fluid flow, acoustics and electromagnetics. This sophisticated design and
analysis software provides the design optimization capabilities necessary to
simulate and solve complex engineering problems in industries such as
aerospace, automotive, biomedical and consumer electronics.
 
  ANSYS/Mechanical. ANSYS/Mechanical provides a wide range of engineering
design, analysis and optimization capabilities. It includes all of the
functionality of ANSYS/Multiphysics except fluid flow and electromagnetics.
This design verification software enables users to determine displacements,
stresses, forces, temperature and pressure distributions, such as the combined
structural and thermal characteristics of a printed circuit board.
 
  ANSYS/Thermal. ANSYS/Thermal is used for steady state and transient thermal
analyses, including conduction, convection, radiation and heat transfer. This
comprehensive thermal program is used for analysis in applications ranging
from electronic cooling to induction furnace start-up.
 
  ANSYS/LinearPlus. ANSYS/LinearPlus is a low-cost structural analysis product
designed for linear static, dynamic and buckling analyses. This product is
used to solve engineering problems such as those in the automotive, bridge
building, hand tools and office equipment industries. ANSYS/LinearPlus is
used, for example, to determine the vibrations and natural frequencies of an
automobile chassis.
 
  ANSYS/FLOTRAN. ANSYS/FLOTRAN is a computational fluid dynamics ("CFD")
program that solves a variety of fluid flow problems, including laminar,
turbulent, compressible and incompressible flow. ANSYS/FLOTRAN is the only CFD
program with design optimization capabilities. A typical use of this product
is to calculate the lift and drag on an airplane wing.
 
  ANSYS/Emag. ANSYS/Emag simulates electromagnetic fields, electrostatics,
circuits and current conduction. It is typically used with other ANSYS
products to study the interaction of flow, electromagnetic fields and
structural mechanics, such as the calculation of the torque and efficiency of
an electric motor.
 
  ANSYS/LS-DYNA. ANSYS/LS-DYNA solves highly nonlinear structural dynamic
problems. This program models dynamic physical scenarios such as material
forming, large deformation impacts, nonlinear material behavior and multibody
contact. This product will be used in applications such as crash test
simulations and metal and glass forming analysis. ANSYS/LS-DYNA is in beta
testing and is scheduled for release in the second half of 1996.
 
  ANSYS/PrepPost. ANSYS/PrepPost is used to prepare a design for analysis and
to display the results of the analysis upon completion. It provides extensive,
fully parametric features in the preprocessing stage of engineering analysis,
thereby allowing users to quickly and easily create finite element models. The
postprocessor enables users to examine results from all ANSYS analysis
programs.
 
  ANSYS/ED. ANSYS/ED is a fully functional design simulation program
possessing the capabilities of the ANSYS/Multiphysics program with limits on
problem size. This inexpensive, self-contained package is used primarily for
training and educational purposes and has been widely distributed to
engineering and technical departments at universities worldwide.
 
 CAD Integration Products
 
  ANSYS/ProFEA. ANSYS/ProFEA is a design analysis software program with a
streamlined version of ANSYS/Mechanical capabilities to allow design engineers
to perform analysis and optimization throughout the design phase from within
Parametric Technology's Pro/ENGINEER user interface.
 
  ANSYS/AutoFEA. ANSYS/AutoFEA, an integrated design analysis program running
completely inside AutoCAD release 13 and Mechanical Desktop, allows design
engineers to assess the integrity of their designs during the
conceptualization stage using AutoDesk's AutoCAD user interface. The Company
released a 2D version of AutoFEA in 1995 and will release the 3D version in
the second half of 1996.

                                      35

 Product Data
 
  The following table indicates the suggested retail price as of March 31,
1996 for a paid-up, per seat license of each of the Company's products, the
date of the latest product release and the date of the first release since the
introduction of ANSYS 5.0 in 1992. ANSYS 5.0 was the first release of the
Company's flagship product with the newly architected data structures to
support CFD and electromagnetics.

                                                   SUGGESTED     LATEST  INITIAL
PRODUCT                                        U.S. RETAIL PRICE RELEASE RELEASE
- -------                                        ----------------- ------- -------
                                                                
Multiphysics:
 ANSYS/Multiphysics*..........................     $ 35,000      Mar. 96 Dec. 92
 ANSYS/Mechanica1.............................       25,000      Mar. 96 Dec. 92
 ANSYS/Thermal................................       10,000      Mar. 96 Feb. 94
 ANSYS/LinearPlus.............................       10,000      Mar. 96 Feb. 94
 ANSYS/FLOTRAN................................       18,000      Mar. 96 Feb. 94
 ANSYS/Emag...................................       18,000      Mar. 96 Feb. 94
 ANSYS/LS-DYNA................................       30,000           **      **
 ANSYS/PrepPost...............................       12,500      Mar. 96 Dec. 92
 ANSYS/ED.....................................          250      Mar. 96 Mar. 93
CAD Integrated:
 ANSYS/ProFEA.................................        8,000      Oct. 95 Nov. 93
 ANSYS/AutoFEA 2D.............................        1,500      Mar. 95 Mar. 95
 ANSYS/AutoFEA 3D ............................        3,800           **      **

- --------
*  Originally marketed as ANSYS 5.0.
** Scheduled for release in the second half of 1996.
 
TECHNOLOGY
 
  The Company's software products allow users to construct computer models (or
transfer computer models from CAD programs) of structures, products,
components or systems. The analyst may then simulate operating loads or other
design performance conditions and study the model's physical responses, such
as stress levels, temperature distributions or the impact of electromagnetic
fields. The Company's products can also be used to optimize a design early in
the product development process to reduce production costs. These processes
help customers shorten the cycle of prototype building, testing and rebuilding
and reduce expensive product overdesign. The Company believes its technology
and products are differentiated from those of its competitors by a combination
of its high speed solvers, its superior parallel processing, the breadth of
its product line, its coupled-field multiphysics capabilities and its
compatible, unified database.
 
  All ANSYS products are based on classical engineering concepts. Through
proven numerical techniques, these concepts can be formulated into matrix
equations that are suitable for finite element analysis ("FEA"). In preparing
for an analysis, a technique known as finite element meshing is used to
subdivide a complex product or part into discrete regions known as elements
connected at a finite number of points known as nodes. The primary unknowns in
an analysis are the degrees of freedom for each node in the finite element
model. Degrees of freedom may include displacements, rotations, temperatures,
pressures, velocities, voltages or magnetic potentials and are defined by the
elements attached to the node. Corresponding to the degrees of freedom,
matrices are generated as appropriate for each element in the model. These
matrices are then assembled to form sets of simultaneous equations that can be
processed by one of the program's several solvers.
 
  An ANSYS analysis comprises three phases: the preprocessing phase, the
solution phase and the postprocessing phase. In the preprocessing or model
generation phase, the data needed to perform an analysis solution are
specified. The user builds a model of the object or system to be analyzed. The
user can select coordinate systems and element types, define real constants
and material properties, create solid models and mesh
 
                                      36

them, manipulate elements and nodes, define coupling and constraint equations
and define the applied loads. Coordinate systems are used in the ANSYS program
to assist the user during the preprocessing stage in locating geometry in
space, specifying degree of freedom directions at certain points in the model,
defining material property directions and changing graphics displays.
Graphical displays and data selection and list utilities are available to
support the user in preparing the model.
 
  After a model is built in the preprocessing phase, the results of the
analysis are obtained in the solution phase. The user can specify the analysis
type, analysis options, load data and load step options and then initiate the
finite element solution. The analysis type specified by the user indicates to
the program which governing equations should be used to solve the problem. The
general categories of available analyses include structural, thermal,
acoustic, electromagnetic field, electric field, electrostatic, fluid and
coupled-field. The user can further define the analysis type by specifying
analysis options, such as linear static or non-linear transient dynamic. ANSYS
incorporates many advanced solver technologies for use during this phase, such
as the PowerSolver, a recently added, high speed, iterative equation solver.
The solution phase is computationally intensive, and ANSYS therefore
incorporates advanced parallel processing capabilities to reduce solution
times for all of its solvers.
 
  In the postprocessing phase, the user views (in graphical or tabular form)
and interprets the results calculated in the solution phase. These results may
include displacements, temperatures, stresses, strains, velocities and heat
flows. Because the postprocessing phase is fully integrated with the ANSYS
preprocessing and solution phases, the user can examine results immediately
and can test alternative solutions by modifying the parameters set in the
preprocessing phase.
 
SALES AND MARKETING
 
  The Company distributes its multiphysics products and services primarily
through its global ASD network. This network, developed over the last decade,
provides the Company with a cost-effective, highly specialized channel of
distribution and technical support. Of the Company's revenue in 1995 and the
three months ended March 31, 1996, 96.9% and 98.4% was derived through the
ASDs. The six largest ASDs accounted for approximately 48.1% of the Company's
revenue in 1995. See "Risk Factors--Dependence on Distributors." All software
licenses for the Company's products are directly between the Company and the
end user.
 
  The ASD network consists of 35 distributors in 68 locations in 27 countries,
including 16 in North America, nine in Europe, nine in the Asia Pacific Region
and one in Brazil. The ASDs sell ANSYS products to new customers, expand
installations within the existing customer base, offer consulting services and
provide the first line of ANSYS technical support. The Company has instituted
an ASD certification process to help ensure that each ASD has the capacity on
an ongoing basis to adequately represent the Company's product line and
provide an acceptable level of services and consultation.
 
  Under the Company's new management, substantially all of the ASDs have
entered into new contracts with the Company. These contracts establish minimum
performance criteria and include provisions relating to product discounts,
payment terms, customer support and training. ASDs are typically granted
exclusive geographic territories for the sale and support of ANSYS core
products (but not for CAD integrated products) and may not market products
which are competitive with ANSYS products. In order to maintain its exclusive
rights, each ASD is required to perform satisfactorily in the areas of sales
volume, payments, customer support and customer satisfaction, as determined
reasonably by the Company. Most ASD contracts are for a term of three years
with automatic renewals for additional one-year terms, unless terminated by
either party. The average ASD has been affiliated with the Company for eight
years, and the Company has only replaced three ASDs since the 1994
Acquisition, none of which represented a significant portion of the Company's
revenue.
 
  The Company's new management team has established a sales management
structure to work with the ASDs to develop a more focused sales approach and
to implement a worldwide major account strategy. The Company's sales
management organization consists of a North American Vice President of Sales,
supported by four Regional Sales Directors and two Major Account
Representatives, and an International Vice President of
 
                                      37

Sales, supported by a European Managing Director and two Regional Sales
Directors. The Company's sales organization also has application support
engineers to represent the Company at exhibitions and conferences worldwide
and to provide backup support to the ASDs. The Company believes that its new
sales management infrastructure contributed significantly to the increase in
its 1995 revenue growth rate.
 
  In 1995, the Company began to establish a dealer channel for its CAD
integrated products because these products are sold primarily to design
engineers rather than engineering analysts. The Company believes that this
dealer channel will complement the ASD network by establishing a broader user
base for its CAD integrated products, which the Company expects will create
new demand for its multiphysics products. As of April 30, 1996 the Company had
signed agreements with 27 dealers. All dealers are required to meet the
Company's standards for sales and customer support by ensuring they have
trained appropriate marketing and technical personnel.
 
  The Company refocused its marketing activities in 1995 to more effectively
support to its sales management and distribution network. The Company has
recently deployed advanced marketing technology including database marketing
systems, proactive Internet marketing and multimedia sales tools.
 
  In addition to marketing to manufacturers, the Company has traditionally
marketed its products to the engineering departments of universities. There
are now approximately 8,100 ANSYS multiphysics licenses at universities
worldwide that are used both for teaching and research. In addition, the
Company has licensed ANSYS/ED to individual engineering students. As a result,
many engineering students are trained on ANSYS prior to entering the work
force. The Company believes that this facilitates the sale of ANSYS products
to manufacturers.
 
CUSTOMER SUPPORT AND SERVICES
 
  The Company's Customer Services Group provides software maintenance, support
and custom programming services to customers. The Company recently reorganized
this Group in an effort to increase the percentage of customers on maintenance
contracts and improve customer problem resolution. The Customer Services Group
consists of 23 employees, 13 of whom are high-level technical support
engineers, four of whom are software developers focused on program
customization services and four of whom are training and education
professionals.
 
  The Company provides two levels of support under its standard maintenance
contract. The ASDs provide local phone support, post sales assistance and
professional services, such as consulting and training. The Company provides
second level technical support, with direct access to development and
technical resources. The technical support effort utilizes an advanced global
help desk and problem tracking software that provide a centralized database
for all customer support issues and product enhancement requests. Customers on
the Company's standard maintenance and lease contracts automatically receive
new releases of the Company's products.
 
  The Company and the ASDs provide customization of ANSYS programs on a fee-
for-services basis. Examples of such services include the integration of a
customer-specific application or technology within an ANSYS program and the
integration of a specific CAD system with the ANSYS program.
 
STRATEGIC ALLIANCES AND MARKETING RELATIONSHIPS
 
  The Company has established strategic alliances with advanced technology
suppliers and marketing relationships with hardware vendors, specialized
application developers and CAD providers. The Company believes these
relationships allow it to accelerate the incorporation of advanced technology
into the ANSYS product family, gain access to important new markets, expand
the Company's sales channel, develop specialized product applications and
provide direct integration with leading CAD systems.

                                      38

  In July 1995, the Company entered into a software license agreement with
Livermore Software Corporation under which Livermore has agreed to provide
LS/DYNA software for explicit dynamics solutions used in applications such as
crash test simulation in the automotive and other industries. Under this
arrangement, Livermore assists in the integration of the LS/DYNA software with
the Company's pre- and postprocessing capabilities and will provide updates
and problem resolution in return for a share of revenue from sales of
ANSYS/LS-DYNA, which is scheduled for release in the second half of 1996. In
December 1995, the Company entered into an arrangement with Spatial
Technology, Inc. for the ACIS Geometric Modeler, which will provide a
foundation for data file conversion for several CAD products. The Company also
has technology transfer agreements with Computational Applications and Systems
Integration, Inc. for the PowerSolver, a high speed iterative solver, and with
XOX, Inc. for the Shapes Geometric Modeler, which is used to support the
Company's parametric solid modeling capability.
 
  The Company has technical and marketing relationships with leading CAD
vendors, such as Parametric Technology, Autodesk, Computervision, Intergraph,
EDS/Unigraphics, SolidWorks and Dassault Systeme, to provide direct links
between the vendors' CAD packages. These links facilitate the transfer of
electronic data models between the CAD system and ANSYS products.
 
  The Company has established relationships with leading suppliers of computer
hardware, including Hewlett-Packard, Silicon Graphics/Cray, Sun Microsystems,
Intergraph, Digital, IBM and Intel. The relationships typically provide the
Company with joint marketing and advertising, Internet links with the hardware
partner's home page and reduced equipment costs.
 
  The Company's Enhanced Solution Provider Program actively encourages
specialized developers of niche software solutions to use ANSYS as a
development platform for their applications. For example, Silverado Software
and Consulting uses the Company's API to develop Silverado's vertical drop
shock application that simulates the dropping of products onto an unyielding
surface, such as an electronic appliance onto concrete. Other Enhanced
Solution Providers include COMET Acoustics, which uses ANSYS/PrepPost to run
its acoustic solver for the automobile industry, and AC Technologies, which
provides an interface to ANSYS in connection with its plastic injection mold
flow analysis product. In many cases, the sale of the Enhanced Solution
Providers' products is accompanied by the sale of an ANSYS product.
 
PRODUCT DEVELOPMENT
 
  The Company intends to maintain its technology leadership by making
significant investments in research and development and continuing its recent
policy of accelerated new product releases. The Company's product development
strategy centers on ongoing development and innovation of new technologies to
increase productivity and provide solutions that customers can integrate into
enterprise-wide engineering systems. The Company's product development efforts
focus on extensions of the ANSYS product family with new functional modules,
further integration with CAD products and the development of new products
based on object-oriented technology. The Company's products run on the most
widely used engineering computing platforms and operating systems, including
Windows 95, Windows NT and most UNIX workstations, as well as on
supercomputers such as the Cray.
 
  The Company's total research and development expense was $6.0 million, $6.8
million and $8.3 million in 1993, 1994 and 1995, or 18.9%, 20.6% and 21.0% of
total revenue, respectively. As of March 31, 1996, the Company's product
development staff consisted of 88 employees, most of whom hold advanced
degrees and have industry experience in engineering, mathematics, computer
science or related disciplines.
 
  For 1996, the Company plans the following major product development
activities:
 
  . The release of ANSYS 5.3, a new version of the Company's flagship
    multiphysics product, and all component products, scheduled for the
    second half of 1996. Major enhancements in this release will include two
    new solvers, improved meshing facilities, explicit dynamics solution
    capability and enhanced graphics and animation functions. ANSYS 5.3 is
    currently in the customer testing phase.

                                      39

  . ANSYS/ProFEA and ANSYS Connection for Pro/ENGINEER are scheduled for
    enhancement releases in 1996, approximately 60 days after Parametric
    Technology releases its new versions of Pro/ENGINEER. These products will
    enable users to access Pro/ENGINEER geometry directly from ANSYS
    products.
 
  . The Company is developing AutoFEA 3D. This product is based on ANSYS
    DesignSpace, a C++ object-oriented product development environment
    evolved from existing ANSYS technology. The commercial release of AutoFEA
    3D is planned for the second half of 1996.
 
  The Company uses multi-functional teams to develop its products and develops
them simultaneously on multiple platforms to reduce subsequent porting costs.
In addition to developing source code, these teams create and perform highly
automated software verification tests; develop on-line documentation and help
for the products; implement development enhancement tools, software
configuration management and product licensing processes; and conduct
regression tests of ANSYS products for all supported platforms.
 
PRODUCT QUALITY
 
  In 1995, the Company achieved ISO 9001 certification for its quality system.
This standard applies to all of the Company's commercial software products and
covers all product-related activities, from establishing product requirements
to customer service practices and procedures.
 
  In accordance with its ISO 9001 certification, the Company's employees
perform all product development and support tasks according to predefined
quality plans, procedures and work instructions. These plans define for each
project the methods to be used, the responsibilities of project participants
and the quality objectives to be met. To ensure that the Company meets or
surpasses the IS0 9001 standards, the Company establishes quality plans for
all products, subjects product designs to multiple levels of testing and
verification, and selects development subcontractors in accordance with
processes established under the Company's quality system.
 
COMPETITION
 
  The CAD, CAE and CAM market is intensely competitive. In the traditional CAE
market, the Company's primary competitors include MacNeal-Schwendler
Corporation, Hibbitt, Karlsson and Sorensen, Inc. and MARC Analysis Research
Corporation. The Company also faces competition from smaller vendors of
specialized analysis applications in fields such as computational fluid
dynamics. In addition, certain integrated CAD suppliers such as Parametric
Technology and Structural Dynamics Research Corporation provide varying levels
of design analysis and optimization and verification capabilities as part of
their product offerings.
 
  The entrance of new competitors would be likely to intensify competition in
all or a portion of the overall CAD, CAE and CAM market. Some of the Company's
current and possible future competitors have greater financial, technical,
marketing and other resources than the Company, and some have well established
relationships with current and potential customers of the Company. It is also
possible that alliances among competitors may emerge and rapidly acquire
significant market share or that competition will increase as a result of
software industry consolidation. Increased competition may result in price
reductions, reduced profitability and loss of market share, any of which would
materially adversely affect the Company's business, financial condition and
results of operations.
 
  The Company believes that the principal competitive factors affecting its
market include product features and functionality, such as ease of use;
flexibility; quality; ease of integration into CAD systems; file compatibility
across computer platforms; range of supported computer platforms; performance;
price and cost of ownership; customer service and support; company reputation
and financial viability; and effectiveness of sales and marketing efforts.
Although the Company believes that it currently competes effectively with
respect to such factors, there can be no assurance that the Company will be
able to maintain its competitive position against current and potential
competitors. There also can be no assurance that CAD software companies will
not develop
 
                                      40

their own analysis software, acquire analysis software from companies other
than the Company or otherwise discontinue their relationships with the
Company. If any of these events occurred, the Company's business, financial
condition and results of operations could be materially adversely affected.
See "--Products" and "--Strategic Alliances and Marketing Relationships."
 
PROPRIETARY RIGHTS AND LICENSES
 
  The Company regards its software as proprietary and relies on a combination
of trade secret, copyright and trademark laws, license agreements,
nondisclosure and other contractual provisions and technical measures to
protect its proprietary rights in its products. The Company distributes its
ANSYS software under software license agreements that grant customers
nonexclusive licenses to use of the Company's products, which are typically
nontransferable. Although the Company distributes its products primarily
through the ASDs, licenses of the Company's products are directly between the
Company and end users. Use of the licensed software is usually restricted to
the customer's internal operations on designated computers at specified sites
unless the client obtains a site license for the client's use of the software.
Software and hardware security measures are also employed to prevent
unauthorized use of the Company's software, and the licensed software is
subject to terms and conditions prohibiting unauthorized reproduction of the
software. Customers may either purchase a paid-up perpetual license of the
technology with the right to purchase annually ongoing maintenance, support
and updates, or may lease the product on an annual basis for a fee which
includes the license, maintenance, support and upgrades.
 
  For certain software such as AutoFEA and ANSYS/ED, the Company primarily
relies on "shrink- wrapped" licenses that are not signed by licensees and
therefore may be unenforceable under the laws of certain jurisdictions.
 
  The Company also seeks to protect the source code of its software as a trade
secret and as unpublished copyrighted work. The Company has obtained a federal
trademark protection for ANSYS and a number of other trademarks and logos. The
Company has also obtained trademark registrations of ANSYS in a number of
foreign countries and is in the process of seeking such registration in other
foreign countries.
 
  Most employees of the Company have signed a Covenant Agreement under which
they have agreed not to disclose trade secrets or confidential information or
to engage in or become connected with any business which is competitive with
the Company anywhere in the world while employed by the Company (and in some
cases for specified periods thereafter), and that any products or technology
created by them during their term of employment is the property of the
Company. In addition, the Company requires all ASDs to enter into agreements
not to disclose the Company's trade secrets and other proprietary information.
 
  Despite these precautions, there can be no assurance that misappropriation
of the Company's technology will not occur. Further, there can be no assurance
that copyright and trade secret protection will be available for the Company's
products in certain countries, or that restrictions on competition will be
enforceable.
 
  The software development industry is characterized by rapid technological
change. Therefore, the Company believes that factors such as the technological
and creative skills of its personnel, new product developments, frequent
product enhancements, name recognition and reliable product maintenance are
more important to establishing and maintaining a technology leadership
position than the various legal protections of its technology which may be
available.
   
  The Company is not aware that any of its products infringe the proprietary
rights of third parties. There can be no assurance, however, that third
parties will not claim in the future such infringement by the Company or its
licensors or licensees with respect to current or future products. The Company
expects that software product developers will increasingly be subject to such
claims as the number of products and competitors in the Company's market
segment grows and the functionality of products in different market segments
overlaps. Any such claims, with or without merit, could be time-consuming,
result in costly litigation, cause product shipment delays or require the
Company to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
the Company.     
 
                                      41

EMPLOYEES
 
  As of March 31, 1996, the Company had 200 full time employees. At that date,
there were also approximately 30 contract personnel and co-op students
providing development services and technical support on an ongoing basis. The
Company believes that its relationship with its employees is good.
 
FACILITIES
 
  The Company is headquartered in Houston, Pennsylvania, where it leases
approximately 66,000 square feet under a lease agreement which terminates in
March 1997. See "Certain Transactions." In January 1996, the Company entered
into a 10-year lease agreement for a nearby corporate office facility of
approximately 107,000 square feet to be constructed by the landlord. The
Company anticipates moving into the new facility in February 1997. In
addition, the Company leases field offices in Detroit, Michigan and the United
Kingdom.
 
LEGAL PROCEEDINGS
 
  From time to time the Company is subject to litigation incidental to its
business. The Company is currently not party to any material litigation.
 
                                      42

                                  MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS
 
  The directors and executive officers of the Company, their positions with
the Company and their ages are as follows:

NAME                        AGE POSITION
- ----                        --- --------
                          
Peter J. Smith............. 51  Chairman of the Board, President and
                                Chief Executive Officer
Dr. John A. Swanson........ 56  Chief Technologist and Director
John M. Sherbin II......... 46  Chief Financial Officer, Vice President, Finance
                                and Administration, Secretary and Treasurer
R. Bruce Morgan............ 44  Vice President, Marketing
Leonard Zera............... 44  Vice President, North American Sales
Mark C. Imgrund............ 39  Vice President, Corporate Quality
James C. Tung.............. 62  Vice President, International Sales
Paul A. Chilensky.......... 38  Vice President, Customer Services
Dr. Shah M. Yunus.......... 41  Corporate Fellow
David L. Conover........... 38  Manager of Product Development
Gary B. Eichhorn(1)........ 41  Director
Roger J. Heinen, Jr.(1).... 45  Director
Roger B. Kafker(1)......... 34  Director
Jacqueline C. Morby(2)..... 59  Director
John F. Smith(2)........... 61  Director
    
- --------
(1) Member of the Audit and Ethics Committee.
 
(2) Member of the Compensation and Option Committee.
 
  Mr. Peter Smith has been the President and Chief Executive Officer of the
Company since March 1994 and Chairman of the Board of Directors since July
1995. Prior to joining the Company, Mr. Smith was Vice President of European
Operations for Digital Equipment Corporation ("Digital"), a computer company,
from November 1991 to March 1994. Previously, he managed Digital's worldwide
applications development and marketing activities, including its engineering
systems group which focused on CAD and CAM graphics and general engineering
market business. Mr. Smith holds a B.S. degree in electrical engineering from
Northeastern University and an M.B.A. from the University of Notre Dame.
 
  Dr. Swanson founded Swanson Analysis Systems, Inc., the Company's
predecessor, in 1970, and served as its President and Chief Executive Officer
until March 1994, when he became Chief Technologist and a director of the
Company following the 1994 Acquisition. Dr. Swanson holds B.S. and M.S.
degrees in mechanical engineering from Cornell University and a Ph.D. in
applied mechanics from the University of Pittsburgh. Dr. Swanson is a Fellow
of the American Society of Mechanical Engineers and a member of the Institute
of American Entrepreneurs.
 
  Mr. Sherbin has been the Company's Chief Financial Officer, Vice President,
Finance and Administration, Secretary and Treasurer since May 1994. Prior to
joining the Company, Mr. Sherbin was Chief Financial Officer
 
                                      43

and Treasurer of II-VI, Incorporated, an infrared materials and electro-
components manufacturer, from February 1986 to May 1994. Mr. Sherbin holds a
B.S. degree in management and accounting from Pennsylvania State University
and an M.B.A. from the University of Pittsburgh.
 
  Mr. Morgan has been the Company's Vice President, Marketing since June 1995.
Prior to joining the Company, Mr. Morgan was Vice President, Sales and
Marketing at Spatial Technology, Inc., a supplier of engineering systems
software, from February 1991 to June 1995. Mr. Morgan holds a B.A. degree in
economics from Carleton University.
 
  Mr. Zera has been the Company's Vice President, North American Sales since
May 1994. Prior to joining the Company, Mr. Zera held sales, sales management
and marketing positions at Digital from January 1978 to April 1994. Mr. Zera
holds a B.A. degree in marketing from Michigan State University and an M.B.A.
from Wayne State University.
 
  Mr. Imgrund has been the Company's Vice President, Corporate Quality since
September 1994 and was the Company's Quality Assurance Manager from March 1987
to September 1994. Mr. Imgrund holds a B.S. degree in civil engineering from
Cornell University and an M.S. degree in mechanical engineering from the
University of Pittsburgh.
 
  Mr. Tung has been the Company's Vice President, International Sales since
March 1995. Prior to joining the Company, Mr. Tung was Vice President of
International Operations and International Sales and Marketing for PDA
Engineering, Inc., a software company, from January 1994 to February 1995.
From December 1992 to December 1993, he was President of Pacific Ventures, a
computer application software consulting company, and from 1989 to December
1992 he was the Vice President--Asia/Pacific Operations of Infotron Systems
Corporation, a communications hardware company. Mr. Tung holds a B.S. degree
in physics from Columbia University and an M.B.A. from the University of Santa
Clara.
 
  Mr. Chilensky was the Company's Manager of Customer Services from January
1995 to March 1996, when he became Vice President, Customer Services. Prior to
joining the Company, Mr. Chilensky was regional manager of professional
services for Legent Corporation, a software company, from May 1991 to December
1994.
 
  Dr. Yunus has been a Corporate Fellow of the Company with responsibility for
product architecture since September 1994, and was a research engineer and
senior project leader for the Company since March 1984. Dr. Yunus holds a B.S.
degree in civil engineering and an M.S. degree in structural engineering from
the Bangladesh University of Engineering and Technology and a Ph.D. in
computational mechanics from Rensselaer Polytechnic Institute.
 
  Mr. Conover joined the Company in 1980 and has served as its Manager of
Product Development since August 1994. Mr. Conover holds B.S. and M.S. degrees
in civil engineering from Carnegie Mellon University.
 
  Mr. Eichhorn has served as a director of the Company since September 1994.
Mr. Eichhorn has been the President and Chief Executive Officer and a director
of Open Market, Inc., an Internet software company, since December 1995. From
September 1991 to November 1995, Mr. Eichhorn worked at Hewlett-Packard
Company, a computer company, most recently serving as Vice President and
General Manager of Hewlett Packard's Medical Systems Group. From 1975 to 1991,
Mr. Eichhorn held various sales and management positions at Digital.
 
  Mr. Heinen has served as a director of the Company since April 1996. Mr.
Heinen was a Senior Vice President of Microsoft Corporation, a software
company, from January 1993 through March 1996. Prior to that time, he was a
Senior Vice President of Apple Computer, Inc., a computer company, from
January 1989 to January 1993.
 
                                      44

  Mr. Kafker has served as a director of the Company since February 1994. He
has been associated with TA Associates, Inc. or its predecessor since 1989 and
became a Principal of that firm in 1994 and a Managing Director in 1995.
 
  Ms. Morby has served as a director of the Company since February 1994. She
has been Managing Director or a partner of TA Associates, Inc. or its
predecessor since 1982. Ms. Morby is also a director of Axent Technologies,
Inc., a computer software company, and Pacific Mutual Life Insurance Co., a
life insurance company.
 
  Mr. John Smith has served as a director of the Company since December 1995.
Mr. Smith served as Chief Operating Officer and Senior Vice President of
Digital from 1986 through 1993, when he retired. Mr. Smith also serves on the
Board of Directors of Sequoia Systems, Inc., a software company, Instron Inc.,
a material testing company, Perseptive Biosystems, Inc., a life sciences
company, and Hadco Inc., an interconnect technology company.
 
BOARD OF DIRECTORS
 
  The number of directors of the Company is currently fixed at seven.
Following this offering, the Company's Board of Directors will be divided into
three classes, with the members of each class of directors serving for
staggered three-year terms. The Board will consist of two Class I Directors
(Mr. Peter Smith and Dr. Swanson), three Class II Directors (Messrs. Heinen
and Kafker and Ms. Morby) and two Class III Directors (Messrs. Eichhorn and
John Smith), whose initial terms will expire at the 1997, 1998 and 1999 annual
meetings of stockholders, respectively.
 
  Dr. Swanson was elected to the Board of Directors in accordance with the
terms of an Investment and Stockholders' Agreement entered into in connection
with the 1994 Acquisition (the "Stockholders' Agreement"). See "Certain
Transactions."
 
  The Board of Directors has established an Audit and Ethics Committee (the
"Audit Committee") and a Compensation and Option Committee (the "Compensation
Committee"). The Audit Committee recommends the firm to be appointed as
independent accountants to audit financial statements and to perform services
related to the audit, reviews the scope and results of the audit with the
independent accountants, reviews with management and the independent
accountants the Company's annual operating results, considers the adequacy of
the internal accounting procedures, considers the effect of such procedures on
the accountants' independence and establishes policies for business values,
ethics and employee relations. The Compensation Committee reviews and
recommends the compensation arrangements for officers and other senior level
employees, reviews general compensation levels for other employees as a group,
determines the options or stock to be granted to eligible persons under the
1996 Stock Plan and takes such other action as may be required in connection
with the Company's compensation and incentive plans.
 
  Nonemployee directors other than Ms. Morby and Mr. Kafker (the "Independent
Directors") receive fees of $1,000 and $500, respectively, for each meeting of
the Board of Directors or Board committee they attend, and each director is
reimbursed for travel and other expenses incurred in attending meetings. Also,
under the 1996 Stock Plan, each Independent Director is entitled to receive an
annual grant of options to purchase Common Stock as described under "--
Employee Stock and Other Benefit Plans--1996 Stock Option and Grant Plan--
Independent Director Options."

                                      45

EXECUTIVE COMPENSATION
 
  Summary Compensation. The following table sets forth information concerning
compensation for services rendered in all capacities awarded to, earned by or
paid to the Chief Executive Officer and the four other most highly compensated
executive officers of the Company during 1995 (the "Named Executive
Officers").
 
                          SUMMARY COMPENSATION TABLE

                                                            LONG-TERM
                                ANNUAL COMPENSATION        COMPENSATION
                                ----------------------     ------------
                                                            SECURITIES
                                                            UNDERLYING      ALL OTHER
NAME AND PRINCIPAL POSITION(1)  SALARY($)   BONUS($)       OPTIONS (#)  COMPENSATION($)(2)
- ------------------------------  ----------  ----------     ------------ ------------------
                                                            
Peter J. Smith..........            245,792    224,139          --            42,940(3)
 Chief Executive Officer
Dr. John A. Swanson.....            239,000     76,825          --            32,460(3)
 Chief Technologist
John M. Sherbin II .....             97,084     38,368        6,000           30,000
 Chief Financial Officer
Leonard Zera............            100,000    104,758(4)       --            36,000(3)
 Vice President, North
American Sales
Mark C. Imgrund.........            112,500     20,000        4,000           30,000
 Vice President,
Corporate Quality

- --------
(1) Two executive officers, Messrs. Morgan and Tung, joined the Company on
    June 30, 1995 and March 9, 1995, respectively, and would have appeared in
    the table above had they been employed by the Company for a full fiscal
    year.
 
(2) Includes $30,000 contributed by the Company to its Pension and Profit-
    Sharing Plans on behalf of each of the Named Executive Officers. See "--
    Employee Stock and Other Benefit Plans--Pension and Profit-Sharing Plans."
 
(3) Includes premiums on life insurance of $5,740 paid by the Company on
    behalf of Mr. Smith, a car allowance for Mr. Smith and Mr. Zera paid at
    the rates of $600 and $500 per month, respectively, and $205 per month
    paid toward the maintenance of a Company car provided to Dr. Swanson.
 
(4) Represents bonus paid in 1996 on account of the Company's 1995 sales
    performance.
 
  Option Grants. The following table sets forth information concerning the
individual grant of options to purchase Common Stock to the Named Executive
Officers during 1995. No stock appreciation rights ("SARs") have been granted.
 
                           OPTION GRANTS DURING 1995

                                                                       POTENTIAL REALIZABLE
                                      INDIVIDUAL GRANTS               VALUE AT ASSUMED ANNUAL
                         --------------------------------------------  RATES OF STOCK PRICE
                                                                      APPRECIATION FOR OPTION
                         OPTIONS   % OF TOTAL    EXERCISE                    TERM (2)
                         GRANTED OPTIONS GRANTED   PRICE   EXPIRATION ------------------------
NAME                     (#)(1)   TO EMPLOYEES   PER SHARE    DATE          5%          10%
- ----                     ------- --------------- --------- ---------- ----------- ------------
                                                                
Peter J. Smith..........    --         --           --         --         --          --
Dr. John A. Swanson.....    --         --           --         --         --          --
John M. Sherbin II......  6,000        1.9%        $.40    7/15/2005       $1,509      $3,825
Leonard Zera............    --         --           --         --         --          --
Mark C. Imgrund.........  4,000        1.3%        $.40    7/15/2005       $1,006      $2,550

- --------
(1) The options set forth above become exercisable in four equal annual
    installments, commencing on the first anniversary of the grant date. All
    options are subject to the employee's continued employment and terminate
    ten years after the grant date, subject to earlier termination in
    accordance with the Company's 1994 Stock Option and Grant Plan (the "1994
    Stock Plan") and the applicable option agreement. All options were granted
    at fair market value as determined by the Option Committee of the Board of
    Directors of the Company on the date of the grant. See "--Employee Stock
    and other Benefit Plans--1994 Stock Option and Grant Plan."
 
(2) This column shows the hypothetical gains or "option spreads" of the
    options granted based on both the fair market value of the Common Stock
    for financial reporting purposes and assumed annual compound stock
    appreciation rates of 5% and 10% over the terms of the options. The 5% and
    10% assumed rates of appreciation are mandated by the rules of the
    Securities and Exchange Commission and do not represent the Company's
    estimate or projection of future Common Stock prices. The gains shown are
    net of the option exercise price, but do not include deductions for taxes
    or other expenses associated with the exercise of the option or the sale
    of the underlying shares, or reflect nontransferability, vesting or
    termination provisions. The actual gains, if any, on the exercises of
    stock options will depend on the future performance of the Common Stock.
 
                                      46

  Option Exercises and Holdings. The following table sets forth information
concerning the number and value of unexercised options to purchase Common
Stock held by the Named Executive Officers at the end of 1995. None of the
Named Executive Officers exercised any stock options during 1995.
 
                            YEAR-END OPTION VALUES

                               NUMBER OF SECURITIES      VALUE OF UNEXERCISED
                              UNDERLYING UNEXERCISED    IN-THE-MONEY OPTIONS AT
                                OPTIONS AT YEAR END           YEAR END(1)
                             ------------------------- -------------------------
NAME                         EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----                         ----------- ------------- ----------- -------------
                                                       
Peter J. Smith..............     --             --         --           --
Dr. John A. Swanson.........     --         960,000(2)     --       $11,424,000
John M. Sherbin II..........     --           6,000        --       $    54,000
Leonard Zera................     --             --         --           --
Mark C. Imgrund.............     --           4,000        --       $    36,000

- --------
(1) There was no public trading market for the Common Stock as of December 31,
    1995. Accordingly, these values have been calculated on the basis of an
    assumed initial public offering price of $13.00 per share, less the
    applicable exercise price.
 
(2) These options became exercisable on March 14, 1996 and Dr. Swanson
    exercised all of them on that date. The shares that Dr. Swanson received
    upon such exercise are restricted shares subject to repurchase by the
    Company in certain circumstances. See "--Employment Agreements."
 
EMPLOYEE BONUS PLAN
 
  The Company has adopted an employee bonus plan for 1996 on terms similar to
those in effect for previous years. The plan is administered by the
Compensation Committee, which determines the amount and timing of payments as
recommended by the Company's Chief Executive Officer in all cases other than
with respect to the Chief Executive Officer. Awards under the plan are
determined on the basis of the Company's performance in relation to certain
pre-determined financial and operating goals. All awards are paid in full, in
cash, following the period of performance.
 
EMPLOYEE STOCK AND OTHER BENEFIT PLANS
   
  1994 Stock Option and Grant Plan. In February 1994, the Company's Board of
Directors adopted and the stockholders subsequently approved the 1994 Stock
Plan under which 868,110 shares of Common Stock have been reserved for
issuance upon exercise of currently outstanding options. The Company does not
intend to make grants under the 1994 Stock Plan after the effective date of
this offering. The 1994 Stock Plan permits (i) the grant of options to
purchase shares of Common Stock intended to qualify as incentive stock options
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") ("Incentive Options"), (ii) the grant of options that do not so
qualify ("Non-Qualified Options"), and (iii) the issuance or sale of Common
Stock with or without restrictions ("Restricted Stock"). As of June 15, 1996,
under the 1994 Stock Plan 1,342,760 shares of Restricted Stock had been issued
and remained outstanding and subject to repurchase by the Company at the
original purchase price, 960,000 shares of Common Stock had been issued
pursuant to the exercise of Incentive Options, and 800,610 Incentive Options
and 67,500 Non-Qualified Options were outstanding. The weighted average
exercise price of the outstanding options is approximately $4.36 per share,
and options generally vest in equal installments over a four-year period.     
 
  The Compensation Committee may, in its sole discretion, accelerate or extend
the date or dates on which all or any particular award or awards granted under
the 1994 Stock Plan may be exercised or vest. In the event of a merger,
liquidation or sale of substantially all of the assets of the Company, the
Board of Directors has the discretion to accelerate the vesting of options
granted under the 1994 Stock Plan, except that 40,000 Non-Qualified Options
held by Independent Directors vest automatically in such circumstances. In
addition, the 1994
 
                                      47

Stock Plan and the grants issued thereunder terminate upon the effectiveness
of any such transaction or event, unless provision is made in connection with
such transaction for the assumption of grants theretofore made.
 
  1996 Stock Option and Grant Plan. The 1996 Stock Plan, adopted by the Board
of Directors on April 19, 1996 and subsequently approved by the Company's
stockholders, will become effective upon completion of this offering. The 1996
Stock Plan permits (i) the grant of Incentive Options, (ii) the grant of Non-
Qualified Options, (iii) the issuance or sale of Common Stock with or without
vesting or other restrictions ("Stock Grants") (iv) the grant of Common Stock
upon the attainment of specified performance goals ("Performance Share
Awards"), and (v) the grant of the right to receive cash dividends with the
holders of the Common Stock as if the recipient held a specified number of
shares of the Common Stock ("Dividend Equivalent Rights"). These grants may be
made to officers and other employees, consultants and key persons of the
Company and its subsidiaries. In addition, Independent Directors will
automatically be eligible for certain grants under the 1996 Stock Plan, as
described below. The 1996 Stock Plan provides for the issuance of 2,250,000
shares of Common Stock, of which no more than 300,000 shares may be issued to
Independent Directors. On and after the date the 1996 Stock Plan becomes
subject to Section 162(m) of the Code, options with respect to no more than
300,000 shares of Common Stock may be granted to any one individual in any
calendar year. No options or other grants have been granted under the 1996
Stock Plan.
 
  The 1996 Stock Plan is administered by the Compensation Committee. Subject
to the provisions of the 1996 Stock Plan, the Compensation Committee has full
power to determine from among the persons eligible for grants under the 1996
Stock Plan (i) the individuals to whom grants will be granted, (ii) the
combination of grants to participants and (iii) the specific terms of each
grant. Incentive Options may be granted only to officers or other employees of
the Company or its subsidiaries including members of the Board of Directors
who are also employees of the Company or its subsidiaries.
 
  The option exercise price of each option granted under the 1996 Stock Plan
is determined by the Compensation Committee but, in the case of Incentive
Options may not be less than 100% of the fair market value of the underlying
shares on the date of grant and may not be exercisable more than ten years
from the date the option is granted. If any employee of the Company or any
subsidiary owns or is deemed to own at the date of grant shares of stock
representing in excess of 10% of the combined voting power of all classes of
stock of the Company or any subsidiary, the exercise price for options granted
to such employee may not be less than 110% of the fair market value of the
underlying shares on that date and the option may not be exercisable more than
five years from the date the option is granted. No option may be exercised
subsequent to the termination of the optionee's employment or other business
relationship with the Company unless otherwise determined by the Compensation
Committee or provided in the option agreement. At the discretion of the
Compensation Committee, any option may include a "reload" feature, pursuant to
which an optionee exercising an option receives in addition to the number of
shares of Common Stock due on the exercise of such an option an additional
option with an exercise price equal to the fair market value of the Common
Stock on the date such additional option is granted. Upon the exercise of
options, the option exercise price must be paid in full either in cash or, in
the sole discretion of the Compensation Committee, by delivery of shares of
Common Stock already owned by the optionee.
 
  The 1996 Stock Plan also permits Stock Grants, Performance Share Awards and
grants of Dividend Equivalent Rights. Stock Grants and Performance Share
Awards may be made to persons eligible under the 1996 Stock Plan, subject to
such conditions and restrictions as the Compensation Committee may determine.
Prior to the vesting of shares, recipients of Stock Grants generally will have
all the rights of a stockholder with respect to the shares, including voting
and dividend rights, subject only to the conditions and restrictions set forth
in the 1996 Stock Plan or in any agreement. In the case of Performance Share
Awards, the issuance of shares of Common Stock will occur only after the
recipient has satisfied the conditions and restrictions set forth in the 1996
Stock Plan or in any agreement. The Compensation Committee may also make Stock
Grants to persons eligible under the 1996 Stock Plan in recognition of past
services or other valid consideration, or in lieu of cash compensation. In
addition, the Compensation Committee may grant Dividend Equivalent Rights in
conjunction with any other grant made pursuant to the 1996 Stock Plan or as a
free standing grant. Dividend Equivalent
 
                                      48

Rights may be paid currently or deemed to be reinvested in additional shares
of Common Stock, which may thereafter accrue further dividends.
 
  The Compensation Committee may, in its sole discretion, accelerate or extend
the date or dates on which all or any particular award or awards granted under
the 1996 Stock Plan may be exercised or vest. In the event of a merger,
liquidation or sale of substantially all of the assets of the Company, the
Board of Directors has the discretion to accelerate the vesting of options
granted under the 1996 Stock Plan, except that options granted to Independent
Directors as described below automatically accelerate in such circumstances.
The 1996 Stock Plan and the grants issued thereunder terminate upon the
effectiveness of any such transaction or event, unless provision is made in
connection with such transaction for the assumption of grants theretofore
made.
 
  Independent Director Options. The 1996 Stock Plan provides for the automatic
grant of Non-Qualified Options to Independent Directors. Under such
provisions, options to purchase that number of shares of Common Stock
determined by dividing $200,000 by the Option Exercise Price (as defined
below) will be granted to each individual who first becomes a member of the
Board of Directors after the closing date of this offering and who is not then
an employee of the Company or any subsidiary of the Company. In addition, on
the date five business days following each annual meeting of stockholders of
the Company commencing with the meeting to be held in 1997, each Independent
Director who is then serving will be granted an option to purchase that number
of shares of Common Stock determined by dividing $75,000 by the Option
Exercise Price. The Option Exercise Price of options granted to Independent
Directors under the 1996 Stock Plan will equal the lesser of (i) the last
reported sale price per share of Common Stock on the date of grant (or if no
such price is reported on such date, such price on the nearest preceding date
on which such a price is reported) or (ii) the average of the last reported
sales price per share of Common Stock as published in The Wall Street Journal
for a period of ten consecutive days prior to such date. Options granted to
Independent Directors under the foregoing provisions will vest in annual
installments over four years commencing with the date of grant and will expire
ten years after grant, subject to earlier termination if the optionee ceases
to serve as a director. The exercisability of these options will be
accelerated upon the occurrence of a merger, liquidation or sale of
substantially all of the assets of the Company.
 
  1996 Employee Stock Purchase Plan. The Company's 1996 Employee Stock
Purchase Plan was adopted by the Board of Directors on April 19, 1996 and was
subsequently approved by the Company's stockholders. Up to 210,000 shares of
Common Stock may be issued under the Purchase Plan. The Purchase Plan is
administered by the Compensation Committee.
 
  The first offering under the Purchase Plan will begin on August 1, 1996 and
end on January 31, 1997. Subsequent offerings will commence on each February 1
and August 1 thereafter and will have a duration of six months. Generally, all
employees who are customarily employed for more than 20 hours per week as of
the first day of the applicable offering period are eligible to participate in
the Purchase Plan. An employee who owns or is deemed to own shares of stock
representing in excess of 5% of the combined voting power of all classes of
stock of the Company may not participate in the Purchase Plan.
 
  During each offering, an employee may purchase shares under the Purchase
Plan by authorizing payroll deductions of up to 10% of his cash compensation
during the offering period. The maximum number of shares which may be
purchased by any participating employee during any offering period is limited
to 960 shares (as adjusted by the Compensation Committee from time to time).
Unless the employee has previously withdrawn from the offering, his
accumulated payroll deductions will be used to purchase Common Stock on the
last business day of the period at a price equal to 85% of the fair market
value of the Common Stock on the first or last day of the offering period,
whichever is lower. Under applicable tax rules, an employee may purchase no
more than $25,000 worth of Common Stock in any calendar year. No Common Stock
has been issued to date under the Purchase Plan.
 
  Key Executive Life Insurance. The Company currently maintains, and is the
sole beneficiary of, life insurance policies on each of Dr. Swanson and Mr.
Peter Smith in the face amounts of $5.0 million and $2.0 million,
respectively.
 
                                      49

  Pension and Profit-Sharing Plans. The Company maintains both a money
purchase pension plan and a profit-sharing plan for all qualifying full-time
employees. The plans are noncontributory. The pension plan requires the
Company to contribute 20% of each participant's compensation annually. The
profit-sharing contribution is determined annually by the Board of Directors,
subject to a maximum limitation of 5% of eligible compensation. The Company's
pension and profit sharing expenses in 1995 were $1.5 million and $345,700,
respectively.
 
EMPLOYMENT AGREEMENTS
 
  The Company entered into an Employment Agreement with Dr. Swanson in
connection with the 1994 Acquisition under which Dr. Swanson serves as Chief
Technologist of the Company. The Agreement has a five-year term ending in
March 1999. The Agreement provides for (i) an annual salary of $228,000,
subject to specified cost of living increases, (ii) continuation of base
salary payments until the later of March 14, 1999 or six months following
termination of Dr. Swanson's employment in the event such employment is
terminated by the Company without cause (as defined) or by Dr. Swanson in the
event of a material default by the Company, and (iii) a restriction on
competitive activities for three years following any termination of Dr.
Swanson's employment with the Company. In connection with his employment by
the Company, Dr. Swanson was granted Incentive Options to purchase 960,000
shares of Common Stock at an exercise price of $.11 a share, or 110% of the
fair market value of the Common Stock at the time of grant. Dr. Swanson
exercised these options on March 14, 1996, and the shares acquired upon
exercise are subject to repurchase by the Company at the exercise price until
they vest in March 1998 and 1999. See "Principal and Selling Stockholders."
 
  The Company has also entered into an Employment Agreement with Mr. Peter
Smith, its Chief Executive Officer. Mr. Smith's Employment Agreement (i)
provides that he shall serve as Chief Executive Officer, (ii) provides for an
annual base salary of at least $235,000 and participation in the Company's
executive bonus program, (iii) is for an indefinite term unless terminated by
either party, (iv) provides for severance at the annual rate of $300,000 in
the event Mr. Smith's employment is terminated by the Company without cause or
in the event of a constructive termination (as defined) until the later of one
year after termination or Mr. Smith's acceptance of other employment and (v)
restricts competitive activities by Mr. Smith for one year following
termination of his employment other than for cause or in the event of a
constructive termination. The Company provided Mr. Smith with $309,058 at the
time of his employment to purchase an annuity that will result in payments to
Mr. Smith beginning at age 62 as well as a $2.0 million term life insurance
policy.
   
  In connection with his employment by the Company, Mr. Smith purchased
626,000 shares of restricted Common Stock in July 1994 for a cash purchase
price of $250,000 (approximately $.40 per share). Mr. Smith funded the
purchase price for the shares with a loan from the Company evidenced by a
promissory note which bears interest at the annual rate of 8.23%, matures on
July 12, 2006, is secured by a pledge of the shares purchased with the
proceeds of the loan and permits recourse against Mr. Smith's other assets
only to the extent of one-fourth of the principal amount of the note. The
Company also agreed to pay Mr. Smith annual bonuses in the amount of the
required interest payments. The shares purchased by Mr. Smith are subject to
repurchase by the Company at the purchase price, with such restrictions
lapsing on a monthly basis over a five-year period. As of June 15, 1996,
407,080 of such shares are no longer subject to this restriction.     
 
  In February 1996 Mr. Smith was granted the right to purchase an additional
135,860 shares of restricted Common Stock and was granted Incentive Options to
purchase 135,860 shares of Common Stock. The purchase price for the restricted
stock was $326,064 ($2.40 per share) and was paid in cash by Mr. Smith. The
shares are subject to repurchase by the Company at the purchase price, with
such restrictions lapsing on February 28, 2001, subject to earlier lapsing in
the event of a sale of the Company or the attainment of specified valuations
for the Company's Common Stock. Mr. Smith's Incentive Options have a $2.40 per
share exercise price and are subject to vesting provisions that are the same
as those applicable to the concurrently granted restricted stock.
 
                                      50

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  Since February 1994, all executive officer compensation decisions have been
made by the Compensation Committee. The Compensation Committee reviews and
makes recommendations to the Board of Directors regarding the compensation for
top management and key employees of the Company, including salaries and
bonuses. The current members of the Compensation Committee are Ms. Morby and
Mr. John Smith, neither of whom is an executive of the Company.
 
                                      51

                             CERTAIN TRANSACTIONS
 
  On March 14, 1994, the Company acquired the assets of Swanson Analysis for a
cash purchase price of approximately $48.0 million. In connection with the
1994 Acquisition, the following transactions occurred:
 
  (i)    the Company incurred $28.0 million of indebtedness under the 1994 Loan,
         approximately $19.8 million of which remained outstanding at March 31,
         1996;
 
  (ii)   the Company assumed certain liabilities of Swanson Analysis totalling
         approximately $4.9 million;
 
  (iii)  the TA Investors invested $12.6 million to acquire (i) Subordinated
         Notes in the aggregate principal amount of $9.2 million, (ii) shares
         of Redeemable Preferred Stock having an aggregate liquidation
         preference of $2.8 million plus accumulated dividends and (iii)
         6,943,481 shares of Common Stock at an aggregate purchase price of
         $630,000 (approximately $.09 per share);
 
  (iv)   the Chestnut Investors invested $930,000 to acquire (i) Subordinated
         Notes in the aggregate principal amount of $680,000, (ii) shares of
         Redeemable Preferred Stock having an aggregate liquidation preference
         of $210,000 plus accumulated dividends and (iii) 509,319 shares of
         Common Stock at an aggregate purchase price of $46,500 (approximately
         $.09 per share);
 
  (v)    Dr. Swanson, the founder of Swanson Analysis, invested $5.4 million to
         acquire (i) a Subordinated Note in the principal amount of $4.3
         million, (ii) shares of Redeemable Preferred Stock having an aggregate
         liquidation preference of $800,000 plus accumulated dividends and (iii)
         1,999,200 shares of Common Stock at an aggregate purchase price of
         $280,000 (approximately $.14 per share); and
 
  (vi) Dr. Swanson and the Company entered the employment and stock option
       arrangements described under "Management--Employment Agreements."
   
  Subsequently, in July 1994, Samuel P. Geisberg, Louis J. Volpe and Steven C.
Walske, current or former affiliates of Parametric Technology, each invested
$200,000 in the Company to acquire (i) a Subordinated Note in the aggregate
principal amount of $150,000, (ii) shares of Redeemable Preferred Stock having
an aggregate liquidation preference of $40,000 plus accumulated dividends and
(iii) 100,000 shares of Common Stock at an aggregate purchase price of $10,000
($.10 per share).     
 
  The Subordinated Notes and Redeemable Preferred Stock described above will
be repaid or redeemed upon completion of this offering. See "Use of Proceeds."
 
  Pursuant to the Stockholders' Agreement among the Company and the TA
Investors, the Chestnut Investors, Dr. Swanson and Marcia S. Morton (the
former Secretary and Treasurer of Swanson Analysis) entered into in connection
with the 1994 Acquisition, to which Messrs. Geisberg, Volpe and Walske became
parties at the time of their investment in the Company (collectively the
"Investors"), (i) each Investor received "piggy back" registration rights, and
the TA Investors, the Chestnut Investors and Dr. Swanson received demand
registration rights, (ii) each Investor granted to and received from the other
Investors rights (the "Co-sale Rights") to participate on a pro rata basis in
certain resales of Common Stock and agreed to restrictions on transfers of
shares, (iii) each Investor was granted preemptive rights with respect to
future issuances of securities by the Company, (iv) each Investor agreed to
elect Dr. Swanson to the Board of Directors, (v) Dr. Swanson granted the
Company rights of repurchase with respect to the shares of Common Stock he
acquired in connection with the 1994 Acquisition in the event his employment
is terminated for "cause," as defined in the Stockholders' Agreement, and (vi)
the Company agreed to pay the fees and expenses of the TA Investors and the
Chestnut Investors incurred in connection with their investment in the
Company. Mr. Kafker and Ms. Morby, directors of the Company, are Managing
Directors of TA Associates, Inc.
 
                                      52

  Effective upon and subject to the closing of this offering, the preemptive
rights and provisions relating to Dr. Swanson's election to the Board will
expire in accordance with their original terms. The Company and the Investors
have agreed that the Co-sale Rights and restrictions on transfers of shares
under the Stockholders' Agreement will also terminate at that time.
 
  Mr. Peter Smith, the Company's Chief Executive Officer, acquired Common
Stock with proceeds from a loan from the Company in connection with his
initial employment by the Company and has received subsequent grants of
restricted stock and Incentive Options as described under "Management--
Employment Agreements." Mr. Smith is entitled to "piggyback" registration
rights under the Stockholders' Agreement on the same terms as the other
Investors.
 
  The Company leases a 66,000 square foot facility from a joint venture in
which Dr. Swanson holds an interest of approximately 50%. The Company leases
these facilities under a lease agreement terminating in March 1997 and will
move to a new corporate headquarters in February 1997. See "Business--
Facilities." The Company incurred $838,700, $837,300 and $805,900 in rental
expense in 1995, 1994 and 1993, respectively.
 
  The Company has adopted a policy providing that all material transactions
between the Company and its officers, directors and other affiliates must be
approved by a majority of the members of the Company's Board of Directors and
by a majority of the disinterested members of the Company's Board of Directors
and be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
 
                                      53

                      PRINCIPAL AND SELLING STOCKHOLDERS
   
  The following table sets forth information as to the beneficial ownership of
the Company's Common Stock as of June 15, 1996 and as adjusted to reflect the
sale of the shares of Common Stock offered hereby by (i) each person known by
the Company to own beneficially five percent or more of the outstanding shares
of Common Stock, (ii) each director and the Named Executive Officers of the
Company, (iii) all directors and the Named Executive Officers of the Company
as a group, (iv) the Selling Stockholder and (v) certain other stockholders.

                               SHARES BENEFICIALLY          NUMBER OF      SHARES BENEFICIALLY
                             OWNED PRIOR TO OFFERING      SHARES OFFERED OWNED AFTER OFFERING(3)
                             ---------------------------- -------------- ----------------------------
NAME OF BENEFICIAL OWNER(1)     NUMBER       PERCENT(2)                     NUMBER       PERCENT(2)
- ---------------------------  -------------- -------------                -------------- -------------
                                                                         
TA Associates
Group(3)(4).............          6,943,481         54.9%        --           6,943,481         43.0%
Dr. John A.
Swanson(3)(5)...........          2,884,200         22.8         --           2,884,200         17.9
Peter J. Smith(6).......            661,860          5.2         --             661,860          4.1
Marcia S. Morton........            548,000          4.3      50,000            498,000          3.1
Chestnut Group(3)(7)....            509,319          4.0         --             509,319          3.2
Samuel P. Geisberg......            100,000            *         --             100,000           *
Louis J. Volpe..........            100,000            *         --             100,000           *
Steven C. Walske........            100,000            *         --             100,000           *
Leonard Zera(8).........            100,000            *         --             100,000           *
John M. Sherbin II(9)...             61,500            *         --              61,500           *
Mark C. Imgrund(10).....             16,000            *         --              16,000           *
Gary B. Eichhorn(11)....             30,000            *         --              30,000           *
Roger J. Heinen,
Jr.(12).................                --             *         --                 --            *
Roger B. Kafker(13).....             13,482            *         --              13,482           *
Jacqueline C. Morby(14).              5,759            *         --               5,759           *
John F. Smith(15).......             20,000            *         --              20,000           *
All Named Executive
 Officers and directors
 as a group (10
 persons)...............          3,792,801         30.0         --           3,792,801         23.5
    
- --------
*  Less than 1%.
 
(1) The address of each of the stockholders in the TA Associates Group is c/o
    TA Associates, Inc., High Street Tower, Suite 2500, 125 High Street,
    Boston, MA 02110-2720. The address of each of the stockholders in the
    Chestnut Group is c/o MVP Ventures, 45 Milk Street, Boston, MA 02109. The
    address of Mr. Kafker and Ms. Morby is c/o TA Associates, Inc., High
    Street Tower, Suite 2500, 125 High Street, Boston, MA 02110-2720. The
    address of Messrs. Geisberg, Volpe and Walske is c/o Parametric Technology
    Corporation, 128 Technology Drive, Waltham, MA 02154. The address of all
    other listed stockholders is c/o ANSYS, Inc., 201 Johnson Road, Houston,
    PA 15342-1300.
   
(2) All percentages have been determined as of June 15, 1996 in accordance
    with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
    "Exchange Act"). For purposes of this table, a person or group of persons
    is deemed to have "beneficial ownership" of any shares of Common Stock
    which such person has the right to acquire within 60 days after the date
    of this Prospectus. For purposes of computing the percentage of
    outstanding shares of Common Stock held by each person or group of persons
    named above, any security which such person or persons has or have the
    right to acquire within 60 days after the date of this Prospectus is
    deemed to be outstanding, but is not deemed to be outstanding for the
    purpose of computing the percentage ownership of any other person. As of
    June 15, 1996, a total of 12,652,760 shares of Common Stock were issued
    and outstanding; upon completion of this offering and on July 15, 1996,
    options to acquire 27,500 and 67,500 shares of Common Stock will become
    exercisable, respectively.     
 
(3) The stockholders comprising the TA Associates Group, the stockholders
    comprising the Chestnut Group, Mr. Peter Smith and Dr. Swanson have
    granted the underwriters a thirty-day option to purchase up to 532,500
    additional shares of Common Stock solely to cover over allotments, if any.
    If the underwriters exercise this option in full, stockholders in the TA
    Associates Group will sell 336,162 shares, stockholders
 
                                      54

      
   within the Chestnut Group will sell 24,655 shares, Mr. Peter Smith will
   sell 32,046 shares and Dr. Swanson will sell 139,637 shares, resulting in
   reductions in the percentages of the shares beneficially owned by them
   after the offering to 40.9%, 3%, 3.9% and 17%, respectively.     
 
(4) Includes (i) 4,968,533 shares of Common Stock owned by Advent VII L.P.,
    (ii) 1,009,726 shares of Common Stock owned by Advent Atlantic and Pacific
    II Limited Partnership, (iii) 364,029 shares of Common Stock owned by
    Advent Industrial II Limited Partnership, (iv) 496,854 shares of Common
    Stock owned by Advent New York L.P. and (v) 104,339 shares of Common Stock
    owned by TA Venture Investors, L.P. Advent VII L.P., Advent Atlantic and
    Pacific II Limited Partnership, Advent Industrial II Limited Partnership,
    Advent New York L.P. and TA Venture Investors, L.P. are part of an
    affiliated group of investment partnerships referred to, collectively, as
    the TA Associates Group. The general partner of Advent VII, L.P. is TA
    Associates VII, L.P. The general partner of each of Advent New York L.P.
    and Advent Industrial II Limited Partnership is TA Associates VI, L.P. The
    general partner of Advent Atlantic and Pacific II Limited Partnership is
    TA Associates AAP II Partners, L.P. The general partner of each of TA
    Associates VII, L.P., TA Associates VI, L.P. and TA Associates AAP II
    Partners, L.P. is TA Associates, Inc. In such capacity, TA Associates,
    Inc. exercises sole voting and investment power with respect to all of the
    shares held of record by the named investment partnerships, with the
    exception of those shares held by TA Venture Investors, L.P.; individually
    no stockholder, director or officer of TA Associates, Inc. is deemed to
    have or share such voting or investment power. Principals and employees of
    TA Associates, Inc. (including Ms. Morby and Mr. Kafker, directors of the
    Company) comprise the general partners of TA Venture Investors, L.P. In
    such capacity, Ms. Morby and Mr. Kafker may be deemed to share voting and
    investment power with respect to the 104,339 shares held of record by TA
    Venture Investors, L.P. Ms. Morby and Mr. Kafker disclaim beneficial
    ownership of such shares, except in the case of Mr. Kafker to the extent
    of the 13,482 shares as to which he holds a pecuniary interest.
 
(5) Includes 591,840 and 223,680 shares which become vested on March 14, 1997
    and 1998, respectively, under terms giving the Company the right to
    purchase unvested shares at a price of approximately $.14 per share upon
    any termination of Dr. Swanson's employment for cause prior to the
    relevant vesting date, and 368,160 and 591,840 shares which vest on March
    14, 1998 and 1999, respectively, under terms giving the Company the right
    to purchase unvested shares at a price of $.11 per share upon any
    voluntary termination or termination for cause of Dr. Swanson's employment
    prior to the relevant vesting date. Also includes 25,000 shares held by
    Janet L. Swanson, Dr. Swanson's wife, as to which shares Dr. Swanson
    disclaims beneficial ownership. Excludes 25,000 shares held by each of
    Daniel S. Swanson, Andrew C. Swanson and Eric H. Swanson, Dr. Swanson's
    adult children, as to which shares Dr. Swanson disclaims beneficial
    ownership. Excludes unvested options to purchase 10,000 shares.
   
(6) Includes 218,920 shares of restricted stock which will become vested in
    equal monthly installments through March 1998 under terms giving the
    Company the right to purchase and Mr. Smith the right to sell to the
    Company unvested shares at a price of $.40 per share upon any termination
    of Mr. Smith's employment prior to the relevant vesting date and 135,860
    shares of restricted stock which will become vested on February 28, 2001,
    subject to acceleration in certain circumstances as described under
    "Management--Employment Agreements," under terms giving the Company the
    right to purchase and Mr. Smith the right to sell to the Company unvested
    shares at a price of $2.40 per share upon any termination of Mr. Smith's
    employment prior to the relevant vesting date. Excludes unvested options
    to purchase 135,860 shares as described under "Management--Employment
    Agreements" and 100,000 shares beneficially owned by a trust for the
    benefit of Mr. Smith's adult children, as to which latter shares Mr. Smith
    disclaims beneficial ownership.     
 
(7) Includes 381,909 shares held by Chestnut III Limited Partnership and
    127,410 shares held by Chestnut Capital International III L.P. Messrs.
    Jonathan J. Fleming, Michael F. Schiavo, Peter A. Schober and John G.
    Turner are the general partners of Chestnut III Management Limited
    Partnership ("CMLP") and MVP Capital Limited Partnership ("MVP"). CMLP has
    voting and investment power to act for Chestnut III Limited Partnership.
    MVP has voting and investment power to act for Chestnut Capital
    International III L.P.
 
                                      55

(8) Includes 80,000 shares of restricted stock held by Mr. Zera which will
    become vested in equal annual installments of 20,000 shares on each of
    November 15, 1996, 1997, 1998 and 1999 and are subject to repurchase at a
    price of $.40 per share upon any termination of Mr. Zera's employment
    prior to the relevant vesting date. Excludes unvested options to purchase
    10,000 shares.
   
(9) Includes 48,000 shares of restricted stock held by Mr. Sherbin which will
    become vested in equal annual installments of 12,000 shares on each of
    November 20, 1996, 1997, 1998 and 1999 and are subject to repurchase at a
    price of $.40 per share upon any termination of Mr. Sherbin's employment
    prior to the relevant vesting date. Excludes unvested options to purchase
    34,500 shares.     
   
(10) Includes 12,000 shares of restricted stock held by Mr. Imgrund which will
     become vested in equal annual installments of 3,000 shares on each of
     July 15, 1996, 1997, 1998 and 1999 and are subject to repurchase at a
     price of $.10 per share upon any termination of Mr. Imgrund's employment
     prior to the relevant vesting date. Excludes unvested options to purchase
     33,000 shares.     
 
(11) Includes 16,000 and 10,000 shares of restricted stock held by Mr.
     Eichhorn which will become vested in equal annual installments of 4,000
     and 2,000 shares, respectively, on each of November 15, 1996, 1997, 1998
     and 1999 and each of December 29, 1996, 1997, 1998, 1999 and 2000,
     respectively, and are subject to repurchase at a price of $.01 and $.40
     per share, respectively, upon any termination of Mr. Eichhorn's service
     as a director prior to the relevant vesting date. Excludes unvested
     options to purchase 10,000 shares.
 
(12) Excludes unvested options to purchase 20,000 shares.
 
(13) Includes 13,482 shares beneficially owned by Mr. Kafker through TA
     Venture Investors, L.P., all of which shares are included in the
     6,943,481 shares described in footnote (4) above. Does not include any
     shares beneficially owned by Advent VII L.P., Advent Atlantic and Pacific
     II Limited Partnership, Advent Industrial II Limited Partnership or
     Advent New York L.P., of which Mr. Kafker disclaims beneficial ownership.
 
(14) Includes 5,759 shares held by Ms. Morby's husband through TA Venture
     Investors, L.P., all of which shares are included in the 6,943,481 shares
     described in footnote (4) above, as to which shares Ms. Morby disclaims
     beneficial ownership. Excludes 5,759 shares beneficially owned through TA
     Venture Investors, L.P., by a trust for the benefit of Ms. Morby's adult
     children, as to which shares Ms. Morby disclaims beneficial ownership;
     all of such shares are included in the 6,943,481 shares described in
     footnote (4) above. Does not include any shares beneficially owned by
     Advent VII L.P., Advent Atlantic and Pacific II Limited Partnership,
     Advent Industrial II Limited Partnership or Advent New York L.P., of
     which Ms. Morby disclaims beneficial ownership.
   
(15) Includes 20,000 shares of restricted stock owned by a trust primarily for
     the benefit of Mr. Smith's adult children and of which Mr. Smith's wife
     is a trustee. Such shares will become vested in equal annual installments
     of 4,000 shares on each of December 28, 1996, 1997, 1998, 1999 and 2000
     and are subject to repurchase at a price of $.40 per share upon any
     termination of Mr. Smith's service as a director prior to the relevant
     vesting date. Excludes unvested options to purchase 10,000 shares held by
     Mr. Smith.     
 
                                      56

                         DESCRIPTION OF CAPITAL STOCK
 
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
 
  The authorized capital stock of the Company upon completion of this offering
will consist of 50,000,000 shares of Common Stock, of which 16,152,760 shares
will be issued and outstanding, and 2,000,000 shares of undesignated preferred
stock issuable in one or more series by the Board of Directors ("Preferred
Stock"), of which no shares will be issued and outstanding.
 
  Common Stock. The holders of Common Stock are entitled to one vote per share
on all matters to be voted on by stockholders and are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor. Any issuance of Preferred
Stock with a dividend preference over Common Stock could adversely affect the
dividend rights of holders of Common Stock. Holders of Common Stock are not
entitled to cumulative voting rights. Therefore, the holders of a majority of
the shares voted in the election of directors can elect all of the directors
then standing for election, subject to any voting rights of the holders of any
then outstanding Preferred Stock. The holders of Common Stock have no
preemptive or other subscription rights, and there are no conversion rights or
redemption or sinking fund provisions with respect to the Common Stock, except
for contractual repurchase arrangements relative to unvested restricted stock
held by employees and directors upon termination of their employment or
service. All outstanding shares of Common Stock, including the shares offered
hereby, are, or will be upon completion of this offering, fully paid and non-
assessable.
 
  The Company's Amended and Restated By-laws (the "By-laws"), which will be
effective upon completion of this offering, provide, subject to the rights of
the holders of any Preferred Stock then outstanding, that the number of
directors shall be fixed by the Board of Directors. The directors, other than
those who may be elected by the holders of any Preferred Stock, are divided
into three classes, as nearly equal in number as possible, with each class
serving for a three-year term. Subject to any rights of the holders of any
Preferred Stock to elect directors, and to remove any director whom the
holders of any Preferred Stock had the right to elect, any director of the
Company may be removed from office only with cause and by the affirmative vote
of at least two-thirds of the total votes which would be eligible to be cast
by stockholders in the election of such director.
 
  Undesignated Preferred Stock. The Board of Directors of the Company is
authorized, without further action of the stockholders, to issue up to
2,000,000 shares of Preferred Stock in one or more series and to fix the
designations, powers, preferences and the relative participating, optional or
other special rights of the shares of each series and any qualifications,
limitations and restrictions thereon. Any such Preferred Stock issued by the
Company may rank prior to the Common Stock as to dividend rights, liquidation
preference or both, may have full or limited voting rights and may be
convertible into shares of Common Stock.
 
  The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
acquiring or seeking to acquire, a significant portion of the outstanding
Common Stock.
 
CERTAIN PROVISIONS OF CERTIFICATE AND BY-LAWS
 
  A number of provisions of the Company's Restated Certificate of
Incorporation (the "Certificate") and By-laws which will be effective upon
completion of this offering concern matters of corporate governance and the
rights of stockholders. Certain of these provisions, as well as the ability of
the Board of Directors to issue shares of Preferred Stock and to set the
voting rights, preferences and other terms thereof, may be deemed to have an
anti-takeover effect and may discourage takeover attempts not first approved
by the Board of Directors, including takeovers which stockholders may deem to
be in their best interests. To the extent takeover attempts are discouraged,
temporary fluctuations in the market price of the Company's Common Stock,
which may result from actual or rumored takeover attempts, may be inhibited.
These provisions, together with the classified Board of Directors and the
ability of the Board of Directors to issue Preferred Stock without further
stockholder action,
 
                                      57

   
also could delay or frustrate the removal of incumbent directors or the
assumption of control by stockholders, even if such removal or assumption
would be beneficial to stockholders of Company. These provisions also could
discourage or make more difficult a merger, tender offer or proxy contest,
even if favorable to the interests of stockholders, and could depress the
market price of the Common Stock. The Board of Directors believes that these
provisions are appropriate to protect the interests of the Company and all of
its stockholders. The Board of Directors has no present plans to adopt any
other measures or devices which may be deemed to have an "anti-takeover
effect."     
 
  Meetings of Stockholders. The By-laws provide that a special meeting of
stockholders may be called only by the Board of Directors unless otherwise
required by law. The By-laws provide that only those matters set forth in the
notice of the special meeting may be considered or acted upon at that special
meeting unless otherwise provided by law. In addition, the By-laws set forth
certain advance notice and informational requirements and time limitations on
any director nomination or any new proposal which a stockholder wishes to make
at an annual meeting of stockholders.
 
  No Stockholder Action by Written Consent. The Certificate provides that any
action required or permitted to be taken by the stockholders of the Company at
an annual or special meeting of stockholders must be effected at a duly called
meeting and may not be taken or effected by a written consent of stockholders
in lieu thereof.
 
  Indemnification and Limitation of Liability. The By-laws provide that
directors and officers of the Company shall be, and in the discretion of the
Board of Directors non-officer employees may be, indemnified by the Company to
the fullest extent authorized by Delaware law, as it now exists or may in the
future be amended, against all expenses and liabilities reasonably incurred in
connection with service for or on behalf of the Company. The By-laws also
provide that the right of directors and officers to indemnification shall be a
contract right and shall not be exclusive of any other right now possessed or
hereafter acquired under any by-law, agreement, vote of stockholders or
otherwise. The Certificate contains a provision permitted by Delaware law that
generally eliminates the personal liability of Directors for monetary damages
for breaches of their fiduciary duty, including breaches involving negligence
or gross negligence in business combinations, unless the director has breached
his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock repurchase in violation of the Delaware General Corporation
Law or obtained an improper personal benefit. This provision does not alter a
director's liability under the federal securities laws and does not affect the
availability of equitable remedies, such as an injunction or rescission, for
breach of fiduciary duty. The Company has also entered into indemnification
agreements with each of its directors reflecting the foregoing and requiring
the advancement of expenses in proceedings involving the directors in most
circumstances.
 
  Amendment of the Certificate. The Certificate provides that an amendment
thereof must first be approved by a majority of the Board of Directors and
(with certain exceptions) thereafter approved by a majority (or 80% in the
case of any proposed amendment to the provisions of the Certificate relating
to the composition of the Board or amendments of the Certificate) of the total
votes eligible to be cast by holders of voting stock with respect to such
amendment.
 
  Amendment of By-laws. The Certificate provides that the By-laws may be
amended or repealed by the Board of Directors or by the stockholders. Such
action by the Board of Directors requires the affirmative vote of a majority
of the directors then in office. Such action by the stockholders requires the
affirmative vote of at least two-thirds of the total votes eligible to be cast
by holders of voting stock with respect to such amendment or repeal at an
annual meeting of stockholders or a special meeting called for such purpose
unless the Board of Directors recommends that the stockholders approve such
amendment or repeal at such meeting, in which case such amendment or repeal
shall only require the affirmative vote of a majority of the total votes
eligible to be cast by holders of voting stock with respect to such amendment
or repeal.
 
  Ability to Adopt Shareholder Rights Plan. The Board of Directors may in the
future resolve to issue shares of Preferred Stock or rights to acquire such
shares, to implement a shareholder rights plan which creates voting or other
impediments or under which shares are distributed to a third-party investor,
to a group of investors or
 
                                      58

stockholders or to an employee stock ownership plan to discourage persons
seeking to gain control of the Company by means of a merger, tender offer,
proxy contest or otherwise if such change in control is not in the best
interest of the Company and its stockholders. The Board of Directors has no
present intention of adopting a shareholder rights plan and is not aware of
any attempt to obtain control of the Company.
 
STATUTORY BUSINESS COMBINATION PROVISION
 
  Upon completion of the offering, the Company will be subject to the
provisions of Section 203 of the Delaware General Corporation Law ("Section
203"). Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations
with a person, or an affiliate or associate of such person, who is an
"interested stockholder" for a period of three years from the date that such
person became an interested stockholder unless: (i) the transaction resulting
in a person becoming an interested stockholder, or the business combination,
is approved by the board of directors of the corporation before the person
becomes an interested stockholder; (ii) the interested stockholder acquired
85% or more of the outstanding voting stock of the corporation in the same
transaction that makes it an interested stockholder (excluding shares owned by
persons who are both officers and directors of the corporation, and shares
held by certain employee stock ownership plans); or (iii) on or after the date
the person becomes an interested stockholder, the business combination is
approved by the corporation's board of directors and by the holders of at
least 66 2/3% of the corporation's outstanding voting stock at an annual or
special meeting, excluding shares owned by the interested stockholder. Under
Section 203, an "interested stockholder" is defined (with certain limited
exceptions) as any person that is (i) the owner of 15% or more of the
outstanding voting stock of the corporation or (ii) an affiliate or associate
of the corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within the three-year period immediately
prior to the date on which it is sought to be determined whether such person
is an interested stockholder.
 
  A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or by-laws by action
of its stockholders to exempt itself from coverage, provided that such by-law
or charter amendment shall not become effective until 12 months after the date
it is adopted. Neither the Certificate nor the By-laws contains any such
exclusion.
 
TRANSFER AGENT AND REGISTRAR
     
  The Company has selected Chase Mellon Shareholder Services, L.L.C. as the
transfer agent and registrar for the Common Stock.     
 
                                      59

                        SHARES ELIGIBLE FOR FUTURE SALE
 
  Upon completion of the offering, the Company will have a total of 16,152,760
shares of Common Stock outstanding. Of these shares, the 3,550,000 shares of
Common Stock offered hereby will be freely tradable without restriction or
registration under the Securities Act by persons other than "affiliates" of
the Company, as defined in the Securities Act, who would be required to sell
such shares under Rule 144 under the Securities Act. The remaining 12,602,760
shares of Common Stock outstanding will be "restricted securities" as that
term is defined by Rule 144 (the "Restricted Shares"). The Restricted Shares
were issued and sold by the Company in private transactions in reliance upon
exemptions from registration under the Securities Act.
 
  Of the Restricted Shares, 10,095,780 Restricted Shares will be eligible for
sale in the public market pursuant to Rule 144, certain of which may be sold
under Rule 144 in accordance with Rule 701 under the Securities Act as
described below, beginning 90 days after the date of this Prospectus.
Substantially all of such shares are subject to the lock-up agreements
described below. The remaining 2,506,980 Restricted Shares are subject to
vesting provisions and will become eligible for sale in the public market
under Rule 144 at various times as they become vested.
 
  In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least two years (including the holding period of any prior owner except
an affiliate), including persons who may be deemed "affiliates" of the
Company, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of one percent of the number of shares
of Common Stock then outstanding (approximately 161,527 shares upon completion
of the offering) or the average weekly trading volume of the Common Stock
during the four calendar weeks preceding the filing of a Form 144 with respect
to such sale. Sales under Rule 144 are also subject to certain manner of sale
provisions and notice requirements, and to the availability of current public
information about the Company. In addition, a person who is not deemed to have
been an affiliate of the Company at the time during the 90 days preceding a
sale, and who has beneficially owned the shares proposed to be sold for at
least three years (including the holding period of any prior owner except an
affiliate), would be entitled to sell such shares under Rule 144(k) without
regard to the requirements described above. Rule 144 also provides that
affiliates who are selling shares that are not Restricted Shares must
nonetheless comply with the same restrictions applicable to Restricted Shares
with the exception of the holding period requirement. The Securities and
Exchange Commission has recently proposed to reduce the two- and three-year
holding periods under Rule 144 to one- and two-year holding periods. If
adopted such amendment will permit earlier resales of shares of Common Stock.
 
  Rule 701 promulgated under the Securities Act provides that shares of Common
Stock acquired pursuant to the exercise of outstanding options or the grant of
Common Stock pursuant to written compensation plans or contracts prior to this
offering may be resold by persons other than affiliates, beginning 90 days
after the date of this Prospectus, subject only to the manner of sale
provisions of Rule 144, and by affiliates, beginning 90 days after the date of
this Prospectus, subject to all provisions of Rule 144 except its two-year
minimum holding period.
 
  The Company's executive officers and directors, the Selling Stockholder and
certain other stockholders of the Company (who in the aggregate hold
substantially all of the 10,095,780 Restricted Shares upon completion of the
offering) have agreed not to sell or offer to sell or otherwise dispose of any
shares of Common Stock currently held by them, any right to acquire any shares
of Common Stock or any securities exercisable for or convertible into any
shares of Common Stock for a period of 180 days after the date of this
Prospectus without the prior written consent of Alex. Brown & Sons
Incorporated. In addition, the Company has agreed that for a period of 180
days after the date of this Prospectus it will not, without the prior written
consent of Alex. Brown & Sons Incorporated, offer, sell or otherwise dispose
of any shares of Common Stock or options, warrants or securities convertible
into or exchangeable for shares of Common Stock except for the shares of
Common Stock offered hereby, shares issued and options granted pursuant to the
1994 Stock Plan, the 1996 Stock Plan and the Purchase Plan and shares issued
or to be issued in acquisitions, if any.

                                      60

   
  As of June 15, 1996, options to purchase 868,110 shares of Common Stock were
outstanding, none of which were exercisable. An additional 2,250,000 and
210,000 shares of Common Stock are reserved for future issuance under the 1996
Stock Plan and the Purchase Plan, respectively. See "Management--Employee
Stock and Other Benefit Plans--1996 Stock Option and Grant Plan" and "--1996
Employee Stock Purchase Plan." The Company intends to file a registration
statement on Form S-8 under the Securities Act to register all shares of
Common Stock issuable pursuant to the 1996 Stock Plan or the Purchase Plan.
The Company expects to file this registration statement approximately 90 days
following the date of this Prospectus, and such registration statement will
become effective upon filing. Shares covered by this registration statement
will thereupon be eligible for sale in the public markets, subject to Rule 144
limitations applicable to affiliates and the lock-up agreements described
above.     
 
  The holders of 10,412,000 shares of Common Stock have the right in certain
circumstances to require the Company to register their shares under the
Securities Act for resale to the public and holders of 11,971,860 shares have
the right to include their shares in a registration statement filed by the
Company under the terms of the Stockholders' Agreement. See "Certain
Transactions."
 
  Prior to the offering, there has been no public market for the Common Stock
and no predictions can be made of the effect, if any, that the sale or
availability for sale of shares of additional Common Stock will have on the
market price of the Common Stock. Nevertheless, sales of substantial amounts
of such shares in the public market, or the perception that such sales could
occur, could materially and adversely affect the market price of the Common
Stock and could impair the Company's future ability to raise capital through
an offering of its equity securities. See "Risk Factors--Shares Eligible for
Future Sale."
 
                                      61

                                 UNDERWRITING
 
  Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), through their representatives
Alex. Brown & Sons Incorporated, Cowen & Company, Wessels, Arnold & Henderson,
L.L.C. and Parker/Hunter Incorporated (the "Representatives"), have severally
agreed to purchase from the Company the following respective numbers of shares
of Common Stock at the initial public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus:

                                                                       NUMBER OF
                             UNDERWRITER                                SHARES
                             -----------                               ---------
                                                                    
Alex. Brown & Sons Incorporated.......................................
Cowen & Company.......................................................
Wessels, Arnold & Henderson, L.L.C. ..................................
Parker/Hunter Incorporated............................................
 
    Total.............................................................
                                                                          ===

  The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all of the shares of the Common Stock offered hereby if any shares
are purchased.
 
  The Company and the Selling Stockholder have been advised by the
Representatives that the Underwriters propose to offer the shares of Common
Stock to the public at the initial public offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $     per share. See "Principal and Selling
Stockholders." The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $     per share to certain other dealers. After
commencement of the offering, the offering price and other selling terms may
be changed by the Representatives.
 
  Certain stockholders of the Company have granted to the Underwriters an
option, exercisable not later than 30 days after the date of this Prospectus,
to purchase up to 532,500 additional shares of Common Stock at the initial
public offering price less the underwriting discounts and commission set forth
on the cover page of this Prospectus. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof that the number of shares
of Common Stock to be purchased by it shown in the above table bears to
3,550,000 and the stockholders will be obligated, pursuant to the option, to
sell such shares to the Underwriters. The Underwriters may exercise such
option only to cover over-allotments made in connection with the sale of
Common Stock offered hereby. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the 3,550,000 shares are
being offered.
 
  The Underwriting Agreement contains covenants of indemnity and contribution
among the Underwriters, the Company, the Selling Stockholder and the
stockholders providing the over-allotment shares regarding certain
liabilities, including liabilities under the Securities Act.

                                      62

  The Company has agreed not to offer, sell or otherwise dispose of any shares
of Common Stock or options, warrants or securities convertible into or
exchangeable for Common Stock for a period of 180 days from the date of this
Prospectus without the prior written consent of Alex. Brown & Sons
Incorporated, except for the shares of Common Stock offered hereby, shares
issued and options granted pursuant to the 1994 Stock Plan, the 1996 Stock
Plan and Purchase Plan and shares issued or to be issued in acquisitions, if
any. The Company's executive officers, directors and stockholders who hold
substantially all of the 10,095,780 Restricted Shares have agreed not to sell,
offer to sell or otherwise dispose of any Common Stock for a period of 180
days from the date of this Prospectus without the prior written consent of
Alex. Brown & Sons Incorporated.
 
  The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.
 
  Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the Common Stock
will be determined by negotiations among the Company, the Representatives and
the Selling Stockholder. Among the factors to be considered in such
negotiations will be prevailing market conditions, the results of operations
of the Company in recent periods, the market capitalizations and stages of
development of other companies which the Company, the Representatives and the
Selling Stockholder believe to be comparable to the Company, estimates of the
business potential of the Company, the present state of the Company's
development and other factors deemed relevant by the Company, the
Representatives and the Selling Stockholder.
 
                                 LEGAL MATTERS
 
  The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Goodwin, Procter & Hoar llp, Boston, Massachusetts.
Certain legal matters related to this offering will be passed upon for the
Underwriters by Piper & Marbury L.L.P., Baltimore, Maryland.
 
                                    EXPERTS
 
  The consolidated balance sheets of the Company as of December 31, 1994 and
1995 and the consolidated statements of operations, stockholders' equity
deficit and cash flows of the Company for the period March 14, 1994 (date of
acquisition) through December 31, 1994 and the year ended December 31, 1995
and of the Company's predecessor for the year ended December 31, 1993 and the
period from January 1, 1994 through March 13, 1994, included in this
Prospectus have been included herein in reliance on the reports of Coopers &
Lybrand L.L.P., independent accountants, given on their authority as experts
in accounting and auditing.
 
                            ADDITIONAL INFORMATION
 
  The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a registration statement on Form S-1 under the Securities
Act with respect to the Common Stock being offered by this Prospectus. This
Prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules filed therewith. For
further information about the Company and the securities offered by this
Prospectus, reference is made to the registration statement and to the
financial statements, schedules and exhibits filed as a part of it. Statements
contained in this Prospectus about the contents of any contract or any other
documents are not necessarily complete, and in each instance, reference is
made to the copy of the contract or document filed as an exhibit to the
registration statement, each such statement being qualified in all respects by
such reference.
 
  A copy of the registration statement may be inspected by anyone without
charge and may be obtained at prescribed rates at the Commission at the Public
Reference Section of the Commission, maintained by the
 
                                      63

Commission at its principal office located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, the New York Regional Office located at Seven World
Trade Center, New York, New York 10048, and the Chicago Regional Office
located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661.
 
  The Company intends to furnish its stockholders with annual reports
containing audited financial statements certified by its independent auditors
and quarterly reports for the first three quarters of each fiscal year
containing unaudited financial information.
 
                                      64

                         INDEX TO FINANCIAL STATEMENTS

                                                                           PAGES
                                                                           -----
                                                                        
Report of Independent Accountants........................................  F-2
Report of Independent Accountants........................................  F-3
Consolidated Balance Sheets as of December 31, 1994 and 1995 and March
31, 1996 (unaudited).....................................................  F-4
Consolidated Statements of Operations for the year ended December 31,
1993 and for the period from January 1, 1994 through March 13, 1994, and
for the period from March 14, 1994 (date of acquisition) through December
31, 1994, for the year ended December 31, 1995 and for the three months
ended March 31, 1995 and 1996 (unaudited)................................  F-6
Consolidated Statements of Stockholders' Equity for the year ended
December 31, 1993 and for the period January 1, 1994 through March 13,
1994.....................................................................  F-7
Consolidated Statements of Stockholders' Equity (Deficit) for the period
from March 14, 1994
(date of acquisition) through December 31, 1994 and for the year ended
December 31, 1995 and
for the three months ended March 31, 1996 (unaudited)....................  F-8
Consolidated Statements of Cash Flows for the year ended December 31,
1993 and for the period from January 1, 1994 through March 13, 1994, and
for the period from March 14, 1994 (date of acquisition) through December
31, 1994, for the year ended December 31, 1995 and for the three months
ended March 31, 1995 and 1996 (unaudited)................................  F-9
Notes to Consolidated Financial Statements...............................  F-11

                                      F-1

                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors of   
  ANSYS, Inc. and Subsidiaries:
 
  We have audited the accompanying consolidated balance sheets of ANSYS, Inc.
(formerly SAS Holdings, Inc.) and Subsidiaries as of December 31, 1994 and
1995, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the period from March 14, 1994 (date of
acquisition) through December 31, 1994 and for the year ended December 31,
1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of ANSYS, Inc. and Subsidiaries as of December 31, 1994 and 1995, and the
consolidated results of their operations and their cash flows for the period
from March 14, 1994 (date of acquisition) through December 31, 1994 and for
the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
 
/s/ Coopers & Lybrand L.L.P.
 
Pittsburgh, Pennsylvania 
April 19, 1996
 
                                      F-2

                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors of   
  Swanson Analysis Systems, Inc.:
 
  We have audited the accompanying combined statements of operations,
stockholder's equity and cash flows of Swanson Analysis Systems, Inc.
(described in Note 1) for the year ended December 31, 1993 and for the period
from January 1, 1994 through March 13, 1994. These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of operations and the cash flows
of Swanson Analysis Systems, Inc. for the year ended December 31, 1993 and for
the period from January 1, 1994 through March 13, 1994, in conformity with
generally accepted accounting principles.
 
/s/ Coopers & Lybrand L.L.P.
 
Pittsburgh, Pennsylvania 
April 19, 1996
 
                                      F-3

                          ANSYS, INC. AND SUBSIDIARIES
 
                         CONSOLIDATED BALANCE SHEETS
                DECEMBER 31, 1994 AND 1995 AND MARCH 31, 1996

                                                 DECEMBER 31,
                                            -----------------------  MARCH 31,
                                               1994        1995        1996
                                            ----------- ----------- -----------
                                                                    (UNAUDITED)
                                                           
                  ASSETS
Current assets:
  Cash and cash equivalents...............  $ 4,299,712 $ 8,091,305 $ 5,576,765
  Accounts receivable, less allowance for
     doubtful accounts of $650,000 in
     1994, $700,000 in 1995 and $712,500
     in 1996:
    Software licenses.....................    5,734,648   7,665,862   9,304,299
    Maintenance and service...............           --          --   2,107,048
    Due from predecessor stockholder......      565,287          --          --
    Due from officers.....................           --          --     431,664
  Refundable and prepaid income taxes.....    1,046,759   1,496,662   1,133,238
  Other current assets....................      407,569     438,802     461,342
  Deferred income taxes...................      279,000     356,000     348,000
                                            ----------- ----------- -----------
   Total current assets...................   12,332,975  18,048,631  19,362,356
Property and equipment, net...............    2,043,317   3,163,405   2,985,451
Capitalized software costs, net of
accumulated amortization of  $4,055,037 in
1994, $9,178,692 in 1995 and $10,460,802
 in 1996..................................   11,311,421   6,206,416   4,924,306
Goodwill, net of accumulated amortization
of $3,871,412 in  1994, $8,761,616 in 1995
and $9,984,167 in 1996....................   10,799,182   5,908,978   4,686,427
Other intangibles.........................    3,434,577   2,807,368   2,650,593
Deferred income taxes.....................    4,748,000   6,786,000   7,389,000
                                            ----------- ----------- -----------
   Total assets...........................  $44,669,472 $42,920,798 $41,998,133
                                            =========== =========== ===========

 
   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                      F-4

                          ANSYS, INC. AND SUBSIDIARIES
 
                         CONSOLIDATED BALANCE SHEETS
                DECEMBER 31, 1994 AND 1995 AND MARCH 31, 1996

                                              DECEMBER 31,
                                         ------------------------   MARCH 31,
                                            1994         1995         1996
                                         -----------  -----------  -----------
                                                                   (UNAUDITED)
                                                           
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
  Accounts payable.....................  $   539,859  $   639,108  $   109,978
  Accrued bonuses......................    1,005,897    1,951,723      614,548
  Accrued pension and profit sharing...      815,365      387,544      926,949
  Other accrued expenses and
liabilities............................    1,109,247    1,752,729    1,257,610
  Accrued interest payable on
subordinated debt......................           --    1,154,809    1,582,566
  Customer prepayments.................       79,579      972,102    1,432,432
  Deferred revenue.....................    1,961,081    2,994,911    3,994,386
  Current portion of long-term debt....    5,000,000    5,000,000    5,250,000
                                         -----------  -----------  -----------
    Total current liabilities..........   10,511,028   14,852,926   15,168,469
Long-term debt, less current portion,
 including amounts due to related
 parties of $16,696,356, $17,204,301
 and $17,204,301 in 1994, 1995 and
 1996, respectively....................   37,696,356   33,204,301   31,704,301
                                         -----------  -----------  -----------
    Total liabilities..................   48,207,384   48,057,227   46,872,770
Redeemable preferred stock, $.01 par
 value, 800 shares authorized; 412
 shares issued and outstanding; at
 liquidation value, including accrued
 dividends of $326,882, and $772,388
 and $873,977 in 1994, 1995 and 1996,
 respectively..........................    4,446,882    4,892,388    4,993,977
Stockholders' equity (deficit):
  Common stock, $.01 par value;
   15,000,000 shares authorized;
   10,626,000 shares issued and
   outstanding at December 31,    
   1994 and 1995; 11,721,860 shares 
   issued and outstanding at 
   March 31, 1996......................      106,260      106,260      117,219
  Class A common stock, $.01 par value;
   nonvoting, 2,000,000 shares
   authorized; 963,750 shares issued at
   December 31, 1994 and 993,750 shares
   issued at December 31, 1995 and 
   March 31, 1996......................        9,638        9,938        9,938
  Additional paid-in capital...........    1,339,677    1,351,377    1,772,082
  Adjustment for predecessor basis.....   (7,010,000)  (7,010,000)  (7,010,000)
  Less treasury stock, at cost: 54,850
     shares of Class A common stock
     held at December 31, 1995 and
     62,850 shares held at 
     March 31, 1996....................           --      (10,285)     (11,085)
  Retained earnings (deficit)..........   (2,116,369)  (4,141,607)  (4,444,268)
  Notes receivable from stockholders...     (314,000)    (334,500)    (302,500)
                                         -----------  -----------  -----------
    Total stockholders' equity
     (deficit).........................   (7,984,794) (10,028,817)  (9,868,614)
                                         -----------  -----------  -----------
      Total liabilities, preferred and
       common stockholders' equity
        (deficit)......................  $44,669,472  $42,920,798  $41,998,133
                                         ===========  ===========  ===========

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
 
                                      F-5

                  ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           PREDECESSOR
                                                    --------------------------
                                                                    PERIOD
                                                                  JANUARY 1,
                                                                 TO MARCH 13,
                                                       1993          1994
                                                    -----------  -------------
                                                           
Revenue:
 Software licenses..........................        $27,495,022   $5,984,237
 Maintenance and service....................          4,109,060      584,962
                                                    -----------   ----------
   Total revenue............................         31,604,082    6,569,199
                                                    -----------   ----------
Cost of sales:
 Software licenses..........................          4,772,051      761,060
 Maintenance and service....................          1,330,750      183,856
                                                    -----------   ----------
   Total cost of sales......................          6,102,801      944,916
                                                    -----------   ----------
Gross profit................................         25,501,281    5,624,283
Operating expenses:
 Selling and marketing......................          3,762,964      672,980
 Research and   development.................          5,972,026    1,349,498
 Amortization...............................            936,839      300,000
 General and   administrative...............          7,181,472    1,234,049
                                                    -----------   ----------
   Total operating     expenses.............         17,853,301    3,556,527
                                                    -----------   ----------
Operating income (loss).....................          7,647,980    2,067,756
Interest expense............................           (305,883)     (61,670)
Other income................................            778,179       39,592
                                                    -----------   ----------
Income (loss) before  income tax benefit....          8,120,276    2,045,678
Income tax benefit..........................                 --           --
                                                    -----------   ----------
Net income (loss)...........................        $ 8,120,276   $2,045,678
                                                    ===========   ==========
Redeemable preferred stock dividends........
Net income (loss) applicable to common
 stock......................................
Net income (loss) per  common share.........
Shares used in computing  per common share
 amounts....................................
- --------------------------------------------------

                                                                       THE COMPANY
                                                    ----------------------------------------------------
                                                       PERIOD
                                                    MARCH 14, TO                      MARCH 31
                                                    DECEMBER 31,               -------------------------
                                                        1994         1995         1995         1996
                                                    ------------- ------------ ------------ ------------
                                                                                     (UNAUDITED)
                                                                                
Revenue:
 Software licenses..........................         $22,309,661  $32,604,044  $ 7,104,177  $ 8,385,166
 Maintenance and service....................           3,943,995    7,011,891    1,121,774    2,348,243
                                                    ------------- ------------ ------------ ------------
   Total revenue............................          26,253,656   39,615,935    8,225,951   10,733,409
                                                    ------------- ------------ ------------ ------------
Cost of sales:
 Software licenses..........................           3,033,816    3,331,250      955,589      666,284
 Maintenance and service....................             708,802    1,571,615      272,973      528,768
                                                    ------------- ------------ ------------ ------------
   Total cost of sales......................           3,742,618    4,902,865    1,228,562    1,195,052
                                                    ------------- ------------ ------------ ------------
Gross profit................................          22,511,038   34,713,070    6,997,389    9,538,357
Operating expenses:
 Selling and marketing......................           3,835,694    7,525,908    1,648,960    2,168,724
 Research and   development.................           5,410,301    8,328,703    2,019,292    2,329,774
 Amortization...............................           8,420,088   10,641,123    2,659,700    2,719,639
 General and   administrative...............           4,606,084    6,856,953    1,492,922    1,850,446
                                                    ------------- ------------ ------------ ------------
   Total operating     expenses.............          22,272,167   33,352,687    7,820,874    9,068,583
                                                    ------------- ------------ ------------ ------------
Operating income (loss).....................             238,871    1,360,383     (823,485)     469,774
Interest expense............................          (3,091,293)  (3,983,177)    (994,848)    (888,163)
Other income................................             145,935      250,062       38,797       91,317
                                                    ------------- ------------ ------------ ------------
Income (loss) before  income tax benefit....          (2,706,487)  (2,372,732)  (1,779,536)    (327,072)
Income tax benefit..........................             917,000      793,000      595,000      126,000
                                                    ------------- ------------ ------------ ------------
Net income (loss)...........................          (1,789,487)  (1,579,732)  (1,184,536)    (201,072)
Redeemable preferred stock dividends........            (326,882)    (445,506)    (101,589)    (101,589)
                                                    ------------- ------------ ------------ ------------
Net income (loss) applicable to common
 stock......................................         $(2,116,369) $(2,025,238) $(1,286,125) $  (302,661)
                                                    ============= ============ ============ ============
Net income (loss) per  common share.........         $      (.19) $      (.17) $      (.11) $      (.02)
                                                    ============= ============ ============ ============
Shares used in computing  per common share
 amounts....................................          11,495,000   12,261,000   12,279,000   12,457,000
- --------------------------------------------------
                                                    ============= ============ ============ ============

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
 
                                      F-6

                                  PREDECESSOR
 
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY FOR THE YEAR ENDED DECEMBER 31,
         1993 AND FOR THE PERIOD FROM JANUARY 1, 1994 TO MARCH 13, 1994

                            COMMON STOCK   ADDITIONAL                    TOTAL
                          ----------------  PAID-IN      RETAINED    STOCKHOLDER'S
                          SHARES   AMOUNT   CAPITAL      EARNINGS       EQUITY
                          ------- -------- ----------  ------------  -------------
                                                      
Balance, December 31,
1992....................  500,000 $500,000 $2,270,033  $ 23,149,180  $ 25,919,213
  Distributions to
stockholder.............       --       --         --   (15,958,688)  (15,958,688)
  Contribution from
stockholder.............       --       --  1,434,070            --     1,434,070
  Net income for year...       --       --         --     8,120,276     8,120,276
                          ------- -------- ----------  ------------  ------------
Balance, December 31,
1993....................  500,000  500,000  3,704,103    15,310,768    19,514,871
  Distributions to
stockholder.............       --       --   (729,486)  (13,811,849)  (14,541,335)
  Contribution from
stockholder.............       --       --     61,670            --        61,670
  Net income for period.       --       --         --     2,045,678     2,045,678
                          ------- -------- ----------  ------------  ------------
Balance, March 13, 1994.  500,000 $500,000 $3,036,287  $  3,544,597  $  7,080,884
                          ======= ======== ==========  ============  ============

 
 
   The accompanying notes are an integral part of the consolidated financial
                                  statements.
 
                                      F-7

                         ANSYS, INC. AND SUBSIDIARIES
 
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                                         CLASS A                ADJUSTMENT                   NOTES
                     COMMON STOCK      COMMON STOCK  ADDITIONAL     FOR       RETAINED     RECEIVABLE  TREASURY STOCK
                  ------------------- --------------  PAID-IN   PREDECESSOR   EARNINGS/       FROM     ---------------
                    SHARES    AMOUNT  SHARES  AMOUNT  CAPITAL      BASIS      (DEFICIT)   STOCKHOLDERS SHARES  AMOUNT
                  ---------- -------- ------- ------ ---------- -----------  -----------  ------------ ------ --------
                                                                                
Balance, March
14, 1994........          --       --      --     --         --          --           --          --       --       --
Initial company
capitalization..  10,000,000 $100,000      --     -- $  900,000          --           --          --       --       --
Adjustment for
predecessor
basis                     --       --      --     --         -- $(7,010,000)          --          --       --       --
Issuance of
Class A common
stock...........          --       -- 300,000 $3,000     27,000                       --          --       --       --
Issuance of
Restricted
stock...........     626,000    6,260 663,750  6,638    412,677          --           --          --       --       --
Dividends
accrued on
redeemable
preferred stock.          --       --      --     --         --          --  $  (326,882)         --       --       --
Loans to
facilitate
purchase of
restricted
stock...........          --       --      --     --         --          --           --   $(314,000)      --       --
Net loss for the
period..........          --       --      --     --         --          --   (1,789,487)         --       --       --
                  ---------- -------- ------- ------ ---------- -----------  -----------   ---------   ------ --------
Balance,
December 31,
1994............  10,626,000  106,260 963,750  9,638  1,339,677  (7,010,000)  (2,116,369)   (314,000)      --       --
Treasury stock
acquired........          --       --      --     --         --          --           --          --   54,850 $(10,285)
Issuance of
Class A common
stock...........          --       --  30,000    300     11,700          --           --          --       --       --
Dividends
accrued on
redeemable
preferred stock.          --       --      --     --         --          --     (445,506)         --       --       --
Loans to
facilitate
purchase of
restricted
stock...........          --       --      --     --         --          --           --     (20,500)      --       --
Net loss for the
year............          --       --      --     --         --          --   (1,579,732)         --       --       --
                  ---------- -------- ------- ------ ---------- -----------  -----------   ---------   ------ --------
Balance,
December 31,
1995............  10,626,000  106,260 993,750  9,938  1,351,377  (7,010,000)  (4,141,607)   (334,500)  54,850  (10,285)
Unaudited
information:
Treasury stock
acquired........          --       --      --     --         --          --           --          --    8,000     (800)
Issuance of
restricted
stock...........     135,860    1,359      --     --    324,705          --           --          --       --       --
Exercise of
stock options...     960,000    9,600      --     --     96,000          --           --          --       --       --
Dividends
accrued on
redeemable
preferred stock.          --       --      --     --         --          --     (101,589)         --       --       --
Repayment of
stockholder
loan............          --       --      --     --         --          --           --      32,000       --       --
Net income for
the period......          --       --      --     --         --          --     (201,072)         --       --       --
                  ---------- -------- ------- ------ ---------- -----------  -----------   ---------   ------ --------
Balance, March
31, 1996
(unaudited).....  11,721,860 $117,219 993,750 $9,938 $1,772,082 $(7,010,000) $(4,444,268)  $(302,500)  62,850 $(11,085)
                  ========== ======== ======= ====== ========== ===========  ===========   =========   ====== ========

                      TOTAL
                  STOCKHOLDERS'
                     EQUITY
                    (DEFICIT)
                  --------------
               
Balance, March
14, 1994........            --
Initial company
capitalization..  $  1,000,000
Adjustment for
predecessor
basis               (7,010,000)
Issuance of
Class A common
stock...........        30,000
Issuance of
Restricted
stock...........       425,575
Dividends
accrued on
redeemable
preferred stock.      (326,882)
Loans to
facilitate
purchase of
restricted
stock...........      (314,000)
Net loss for the
period..........    (1,789,487)
                  --------------
Balance,
December 31,
1994............    (7,984,794)
Treasury stock
acquired........       (10,285)
Issuance of
Class A common
stock...........        12,000
Dividends
accrued on
redeemable
preferred stock.      (445,506)
Loans to
facilitate
purchase of
restricted
stock...........       (20,500)
Net loss for the
year............    (1,579,732)
                  --------------
Balance,
December 31,
1995............   (10,028,817)
Unaudited
information:
Treasury stock
acquired........          (800)
Issuance of
restricted
stock...........       326,064
Exercise of
stock options...       105,600
Dividends
accrued on
redeemable
preferred stock.      (101,589)
Repayment of
stockholder
loan............        32,000
Net income for
the period......      (201,072)
                  --------------
Balance, March
31, 1996
(unaudited).....  $ (9,868,614)
                  ==============

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
 
                                      F-8

                  ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                                          PREDECESSOR                            THE COMPANY
                                                    -------------------------  --------------------------------------------------
                                                                    PERIOD        PERIOD
                                                                  JANUARY 1,   MARCH 14 TO                      MARCH 31,
                                                                 TO MARCH 13,  DECEMBER 31,               -----------------------
                                                       1993          1994          1994         1995         1995         1996
                                                    -----------  ------------  ------------  -----------  -----------  ----------
                                                                                                               (UNAUDITED)
                                                                                                     
Cash flows from operating activities:
 Net income (loss)............................       $8,120,276  $ 2,045,678   $(1,789,487)  $(1,579,732) $(1,184,536)  $(201,072)
 Adjustments to reconcile net loss to net cash
  provided by operating activities:
 Depreciation and amortization................        1,626,016      427,496     8,605,999    11,458,053    2,784,315   2,950,712
 Deferred income tax benefit..................               --           --    (1,491,000)   (2,115,000)    (719,000)   (595,000)
 Provision for bad debts......................        1,339,630           --       150,000        50,031           --      12,500
 Capital gains and dividends reinvested.......         (585,949)      (8,499)           --            --           --          --
 Unrealized loss on foreign exchange..........          120,873           --         5,367            --           --          --
 Deferred compensation expense................           18,232        3,596            --            --           --          --
 Write-down of inventory......................           46,734           --            --            --           --          --
 Change in operating assets and liabilities,
  net of effects of acquisition:
  Accounts receivable.........................       (1,184,143)    (717,508)       57,684    (1,981,245)    (758,669) (3,757,985)
  Refundable and prepaid income taxes.........               --           --      (920,206)     (449,903)      (1,118)    363,424
  Other current assets........................           63,948       71,785     1,108,620       534,054      852,733    (454,204)
  Other assets................................           39,780       21,839            --            --           --          --
  Accounts payable, accrued expenses and
   liabilities and customer prepayments.......           89,755      918,883       523,317     3,816,013     (556,108)   (933,932)
  Deferred revenue............................          (30,766)      (9,874)       82,399     1,033,830      647,274     999,475
                                                    -----------  -----------   -----------   -----------  -----------  ----------
   Net cash provided by operating activities..        9,664,386    2,753,396     6,332,693    10,766,101    1,064,891  (1,616,082)
                                                    -----------  -----------   -----------   -----------  -----------  ----------
Cash flows from investing activities:
 Purchase of Swanson Analysis Systems, Inc.,
  including related acquisition costs of
  $273,000, net of cash acquired of $42,744...               --           --   (46,845,552)           --           --          --
 Purchase of marketable securities............       (2,850,000)          --            --            --           --          --
 Capital expenditures.........................       (1,658,386)     (91,254)     (795,004)   (1,937,073)    (441,775)   (111,322)
 Capitalization of internally developed
  software costs..............................         (280,392)          --            --       (18,650)          --          --
 Payments for software products acquired......         (600,000)    (300,200)           --            --     (110,000)         --
 Other assets.................................               --           --      (179,000)           --           --          --
 Notes receivable from stockholders...........          185,913           --            --       (20,500)          --      32,000
                                                    -----------  -----------   -----------   -----------  -----------  ----------
Net cash used in investing activities.........       (5,202,865)    (391,454)  (47,819,556)   (1,976,223)    (551,775)    (79,322)
                                                    -----------  -----------   -----------   -----------  -----------  ----------
Cash flows from financing activities:
 Proceeds from long-term debt.................          706,663           --    28,000,000            --           --          --
 Payments on long-term debt...................               --           --    (2,000,000)   (5,000,000)  (2,000,000) (1,250,000)
 Proceeds from issuance of restricted stock ..               --           --       111,575        12,000           --     326,064
 Proceeds from issuance of preferred and
  common stock................................               --           --     5,150,000            --           --          --
 Proceeds from exercise of stock options......               --           --            --            --           --     105,600
 Proceeds from issuance of subordinated notes.               --           --    15,450,000            --           --          --
 Debt issuance costs..........................               --           --      (925,000)           --           --          --
 Purchase of treasury stock...................               --           --            --       (10,285)          --        (800)
 Cash distributions to stockholder............      (13,306,908)  (3,212,027)           --            --           --          --
 Contributions by stockholder.................          704,583       61,670            --            --           --          --
                                                    -----------  -----------   -----------   -----------  -----------  ----------
   Net cash (used in) provided by financing
    activities................................      (11,895,662)  (3,150,357)   45,786,575    (4,998,285)  (2,000,000)   (819,136)
                                                    -----------  -----------   -----------   -----------  -----------  ----------
Net (decrease) increase in cash and cash
equivalents...................................       (7,434,141)    (788,415)    4,299,712     3,791,593   (1,486,884) (2,514,540)
Cash and cash equivalents, beginning of
period........................................        8,650,004    1,215,863            --     4,299,712    4,049,712   8,091,305
                                                    -----------  -----------   -----------   -----------  -----------  ----------
Cash and cash equivalents, end of period......       $1,215,863  $   427,448    $4,299,712    $8,091,305   $2,562,828  $5,576,765
- --------------------------------------------------
                                                    ===========  ===========   ===========   ===========  ===========  ==========

                                   continued
 
                                      F-9

                  ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
               CONSOLIDATED STATEMENT OF CASH FLOWS--(CONTINUED)

                               PREDECESSOR                      THE COMPANY
                          ---------------------- -----------------------------------------
                                       PERIOD       PERIOD                   MARCH 31,
                                     JANUARY 1,  MARCH 14 TO             -----------------
                                    TO MARCH 13, DECEMBER 31,
                            1993        1994         1994        1995      1995     1996
                          --------- ------------ ------------ ---------- -------- --------
                                                                            (UNAUDITED)
                                                                
Supplemental disclosures
of cash flow
information:
 Cash paid during the
 period for:
 Interest...............         --          --   $1,676,666  $2,567,979 $613,889 $457,611
 Income taxes...........         --          --    1,544,759   1,826,100       --       --
Supplemental noncash
investing and financing
activities:
 Deferred interest notes
  issued for interest in
  arrears on
  subordinated notes....         --          --    1,246,356     507,945       --       --
 Restricted stock
  purchased with notes
  to stockholders.......         --          --      314,000          --       --       --
 Marketable securities
  distributed to
  Predecessor
  stockholder...........         --  11,329,308           --          --       --       --
 Purchased capitalized
  software included in
  accounts payable......         --     212,600           --          --       --       --
 Note receivable and
  accrued interest
  exchanged for partial
  payment of a software
  license included in
  capitalized software
  costs.................  1,055,483          --           --          --       --       --
 Notes receivable from
  Predecessor
  stockholder
  distributed to
  Predecessor
  stockholder...........  2,651,780          --           --          --       --       --
 Notes payable to
  Predecessor
  stockholder forgiven
  by Predecessor
  stockholder and
  accounted for as
  additional paid-in
  capital...............    729,486          --           --          --       --       --

 
   The accompanying notes are an integral part of the consolidated financial
                                  statements.
 
                                      F-10

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.ORGANIZATION AND BASIS OF PRESENTATION:
   
  ANSYS, Inc. (the Company), formerly SAS Holdings, Inc., is a holding company
incorporated on January 12, 1994 for the purpose of acquiring through its
subsidiary, SAS Acquisition Corp. (Acquisition), substantially all of the
assets and technology of Swanson Analysis Systems, Inc. (SASI or Predecessor)
for approximately $48 million in cash, the assumption of certain liabilities
totaling $4.9 million and acquisition costs of $273,000. The Company, through
its operating subsidiaries, develops, markets and supports a family of
mechanical computer-aided engineering software products.     
 
  The acquisition was effective and the Company commenced business on March
14, 1994. The acquisition was financed through the issuance of preferred and
common stock, borrowings under a $28 million term loan with a bank and the
issuance of subordinated notes (see Note 6). The acquisition of SASI was
accounted for using the purchase method of accounting. In recording the
acquisition, in accordance with generally accepted accounting principles, the
aggregate consideration was adjusted downward to reflect the carryover of the
seller's basis in the net assets acquired. The effect of this adjustment was
to reduce, on the date of acquisition, the value of stockholders' equity and
the purchased net assets by $7,010,000 and to preclude a write-up of a
proportionate amount of the assets acquired.
 
  The accompanying financial statements present the Company's consolidated
operations and cash flows from the acquisition date of March 14, 1994 through
December 31, 1994 and for the year ended December 31, 1995, and the combined
operations and cash flows of SASI for the year ended December 31, 1993 and for
the period January 1, 1994 through March 13, 1994.
 
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
 Principles of Consolidation:
   
  The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, SAS Acquisition Corp., ANSYS
Operating Corp. and SAS IP, Inc. In addition, the accompanying combined
financial statements include the accounts of SASI, Compuflo, Inc., a company
owned by the sole stockholder of SASI, which merged with SASI on April 1,
1993, and a joint venture between the sole stockholder of SASI and a corporate
officer of SASI, which owns the buildings leased by the Company (see Note 14).
The accounts of the joint venture are not included in the accompanying
consolidated financial statements of the Company. All significant intercompany
accounts and transactions have been eliminated in consolidation.     
 
 Revenue Recognition:
 
  The Company's revenue recognition policy is in conformance with the American
Institute of Certified Public Accountants' Statement of Position 91-1,
"Software Revenue Recognition."
 
  The Company's products are sold primarily through distributors, who are
resellers with respect to its products. Revenue is derived principally from
the licensing of computer software products, either on a monthly 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. 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. The portion of the perpetual license fee
associated with providing the initial warranty is unbundled from the perpetual
license fee and deferred and recognized ratably over the warranty period.
Maintenance billed separately is recognized ratably over the term of the
agreement. Costs related to maintenance obligations are expensed as incurred.

                                     F-11

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
 
  Revenue from training, support and other service is recognized as the
services are performed.
 
 Cash Equivalents:
 
  For the purposes of the consolidated statements of cash flows, the Company
considers highly liquid deposits in money market funds to be cash equivalents.
Cash equivalents are recorded at cost, which approximates fair value.
 
 Marketable Securities:
 
  Marketable securities distributed to the Predecessor's sole stockholder
during the period from January 1, 1994 through March 13, 1994 were carried at
the lower of cost or market. Gains and losses on marketable securities were
determined by specific identification.
 
 Property and Equipment:
 
  Property and equipment is carried at cost which includes the allocated
purchase price for the acquisition described in Note 1. Depreciation is
computed by the straight-line method over the estimated useful lives of the
various classes of assets, which range from three to ten years for the related
assets of the Company, and three to forty years for the Predecessor. Repairs
and maintenance are charged to expense as incurred. Gains or losses from the
sale or retirement of property and equipment are included in the results of
operations.
 
 Capitalized Software:
 
  Internally developed computer software costs and costs of product
enhancements are capitalized subsequent to the determination of technological
feasability; such capitalization continues until the product becomes available
for general release. Amortization of capitalized software costs, both for
internally developed as well as for purchased software products, is computed
on a product-by-product basis over the estimated economic life of the product
which ranges from three years to five years. Amortization is the greater of
the amount computed using (1) the ratio of the current year's gross revenue to
the total current and anticipated future gross revenue for that product or (2)
the straight-line method over the estimated life of the product.
 
  The Company periodically reviews the carrying value of capitalized software
and impairments are recognized in the results of operations when the expected
future undiscounted operating cash flow derived from the capitalized software
is less than its carrying value.
 
 Research and Development Costs:
 
  Research and development costs are expensed as incurred.
 
 General and Administrative Expenses:
 
  Included in general and administrative expenses for the year ended December
31, 1993 is approximately $1.6 million in legal fees and related costs to
settle a legal dispute.
 
 Goodwill and Other Intangible Assets:
 
  Intangible assets consist of the excess of the purchase cost over the fair
value of net assets acquired (goodwill), the ANSYS trade name and a noncompete
agreement, which are being amortized on the straight-line method over the
estimated useful lives of these assets. The Company periodically evaluates the
carrying value of goodwill, which is being amortized over three years, based
on whether the goodwill is recoverable from expected future undiscounted
operating cash flows of the related business. Additionally, the Company
periodically reviews the carrying value of other intangible assets and will
recognize impairments when the expected future operating cash flow derived
from such intangible assets is less than their carrying value.
 
                                     F-12

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
 
 Debt Issuance Costs:
 
  Debt issuance costs, which were incurred by the Company in connection with
the borrowings under the credit facilities agreement (see Note 6), are
deferred and amortized over the term of the related debt. Debt issuance costs
have been included in other intangibles on the consolidated balance sheet.
 
 Concentrations of Credit Risk:
 
  The Company invests its cash primarily in deposits and money market funds
with commercial banks. The Company has not experienced any losses to date on
its invested cash.
 
  The Company has a concentration of credit risk with respect to trade
receivables because of the limited number of distributors through which the
Company sells its products. The Company performs periodic credit evaluations
of its customers' financial condition and generally does not require
collateral.
 
  During 1995, sales by distributors comprised approximately 97% of the
Company's total revenue, with two distributors accounting for approximately
15% and 10% of total revenue.
 
 Income Taxes:
 
  The Company and its wholly-owned subsidiaries are "C" corporations. Deferred
tax assets and liabilities are determined based on temporary differences
between the financial statement and the 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.
 
  SASI and Compuflo, Inc., prior to its merger with SASI, were "S"
corporations. These entities and the limited partnership, which owns the
building leased by the Company, were not subject to federal and state income
tax. Accordingly, the federal and state income tax liabilities were borne by
the respective stockholders or partners.
 
 Foreign Currency Transactions:
 
  Certain of the Company's sales transactions are denominated in foreign
currencies. These transactions are translated to U.S. dollars at the exchange
rate on the transaction date. Accounts receivable in foreign currencies at
year-end are translated at the effective exchange rate on that date. The
unrealized exchange loss or gain resulting from the translation as of year-end
is included in the results of operations.
 
 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
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the amounts of revenues and expenses during
the reported periods. Actual results could differ from the estimates.
 
 Net Income (Loss) Per Share:
 
  Net income (loss) per 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 antidilutive, except that, in accordance with certain
Securities and Exchange Commission (SEC) Staff Accounting Bulletins, common
and common equivalent shares issued within 12 months of the initial filing
date of this registration statement have been included in the calculation as
if they were outstanding for all prior periods presented, using the treasury
stock method and the anticipated initial public offering (IPO) price. Such
shares totaled 690,680 and are included in the shares used in computing per
common
 
                                     F-13

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
 
share amounts for all periods presented. Common equivalent shares consist of
the common shares issuable upon the exercise of stock options (using the
treasury stock method). Primary and fully diluted net income (loss) per share
are the same for all periods presented. All references in the accompanying
consolidated financial statements to the number of shares of common stock have
been retroactively restated to reflect the stock split discussed in Note 18.
 
  As the proceeds of the IPO (see Note 18) will be used to repay the Company's
senior term loan, subordinated notes and associated deferred interest notes,
and redeemable preferred stock, the following pro forma information for the
year ended December 31, 1995 and for the three month period ended March 31,
1996 is presented:

                                               YEAR ENDED     THREE MONTHS ENDED
                                            DECEMBER 31, 1995   MARCH 31, 1996
                                            ----------------- ------------------
                                               (UNAUDITED)       (UNAUDITED)
                                                        
Net loss..................................     $(1,579,732)      $  (201,072)
Pro forma adjustments to reflect repayment
 of long term debt and redeemable
 preferred stock from proceeds on January
 1, 1995..................................       2,815,856           583,838
                                               -----------       -----------
Pro forma net income......................     $ 1,236,124       $   382,766
                                               ===========       ===========
Pro forma weighted average shares
 outstanding..............................      12,261,000        12,457,000
Add: Additional pro forma shares required
 to repay long-term debt and redeemable
 preferred stock (assuming an IPO price of
 $13 per share)...........................       3,190,000         3,190,000
                                               -----------       -----------
  Total pro forma shares..................      15,451,000        15,647,000
                                               ===========       ===========
Pro forma income per share................           $0.08             $0.02
                                                     =====             =====

 New Accounting Pronouncements:
 
  In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of."
The new standard is effective for fiscal year 1996. Management believes that
the implementation of the standard will not have a material effect on its
consolidated financial statements.
 
  In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." The new standard, which is effective for fiscal year 1996,
requires the Company to adopt either a recognition method or a disclosure-only
approach of accounting for stock based employee compensation plans. Management
intends to adopt the disclosure-only approach and, as such, does not believe
that the implementation of the standard will have a material effect on its
consolidated financial statements.
 
 Interim Consolidated Financial Statements (Unaudited):
 
  The unaudited consolidated balance sheet as of March 31, 1996 and the
unaudited consolidated statements of operations and cash flows for the three
months ended March 31, 1995 and 1996, in the opinion of management, have been
prepared on the same basis as the audited consolidated financial statements
and include all significant adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the results of the interim
periods. The data disclosed in these notes to the consolidated financial
statements for these periods are also unaudited. Operating results for the
three months ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the entire year ending December 31, 1996.
 
                                     F-14

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
3.PROPERTY AND EQUIPMENT:
 
  Property and equipment consisted of the following:

                                               DECEMBER 31,
                                           ----------------------   MARCH 31,
                                              1994        1995        1996
                                           ----------  ----------  -----------
                                                                   (UNAUDITED)
                                                          
Equipment................................. $  987,897  $1,721,174  $ 1,787,497
Computer equipment and software...........    470,263   1,557,117    1,602,116
Furniture.................................    256,259     265,751      265,751
Leasehold improvements....................    515,797     530,073      530,073
                                           ----------  ----------  -----------
                                            2,230,216   4,074,115    4,185,437
Less: accumulated depreciation and
amortization..............................   (186,899)   (910,710)  (1,199,986)
                                           ----------  ----------  -----------
                                           $2,043,317  $3,163,405  $ 2,985,451
                                           ==========  ==========  ===========

  Depreciation expense was approximately $690,000 for the year ended December
31, 1993; $127,000 for the period January 1, 1994 through March 13, 1994;
$186,000 for the period March 14, 1994 through December 31, 1994; $877,000 for
the year ended December 31, 1995; and $125,000 and $231,000 for the three
months ended March 31, 1995 and 1996, respectively.
 
  During January 1996, the Company approved plans to move into new corporate
office facilities on or about February 15, 1997 (see Note 14). Accordingly,
the Company reduced the estimated useful life of the leasehold improvements
maintained on its existing facilities through the anticipated move date. This
resulted in an increase in depreciation expense of $108,000 for the year ended
December 31, 1995 and $32,000 for the three months ended March 31, 1996.
 
4.OTHER INTANGIBLE ASSETS:
 
  The components of other intangible assets were as follows:

                         ESTIMATED      DECEMBER 31,
                          USEFUL   -----------------------   MARCH 31,
                           LIVES      1994        1995         1996
                         --------- ----------  -----------  -----------
                                                            (UNAUDITED)
                                                
Trade names.............     10    $1,824,268  $ 1,824,268  $ 1,824,268
Noncompete agreement....      5     1,000,000    1,000,000    1,000,000
Debt issuance costs.....      5       925,000      925,000      925,000
Other...................      3       179,000      179,000      179,000
                                   ----------  -----------  -----------
                                    3,928,268    3,928,268    3,928,268
Less: accumulated
amortization............             (493,691)  (1,120,900)  (1,277,675)
                                   ----------  -----------  -----------
                                   $3,434,577  $ 2,807,368  $ 2,650,593
                                   ==========  ===========  ===========

5.LINE OF CREDIT:
 
  The Company has a $1,000,000 revolving line of credit with a bank under a
credit facilities agreement, which is available through June 1, 1997.
Borrowings under the revolving line of credit bear interest at the bank's
prime rate (8.5% at December 31, 1995) plus 1%. There were no borrowings
outstanding under this line of credit during 1994, 1995 and 1996.

                                     F-15

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6.LONG-TERM DEBT:
 
  Long-term debt consisted of the following:

                                                  DECEMBER 31,
                                             -----------------------  MARCH 31,
                                                1994        1995        1996
                                             ----------- ----------- -----------
                                                                     (UNAUDITED)
                                                            
Senior term loan............................ $26,000,000 $21,000,000 $19,750,000
Subordinated notes..........................  15,450,000  15,450,000  15,450,000
Deferred interest notes.....................   1,246,356   1,754,301   1,754,301
                                             ----------- ----------- -----------
                                              42,696,356  38,204,301  36,954,301
Less current portion........................   5,000,000   5,000,000   5,250,000
                                             ----------- ----------- -----------
Long-term Debt.............................. $37,696,356 $33,204,301 $31,704,301
                                             =========== =========== ===========

  The Company's bank credit facilities agreement includes a $28,000,000 term
loan which is payable in quarterly principal installments through December 31,
1998. The term loan agreement also provides for additional principal payments
based on 75% of the Company's excess cash flow, as defined in the loan
agreement. No such payment was required for 1994. For 1995, the required
payment of $890,000 was waived by the bank.
 
  As part of the credit facilities agreement, all of the Company's assets have
been pledged as collateral. The agreement contains covenants which, among
other matters, restrict or limit the ability of the Company to pay dividends,
incur indebtedness, merge, acquire or sell assets and make capital
expenditures. The Company must also maintain certain financial ratios
regarding interest coverage, leverage and net worth, among other restrictions.
 
  The Company can elect to change the interest rate on the term loan from the
bank's prime rate plus 1% to the bank's Eurodollar rate plus 3% on a 30, 60 or
90 day basis. At December 31, 1995, the interest rate in effect was the bank's
Eurodollar rate (5.67% at December 31, 1995) plus 3%. The term loan had a
weighted average interest rate during 1994 of 8.36% and during 1995 of 9.56%.
The Company entered into an interest rate cap agreement with a bank to
mitigate the fluctuations of variable rates. This agreement resulted in a
fixed interest rate of 9% on $14,000,000 of the principal through March 31,
1997.
   
  The Company issued $15,000,000 of subordinated notes to certain stockholders
in connection with the acquisition described in Note 1. In July 1994, the
Company issued an additional $450,000 of subordinated notes to other
stockholders. The notes are subordinated to the senior term loan and bear
interest at 10%, with interest payable annually in arrears on May 1 of each
year with the first such payment due on May 1, 1995. One-half of the initial
principal amount of the notes and accrued but unpaid interest are due on April
14, 1999 with the remaining principal and accrued but unpaid interest due on
April 14, 2000. The notes are subject to mandatory repayment in the event of a
change in control or a qualified IPO, both as defined in the related
agreements. To the extent the Company is prohibited from making subordinated
note interest payments by the terms of its bank credit facilities agreement,
the Company is required to issue deferred interest notes, subject to the same
terms as the subordinated notes. At December 31, 1994 and 1995, in accordance
with such payment provisions, accrued interest on the subordinated notes in
the amounts of $1,246,356 and $1,754,301 was converted into deferred interest
notes.     
 
                                     F-16

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
6.LONG-TERM DEBT, CONTINUED:
 
  Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value for all financial instruments. Based on interest rates
currently available, management believes that the carrying amount of the long-
term debt is a reasonable estimation of fair value. The carrying value of the
interest rate cap is not materially different than fair value.
 
  The scheduled aggregate maturities of total long-term debt are $5,000,000 in
1996, $6,000,000 in 1997, $10,000,000 in 1998, $8,602,000 in 1999 and
$8,602,000 in 2000.
 
7.INCOME TAXES:
 
  The provision (benefit) for income taxes is comprised of the following:

                                       DECEMBER 31,             MARCH 31,
                                  ------------------------  -------------------
                                     1994         1995        1995      1996
                                  -----------  -----------  --------  ---------
                                                               (UNAUDITED)
                                                          
Current:
  Federal........................ $    86,000  $   680,000        --  $ 339,000
  State..........................          --        5,000        --     25,000
  Foreign........................     488,000      637,000  $124,000    105,000
Deferred:
  Federal........................  (1,491,000)  (2,115,000) (719,000)  (595,000)
                                  -----------  -----------  --------  ---------
    Total........................ $  (917,000) $  (793,000) (595,000) $(126,000)
                                  ===========  ===========  ========  =========

  The reconciliation of the federal statutory tax rate to the consolidated
effective tax rate is as follows:

                                                   DECEMBER 31,     MARCH 31,
                                                   --------------  ------------
                                                    1994    1995   1995   1996
                                                   ------  ------  -----  -----
                                                                   (UNAUDITED)
                                                              
Federal statutory tax rate........................   34.0%   34.0%  34.0%  34.0%
State income taxes, net of federal benefit........     --     0.5     --    4.7
Research and experimentation credit...............   (0.1)   (1.1)  (0.6)  (0.2)
                                                   ------  ------  -----  -----
                                                     33.9%   33.4%  33.4%  38.5%
                                                   ======  ======  =====  =====

                                     F-17

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
7.INCOME TAXES, CONTINUED:
 
  The components of net deferred tax assets and liabilities are as follows:

                                                   DECEMBER 31,
                                               ---------------------  MARCH 31,
                                                  1994       1995       1996
                                               ---------- ---------- -----------
                                                                     (UNAUDITED)
                                                            
Deferred tax assets:
  Goodwill.................................... $1,560,000 $2,854,000 $3,178,000
  Capitalized software........................  2,595,000  3,884,000  4,206,000
  Other intangible assets.....................    270,000    320,000    333,000
  Allowance for doubtful accounts.............    221,000    238,000    242,000
  Accrued expenses and liabilities............     57,000    118,000    116,000
  Tax credits.................................    420,000         --         --
                                               ---------- ---------- ----------
                                                5,123,000  7,414,000  8,075,000
                                               ---------- ---------- ----------
Deferred tax liability:
  Property and equipment......................     24,000    202,000    200,000
  Other.......................................     72,000     70,000    138,000
                                               ---------- ---------- ----------
                                                   96,000    272,000    338,000
                                               ---------- ---------- ----------
    Net deferred tax asset.................... $5,027,000 $7,142,000 $7,737,000
                                               ========== ========== ==========

  Based upon the Company's current and historical taxable income and the
anticipated level of future taxable income, management believes it is more
likely than not that all of the deferred tax assets will be realized.
Accordingly, no valuation allowance has been established against the deferred
tax assets.
 
8.REDEEMABLE PREFERRED STOCK:
 
  The Company is authorized to issue 10% cumulative redeemable preferred
stock. There are no voting rights associated with this class of stock. The
preferred stock is redeemable at the option of the Company or upon a change of
control or a qualified IPO, both as defined in the preferred stock
instruments, at $10,000 per share plus all accumulated but unpaid dividends.
Each share of preferred stock is subject to annual cumulative dividend
requirements of $1,000 per share, which began to accumulate on the date of
issuance and are payable in arrears as of January 1 of each year, beginning
January 1, 1995.
 
  Dividends accumulated, but unpaid, accumulate additional dividends at 10%
per annum. All unpaid dividends compound semi-annually on January 1 and July 1
of each year, until such dividends are paid. At December 31, 1994, 1995 and
March 31, 1996, accumulated but unpaid dividends amounted to $326,882,
$772,388 and $873,977, respectively. The preferred shares have a liquidation
preference equal to $10,000 per share plus all accumulated and unpaid
dividends.
 
9.COMMON STOCK:
 
  The Company is authorized to issue shares of $.01 par value voting common
stock and shares of $.01 par value nonvoting Class A common stock. Shares of
common stock and Class A common stock, apart from voting rights, have equal
rights in liquidation and with respect to dividends. Upon the closing of an
IPO of the Company's common stock, each Class A share automatically converts
into one share of common stock.
 
  Certain holders of the Company's common stock have entered into transfer
restrictions and co-sale agreements with the Company. Among other provisions,
the agreements restrict the transfer of common stock and allow for repurchase
by the Company at the original purchase price, in the event that the
restricted shares are offered for sale or upon cessation of employment of the
holder with the Company. Effective upon the closing of the proposed IPO (see
Note 18), these co-sale rights and the transfer restrictions terminate.
 
                                     F-18

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
10.PENSION AND PROFIT-SHARING PLANS:
 
  The Company maintains and the Predecessor maintained both a money purchase
pension plan and a profit-sharing plan for all qualifying full-time employees.
The plans are noncontributory. The pension plan requires the Company to
contribute 20% of each participant's compensation annually while the profit-
sharing contribution is determined annually by the Board of Directors, subject
to a maximum limitation of 5% of eligible compensation.
 
  Pension expense was $1,747,000 for the year ended December 31, 1993;
$317,000 for the period January 1, 1994 through March 13, 1994; $1,318,200 for
the period March 14, 1994 through December 31, 1994; $1,500,400 for the year
ended December 31, 1995 and $420,600 and $519,200 for the three-month periods
ended March 31, 1995 and 1996, respectively. Additionally, profit-sharing
expense was $380,000 for the year ended December 31, 1993; $85,000 for the
period January 1, 1994 through March 13, 1994; $322,000 for the period March
14, 1994 through December 31, 1994; $345,700 for the year ended December 31,
1995 and $105,200 and $109,700 for the three-month periods ended March 31,
1995 and 1996, respectively.
 
11.DEFERRED COMPENSATION:
 
  The Predecessor had a deferred compensation agreement with two executives.
One agreement provided for the payment of $52,500 per year for 10 years upon
the executive's retirement at age 65. The other agreement provided for the
payment of $26,300 per year for 10 years upon the executive's retirement at
age of 65. The Predecessor expensed the present value of the payments at the
time of retirement equally over the employment period in which the
compensation is expected to be earned. The deferred compensation expense was
$18,232 for the year ended December 31, 1993 and $3,596 for the period from
January 1, 1994 through March 13, 1994. The liability associated with the
deferred compensation agreement was not assumed by the Company in connection
with the acquisition described in Note 1.
 
12.NONCOMPETE AND EMPLOYMENT AGREEMENTS:
 
  The Company has entered into noncompete agreements with certain holders of
the Company's common stock, including the sole stockholder of SASI. The
agreements preclude the stockholders from competing either directly or
indirectly with the company for a period ranging from one to three years
subsequent to termination.
 
  The Company has entered into employment agreements with the chief executive
officer and another senior executive (who was the sole stockholder of SASI).
The terms of the agreements are substantially similar except with respect to
minimum annual base salary. In the event the chief executive officer is
terminated without cause, his employment agreement provides for severance at
the annual rate of $300,000 for the later of a period of one year after
termination or when he accepts other employment. In the event the other senior
executive is terminated without cause, his employment agreement provides that
the Company will continue to pay his base salary of $228,000, subject to
specified cost of living increases, through the later of March 14, 1999 or six
months from the date of termination. The chief executive officer and the other
senior executive are subject to one and three-year restrictions on
competition, respectively, with the Company following termination of
employment under the circumstances described in each contract.
 
13.STOCK OPTION AND GRANT PLAN:
 
  In February 1994, the Company's Board of Directors adopted and the
stockholders subsequently approved the 1994 Stock Option and Grant Plan (1994
Stock Plan) under which 868,110 shares of common stock have been reserved for
issuance upon exercise of currently outstanding options. Under the 1994 Stock
Plan, the Company may issue or sell shares of common stock with or without
restrictions (restricted stock) and grant either incentive stock options
(Incentive Options) or nonqualified stock options (Non-Qualified Options). The
1994
 
                                     F-19

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
13.STOCK OPTION AND GRANT PLAN, CONTINUED:
   
Stock Plan provides that (i) the exercise price of an Incentive Option must be
no less than the fair value of the relevant stock at the date of grant, and
(ii) the exercise price of an optionee who possesses more than 10% of the
total combined voting power of all classes of stock must be no less than 110%
of the fair market value of the stock at the time of grant. The Board of
Directors has the authority to set expiration dates no longer than ten years
from the date of grant (or five years for an optionee who meets the 10%
criteria), payment terms and other provisions of each grant. Shares associated
with unexercised options or repurchased shares of common stock become
available for options or issuances under the Plan. The Compensation Committee
of the Board of Directors may, in its sole discretion, accelerate or extend
the date or dates on which all or any particular award or awards granted under
the 1994 Stock Plan may be exercised or vest. In the event of a merger of the
Company, or the sale of substantially all of the assets of the Company, the
Board of Directors has the discretion to accelerate the vesting of the options
granted under the 1994 Stock Plan, except that 40,000 Non-Qualified Options
held by independent directors (Independent Directors) vest automatically in
such circumstances. In addition, the 1994 Stock Plan and the grants issued
thereunder terminate upon the effectiveness of any such transaction or event,
unless provision is made in connection with such transaction for the
assumption of grants theretofore made. No options or issuances may be granted
or made after March 14, 2004. In addition, the Company does not intend to make
any further grants or issuances under the 1994 Plan after the effective date
of the planned initial public offering (see Note 18).     
   
  During 1994, the Company issued 1,289,750 shares of restricted common stock
to certain officers, employees and a member of the Board of Directors. In
addition, during 1995 and for the three months ended March 31, 1996, the
Company issued 30,000 and 135,860 shares, respectively, of restricted common
stock to an officer and members of the Board of Directors. Substantially all
shares of restricted stock and all of the options were issued at the estimated
market value of the Company's common stock at the time of issuance. The
recipients of the restricted stock are required to continue in the employment
or service of the Company for periods up to five years after the date of
issuance for ownership to vest and provide for repurchase by the Company at
the original purchase price in the event of the termination of employment
prior to vesting. In addition, 135,860 shares of restricted stock provide for
accelerated vesting in the event of a sale of the Company or the attainment of
specified valuations for the Company's common stock. Upon termination of
employment, the Company repurchased 54,850 shares of restricted stock from
employees in 1995 and 8,000 shares during the three month period ended March
31, 1996.     
 
  Restricted stock purchases, grants and option activity under the 1994 Stock
Plan, and the issuance of 50,000 shares of restricted stock to members of the
Board of Directors under separate agreements, are summarized as follows:
 
                                     F-20

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
13.STOCK OPTION AND GRANT PLAN, CONTINUED:

                               RESTRICTED STOCK             STOCK OPTIONS
                             ------------------------   -----------------------
                             NUMBER OF     RANGE OF     NUMBER OF    RANGE OF
                              SHARES      ISSUE PRICE    OPTIONS   OPTION PRICE
                             ---------    -----------   ---------  ------------
                                                       
Outstanding at March 14,
1994 (date of acquisition)..        --            --           --           --
Issued/Granted.............. 1,289,750     $ .01-.40      960,000   $      .11
Exercised...................        --            --           --           --
Repurchased/canceled........        --            --           --           --
                             ---------     ---------    ---------   ----------
Outstanding at December 31,
1994........................ 1,289,750       .01-.40      960,000          .11
Issued/Granted..............    30,000           .40      315,000          .40
Exercised...................        --            --           --           --
Repurchased/canceled........   (54,850)      .01-.40           --           --
                             ---------     ---------    ---------   ----------
Outstanding at December 31,
1995........................ 1,264,900       .01-.40    1,275,000     .11 -.40
Issued/Granted.............. 1,095,860(1)   .11-2.40(1)   234,110    1.28-2.40
Exercised...................        --            --     (960,000)         .11
Repurchased/canceled........    (8,000)          .10       (1,000)         .40
                             ---------     ---------    ---------   ----------
Outstanding at March 31,
1996 (unaudited)............ 2,352,760     $.01-2.40      548,110   $ .11-2.40
                             =========     =========    =========   ==========
Exercisable at:
  December 31, 1994.........   219,160                         --
                             =========                  =========
  December 31, 1995.........   471,340                         --
                             =========                  =========
  March 31, 1996
  (unaudited)...............   502,660                         --
                             =========                  =========
    
- --------
   
(1) Includes 960,000 options exercised by the sole stockholder of SASI at an
    exercise price of $ .11 per share. The shares received upon such exercise
    are restricted subject to repurchase by the Company in certain
    circumstances and vest in March 1998 and 1999.     
 
14.LEASES:
 
  The Company operates from facilities it leases from a joint venture held by
the sole stockholder of SASI and a corporate officer of SASI. Due to the
common ownership with SASI, the accounts and results of operations of the
joint venture were combined with the financial statements of SASI prior to the
acquisition described in Note 1. As a result of the acquisition, the Company
accounts for the lease, which provides for monthly rentals of approximately
$69,000 through March 1997, as an operating lease.
 
  The Company incurred lease rental expense related to this lease agreement of
$628,000 for the period March 14, 1994 through December 31, 1994, $838,700 for
the year ended December 31, 1995 and $209,700 for each of the three-month
periods ended March 31, 1995 and 1996, respectively.
 
  In January 1996, the Company entered into a lease agreement with an
unrelated third party for a new corporate office facility. The Company
anticipates moving into its new facility on or about February 15, 1997. The
lease agreement is for ten years, with an option for five additional years,
and includes a rental acceleration at the end of the fifth and tenth years.
Future minimum lease payments under the facility lease are $1,226,500 per
annum for 1997 through 2001.
 
  The Company and the Predecessor also entered into various noncancelable
operating leases for equipment. Lease rental expense related to these leases
totaled $698,000 for the year ended December 31, 1993; $138,000 for the period
January 1, 1994 to March 13, 1994; $656,900 for the period March 14, 1994
through December
 
                                     F-21

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14.LEASES, CONTINUED:
 
31, 1994 and $889,300 for the year ended December 31, 1995 and $196,700 and
$342,200 for the three months ended March 31, 1995 and 1996, respectively.
Future minimum lease payments under operating leases for equipment in effect
at December 31, 1995 are as follows: 1996-$1,226,000 and 1997-$154,000.
 
15.ROYALTY AGREEMENTS:
 
  In 1995, the Company entered into various renewable nonexclusive 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. Royalty fees, which are included in cost of sales, were
approximately $114,000 for the year ended December 31, 1995 and $15,000 for
the three months ended March 31, 1996.
 
16.RELATED PARTY TRANSACTIONS:
 
  In 1993, the Predecessor paid $600,000 and exchanged a note receivable and
accrued interest in the amount of $1,055,483 for the purchase of a software
license agreement from a company in which the stockholder is a board member.
 
  Due from Predecessor stockholder arising from the acquisition described in
Note 1 was collected in 1995.
 
  In connection with his initial employment, the Company's Chief Executive
Officer purchased 626,000 restricted shares of common stock in July 1994 for a
cash purchase price of $250,000 with proceeds from a loan from the Company
evidenced by a promissory note bearing interest at 8.23% and maturing on July
8, 2006. The promissory note is collateralized by a pledge of the shares
purchased with the proceeds of the loan. The shares purchased by the Chief
Executive Officer vest on a monthly basis over a five-year period.
 
  In addition, other officers of the Company purchased restricted shares of
common stock with proceeds from loans from the Company. The loans, which
totaled $64,000 in 1994 and $20,000 in 1995, have terms similar to the
promissory note described above.
   
  Due from officers at March 31, 1996 of $431,664 relates to the purchase of
restricted shares of common stock in March 1996 which was collected in April
1996.     
 
17.GEOGRAPHIC INFORMATION:
   
  Revenue by geographic area based on sales to distributors is as follows:

                            UNITED                          OTHER                   OTHER
                            STATES     CANADA   GERMANY     EUROPE     JAPAN    INTERNATIONAL    TOTAL
                          ----------- -------- ---------- ---------- ---------- ------------- -----------
                                                                         
Year ended December 31,
 1993...................  $14,627,312 $677,728 $3,052,954 $6,809,072 $4,945,013  $1,492,003   $31,604,082
Period from January 1,
 1994 through March 13,
 1994...................    3,018,889  134,327    640,497  1,724,415    656,920     394,151     6,569,199
Period from March 14,
 1994 through
 December 31, 1994......   11,728,386  521,861  2,559,731  5,539,992  4,679,895   1,223,791    26,253,656
Year ended December 31,
 1995...................   17,950,590  771,380  4,021,017  8,241,963  6,054,990   2,575,995    39,615,935
Three months ended March
 31, 1995...............    3,491,733  214,597    830,821  1,741,102  1,145,052     802,646     8,225,951
Three months ended March
 31, 1996...............    4,978,785  213,413  2,459,024    895,104  1,522,058     665,025    10,733,409

                                     F-22

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
18.SUBSEQUENT EVENTS:
 
  On April 19, 1996, the Board of Directors authorized management of the
Company to file a registration statement with respect to a proposed initial
public offering by the Company of up to 3,500,000 shares of common stock. The
net proceeds will be applied to repay outstanding senior secured indebtedness,
subordinated notes and redeemable preferred stock, including all associated
accrued or accumulated and unpaid interest and dividends.
 
  In addition on April 19, 1996, the Board of Directors approved a ten-for-one
stock split of the Company's common stock, effected in the form of a stock
dividend, paid on or about April 30, 1996. All references in the accompanying
consolidated financial statements to the number of shares of common stock have
been retroactively restated to reflect this stock split. The Board of
Directors also, on April 19, 1996, authorized an increase of the number of
authorized shares of common stock to 50,000,000 shares and authorized
2,000,000 shares of undesignated preferred stock issuable in one or more
series by the Board of Directors.
   
  On April 19, 1996, the Board of Directors granted 320,000 options to certain
officers, employees and directors of the Company. The options expire five or
ten years from the date of grant. 310,000 options are exercisable at $10 per
share and vest ratably over a period of four years, and the remaining 10,000
options are exercisable at $11 per share and vest ratably over a period of
four years.     
 
  The 1996 Stock Option and Grant Plan (1996 Stock Plan), adopted by the Board
of Directors on April 19, 1996 and subsequently approved by the Company's
stockholders, will become effective upon completion of the proposed offering.
The 1996 Stock Plan permits (i) the grant of Incentive Options, (ii) the grant
of Non-Qualified Options, (iii) the issuance or sale of common stock with or
without vesting or other restrictions (Stock Grants) (iv) the grant of common
stock upon the attainment of specified performance goals (Performance Share
Awards), and (v) the grant of the right to receive cash dividends with the
holders of the Common Stock as if the recipient held a specified number of
shares of the common stock (Dividend Equivalent Rights). These grants may be
made to officers and other employees, consultants and key persons of the
Company and its subsidiaries. In addition, Independent Directors will
automatically be eligible for certain grants under the 1996 Stock Plan, as
described below. The 1996 Stock Plan provides for the issuance of 2,250,000
shares of common stock, of which no more than 300,000 shares may be issued to
Independent Directors. On and after the date the 1996 Stock Plan becomes
subject to Section 162(m) of the Internal Revenue Code of 1986, as amended,
options with respect to no more than 300,000 shares of common stock may be
granted to any one individual in any calendar year. No options or other grants
have been granted under the 1996 Stock Plan.
 
  The 1996 Stock Plan is administered by the Compensation Committee. Subject
to the provisions of the 1996 Stock Plan, the Compensation Committee has full
power to determine from among the persons eligible for grants under the 1996
Stock Plan (i) the individuals to whom grants will be granted, (ii) the
combination of grants to participants and (iii) the specific terms of each
grant. Incentive Options may be granted only to officers or other employees of
the Company or its subsidiaries including members of the Board of Directors
who are also employees of the Company or its subsidiaries.
 
  The option exercise price of each option granted under the 1996 Stock Plan
is determined by the Compensation Committee but, in the case of Incentive
Options may not be less than 100% of the fair market value of the underlying
shares on the date of grant and may not be exercisable more than ten years
from the date the option is granted. If any employee of the Company or any
subsidiary owns or is deemed to own at the date of grant shares of stock
representing in excess of 10% of the combined voting power of all classes of
stock of the Company or any subsidiary, the exercise price for options granted
to such employee may not be less than 110% of the fair market value of the
underlying shares on that date and the option may not be exercisable more than
five years from the date the option is granted. No option may be exercised
subsequent to the termination of the optionee's employment or other business
relationship with the Company unless otherwise determined by the
 
                                     F-23

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
18.SUBSEQUENT EVENTS, CONTINUED:
 
Compensation Committee or provided in the option agreement. At the discretion
of the Compensation Committee, any option may include a "reload" feature,
pursuant to which an optionee exercising an option receives in addition to the
number of shares of common stock due on the exercise of such an option an
additional option with an exercise price equal to the fair market value of the
common stock on the date such additional option is granted. Upon the exercise
of options, the option exercise price must be paid in full either in cash or,
in the sole discretion of the Compensation Committee, by delivery of shares of
common stock already owned by the optionee.
 
  The 1996 Stock Plan also permits Stock Grants, Performance Share Awards and
grants of Dividend Equivalent Rights. Stock Grants and Performance Share
Awards may be made to persons eligible under the 1996 Stock Plan, subject to
such conditions and restrictions as the Compensation Committee may determine.
Prior to the vesting of shares, recipients of Stock Grants generally will have
all the rights of a stockholder with respect to the shares, including voting
and dividend rights, subject only to the conditions and restrictions set forth
in the 1996 Stock Plan or in any agreement. In the case of Performance Share
Awards, the issuance of shares of common stock will occur only after the
recipient has satisfied the conditions and restrictions set forth in the 1996
Stock Plan or in any agreement. The Compensation Committee may also make Stock
Grants to persons eligible under the 1996 Stock Plan in recognition of past
services or other valid consideration, or in lieu of cash compensation. In
addition, the Compensation Committee may grant Dividend Equivalent Rights in
conjunction with any other grant made pursuant to the 1996 Stock Plan or as a
free standing grant. Dividend Equivalent Rights may be paid currently or
deemed to be reinvested in additional shares of common stock, which may
thereafter accrue further dividends.
 
  The Compensation Committee may, in its sole discretion, accelerate or extend
the date or dates on which all or any particular award or awards granted under
the 1996 Stock Plan may be exercised or vest. In the event of a merger,
liquidation or sale of substantially all of the assets of the Company, the
Board of Directors has the discretion to accelerate the vesting of options
granted under the 1996 Stock Plan, except that options granted to Independent
Directors as described below automatically accelerate in such circumstances.
The 1996 Stock Plan and the grants issued thereunder terminate upon the
effectiveness of any such transaction or event, unless provision is made in
connection with such transaction for the assumption of grants theretofore
made.
 
  The 1996 Stock Plan provides for the automatic grant of Non-Qualified
Options to Independent Directors. Under such provisions, options to purchase
that number of shares of common stock determined by dividing $200,000 by the
Option Exercise Price (as defined below) will be granted to each individual
who first becomes a member of the Board of Directors after the closing date of
the proposed offering and who is not then an employee of the Company or any
subsidiary of the Company. In addition, on the date five business days
following each annual meeting of stockholders of the Company commencing with
the meeting to be held in 1997, each Independent Director who is then serving
will be granted an option to purchase that number of shares of common stock
determined by dividing $75,000 by the Option Exercise Price. The Option
Exercise Price of options granted to Independent Directors under the 1996
Stock Plan will equal the lesser of (i) the last reported sale price per share
of common stock on the date of grant (or if no such price is reported on such
date, such price on the nearest preceding date on which such a price is
reported) or (ii) the average of the last reported sales price per share of
common stock as published in The Wall Street Journal for a period of ten
consecutive days prior to such date. Options granted to Independent Directors
under the foregoing provisions will vest in annual installments over four
years commencing with the date of grant and will expire ten years after grant,
subject to earlier termination if the optionee ceases to serve as a director.
The exercisability of these options will be accelerated upon the occurrence of
a merger, liquidation or sale of substantially all of the assets of the
Company.
 
                                     F-24

                 ANSYS, INC. AND SUBSIDIARIES AND PREDECESSOR
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
18.SUBSEQUENT EVENTS, CONTINUED:
 
  The Company's 1996 Employee Stock Purchase Plan (Purchase Plan) was adopted
by the Board of Directors on April 19, 1996 and was subsequently approved by
the Company's stockholders. Up to 210,000 shares of common stock may be issued
under the Purchase Plan. The Purchase Plan is administered by the Compensation
Committee. The first offering under the Purchase Plan will begin on August 1,
1996 and end on January 31, 1997. Subsequent offerings will commence on each
February 1 and August 1 thereafter and will have a duration of six months.
Generally, all employees who are customarily employed for more than 20 hours
per week as of the first day of the applicable offering period are eligible to
participate in the Purchase Plan. An employee who owns or is deemed to own
shares of stock representing in excess of 5% of the combined voting power of
all classes of stock of the Company may not participate in the Purchase Plan.
 
  During each offering, an employee may purchase shares under the Purchase
Plan by authorizing payroll deductions of up to 10% of his cash compensation
during the offering period. The maximum number of shares which may be
purchased by any participating employee during any offering period is limited
to 960 shares (as adjusted by the Compensation Committee from time to time).
Unless the employee has previously withdrawn from the offering, his
accumulated payroll deductions will be used to purchase common stock on the
last business day of the period at a price equal to 85% of the fair market
value of the common stock on the first or last day of the offering period,
whichever is lower. Under applicable tax rules, an employee may purchase no
more than $25,000 worth of common stock in any calendar year. No common stock
has been issued to date under the Purchase Plan.
 
                                     F-25

                       Behind it all, there's ANSYS/(R)/

Motion Picture Industry

                                                 [PHOTO OF IMAX EQUIPMENT]
Imax Corporation is a leader in
giant-screen film technology.
Imax uses advanced equipment to
precisely control the film, a critical
factor in the clarity of its images.
Imax engineers use ANSYS
software to optimize and improve
the design of their equipment,
such as projector components.

Consumer Appliances

                                                 [PHOTO OF IRON]

Black & Decker uses advanced
technology in the development of
its new commercial and household
appliances. For instance, the
company's engineers used ANSYS
software to reduce the weight
of the SurgeXpress iron, while
increasing its steam output.

Electronics Packaging

                                                [PHOTO OF ELECTRONIC COMPONENTS)

Motorola's Semiconductor Product
Sector manufactures components
that are used in tens of thousands
of products. ANSYS is one of
Motorola's simulation tools used
by many engineers for thermal,
coupled-field thermal/electric,
viscoplastic, static, and dynamic
analyses to ensure products resist
damaging heat build-up while
withstanding vibration, shock,
and temperature changes.

 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
 NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OF-
FERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURI-
TIES OTHER THAN THE SHARES OF COMMON STOCK TO WHICH IT RELATES OR AN OFFER TO,
OR A SOLICITATION OF, ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT INFORMA-
TION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
 
                                  -----------
 
                               TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
                                                                         
Prospectus Summary........................................................    3
Risk Factors..............................................................    7
Use of Proceeds...........................................................   12
Dividend Policy...........................................................   12
Capitalization............................................................   13
Dilution..................................................................   14
Selected Consolidated Financial Data......................................   15
Management's Discussion and Analysis of Financial Condition and Results of
 Operations...............................................................   18
Business..................................................................   28
Management................................................................   43
Certain Transactions......................................................   52
Principal and Selling Stockholders........................................   54
Description of Capital Stock..............................................   57
Shares Eligible for Future Sale...........................................   60
Underwriting..............................................................   62
Legal Matters.............................................................   63
Experts...................................................................   63
Additional Information....................................................   63
Index to Financial Statements.............................................  F-1

                                  -----------
 
 UNTIL       , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT PAR-
TICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS
DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOT-
MENTS OR SUBSCRIPTIONS.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
                               3,550,000 Shares
                                   
                    [LOGO OF ANSYS INC. APPEARS HERE]     
                                 Common Stock
                                  -----------
 
                                  PROSPECTUS
 
                                  -----------
                              Alex. Brown & Sons
                                 INCORPORATED
                                Cowen & Company
                          Wessels, Arnold & Henderson
                                 Parker/Hunter
                                 INCORPORATED
                                       , 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

                                    PART II
 
                    INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1)
 
  The following table sets forth the estimated expenses payable by the Company
in connection with this offering (excluding underwriting discounts and
commissions):

    NATURE OF EXPENSE                                                   AMOUNT
    -----------------                                                  --------
                                                                    
    SEC Registration Fee.............................................. $ 18,456
    NASD Filing Fee...................................................    5,852
    Nasdaq Listing Fee................................................   50,000
    Accounting Fees and Expenses......................................  115,000
    Legal Fees and Expenses...........................................  350,000
    Printing Expenses.................................................  175,000
    Blue Sky Qualification Fees and Expenses..........................   10,000
    Transfer Agent's Fee..............................................    5,000
    Miscellaneous.....................................................  120,692
                                                                       --------
      TOTAL........................................................... $850,000
                                                                       ========

- --------
(1) The amounts set forth above, except for the SEC, NASD and Nasdaq fees, are
    in each case estimated.
 
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
  In accordance with Section 145 of the General Corporation Law of the State
of Delaware, Article VII of the Company's Restated Certificate of
Incorporation (the "Certificate") provides that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases, or
(iv) for any transaction from which the director derived an improper personal
benefit. In addition, the Certificate provides that if the Delaware General
Corporation Law is amended to authorize the further elimination or limitation
of the liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
 
  Article V of the Company's Amended and Restated By-laws (the "By-laws")
provides for indemnification by the Company of its officers and certain non-
officer employees under certain circumstances against expenses (including
attorneys fees, judgments, fines and amounts paid in settlement) reasonably
incurred in connection with the defense or settlement of any threatened,
pending or completed legal proceeding in which any such person is involved by
reason of the fact that such person is or was an officer or employee of the
Company if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to criminal actions or proceedings, if such person
had no reasonable cause to believe his or her conduct was unlawful.
 
  The Company has entered into indemnification agreements with each of its
directors reflecting the foregoing provisions of its By-laws and requiring the
advancement of expenses in proceedings involving the directors in most
circumstances.
 
  Under Section 8 of the Underwriting Agreement filed as Exhibit 1.1 hereto,
the Underwriters have agreed to indemnify, under certain conditions, the
Company, its directors, certain officers and persons who control the Company
within the meaning of the Securities Act of 1933 against certain liabilities.

                                     II-1

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
 
  Set forth in chronological order below is information regarding the number
of shares of Common Stock issued, and the number of options granted, by the
Registrant since its incorporation in January 1994. Further included is the
consideration, if any, received by the Registrant for such shares and options,
and information relating to the section of the Securities Act of 1933, as
amended (the "Securities Act"), or rule of the Securities and Exchange
Commission under which exemption from registration was claimed. The following
transactions give effect to the Company's ten-for-one split of its Common
Stock, in the form of a stock dividend, which became effective as of April 30,
1996, and the conversion of all Class A (nonvoting) Common Stock into Common
Stock upon completion of this offering.
 
    (1) In February 1994 and March 1994, pursuant to an Investment and
  Stockholders' Agreement (the "Stockholders' Agreement"), the Company sold
  an aggregate of (i) 240,300 shares of the Company's Common Stock for an
  aggregate purchase price of $24,030, (ii) 7,212,500 shares of the Company's
  Common Stock for an aggregate purchase price of $655,970, (iii) 300.032
  shares of the Company's 10% Redeemable Preferred Stock for an aggregate
  purchase price of $3,000,320 and (iv) 10% Subordinated Notes in the
  aggregate principal amount of $9.9 million to Advent VII L.P., Advent
  Atlantic and Pacific II Limited Partnership, Chestnut Capital International
  III L.P., Chestnut III Limited Partnership, Advent Industrial II Limited
  Partnership, Advent New York L.P. and TA Venture Investors, L.P.
 
    (2) In February 1994 and March 1994, pursuant to the Stockholders'
  Agreement, the Company sold an aggregate of (i) 59,700 shares of the
  Company's Common Stock for a purchase price of $5,970, (ii) 1,939,500
  shares of the Company's Common Stock for a purchase price of $272,168,
  (iii) 79.968 shares of the Company's 10% Redeemable Preferred Stock for a
  purchase price of $799,680 and (iv) a 10% Subordinated Note in the
  principal amount of $4.3 million to Dr. John A. Swanson.
 
    (3) In March 1994, pursuant to the Stockholders' Agreement, the Company
  sold an aggregate of (i) 548,000 shares of the Company's Common Stock for a
  purchase price of $50,000, (ii) 20 shares of the Company's 10% Redeemable
  Preferred Stock for a purchase price of $200,000 and (iii) a 10%
  Subordinated Note in the principal amount of $750,000 to Marcia S. Morton.
     
    (4) In July 1994, the Company sold (i) 100,000 shares of the Company's
  Common Stock for a purchase price of $10,000, (ii) 4 shares of the
  Company's 10% Redeemable Preferred Stock for a purchase price of $40,000
  and (iii) a 10% Subordinated Note in the principal amount of $150,000 to
  each of Samuel P. Geisberg, Steven C. Walske and Louis J. Volpe.     
 
    (5) In July 1994, pursuant to a Restricted Stock Agreement, the Company
  sold 626,000 shares of the Company's Common Stock for a purchase price of
  $250,000 to Peter J. Smith.
 
    (6) In July 1994, pursuant to Restricted Stock Agreements, the Company
  granted an aggregate of 269,500 shares of the Company's Common Stock to
  certain members of management and key employees of the Company in
  consideration of services.
 
    (7) In September 1994, pursuant to Restricted Stock Agreements, the
  Company sold an aggregate of 4,250 shares of the Company's Common Stock for
  an aggregate purchase price of $425 to certain members of management and
  key employees of the Company.
 
    (8) In October 1994, pursuant to Restricted Stock Agreements, the Company
  sold an aggregate of 190,000 shares of the Company's Common Stock for an
  aggregate purchase price of $76,000 to certain members of management and
  key employees of the Company.
 
    (9) In November 1994, pursuant to Restricted Stock Agreements, the
  Company sold an aggregate of 120,000 shares of the Company's Common Stock
  for an aggregate purchase price of $48,000 to certain members of management
  and key employees of the Company and sold 20,000 shares of the Company's
  Common Stock for an aggregate purchase price of $200 to Gary B. Eichhorn.
 
    (10) In November 1994, pursuant to a Restricted Stock Agreement, the
  Company sold 60,000 shares of the Company's Common Stock for an aggregate
  purchase price of $24,000 to John M. Sherbin II.
 
    (11) In December 1995, pursuant to a Restricted Stock Agreement, the
  Company sold 20,000 shares of the Company's Common Stock for an aggregate
  purchase price of $8,000 to John F. Smith.
 
    (12) In December 1995, pursuant to a Restricted Stock Agreement, the
  Company sold 10,000 shares of the Company's Common Stock for an aggregate
  purchase price of $4,000 to Gary B. Eichhorn.
 
                                     II-2

    (13) In February 1996, pursuant to a Restricted Stock Agreement, the
  Company granted 135,860 restricted shares of the Company's Common Stock to
  Peter J. Smith for an aggregate purchase price of $326,064.
 
    (14) In March 1996, pursuant to the exercise of options granted in 1994,
  the Company issued 960,000 shares of the Company's Common Stock for an
  aggregate exercise price of $105,600 to Dr. John A. Swanson.
 
    (15) From inception through April 1996, the Company issued options to
  purchase an aggregate of 1,828,110 (including the option to purchase
  960,000 shares issued to Dr. Swanson, as described in the preceding
  paragraph) shares of the Company's Common Stock to officers, employees,
  consultants and directors of the Company pursuant to the Company's 1994
  Stock Option and Grant Plan at exercise prices ranging from $.11 to $10.00
  per share.
 
  The shares of capital stock and securities issued in the above transactions
were offered and sold in reliance upon the exemption from registration under
Section 4(2) of the Securities Act or Regulation D or Rule 701 promulgated
under the Securities Act, relative to sales by an issuer not involving a
public offering.
 
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
   
  Unless otherwise indicated, all exhibits were filed with either the
Registration Statement on Form S-1, dated May 1, 1996, Amendment No. 1 to such
Registration Statement, dated May 23, 1996, or Amendment No. 2 to such
Registration Statement, dated June 7, 1996.     

                                                                      
  *1.1 Form of Underwriting Agreement.
   3.1 Second Amended and Restated Certificate of Incorporation, as
       amended.
   3.2 Form of Restated Certificate of Incorporation.
   3.3 By-laws.
   3.4 Form of Amended and Restated By-laws.
   4.1 Specimen certificate for shares of Common Stock, $.01 par value.
   5.1 Opinion of Goodwin, Procter & Hoar llp as to the validity of the
       securities being offered.
  10.1 1994 Stock Option and Grant Plan, as amended.
  10.2 1996 Stock Option and Grant Plan.
  10.3 Employee Stock Purchase Plan.
  10.4 Asset Purchase Agreement dated as of February 7, 1994 by and among
       SAS Acquisition Corp., SAS Software, Inc. and Dr. John A. Swanson,
       as amended (excluding schedules, which the Registrant agrees to
       furnish supplementally to the Commission upon request).
  10.5 Investment and Stockholders' Agreement dated as of February 7,
       1994 by and among SAS Acquisition Corp., SAS Software, Inc., Dr.
       John A. Swanson, the TA Investors (as defined) and Marcia S.
       Morton, as amended (excluding schedules, which the Registrant
       agrees to furnish supplementally to the Commission upon request).
  10.6 Investment Agreement among SAS Holdings, Inc., the Present
       Investors (as defined), Peter J. Smith and the Parametric
       Investors (as defined) dated July 8, 1994, as amended.
  10.7 Employment Agreement among the Registrant, a subsidiary of the
       Registrant and Dr. John A. Swanson dated February 7, 1994.
  10.8 Incentive Stock Option Agreement between the Registrant and Dr.
       John A. Swanson dated March 14, 1994, as amended.
  10.9 Agreement Regarding Inventions, Confidentiality and Competitive
       Activities between the Registrant, subsidiaries of the Registrant
       and Dr. John A. Swanson dated February 7, 1994.
 10.10 Employment Agreement between a subsidiary of the Registrant and
       Peter J. Smith dated as of March 28, 1994.
 10.11 Restricted Stock Agreement between the Registrant and Peter J.
       Smith dated July 12, 1994.
 10.12 Pledge Agreement between the Registrant and Peter J. Smith dated
       July 12, 1994.
 10.13 Letter Agreement between a subsidiary of the Registrant and Peter
       J. Smith dated July 12, 1994.

 
                                     II-3

   
                                                                      
 10.14 Promissory Note between the Registrant and Peter J. Smith dated
       July 12, 1994, as amended.
 10.15 Restricted Stock Agreement between the Registrant and Peter J.
       Smith dated February 29, 1996.
 10.16 Incentive Stock Option Agreement between the Registrant and Peter
       J. Smith dated February 29, 1996.
 10.17 Key-Man Executive Life Insurance Policies for Peter J. Smith and
       Dr. John A. Swanson.
 10.18 Lease Agreement between the Registrant, Dr. John A. Swanson and
       Marcia S. Morton and Swanson Analysis Systems, Inc. for the
       Houston, Pennsylvania property.
 10.19 Lease between National Build to Suit Washington County, L.L.C. and
       the Registrant for the new Southpointe property.
 10.20 Registrant's Pension Plan and Trust, as amended.
 10.21 Form of Director Indemnification Agreement.
   *21 Subsidiaries of the Registrant.
  23.1 Consent of Goodwin, Procter & Hoar llp (included in Exhibit 5.1
       hereto).
 *23.2 Consent of Coopers & Lybrand L.L.P.
  24.1 Powers of Attorney (included on page II-5 of manually signed copy
       and page II-4 of conformed copies).
    
- --------
    * Filed herewith.
 
(B) FINANCIAL STATEMENT SCHEDULES
 
  The following schedule is included herewith:
 
    Valuation and Qualifying Accounts
 
ITEM 17. UNDERTAKINGS
 
  The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
  Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
 
  The undersigned Registrant hereby undertakes that:
 
    (1) For purposes of determining any liability under the Securities Act,
  the information omitted from the form of Prospectus filed as part of this
  Registration Statement in reliance upon Rule 430A and contained in a form
  of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
  497(h) under the Securities Act shall be deemed to be part of this
  Registration Statement as of the time it was declared effective.
 
    (2) For the purpose of determining any liability under the Securities
  Act, each post-effective amendment that contains a form of Prospectus shall
  be deemed to be a new registration statement relating to the securities
  offered therein, and the offering of such securities at that time shall be
  deemed to be the initial bona fide offering thereof.
 
                                     II-4

                                  SIGNATURES
   
  Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused Amendment No. 3 to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Houston,
Pennsylvania, on June 19, 1996.     
 
                                          ANSYS, INC.
                                             
                                          By: /s/ John M. Sherbin II    
                                             ----------------------------------
                                                    John M. Sherbin II,
                                                  Chief Financial Officer
   
  Pursuant to the requirements of the Securities Act of 1933, Amendment No. 3
to this Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.     

                      SIGNATURE             TITLE                   DATE
                      ---------             -----                   ----
                                                        
              *                 Chairman, Chief Executive
_______________________________ Officer                         June 19, 1996
        PETER J. SMITH          and Director

     /s/ John M. Sherbin II     Chief Financial Officer         June 19, 1996
- ------------------------------- (Principal Financial Officer and 
      JOHN M. SHERBIN II        Principal Accounting Officer)

               *                Chief Technologist and 
_______________________________ Director                        June 19, 1996
      DR. JOHN A. SWANSON

               *
_______________________________ Director                        June 19, 1996
      JACQUELINE C. MORBY

               *
_______________________________ Director                        June 19, 1996
        ROGER B. KAFKER

               *
_______________________________ Director                        June 19, 1996
       GARY B. EICHHORN

               *
_______________________________ Director                        June 19, 1996
         JOHN F. SMITH

               *
_______________________________ Director                        June 19, 1996
     ROGER J. HEINEN, JR.

*By /s/ John M. Sherbin II
   -----------------------------
      JOHN M. SHERBIN II
       Attorney-in-fact
 
                                     II-5

                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors of 
 ANSYS, Inc. and Subsidiaries:
 
  In connection with our audits of the consolidated financial statements of
ANSYS, Inc. and Subsidiaries as of December 31, 1994 and 1995 and for the
period from March 14, 1994 (date of acquisition) through December 31, 1994 and
for the year ended December 31, 1995; and combined financial statements of
Swanson Analysis Systems, Inc. for the year ended December 31, 1993 and for
the period January 1, 1994 through March 13, 1994, which financial statements
are included in the Prospectus, we have also audited the financial statement
schedule listed in Item 16 herein.
 
  In our opinion, this financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
 
/s/ Coopers & Lybrand L.L.P.

Pittsburgh, Pennsylvania 
April 19, 1996

                                                                     SCHEDULE II
 
                                  ANSYS, INC.
 
                       VALUATION AND QUALIFYING ACCOUNTS

COL. A                     COL. B     COL. C       COL. D       COL. E      COL. F
- ------                    --------- ---------- -------------- ---------- -------------
                                            ADDITIONS
                                    -------------------------
                           BALANCE
                             AT
                          BEGINNING CHARGED TO   CHARGED TO               BALANCE AT
                          OF PERIOD  EXPENSE   OTHER ACCOUNTS DEDUCTIONS END OF PERIOD
                          --------- ---------- -------------- ---------- -------------
                                                          
Accounts Receivable Re-
 serve:
  Year ended December
 31, 1993...............  $     --  $1,504,000       --        $754,000    $750,000
  Period from January 1,
 1994
    through March 13,
 1994...................   750,000      --           --           --        750,000
  Period from March 14,
 1994
   through December 31,
 1994...................   750,000      --           --         100,000     650,000
  Year ended December
 31, 1995...............   650,000      58,000       --           8,000     700,000
  Three months ended
 March 31, 1996.........   700,000      12,500       --           --        712,500

                                       2

                                 EXHIBIT INDEX

                                                                           PAGE
                                                                           ----
                                                                     
  *1.1 Form of Underwriting Agreement.
   3.1 Second Amended and Restated Certificate of Incorporation, as
       amended.
   3.2 Form of Restated Certificate of Incorporation.
   3.3 By-laws.
   3.4 Form of Amended and Restated By-laws.
   4.1 Specimen certificate for shares of Common Stock, $.01 par value.
   5.1 Opinion of Goodwin, Procter & Hoar llp as to the validity of the
       securities being offered.
  10.1 1994 Stock Option and Grant Plan, as amended.
  10.2 1996 Stock Option and Grant Plan.
  10.3 Employee Stock Purchase Plan.
  10.4 Asset Purchase Agreement dated as of February 7, 1994 by and
       among SAS Acquisition Corp., SAS Software, Inc. and Dr. John A.
       Swanson, as amended (excluding schedules, which the Registrant
       agrees to furnish supplementally to the Commission upon request).
  10.5 Investment and Stockholders' Agreement dated as of February 7,
       1994 by and among SAS Acquisition Corp., SAS Software, Inc., Dr.
       John A. Swanson, the TA Investors (as defined) and Marcia S.
       Morton, as amended (excluding schedules, which the Registrant
       agrees to furnish supplementally to the Commission upon request).
  10.6 Investment Agreement among SAS Holdings, Inc., the Present
       Investors (as defined), Peter J. Smith and the Parametric
       Investors (as defined) dated July 8, 1994, as amended.
  10.7 Employment Agreement among the Registrant, a subsidiary of the
       Registrant and Dr. John A. Swanson dated February 7, 1994.
  10.8 Incentive Stock Option Agreement between the Registrant and Dr.
       John A. Swanson dated March 14, 1994, as amended.
  10.9 Agreement Regarding Inventions, Confidentiality and Competitive
       Activities between the Registrant, subsidiaries of the Registrant
       and Dr. John A. Swanson dated February 7, 1994.
 10.10 Employment Agreement between a subsidiary of the Registrant and
       Peter J. Smith dated as of March 28, 1994.
 10.11 Restricted Stock Agreement between the Registrant and Peter J.
       Smith dated July 12, 1994.
 10.12 Pledge Agreement between the Registrant and Peter J. Smith dated
       July 12, 1994.
 10.13 Letter Agreement between a subsidiary of the Registrant and Peter
       J. Smith dated July 12, 1994.
 10.14 Promissory Note between the Registrant and Peter J. Smith dated
       July 12, 1994, as amended.
 10.15 Restricted Stock Agreement between the Registrant and Peter J.
       Smith dated February 29, 1996.
 10.16 Incentive Stock Option Agreement between the Registrant and Peter
       J. Smith dated February 29, 1996.
 10.17 Key-Man Executive Life Insurance Policies for Peter J. Smith and
       Dr. John A. Swanson.
 10.18 Lease Agreement between the Registrant, Dr. John A. Swanson and
       Marcia S. Morton and Swanson Analysis Systems, Inc. for the
       Houston, Pennsylvania property.
 10.19 Lease between National Build to Suit Washington County, L.L.C.
       and the Registrant for the new Southpointe property.

 

                                                                           PAGE
                                                                           ----
                                                                     
 10.20 Registrant's Pension Plan and Trust, as amended.
 10.21 Form of Director Indemnification Agreement.
   *21 Subsidiaries of the Registrant.
  23.1 Consent of Goodwin, Procter & Hoar llp (included in Exhibit 5.1
       hereto).
 *23.2 Consent of Coopers & Lybrand L.L.P.
  24.1 Powers of Attorney (included on page II-6 of manually signed copy
       and page II-6 of conformed copies).
    
- --------
    * Filed herewith.

                                                                     EXHIBIT 1.1

                               3,550,000 SHARES
                                  ANSYS, INC.
                                 COMMON STOCK
 
                            UNDERWRITING AGREEMENT
 
                                                                  JUNE   , 1996
 
ALEX. BROWN & SONS INCORPORATED
COWEN & COMPANY
WESSELS, ARNOLD & HENDERSON, L.L.C.
PARKER/HUNTER INCORPORATED
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, Maryland 21202
 
Gentlemen:
 
  Ansys, Inc., a Delaware corporation (the "Company"), and a shareholder of
the Company (the "Selling Shareholder") propose to sell to the several
underwriters (the "Underwriters") named in Schedule I hereto for whom you are
acting as representatives (the "Representatives") an aggregate of 3,550,000
shares of the Company's Common Stock, $.01 par value (the "Firm Shares"), of
which 3,500,000 shares will be sold by the Company and 50,000 shares will be
sold by the Selling Shareholder. The respective amounts of the Firm Shares to
be so purchased by the several Underwriters are set forth opposite their names
in Schedule I hereto, and the respective amounts to be sold by the Selling
Shareholder are set forth opposite their names in Schedule II hereto. The
Company, the Selling Shareholder and the Option Selling Shareholders (as
hereinafter defined) are sometimes referred to herein collectively as the
"Sellers." Certain shareholders of the Company, other than the Selling
Shareholder (the "Option Selling Shareholders"), also propose to sell at the
Underwriters' option an aggregate of up to 532,500 additional shares of the
Company's Common Stock (the "Option Shares") as set forth below. The maximum
number of Option Shares to be sold by the Option Selling Shareholders is set
forth opposite their names on Schedule III hereto.
 
  As the Representatives, you have advised the Company, the Selling
Shareholder and the Option Selling Shareholders (a) that you are authorized to
enter into this Agreement on behalf of the several Underwriters, and (b) that
the several Underwriters are willing, acting severally and not jointly, to
purchase the numbers of Firm Shares set forth opposite their respective names
in Schedule I, plus their pro rata portion of the Option Shares if you elect
to exercise the over-allotment option in whole or in part for the accounts of
the several Underwriters. The Firm Shares and the Option Shares (to the extent
the aforementioned option is exercised) are herein collectively called the
"Shares."
 
  In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
 
  1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE SELLING SHAREHOLDER
AND THE OPTION SELLING SHAREHOLDERS.
 
  (a) The Company represents and warrants to each of the Underwriters as
  follows:
 
    (i) A registration statement on Form S-1 (File No. 333-4278) with respect
  to the Shares has been carefully prepared by the Company in conformity with
  the requirements of the Securities Act of 1933, as
 
                                     - 1 -

  amended (the "Act"), and the Rules and Regulations (the "Rules and
  Regulations") of the Securities and Exchange Commission (the "Commission")
  thereunder and has been filed with the Commission. Copies of such
  registration statement, including any amendments thereto, the preliminary
  prospectuses (meeting the requirements of the Rules and Regulations)
  contained therein and the exhibits, financial statements and schedules, as
  finally amended and revised, have heretofore been delivered by the Company
  to you. Such registration statement, together with any registration
  statement filed by the Company pursuant to Rule 462 (b) of the Act, herein
  referred to as the "Registration Statement," which shall be deemed to
  include all information omitted therefrom in reliance upon Rule 430A and
  contained in the Prospectus referred to below, has become effective under
  the Act and no post-effective amendment to the Registration Statement has
  been filed as of the date of this Agreement. "Prospectus" means (a) the
  form of prospectus first filed with the Commission pursuant to Rule 424(b)
  or (b) the last preliminary prospectus included in the Registration
  Statement filed prior to the time it becomes effective or filed pursuant to
  Rule 424(a) under the Act that is delivered by the Company to the
  Underwriters for delivery to purchasers of the Shares, together with the
  term sheet or abbreviated term sheet filed with the Commission pursuant to
  Rule 424(b)(7) under the Act. Each preliminary prospectus included in the
  Registration Statement prior to the time it becomes effective is herein
  referred to as a "Preliminary Prospectus."
 
    (ii) The Company has been duly organized and is validly existing as a
  corporation in good standing under the laws of the State of Delaware, with
  corporate power and authority to own or lease its properties and conduct
  its business as described in the Registration Statement. Each of the
  subsidiaries of the Company as listed in Exhibit 21 to Item 16(a) of the
  Registration Statement (collectively, the "Subsidiaries") has been duly
  organized and is validly existing as a corporation in good standing under
  the laws of the jurisdiction of its incorporation, with corporate power and
  authority to own or lease its properties and conduct its business as
  described in the Registration Statement. The Subsidiaries are the only
  subsidiaries, direct or indirect, of the Company. The Company and each of
  the Subsidiaries are duly qualified to transact business in all
  jurisdictions in which the conduct of their business requires such
  qualification, except where the failure to be so qualified would not have a
  material adverse effect upon the Company and the Subsidiaries taken as a
  whole. The outstanding shares of capital stock of each of the Subsidiaries
  have been duly authorized and validly issued, are fully paid and non-
  assessable and are owned by the Company or another Subsidiary free and
  clear of all liens, encumbrances and equities and claims (except for the
  pledge of such shares pursuant to the 1994 Loan, as defined in the
  Prospectus); and no options, warrants or other rights to purchase,
  agreements or other obligations to issue or other rights to convert any
  obligations into shares of capital stock or ownership interests in the
  Subsidiaries are outstanding.
 
    (iii) The outstanding shares of Redeemable Preferred Stock, Class A
  Common Stock and Common Stock of the Company, including all shares of
  Common Stock to be sold by the Selling Shareholder and the Option Selling
  Shareholders, have been duly authorized and validly issued and are fully
  paid and non-assessable; the portion of the Shares to be issued and sold by
  the Company have been duly authorized and when issued and paid for as
  contemplated herein will be validly issued, fully paid and non-assessable;
  and no preemptive rights of stockholders exist with respect to any of the
  Shares or the issue and sale thereof. Neither the filing of the
  Registration Statement nor the offering or sale of the Shares as
  contemplated by this Agreement gives rise to any rights, other than those
  which have been waived or satisfied, for or relating to the registration of
  any shares of Common Stock.
 
    (iv) The information set forth under the caption "Capitalization" in the
  Prospectus is true and correct. All of the Shares conform in all material
  respects to the description thereof contained in the Registration
  Statement. The form of certificates for the Shares conforms to the
  corporate law of the State of Delaware.
 
    (v) The Commission has not issued an order preventing or suspending the
  use of any Prospectus relating to the proposed offering of the Shares nor
  instituted proceedings for that purpose. The Registration Statement
  contains, and the Prospectus and any amendments or supplements thereto will
  contain, all statements which are required to be stated therein by, and
  will conform, in all material respects, to the requirements of the Act and
  the Rules and Regulations. The Registration Statement and any amendment
 
                                     - 2 -

  thereto do not contain, and will not contain, any untrue statement of a
  material fact and do not omit, and will not omit, to state any material
  fact required to be stated therein or necessary to make the statements
  therein not misleading. The Prospectus and any amendments and supplements
  thereto do not contain, and will not contain, any untrue statement of
  material fact; and do not omit, and will not omit, to state any material
  fact required to be stated therein or necessary to make the statements
  therein, in the light of the circumstances under which they were made, not
  misleading; provided, however, that the Company makes no representations or
  warranties as to information contained in or omitted from the Registration
  Statement or the Prospectus, or any such amendment or supplement, in
  reliance upon, and in conformity with, written information furnished to the
  Company by or on behalf of any Underwriter through the Representatives,
  specifically for use in the preparation thereof.
 
    (vi) The consolidated financial statements of the Company and the
  Subsidiaries, together with related notes and schedules as set forth in the
  Registration Statement, present fairly in all material respects the
  financial position and the results of operations and cash flows of the
  Company and the consolidated Subsidiaries, or its predecessor, as the case
  may be, at the indicated dates and for the indicated periods. Such
  financial statements and related schedules have been prepared in accordance
  with generally accepted principles of accounting, consistently applied
  throughout the periods involved, except as disclosed herein, and all
  adjustments necessary for a fair presentation of results for such periods
  have been made. The summary financial and statistical data included in the
  Registration Statement presents fairly in all material respects the
  information shown therein and such data has been compiled on a basis
  consistent with the financial statements presented therein and the books
  and records of the Company.
 
    (vii) Coopers & Lybrand L.L.P., who have certified certain of the
  financial statements filed with the Commission as part of the Registration
  Statement, are independent public accountants as required by the Act and
  the Rules and Regulations.
 
    (viii) There is no action, suit, claim or proceeding pending or, to the
  knowledge of the Company, threatened against the Company or any of the
  Subsidiaries before any court or administrative agency or otherwise which
  if determined adversely to the Company or any of its Subsidiaries would
  reasonably be expected to result in any material adverse change in the
  earnings, business, management, properties, assets, rights, operations,
  condition (financial or otherwise) or prospects of the Company and of the
  Subsidiaries taken as a whole or prevent the consummation of the
  transactions contemplated hereby, except as set forth in the Registration
  Statement.
 
    (ix) The Company and the Subsidiaries have good and valid title to all of
  the properties and assets reflected in the financial statements (or as
  described in the Registration Statement) hereinabove described, subject to
  no lien, mortgage, pledge, charge or encumbrance of any kind except those
  reflected in such financial statements (or as described in the Registration
  Statement) or which are not material in amount. The Company and the
  Subsidiaries occupy their leased properties under valid and binding leases
  conforming in all material respects to the description thereof set forth in
  the Registration Statement.
 
    (x) The Company and the Subsidiaries have filed all Federal, State, local
  and foreign income tax returns which have been required to be filed and
  have paid all taxes shown in said returns and all assessments received by
  them or any of them to the extent that such taxes have become due. All tax
  liabilities have been adequately provided for in the financial statements
  of the Company.
 
    (xi) Since the respective dates as of which information is given in the
  Registration Statement, as it may be amended or supplemented, there has not
  been any material adverse change or any development involving a prospective
  material adverse change in or affecting the earnings, business, management,
  properties, assets, rights, operations, condition (financial or otherwise),
  or prospects of the Company and its Subsidiaries taken as a whole, whether
  or not occurring in the ordinary course of business, and there has not been
  any material transaction entered into or any material transaction that is
  probable of being entered into by the Company or the Subsidiaries, other
  than transactions in the ordinary course of business and
 
                                     - 3 -

  changes and transactions described in the Registration Statement, as it may
  be amended or supplemented. Neither the Company nor any of the Subsidiaries
  has any material contingent obligations which are not disclosed in the
  Company's financial statements which are included in the Registration
  Statement.
 
    (xii) Neither the Company nor any of the Subsidiaries is or with the
  giving of notice or lapse of time or both, will be, in violation of or in
  default under its Charter or By-Laws or under any agreement, lease,
  contract, indenture or other instrument or obligation to which it is a
  party or by which it, or any of its properties, is bound and which default
  is of material significance in respect of the management, properties,
  assets, rights, operations, condition (financial or otherwise) or prospects
  of the Company and the Subsidiaries taken as a whole. The execution and
  delivery of this Agreement and the consummation of the transactions herein
  contemplated and the fulfillment of the terms hereof will not conflict with
  or result in a breach of any of the terms or provisions of, or constitute a
  default under, any indenture, mortgage, deed of trust or other agreement or
  instrument to which the Company or any Subsidiary is a party (other than
  with respect to the 1994 Loan and the Subordinated Notes, as defined in the
  Prospectus), or of the Charter or by-laws of the Company or any order, rule
  or regulation applicable to the Company or any Subsidiary of any court or
  of any regulatory body or administrative agency or other governmental body
  having jurisdiction.
 
    (xiii) Each approval, consent, order, authorization, designation,
  declaration or filing by or with any regulatory, administrative or other
  governmental body necessary in connection with the execution and delivery
  by the Company of this Agreement and the consummation of the transactions
  herein contemplated (except such additional steps as may be required by the
  Commission, the National Association of Securities Dealers, Inc. (the
  "NASD") or such additional steps as may be necessary to qualify the Shares
  for public offering by the Underwriters under state securities or Blue Sky
  laws) has been obtained or made and is in full force and effect.
 
    (xiv) The Company and each of the Subsidiaries hold all material
  licenses, certificates and permits from governmental authorities which are
  necessary to the conduct of their businesses, other than licenses,
  certificates or permits the failure of which to hold would not,
  individually or in the aggregate, have a material adverse effect on the
  Company and the Subsidiaries, taken as a whole neither the Company nor any
  of the Subsidiaries has infringed any patents, patent rights, trade names,
  trademarks or copyrights, which infringement is material to the business of
  the Company and the Subsidiaries taken as a whole. The Company knows of no
  material infringement by others of patents, patent rights, trade names,
  trademarks or copyrights owned by or licensed to the Company which would
  have a material adverse effect on the business or financial condition of
  the Company and the Subsidiaries, taken as a whole.
 
    (xv) Neither the Company, nor to the Company's best knowledge, any of its
  affiliates, has taken or may take, directly or indirectly, any action
  designed to cause or result in, or which has constituted or which might
  reasonably be expected to constitute, the stabilization or manipulation of
  the price of the shares of Common Stock to facilitate the sale or resale of
  the Shares.
 
    (xvi) Neither the Company nor any Subsidiary is an "investment company"
  within the meaning of such term under the Investment Company Act of 1940
  and the rules and regulations of the Commission thereunder.
 
    (xvii) The Company maintains a system of internal accounting controls
  sufficient to provide reasonable assurances that (i) transactions are
  executed in accordance with management's general or specific authorization;
  (ii) transactions are recorded as necessary to permit preparation of
  financial statements in conformity with generally accepted accounting
  principles and to maintain accountability for assets; (iii) access to
  assets is permitted only in accordance with management's general or
  specific authorization; and (iv) the recorded accountability for assets is
  compared with existing assets at reasonable intervals and appropriate
  action is taken with respect to any differences.

                                     - 4 -

    (xviii) The Company and each of its Subsidiaries carry, or are covered
  by, insurance in such amounts and covering such risks as is adequate for
  the conduct of their respective businesses and the value of their
  respective properties and as is customary for companies engaged in similar
  industries.
 
    (xix) The Company is in compliance in all material respects with all
  presently applicable provisions of the Employee Retirement Income Security
  Act of 1974, as amended, including the regulations and published
  interpretations thereunder ("ERISA"); no "reportable event" (as defined in
  ERISA) has occurred with respect to any "pension plan" (as defined in
  ERISA) for which the Company would have any liability; the Company has not
  incurred and does not expect to incur liability under (i) Title IV of ERISA
  with respect to termination of, or withdrawal from, any "pension plan" or
  (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
  including the regulations and published interpretations thereunder (the
  "Code"); and each "pension plan" for which the Company would have any
  liability that is intended to be qualified under Section 401(a) of the Code
  is so qualified in all material respects and nothing has occurred, whether
  by action or by failure to act, which would cause the loss of such
  qualification.
 
    (xx) The Company confirms as of the date hereof that it is in compliance
  with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act
  Relating to Disclosure of doing Business with Cuba, and the Company further
  agrees that if it commences engaging in business with the government of
  Cuba or with any person or affiliate located in Cuba after the date the
  Registration Statement becomes or has become effective with the Commission
  or with the Florida Department of Banking and Finance (the "Department"),
  whichever date is later, or if the information reported or incorporated by
  reference in the Prospectus, if any, concerning the Company's business with
  Cuba or with any person or affiliate located in Cuba changes in any
  material way, the Company will provide the Department notice of such
  business or change, as appropriate, in a form acceptable to the Department.
 
    (b) The Selling Shareholder and each of the Option Selling Shareholders
  severally represent and warrant as follows:
 
    (i) Such Selling Shareholder or Option Selling Shareholder now has and at
  the Closing Date and the Option Closing Date, as the case may be (as such
  dates are hereinafter defined) will have good and valid title to the Firm
  Shares and the Option Shares to be sold by such Selling Shareholder or
  Option Selling Shareholder, free and clear of any liens, encumbrances,
  equities and claims (other than any that will be released in connection
  with the sale of the shares by the Selling Shareholder or an Option Selling
  Shareholder pursuant hereto), and full right, power and authority to effect
  the sale and delivery of such Firm Shares and Option Shares; and upon the
  delivery of, against payment for, such Firm Shares and Option Shares
  pursuant to this Agreement, the Underwriters will acquire good and
  marketable title thereto, free and clear of any liens, encumbrances,
  equities and claims.
 
    (ii) Such Selling Shareholder or Option Selling Shareholder has full
  right, power and authority to execute and deliver this Agreement, the Power
  of Attorney, and the Custodian Agreement referred to below and to perform
  its obligations under such Agreements. The execution and delivery of this
  Agreement and the consummation by such Selling Shareholder or Option
  Selling Shareholder of the transactions herein contemplated and the
  fulfillment by such Selling Shareholder or Option Selling Shareholder of
  the terms hereof will not require such Selling Shareholder or Option
  Selling Shareholder to obtain any consent, approval, authorization, or
  other order of any court, regulatory body, administrative agency or other
  governmental body (except as may be required under the Act, state
  securities laws or Blue Sky laws) and will not result in a breach of any of
  the terms and provisions of, or constitute a default under, organizational
  documents of such Selling Shareholder or Option Selling Shareholder, if not
  an individual, or any indenture, mortgage, deed of trust or other agreement
  or instrument to which such Selling Shareholder or Option Selling
  Shareholder is a party, or of any order, rule or regulation applicable to
  such Selling Shareholder or Option Selling Shareholder of any court or of
  any regulatory body or administrative agency or other governmental body
  having jurisdiction.

                                     - 5 -

    (iii) Such Selling Shareholder or Option Selling Shareholder has not
  taken and will not take, directly or indirectly, any action designed to, or
  which has constituted, or which might reasonably be expected to cause or
  result in the stabilization or manipulation of the price of the Common
  Stock of the Company and, other than as permitted by the Act, the Selling
  Shareholder or Option Selling Shareholder will not distribute any
  prospectus or other offering material in connection with the offering of
  the Shares.
 
    (iv) Without having undertaken to determine independently the accuracy or
  completeness of either the representations and warranties of the Company
  contained herein or the information contained in the Registration
  Statement, such Selling Shareholder or Option Selling Shareholder does not
  have actual knowledge of any representations and warranties of the Company
  contained in this Section 1 that are not true and correct in all material
  respects, and does not have actual knowledge of any material fact,
  condition or information not disclosed in the Registration Statement which
  has materially adversely affected or may reasonably be expected to
  materially adversely affect the business of the Company or any of the
  Subsidiaries; and the sale of the Firm Shares and the Option Shares by such
  Selling Shareholder or Option Selling Shareholder pursuant hereto is not
  prompted by any information concerning the Company or any of the
  Subsidiaries which is not set forth in the Registration Statement. The
  information pertaining to such Selling Shareholder or Option Selling
  Shareholder under the caption "Principal and Selling Shareholder" in the
  Prospectus is complete and accurate in all material respects.
 
  2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
 
    (a) On the basis of the representations, warranties and covenants herein
  contained, and subject to the conditions herein set forth, the Sellers
  agree to sell to the Underwriters and each Underwriter agrees, severally
  and not jointly, to purchase, at a price of $      per share, the number of
  Firm Shares set forth opposite the name of each Underwriter in Schedule I
  hereof, subject to adjustments in accordance with Section 9 hereof. The
  number of Firm Shares to be purchased by each Underwriter from each Seller
  shall be as nearly as practicable in the same proportion to the total
  number of Firm Shares being sold by each Seller as the number of Firm
  Shares being purchased by each Underwriter bears to the total number of
  Firm Shares to be sold hereunder. The obligations of the Company and of the
  Selling Shareholder, and, if applicable, Option Selling Shareholders shall
  be several and not joint.
 
    (b) Certificates in negotiable form for the total number of the Shares to
  be sold hereunder by the Selling Shareholder and the Option Selling
  Shareholders have been placed in custody with John M. Sherbin II as
  custodian (the "Custodian") pursuant to the Custodian Agreement executed by
  the Selling Shareholder and each Option Selling Shareholder for delivery of
  all Firm Shares and any Option Shares to be sold hereunder by the Selling
  Shareholder and the Option Selling Shareholders. Each of the Selling
  Shareholder and the Option Selling Shareholders specifically agrees that
  the Firm Shares and any Option Shares represented by the certificates held
  in custody for the Selling Shareholder and the Option Selling Shareholders
  under the Custodian Agreement are subject to the interests of the
  Underwriters hereunder, that the arrangements made by the Selling
  Shareholder and the Option Selling Shareholders for such custody are to
  that extent irrevocable, and that the obligations of the Selling
  Shareholder and the Option Selling Shareholders hereunder shall not be
  terminable by any act or deed of the Selling Shareholder or the Option
  Selling Shareholders (or by any other person, firm or corporation including
  the Company, the Custodian or the Underwriters) or by operation of law
  (including the death of an individual Selling Shareholder or Option Selling
  Shareholder or the dissolution of a corporate Selling Shareholder or Option
  Selling Shareholder) or by the occurrence of any other event or events,
  except as set forth in the Custodian Agreement. If any such event should
  occur prior to the delivery to the Underwriters of the Firm Shares or the
  Option Shares hereunder, certificates for the Firm Shares or the Option
  Shares, as the case may be, shall be delivered by the Custodian in
  accordance with the terms and conditions of this Agreement as if such event
  has not occurred. The Custodian is authorized to receive and acknowledge
  receipt of the proceeds of sale of the Shares held by it against delivery
  of such Shares.

                                     - 6 -

    (c) Payment for the Firm Shares to be sold hereunder is to be made via
  wire transfer of same day funds to the order of the Company for the shares
  to be sold by it and to the order of the Selling Shareholder for the shares
  to be sold by the Selling Shareholder, in each case against delivery of
  certificates therefor to the Representatives for the several accounts of
  the Underwriters. Such payment and delivery are to be made at the offices
  of Alex. Brown & Sons Incorporated, 135 East Baltimore Street, Baltimore,
  Maryland, at 10:00 a.m., Baltimore time, on the third business day after
  the date of this Agreement or at such other time and date not later than
  five business days thereafter as you and the Company shall agree upon, such
  time and date being herein referred to as the "Closing Date." (As used
  herein, "business day" means a day on which the New York Stock Exchange is
  open for trading and on which banks in New York are open for business and
  not permitted by law or executive order to be closed.) The certificates for
  the Firm Shares will be delivered in such denominations and in such
  registrations as the Representatives requests in writing not later than the
  second full business day prior to the Closing Date, and will be made
  available for inspection by the Representatives at least one business day
  prior to the Closing Date.
 
    (d) In addition, on the basis of the representations and warranties
  herein contained and subject to the terms and conditions herein set forth,
  the Option Selling Shareholders listed on Schedule III hereto hereby grant
  an option to the several Underwriters to purchase the Option Shares at the
  price per share as set forth in the first paragraph of this Section 2. The
  maximum number of Option Shares to be sold by the Option Selling
  Shareholders is set forth opposite their respective names on Schedule III
  hereto. The option granted hereby may be exercised in whole or in part by
  giving written notice (i) at any time before the Closing Date and (ii) only
  once thereafter within 30 days after the date of this Agreement, by you, as
  Representatives of the several Underwriters, to the Company, the Attorney-
  in-Fact, and the Custodian setting forth the number of Option Shares as to
  which the several Underwriters are exercising the option, the names and
  denominations in which the Option Shares are to be registered and the time
  and date at which such certificates are to be delivered. If the option
  granted hereby is exercised in part, the respective number of Option Shares
  to be sold by each of the Option Selling Shareholders listed in Schedule
  III hereto shall be determined on a pro rata basis in accordance with the
  percentages set forth opposite their names on Schedule III hereto, adjusted
  by you in such manner as to avoid fractional shares. The time and date at
  which certificates for Option Shares are to be delivered shall be
  determined by the Representatives but shall not be earlier than three nor
  later than 10 full business days after the exercise of such option, nor in
  any event prior to the Closing Date (such time and date being herein
  referred to as the "Option Closing Date"). If the date of exercise of the
  option is three or more days before the Closing Date, the notice of
  exercise shall set the Closing Date as the Option Closing Date. The number
  of Option Shares to be purchased by each Underwriter shall be in the same
  proportion to the total number of Option Shares being purchased as the
  number of Firm Shares being purchased by such Underwriter bears to the
  total number of Firm Shares, adjusted by you in such manner as to avoid
  fractional shares. The option with respect to the Option Shares granted
  hereunder may be exercised only to cover over-allotments in the sale of the
  Firm Shares by the Underwriters. You, as Representatives of the several
  Underwriters, may cancel such option at any time prior to its expiration by
  giving written notice of such cancellation to the Company and the Attorney-
  in-Fact. To the extent, if any, that the option is exercised, payment for
  the Option Shares shall be made on the Option Closing Date via wire
  transfer to the order of each of the Option Selling Shareholders for the
  Option Shares to be sold by the Option Selling Shareholders against
  delivery of certificates therefor at the offices of Alex. Brown & Sons
  Incorporated, 135 East Baltimore Street, Baltimore, Maryland.
 
    (e) If on the Closing Date or Option Closing Date, as the case may be,
  any Selling Shareholder or Option Selling Shareholder fails to sell the
  Firm Shares or Option Shares which such Selling Shareholder or Option
  Selling Shareholder has agreed to sell on such date as set forth in
  Schedule II hereto, the Company agrees that it will sell or arrange for the
  sale of that number of shares of Common Stock to the Underwriters which
  represents Firm Shares or the Option Shares which such Selling Shareholder
  or Option Selling Shareholder has failed to so sell, as set forth in
  Schedule II hereto, or such lesser number as may be requested by the
  Representatives.

                                     - 7 -

  3. OFFERING BY THE UNDERWRITERS. It is understood that the several
Underwriters are to make a public offering of the Firm Shares as soon as the
Representatives deem it advisable to do so. The Firm Shares are to be
initially offered to the public at the initial public offering price set forth
in the Prospectus. The Representatives may from time to time thereafter change
the public offering price and other selling terms. To the extent, if at all,
that any Option Shares are purchased pursuant to Section 2 hereof, the
Underwriters will offer them to the public on the foregoing terms.
 
  It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
 
  4. COVENANTS OF THE COMPANY, THE SELLING SHAREHOLDER AND THE OPTION SELLING
SHAREHOLDERS.
 
    (a) The Company covenants and agrees with the several Underwriters that:
 
    (i) The Company will (A) use its best efforts to cause the Registration
  Statement to become effective or, if the procedure in Rule 430A of the
  Rules and Regulations is followed, to prepare and timely file with the
  Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a
  form approved by the Representatives containing information previously
  omitted at the time of effectiveness of the Registration Statement in
  reliance on Rule 430A of the Rules and Regulations and (B) not file any
  amendment to the Registration Statement or supplement to the Prospectus of
  which the Representatives shall not previously have been advised and
  furnished with a copy or to which the Representatives shall have reasonably
  objected in writing or which is not in compliance with the Rules and
  Regulations.
 
    (ii) The Company will advise the Representatives promptly (A) when the
  Registration Statement or any post-effective amendment thereto shall have
  become effective, (B) of receipt of any comments from the Commission, (C)
  of any request of the Commission for amendment of the Registration
  Statement or for supplement to the Prospectus or for any additional
  information, and (D) of the issuance by the Commission of any stop order
  suspending the effectiveness of the Registration Statement or the use of
  the Prospectus or of the institution of any proceedings for that purpose.
  The Company will use its best efforts to prevent the issuance of any such
  stop order preventing or suspending the use of the Prospectus and to obtain
  as soon as possible the lifting thereof, if issued.
 
    (iii) The Company will cooperate with the Representatives in endeavoring
  to qualify the Shares for sale under the securities laws of such
  jurisdictions as the Representatives may reasonably have designated in
  writing and will make such applications, file such documents, and furnish
  such information as may be reasonably required for that purpose, provided
  the Company shall not be required to qualify as a foreign corporation or to
  file a general consent to service of process in any jurisdiction where it
  is not now so qualified or required to file such a consent. The Company
  will, from time to time, prepare and file such statements, reports, and
  other documents, as are or may be required to continue such qualifications
  in effect for so long a period as the Representatives may reasonably
  request for distribution of the Shares.
 
    (iv) The Company will deliver to, or upon the order of, the
  Representatives, from time to time, as many copies of any Preliminary
  Prospectus as the Representatives may reasonably request. The Company will
  deliver to, or upon the order of, the Representatives during the period
  when delivery of a Prospectus is required under the Act, as many copies of
  the Prospectus in final form, or as thereafter amended or supplemented, as
  the Representatives may reasonably request. The Company will deliver to the
  Representatives at or before the Closing Date, four signed copies of the
  Registration Statement and all amendments thereto including all exhibits
  filed therewith, and will deliver to the Representatives such number of
  copies of the Registration Statement (including such number of copies of
  the exhibits filed therewith that may reasonably be requested), including
  documents incorporated by reference therein, and of all amendments thereto,
  as the Representatives may reasonably request.

                                     - 8 -

    (v) The Company will comply with the Act and the Rules and Regulations,
  and the Securities Exchange Act of 1934 (the "Exchange Act"), and the rules
  and regulations of the Commission thereunder, so as to permit the
  completion of the distribution of the Shares as contemplated in this
  Agreement and the Prospectus. If during the period in which a prospectus is
  required by law to be delivered by an Underwriter or dealer, any event
  shall occur as a result of which, in the judgment of the Company or in the
  reasonable opinion of the Underwriters, it becomes necessary to amend or
  supplement the Prospectus in order to make the statements therein, in the
  light of the circumstances existing at the time the Prospectus is delivered
  to a purchaser, not materially misleading, or, if it is necessary at any
  time to amend or supplement the Prospectus to comply with any law, the
  Company promptly will prepare and file with the Commission an appropriate
  amendment to the Registration Statement or supplement to the Prospectus so
  that the Prospectus as so amended or supplemented will not, in the light of
  the circumstances when it is so delivered, be materially misleading, or so
  that the Prospectus will comply with the law.
 
    (vi) The Company will make generally available to its security holders,
  as soon as it is practicable to do so, but in any event not later than 15
  months after the effective date of the Registration Statement, an earning
  statement (which need not be audited) in reasonable detail, covering a
  period of at least 12 consecutive months beginning after the effective date
  of the Registration Statement, which earning statement shall satisfy the
  requirements of Section 11(a) of the Act and Rule 158 of the Rules and
  Regulations and will advise you in writing when such statement has been so
  made available.
 
    (vii) The Company will, for a period of five years from the Closing Date,
  deliver to the Representatives copies of annual reports and copies of all
  other documents, reports and information furnished by the Company to its
  stockholders or filed with any securities exchange pursuant to the
  requirements of such exchange or with the Commission pursuant to the Act or
  the Securities Exchange Act of 1934, as amended. The Company will deliver
  to the Representatives similar reports with respect to significant
  subsidiaries, as that term is defined in the Rules and Regulations, which
  are not consolidated in the Company's financial statements.
 
    (viii) No offering, sale, short sale or other disposition of any shares
  of Common Stock of the Company or options or warrants for the purchase of
  any shares of Common Stock or other securities convertible into or
  exchangeable or exercisable for shares of Common Stock or derivative of
  Common Stock (or agreement for such) will be made for a period of 180 days
  after the date of this Agreement, directly or indirectly, by the Company
  otherwise than hereunder or with the prior written consent of Alex. Brown &
  Sons Incorporated, except that the Company may, without such consent, issue
  shares upon exercise of options outstanding on the date of this Agreement
  granted pursuant to the 1994 Stock Plan, the 1996 Stock Plan and the
  Purchase Plan (each as defined in the Prospectus), and shares issued or to
  be issued in acquisitions, if any.
 
    (ix) The Company will use its best efforts to have the Common Stock
  authorized for inclusion, subject to notice of issuance, the Shares on The
  Nasdaq Stock Market.
 
    (x) The Company has caused each officer and director and specific
  shareholders of the Company to furnish to you, on or prior to the date of
  this agreement, a letter or letters, in form and substance satisfactory to
  the Underwriters, pursuant to which each such person shall agree not to
  offer, sell, or otherwise dispose of any shares of Common Stock of the
  Company (or as to which such person has the right to direct the disposition
  of) for a period of 180 days after the date of this Agreement, directly or
  indirectly, except with the prior written consent of Alex. Brown & Sons
  Incorporated ("Lockup Agreements").
 
    (xi) The Company shall apply the net proceeds of its sale of the Shares
  as set forth in the Prospectus and shall file such reports with the
  Commission with respect to the sale of the Shares and the application of
  the proceeds therefrom as may be required in accordance with Rule 463 under
  the Act.

                                     - 9 -

    (xii) The Company shall not invest, or otherwise use the proceeds
  received by the Company from its sale of the Shares in such a manner as
  would require the Company or any of the Subsidiaries to register as an
  investment company under the Investment Company Act of 1940, as amended
  (the "1940 Act").
 
    (xiii) The Company will maintain a transfer agent and, if necessary under
  the jurisdiction of incorporation of the Company, a registrar for the
  Common Stock.
 
    (xiv) The Company will not take, directly or indirectly, any action
  designed to cause or result in, or that has constituted or might reasonably
  be expected to constitute, the stabilization or manipulation of the price
  of any securities of the Company.
 
    (b) The Selling Shareholder and each of the Option Selling Shareholders,
  severally and not jointly, covenants and agrees with the several
  Underwriters that:
 
      (i) No offering, sale or other disposition of any shares of Common
    Stock of the Company owned by the Selling Shareholder or each Option
    Selling Shareholder (or as to which the Selling Shareholder or any
    Option Selling Shareholder has the right to direct the disposition of)
    will be made for a period of 180 days after the date of this Agreement,
    directly or indirectly, by such Selling Shareholder or Option Selling
    Shareholder otherwise than hereunder or with the prior written consent
    of Alex. Brown & Sons Incorporated.
 
      (ii) In order to document the Underwriters' compliance with the
    reporting and withholding provisions of the Tax Equity and Fiscal
    Responsibility Act of 1982 and the Interest and Dividend Tax Compliance
    Act of 1983 with respect to the transactions herein contemplated, each
    of the Selling Shareholder and Option Selling Shareholders agrees to
    deliver to you prior to or at the Closing Date a properly completed and
    executed United States Treasury Department Form W-9 (or other
    applicable form or statement specified by Treasury Department
    regulations in lieu thereof).
 
      (iii) Such Selling Shareholder or Option Selling Shareholder will not
    take, directly or indirectly, any action designed to cause or result
    in, or that has constituted or might reasonably be expected to
    constitute, the stabilization or manipulation of the price of any
    securities of the Company.
 
  5. COSTS AND EXPENSES. The Company will pay all costs, expenses and fees
incident to the performance of the obligations of the Sellers under this
Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of
counsel for the Company and the Option Selling Shareholders and the Selling
Shareholder; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses,
the Prospectus, this Agreement, the Underwriters' Invitation Letter, the
Preliminary Blue Sky Survey and any supplements or amendments thereto; the
filing fees of the Commission; the filing fees of the NASD; the Listing Fee of
The Nasdaq Stock Market; and the expenses, including the fees and
disbursements of counsel for the Underwriters, incurred in connection with the
qualification of the Shares under State securities or Blue Sky laws. To the
extent, if at all, that the Selling Shareholder or any of the Option Selling
Shareholders engage special legal counsel to represent them in connection with
this offering, the fees and expenses of such counsel shall be borne by such
Selling Shareholder or Option Selling Shareholder. Any transfer taxes imposed
on the sale of the Shares to the several Underwriters will be paid by the
Sellers pro rata. The Sellers shall not, however, be required to pay for any
of the Underwriters expenses (other than those related to State securities or
Blue Sky laws) except that, if this Agreement shall not be consummated because
the conditions in Section 6 hereof are not satisfied, or because this
Agreement is terminated by the Representatives pursuant to Section 11 hereof,
or by reason of any failure, refusal or inability on the part of the Company,
the Selling Shareholder or the Option Selling Shareholders to perform any
undertaking or satisfy any condition of this Agreement or to comply with any
of the terms hereof on their part to be performed, unless such failure to
satisfy said condition or to comply with said terms be due to the default or
omission of any Underwriter, then the Company shall reimburse the several
Underwriters for reasonable out-of-pocket expenses, including fees and
disbursements of counsel, reasonably incurred in
 
                                    - 10 -

connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company,
the Selling Shareholder and the Option Selling Shareholders shall not in any
event be liable to any of the several Underwriters for damages on account of
loss of anticipated profits from the sale by them of the Shares.
 
  6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The several obligations of
the Underwriters to purchase the Firm Shares on the Closing Date and the
Option Shares, if any, on the Option Closing Date are subject to the accuracy,
as of the Closing Date or the Option Closing Date, as the case may be, of the
representations and warranties of the Company, the Selling Shareholder and the
Option Selling Shareholders contained herein, and to the performance by the
Company, the Selling Shareholder and the Option Selling Shareholders of their
covenants and obligations hereunder and to the following additional
conditions:
 
    (a) The Registration Statement and all post-effective amendments thereto
  shall have become effective and any and all filings required by Rule 424
  and Rule 430A of the Rules and Regulations shall have been made, and any
  request of the Commission for additional information (to be included in the
  Registration Statement or otherwise) shall have been disclosed to the
  Representatives and complied with to their reasonable satisfaction. No stop
  order suspending the effectiveness of the Registration Statement, as
  amended from time to time, shall have been issued and no proceedings for
  that purpose shall have been taken or, to the knowledge of the Company, the
  Selling Shareholder or the Option Selling Shareholders, shall be
  contemplated by the Commission and no injunction, restraining order, or
  order of any nature by a Federal or state court of competent jurisdiction
  shall have been issued as of the Closing Date which would prevent the
  issuance of the Shares.
 
    (b) The Representatives shall have received on the Closing Date or the
  Option Closing Date, as the case may be, the opinions of Goodwin, Procter &
  Hoar LLP, counsel for the Company, the Option Selling Shareholders and the
  Selling Shareholder, dated the Closing Date or the Option Closing Date, as
  the case may be, addressed to the Underwriters (and stating that it may be
  relied upon by counsel to the Underwriters) to the effect that:
 
      (i) The Company has been duly organized and is validly existing as a
    corporation in good standing under the laws of the State of Delaware,
    with corporate power and authority to own or lease its properties and
    conduct its business as described in the Registration Statement; each
    of the Subsidiaries has been duly organized and is validly existing as
    a corporation in good standing under the laws of the jurisdiction of
    its incorporation, with corporate power and authority to own or lease
    its properties and conduct its business as described in the
    Registration Statement; the Company and each of the Subsidiaries are
    duly qualified to transact business in the jurisdictions identified in
    such counsel's opinion; and the outstanding shares of capital stock of
    each of the Subsidiaries have been duly authorized and validly issued
    and are fully paid and non-assessable and are owned of record by the
    Company or a Subsidiary; and, to the best of such counsel's knowledge,
    (i) the outstanding shares of capital stock of each of the Subsidiaries
    is owned free and clear of all liens, encumbrances and equities and
    claims (except for the pledge of such shares pursuant to the 1994
    Loan), and (ii) no options, warrants or other rights to purchase,
    agreements or other obligations to issue or other rights to convert any
    obligations into any shares of capital stock or of ownership interests
    in the Subsidiaries are outstanding.
 
      (ii) The Company has authorized and outstanding capital stock as set
    forth under the caption "Capitalization" in the Prospectus; the
    authorized shares of the Company's Redeemable Preferred Stock, Class A
    Common Stock and Common Stock have been duly authorized; the
    outstanding shares of the Company's Redeemable Preferred Stock, Class A
    Common Stock and Common Stock, including the Shares to be sold by the
    Selling Shareholder and the Option Selling Shareholders, have been duly
    authorized and validly issued and are fully paid and non-assessable;
    all of the Shares conform as to matters of law in all material respects
    to the description thereof contained in the Prospectus; the
    certificates for the Shares, assuming they are in the form filed with
    the Commission, are in due and
 
                                    - 11 -

    proper form under the Delaware General Corporation Law; the shares of
    Common Stock, including the Option Shares, if any, to be sold by the
    Company pursuant to this Agreement have been duly authorized and will
    be validly issued, fully paid and non-assessable when issued and paid
    for as contemplated by this Agreement; and, to the knowledge of such
    counsel, no preemptive rights of stockholders exist with respect to any
    of the Shares or the issue or sale thereof.
 
      (iii) Except as described in or contemplated by the Prospectus, to
    the knowledge of such counsel, there are no outstanding securities of
    the Company convertible or exchangeable into or evidencing the right to
    purchase or subscribe for any shares of capital stock of the Company
    and there are no outstanding or authorized options, warrants or rights
    of any character obligating the Company to issue any shares of its
    capital stock or any securities convertible or exchangeable into or
    evidencing the right to purchase or subscribe for any shares of such
    stock; and except as described in the Prospectus, to the knowledge of
    such counsel, no holder of any securities of the Company or any other
    person has the right, contractual or otherwise, which has not been
    satisfied or effectively waived, to issue any shares of its capital
    stock or any securities convertible or exchangeable into or evidencing
    the right to purchase or subscribe for any shares of such stock or to
    have any Common Stock or other securities of the Company included in
    the Registration Statement or the right, as a result of the filing of
    the Registration Statement, to require registration under the Act of
    any shares of Common Stock or other securities of the Company.
 
      (iv) The Registration Statement has become effective under the Act
    and, to the knowledge of such counsel, no stop order proceedings with
    respect thereto have been instituted or are pending or threatened under
    the Act.
 
      (v) The Registration Statement, the Prospectus and each amendment or
    supplement thereto comply as to form in all material respects with the
    requirements of the Act and the applicable Rules and Regulations
    thereunder (except that such counsel need express no opinion as to the
    financial statements or notes thereto, and related schedules and other
    financial and statistical data therein).
 
      (vi) The statements under the captions "Management--Employee Bonus
    Plan," "--Employee Stock and Other Benefit Plans," "--Employment
    Agreements," "Certain Transactions," "Description of Capital Stock" and
    "Shares Eligible for Future Sale" in the Prospectus, insofar as such
    statements constitute a summary of documents referred to therein or
    matters of law, fairly summarize in all material respects the
    information called for with respect to such documents and matters.
 
      (vii) Such counsel does not know of any contracts or documents
    required to be filed as exhibits to the Registration Statement or
    described in the Registration Statement or the Prospectus which are no
    so filed or described as required.
 
      (viii) Such counsel knows of no material legal or governmental
    proceedings pending or threatened against the Company or any of the
    Subsidiaries that are required to be described in the Prospectus that
    are not described as required.
 
      (ix) The execution and delivery of this Agreement and the
    consummation of the transactions herein contemplated do not and will
    not conflict with or result in a breach of any of the terms or
    provisions of, or constitute a default under, the Charter or by-laws of
    the Company, or any agreement or instrument known to such counsel to
    which the Company or any of the Subsidiaries is a party or by which the
    Company or any of the Subsidiaries is bound that is material to the
    Company and the Subsidiaries, taken as a whole.
 
      (x) This Agreement has been duly authorized, executed and delivered
    by the Company.

                                    - 12 -

      (xi) No approval, consent, order, authorization, designation,
    declaration or filing by or with any Massachusetts, Delaware or Federal
    regulatory, administrative or other governmental body is necessary in
    connection with the execution and delivery of this Agreement and the
    consummation of the transactions herein contemplated (other than such
    as have been obtained under the Act and such as may be required by the
    NASD or as required by State securities and Blue Sky laws as to which
    such counsel need express no opinion) except such as have been obtained
    or made, specifying the same.
 
      (xii) The Company is not, and will not become, as a result of the
    consummation of the transactions contemplated by this Agreement, and
    application of the net proceeds therefrom as described in the
    Prospectus, required to register as an investment company under the
    1940 Act.
 
      (xiii) To such counsel's knowledge, this Agreement has been duly
    authorized, executed and delivered on behalf of the Selling Shareholder
    and the Option Selling Shareholders.
 
      (xiv) Each Option Selling Shareholder that is not an individual has
    full legal right, power and authority under its governing partnership
    agreement and, to such counsel's knowledge, has all approvals required
    by law (other than as required by State securities and Blue Sky laws as
    to which such counsel need express no opinion), to sell, assign,
    transfer and deliver the portion of the Shares to be sold by such
    Option Selling Shareholder.
 
      (xv) To such counsel's knowledge, the Custodian Agreement and the
    Power of Attorney executed and delivered by each Selling Shareholder
    and Option Selling Shareholders is valid and binding.
 
      (xvi) Upon payment and delivery in accordance with this Agreement,
    the Underwriters (assuming that they are bona fide purchasers within
    the meaning of the Uniform Commercial Code) will have acquired all
    rights of such Selling Shareholder and Option Selling Shareholders in
    and to the Shares on the Closing Date, and the Option Closing Date, as
    the case may be, free, to such counsel's knowledge, of any adverse
    claim, any lien in favor of the Company and any restrictions on
    transfer imposed by the Company.
 
  In rendering such opinion Goodwin, Procter & Hoar LLP may rely as to matters
governed by laws other than the laws of the Commonwealth of Massachusetts, the
Delaware General Corporation Law or Federal laws on local counsel in such
other jurisdictions and as to the matters set forth in subparagraphs (xiii),
(xiv) and (xv) on opinions of other counsel representing the respective
Selling Shareholder or Option Selling Shareholder, provided that in each case
Goodwin, Procter & Hoar LLP shall state that they believe that they and the
Underwriters are justified in relying on such other counsel. In addition to
the matters set forth above, such opinion shall also include a statement to
the effect that nothing has come to the attention of such counsel which leads
them to believe that (i) the Registration Statement, at the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the
Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Prospectus, or any supplement thereto, on the date it
was filed pursuant to the Rules and Regulations and as of the Closing Date or
the Option Closing Date, as the case may be, contained an untrue statement of
a material fact or omitted to state a material fact necessary in order to make
the statements, in the light of the circumstances under which they are made,
not misleading (except that such counsel need express no view as to financial
statements, or notes thereto, schedules and other financial and statistical
information therein). With respect to such statement, Goodwin, Procter & Hoar
LLP may state that their belief is based upon the procedures set forth
therein, but is without independent check and verification.
 
    (c) The Representatives shall have received from Piper & Marbury L.L.P.,
  counsel for the Underwriters, an opinion dated the Closing Date or the
  Option Closing Date, as the case may be, substantially to the effect
  specified in subparagraphs (ii), (iii), (iv) and (x) of Paragraph (b) of
  this Section 6, and that the Company is a duly organized and validly
  existing corporation under the laws of the State of Delaware. In rendering
  such opinion Piper & Marbury L.L.P. may rely as to all matters governed
  other than
 
                                    - 13 -

  by the laws of the states of Maryland and Delaware or Federal laws on the
  opinion of counsel referred to in Paragraph (b) of this Section 6. In
  addition to the matters set forth above, such opinion shall also include a
  statement to the effect that nothing has come to the attention of such
  counsel which leads them to believe that (i) the Registration Statement, or
  any amendment thereto, as of the time it became effective under the Act
  (but after giving effect to any modifications incorporated therein pursuant
  to Rule 430A under the Act) as of the Closing Date or the Option Closing
  Date, as the case may be, contained an untrue statement of a material fact
  or omitted to state a material fact required to be stated therein or
  necessary to make the statements therein not misleading, and (ii) the
  Prospectus, or any supplement thereto, on the date it was filed pursuant to
  the Rules and Regulations and as of the Closing Date or the Option Closing
  Date, as the case may be, contained an untrue statement of a material fact
  or omitted to state a material fact, necessary in order to make the
  statements, in the light of the circumstances under which they are made,
  not misleading (except that such counsel need express no view as to
  financial statements, schedules and statistical information therein). With
  respect to such statement, Piper & Marbury L.L.P. may state that their
  belief is based upon the procedures set forth therein, but is without
  independent check and verification.
 
    (d) The Representatives shall have received at or prior to the Closing
  Date from Piper & Marbury L.L.P. a memorandum or summary, in form and
  substance satisfactory to the Representatives, with respect to the
  qualification for offering and sale by the Underwriters of the Shares under
  the State securities or Blue Sky laws of such jurisdictions as the
  Representatives may reasonably have designated to the Company.
 
    (e) You shall have received, on each of the dates hereof, the Closing
  Date and the Option Closing Date, as the case may be, a letter dated the
  date hereof, the Closing Date or the Option Closing Date, as the case may
  be, in form and substance satisfactory to you, of Coopers & Lybrand L.L.P.
  confirming that they are independent public accountants within the meaning
  of the Act and the applicable published Rules and Regulations thereunder
  and stating that in their opinion the financial statements and schedules
  examined by them and included in the Registration Statement comply in form
  in all material respects with the applicable accounting requirements of the
  Act and the related published Rules and Regulations; and containing such
  other statements and information as is ordinarily included in accountants'
  "comfort letters" to Underwriters with respect to the financial statements
  and certain financial and statistical information contained in the
  Registration Statement and Prospectus.
 
    (f) The Representatives shall have received on the Closing Date or the
  Option Closing Date, as the case may be, a certificate or certificates of
  the Chairman, President and Chief Executive Officer and the Chief Financial
  Officer, Vice President--Finance and Administration, Secretary and
  Treasurer of the Company to the effect that, as of the Closing Date or the
  Option Closing Date, as the case may be, each of them severally represents
  as follows:
 
      (i) The Registration Statement has become effective under the Act and
    no stop order suspending the effectiveness of the Registrations
    Statement has been issued, and no proceedings for such purpose have
    been taken or are, to his knowledge, contemplated by the Commission;
 
      (ii) The representations and warranties of the Company contained in
    Section 1 hereof are true and correct as of the Closing Date or the
    Option Closing Date, as the case may be;
 
      (iii) All filings required to have been made pursuant to Rules 424 or
    430A under the Act have been made;
 
      (iv) He has carefully examined the Registration Statement and the
    Prospectus and, in his or her opinion, as of the effective date of the
    Registration Statement, the statements contained in the Registration
    Statement were true and correct, and such Registration Statement and
    Prospectus did not omit to state a material fact required to be stated
    therein or necessary in order to make the statements therein not
    misleading, and since the effective date of the Registration Statement,
    no event has occurred
 
                                    - 14 -

    which should have been set forth in a supplement to or an amendment of
    the Prospectus which has not been so set forth in such supplement or
    amendment; and
 
      (v) Since the respective dates as of which information is given in
    the Registration Statement and Prospectus, there has not been any
    material adverse change or any development involving a prospective
    material adverse change in or affecting the condition, financial or
    otherwise, of the Company and its Subsidiaries taken as a whole or the
    earnings, business, management, properties, assets, rights, operations,
    condition (financial or otherwise) or prospects of the Company and the
    Subsidiaries taken as a whole, whether or not arising in the ordinary
    course of business.
 
    (g) The Company, the Selling Shareholder and the Option Selling
  Shareholders shall have furnished to the Representatives such further
  certificates and documents confirming the representations and warranties,
  covenants and conditions contained herein and related matters as the
  Representatives may reasonably have requested.
 
    (h) The Firm Shares and Option Shares, if any, have been approved for
  designation upon notice of issuance on The Nasdaq Stock Market.
 
    (i) The Lockup Agreements described in Section 4(x) are in full force and
  effect.
 
  The opinions and certificates mentioned in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and to Piper & Marbury L.L.P.,
counsel for the Underwriters.
 
  If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company, the Selling Shareholder and the
Option Selling Shareholders of such termination in writing or by telegram at
or prior to the Closing Date or the Option Closing Date, as the case may be.
In such event, the Selling Shareholder, the Option Selling Shareholders the
Company and the Underwriters shall not be under any obligation to each other
(except to the extent provided in Sections 5 and 8 hereof).
 
  7. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS. The obligations of the
Sellers to sell and deliver the portion of the Shares required to be delivered
as and when specified in this Agreement are subject to the conditions that at
the Closing Date or the Option Closing Date, as the case may be, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and in effect or proceedings therefor initiated or threatened.
 
  8. INDEMNIFICATION.
 
    (a) The Company agrees, and each of the Option Selling Shareholders
  listed on Schedule IV hereto (the "Management Selling Shareholders"),
  severally and not jointly, agree to indemnify and hold harmless each
  Underwriter and each person, if any, who controls any Underwriter within
  the meaning of the Act, against any losses, claims, damages or liabilities
  to which such Underwriter or any such controlling person may become subject
  under the Act or otherwise, insofar as such losses, claims, damages or
  liabilities (or actions or proceedings in respect thereof) arise out of or
  are based upon (i) any untrue statement or alleged untrue statement of any
  material fact contained in the Registration Statement, any Preliminary
  Prospectus, the Prospectus or any amendment or supplement thereto, or (ii)
  the omission or alleged omission to state therein a material fact required
  to be stated therein or necessary to make the statements therein not
  misleading; and will reimburse each Underwriter and each such controlling
  person for any legal or other expenses reasonably incurred by such
  Underwriter or such controlling person in connection with investigating or
  defending any such loss, claim, damage or liability, action or proceeding
  or in responding to a subpoena or governmental inquiry related to the
  offering of the Shares, whether or not such Underwriter or controlling
  person is a party to any action or proceeding; provided, however, that the
  Company and the Management Selling Shareholders will not be liable in any
  such case to the extent that any such loss, claim,
 
                                    - 15 -

  damage or liability arises out of or is based upon an untrue statement or
  alleged untrue statement, or omission or alleged omission made in the
  Registration Statement, any Preliminary Prospectus, the Prospectus, or such
  amendment or supplement, in reliance upon and in conformity with written
  information furnished to the Company by or through the Representatives
  specifically for use in the preparation thereof; and provided, further,
  that neither the Company nor the Management Selling Shareholders shall be
  liable to any Underwriter under this Section 8(a) with respect to any
  Preliminary Prospectus to the extent that any such loss, claim, damage or
  liability of such Underwriter results solely from an untrue statement of a
  material fact contained in, or the omission of a material fact from, such
  Preliminary Prospectus, which untrue statement or omission was corrected in
  the Prospectus, if the Company or the Management Selling Shareholders, as
  the case may be, shall sustain the burden of proving that such Underwriter
  sold Shares to the person alleging such loss, claim, damage or liability
  without sending or giving, at or prior to the written confirmation of such
  sale, a copy of the Prospectus if the Company has previously furnished
  copies thereof to such Underwriter. In no event, however, shall the
  liability of any Management Selling Shareholder for indemnification under
  this Section 8(a) exceed the lesser of (A) the product of (I) the total
  number of Shares sold by such Management Selling Shareholder, times (II)
  the Share Price, or (B) the proportion of such losses, claims, damages or
  liabilities equal to the proportion of the total number of Shares sold
  hereunder which is being sold by such Management Selling Shareholder. This
  indemnity agreement will be in addition to any liability which the Company,
  the Selling Shareholder or the Option Selling Shareholders may otherwise
  have.
 
    (b) Each of the Selling Shareholder and the Option Selling Shareholders
  listed on Schedule V hereto (the "Non-Management Selling Shareholders"),
  severally and not jointly, agrees to indemnify and hold harmless each
  Underwriter and each person, if any, who controls any Underwriter within
  the meaning of the Act, against any losses, claims, damages or liabilities
  to which such Underwriter or any controlling person may become subject
  under the Act or otherwise, insofar as such losses, claims, damages or
  liabilities (or actions or proceedings in respect thereof) arise out of or
  are based upon (i) any untrue statement or alleged untrue statement of any
  material fact contained in the Registration Statement, any Preliminary
  Prospectus, the Prospectus or any amendment or supplement thereto, or (ii)
  the omission or alleged omission to state therein a material fact required
  to be stated therein or necessary to make the statements therein not
  misleading, in the light of the circumstances under which they were made;
  provided, however, that a Non-Management Selling Shareholder shall be
  liable only to the extent that such untrue statement or alleged untrue
  statement or such omission or alleged omission has been made in the the
  Registration Statement, any Preliminary Prospectus, the Prospectus or any
  amendment or supplement thereto in reliance upon and in conformity with
  written information furnished to the Company by such Non-Management Selling
  Shareholder specifically for use in preparation thereof; and will reimburse
  each Underwriter and each such controlling person upon demand for any legal
  or other expenses reasonably incurred by such Underwriter and each such
  controlling person in connection with investigating or defending any such
  loss, claim, damage, liability, action or proceeding or in responding to a
  subpoena or governmental inquiry related to the offering of the Shares,
  whether or not such Underwriter or controlling person is a party to any
  such action or proceeding; provided, however, that the Non-Management
  Selling Shareholders will not be liable in any such case to the extent that
  any such loss, claim, damage or liability arises out of or is based upon an
  untrue statement or alleged untrue statement, or omission or alleged
  omission, made in the Registration Statement, any Preliminary Prospectus,
  the Prospectus or such amendment or supplement in reliance upon and in
  conformity with written information furnished to the Company by or through
  the Representatives specifically for use in the preparation thereof; and
  provided further that the Non-Management Selling Shareholders shall not be
  liable to any Underwriter under this Section 8(b) with respect to any
  Preliminary Prospectus to the extent that any such loss, claim, damage or
  liability of such Underwriter results solely from an untrue statement of a
  material fact contained in, or the omission of a material fact from, such
  Preliminary Prospectus, which untrue statement or omission was corrected in
  the Prospectus, if the Non-Management Selling Shareholders shall sustain
  the burden of proving that such Underwriter sold Shares to the person
  alleging such loss, claim, damage or liability without sending or giving,
  at or prior to the written confirmation of such sale, a copy of the
  Prospectus if the Company has previously furnished copies thereof
 
                                    - 16 -

  to such Underwriter. In no event, however, shall the liability of any Non-
  Management Selling Shareholder for indemnification under this Section 8(c)
  exceed the lesser of (A) the product of (I) the total number of Shares sold
  by such Non-Management Selling Shareholder, times (II) the Share Price, or
  (B) the proportion of such losses, claims, damages or liabilities equal to
  the proportion of the total number of Shares sold hereunder which is being
  sold by such Non-Management Selling Shareholder. This indemnity agreement
  will be in addition to any liability which the Non-Management Selling
  Shareholders may otherwise have.
 
    (c) Each Underwriter severally and not jointly will indemnify and hold
  harmless the Company, each of its directors, each of its officers who have
  signed the Registration Statement, the Selling Shareholder and the Option
  Selling Shareholders and each person, if any, who controls the Company or
  the Selling Shareholder and the Option Selling Shareholders within the
  meaning of the Act, against any losses, claims, damages or liabilities to
  which the Company or any such director, officer, Selling Shareholder or
  Option Selling Shareholders or controlling person may become subject under
  the Act or otherwise, insofar as such losses, claims, damages or
  liabilities (or actions or proceedings in respect thereof) arise out of or
  are based upon (i) any untrue statement or alleged untrue statement of any
  material fact contained in the Registration Statement, any Preliminary
  Prospectus, the Prospectus or any amendment or supplement thereto, or (ii)
  the omission or the alleged omission to state therein a material fact
  required to be stated therein or necessary to make the statements therein
  not misleading in the light of the circumstances under which they were
  made; and will reimburse any legal or other expenses reasonably incurred by
  the Company or any such director, officer, Selling Shareholder or Option
  Selling Shareholders or controlling person in connection with investigating
  or defending any such loss, claim, damage, liability, action or proceeding;
  provided, however, that each Underwriter will be liable in each case to the
  extent, but only to the extent, that such untrue statement or alleged
  untrue statement or omission or alleged omission has been made in the
  Registration Statement, any Preliminary Prospectus, the Prospectus or such
  amendment or supplement, in reliance upon and in conformity with written
  information furnished to the Company by or through the Representatives
  specifically for use in the preparation thereof. This indemnity agreement
  will be in addition to any liability which such Underwriter may otherwise
  have.
 
    (d) In case any proceeding (including any governmental investigation)
  shall be instituted involving any person in respect of which indemnity may
  be sought pursuant to this Section 8, such person (the "indemnified party")
  shall promptly notify the person against whom such indemnity may be sought
  (the "indemnifying party") in writing. No indemnification provided for in
  Section 8(a), (b) or (c) shall be available to any party who shall fail to
  give notice as provided in this Section 8(d) if the party to whom notice
  was not given was unaware of the proceeding to which such notice would have
  related and was materially prejudiced by the failure to give such notice,
  but the failure to give such notice shall not relieve the indemnifying
  party or parties from any liability which it or they may have to the
  indemnified party for contribution or otherwise than on account of the
  provisions of Section 8(a), (b) or (c). In case any such proceeding shall
  be brought against any indemnified party and it shall notify the
  indemnifying party of the commencement thereof, the indemnifying party
  shall be entitled to participate therein and, to the extent that it shall
  wish, jointly with any other indemnifying party similarly notified, to
  assume the defense thereof, with counsel satisfactory to such indemnified
  party and shall pay as incurred (or within thirty days of presentation
  thereof) the fees and disbursements of such counsel related to such
  proceeding. In any such proceeding, any indemnified party shall have the
  right to retain its own counsel at its own expense. Notwithstanding the
  foregoing, the indemnifying party shall pay as incurred (or within 30 days
  of presentation) the fees and expenses of the counsel retained by the
  indemnified party in the event (i) the indemnifying party and the
  indemnified party shall have mutually agreed to the retention of such
  counsel, (ii) the named parties to any such proceeding (including any
  impleaded parties) include both the indemnifying party and the indemnified
  party and representation of both parties by the same counsel would be
  inappropriate due to actual or potential differing interests between them
  or (iii) the indemnifying party shall have failed to assume the defense and
  employ counsel acceptable to the indemnified party within a reasonable
  period of time after notice of commencement of the action. It is understood
  that the indemnifying party shall not, in connection with any proceeding or
  related proceedings in the same jurisdiction, be liable
 
                                    - 17 -

  for the reasonable fees and expenses of more than one separate firm for all
  such indemnified parties. Such firm shall be designated in writing by you
  in the case of parties indemnified pursuant to Section 8(a) and by the
  Company, the Selling Shareholder and the Option Selling Shareholders in the
  case of parties indemnified pursuant to Section 8(b) or (c), as the case
  may be. The indemnifying party shall not be liable for any settlement of
  any proceeding effected without its written consent but if settled with
  such consent or if there be a final judgment for the plaintiff, the
  indemnifying party agrees to indemnify the indemnified party from and
  against any loss or liability by reason of such settlement or judgment. In
  addition, the indemnifying party will not, without the prior written
  consent of the indemnified party, settle or compromise or consent to the
  entry of any judgment in any pending or threatened claim, action or
  proceeding of which indemnification may be sought hereunder (whether or not
  any indemnified party is an actual or potential party to such claim, action
  or proceeding) unless such settlement, compromise or consent includes an
  unconditional release of each indemnified party from all liability arising
  out of such claim, action or proceeding.
 
    (e) If the indemnification provided for in this Section 8 is unavailable
  to or insufficient to hold harmless an indemnified party under Section
  8(a), (b) or (c) above in respect of any losses, claims, damages or
  liabilities (or actions or proceedings in respect thereof) referred to
  therein, then each indemnifying party shall contribute to the amount paid
  or payable by such indemnified party as a result of such losses, claims,
  damages or liabilities (or actions or proceedings in respect thereof) in
  such proportion as is appropriate to reflect the relative benefits received
  by the Company, the Selling Shareholder and the Option Selling Shareholders
  on the one hand and the Underwriters on the other from the offering of the
  Shares. If, however, the allocation provided by the immediately preceding
  sentence is not permitted by applicable law then each indemnifying party
  shall contribute to such amount paid or payable by such indemnified party
  in such proportion as is appropriate to reflect not only such relative
  benefits but also the relative fault of the Company, the Selling
  Shareholder and the Option Selling Shareholders on the one hand and the
  Underwriters on the other in connection with the statements or omissions
  which resulted in such losses, claims, damages or liabilities, (or actions
  or proceedings in respect thereof), as well as any other relevant equitable
  considerations. The relative benefits received by the Company, the Selling
  Shareholder and the Option Selling Shareholders on the one hand and the
  Underwriters on the other shall be deemed to be in the same proportion as
  the total net proceeds from the offering (before deducting expenses)
  received by the Company, the Selling Shareholder and the Option Selling
  Shareholders bear to the total underwriting discounts and commissions
  received by the Underwriters, in each case as set forth in the table on the
  cover page of the Prospectus. The relative fault shall be determined by
  reference to, among other things, whether the untrue or alleged untrue
  statement of a material fact or the omission or alleged omission to state a
  material fact relates to information supplied by the Company, the Selling
  Shareholder or the Option Selling Shareholders on the one hand or the
  Underwriters on the other and the parties' relative intent, knowledge,
  access to information and opportunity to correct or prevent such statement
  or omission.
 
    The Company, the Selling Shareholder and the Option Selling Shareholders
  and the Underwriters agree that it would not be just and equitable if
  contributions pursuant to this Section 8(e) were determined by pro rata
  allocation (even if the Underwriters were treated as one entity for such
  purpose) or by any other method of allocation which does not take account
  of the equitable considerations referred to above in this Section 8(e). The
  amount paid or payable by an indemnified party as a result of the losses,
  claims, damages or liabilities (or actions or proceedings in respect
  thereof) referred to above in this Section 8(e) shall be deemed to include
  any legal or other expenses reasonably incurred by such indemnified party
  in connection with investigating or defending any such action or claim.
  Notwithstanding the provisions of this subsection (e), (i) no Underwriter
  shall be required to contribute any amount in excess of the underwriting
  discounts and commissions applicable to the Shares purchased by such
  Underwriter, (ii) no person guilty of fraudulent misrepresentation (within
  the meaning of Section 11(f) of the Act) shall be entitled to contribution
  from any person who was not guilty of such fraudulent misrepresentation,
  and (iii) no Selling Shareholder or Option Selling Shareholder shall be
  required to contribute any amount in excess of the lesser of (A) that
  proportion of the total of such losses, claims, damages or liabilities
  indemnified or contributed against equal
 
                                    - 18 -

  to the proportion of the total Shares sold hereunder which is being sold by
  such Selling Shareholder or Option Selling Shareholder, or (B) the proceeds
  received by such Selling Shareholder or Option Selling Shareholder from the
  Underwriters in the offering. The Underwriters' obligations in this Section
  8(e) to contribute are several in proportion to their respective
  underwriting obligations and not joint.
 
    (f) In any proceeding relating to the Registration Statement, any
  Preliminary Prospectus, the Prospectus or any supplement or amendment
  thereto, each party against whom contribution may be sought under this
  Section 8 hereby consents to the jurisdiction of any court having
  jurisdiction over any other contributing party, agrees that process issuing
  from such court may be served upon him or it by any other contributing
  party and consents to the service of such process and agrees that any other
  contributing party may join him or it as an additional defendant in any
  such proceeding in which such other contributing party is a party.
 
    (g) Any losses, claims, damages, liabilities or expenses for which an
  indemnified party is entitled to indemnification or contribution under this
  Section 8 shall be paid by the indemnifying party to the indemnified party
  as such losses, claims, damages, liabilities or expenses are incurred (or
  within thirty days of presentation thereof). The indemnity and contribution
  agreements contained in this Section 8 and the representations and
  warranties of the Company set forth in this Agreement shall remain
  operative and in full force and effect, regardless of (i) any investigation
  made by or on behalf of any Underwriter or any person controlling any
  Underwriter, the Company, its directors or officers or any persons
  controlling the Company, (ii) acceptance of any Shares and payment therefor
  hereunder, and (iii) any termination of this Agreement. A successor to any
  Underwriter, or to the Company, its directors or officers, or any person
  controlling the Company, shall be entitled to the benefits of the
  indemnity, contribution and reimbursement agreements contained in this
  Section 8.
 
  9. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option Closing
Date, as the case may be, any Underwriter shall fail to purchase and pay for
the portion of the Shares which such Underwriter has agreed to purchase and
pay for on such date (otherwise than by reason of any default on the part of
the Company, the Selling Shareholder or an Option Selling Shareholders), you,
as Representatives of the Underwriters, shall use your reasonable efforts to
procure within 36 hours thereafter one or more of the other Underwriters, or
any others, to purchase from the Company, the Selling Shareholder and the
Option Selling Shareholders such amounts as may be agreed upon and upon the
terms set forth herein, the Firm Shares or Option Shares, as the case may be,
which the defaulting Underwriter or Underwriters failed to purchase. If during
such 36 hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares
or Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b)
if the aggregate number of shares of Firm Shares or Option Shares, as the case
may be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company, the
Selling Shareholder and the Option Selling Shareholders or you as the
Representatives of the Underwriters will have the right, by written notice
given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company, the Selling Shareholder or the Option Selling
Shareholders except to the extent provided in Section 8 hereof. In the event
of a default by any Underwriter or Underwriters, as set forth in this Section
9, the Closing Date or Option Closing Date, as the case may be, may be
postponed for such period, not exceeding seven days, as you, as
Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section
9 shall not relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.

                                    - 19 -

  10. NOTICES. All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to Alex. Brown &
Sons Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202,
Attention: Patrick J. Kerins, Managing Director; with a copy to Alex. Brown &
Sons Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202.
Attention: General Counsel; if to the Company, the Selling Shareholder or the
Option Selling Shareholders, to ANSYS, Inc., 201 Johnson Road, Houston,
Pennsylvania 15342-1300, Attention: Peter J. Smith, Chairman, President and
Chief Executive Officer.
 
  11. TERMINATION. This Agreement may be terminated by you by notice to the
Sellers as follows:
 
    (a) at any time prior to the earlier of (i) the time the Shares are
  released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m.
  on the first business day following the date of this Agreement;
 
    (b) at any time prior to the Closing Date if any of the following has
  occurred: (i) since the respective dates as of which information is given
  in the Registration Statement and the Prospectus, any material adverse
  change or any development involving a prospective material adverse change
  in or affecting the condition, financial or otherwise, of the Company and
  its Subsidiaries, taken as a whole, or the earnings, business, management,
  properties, assets, rights, operations, condition (financial or otherwise)
  or prospects of the Company and its Subsidiaries, taken as a whole, whether
  or not arising in the ordinary course of business, (ii) any outbreak or
  escalation of hostilities or declaration of war or national emergency or
  other national or international calamity or crisis or change in economic or
  political conditions if the effect of such outbreak, escalation,
  declaration, emergency, calamity, crisis or change on the financial markets
  of the United States would, in your reasonable judgment, make it
  impracticable to market the Shares or to enforce contracts for the sale of
  the Shares, or (iii) suspension of trading in securities generally on the
  New York Stock Exchange or the American Stock Exchange or limitation on
  prices (other than limitations on hours or numbers of days of trading) for
  securities on either such Exchange, (iv) the enactment, publication, decree
  or other promulgation of any statute, regulation, rule or order of any
  court or other governmental authority which in your opinion materially and
  adversely affects or may materially and adversely affect the business or
  operations of the Company, (v) declaration of a banking moratorium by
  United States or New York State authorities, (vi) the suspension of trading
  of the Company's Common Stock by the Commission on The Nasdaq Stock Market
  or (vii) the taking of any action by any governmental body or agency in
  respect of its monetary or fiscal affairs which in your reasonable opinion
  has a material adverse effect on the securities markets in the United
  States; or
 
    (c) as provided in Sections 6 and 9 of this Agreement.
 
  12. SUCCESSORS. This Agreement has been and is made solely for the benefit
of the Underwriters and, the Company, the Selling Shareholder and the Option
Selling Shareholders and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
 
  13. INFORMATION PROVIDED BY UNDERWRITERS. The Company, the Selling
Shareholder and the Option Selling Shareholders and the Underwriters
acknowledge and agree that the only information furnished or to be furnished
by any Underwriter to the Company for inclusion in any Prospectus or the
Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
 
  14. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless
of (a) any termination of this Agreement, (b) any investigation made by or on
behalf of any
 
                                    - 20 -

Underwriter or controlling person thereof, or by or on behalf of the Company
or its directors or officers and (c) delivery of and payment for the Shares
under this Agreement.
 
  This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
 
  This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland.
 
  If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Shareholder and
the Option Selling Shareholders, the Company, the several Underwriters in
accordance with its terms.
 
  Any person executing and delivering this Agreement as Attorney-in-Fact for
the Selling Shareholder or an Option Selling Shareholder represents by so
doing that he has been duly appointed as Attorney-in-Fact by such Selling
Shareholder or an Option Selling Shareholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.
 
                                          Very truly yours,
 
                                          ANSYS, INC.
 
                                          By___________________________________
                                          Peter J. Smith
                                          President and Chief Executive
                                          Officer
 
                                          SELLING SHAREHOLDER
 
                                          By __________________________________
                                            Attorney-in-Fact

                                          OPTION SELLING SHAREHOLDERS
 
                                          By __________________________________
                                            Attorney-in-Fact

(signatures continue on following page)
 
                                    - 21 -

The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written
 
ALEX BROWN & SONS INCORPORATED
COWEN & COMPANY
WESSELS, ARNOLD & HENDERSON, L.L.C.
PARKER/HUNTER INCORPORATED
 
As Representatives of the several
Underwriters listed on Schedule I
 
By___________________________________
  ALEX BROWN & SONS INCORPORATED
 
By __________________________________
 Authorized Officer
 
                                     - 22 -

                                   SCHEDULE I
 
                            SCHEDULE OF UNDERWRITERS

                                                           NUMBER OF FIRM SHARES
      UNDERWRITER                                             TO BE PURCHASED
      ------------                                         ---------------------
                                                        
Alex. Brown & Sons Incorporated...........................
Cowen & Company...........................................
Wessels, Arnold & Henderson, L.L.C........................
Parker/Hunter Incorporated................................

                                                                 ---------
  Total...................................................       3,500,000
                                                                 =========

                                     - 23 -

                                  SCHEDULE II
 
                        SCHEDULE OF SELLING SHAREHOLDER

                              NUMBER OF FIRM SHARES
      SELLING SHAREHOLDER         TO BE SOLD
      -------------------     ---------------------
                           
Marcia S. Morton                    50,000

 
 
                                    ------
  Total                             50,000
                                    ======

                                     - 24 -

                                  SCHEDULE III
 
                           SCHEDULE OF OPTION SHARES

                                              MAXIMUM NUMBER     PERCENTAGE OF
                                            OF OPTION SHARES TO TOTAL NUMBER OF
      NAME OF SELLER                             BE SOLD         OPTION SHARES
      --------------                        ------------------- ---------------
                                                          
Peter J. Smith.............................        32,046             6.02%
John A. Swanson............................       139,637            26.22%
Advent VII L.P.............................       240,547            45.17%
Advent Atlantic and Pacific II Limited
Partnership................................        48,885             9.18%
Advent Industrial II Limited Partnership...        17,624             3.30%
Advent New York L.P........................        24,055             4.52%
TA Venture Investors, L.P..................         5,051             0.95%
Chestnut III Limited Partnership...........        18,487             3.47%
Chestnut Capital International III L.P.....         6,168             1.16%
                                                  -------            -----
  Total....................................       532,500              100%
                                                  =======            =====

                                     - 25 -

                                  SCHEDULE IV
 
                  SCHEDULE OF MANAGEMENT SELLING SHAREHOLDERS
 
Peter J. Smith
 
Dr. John A. Swanson

                                     - 26 -

                                   SCHEDULE V
 
                SCHEDULE OF NON-MANAGEMENT SELLING SHAREHOLDERS
 
Marcia S. Morton
 
Advent VII L.P.
 
Advent Atlantic and Pacific II Limited Partnership
 
Advent Industrial II Limited Partnership
 
Advent New York L.P.
 
TA Venture Investors, L.P.
 
Chestnut III Limited Partnership
 
Chestnut Capital International III L.P.

 
                                     - 27 -

                                                                    Exhibit 21

                         Subsidiaries of the Registrant
                         ------------------------------

     ANSYS Operating Corporation, a Delaware corporation

     SAS Acquisition Corp., a Delaware corporation

     SAS IP, Inc., a Wyoming corporation

     ASN Systems Limited

                                                                   EXHIBIT 23.2
 
                      CONSENT OF INDEPENDENT ACCOUNTANTS
   
  We consent to the inclusion in this Registration Statement on Form S-1
(Registration No. 333-4278) of our reports dated April 19, 1996, on the
consolidated financial statements of ANSYS, Inc. and Subsidiaries as of
December 31, 1994 and 1995 and for the period from March 14, 1994 (date of
acquisition) through December 31, 1994 and for the year ended December 31,
1995; and combined financial statements of Swanson Analysis Systems, Inc. for
the year ended December 31, 1993 and for the period January 1, 1994 through
March 13, 1994. We also consent to the reference to the firm under the caption
"Experts."     
 
/s/ Coopers & Lybrand LLP

600 Grant Street
Pittsburgh, Pennsylvania
   
June 19, 1996