<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 9, 1996
Ansoft Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-27874 72-1001909
---------------------------- ------------ ----------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
FourStation Square, Suite 660, Pittsburgh, PA 15219
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (412) 261-3200
<PAGE> 2
The undersigned Registrant hereby amends the following items, financial
statements, exhibits, and other portions of its Current Report on Form 8-K
originally filed with the Securities and Exchange Commission on August 9, 1996:
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 24, 1996, Ansoft Corporation (the "Company") acquired the assets
of The MacNeal-Schwendler Corporation's ("MSC") Electronics Business Unit (the
"EBU") including certain customer contracts, employment arrangements,
equipment, distributor/reseller agreements and software programs for $5.6
million dollars in cash and the assumption of certain liabilities under the
above-mentioned customer contracts. The registrant intends to continue to use
the equipment purchased from MSC for its electronic design automation software
business. The registrant believes that the consideration paid for the EBU
represents the fair market value of the business by considering the historical
revenues of the business including related intangible assets and the fair
market value of the net tangible assets purchased. The cash consideration paid
by the registrant in the transaction represented a portion of the net proceeds
of the registrant's recently completed initial public offering.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of the business acquired.
As discussed above, Ansoft Corporation and MSC entered into an asset
purchase agreement on July 24, 1996, pursuant to which the Company agreed to
acquire MSC's EBU for $5.6 million in cash.
The EBU was operated by MSC as two software products within MSC's overall
product offerings. These products represented an immaterial portion of MSC's
business and had an immaterial impact on MSC's balance sheet and operating
results. Accordingly, MSC did not maintain separate accounting records for the
EBU. Historically, MSC did not allocate general and administrative costs to the
EBU, so any such allocation at this time would be purely arbitrary. The
principal assets acquired by the Company were intangibles (i.e. intellectual
property, product rights, customer list, research and development, etc.). The
primary tangible assets acquired were computer equipment with an estimated fair
value of approximately $215,000. The primary liabilities assumed were accrued
maintenance obligations for the remaining software license contracts for which
the Company estimates the probable obligation to be approximately $243,000.
Accordingly, the attached financial statements were prepared solely to
present the net revenues and direct operating costs of the EBU, along with the
fair value of the net assets acquired. The attached financial statements are
therefore not intended to be a complete presentation, in accordance with
generally accepted accounting principles, of results of operation or financial
position of the EBU. Such a complete presentation would be impractical and/or
not meaningful for the reasons described above.
The following Financial Statements are attached:
Report of Independent Auditors
Statements of Net Revenue and Direct Operating Costs of the EBU for each
of the years in the two-year period ended January 31, 1996 and the
four-month period ending May 31, 1996
<PAGE> 3
Statement of Fair Value of the Net Assets Acquired as of July 24, 1996.
Notes to Statements
(b) Pro forma financial information
The Company has also attached hereto the following pro forma financial
information reflecting the Company's best estimates of the pro forma effect of
the EBU on the Company had the acquisition previously described been consumated
as of May 1, 1995, the beginning of the Registrant's fiscal 1996 year, based on
the financial statements described in Item 7(a) above.
The following unaudited Pro Forma Financial Statements are attached:
Introductory Statement
Pro Forma Condensed Combined Statement of Operations for the year ended
April 30, 1996 (unaudited) and the three-month period ended July 31, 1996
(unaudited).
Notes to Pro Forma Condensed Combined Statement of Operations
(c) Exhibits
Exhibit No.
10.1 Asset Purchase Agreement By and Between Ansoft Corporation and
The MacNeal-Schwendler Corporation dated July 24, 1996
(previously filed on Form 10-Q dated September 11, 1996)
99 Press Release dated July 25, 1996 (previously filed on Form 8-K
dated August 9, 1996)
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 7, 1996
ANSOFT CORPORATION
By: /s/ NICHOLAS CSENDES
--------------------------
Nicholas Csendes
President
<PAGE> 5
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Ansoft Corporation
We have audited the accompanying statements of net revenue and direct operating
expenses of the Electronics Business Unit of MacNeal-Schwendler Corporation
(EBU) for the four months ended May 31, 1996 and the years ended January 31,
1996, and 1995 and the statement of fair value of net assets of the Electronics
Business Unit of MacNeal-Schwendler Corporation acquired by Ansoft Corporation
as of July 24, 1996 (the "financial statements"). These financial statements are
the responsibility of Ansoft Corporation's management. Our responsibility is to
express an opinion on these 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 referred to above
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements referred to above . An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements referred to
above. We believe that our audits provide a reasonable basis for our opinion.
The accompanying financial statements were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission and for inclusion in Form 8-K/A, Amendment No. 1 of Ansoft
Corporation, as described in Note 1. This presentation is not intended to be a
complete presentation of the EBU's or Ansoft Corporation's financial position
or results of operations.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net revenue and direct operating expenses of the
Electronics Business Unit of MacNeal-Schwendler Corporation for the four months
ended May 31, 1996 and the years ended January 31, 1996 and 1995, and the fair
value of the nets assets of the Electronic Business Unit of MacNeal-Schwendler
Corporation acquired by Ansoft Corporation as of July 24, 1996 in conformity
with generally accepted accounting principles.
Pittsburgh, Pennsylvania
October 4, 1996
<PAGE> 6
Electronics Business Unit
of The MacNeal-Schwendler Corporation
Statements of Net Revenue and Direct Operating Expenses of the
Electronics Business Unit of The MacNeal-Schwendler Corporation
(in thousands)
<TABLE>
<CAPTION>
Four Months
Ended May 31, Year ended January 31,
1996 1996 1995
------------- ------ ------
<S> <C> <C> <C>
Net revenue $1,244 $3,778 $3,226
Direct operating expenses:
Selling 531 1,137 991
Research and development 680 1,494 1,346
------ ------ ------
Total direct operating expenses 1,211 2,631 2,337
------ ------ ------
Net revenue less direct
operating expenses $ 33 $1,147 $ 889
------ ------ ------
</TABLE>
See accompanying notes.
<PAGE> 7
Electronics Business Unit
of The MacNeal-Schwendler Corporation
Statement of Fair Value of Net Assets of the Electronics Business Unit
of The MacNeal-Schwendler Corporation Acquired by Ansoft Corporation
(in thousands)
<TABLE>
<CAPTION>
Asset (Liability)
July 24,
1996
--------
<S> <C>
Equipment $ 215
Other Assets 11
Accrued Liabilities (491)
Deferred Revenue (243)
Intangible assets (note 2) 3,054
------
Net assets acquired $2,546
------
</TABLE>
See accompanying notes.
<PAGE> 8
Electronics Business Unit
of The MacNeal-Schwendler Corporation
Notes to Statements of Net Revenue and Direct Operating Expenses and Fair
Value of Net Assets Acquired
1. Basis of Presentation
The Electronics Business Unit (the "EBU") has never operated as a
standalone business unit of The MacNeal-Schwendler Corporation ("MSC"). The
accompanying statements of net revenue and direct operating expenses were
prepared to present the net revenue and direct operating expenses of the EBU and
are not intended to be a complete presentation of the results of operations of
the EBU in accordance with generally accepted accounting principles. Net revenue
and direct operating expenses include transactions related to those products of
the EBU of MSC, acquired by Ansoft Corporation (the "Company"), pursuant to an
Asset Purchase Agreement (the "Agreement") by and between the Company and MSC
dated July 24, 1996. Further, the accompanying Statement of Fair Value of Net
Assets Acquired is not intended to be a complete presentation of the financial
position of the EBU in accordance with generally accepted accounting principles.
The EBU has no separate legal status and was operated by MSC as two
software products within MSC's overall product offerings. These products
represented an immaterial portion of MSC's business and had an immaterial
impact on MSC's balance sheet and operating results. Accordingly, MSC did not
maintain separate accounting records for the EBU. The accompanying statements
of net revenue and direct operating expenses have been prepared from the
historical accounting records of MSC and do not purport to reflect the net
revenue and direct operating expenses that would have resulted if the EBU had
operated as an unaffiliated independent entity.
2. Significant Accounting Polices
Revenues
Net revenue represents purchases of the EBU products by unaffiliated
customers. Net revenue consists primarily of fees for licenses of the Company's
software products and fees for customer service and support. Revenue from
leasing computer software products is recognized monthly as earned. The
software licenses generally provide for a monthly minimum rental, with
additional amounts due based on usage. Revenue from prepaid and paid-up
licenses is recognized in full at the delivery of the software with maintenance
on such licenses deferred and recognized over the term of the maintenance
agreement, generally one year.
Direct Operating Costs
MSC's sales personnel generally sold products for multiple business units
and therefore were not fully dedicated to the EBU. Accordingly, selling expense
consists primarily of an estimate of the costs, including sales commissions, of
personnel directly involved in the sales process. The estimate is based on an
evaluation by management of the relevant facts and circumstances as of the date
of these financial statements. Actual results may differ from these estimates.
Research and Development expenses include costs associated with the development
of new products and the enhancement of existing products. These costs are not
necessarily indicative of the costs that would have been incurred had the EBU
operated as a unaffiliated independent entity.
<PAGE> 9
As discussed in note (1) above, MSC did not maintain separate accounting
records for the EBU. Historically, MSC did not allocate general administrative
costs to the EBU, so any such allocation at this time would be purely arbitrary
and possibly misleading.
Intangible Assets
The acquisition of the EBU has been accounted for as a purchase. The
purchase price of $5,600,000 has been allocated between the fair value of the
net assets acquired of $2,546,000 and in process research and development of
$3,054,000 on the basis of the estimated fair value of the assets acquired and
the liabilities assumed. Intangible assets include $2.5 million and $560,000,
which consist of the customer list and established work force, respectively, and
are being amortized on a straight line basis over a seven and three year life,
respectively, commencing in August 1996.
In the first quarter of fiscal 1997, the Company charged to expense the
portion of the purchase price allocated to in process research and development
which aggregated $3,054,000. This charge is not reflected in the accompanying
statement of net revenue and direct operating expenses. The amount of this
non-recurring charge was equal to the estimated current fair value, based on the
risk adjusted discounted cash flows, of specifically identified technologies for
which technological feasibility had not yet been established pursuant to
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs
of Computer Software to be Sold, Leased or Otherwise Marketed," and for which
future alternative uses did not exist.
<PAGE> 10
Ansoft Corporation and the
Electronics Business Unit of
The MacNeal-Schwendler Corporation
Pro Forma Condensed Combined Statement of Operations
The following unaudited Pro Forma Condensed Combined Statement of
Operations gives effect to the combined financial results of Ansoft and MSC's
EBU for the year ended April 30, 1996 and for the three-month period ended July
31, 1996, as if the acquisition of the EBU had occurred as of the beginning of
each period presented. Such unaudited Pro Forma Condensed Combined financial
information should not be considered an indication of the financial results of
the Company subsequent to the acquisition.
<PAGE> 11
Ansoft Corporation and the
Electronics Business Unit of
The MacNeal-Schwendler Corporation
Pro Forma Condensed Combined Statement of Operations
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, 1996
-----------------------------------------------------------
ANSOFT EBU ADJUSTMENTS NOTES COMBINED
------ --- ----------- ----- --------
<S> <C> <C> <C> <C> <C>
Net revenue $8,695 $3,778 $ -- $12,473
Costs and expenses:
Sales and marketing 5,007 1,137 -- 6,144
Research and development 1,766 1,494 -- 3,260
General and administrative 1,269 -- 1,110 (3)(5) 2,379
------ ------ ------- -------
Total costs and expenses 8,042 2,631 1,110 11,783
------ ------ ------- -------
Income from operations 653 1,147 (1,110) 690
Interest income 41 -- -- 41
Interest expense (6) -- -- (6)
------ ------ ------- -------
Income before income taxes 688 1,147 (1,110) 725
Income taxes 612 -- -- 612
------ ------ ------- -------
Net income $1,300 $1,147 $(1,110) $ 1,337
====== ====== ======= =======
Net income per share $0.19 $ 0.19
====== =======
Weighted average shares
outstanding 6,873 6,873
====== =======
</TABLE>
See accompanying notes.
<PAGE> 12
Ansoft Corporation and the
Electronics Business Unit of
The MacNeal-Schwendler Corporation
Pro Forma Condensed Combined Statement of Operations
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED JULY 31, 1996
-----------------------------------------------------------
ANSOFT EBU ADJUSTMENTS NOTES COMBINED
------ --- ----------- ----- --------
<S> <C> <C> <C> <C> <C>
Net revenue $2,318 $845 $ -- $3,163
Costs and expenses:
Sales and marketing 1,429 390 -- 1,819
Research and development 498 491 -- 989
General and administrative 294 -- 262 (3)(5) 556
In process research and
development 3,054 -- (3,054) (4) --
------- ---- ------- ------
Total costs and expenses 5,275 881 (2,792) 3,364
------- ---- ------- ------
Income (loss) from operations (2,957) (36) 2,792 (201)
Interest income 220 -- -- 220
Interest expense -- -- -- --
------- ---- ------- ------
Income (loss) before
income taxes (2,737) (36) 2,792 19
Income taxes -- -- -- --
------- ---- ------- ------
Net income (loss) $(2,737) $(36) $ 2,792 $ 19
======= ==== ======= ======
Net income (loss) per share $ (0.35) $ 0.00
======= ======
Weighted average shares
outstanding 7,907 352 8,259
======= ======= ======
</TABLE>
See accompanying notes.
<PAGE> 13
Notes to the Pro Forma Condensed Combined Statement of Operations:
(1) The Company's fiscal year and first quarter ends on April 30 and July 31,
respectively. The fiscal year end and first quarter of MSC and the EBU ends on
January 31 and April 30, respectively. For ease of presentation, April 30 and
July 31 has been utilized as the fiscal year and quarter end, respectively, for
all financial statement captions, although the financial information of the EBU
is presented on a three-month lag basis.
(2) The EBU was operated by MSC as two software products within MSC's overall
product offerings. These products represented an immaterial portion of MSC's
business and had an immaterial impact on MSC's balance sheet and operating
results. Accordingly, MSC did not maintain separate accounting records for the
EBU. Historically, MSC did not allocate general administrative costs to the
EBU, so any such allocation at this time would be purely arbitrary and possibly
misleading.
(3) The cost of the acquisition has been allocated on the basis of the
estimated fair value of the assets acquired and the liabilities assumed. The
purchased intangible assets include $2.5 million and $560,000 which consist of
the customer list and established work force, respectively. They are being
amortized on a straight line basis over a seven and three year life,
respectively (for a total amortization charge of $543,000 per year, or $135,000
per quarter).
(4) In the first quarter of fiscal 1997, the Company recorded a non-recurring
charge to expense equal to the portion of the purchase price allocated to in
process research and development ($3.1 million). The amount of this
non-recurring charge was equal to the estimated current fair value, based on the
risk adjusted cash flows, of specifically identified technologies for which
technological feasibility had not yet been established pursuant to Statement of
Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased or Otherwise Marketed," and for which future
alternative uses did not exist.
(5) As discussed in note (2) above, there is no allocation of general and
administrative expenses included in the EBU financial statements. While the
Company anticipates increased general and administrative costs following the
acquisition, the only increase that will be directly attributable to the
transaction is the additional costs required to support the increase in
operations. Estimated general and administrative costs of $567,000 and $127,000
attributable to the EBU for the year ended April 30, 1996 and the quarter ended
July 31, 1996, respectively, have been charged to general and administrative
expense. These estimates are based on the historical relationship of the
Company's general and administrative costs as a percentage of net revenue
applied to the EBU's net revenue. Although managment believes that this is a
reasonable basis to estimate such costs, actual results may have differed from
those estimates.
