<PAGE> 1
As filed with the Securities and Exchange Commission on November 14, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ANSOFT CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 7372 72-1001909
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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FOUR STATION SQUARE, SUITE 660
PITTSBURGH, PENNSYLVANIA 15219
(412) 261-3200
(Address, including zip code, and telephone number including area code, of
registrant's principal executive offices)
NICHOLAS CSENDES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FOUR STATION SQUARE, SUITE 660
PITTSBURGH, PENNSYLVANIA 15219
(412) 261-3200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
Ronald W. Schuler, Esq.
Buchanan Ingersoll
Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, PA 15219
(412) 562-1414
John A. Burgess, Esq.
Hale and Dorr LLP
60 State Street
Boston, MA 02109
(617) 526-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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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, as amended (the "Securities Act") please check the following box. [ ]
If this Form is filed to register additional securities for an offering
under Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] 33- .
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462 (d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- ----------------------------------------------------------------------------------------------------------
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Common Stock, $.01 par value........... 4,025,000 $15.82 $63,675,500 $19,296.00
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(1) Includes 525,000 shares that are subject to an over-allotment option granted
to the Underwriters by the Company.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933 on the basis of the average
high and low prices of the Common Stock on the Nasdaq National Market on
November 12, 1997.
------------------------
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
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 STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 13, 1997
PROSPECTUS
3,500,000 SHARES
LOGO
COMMON STOCK
Of the 3,500,000 shares of Common Stock offered hereby, 2,550,000 shares
are being sold by Ansoft Corporation ("Ansoft" or the "Company") and 950,000
shares are being sold by the Selling Stockholders. The Company will not receive
any part of the proceeds from the sale of shares by the Selling Stockholders.
See "Principal and Selling Stockholders."
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol ANST. On November 12, 1997, the last reported sale price of the
Common Stock was $15.25 per share. See "Price Range of Common Stock."
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THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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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.
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========================================================================================================
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
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Per Share.................. $ $ $ $
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Total(3)................... $ $ $ $
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(1) See "Underwriting" for a description of indemnification arrangements with
the several Underwriters.
(2) Before deducting expenses payable by the Company estimated at $400,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
525,000 additional shares of Common Stock solely to cover over-allotment, if
any. If all such shares are purchased, the total Price to Public,
Underwriting Discount, Proceeds to Company and Proceeds to Selling
Stockholders will be $ , $ , $ , and $ ,
respectively. See "Underwriting."
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The shares of Common Stock are offered by the several Underwriters subject
to prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1997, at the office of the agent of Hambrecht
& Quist LLC in New York, New York.
HAMBRECHT & QUIST WESSELS, ARNOLD & HENDERSON
, 1997
<PAGE> 3
[Graphic depicts satellite dish, computers, video camera, airplane, car and
cellular phone surrounding Company logo within a triangle with the terms
"performance," "miniaturization" and "yield" at the points of the triangle.]
ANSOFT'S ELECTROMAGNETICS-BASED EDA SOFTWARE IS USED BY ENGINEERS TO DESIGN
COMPONENTS AND SYSTEMS INCORPORATED IN PRODUCTS SUCH AS THE ONES DEPICTED ABOVE.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE
SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto of the
Company appearing elsewhere in this Prospectus. Prospective investors should
consider carefully the information under "Risk Factors."
THE COMPANY
Ansoft Corporation ("Ansoft" or the "Company") develops, markets and
supports electronic design automation ("EDA") software based on fundamental
electromagnetic principles. The Company's products are used by design engineers
in a wide range of industries, including the rapidly evolving wireless
communications and RF markets as well as the semiconductor, computer, automotive
and consumer electronics industries. The Company's software is used in the
design of high performance electrical devices and systems, such as cellular
phones, communications systems, computer circuit boards and motors.
As the marketplace demands higher levels of system performance and
miniaturization, the need to model accurately the electromagnetic interaction in
communication and computing devices and electromechanical systems is becoming
increasingly important. The design requirement to fit more devices and
interconnections into smaller spaces results in increased electromagnetic
interaction. Moreover, high performance systems, with frequencies of
approximately 500 MHz and beyond, exhibit a high level of electromagnetic
interaction causing the degradation of the quality of electrical signals.
Traditional EDA tools lack the requisite degree of precision in modeling
electromagnetic interactions in components and systems and, as a result, the
current process for designing and manufacturing wireless and electronic
components and systems is often iterative, time-consuming and inaccurate. By
using the Company's software, design engineers can more accurately predict
electromagnetic interactions at the component and system level. This allows the
Company's customers to produce more compact systems with higher performance
while reducing time-to-market, lowering risk of design failure and eliminating
costly and time-consuming product redesign. The Company believes that its
software products, which are based on Maxwell's Equations, more accurately model
electromagnetic interaction than do traditional EDA tools.
The Company's software products are targeted at three markets:
high-frequency ("HF"), signal integrity ("SI") and electromechanical ("EM"). The
HF software enables users to design RF integrated circuits, antenna and radar
systems and microwave components. The SI software enables users to design
computer interconnects, IC packaging structures and electronic systems by
accurately capturing the degradation in signal quality due to higher clock
speeds and smaller physical dimensions. The EM software enables designers of
electromechanical components and systems to optimize the electrical performance
of their designs while increasing manufacturing yields. Ansoft products may be
used as an independent design platform or integrated with complementary EDA
tools within a customer's existing design environment and are available for Unix
and Microsoft Windows 95/NT operating systems.
The Company's objective is to become a leading worldwide supplier of EDA
software. Using its proprietary electromagnetic technology as a primary
competitive advantage, the Company pursues its objectives through the following
strategies: leveraging its technology leadership to solve emerging
electromagnetic design issues in high performance electrical devices and
systems; capitalizing on the growing need for electromagnetic analysis in
increasingly compact and complex electronic and electromechanical components and
systems operating at higher speeds; and expanding its broad range of product
applications to address emerging customer design requirements.
Ansoft markets and sells its products through its direct sales force and
distributors. As of October 31, 1997, the Company had a direct sales force of 30
representatives, supported by 60 employees in application engineering, marketing
and sales administration. The Company has sold licenses for its products to over
500 organizations worldwide. Ansoft's customers include industry leaders in
wireless communications and RF markets, as well as in the automotive, computer
and consumer electronics industries. The Company's customers include Andrew
Corporation, Applied Materials, GM, IBM, Intel, Lucent Technologies, Mitsubishi,
Motorola, Nissan and Texas Instruments.
3
<PAGE> 5
THE OFFERING
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Common Stock offered by the Company................... 2,550,000 shares
Common Stock offered by the Selling Stockholders...... 950,000 shares
Common Stock outstanding after the offering(1)........ 11,739,769 shares
Use of Proceeds....................................... For working capital, repayment of
indebtedness and other general
corporate purposes, including
possible acquisitions.
Nasdaq National Market Symbol......................... ANST
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SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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SIX MONTHS ENDED
FISCAL YEAR ENDED APRIL 30, OCTOBER 31,
-------------------------------------------------- ------------------
1993 1994 1995 1996 1997 1996 1997
------- ------- ------- ------ ------- ------- -------
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CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Total revenue.............. $ 3,471 $ 5,121 $ 6,154 $8,695 $14,188 $ 5,652 $11,619
Income (loss) from
operations(2)........... (774) (46) (289) 653 (7,552) (2,782) 1,064
Net income (loss)(2)....... $ (967) $ (140) $ (305) $1,300 $(6,450) $(2,404) $ 1,641
Net income (loss) per
share(2)................ $ (0.40) $ (0.06) $ (0.06) $ 0.19 $ (0.81) $ (0.31) $ 0.17
Weighted average shares
outstanding............. 2,394 2,394 5,528 6,873 7,955 7,878 9,859
</TABLE>
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OCTOBER 31, 1997
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ACTUAL AS ADJUSTED(3)
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CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents........................................... $ 1,040 $35,324
Working capital..................................................... 3,096 39,289
Total assets........................................................ 21,762 56,046
Total stockholders' equity.......................................... $17,595 $53,788
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(1) Based on the number of shares outstanding as of October 31, 1997, after
giving effect to the exercise by one of the Selling Stockholders of options
to purchase 10,000 shares of Common Stock to be sold by such Selling
Stockholder in this offering. Excludes (i) 2,350,000 shares of Common Stock
reserved for issuance under the Company's 1988 and 1995 Stock Option Plans,
of which 1,239,417 shares were subject to outstanding options as of October
31, 1997, at a weighted average exercise price of $4.06 per share (options
for 10,000 of such shares will be exercised and sold in connection with this
offering), and (ii) 260,000 shares reserved for issuance upon exercise of
options outstanding as of October 31, 1997, at a weighted average exercise
price of $5.23 per share. See "Management--Employee Stock Option Plans" and
Note 8 of Notes to the Consolidated Financial Statements of the Company.
(2) Includes acquired in process research and development charges of $8,754, or
$1.07 per share, recognized in fiscal 1997.
(3) As adjusted to reflect the sale of shares of Common Stock offered by the
Company hereby at an assumed public offering price of $15.25 per share,
including the repayment of approximately $1,909,000 in indebtedness. See
"Use of Proceeds" and "Capitalization."
----------------------------------
Except as otherwise indicated, (i) all information in this Prospectus
assumes no exercise of the Underwriters' over-allotment option and (ii) all
references herein to the "Company" or "Ansoft" include Ansoft Corporation and
its wholly-owned subsidiaries. All references herein to a particular fiscal year
are to the fiscal year ending April 30 of that year.
Compact Software(R), Maxwell(R), Harmonica(R), ParlCs(R) and Serenade(R)
are registered United States trademarks of Ansoft. All other trademarks, service
marks and trade names referred to in this Prospectus are the property of their
respective owners.
4
<PAGE> 6
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including those
set forth below and elsewhere in this Prospectus. The following risk factors
should be considered carefully in addition to the other information in this
Prospectus before purchasing the shares of the Common Stock offered hereby.
UNCERTAINTY OF BROAD MARKET ACCEPTANCE. Historically, substantially all of
the Company's revenue has been derived from the licensing and support of its
electromagnetic analysis software. To date, there has been a limited market for
electromagnetic analysis software. The failure of this market to develop or the
slow development of this market would have a material adverse effect on the
Company's business, operating results and financial condition. The Company
believes that a number of factors will be necessary for its products to achieve
broad market acceptance. These factors include increased demand for performance,
miniaturization and manufacturing yield in the communications, computer and
electronics industries; integration of its products with existing design systems
and complementary EDA software; and user familiarity with the Company's products
and capabilities. A decreased demand for electromagnetic analysis software as a
result of competition, technological change or other factors would have a
material adverse effect on the Company's business, operating results and
financial condition. There can be no assurance that markets for the Company's
products will develop further or, if they do, that the Company's products will
achieve broad market acceptance. See "Business-- Products" and
"Business--Product Development."
COMPETITION. The EDA software industry is highly competitive and is
characterized by continuing advances in products and technologies. In general,
competition comes from major EDA vendors, many of which have a longer operating
history, significantly greater financial, technical and marketing resources,
greater name recognition and a larger installed customer base than the Company.
These companies also have established relationships with current and potential
customers of the Company. The Company competes directly with certain major EDA
vendors and privately-held companies which also provide products based on
electromagnetic principles derived from Maxwell's Equations. There can be no
assurance that the major EDA vendors and other EDA companies will not expand and
develop new products in the electromagnetics-based EDA market. The Company also
competes, on a limited basis, with the internal development groups of its
existing and potential customers, many of whom design and develop customized
design tools for their particular needs. In addition, the EDA industry has
become increasingly concentrated in recent years as a result of acquisitions,
and further concentration within the EDA industry could result in increased
competition for the Company. The Company's software products currently compete
with certain software offerings from Hewlett-Packard Corporation ("HP"). The
Company entered into a distribution arrangement with HP under which HP formerly
distributed the Company's HFSS 4.0 product on an exclusive basis (the "HP
Agreement"). The HP Agreement has since expired, although HP retains the right
to distribute HFSS 4.0 through January 1998. HP has publicly announced the
introduction of a follow-on product called HP HFSS 5.0. The Company currently
sells the latest version of its HFSS product, Ansoft HFSS 5.0, through its own
sales force and other distributors. There can be no certainty that the Company
will be able to compete successfully against HP, or that any failure to compete
successfully with the introduction of HP's own HFSS product will not have an
adverse impact on the Company's operations and prospects. The failure of the
Company to compete successfully against current and future competitors would
have a material adverse effect on the Company's business, operating results and
financial condition. See "Business--Competition."
HISTORY OF LOSSES; FUTURE OPERATING RESULTS UNCERTAIN. The Company has
incurred net losses in each fiscal year since its founding with the exception of
fiscal 1996. Although the Company is experiencing revenue growth and reported
net income in six of its last eight fiscal quarters, such growth and
profitability should not be considered to be indicative of future revenue
growth, if any, or of future operating results. There can be no assurance that
the Company's revenue and net income will grow or be sustained in future periods
or that the Company will remain profitable in any future period. Future
operating results will depend on many factors, including the degree and the rate
of growth of the markets in which the Company competes and the accompanying
demand for the Company's products, the level of product and price competition,
the ability of the Company to develop and market new products and to control
costs, the ability of the Company to expand its
5
<PAGE> 7
direct sales force and the ability of the Company to attract and retain key
personnel. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. The Company's quarterly
operating results have varied in the past and may in the future vary
significantly depending on factors such as increased competition, the timing of
new product announcements and changes in pricing policies by the Company or its
competitors, market acceptance of new and enhanced versions of the Company's
products, the size and timing of significant license purchases, the cancellation
of maintenance agreements, the mix of direct and indirect sales, future
acquisitions, changes in operating expenses and changes in general economic
factors. The sales cycle associated with licensing the Company's products is
typically lengthy and subject to a number of significant risks over which the
Company has little or no control, including customers' budgetary constraints and
internal acceptance reviews. Due to the foregoing factors, and particularly the
variability of the size and timing of significant license purchases, quarterly
revenue and operating results are difficult to forecast.
As is common in the software industry, the Company frequently ships more
product in the third month of each quarter than in either of the first two
months of the quarter, and shipments in the third month are higher at the end of
that month. This pattern is likely to continue. The concentration of sales in
the last month of the quarter makes the Company's quarterly financial results
difficult to predict. Also, any failure of sufficient business to materialize or
a disruption in the Company's production or shipping near the end of a quarter
could have a material adverse effect on the Company's business, operating
results and financial condition. In addition, the Company's business has been
seasonal, with revenues in the first fiscal quarter typically lower than those
in the fourth quarter of the preceding fiscal year.
The Company's expense levels are based, in part, on its expectations as to
future revenue levels. If revenue levels are below expectations, it could have a
material adverse effect on the Company's business, operating results and
financial condition. In particular, net income, if any, may be
disproportionately affected by a reduction in revenue because only a small
portion of the Company's expenses varies with revenue. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Quarterly Results of Operations."
LIMITED TRADING HISTORY OF COMMON STOCK; POTENTIAL VOLATILITY OF STOCK
PRICE. The Company's Common Stock first became publicly traded on April 3, 1996
after the Company's initial public offering at $8.50 per share. The market price
of the Common Stock has and could continue to fluctuate substantially due to a
variety of factors, including quarterly fluctuations in results of operations,
adverse circumstances affecting the introduction or market acceptance of new
products and services offered by the Company, announcements of new products and
services by competitors, changes in the EDA environment, changes in earnings
estimates by analysts, changes in accounting principles, sales of Common Stock
by existing holders, loss of key personnel and other factors. The market price
for the Company's Common Stock may also be affected by the Company's ability to
meet securities or industry analysts' expectations, and any failure to meet such
expectations, even if minor, could have a material adverse effect on the market
price of the Company's Common Stock. In addition, the stock market is subject to
extreme price and volume fluctuations. This volatility has had a significant
effect on the market prices of securities issued by many companies for reasons
unrelated to the operating performance of these companies. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been instituted against such a
company. Any such litigation instituted against the Company could result in
substantial costs and a diversion of management's attention and resources, which
could have a material adverse effect on the Company's business, operating
results and financial condition. See "Price Range of Common Stock."
RISKS ASSOCIATED WITH ACQUISITIONS. The Company's strategy includes the
acquisition of businesses, products and technologies that are complementary to
those of the Company. Promising acquisitions are difficult to identify and
complete for a number of reasons, including competition among prospective
buyers. In furtherance of this strategy, in fiscal 1997 and 1998 the Company
acquired three businesses, Compact Software, Inc. ("Compact"), the Electronic
Business Unit (the "EBU") of MacNeal Schwendler Company ("MSC") and Boulder
Microwave Technologies, Inc. ("Boulder"). There can be no assurance that the
Company will be able to complete future acquisitions or that the Company will be
able to successfully integrate these and any future acquired businesses. The
failure of the Company to integrate any acquired businesses could have a
material
6
<PAGE> 8
adverse effect on the Company's business, operating results and financial
condition. In order to finance any future acquisitions, it may be necessary for
the Company to raise additional funds through public or private financings. Any
equity or debt financing, if available at all, may be on terms which are not
favorable to the Company and, in the case of equity financing, may result in
dilution to the Company's stockholders. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources--Acquisitions."
RISKS ASSOCIATED WITH COMPANY INVESTMENTS. The Company invested a portion
of the proceeds of its initial public offering in certain long-, medium- and
short-term investment grade, interest-bearing securities, and currently holds
$3.0 million (as valued on its balance sheet as of October 31, 1997) in such
securities. The value of the Company's investment in such instruments is subject
to the normal risks of interest-bearing investments. Over time, the level of
interest rates available in the market changes. As prevailing interest rates
fall, the prices of bonds and other securities that trade on a yield basis tend
to rise. Conversely, when prevailing interest rates rise, bond prices generally
will fall. Generally, the longer the maturity of a fixed-income security, the
higher its yield and the greater its price volatility. As a consequence, the
value of the bonds and other instruments held by the Company could fluctuate
substantially over time, depending upon long-term and short-term trends and
interest rates. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
DEPENDENCE ON PROPRIETARY TECHNOLOGY. The Company's success is heavily
dependent upon its proprietary software technology. The Company does not
currently have any patents and relies principally on trade secret and copyright
laws and contractual protections to establish and protect its proprietary
rights. However, there can be no assurance that the steps taken by the Company
will prevent misappropriation or infringement of its technology. Moreover, third
parties could independently develop competing technologies that are
substantially equivalent to the Company's technologies. Although the Company
believes that its products and proprietary rights do not infringe patents and
proprietary rights of third parties, there can be no assurance that infringement
claims, regardless of merit, will not be asserted against the Company in the
future or that any such assertion will not result in costly litigation or
require the Company to obtain a license to intellectual property rights of such
third parties. In addition, there can be no assurance that such licenses will be
available on reasonable terms or at all, which could have a material adverse
effect on the Company's business, operating results and financial condition. See
"Business--Proprietary Rights."
DEPENDENCE ON KEY PERSONNEL. The Company's future operating results depend
in large part upon the continued services of its key technical and management
personnel, including Dr. Zoltan J. Cendes, a founder, Chairman of the Board of
Directors and Chief Technology Officer of the Company. The Company does not have
employment contracts with Dr. Cendes or any other executive officer. The Company
also believes that its future success will also depend in large part on its
ability to continue to attract and retain highly-skilled technical, marketing
and management personnel. The competition for such personnel, as well as for
qualified EDA engineers, is intense. There can be no assurance that the Company
will be able to continue to attract and retain the qualified technical and other
personnel necessary for the development of its business. The Company maintains
key-man life insurance with respect to Dr. Cendes in the amount of $5,000,000.
See "Business--Product Development," and "--Employees" and "Management."
RAPID TECHNOLOGY CHANGE AND NEED FOR NEW PRODUCTS. The EDA software
industry is characterized by rapid and continuing advances in products and
technologies. The Company's future success will depend upon its ability to
enhance continually its current products, to develop and introduce new products
that keep pace with technological advancements and changes in computer systems
and design environments and to address the increasingly sophisticated needs of
its customers. However, there can be no assurance that the Company will be
successful in developing and marketing product enhancements or new products that
will adequately meet the requirements of the marketplace. In addition, the
introduction of products embodying new technologies and the emergence of new
industry standards could render the Company's existing products, and products
currently under development, obsolete and unmarketable. From time to time, the
Company and others may announce new products, capabilities or technologies that
have the potential to replace or shorten the life cycle of the Company's
existing product offerings. There can be no assurance that announcements of
currently planned or other new
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<PAGE> 9
product offerings will not cause customers to defer purchasing existing Company
products. See "Business--Products" and "--Product Development."
USE OF DISTRIBUTORS AND SHIFT IN DISTRIBUTION MODEL. A significant portion
of the Company's license and service revenue results from a limited number of
international distributors. During fiscal 1996, 1997 and for the six month
period ended October 31, 1997, revenue from international distributors accounted
for approximately 19%, 19%, and 21%, respectively, of the Company's total
revenue. In addition, pursuant to the HP Agreement, HP formerly distributed the
Company's HFSS 4.0 product on an exclusive basis. The HP Agreement has since
expired, although HP retains the right to distribute HFSS 4.0 through January
1998. The Company currently sells the latest version of its HFSS product, Ansoft
HFSS 5.0, through its own sales force and other distributors. During fiscal
1996, 1997 and for the six month period ended October 31, 1997, revenue from the
HP Agreement accounted for approximately 13%, 12%, and 6%, respectively, of the
Company's total revenue.
The Company's distributors are not obligated to purchase products from the
Company and may also represent other products. There can be no assurance that
the Company's current international distributors will continue to market,
service and support the Company's products effectively, that they will choose to
continue to license such products or that they will not devote greater resources
to marketing or licensing products of other companies.
The Company has recently shifted its distribution model to the use of
direct sales personnel in Japan and other foreign markets. There can be no
assurance that this transition will not result in dislocations or delays in
penetration in these markets or that the recent shift will not result in
start-up costs and other expenses. These expenses may be incurred before a
commensurate level of revenues are generated in these markets. Failure to
generate a requisite level of revenues in light of these expenses could have a
material adverse effect on the Company's business, operating results and
financial condition. See "Business--Sales and Marketing."
RISKS ASSOCIATED WITH INTERNATIONAL LICENSING. International license and
service revenue accounted for 32%, 41% and 48% of total product revenue in
fiscal 1996, 1997 and the six month period ended October 31, 1997, respectively.
The Company expects that international license and service revenue will continue
to account for a significant portion of its revenue. The majority of the
Company's international sales are priced in foreign currencies which the Company
does not hedge and as such the Company's revenues and profits from such sales
are subject to fluctuation due to variable foreign currency exchange rates.
International licenses involve a number of inherent risks, including
fluctuations in foreign currency exchange rates, variability of foreign economic
conditions, changing restrictions imposed by United States export laws, the
impact of recessionary environments in economies outside the United States,
generally longer receivables collection periods, unexpected changes in and
compliance with regulatory requirements, reduced protection for intellectual
property rights in some countries, tariffs and other trade barriers. See
"Business--Sales and Marketing."
MANAGEMENT OF GROWTH. The Company's business has experienced rapid growth
in recent years which has placed and could continue to place a significant
strain on the Company's managerial and other resources. Revenues have grown from
$3.5 million in fiscal 1993 to $14.2 million in fiscal year 1997, and the number
of employees has grown from 69 in April 1996 to 176 as of October 31, 1997. The
Company's ability to manage growth effectively will require it to continue to
improve its operational and financial systems, hire and train new employees and
add additional space, both domestically and internationally. The Company's
success abroad will depend in part on its ability to manage its foreign
operations. There can be no assurance that such efforts can be accomplished
successfully. The failure to manage growth effectively or to generate sufficient
increased revenues necessary to cover any higher costs resulting from such
growth could have a material adverse effect on the Company's business, operating
results and financial condition. See "Business."
SUSCEPTIBILITY TO CHANGING ECONOMIC FACTORS. The Company is dependent upon
the communications, semiconductor, automotive/industrial, computer, consumer
electronics and defense/aerospace industries. Because these industries are
characterized by technological change, short product life cycles, fluctuations
in manufacturing capacity and pricing and gross margin pressure, they have from
time to time experienced sudden economic downturns. During these periods,
capital spending is commonly curtailed and the number of design projects often
decreases. Since the Company's sales are dependent upon capital spending trends
and new design project in these
8
<PAGE> 10
industries, negative factors affecting these industries could have a material
adverse effect on the Company's business, operating results and financial
condition.
RISK OF PRODUCT DEFECTS. Complex software products, such as those offered
by the Company, may contain defects, undetected errors or failures when
introduced or when new versions are released. There can be no assurance that,
despite testing by the Company, errors will not be found in new products or
versions after commencement of commercial shipments, resulting in loss of market
share or failure to achieve market acceptance. Any such occurrence could have a
material adverse effect upon the Company's business, operating results and
financial condition.
CONCENTRATION OF STOCK OWNERSHIP. Upon completion of this offering, the
directors and executive officers of the Company and their affiliates will
beneficially own approximately 45% (43% if the Underwriters' overallotment
option is exercised in full) of the Company's outstanding Common Stock. As a
result, these stockholders will be able to exercise control over all matters
requiring stockholder approval, including the election of directors and approval
of significant corporate transactions. Such concentration of ownership may have
the effect of delaying, deterring or preventing a change in control of the
Company. See "Principal and Selling Stockholders."
EFFECT OF CERTAIN CHARTER PROVISIONS, ANTITAKEOVER EFFECTS OF CERTIFICATE
OF INCORPORATION, BYLAWS AND DELAWARE LAW. The Company's Board of Directors has
the authority to issue up to 1,000,000 shares of Preferred Stock without any
further vote or action by the Company's stockholders. The rights of the holders
of the Common Stock will be subject to, and may be adversely affected by, the
rights of the holders of any Preferred Stock that may be issued in the future.
The issuance of Preferred Stock, while providing desirable flexibility in
connection with certain corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. The Company currently has no plans to issue shares of
Preferred Stock. Further, certain provisions of the Company's Certificate of
Incorporation and Bylaws and of Delaware law could delay or make more difficult
a merger, tender offer or proxy contest involving the Company. See "Description
of Capital Stock."
9
<PAGE> 11
THE COMPANY
The Company was incorporated under the laws of Delaware in 1984. The
Company has three wholly-owned subsidiaries, Ansoft California, Inc. ("Ansoft
California"), Compact Software, Inc. ("Compact") which was acquired by the
Company in 1997, and Ansoft Japan KK. Compact and Ansoft California were
incorporated under the laws of the State of Delaware in 1983 and 1996,
respectively. The results of operations of the subsidiaries are consolidated
into the Company's operating results for financial reporting purposes. The
Company's principal executive offices are located at Four Station Square,
Pittsburgh, PA 15219. The Company's telephone number is (412) 261-3200 and
e-mail address is [email protected].
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,550,000 shares of
Common Stock offered by the Company hereby (after deducting estimated
underwriting discounts and commissions and estimated offering expenses) will be
approximately $36,193,000 ($43,727,000 if the Underwriters' over-allotment
option is exercised in full), based upon an assumed public offering price of
$15.25 per share. Approximately $1,909,000 of the net proceeds from this
offering will be used to repay in full indebtedness owed to a financial
institution from whom the Company borrowed funds. The amounts borrowed are
secured by certain investment securities held by the Company and accrue interest
at a rate of 2% over the Broker Call Rate. The Company intends to use the
remainder of the net proceeds from this offering for working capital, settlement
of outstanding indebtedness and other general corporate purposes. From time to
time, in the ordinary course of business, the Company evaluates potential
acquisitions of complementary businesses, products or technologies, for which a
portion of the net proceeds may also be used. However, the Company currently has
no understandings, commitments or agreements with respect to any material
acquisition of other businesses, products or technologies. Pending such uses,
the net proceeds of the offering may be invested in investment-grade,
interest-bearing securities. The Company will not receive any proceeds from the
sale of Common Stock by the Selling Stockholders.
DIVIDEND POLICY
The Company has never paid any cash dividends on its Common Stock. The
Company currently intends to retain the earnings from operations for use in the
operation of its business and does not anticipate paying cash dividends with
respect to its Common Stock in the foreseeable future. The payment of any future
dividends will be determined by the Board of Directors in light of the then
current conditions, including the Company's earnings and financial condition.
10
<PAGE> 12
PRICE RANGE OF COMMON STOCK
The Company's Common Stock has been traded on the Nasdaq National Market
under the symbol ANST since April 3, 1996. The following table sets forth, for
the periods indicated, the range of high and low last reported sale prices for
the Common Stock as reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
FISCAL YEAR ENDED APRIL 30, 1996
4th Quarter (From April 3, 1996 through April 30, 1996)....... $ 9.500 $ 7.125
FISCAL YEAR ENDED APRIL 30, 1997
1st Quarter................................................... 8.750 4.000
2nd Quarter................................................... 7.250 5.000
3rd Quarter................................................... 6.875 4.500
4th Quarter................................................... 5.875 4.625
FISCAL YEAR ENDED APRIL 30, 1998
1st Quarter................................................... 9.000 4.875
2nd Quarter................................................... 23.250 8.375
3rd Quarter (through November 12, 1997)....................... 16.688 15.250
</TABLE>
On November 12, 1997, the last reported sale price of the Company's Common
Stock was $15.25 per share. On November 12, 1997, the Company had approximately
138 shareholders of record.
11
<PAGE> 13
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
October 31, 1997 (i) on an actual basis and (ii) as adjusted to give effect to
the sale by the Company of 2,550,000 shares of Common Stock offered hereby at an
assumed public offering price of $15.25 per share and the application of the
estimated net proceeds therefrom. This table should be read in conjunction with
the Consolidated Financial Statements of the Company and the Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus:
<TABLE>
<CAPTION>
OCTOBER 31, 1997
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Stockholders' equity:
Preferred Stock, $0.01 par value; 1,000,000 shares authorized;
no shares outstanding.......................................... $ -- $ --
Common Stock, $0.01 par value; 25,000,000 shares authorized;
9,179,769 shares issued and outstanding; 11,739,769 shares
issued and outstanding, as adjusted (1)......................... 92 118
Additional paid-in capital....................................... 25,170 61,338
Net unrecognized gain (loss) on marketable securities............ 131 131
Accumulated deficit.............................................. (7,798) (7,798)
-------- -----------
Total stockholders' equity.................................. $ 17,595 $ 53,788
======= =========
</TABLE>
- ---------
(1) Based on the number of shares outstanding as of October 31, 1997 after
giving effect to the exercise by one of the Selling Stockholders of options
to purchase 10,000 shares of Common Stock to be sold by such Selling
Stockholder in this offering. Excludes (i) 2,350,000 shares of Common Stock
reserved for issuance under the Company's 1988 and 1995 Stock Option Plans,
of which 1,239,417 shares were subject to outstanding options as of October
31, 1997, at a weighted average exercise price of $4.05 per share (options
for 10,000 of such shares will be exercised and sold in connection with this
offering), and (ii) 260,000 shares reserved for issuance upon exercise of
options outstanding as of October 31, 1997, at a weighted average exercise
price of $5.23 per share. See "Management--Employee Stock Option Plans" and
Note 8 of Notes to the Consolidated Financial Statements of the Company.
12
<PAGE> 14
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below for the five years
ended April 30, 1997, are derived from the Company's Consolidated Financial
Statements and related Notes thereto which have been audited by KPMG Peat
Marwick LLP, independent certified public accountants. The selected consolidated
financial data as of and for the interim periods ended October 31, 1996 and
October 31, 1997, are unaudited but, in the opinion of management, include all
adjustments that are necessary for a fair presentation of the results for the
interim period, and all such adjustments are of a recurring nature. The
operating results for the six months ended October 31, 1997 are not necessarily
indicative of the results to be expected for any other interim period or any
future fiscal year. The selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and related
Notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED APRIL 30, OCTOBER 31,
------------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1996 1997
------- ------- ------- ------- ------- ------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue
License.................... $3,350 $4,944 $5,921 $ 7,995 $11,950 $4,811 $ 8,907
Service and other.......... 121 177 233 700 2,238 841 2,712
------- ------- ------- ------- ------- ------- -------
Total revenue......... 3,471 5,121 6,154 8,695 14,188 5,652 11,619
------- ------- ------- ------- ------- ------- -------
Costs and expenses
Sales and marketing........ 1,699 2,734 3,935 5,007 7,939 3,348 5,424
Research and development... 1,450 1,296 1,462 1,766 2,993 1,247 3,374
General and
administrative........... 1,096 1,137 1,046 1,269 1,647 649 1,067
Amortization............... -- -- -- -- 407 136 690
Acquired in process
research and
development.............. -- -- -- -- 8,754 3,054 --
------- ------- ------- ------- ------- ------- -------
Total costs and
expenses............ 4,245 5,167 6,443 8,042 21,740 8,434 10,555
------- ------- ------- ------- ------- ------- -------
Income (loss) from
operations................... (774) (46) (289) 653 (7,552) (2,782) 1,064
Interest income (expense),
net.......................... (193) (94) (16) 35 682 378 187
------- ------- ------- ------- ------- ------- -------
Income (loss) before income
taxes........................ (967) (140) (305) 688 (6,870) (2,404) 1,251
Income taxes benefit........... -- -- -- 612 420 -- 390
------- ------- ------- ------- ------- ------- -------
Net income (loss).............. $ (967) $ (140) $ (305) $ 1,300 $(6,450) $(2,404) $ 1,641
======= ======= ======= ======= ======= ======= =======
Net income (loss) per share.... $(0.40) $(0.06) $(0.06) $ 0.19 $(0.81) $(0.31) $ 0.17
======= ======= ======= ======= ======= ======= =======
Weighted average shares
outstanding.................. 2,394 2,394 5,528 6,873 7,955 7,878 9,859
</TABLE>
<TABLE>
<CAPTION>
APRIL 30,
-------------------------------------------------------
1993 1994 1995 1996 1997 OCTOBER 31, 1997
------- ------- ------- ------- ------- ----------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............ $ 10 $ 43 $ 116 $10,728 $ 312 $ 1,040
Working capital (deficit)............ (748) 259 593 12,204 (1,936) 3,096
Total assets......................... 950 1,417 1,792 15,391 21,951 21,762
Total stockholders' equity
(deficit).......................... (3,295) (3,435) 1,161 14,291 14,917 17,595
</TABLE>
13
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains certain forward-looking statements that
involve substantial risks and uncertainties. When used in this Prospectus, the
words "anticipate," "plan," "believe," "estimate," "expect" and similar
expressions as they relate to the Company or its management are intended to
identify such forward-looking statements. The Company's actual results,
performance or achievements could differ materially from the results expressed
in, or implied by, these forward-looking statements. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors."
OVERVIEW
Ansoft Corporation ("Ansoft" or the "Company") develops, markets and
supports electronic design automation ("EDA") software based on fundamental
electromagnetic principles. The Company's software is used by engineers in the
design of high performance electronic devices and systems, such as cellular
phones, communications systems, computer circuit boards and motors. As the
marketplace demands higher levels of system performance and miniaturization, the
need to model accurately the electromagnetic interaction in communications,
computer devices and electromechanical components and systems is becoming
increasingly important, yet traditional EDA tools do not provide accurate
modeling of electromagnetic interaction. By using the Company's software,
companies can more easily predict electromagnetic interaction in such systems
and components, thus reducing time to market and simultaneously lowering design
and manufacturing costs. The Company's products are used by design engineers in
a wide range of industries, particularly the rapidly evolving wireless
communications and RF (radio frequency) markets as well as the semiconductor,
computer, automotive and consumer electronics industries.
License revenue consists principally of revenue from the licensing of the
Company's software and is generally recognized when the software has been
shipped and there are no significant remaining obligations. Service revenue
consists of maintenance fees for providing system updates, user documentation
and technical support for software products, and is recognized ratably over the
term of the maintenance agreement. Other revenue consists primarily of revenue
earned on development contracts with government-sponsored entities. Revenue
under these arrangements is recognized as the service is performed.
In accordance with Statement of Financial Accounting Standards (SFAS) No.
86, the Company has evaluated the establishment of technological feasibility of
its various products during the development phase. Due to the dynamic changes in
the market, the Company has concluded that it cannot determine, with any
reasonable degree of accuracy, technological feasibility until the development
phase of the project is nearly complete. The time period during which costs
could be capitalized from the point of reaching technological feasibility until
the time of general product release is generally very short and, consequently,
the amounts that could be capitalized pursuant to SFAS No. 86 are not material
to the Company's financial position or results of operations. Therefore, the
Company charges all research and development expenses to operations in the
period incurred.
Effective July 24, 1996, April 9, 1997 and August 8, 1997, the Company
acquired the Electronic Business Unit (the "EBU") of The MacNeal Schwendler
Company ("MSC"), Compact Software Inc. ("Compact"), and Boulder Microwave
Technologies, Inc. ("Boulder"), respectively. The cost of these acquisitions has
been allocated on the basis of the estimated fair value of the assets acquired
and the liabilities assumed. The allocation of the EBU and Compact acquisitions
resulted in charges of $3.1 million and $5.7 million recorded, respectively, in
fiscal 1997 based on the future expected cash flows of certain acquired in
process research and development that had not reached technological feasibility.
The acquisitions have been accounted for as purchases, and their respective
financial results have been included in the accompanying consolidated financial
statements since the date of their respective acquisitions.
14
<PAGE> 16
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of total revenue of each item in the Company's consolidated statements of
operations:
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUE
-------------------------------------------------------
SIX MONTHS
ENDED
FISCAL YEAR ENDED APRIL 30, OCTOBER 31,
----------------------------- -----------------
1995 1996 1997 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenue
License....................................... 96% 92% 84% 85% 77%
Service and other............................. 4 8 16 15 23
----- ----- ----- ----- -----
Total revenue............................... 100 100 100 100 100
----- ----- ----- ----- -----
Costs and expenses
Sales and marketing........................... 64 58 56 59 47
Research and development...................... 24 20 21 22 29
General and administrative.................... 17 15 12 12 9
Amortization.................................. -- -- 3 2 6
Acquired in process research and
development................................. -- -- 62 54 --
----- ----- ----- ----- -----
Total costs and expenses.................... 105 93 153 149 91
----- ----- ----- ----- -----
Income (loss) from operations................... (5) 7 (53) (49) 9
Interest, net................................... -- -- 5 7 2
----- ----- ----- ----- -----
Income (loss) before income taxes............... (5) 7 (48) (42) 11
Income taxes benefit............................ -- 8 3 -- 3
----- ----- ----- ----- -----
Net income (loss)............................... (5)% 15% (45)% (42)% 14%
===== ===== ===== ===== =====
</TABLE>
SIX MONTHS ENDED OCTOBER 31, 1997 COMPARED WITH SIX MONTHS ENDED OCTOBER 31,
1996
REVENUE. Total revenue in the six-month period ended October 31, 1997
increased 105% to $11.6 million from $5.7 million in the comparable period of
the preceding fiscal year, primarily due to increases in license revenue.
License revenue during the six month period ended October 31, 1997 increased 85%
to $8.9 million from $4.8 million during the comparable period in the prior
fiscal year. The growth of license revenue is attributable to the continued
increase in sales of existing Ansoft products as well as sales of the expanded
suite of products offered by Ansoft as a result of the acquisitions. The
increase in service and other revenue is attributable to an increase in revenue
recognized under research and development cost sharing agreements as well as the
continued growth of the installed base of customers and increased focus on
marketing annual maintenance agreements.
International revenue accounted for 48% and 39% of the Company's total
product revenue in the six-month period ended October 31, 1997 and 1996,
respectively.
The Company entered into a distribution arrangement with HP under which HP
formerly distributed the Company's HFSS product on an exclusive basis (the "HP
Agreement"). The HP Agreement has since expired, although HP retains the right
to distribute HFSS 4.0 through January 1998. The Company currently sells the
latest version of its HFSS product, Ansoft HFSS 5.0, through its own sales force
and other distributors. Revenue from the HP Agreement accounted for 6% and 13%
of total revenue in the six-month period ended October 31, 1997 and 1996,
respectively. The Company expects that HP will account for a decreasing
percentage of its total revenues over the next three months. Management believes
that the expiration of the HP Agreement will not have a material adverse effect
on the consolidated financial condition or results of operations.
SALES AND MARKETING EXPENSES. Sales and marketing expenses consist of
salaries, commissions paid to internal sales and marketing personnel and
international distributors, promotional costs and related operating expenses.
Sales and marketing expenses increased by 62% to $5.4 million in the six-month
period ended October 31, 1997, as compared to $3.3 million in the same period in
the previous fiscal year. The increase is
15
<PAGE> 17
attributable to an increase in the Company's sales force as a result of the
acquisitions as well as increased marketing efforts, including advertising in
trade publications and increased participation in industry trade shows. Sales
and marketing expenses represented 47% and 59% of total revenue in the six-month
period ended October 31, 1997 and 1996, respectively. The Company expects to
increase sales and marketing expenditures both domestically and internationally
as part of its continuing effort to expand its markets, introduce new products,
build marketing staff and programs and expand its international presence. The
Company expects that sales and marketing expenses will increase in absolute
dollars in future periods.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
include all costs associated with the development of new products and
enhancements to existing products. Research and development expenses for the
six-month period ended October 31, 1997 increased 171% to $3.4 million, as
compared to $1.2 million for the same period in the previous fiscal year. The
increase is due to increased research and development personnel primarily as a
result of the acquisitions. Research and development expenses represented 29%
and 22% of total revenue in the six-month period ended October 31, 1997 and
1996, respectively. The Company anticipates that research and development
expenses will increase in absolute dollars in future periods.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the six-month period ended October 31, 1997 increased 64% to $1.1 million,
as compared to $649,000 for the same period in the previous fiscal year. The
increase is due to additional costs required to support the increase in
operations, including the hiring of additional administrative personnel. General
and administrative expenses represented 9% and 12% of total revenue in the
six-month period ended October 31, 1997 and 1996, respectively. The Company
anticipates that general and administrative expenses will increase in absolute
dollars in future periods.
AMORTIZATION EXPENSE. Amortization expense for the six-month period ended
October 31, 1997 increased to $690,000, as compared to $136,000 for the same
period in the previous fiscal year. The increase is due to the amortization of
the additional intangible assets acquired during fiscal 1997 and fiscal 1998.
ACQUIRED IN PROCESS RESEARCH AND DEVELOPMENT EXPENSES. On July 24, 1996,
the Company acquired the EBU for $5.6 million in cash. 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 allocation of the cost of the
acquisition resulted in an in process research and development charge of $3.1
million based on the future expected cash flows of certain acquired in process
research and development that had not reached technological feasibility.
INTEREST (NET). Interest income for the six-month period ended October 31,
1997 decreased to $300,000, compared to $432,000 for the same period in the
previous fiscal year. Interest income decreased due to the use of cash in
partial payment for the fiscal 1997 and fiscal 1998 acquisitions. Interest
expense for the six-month period ended October 31, 1997 increased to $113,000,
compared to $54,000 for the same period in the previous fiscal year. Interest
expense increased due to increased borrowing by the Company.
INCOME TAXES. In the six-month period ended October 31, 1997, the Company
recorded a net income tax benefit of $390,000, resulting from the partial
recognition of previously unrecognized deferred tax assets in accordance with
the Financial Accounting Standards Board's SFAS No. 109, "Accounting for Income
Taxes." The Company's net deferred tax asset of $1.5 million as of October 31,
1997, consists primarily of net operating loss carryforwards for federal income
tax purposes, which are available to offset future taxable income, and expire in
increments beginning in April 2004, through April 2012.
YEAR ENDED APRIL 30, 1997 COMPARED WITH YEAR ENDED APRIL 30, 1996
REVENUE. The Company's license revenue increased by 49% to $12.0 million
for the year ended April 30, 1997, as compared with $8.0 million in the previous
year. The revenue growth was attributable to the continued growth of the
installed base of customers licensing the Company's existing products and to the
expanded suite of products offered by Ansoft as a result of the acquisition of
the EBU. Service and other revenue increased by 220% to $2.2 million for the
year ended April 30, 1997, as compared with $0.7 million in the previous year.
The increase in service and other revenue is attributed to increased purchased
annual maintenance agreements, and reflects the continued growth of the
installed base of customers and increased focus on marketing annual
16
<PAGE> 18
maintenance agreements as well as an increase in revenue recognized under
research and development cost sharing agreements.
International revenue accounted for 41% and 33% of the Company's total
product revenue in fiscal 1997 and 1996, respectively. Revenue from the HP
Agreement accounted for 12% and 13% of total revenue in fiscal 1997 and 1996,
respectively.
SALES AND MARKETING EXPENSES. Sales and marketing expenses increased by
59% to $7.9 million in fiscal 1997, as compared to $5.0 million in fiscal 1996.
The increase was attributable to increased marketing efforts, including
advertising in trade publications and increased participation in industry trade
shows and the increase in sales force as a result of the 1997 acquisitions.
Sales and marketing expenses represented 56% and 58% of total revenue in fiscal
1997 and fiscal 1996, respectively.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased 70% to $3.0 million in fiscal 1997, as compared to $1.8 million in
fiscal 1996. The increase was due to increased costs associated with continuing
product development and enhancement of existing products in addition to the
increased personnel as a result of the EBU acquisition. Research and development
expenses represented 21% and 20% of total revenue in fiscal 1997 and 1996,
respectively.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased 30% to $1.6 million in fiscal 1997, as compared to $1.3 million in
fiscal 1996. The increase was due to additional costs required to support the
increase in operations, including the hiring of additional administrative
personnel, along with other general cost increases. General and administrative
expenses represented 12% and 15% of total revenue in fiscal 1997 and 1996,
respectively. The decrease as a percentage of revenue was due to certain of the
expenses being of a fixed nature which have not increased proportionately with
the increase in revenue.
AMORTIZATION EXPENSE. Amortization expense in fiscal 1997 of $407,000 was
recognized as a result of the amortization of the intangible assets acquired
during fiscal 1997.
ACQUIRED IN PROCESS RESEARCH AND DEVELOPMENT EXPENSES. On July 24, 1996,
the Company acquired the EBU for $5.6 million in cash. On April 9, 1997, the
Company acquired Compact for approximately $10.0 million in cash and stock.
These acquisitions have been accounted for as purchases and the cost of these
acquisitions has been allocated on the basis of the estimated fair value of the
assets acquired and the liabilities assumed. The allocation of the EBU and
Compact acquisitions resulted in charges of $3.1 million and $5.7 million,
respectively, based on the future expected cash flows of certain acquired in
process research and development that had not reached technological feasibility.
INTEREST (NET). Interest income increased to $902,000 in fiscal 1997, as
compared to $41,000 in fiscal 1996. Interest income increased due to larger cash
and marketable securities balances resulting primarily from the net proceeds of
the Company's initial public offering which was completed in April 1996.
Interest expense increased to $220,000 in fiscal 1997, as compared to $6,000 in
fiscal 1996. Interest expense increased due to increased borrowing by the
Company.
INCOME TAXES. During fiscal 1997 the Company recorded a net income tax
benefit of $420,000, resulting from the partial recognition of previously
unrecognized deferred tax assets in accordance with the Financial Accounting
Standards Board's SFAS No. 109, "Accounting for Income Taxes."
YEAR ENDED APRIL 30, 1996 COMPARED WITH YEAR ENDED APRIL 30, 1995
REVENUE. The Company's license revenue increased by 35% to $8.0 million
for the year ended April 30, 1996, as compared with $5.9 million in the previous
year. The increase in revenue was primarily attributable to the increase in the
number of licenses sold. Service and other revenue increased by 200% to $700,000
for the year ended April 30, 1996, as compared with $233,000 in the previous
year. The increase in service and maintenance revenue was primarily attributable
to purchased annual maintenance agreements and reflected the continued growth of
the installed base of customers and increased focus on marketing annual
maintenance agreements and to a lesser extent, revenue recognized on the
research and development cost sharing agreement.
17
<PAGE> 19
International revenue accounted for 33% and 31% of the Company's total
product revenue in fiscal 1996 and 1995, respectively. Revenue from the HP
Agreement accounted for 13% and 18% of total revenue in fiscal 1996 and 1995,
respectively.
SALES AND MARKETING EXPENSES. Sales and marketing expenses increased by
27% to $5.0 million in fiscal 1996, as compared to $3.9 million in fiscal 1995.
Sales and marketing expenses increased primarily due to the expansion of the
Company's sales and marketing organization and, to a lesser extent,
participation in domestic and international conferences and trade shows. Sales
and marketing expenses represented 58% and 64% of total revenue in fiscal 1996
and fiscal 1995, respectively. The decrease as a percentage of revenue was due
to certain of the expenses being of a fixed nature which have not increased
proportionately with the increase in revenue.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased 21% to $1.8 million in fiscal 1996, as compared to $1.5 million in
fiscal 1995. The increase was due to increased costs associated with continuing
product development and enhancement of existing products. Research and
development expenses represented 20% and 24% of total revenue in fiscal 1996 and
1995, respectively. The decrease as a percentage of revenue was due to certain
of the expenses being of a fixed nature which did not increase proportionately
with the increase in revenue.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased 21% to $1.3 million in fiscal 1996, as compared to $1.0 million in
fiscal 1995. The increase was due to additional costs required to support the
increase in operations, including the hiring of additional administrative
personnel, along with other general cost increases. General and administrative
expenses represented 15% and 17% of total revenue in fiscal 1996 and 1995,
respectively.
INTEREST (NET). The Company recorded interest income of $35,000 in fiscal
1996, as compared to interest expense of $16,000 in fiscal 1995. Interest income
resulted primarily from the net proceeds of the Company's initial public
offering which was completed in April 1996.
INCOME TAXES. During fiscal 1996 the Company recorded a net income tax
benefit of $612,000, resulting from the partial recognition of previously
unrecognized deferred tax assets in accordance with the Financial Accounting
Standards Board's SFAS No. 109, "Accounting for Income Taxes."
QUARTERLY RESULTS OF OPERATIONS
The following table presents unaudited quarterly results in dollar amounts
and as a percentage of total revenue for each quarter of fiscal 1997 and the
first two quarters of fiscal 1998. The information has been prepared on a basis
consistent with the Company's annual consolidated financial statements and, in
the opinion of management, contains all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the information for
such periods. The Company's quarterly results have been in the past, and may be
in the future, subject to fluctuations due to increased competition, the timing
of new product announcements, changes in pricing policies by the Company or its
competitors, market acceptance of new and enhanced versions of the Company's
products and the size and timing of significant licenses. The Company believes
that results of operations for the interim periods are not necessarily
indicative of the results to be expected for any future period.
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<PAGE> 20
The Company's business has been seasonal, with revenues in the first fiscal
quarter typically lower than the fourth quarter of the preceding fiscal year.
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------
FISCAL 1997 FISCAL 1998
------------------------------------------------ ---------------------
JULY 31, OCT. 31, JAN. 31, APRIL 30, JULY 31, OCT. 31,
1996 1996 1997 1997 1997 1997
-------- -------- -------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenue
License.................................. $ 1,961 $2,850 $3,010 $ 4,129 $4,016 $ 4,891
Service and other........................ 357 484 565 832 1,319 1,393
------- ------ ------ ------- ------ -------
Total Revenue.......................... 2,318 3,334 3,575 4,961 5,335 6,284
------- ------ ------ ------- ------ -------
Costs and expenses
Sales and marketing...................... 1,429 1,919 1,977 2,614 2,557 2,867
Research and development................. 498 749 720 1,026 1,510 1,864
General and administrative............... 294 355 442 555 470 597
Amortization............................. -- 136 136 136 314 376
Acquired in process research and
development............................ 3,054 -- -- 5,700 -- --
------- ------ ------ ------- ------ -------
Total costs and expenses............... 5,275 3,159 3,275 10,031 4,851 5,704
------- ------ ------ ------- ------ -------
Income (loss) from operations.............. (2,957) 175 300 (5,070) 484 580
Interest income (expense).................. 220 158 167 137 91 96
Income (loss) before taxes................. (2,737) 333 467 (4,933) 575 676
Income tax benefit......................... -- -- -- 420 170 220
------- ------ ------ ------- ------ -------
Net income (loss)........................ $(2,737) $ 333 $ 467 $(4,513) $ 745 $ 896
======= ====== ====== ======= ====== =======
Net income (loss) per share.............. $ (0.35) $ 0.04 $ 0.06 $ (0.54) $ 0.08 $ 0.09
======= ====== ====== ======= ====== =======
Weighted average number of shares
outstanding.............................. 7,907 8,170 8,184 8,308 9,621 10,121
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUE
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
License.................................. 85% 85% 84% 83% 75% 77%
Service and other........................ 15 15 16 17 25 23
------ ------ ------ ------- ------ -------
Total Revenue.......................... 100 100 100 100 100 100
------ ------ ------ ------- ------ -------
Costs and expenses
Sales and marketing...................... 62 58 55 53 48 46
Research and development................. 21 22 21 20 28 30
General and administrative............... 13 11 12 11 9 9
Amortization............................. -- 4 4 3 6 6
Acquired in process research and
development............................ 132 -- -- 115 -- --
------ ------ ------ ------- ------ -------
Total costs and expenses............... 228 95 92 202 91 91
------ ------ ------ ------- ------ -------
Income (loss) from operations.............. (128) 5 8 (102) 9 9
Interest income (expense).................. 10 5 5 3 2 2
------ ------ ------ ------- ------ -------
Income (loss) before taxes................. (118) 10 13 (99) 11 11
Income tax benefit......................... -- -- -- 8 3 3
------ ------ ------ ------- ------ -------
Net income (loss).......................... (118)% 10% 13% (91)% 14% 14%
====== ====== ====== ======= ====== =======
</TABLE>
19
<PAGE> 21
LIQUIDITY AND CAPITAL RESOURCES
As of October 31, 1997, the Company had $1.0 million in cash and cash
equivalents. Net cash provided by operating activities was $716,000 and $403,000
in fiscal 1996, fiscal 1997, respectively. Net cash used in operating activities
was $340,000 and $79,000 in fiscal 1995 and the first six months ended October
31, 1997, respectively.
Net cash used in investing activities was $277,000, $1,859,000, $15.1
million and $3.0 million in fiscal 1995, fiscal 1996, fiscal 1997 and the six
months ended October 31, 1997, respectively. During fiscal 1996, fiscal 1997,
and the six months ended October 31, 1997, the Company purchased (sold)
marketable securities of $1.5 million, $5.7 million, and $(4.3) million
respectively. The Company used $8.6 million in the acquisitions of the EBU and
Compact in fiscal 1997 and $676,000 (net of cash acquired) in the acquisition of
Boulder in the first six months of fiscal 1998.
Capital expenditures, consisting primarily of purchases of computer
equipment, were $277,000, $400,000 and $811,000 in fiscal 1995, 1996 and 1997,
respectively and $676,000 in the six months ended October 31, 1997. The Company
expects that purchases of computer equipment will increase as the Company's
employee base grows.
Net cash provided by financing activities includes proceeds from the
issuance of Common Stock and stockholders advances totaling $714,000, $11.8
million and $120,000, in fiscal 1995, 1996 and 1997, respectively, and $119,000
in the six months ended October 31, 1997. In addition, during fiscal 1997 the
Company borrowed $4.2 million on its secured line of credit with a financial
institution which was used primarily as part of the cash payment for the
acquisitions. During the six months ended October 31, 1997, the Company repaid
$2.3 million on its line of credit.
As of October 31, 1997, the Company had working capital of $3.1 million.
The Company also has available an unused portion of a secured line of credit
with a financial institution at an interest rate varying from a minimum of 2%
below the Broker Call Rate to a maximum equaling the Broker Call Rate. The line
of credit is collateralized by marketable securities owned by the Company. As of
October 31, 1997, $1.9 million was outstanding under the line of credit with
approximately $30,000 available for borrowing on this line of credit. The total
funds that may be available for borrowing may vary as the market value of the
underlying securities varies. The Company intends to use a portion of the net
proceeds from this offering to repay in full the indebtedness under the line of
credit. The Company believes that the available funds, cash flows from
operations and the net proceeds of this offering will be sufficient to meet its
anticipated cash needs for working capital and capital expenditures for at least
the next twelve months. Thereafter, if cash generated from operations is
insufficient to satisfy the Company's liquidity requirements, the Company may
seek additional funds through equity or debt financing. There can be no
assurance that additional financing will be available or that, if available,
such financing will be on terms favorable to the Company.
ACQUISITIONS. On July 24, 1996, the Company acquired the EBU for $5.6
million in cash. The acquisition was accounted for as a purchase, and the
financial results of the EBU have been included in the accompanying consolidated
financial statements since the date of the acquisition.
On April 9, 1997, the Company acquired all of the outstanding capital stock
of Compact for $3.0 million in cash and 1,272,728 shares of the Company's Common
Stock. The acquisition was accounted for as a purchase and the financial results
of Compact have been included in the accompanying consolidated financial
statements since the date of the acquisition.
On August 11, 1997, the Company acquired Boulder by the merger of Boulder
with and into the Company, in consideration for $743,000 in cash and 108,146
shares of the Company's Common Stock. The acquisition was accounted for as a
purchase, and the financial results of Boulder have been included in the
accompanying consolidated financial statements since the date of the
acquisition.
EFFECTS OF INFLATION
To date, inflation has not had a material impact on the Company's
consolidated financial results.
20
<PAGE> 22
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, SFAS No. 128 "Earnings Per Share" was issued by the
Financial Accounting Standards Board. SFAS 128 specifies modifications to the
calculation of earnings per share from that currently used by the Company. Under
SFAS 128, "basic earnings per share" will be calculated based upon the weighted
average number of common shares actually outstanding, and "diluted earnings per
share" will be calculated based upon the weighted average number of common
shares outstanding and other potential common shares if they are dilutive. SFAS
128 is effective for the Company's third quarter of fiscal 1998 and will be
adopted at that time. Prior periods will be restated. Had the Company determined
earnings per share in accordance with SFAS 128, basic earnings (loss) per share
for fiscal 1995, 1996, 1997 and the first six months of fiscal 1998 ended
October 31, 1997 would have been $(0.06), $0.21, $(0.83) and $0.18,
respectively, and diluted earnings per share would have been $(0.06), $0.19,
$(0.81) and $0.17, respectively.
On May 1, 1996, the Company adopted SFAS No. 123 "Accounting for
Stock-Based Compensation." This statement permits a company to choose either a
new fair value based method of accounting for its stock-based compensation
arrangements or to comply with the current APB Opinion 25 intrinsic value based
method adding pro forma disclosures of net income and earnings per share
computed as if the fair value based method had been applied in the financial
statements. The Company has adopted SFAS 123 by retaining the APB Opinion 25
method of accounting for stock-based compensation with annual pro forma
disclosures of net income and earnings (loss) per share.
SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," are
effective for the year ended April 30, 1999. The Registrant does not believe
these statements will have a material impact on its financial statements.
YEAR 2000 ISSUES
The Company is evaluating Year 2000 issues and their potential impact on
its information systems and computer technologies. All evaluation costs will be
expensed as incurred. Year 2000 issues are not expected to have a significant
impact on the Company's ongoing results of operations.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" which are not historical are
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements represent the Company's present
expectations or beliefs concerning future events. The Company cautions that such
statements are qualified by important factors that could cause actual results to
differ materially from those in the forward looking statements including those
factors identified in "Risk Factors." Results actually achieved thus may differ
materially from expected results included in these statements.
21
<PAGE> 23
BUSINESS
Ansoft Corporation ("Ansoft" or the "Company") develops, markets and
supports electronic design automation ("EDA") software based on fundamental
electromagnetic principles. The Company's software is used by engineers in the
design of high performance electronic devices and systems, such as cellular
phones, communications systems, computer circuit boards and motors. As the
marketplace demands higher levels of system performance and miniaturization, the
need to model accurately the electromagnetic interaction in communications,
computer devices and electromechanical components and systems is becoming
increasingly important, yet traditional EDA tools do not provide accurate
modeling of electromagnetic interaction. By using the Company's software,
companies can more easily predict electromagnetic interaction in such systems
and components, thus reducing time-to-market and simultaneously lowering design
and manufacturing costs. The Company's products are used by design engineers in
a wide range of industries, particularly the rapidly evolving wireless
communications and RF (radio frequency) markets as well as the semiconductor,
computer, automotive and consumer electronics industries.
INDUSTRY BACKGROUND
In recent years, engineers have used EDA software to automate the
previously manual, time-consuming and error-prone design process, resulting in
dramatic increases in productivity and efficiency. EDA software can be used in
each of the three phases of the electronic design process: Logic Design and
Synthesis, which provides an outline of the system's overall architecture;
Functional Design and Analysis, which encompasses the specification of desired
functionality, functional design, simulation and analysis; and Physical Design
and Verification, which involves the creation of physical layout (i.e.,
placement and routing) and verification that the design meets required
specifications.
As the marketplace demands higher levels of system performance and
miniaturization, the need to model accurately the electromagnetic interaction in
communication and computing devices and electromechanical components is becoming
increasingly important. The design requirement to fit more devices and
interconnections into smaller spaces results in increased electromagnetic
interaction. Moreover, high performance systems, with frequencies of
approximately 500 MHz and beyond, exhibit a high level of electromagnetic
interaction causing the degradation of the quality of electrical signals. In
addition, the electromagnetic radiation emitted by electronic products is
regulated by the Federal Communications Commission ("FCC") and equivalent
regulatory bodies in Europe and Japan, and commercialization of these products
is contingent upon meeting government-specified electromagnetic compatibility
requirements. These problems are exacerbated by time-to-market pressures and the
need to reduce design and development costs.
While traditional EDA tools have become more sophisticated, they lack the
requisite degree of precision in modeling electromagnetic interactions in
components and systems. As a result, the current process for designing and
manufacturing wireless and electronic components and systems is often iterative,
time-consuming and inaccurate. Designs are generated, devices and systems are
developed, prototypes are manufactured, performance is measured and assessed and
designs are then refined to meet the original performance specifications. This
entire process is typically repeated a number of times, lengthening the design
process, increasing costs and resulting in lost market opportunities.
THE ANSOFT SOLUTION
The Company's software products allow design engineers to model component
level and system level electromagnetic interaction which the Company believes is
crucial to the effective design of electronic systems and components. The
Company's products apply electromagnetic principles, derived from Maxwell's
Equations, to more accurately model electromagnetic interaction. By using Ansoft
software products to analyze electromagnetic interaction, the Company believes
that end users of its products are able to reduce the time-to-market for their
products, lower the risks of design failure and eliminate costly and
time-consuming product redesign. Ansoft's software products may be used as an
independent design platform or integrated with complementary EDA tools within a
customer's existing design environment. The Company's research and development
team has
22
<PAGE> 24
broad expertise in electromagnetic simulation, electrical engineering, applied
mathematics and software development, enabling Ansoft to continue to advance its
electromagnetics-based EDA software.
The following diagram illustrates the phases of design in which the
Company's electromagnetics-based EDA software is used in the high frequency
(HF), signal integrity (SI) and electromechanical (EM) markets.
[Diagram illustrates three phases of electronic design process, representative
applications and representative industries for such applications.]
ANSOFT STRATEGY
Ansoft's objective is to become a leading worldwide supplier of EDA
software. Using its proprietary electromagnetics technology as a primary
competitive advantage, the Company pursues its objective through the following
strategies:
Leverage Expertise in Electromagnetic Analysis. The Company continually
seeks to develop new technologies and design new products and interfaces which
leverage the Company's expertise in electromagnetic modeling and its focused
team of research and development engineers. For example, the Company has applied
its technology expertise to solve high frequency modeling and device design
issues confronting wireless communications engineers.
Capitalize on Growing Need for Electromagnetic Analysis. Ansoft seeks to
capitalize on the increased need in the marketplace for the accurate modeling of
electromagnetic interaction. More accurate modeling of electromagnetic
interaction is becoming increasingly critical as compact electronic and
electromechanical components and systems operate at higher speeds and with
greater complexity.
Expand Broad Range of Product Applications. The Company offers products
which address a wide range of design problems including electromagnetic
interference in communications industries, IC packaging and signal integrity
issues in the semiconductor and computer industries, and electromagnetic
performance and yield issues in the automotive and consumer electronics
industries. The Company continually seeks to develop new applications and
product enhancements, as well as new interfaces for its existing products.
23
<PAGE> 25
Integrate with Multiple Design Environments. Ansoft's software products
may be used as independent design platforms or integrated with complementary EDA
tools within a customer's existing design environment. Ansoft participates in
industry standardization efforts and supports a wide range of Unix-based
workstations and personal computers running Microsoft Windows 95 and Windows NT.
Focus on Customer Service. The Company focuses on providing worldwide
customer service to achieve a high degree of customer satisfaction and provides
a wide range of support services to maximize the success of its tools in the
customer's design environment. The Company offers on-site and in-house training
programs and on-line and telephone support for its customers.
PRODUCTS
The Company's high-frequency ("HF") software enables users to design RF
ICs, antenna and radar systems and microwave components. The Company's signal
integrity ("SI") software enables users to design computer interconnects, IC
Packaging structures and electronic systems by accurately capturing the
degradation in signal quality due to higher clock speeds and smaller physical
dimensions. The Company's Maxwell Eminence software combines both HF and SI
functionality. The Company's electromechanical ("EM") software products enable
designers of electromechanical components and systems to optimize the electrical
performance of their designs while increasing manufacturing yields. Ansoft
products are available for Unix-based workstations and personal computers
running Microsoft Windows 95 and Windows NT.
The following table sets forth each of the Company's primary products:
[Products chart depicting primary software products of the Company, date of
first shipment and date of last release]
24
<PAGE> 26
Ansoft HF Software
Maxwell Strata. This product enables the design of RF ICs, MMICs
(Monolithic Microwave Integrated Circuits), and planar antennas for customers in
the communications markets. The product is priced at $29,900 stand-alone and
$19,900 if bundled with another Ansoft product.
Ansoft HFSS (High-Frequency Structure Simulator). Ansoft HFSS enables
engineers to compute functional models and expected characteristics for passive
devices, particularly RF and wireless components such as couplers,
high-frequency filters and antennas. The Company sells the latest version of
this product, Ansoft HFSS 5.0, worldwide through its direct sales force and its
distributors. The Company continues to supply HP with HFSS 4.0 in accordance
with the terms of the HP Agreement which expired in January 1997 and has not
been renewed. HP has the right to sell HFSS 4.0 through January 1998. The U.S.
list price of Ansoft HFSS 5.0 is $41,900.
Serenade. This software suite provides integrated design support for
microwave, RF and lightwave circuit designs. The software supports schematic,
circuit analysis and layout capabilities concurrently. The Serenade suite
complements Ansoft HFSS and Strata, allowing users to include rigorous analysis
of electromagnetic coupling effects within their circuit analysis. The U.S. list
price of this product suite ranges from $19,900 to $39,900.
Ensemble. This product offers similar but reduced levels of functionality
as Maxwell Strata and is focused on the needs of designers of printed circuit
antennas. The U.S. list price of this product is $16,500.
Maxwell Eminence
This product combines the functionality of the Company's HF and SI products
to enable designers of wireless communication systems to design RF components
and sub-systems and to evaluate the interaction between the digital and RF
portions of communications systems. This product allows system designers to
model critical path PCB emissions, evaluate component level electromagnetic
interference and to study shielding effectiveness enabling them to design for
FCC and other regulatory guidelines proactively. The U.S. list price of this
product is $64,900.
Ansoft SI Software
Maxwell SI 2D and Maxwell SI 3D. These products import interconnect
geometry from design databases and creates device models in HSPICE (Meta
Software), PSpice (MicroSim), or DF/SigNoise (Cadence) formats. These models
accurately capture the degradation in signal quality due to higher clock speeds
and smaller physical dimensions. The U.S. list price of each of these products
is $19,900.
Maxwell Spicelink. This product creates physical models of IC Packaging
structures in industry standard JEDEC (Joint Electronic Device Engineering
Committee) format and creates SPICE models for these devices. The package, which
includes a schematic capture tool and circuit simulation tool, allows system
designers to study the effect of connectors, packages and cables on system
performance. The U.S. list price of this product is $34,900.
Ansoft EM Software
Maxwell 2D Field Simulator. This product performs electromagnetic field
simulation at the design stage based on the geometry and material properties of
the component. Electromagnetic field simulation provides designers with critical
device parameters such as forces, torques, saturation effects, inductance,
capacitance and power losses. The parametrics capability of the two-dimensional
field simulator allows the user to easily perform "what-if" analysis by
automatically varying physical dimensions, material properties and excitation
levels. By evaluating field solutions and device characteristics, the designer
is able to determine where material substitutions and geometry changes can be
made to reduce production costs while increasing device performance. The U.S.
list price of this product ranges from $2,900 to $13,900.
25
<PAGE> 27
Maxwell 3D Field Simulator. This product provides similar electromagnetic
field simulation of devices as the Maxwell 2D Field Simulator for applications
that require three dimensional analysis. The U.S. list price for this product
ranges from $14,900 to $34,900 and includes Maxwell 2D Field Simulator.
EMSS. This product allows devices designed at the component level in
Maxwell 2D and 3D Field Simulators to be simulated on a larger system level by
coupling the electromagnetic behavior of a device with electrical and mechanical
drive and load components, and permits the critical evaluation of both transient
and steady state system level behavior. The integrated solution is used to study
issues such as the effects of non-linear magnetic components on system level
behavior, source and load transients, induced voltages and currents, as well as
position and velocity of moving parts. The U.S. list price of this product
ranges from $19,900 to $24,900.
EMAS. This product is a two- and three-dimensional field simulation tool
for engineers requiring comprehensive analysis capability. EMAS complements EMSS
and the Maxwell Field Simulators by bridging the gap between electromagnetic,
structural, and thermal analysis and by permitting customers to analyze
structural and thermal characteristics concurrently in order to avoid
unacceptable levels of heat generation. The U.S. list price of this product
ranges from $37,000 to $65,000.
ANSOFT TECHNOLOGY
Electrical components and systems exhibit behavior determined by
fundamental electromagnetic forces. Electromagnetic fields can be analyzed by
using a set of equations known as Maxwell's Equations, derived by the physicist
James Clerk Maxwell in 1869. While Maxwell's Equations describe electromagnetic
phenomena completely, they are difficult to apply to complex, real-life
problems. Traditional EDA tools rely on circuit theory to approximate
electromagnetic behavior by reducing designs to simple systems of large isolated
components where electrical signs vary, or "switch," relatively slowly. However,
as frequencies and structural complexities increase, the amount of
electromagnetic interaction in a system rises dramatically. The Company believes
that software based on circuit theory cannot model such systems with the
requisite degree of accuracy.
Ansoft has a team of research engineers focused on the mathematical and
physical underpinnings of the Company's simulation algorithms. Dr. Zoltan
Cendes, a founder of the Company, serves as the technical leader of the group.
By virtue of over 15 years of research and development by Dr. Cendes prior to
the Company's inception in 1984, and by its internal research and development
staff thereafter, Ansoft has pioneered the following technologies: automatic and
adaptive convergence to solutions, asymptotic waveform evaluation for spectral
domain solutions, transfinite elements, basis evaluation state-space techniques
and fast multipole acceleration algorithms. As a result of the work of Dr.
Cendes and the Ansoft research and development team, the Company's technology
applies Maxwell's Equations to complex, real-life problems in the following
three stages:
Preprocessing. The first stage is preprocessing and consists of building a
computer model of the device to be simulated. This is accomplished by creating a
model of the device geometry, using either Ansoft's solid modeling system or
other mechanical CAD systems, and then defining the physical properties (such as
material, voltage, current and charge) of the device components.
Solution. The second stage is the solution process, which involves
calculating electromagnetic fields for the devices generated during the
preprocessing stage. These procedures provide accurate and stable solutions for
field problems, inductance and capacitance calculations used in signal integrity
simulation of digital components and wide-band frequency response of
high-frequency devices. Since Ansoft's solution procedure is fully automatic and
essentially invisible to the user, analysis involving this high level of
sophistication can be used by designers with varying levels of experience.
Post-processing. The third stage is post-processing, which consists of
applying additional proprietary procedures to analyze the results from the
second stage in light of the specific design environment. Examples of these
procedures are the "transfinite element method," which provides accurate
s-parameters for high-frequency engineers, and the basis evaluation state-space
technique, which is used to couple the electromagnetic devices with electronic
circuits and mechanical loads.
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<PAGE> 28
PRODUCT DEVELOPMENT
The Company continually seeks to design and develop new technologies,
products and interfaces based on its core electromagnetic expertise. This effort
includes releasing improved versions of its products on a regular basis as well
as developing new products. The Company assigns an interdisciplinary team of
personnel from research and development, software development, documentation,
quality assurance, customer support and marketing to each product development
project. Ansoft develops cooperative relationships with major customers with
respect to beta-testing its new products or enhancements and implementing
suggestions for new product features. The Company also maintains cooperative
relationships with the major hardware vendors on which the Company's products
operate. The Company believes that its team approach and cooperative
relationships allow it to design products that respond on a timely basis to
emerging trends in computing, graphics and networking technologies.
As of October 31, 1997, the Company's product development group consisted
of 74 employees. The Company seeks to hire experts in the fields of
electromagnetic engineering, high speed circuit simulation, applied mathematics
and software development.
During fiscal 1996, 1997 and the six month period ended October 31, 1997,
research and development expenses were $1.8 million, $3.0 million and $1.9
million, respectively. See also "Management's Discussion and Analysis--Liquidity
and Capital Resources--Acquisitions."
SALES AND MARKETING
Ansoft markets and sells its products worldwide through its direct sales
force and distributors. The Company hires application engineers with significant
industry experience who can analyze the needs of its customers and gain
technical insight into the development of future products and enhancements to
existing products. The Company's application engineers work with the direct
sales force to provide on-site support during critical stages of the user's
benchmark, evaluation and implementation processes. The Company generates sales
leads through customer referrals, advertising in trade publications and on the
World Wide Web. In addition, the Company participates in industry trade shows
and organizes seminars to promote and expand the adoption of its products.
Direct. In North America, the Company maintains sales and support offices
in Arizona, Northern and Southern California, Florida, Massachusetts, Michigan,
New Jersey, Ohio, Pennsylvania, Texas, Wisconsin, and a telemarketing sales
group operating from its Pittsburgh headquarters. In Asia, the Company maintains
direct sales and support offices in Japan, China and Singapore. In Europe, the
Company maintains sales and support offices in England, Germany and Italy. As of
October 31, 1997, the Company had a direct sales force of 30 representatives,
supported by 60 employees in application engineering, marketing and sales
administration.
Distributors and HP. In 1989, the Company entered into a distribution
arrangement with Hewlett-Packard Corporation ("HP") under which HP formerly
distributed the Company's HFSS 4.0 product on an exclusive basis (the "HP
Agreement"). The HP Agreement has since expired, although HP retains the right
to distribute HFSS 4.0 through January 1998. The Company currently sells the
latest version of its HFSS product, Ansoft HFSS 5.0, through its own sales force
and other distributors. During fiscal 1996, 1997 and the six month period ended
October 31, 1997, revenue from HP accounted for approximately 13%, 12% and 6%,
respectively, of the Company's total revenue. The Company expects that HP will
account for a decreasing percentage of its total revenues over the next three
months. Management believes that the expiration of the HP agreement will not
have a material adverse effect on the Company's future financial condition or
results of operations.
The Company also has distribution agreements with various international
distributors. The Company supports its distributors and their customers with
technical, sales and management personnel.
CUSTOMERS
The Company has significant breadth in its installed base with over 500
customers in the communications, semiconductor, automotive/industrial, computer,
consumer electronics and defense/aerospace industries. No single customer in the
Company's installed base accounted for more than 10% of total revenue within any
of the
27
<PAGE> 29
past three fiscal years. The following are customers by industry from whom the
Company has received more than $50,000 in revenues in either fiscal 1997 or the
first six months of fiscal 1998.
<TABLE>
<S> <C> <C>
COMMUNICATIONS SEMICONDUCTOR AUTOMOTIVE/INDUSTRIAL
-------------- ---------------- ---------------------
Andrew Corporation Amkor Electronics ABB
Celwave Anam Semiconductor Chrysler
GEC-Marconi Applied Materials Cutler Hammer
Generaldirektion PTT Conductus Delphi Packard
Hughes ETRI Dupont
Italtel S.p.A. Harris Semiconductor Eaton
Lucent Technologies Intel Ford Motor
Metawave Communications LG General Motors
Motorola Molex Hyundai
Pacific Antenna Communications Teradyne Nissan
Rockwell Texas Instruments Robert Bosch
Siemens Wolff Controls
StarFire Antenna
Wave Trace
COMPUTER CONSUMER ELECTRONICS DEFENSE/AEROSPACE
- -------- ------------------- -----------------
Fujitsu Daewoo Electronics AlliedSignal
Hitachi Daido Tokushukokk Australian Dept. of Defense,
Honeywell General Electric Navy
IBM Mitsubishi Bell Helicopter
NEC Nikon Boeing
Seagate Phillips Defense Science Org.
Tektronix Sharp Jet Propulsion Laboratory
Sony Lawrence Livermore National Lab.
Toshiba Lockheed-Martin
Northrop Grumman
Raytheon
TRW
US Naval Research Laboratory
</TABLE>
CUSTOMER SERVICE AND SUPPORT
Sales of the Company's software include one year of customer support
services; thereafter annual one year maintenance contracts may be purchased.
Customer support services include on-line and telephone support for design
engineers and on-site and in-house training on all products. Customers with
maintenance agreements receive all product enhancement releases without
additional charge. Product upgrades that add significant new functionality are
provided to customers for an additional fee.
The Company offers a variety of training programs for customers ranging
from introductory level courses to advanced training.
COMPETITION
The EDA software industry is highly competitive and is characterized by
continuing advances in products and technologies. In general, competition comes
from major EDA vendors, many of which have a longer operating history,
significantly greater financial, technical and marketing resources, greater name
recognition and a larger installed customer base than the Company. These
companies also have established relationships with current and potential
customers of the Company. The Company competes directly with certain major EDA
vendors and privately-held companies which also provide products based on
electromagnetic principles derived from Maxwell's Equations. There can be no
assurance that the major EDA vendors and other EDA companies will not expand and
develop new products in the electromagnetics-based EDA market. The Company also
competes, on a limited basis, with the internal development groups of its
existing and potential customers, many
28
<PAGE> 30
of whom design and develop customized design tools for their particular needs.
In addition, the EDA industry has become increasingly concentrated in recent
years as a result of acquisitions, and further concentration within the EDA
industry could result in increased competition for the Company. The Company's
software products currently compete with certain software offerings from
Hewlett-Packard Corporation ("HP"). The Company entered into a distribution
arrangement with HP under which HP formerly distributed the Company's HFSS 4.0
product on an exclusive basis (the "HP Agreement"). The HP Agreement has since
expired, although HP retains the right to distribute HFSS 4.0 through January
1998. HP has publicly announced the introduction of a follow-on product called
HP HFSS 5.0. The Company currently sells the latest version of its HFSS product,
Ansoft HFSS 5.0, through its own sales force and other distributors. There can
be no certainty that the Company will be able to compete successfully against
HP, or that any failure to compete successfully with the introduction of HP's
own HFSS product will not have an adverse impact on the Company's operations and
prospects. The failure of the Company to compete successfully against current
and future competitors would have a material adverse effect on the Company's
business, operating results and financial condition. Ansoft believes that its
current products compete effectively on the basis of product functionality,
solution speed and accuracy, reliability, price, ease of use and technical
support for applications which require accurate modeling of electromagnetic
interaction. However, there is no assurance that the Company will not face
competitive technologies that could hinder its future prospects.
PROPRIETARY RIGHTS
The Company is heavily dependent on its proprietary software technology.
The Company relies on a combination of non-competition and confidentiality
agreements with its employees, license agreements, copyrights, trademarks and
trade secret laws to establish and protect proprietary rights to its technology.
The Company does not hold any patents. All Ansoft software is shipped with a
security lock which limits software access to authorized users. In addition, the
Company does not license or release its source code. Effective copyright and
trade secret protection of the Company's proprietary technology may be
unavailable or limited in certain foreign countries.
Compact Software, Maxwell(R), Harmonica(R), ParICs(R) and Serenade(R) are
registered United States trademarks of Ansoft.
EMPLOYEES
As of October 31, 1997, the Company had a total of 176 employees, including
74 in research and development, 90 in sales, marketing, and customer support
services and 12 in administration. None of the Company's employees is
represented by a collective bargaining agreement, nor has the Company
experienced any work stoppage. The Company considers its relations with its
employees to be good. Many of the Company's employees are highly skilled, and
there is no assurance that the Company will be able to attract and retain
sufficient technical personnel in the future.
LITIGATION
The Company is not a party to any litigation and is not aware of any
threatened litigation, unasserted claims or assessments that could have material
adverse effect on the Company's business, operating results or financial
condition.
FACILITIES
The Company occupies approximately 18,000 square feet of space at its
headquarters in Pittsburgh, Pennsylvania under a lease expiring in 1998. The
current annual base rent is approximately $286,000. The Company also leases
sales and support offices in California, Colorado, New Jersey, Wisconsin, Europe
and Japan. The Company's current aggregate annual rental expenses for these
additional facilities is approximately $345,000. Ansoft believes that its
existing facilities are adequate for its current needs and that suitable
additional space will be available when needed.
29
<PAGE> 31
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning each of the
directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ----------------------------------- ---- --------------------------------------------------
<S> <C> <C>
Zoltan J. Cendes, Ph.D............. 51 Chief Technology Officer and Chairman of the Board
Nicholas Csendes................... 53 President, Chief Executive Officer and Director
Padmanabhan Premkumar.............. 34 Vice President-Marketing
Jack Parkes........................ 38 Vice President-Engineering
Anthony L. Ryan.................... 29 Chief Financial Officer
Thomas A.N. Miller................. 49 Director
Ulrich L. Rohde, Ph.D.............. 57 Director
John N. Whelihan (1)............... 53 Director
Jacob K. White, Ph.D.(1)........... 38 Director
</TABLE>
- ---------
(1) Member of the Compensation and Audit Committees.
Dr. Zoltan J. Cendes is a founder of Ansoft and has served as Chairman of
the Board of Directors of the Company and its chief research scientist since its
formation in 1984. Since 1982, Dr. Cendes has been a university professor in
electrical and computer engineering at Carnegie Mellon University. Dr. Cendes
has lectured throughout North America, Europe and Asia on the topic of
electromagnetics and finite element analysis and has published over 100
publications on these topics. Dr. Cendes directs the research efforts of Ansoft.
Nicholas Csendes is a founder of Ansoft and has served as President, Chief
Executive Officer and Secretary since 1992 and a director since 1984. Mr.
Csendes was a senior investment officer with Sun Life of Canada, a major
international financial institution focusing on the sale of life insurance and
retirement products ("Sun Life"), for over 15 years. Since 1985, Mr. Csendes has
been involved with various public and private companies including a
publicly-held interactive software company, and has been an officer, director
and a controlling stockholder of American Banner Resources, Inc. ("ABR"), a
privately-held holding company with various interests in real estate and public
and private securities, including a 24% beneficial ownership interest in Ansoft
as of October 31, 1997.
Padmanabhan Premkumar joined Ansoft in 1989. From 1991 to 1995, Mr.
Premkumar was in charge of Ansoft's software development programs as Vice
President-Development. Since 1995, Mr. Premkumar has been Vice
President-Marketing, responsible for product planning, marketing and
commercialization of existing software product enhancements and the commercial
development of new products. Prior to joining Ansoft, Mr. Premkumar was a
research associate in the Robotics Laboratory at the University of Toledo.
Jack Parkes joined Ansoft in 1990. In May 1997, Mr. Parkes was appointed
Vice President-Engineering. Mr. Parkes joined Ansoft in 1990 with over 10 years
of experience in electrical engineering. Prior to joining Ansoft, Mr. Parkes was
a senior design and development engineer with Loral Corporation ("Loral") and,
prior to joining Loral, with Texas Instruments, Inc.
Anthony L. Ryan joined Ansoft in 1995 as corporate controller. In May 1997,
Mr. Ryan was appointed Chief Financial Officer. From 1991 to 1995, Mr. Ryan
worked as a certified public accountant with KPMG Peat Marwick LLP, an
international accounting firm.
Thomas A.N. Miller is a founder of Ansoft and has served as a director
since 1984 and served as Chief Financial Officer from 1994 to May 1997. From
1989 to 1994, Mr. Miller was an officer, director and controlling stockholder of
Southwest Gas, a privately-held natural gas company which was sold to Enserch
Corporation in 1994. Mr. Miller was a founder of IT Network, Inc. ("ITN"), the
predecessor of Source Media Inc., a publicly-held interactive information
service company and served as Chairman of the Board of ITN from its inception in
30
<PAGE> 32
1988 to 1994, and as chief executive officer of ITN from its inception to
December 1992. Since 1981, Mr. Miller has been President, director and a
controlling stockholder of ABR and its predecessor companies.
Dr. Ulrich L. Rohde became a director of the Company in April 1997 in
connection with Ansoft's acquisition of Compact on April 9, 1997. From 1985 to
1997, Dr. Rohde was the majority shareholder, president and chief executive
officer of Compact and he has over 20 years of expertise in microwave systems
technology. Dr. Rohde was an adjunct professor of electrical engineering at the
University of Florida, Gainesville, and is currently an adjunct professor at
George Washington University. Dr. Rohde has lectured on the topic of microwave
circuit simulation and design throughout North America, Europe and Asia and has
published numerous articles and books on these topics.
John N. Whelihan became a director of the Company in March 1996. Since 1994
Mr. Whelihan has served as Vice President of Sun Life of Canada, a major
international financial institution. Mr. Whelihan is in charge of U.S. private
placements.
Dr. Jacob K. White became a director of the Company in February 1996. Since
1991, Dr. White has been an Associate Professor of electrical engineering and
computer science at the Massachusetts Institute of Technology ("MIT"). From 1987
to 1991, he was an Assistant Professor at MIT.
All directors hold office until the next annual meeting of the stockholders
and until their successors have been elected and qualified. Officers are
appointed by the Board of Directors and serve at the discretion of the Board.
Dr. Zoltan J. Cendes and Mr. Nicholas Csendes are brothers. There are no other
family relationships between any of the directors or executive officers of the
Company.
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<PAGE> 33
EXECUTIVE COMPENSATION
Summary Compensation
The following table summarizes the aggregate cash compensation for services
in all capacities to the Company for the fiscal year ended April 30, 1997 for
the Chief Executive Officer and each executive officer of the Company whose
total annual salary and bonus exceeded $100,000 during the fiscal year ended
April 30, 1997, and compensation received by each such individual for the
Company's two prior years (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
AWARDS
ANNUAL COMPENSATION ----------------------
----------------------- SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)
- ---------------------------------------------- ---- ---------- --------- ----------------------
<S> <C> <C> <C> <C>
Nicholas Csendes.............................. 1997 $ 120,000 $ 4,800 --
President and Chief Executive Officer 1996 120,000 -- --
1995 120,000 -- --
Zoltan J. Cendes, Ph.D........................ 1997 120,000 4,800 --
Chairman of the Board and Chief Technology 1996 108,333 -- --
Officer 1995 80,000 -- 200,000
</TABLE>
Option Grants and Exercises
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held, on April 30, 1997,
by each of the Named Executive Officers:
AGGREGATED OPTION EXERCISES DURING FISCAL 1997
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FISCAL YEAR OPTIONS/SARS AT FISCAL YEAR
EXECUTIVE OFFICER END (#) END ($)(1)
- --------------------------------------------- --------------------------- ---------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C>
Nicholas Csendes............................. -- --
Zoltan J. Cendes............................. 155,200/120,000 $225,000/$0
</TABLE>
- ---------
(1) The closing price for the Company's Common Stock as reported by The Nasdaq
National Market on April 30, 1997 was $4.75. Value is calculated on the
basis of the difference between the exercise price and $4.75, multiplied by
the number of shares of Common Stock underlying the option.
The Company did not grant any options to the Named Executive Officers
during the fiscal year ended April 30, 1997.
BOARD COMMITTEES
Compensation Committee. The Board has a Compensation Committee, consisting
of Mr. Whelihan and Dr. White, each of whom is an independent director. The
Compensation Committee is responsible for reviewing and approving matters
involving the compensation of directors and executive officers of the Company,
periodically reviewing management development plans, administering the Company's
incentive compensation plans and making recommendations to the full Board on
these matters. The Compensation Committee did not meet during fiscal 1997 and
has met once in fiscal 1998.
Audit Committee. The Board has an Audit Committee comprised of Mr.
Whelihan and Dr. White. The Audit Committee's duties include recommending to the
Board of Directors the firm of independent accountants to audit the Company's
consolidated financial statements, reviewing the scope and results of the
independent auditors' activities and the fees proposed and charged therefor,
reviewing the adequacy of internal controls and reviewing the scope and results
of internal audit activities, and reporting the results of the committee's
activities to the full Board. The Audit Committee met once during fiscal year
1997.
32
<PAGE> 34
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Jacob K. White and John N. Whelihan serve as members of the Compensation
Committee of the Board of Directors. Neither Dr. White nor Mr. Whelihan is or
has been an officer or employee of the Company.
On September 16, 1997, the Company entered into a Consulting Agreement (the
"Agreement") with Dr. Jacob White pursuant to which Dr. White has agreed to
develop a computer program for use within the Company's products and under which
the Company may be obligated to pay Dr. White to a maximum of $25,500 plus
related expenses. Pursuant to the Agreement, any resulting software is to be
commercialized and fully supported by the Company. Further, all applicable
copyrights, patents, technology and intellectual property developed under this
Agreement are transferred on an exclusive basis to the Company, who will own
them and have the unlimited, exclusive and unimpeded rights to commercialize the
work.
DIRECTOR COMPENSATION
Directors receive $1,000 per meeting which they attend and are reimbursed
for all reasonable expenses incurred by them in attending meetings of the Board
of Directors and its committees. At the closing of the Company's initial public
offering in April 1996, Dr. White and Mr. Whelihan each received an option to
purchase 30,000 shares of Common Stock of the Company at an exercise price per
share equal to $8.50, the initial offering price per share. Such options are
subject to vesting over a five-year period commencing from the date of grant. On
September 10, 1996, the Board of Directors (Dr. White and Mr. Whelihan
abstaining) approved the repricing of the exercise price on those stock options
held by Dr. White and Mr. Whelihan from $8.50 to $6.00.
EMPLOYEE STOCK OPTION PLANS
1988 Stock Option Plan. The Company's 1988 Stock Option Plan (the "1988
Plan") provides for grants of both "incentive stock options" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and "non-qualified stock options" which are not eligible for preferential
treatment under Section 422 of the Code. The purposes of the 1988 Plan are to
encourage ownership of the Common Stock of the Company by employees in order to
attract employees, induce them to remain in the employ of the Company and
provide additional incentive for such employees to promote the success of the
Company.
The term of the options granted under the 1988 Plan has generally been
three years, although the 1988 Plan permits the grant of options which may
remain outstanding for up to ten years from the date of grant. If an employee
who has been granted an option ceases to be an employee of the Company for any
reason other than death, disability or termination by the Company for cause,
such employee may exercise that option only during the three-month period
following the date of termination, and only to the extent that the option was
exercisable on the date of termination. An employee of the Company whose
employment is terminated due to death or disability may exercise outstanding
options up to six months following the date of such termination to the extent
that such options are exercisable on the date of termination. Options
automatically expire upon termination. of an employee for cause. No option
granted under the 1988 Plan is transferable.
As of October 31, 1997, options to purchase 422,709 shares of the Company's
Common Stock were outstanding under the 1988 Plan. The Company does not expect
to grant any additional options under the 1988 Plan.
1995 Stock Option Plan. The Company's 1995 Stock Option Plan (the "1995
Plan") provides for grants of both "incentive stock options" within the meaning
of Section 422 of the Code and "non-qualified stock options" which are not
eligible for preferential treatment under the Code. The purposes of the 1995
Plan are to attract, retain and reward persons providing services to the Company
and to provide incentive for such persons to contribute to the growth and
profits of the Company in the future.
The 1995 Plan provides that the options shall expire no more than ten years
from the date of grant. If an employee who has been granted an option ceases to
be an employee of the Company for any reason other than termination by the
Company for cause, such employee may exercise that option only during the
three-month period following the date of termination, and only to the extent
that the option was exercisable on the date of
33
<PAGE> 35
termination. Options automatically expire upon termination of an employee for
cause. No option granted under the 1995 Plan is transferable.
The Board of Directors has approved the reservation of up to 1,500,000
shares of Common Stock eligible for issuance under the 1995 Plan.
As of October 31, 1997, options to purchase 816,708 shares of the Company's
Common Stock were outstanding under the 1995 Plan and 669,092 shares of the
Company's Common Stock were reserved and available for future grants under the
1995 Plan.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL AGREEMENTS
Other than the Company's standard form of non-competition and
confidentiality agreement, the Company does not presently have any employment
contracts in effect including any compensatory plans or arrangements resulting
from the resignation, retirement or other termination or change-in-control with
either of the Named Executive Officers or the other executive officers of the
Company. Compensation for the Named Executive Officers and the other executive
officers of the Company is currently set by the Compensation Committee of the
Board of Directors of the Company.
34
<PAGE> 36
CERTAIN TRANSACTIONS
On March 15, 1995, the Company entered into an agreement with ABR, a
principal stockholder of the Company which is controlled by Nicholas Csendes and
Thomas A. N. Miller. This agreement provided for the funding by ABR of the
repurchase obligations that the Company incurred as a result of the Company's
agreement to redeem up to 197,008 shares of Common Stock held by employees of
the Company upon their request between March 15, 1996 and March 15, 1997 for the
initial purchase price paid by such employees plus 10%, or an aggregate amount
of $358,136.90 (assuming all employees were to have exercised their redemption
rights). No such requests for redemption were made. The funding was to have been
provided by ABR purchasing from the Company that number of shares of Common
Stock equal to the number of shares redeemed by Ansoft from the employees at the
same price paid to the employees. The Company believes that the agreement was
made on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties.
On March 15, 1995, ABR purchased 151,500 shares of the Company's Common
Stock for $200,000 of cash and a receivable for the remaining balance of
$103,000, which was paid in full on January 31, 1996. The purchase price of the
foregoing transaction was equal to the fair market value of the Company's Common
Stock on the date of such transaction as determined by the Board of Directors.
On April 30, 1995, Dr. Zoltan Cendes, an officer and director of the
Company, received a non-transferable option to purchase 200,000 shares of the
Company's Common Stock at an exercise price of $5.00 per share, a price at that
time determined by the Board of Directors to be above the fair market value of
the Company's Common Stock. The option provides that the shares vest at a rate
of 40,000 shares per year for five years beginning in fiscal year 1996; however,
the option shall become fully vested upon a change of control of the Company, as
defined in the option agreement. Upon Dr. Cendes' death, vested options as of
such date may be exercised within 90 days. The option, which expires on April
30, 2005, has not been exercised.
In fiscal 1995, certain stockholders, including the Company's principal
stockholders, advanced funds to the Company and the Company issued shares of
Common Stock in consideration for these advances at prices ranging from $1.00 to
$1.27 (the estimated fair market value of the Company's Common Stock at the
dates of the respective advances, as determined by the Board of Directors) as
follows: 1,797,600 shares to ABR for advances of $2,072,000; 651,953 shares to
Nicholas Csendes, an officer and director of the Company, for advances of
$724,551; 651,953 shares to Thomas A. N. Miller, a director and former officer
of the Company, for advances of $724,551; 110,618 shares to Dr. Zoltan Cendes
for advances of $141,027; and 700,000 shares to the Maier Trust for advances of
$734,951.
On April 9, 1997, Dr. Ulrich L. Rohde, a director of the Company, sold 810
shares of common stock of Compact to the Company pursuant to a stock purchase
agreement. Additionally, in the same transaction, Dr. Meta Rohde, the wife of
Dr. Ulrich Rohde, sold 190 shares of common stock of Compact to the Company.
(Hereinafter, Dr. Ulrich Rohde's Compact shares and Dr. Meta Rohde's Compact
shares are collectively referred to as the "Compact Shares".) The Compact Shares
represented all of the issued and outstanding shares of Compact. As
consideration for the Compact Shares, Dr. Ulrich Rohde and Dr. Meta Rohde
received in the aggregate $3,000,000 in cash and 1,272,728 shares of Ansoft
Common Stock.
In connection with the acquisition of the Compact Shares, the Company
entered into a registration rights agreement with Dr. Ulrich Rohde and Dr. Meta
Rohde pursuant to which Dr. Ulrich Rohde and Dr. Meta Rohde, jointly, were given
the right, exercisable at any time after the first anniversary of the
transaction, to make two demands on the Company to register the shares of Ansoft
Common Stock received by them for the Compact Shares. In addition, pursuant to
the registration rights agreement, Dr. Ulrich Rohde and Dr. Meta Rohde were
given the right to register the shares of Ansoft Common Stock received by them
for the Compact Shares whenever the Company proposed to register any of its
securities under the Securities Act (other than pursuant to a registration
statement on Forms S-4 or S-8).
It is the Company's policy that transactions between the Company and its
officers, directors and principal stockholders and their affiliates are approved
by a majority of the Board of Directors, including a majority of the
disinterested directors, and are on terms no less favorable to the Company than
could be obtained from unaffiliated third parties.
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<PAGE> 37
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of October 31, 1997, and as adjusted
to reflect the sale of the Common Stock offered by the Company and the Selling
Stockholders, (i) by each person who is known by the Company to beneficially own
more than five percent of the Company's Common Stock, (ii) by each director of
the Company, (iii) by each of the Named Executive Officers, (iv) by each of the
Selling Stockholders and (v) by all executive officers and directors as a group.
Except as noted, all persons listed below have sole voting and investment power
with respect to their shares of Common Stock, subject to community property laws
where applicable.
<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP OWNERSHIP
PRIOR TO NUMBER AFTER
OFFERING(1) OF OFFERING
---------------------- SHARES --------------------
NUMBER OF BEING NUMBER OF
BENEFICIAL OWNER SHARES PERCENT OFFERED SHARES PERCENT
- -------------------------------------------- ----------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
American Banner Resources, Inc.(2)(3)....... 2,174,100 23.7% -- 2,174,100 18.5%
Thomas A. N. Miller(2)(4)................... 2,949,053 32.1% 200,000 2,749,053 23.4%
Nicholas Csendes(2)(5)...................... 2,944,053 32.1% 200,000 2,744,053 23.4%
Ulrich L. and Meta M. Rohde(2)(6)........... 1,272,728 13.9% 130,000 1,142,728 9.7%
Zoltan J. Cendes(2)(7)...................... 865,818 9.3% 120,000 745,818 6.3%
Linda Rosenson Trustee...................... 215,000 2.3% 50,000 165,000 1.4%
Susan Lisa Elmore Trustee................... 215,000 2.3% 50,000 165,000 1.4%
Maier Family Trust, Residual Fund #2........ 350,000 3.8% 100,000 250,000 2.1%
Jacob K. White(8)........................... 12,000 * -- 12,000 *
John N. Whelihan(9)......................... 18,000 * -- 18,000 *
Padmanabhan Premkumar(2)(10)................ 150,000 1.6 40,000 110,000 *
Jack Parkes(2)(11).......................... 33,000 * 10,000 23,000
Doris I. Wu and Paul Schroeder.............. 96,162 1.1% 50,000 46,162 *
All directors and officers as a group (9
persons)(4)(5)(6)(7)(8)(9)(10)(11)(12).... 6,052,552 63.6% 650,000 5,392,552 44.6%
</TABLE>
- ---------
* Less than 1%.
(1) The information contained in the table above reflects "beneficial
ownership" of the Common Stock within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Unless
otherwise indicated, all shares of Common Stock are held directly with sole
voting and dispositive power.
(2) The business address of the stockholder is Four Station Square, Suite 660,
Pittsburgh, PA 15219
(3) Does not include 774,953 shares held by Thomas A. N. Miller, an officer,
director and controlling stockholder of ABR, or 769,953 shares held by
Nicholas Csendes, also an officer, director and controlling stockholder.
(4) Includes 2,174,100 shares held by ABR, of which Mr. Miller is an officer,
director and controlling stockholder, but excludes 147,000 shares held by
trusts for the benefit of certain family members of Mr. Miller with respect
to which trusts Mr. Miller is not a trustee and disclaims any beneficial
ownership.
(5) Includes 2,174,100 shares held by ABR, of which Mr. Csendes is an officer,
director and controlling stockholder, but excludes 152,000 shares held by
trusts for the benefit of certain family members of Mr. Csendes with
respect to which trusts Mr. Csendes is not a trustee and disclaims any
beneficial ownership.
(6) Dr. Ulrich Rohde and Dr. Meta Rohde share voting power and dispositive
power with respect to all such 1,272,728 shares.
(7) Includes 155,200 shares issuable upon exercise of options exercisable
within 60 days of October 31, 1997.
(8) Includes 12,000 shares issuable upon exercise of options exercisable within
60 days of October 31, 1997.
(9) Includes 12,000 shares issuable upon exercise of options exercisable within
60 days after October 31, 1997. Also includes 6,000 shares jointly owned
with Mr. Whelihan's spouse.
(10) Includes 110,000 shares issuable upon exercise of options exercisable
within 60 days after October 31, 1997.
(11) Consists of 33,000 shares issuable upon exercise of options exercisable
within 60 days after October 31, 1997 (10,000 of which will be exercised
and sold in connection with this offering).
(12) Includes 22,000 shares issuable upon exercise of options by an executive
officer within 60 days after October 31, 1997.
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<PAGE> 38
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $0.01 per share, and 1,000,000 shares of Preferred
Stock, par value $0.01 per share ("Preferred Stock").
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters to be voted on by the stockholders. Subject to preferences that may be
applicable to any outstanding Preferred Stock, the holders of Common Stock are
entitled to receive dividends ratably, if any such dividends are declared by the
Board of Directors, out of funds legally available therefor. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior rights of the holders
of the Preferred Stock then outstanding. There are no redemption or sinking fund
provisions available to the Common Stock. All outstanding shares of Common Stock
are fully paid and non-assessable and the shares of Common Stock to be issued
upon completion of this offering will be fully paid and non-assessable.
As of November 12, 1997, approximately 9,179,769 shares of Common Stock
were outstanding and held of record by approximately 138 stockholders. As of
October 31, 1997, options to purchase an aggregate of 1,239,417 shares of Common
Stock were also outstanding (excluding options to purchase 260,000 shares of
Common Stock not issued pursuant to either the 1988 Plan or the 1995 Plan).
PREFERRED STOCK
The Company is authorized to issue 1,000,000 shares of Preferred Stock. The
Board of Directors is authorized, subject to any limitations prescribed by law,
without further stockholder approval, to issue from time to time such shares of
Preferred Stock in one or more classes or series. Each class or series of
Preferred Stock shall have such number of shares, designations, preferences,
voting powers, qualifications and special or relative rights or privileges as
shall be determined by the Board of Directors, which may include, among other
provisions, dividend rights, voting rights, redemption and sinking fund
provisions, liquidation preferences, conversion rights and preemptive rights.
The stockholders of the Company have granted the Board of Directors
authority to issue the Preferred Stock and to determine its rights and
preferences in order to eliminate delays associated with a stockholder vote on
specific issuances. The issuance of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could, depending on the rights of any series of Preferred Stock issued
and outstanding, have the effect of making it more difficult for a third party
to acquire the Company, discourage a third party from acquiring the Company
and/or deter a third party from paying a premium to acquire a majority of the
outstanding voting stock of the Company. Additionally, depending on the rights
and preferences of any series of Preferred Stock issued and outstanding, the
issuance of Preferred Stock may adversely affect the voting and other rights of
the holders of the Common Stock, including the possibility of the loss of voting
control to others.
The Company has no shares of Preferred Stock outstanding. At present, the
Company has no plans to issue any shares of Preferred Stock.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS
AND DELAWARE LAW
Delaware General Corporation Law
The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203") which, subject to certain exceptions, prohibits a Delaware
corporation, the voting stock of which is generally publicly traded (i.e.,
listed on a national securities exchange or authorized for quotation on an
inter-dealer quotation system of a registered national securities association)
or held of record by more than 2,000 stockholders, from engaging in any business
combination with any interested stockholder for a period of three years
following the date that such stockholder became an interested stockholder,
unless: (i) prior to such date, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder
37
<PAGE> 39
becoming an interested stockholder; (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (x) by persons
who are directors and also officers and (y) by employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer,
or (iii) on or subsequent to such date, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder.
Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and an interested stockholder, (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving an interested stockholder, (iii) subject to certain
exceptions, any transaction which results in the issuance or transfer by the
corporation of any stock of the corporation to an interested stockholder; (iv)
any transaction involving the corporation which has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by an interested stockholder or (v) the receipt by an
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
Certificate of Incorporation and Bylaws
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue up to 1,000,000 shares of Preferred Stock and to determine
its rights and preferences in order to eliminate delays associated with a
stockholder vote on specific issuances. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could, depending on the rights of any series of
Preferred Stock issued and outstanding, have the effect of making it more
difficult for a third party to acquire the Company, discourage a third party
from acquiring the Company and/or deter a third party from paying a premium to
acquire a majority of the outstanding voting stock of the Company. Additionally,
depending on the rights and preferences of any series of Preferred Stock issued
and outstanding, the issuance of Preferred Stock may adversely affect the voting
and other rights of the holders of the Common Stock, including the possibility
of the loss of voting control to others.
The Company's Amended and Restated Bylaws allow the Board of Directors to
increase the number of directors from time to time (though a decrease in the
number of directors may not have the effect of shortening the term of any
incumbent director) and to fill any vacancies on the Board of Directors,
including vacancies resulting from an increase in the number of directors. This
provision is designed to provide the Board of Directors with flexibility to deal
with an attempted hostile takeover by a shareholder who may acquire a majority
voting interest in the Company without paying a premium therefor. This provision
allows the Board of Directors to increase its size and prevent a "squeeze-out"
of any remaining minority interest soon after a new majority shareholder gains
control over the Company. Further, the Bylaws limit the new majority
shareholder's power to remove a current or all current directors before the
annual meeting in the absence of "cause." Cause for removal of a director is
limited to: (i) a judicial determination that a director is of unsound mind;
(ii) a conviction of a director of an offense punishable by imprisonment for a
term of more than one year; (iii) a breach or failure by a director to perform
the statutory duties of said director's office if the breach or failure
constitutes self-dealing, willful misconduct or recklessness or (iv) a failure
of a director, within 60 days after notice of his or her election, to accept
such office either in writing or by attending a meeting of the Board of
Directors and fulfilling such other requirements of qualification as the bylaws
or certificate of incorporation may provide.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer & Trust Company, New York, New York.
38
<PAGE> 40
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist LLC
and Wessels, Arnold & Henderson, L.L.C. (the "Representatives") have severally
agreed to purchase from the Company and the Selling Stockholders the following
respective number of shares of Common Stock:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
------------------------------------------------------------- ----------------
<S> <C>
Hambrecht & Quist LLC
Wessels, Arnold & Henderson, L.L.C.
--------
Total........................................................ 3,500,000
========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company and its counsel and
independent auditors. The nature of the Underwriters' obligation is such that
they are committed to purchase all shares of Common Stock offered hereby if any
such shares are purchased.
The Underwriters propose to offer the shares of Common Stock directly to
the public at the 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. The Underwriters may allow and such dealers may reallow a
concession not in excess of $ per share to certain other dealers. After
the public offering of the shares, the offering price and other selling terms
may be changed by the Representatives of the Underwriters.
The Company has granted to the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to 525,000
additional shares of Common Stock at the public offering price, less the
underwriting discount, set forth on the cover page of this Prospectus. To the
extent that the Underwriters exercise this option, each of the Underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of Common Stock to be purchased by it shown in the
above table bears to the total number of shares of Common Stock offered hereby.
The Company will be obligated, pursuant to the option, to sell shares to the
Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of the shares of Common Stock offered hereby.
The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.
The Selling Stockholders and the executive officers and directors, who will
own in the aggregate 5,684,514 shares of Common Stock after the offering, and
the Company have agreed that without the prior consent of Hambrecht & Quist LLC,
they will not, directly or indirectly sell, offer, contract to sell, make any
short sale, pledge, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for or any rights to purchase or acquire
Common Stock or enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences or ownership of Common Stock,
whether any such transaction described above is settled by delivery of Common
Stock or such
39
<PAGE> 41
other securities, in cash or otherwise, during the 90-day period following the
effective date of the Registration Statement of which this Prospectus is a part,
except that the Company may issue, and grant options to purchase, shares of
Common Stock pursuant to its existing stock option plans and under currently
outstanding options.
Certain persons participating in this offering may over-allot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Company's Common Stock at levels above those which might otherwise prevail
in the open market, including by entering stabilizing bids or effecting
syndicate covering transactions. A stabilizing bid means the placing of any bid
or effecting of any purchase, for the purpose of pegging, fixing or maintaining
the price of the Company's Common Stock. A syndicate covering transaction means
the placing of any bid on behalf of the underwriting syndicate or the effecting
of any purchase to reduce a short position created in connection with the
offering. 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.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby and certain
other legal matters in connection with this offering will be passed upon for the
Company by Buchanan Ingersoll Professional Corporation, Pittsburgh,
Pennsylvania. Certain legal matters in connection with this offering will be
passed upon for the Underwriters by Hale and Dorr LLP, Boston, Massachusetts.
EXPERTS
The Consolidated Financial Statements included in this Prospectus and the
Financial Schedule included in this Registration Statement have been audited by
KPMG Peat Marwick LLP, independent certified public accountants, to the extent
and for the periods as indicated in their reports with respect thereto and have
been included herein upon the authority of said firm as experts in accounting
and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports,
proxy statements and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act may be inspected
and copies at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048, and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials also may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The Common Stock of the Company is traded on the
Nasdaq National Market. Reports and other information concerning the Company may
be inspected at the National Association of Securities Dealers, Inc., 1801 K
Street, N.W., Washington, D.C. 20006. In addition, the Company is required to
file electronic versions of these documents with the Commission through the
Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system.
The Commission maintains a World Wide Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-1 under the
Securities Act (the "Registration Statement") with respect to the Common Stock
offered hereby. This Prospectus, which constitutes part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and the Common Stock, reference is hereby made to the
Registration Statement and the exhibits and schedules filed therewith.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement, including the exhibits and schedules
thereto, may be inspected without charge at the principal office of the
Commission in Washington, D.C.
40
<PAGE> 42
and copies of all or any part of which may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material may be obtained at prescribed
rates by mail from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
41
<PAGE> 43
ANSOFT CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors Report.......................................................... F-2
Balance Sheets as of April 30, 1996 and 1997 and October 31, 1997 (unaudited)........ F-3
Statements of Operations for the years ended April 30, 1995, 1996 and 1997 and six
months ended (unaudited) October 31, 1996 and 1997................................. F-4
Statements of Stockholders' Equity (Deficit) for the years ended April 30, 1995, 1996
and 1997 and six months ended (unaudited) October 31, 1997......................... F-5
Statements of Cash Flows for the years ended April 30, 1995, 1996 and 1997 and six
months ended (unaudited) October 31, 1996 and 1997................................. F-6
Notes to Consolidated Financial Statements........................................... F-7
</TABLE>
F-1
<PAGE> 44
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Ansoft Corporation:
We have audited the accompanying consolidated balance sheets of Ansoft
Corporation and subsidiaries as of April 30, 1996 and 1997, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the years in the three-year period ended April 30, 1997. 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 financial position of Ansoft
Corporation and subsidiaries as of April 30, 1996 and 1997, and the results of
their operations and their cash flows for each of the years in the three-year
period ended April 30, 1997, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
May 27, 1997
F-2
<PAGE> 45
ANSOFT CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
APRIL 30,
------------------- OCTOBER 31,
1996 1997 1997
------- ------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................... $10,728 $ 312 $ 1,040
Accounts receivable, net of allowance for doubtful
accounts of $125..................................... 1,666 4,129 4,998
Marketable securities................................... 119 55 --
Deferred income taxes................................... 427 320 680
Prepaid expenses and other assets....................... 91 282 349
------- ------- -------
Total current assets...................................... 13,031 5,098 7,067
Plant and equipment....................................... 724 1,995 2,628
Marketable securities..................................... 1,340 7,095 2,982
Other asset............................................... 13 3 455
Deferred taxes--non current............................... 273 800 830
Intangible assets......................................... 10 6,960 7,800
------- ------- -------
Total assets.............................................. $15,391 $21,951 $21,762
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit.......................................... $ -- $ 4,208 $ 1,909
Accounts payable........................................ 345 149 351
Accrued expenses........................................ 131 1,017 122
Accrued wages........................................... 209 500 234
Deferred revenue........................................ 415 1,160 1,355
------- ------- -------
Total current liabilities................................. 1,100 7,034 3,971
Other liabilities......................................... -- -- 196
------- ------- -------
Total liabilities......................................... 1,100 7,034 4,167
Stockholders' equity:
Preferred stock, par value $.01 per share; 1,000 shares
authorized, no shares outstanding.................... -- -- --
Common stock, par value $.01 per share; 25,000
authorized shares; issued and outstanding 7,636,
8,989 and 9,178 shares, respectively................. 76 90 92
Additional paid-in capital.............................. 17,204 24,310 25,170
Net unrealized gain (loss) on marketable securities..... -- (44) 131
Accumulated deficit..................................... (2,989) (9,439) (7,798)
------- ------- -------
Total stockholders' equity................................ 14,291 14,917 17,595
------- ------- -------
Total liabilities and stockholders' equity................ $15,391 $21,951 $21,762
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 46
ANSOFT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED APRIL 30, OCTOBER 31,
----------------------------- -----------------------
1995 1996 1997 1996 1997
------ ------ ------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue
License.............................. $5,921 $7,995 $11,950 $ 4,811 $ 8,907
Service and other.................... 233 700 2,238 841 2,712
------ ------ ------- ------ ------
Total revenue................... 6,154 8,695 14,188 5,652 11,619
Cost and expenses
Sales and marketing.................. 3,935 5,007 7,939 3,348 5,424
Research and development............. 1,462 1,766 2,993 1,247 3,374
General and administrative........... 1,046 1,269 1,647 649 1,067
Amortization......................... -- -- 407 136 690
Acquired in process research and
development....................... -- -- 8,754 3,054 --
------ ------ ------- ------ ------
Total costs and expenses........ 6,443 8,042 21,740 8,434 10,555
------ ------ ------- ------ ------
Income (loss) from operations.......... (289) 653 (7,552) (2,782) 1,064
Interest income........................ -- 41 902 432 300
Interest expense....................... (16) (6) (220) (54) (113)
------ ------ ------- ------ ------
Income (loss) before income taxes...... (305) 688 (6,870) (2,404) 1,251
Income tax benefit..................... -- 612 420 -- 390
------ ------ ------- ------ ------
Net income (loss)............... $ (305) $1,300 $(6,450) $(2,404) $ 1,641
====== ====== ======= ====== ======
Net income (loss) per share............ $(0.06) $ 0.19 $ (0.81) $ (0.31) $ 0.17
====== ====== ======= ====== ======
Weighted average shares outstanding.... 5,528 6,873 7,955 7,878 9,859
====== ====== ======= ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 47
ANSOFT CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNREALIZED
COMMON STOCK RECEIVABLE ADDITIONAL GAIN (LOSS) ON
---------------- FROM PAID-IN ACCUMULATED MARKETABLE
SHARES AMOUNT STOCKHOLDERS CAPITAL DEFICIT SECURITIES TOTAL
------ ------ ------------ ---------- ----------- -------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, April 30, 1994..... 1,680 $17 $ -- $ 532 $(3,984) -- $(3,435)
Net loss.................... -- --- -- 33 (305) -- (272)
Issuance of common stock.... 4,413 44 (442) 5,266 -- -- 4,868
----- --- ----- ------- ------- ---- -------
Balance, April 30, 1995..... 6,093 $61 $ (442) $ 5,831 $(4,289) -- $ 1,161
Net income.................. -- --- -- -- 1,300 -- 1,300
Issuance of common stock.... 1,543 15 -- 11,373 -- -- 11,388
Payments from
stockholders.............. -- -- 442 -- -- -- 442
----- --- ----- ------- ------- ---- -------
Balance, April 30, 1996..... 7,636 $76 $ -- $ 17,204 $(2,989) -- $14,291
Net loss.................... -- --- -- -- (6,450) -- (6,450)
Issuance of common stock.... 1,353 14 -- 7,106 -- -- 7,120
Unrecognized loss on
marketable securities..... -- -- -- -- -- (44) (44)
----- --- ----- ------- ------- ---- -------
Balance, April 30, 1997..... 8,989 $90 $ -- $ 24,310 $(9,439) $(44) $14,917
Net income (unaudited)...... -- --- -- -- 1,641 -- 1,641
Issuance of common stock
(unaudited)............... 189 2 -- 860 -- -- 862
Unrecognized gain on
marketable securities
(unaudited)............... -- -- -- -- -- 175 175
----- --- ----- ------- ------- ---- -------
Balance, October 31, 1997
(unaudited)............... 9,178 $92 $ -- $ 25,170 $(7,798) $131 $17,595
===== === ===== ======= ======= ==== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 48
ANSOFT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED APRIL 30, OCTOBER 31,
-------------------------------- ---------------------
1995 1996 1997 1996 1997
----- ------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income (loss)......................... $(305) $ 1,300 $ (6,450) $(2,404) $ 1,641
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation.............................. 145 197.... 299 133 270
Amortization.............................. 24 24..... 429 153 690
Acquired in process research and
development............................. -- -- 8,754 3,054 --
Non-cash compensation..................... 33 -- -- -- --
Deferred taxes............................ -- (700) (420) -- (390)
Changes in assets and liabilities
Accounts receivable....................... (194) (566) (1,971) (821) (869)
Prepaid expenses and other assets......... -- (83) (191) (45) (67)
Other long-term assets.................... -- -- 10 13 (452)
Accounts payable.......................... (65) 130 (196) (88) 202
Accrued wages and expenses................ (23) 148 (13) (81) (1,319)
Deferred revenue.......................... 45 266 152 66 195
----- ------- -------- ------- --------
Net cash provided by (used in)
operating activities............. (340) 716 403 (20) (99)
----- ------- -------- ------- --------
Cash flows from investing activities
Purchases of plant and equipment.......... (277) (400) (811) (340) (676)
Investment in acquired businesses......... -- -- (8,600) (5,600) (660)
Sale of marketable securities............. -- -- 5,878 (8,592) 4,343
Purchases of marketable securities........ -- (1,459) (11,614) -- --
----- ------- -------- ------- --------
Net cash provided by (used in) investing
activities................................ (277) (1,859) (15,147) (14,532) 3,007
----- ------- -------- ------- --------
Cash flows from financing activities
Proceeds from line of credit, net......... -- -- 4,208 4,169 (2,299)
Repayment of borrowings................... (24) (75) -- -- --
Proceeds from the issuance of common
stock, net.............................. 14 11,388 120 41 119
Proceeds from related party stockholders,
net..................................... 700 442 -- -- --
----- ------- -------- ------- --------
Net cash provided by (used in) financing
activities................................ 690 11,755 4,328 4,210 (2,180)
----- ------- -------- ------- --------
Net increase (decrease) in cash and cash
equivalents............................... 73 10,612 (10,416) (10,342) 728
Cash and cash equivalents at beginning of
period.................................... 43 116 10,728 10,728 312
----- ------- -------- ------- --------
Cash and cash equivalents at end of
period.................................... $ 116 $10,728 $ 312 $ 386 $ 1,040
===== ======= ======== ======= ========
Supplemental disclosures of cash flow
information
Cash paid for interest.................... $ 15 $6...... $ 221 $ 54 $ 113
===== ======= ======== ======= ========
Cash paid for income taxes................ $ 2 $ 72 $ 13 $ 10 $ 29
===== ======= ======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 49
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Ansoft is a leading developer of electronic design automation ("EDA")
software. Its products are used by engineers in the design of high performance
electrical devices and systems, such as cellular phones, satellite
communications, computer circuit boards, motors and ABS braking systems.
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries, from the date of inception or acquisition. On
July 24, 1996, the Company acquired The MacNeal Schwendler Corporation's
Electronic Business Unit ("EBU") for $5,600 in cash. On April 9, 1997, the
Company acquired Compact Software, Inc., ("Compact") for approximately $3,000 in
cash and 1,273 shares of Common Stock. The costs of the acquisitions have been
allocated on the basis of the estimated fair value of the assets acquired and
the liabilities assumed. The acquisitions have been accounted for as a purchase,
and the financial results of the EBU and Compact have been included in the
accompanying consolidated financial statements since the date of their
respective acquisitions.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements are based on
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. Actual results may differ from those estimates.
Cash Equivalents
Cash equivalents include only highly liquid debt instruments purchased with
original maturity dates of three months or less.
Marketable Securities
In fiscal 1995, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115"). Marketable Securities portfolio consists of corporate
bonds and government agency issues and are classified as of April 30, 1997 and
1996, as available for sale. In accordance with SFAS 115, marketable securities
available for sale are recorded at fair market value and any unrecorded gains or
losses are recorded as part of stockholders' equity. Costs of investments sold
are determined on the basis of specific identification.
Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation for financial reporting purposes is computed using
the straight-line method based upon the estimated useful lives of the assets
which range from three to seven years. Assets acquired under capital leases and
leasehold improvements are amortized over their useful life or the lease term,
as appropriate.
F-7
<PAGE> 50
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
Revenue Recognition
The Company recognizes revenue in accordance with the provisions of
American Institute of Certified Public Accountants Statement of Position No.
91-1, Software Revenue Recognition.
License revenue consists principally of revenue from licensing the
Company's software and is generally recognized when the software has been
shipped and there are no significant remaining obligations. Service revenue
consists of maintenance fees for providing system updates, user documentation
and technical support for software products, and is recognized ratably over the
term of the maintenance agreement. Other revenue consists primarily of revenue
earned on development contracts with government-sponsored entities. Revenue
under these arrangements is recognized as the service is performed.
The Company uses distributors for certain of its international sales.
Revenue generated through distributors is generally recorded at the gross sales
price paid by the customer. Commissions withheld by distributors are recorded as
sales and marketing expense. License revenue also includes royalties earned on
sales of certain products under terms of an agreement with Hewlett-Packard
Corporation (see also note 9). Related royalty revenue is recognized upon
shipment of product as reported to the Company by Hewlett-Packard. All
obligations of the Company are satisfied upon shipment of product by
Hewlett-Packard.
Software Development Costs
In accordance with Statement of Financial Accounting Standards (SFAS) No.
86, the Company has evaluated the establishment of technological feasibility of
its various products during the development phase. Due to the dynamic changes in
the market, the Company has concluded that it cannot determine, with any
reasonable degree of accuracy, technological feasibility until the development
phase of the project is nearly complete. The time period during which costs
could be capitalized from the point of reaching technological feasibility until
the time of general product release is generally very short and, consequently,
the amounts that could be capitalized pursuant to SFAS No. 86 are not material
to the Company's financial position or results of operations. Therefore, the
Company charges all research and development expenses to operations in the
period incurred.
Income Taxes
Income taxes are provided for under the provisions of SFAS No. 109,
"Accounting for Income Taxes," for all periods presented. Under the asset and
liability method of SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
SFAS No. 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date. Valuation allowances are established when necessary to reduce deferred tax
assets to the amounts expected to be realized.
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 the period. Common
equivalent shares are not included in the per share calculations where their
inclusion would be antidilutive, except that in accordance with certain SEC
Staff Accounting Bulletins, common and common equivalent shares issued during
the 12 months preceding the initial
F-8
<PAGE> 51
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
filing of the Registration Statement for the Company's initial public offering
have been included in the calculation using the treasury stock method as if they
were outstanding for all periods presented.
In February 1997, Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("SFAS 128") was issued by the Financial Accounting
Standards Board. SFAS 128 specifies modifications to the calculation of earnings
per share from that currently used by the Company. Under SFAS 128, "basic
earnings (loss) per share" will be calculated based upon the weighted average
number of common shares actually outstanding, and "diluted earnings per share"
will be calculated based upon the weighted average number of common shares
outstanding and other potential common shares if they are dilutive. FAS 128 is
effective for the Company's third quarter of fiscal 1998 and will be adopted at
that time. Prior periods will be restated. Had the Company determined earnings
per share in accordance with FAS 128, basic earnings (loss) per share for fiscal
1995, 1996, 1997 would have been $(0.06), $0.21 and $(0.83), respectively, and
diluted earnings (loss) per share would have been $(0.06), $0.19 and $(0.81),
respectively. For the six months ended October 31, 1996 and 1997, basic earnings
per share would have been $(0.31) and $0.18, respectively, and diluted earnings
per share would have been $(0.31) and $0.17, respectively.
Stock Based Compensation
On May 1, 1996, the Company adopted the Financial Accounting Standards
Board's Statement of Financial Accounting Standards (SFAS) No. 123 "Accounting
for Stock-Based Compensation." This statement permits a company to choose either
a new fair value based method of accounting for its stock-based compensation
arrangements or to comply with the current APB Opinion 25 intrinsic value based
method adding pro forma disclosures of net income and earnings per share
computed as if the fair value based method had been applied in the financial
statements. The Company has adopted SFAS No. 123 by retaining the APB Opinion 25
method of accounting for stock-based compensation with annual pro forma
disclosures of net income and earnings per share.
Reclassifications
Certain reclassifications have been made in the accompanying consolidated
financial statements for 1996 and 1995 to conform with the 1997 presentation.
2. ACQUISITIONS AND RELATED INTANGIBLE ASSETS
On July 24, 1996, the Company acquired the EBU for $5,600 in cash. The
acquisition has been accounted for as a purchase, and the financial results of
the EBU have been included in the accompanying consolidated financial statements
since the date of the acquisition. 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 allocation of the acquisition costs resulted in an
acquired in process research and development charge of $3,054 based on the
future expected cash flows of certain acquired technology that had not reached
technological feasibility. The intangible assets of $2,227 (net of amortization
of $267) and $420 (net of amortization of $140) as of April 30, 1997, 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, commencing in August 1996.
F-9
<PAGE> 52
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
The allocation of fair values are presented below:
<TABLE>
<S> <C>
Plant and equipment......................................... $ 215
Other assets................................................ 11
Accrued liabilities......................................... (491)
Deferred revenue............................................ (243)
In process research and development......................... 3,054
Intangible assets........................................... 3,054
------
Total purchase price........................................ $5,600
======
</TABLE>
On April 9, 1997, the Company acquired Compact for approximately $3,000 in
cash and 1,273 shares of common stock. 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 acquisition has been accounted for as a purchase,
and the financial results of Compact have been included in the accompanying
consolidated financial statements since the date of the acquisition. The
allocation of the acquisition costs resulted in an acquired in process research
and development charge of $5,700, based on the future expected cash flows of
certain acquired technology that had not reached technological feasibility. The
intangible assets of $3,813 and $500 as of April 30, 1997, 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,
commencing in May 1997.
The allocation of fair values are presented below:
<TABLE>
<S> <C>
Accounts receivable........................................ $ 492
Plant and equipment........................................ 544
Accrued liabilities........................................ (568)
Accrued wages.............................................. (131)
Deferred revenue........................................... (350)
In process research and development........................ 5,700
Intangible assets.......................................... 4,313
-------
Total purchase price....................................... $10,000
=======
</TABLE>
The following unaudited pro forma summary presents information as if the
acquisitions of the EBU and Compact occurred at the beginning of the periods
presented but does not include the impact of the acquisition of Boulder
Microwave Technologies, Inc. on August 8, 1997 as it was not significant. The
EBU has no separate legal status as it was an integral part of MSC's overall
operations. As a result, separate financial statements have not been maintained
for the EBU. Historically, MSC did not allocate general and administrative costs
to the EBU, so any such allocation at this time would be arbitrary. In process
research and development charges are considered nonrecurring charges related
directly to the acquisitions and have therefore been excluded from pro forma net
income and net income per share. The pro forma information is provided for
information purposes only. It is based on historical information and does not
necessarily reflect the actual results that would have occurred, nor is it
necessarily indicative of future results of operations of the combined
enterprise.
<TABLE>
<CAPTION>
YEAR ENDING APRIL SIX MONTHS ENDED
30, OCTOBER 31,
------------------ ------------------
1996 1997 1996 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue....................... $17,633 $21,030 $ 9,463 $11,619
Net income.................... $ 841 $ 2,456 $ 1,056 $ 1,647
Net income per share.......... $ 0.10 $ 0.27 $ 0.12 $ 0.17
</TABLE>
F-10
<PAGE> 53
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
3. PLANT AND EQUIPMENT
Plant and equipment consist of the following:
<TABLE>
<CAPTION>
APRIL 30,
------------------ OCTOBER 31,
1996 1997 1997
------- ------- ----------------
<S> <C> <C> <C>
Computers and equipment........... $ 1,404 $ 2,856 $ 3,448
Furniture and fixtures............ 262 298 583
Leasehold improvements............ 2 84 110
------- ------- --------
1,668 3,238 4,141
Less allowances for depreciation
and amortization................ 944 1,243 1,513
------- ------- --------
$ 724 $ 1,995 $ 2,628
======= ======= ========
</TABLE>
4. MARKETABLE SECURITIES
Marketable securities, classified as available for sale, are summarized as
follows:
<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED GAIN MARKET
COST (LOSS) VALUE
--------- ---------- ------
<S> <C> <C> <C>
October 31, 1997
Marketable Securities..................... $ 2,851 $131 $2,982
April 30, 1997
Marketable Securities..................... $ 7,194 $(44) $7,150
April 30, 1996
Marketable Securities..................... $ 1,459 $ -- $1,459
</TABLE>
The carrying values of debt securities as of October 31, 1997, by
contractual maturity is shown below:
<TABLE>
<S> <C>
Due in one to five years.................................... $ 515
Due in five to ten years.................................... 1,959
Due in over ten years....................................... 508
------
$2,982
======
</TABLE>
Gross realized and unrealized gains (losses) on sales of securities in
fiscal 1996 and 1997 and the six months ended October 31, 1996 and 1997 were
immaterial.
5. LINE OF CREDIT
The Company has available a secured line of credit from a domestic
financial institution at an interest rate varying from a minimum of 2% below the
Broker Call Rate to a maximum equaling the Broker Call Rate. The line of credit
is secured by the marketable securities held with the institution. As of April
30, 1997 and October 31, 1997, the interest rate charged was 6.5%. The
availability of the unused line of credit, approximately $30 as of October 31,
1997, is subject to certain borrowing base requirements.
6. LEASES
The Company leases its corporate headquarters in Pittsburgh, Pennsylvania,
and other facilities under operating lease agreements which expire over the next
six years. Rental expense incurred by the Company under
F-11
<PAGE> 54
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
operating lease agreements totaled $154, $187 and $548 for the years ended April
30, 1995, 1996 and 1997, respectively, and $137 and $283 for the six month
periods ended October 31, 1996 and 1997. The future minimum lease payments for
such operating leases as of October 31, 1997, are:
<TABLE>
<CAPTION>
YEAR ENDING APRIL 30,
---------------------------------
<S> <C>
1998................................................... $ 345
1999................................................... 534
2000................................................... 380
2001................................................... 349
2002................................................... 312
Thereafter............................................. 330
------
$2,250
======
</TABLE>
7. STOCKHOLDERS' EQUITY AND ADVANCES
In May and December 1994, the Company issued 1,398 shares and 400 shares,
respectively, to a corporation whose sole stockholders had been directors and
executive officers of the Company since the formation of the Company, for
settlement of prior advances totaling $2,072. In May 1994, the Company issued
615 shares to three directors and executive officers of the Company at that time
for settlement of prior advances totaling $670. In September 1994, the Company
issued 1,332 shares to nine persons (including three directors and executive
officers of the Company at that time) for settlement of prior advances totaling
$1,413. In December 1994, the Company issued 400 shares to two of the directors
and executive officers of the Company at that time for settlement of advances in
fiscal 1995 totaling $500. The exchange rates for such advances were fixed at
the time of the initial advances, at the estimated fair market value of the
Common Stock on the date of such advance. Interest expense in 1994 includes
interest on stockholder advances totaling $67.
In April 1996, the Company closed its initial public offering of 1,500
shares of common stock at $8.50 per share. The net proceeds of the offering were
approximately $11,400, after deducting applicable costs and expenses.
8. COMMON STOCK OPTIONS
The Company's 1988 Stock Option Plan (1988 Plan) authorizes the issuance of
850 shares of Common Stock for the grant of incentive or nonstatutory stock
options to employees and directors. Under the terms of the 1988 Plan, options to
purchase Common Stock are granted at no less than the stock's estimated fair
market value at the date of the grant and may be exercised during specified
future periods as determined by the Board of Directors. The 1988 Plan provides
that the options shall expire no more than ten years after the date of the
grant.
In March 1995, the Board of Directors approved a 1995 Stock Option Plan
(1995 Plan) that authorized the issuance of up to 350 shares of Common Stock for
the grant of incentive or nonstatutory stock options to employees and directors.
The Board of Directors approved an additional 850 shares of Common Stock for
grant. Under the terms of the 1995 Plan, options to purchase Common Stock are
granted at no less than the stock's estimated fair market value at the date of
the grant and may be exercised during specified future periods as determined by
the Board of Directors. The 1995 Plan provides that the options shall expire no
more than ten years after the date of the grant. Under the 1995 Plan, the Board
approved the granting of incentive stock options to employees who elected to
exercise up to 50% of their currently outstanding incentive stock options under
the 1988 Plan. Employees were also offered the ability to finance the stock
purchased from the exercise of their 1988 Plan options through the origination
of two-year, 8% loans from American Banner Resources, Inc., a company
F-12
<PAGE> 55
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
wholly owned by two directors of the Company. In connection with this
transaction, the Company recorded a charge to fiscal 1995 operations of $33
representing compensation equal to the 10% per share premium on the 1988 options
which were exercised pursuant to the 1995 Plan. Shares underlying outstanding
options under the 1988 Plan and the 1995 Plan are as follows:
<TABLE>
<CAPTION>
SHARES UNDERLYING
OUTSTANDING OPTIONS
-------------------------
SHARES PRICE
------ --------------
<S> <C> <C>
Outstanding, April 30, 1994.................. 788 $0.32-$1.75
Granted.................................... 341 $1.75-$2.00
Exercised.................................. (218) $0.32-$1.75
Canceled................................... (149) $1.75
------ -------------
Outstanding, April 30, 1995.................. 762 $0.32-$2.00
Granted.................................... 174 $1.75-$2.00
Exercised.................................. (43) $0.32-$1.75
Canceled................................... (58) $1.75
------ -------------
Outstanding, April 30, 1996.................. 835 $1.00-$2.00
Granted.................................... 270 $5.00-$6.50
Exercised.................................. (80) $1.14-$2.00
Canceled................................... (33) $2.00-$5.38
------ -------------
Outstanding, April 30, 1997.................. 992 $1.00-$6.50
===== =============
Granted.................................... 419 $5.00-$11.38
Exercised.................................. (79) $1.00-$5.00
Canceled................................... (33) $2.00-$3.50
------ -------------
Outstanding, October 31, 1997................ 1,299 $1.00-$11.39
===== =============
</TABLE>
Options to purchase 627 shares of Common Stock were exercisable as of
October 31, 1997 and options to purchase 686 shares of Common Stock were
available for future grant as of October 31, 1997.
In addition to the options described above, the Chairman of the Board of
Directors received an option to purchase 200 shares of Common Stock at an
exercise price of $5.00 per share in April 1995. At that time, such exercise
price was considered to be above the estimated fair market value. As of October
31, 1997, all such options were still outstanding and unexercised. The options
expire ten years after the date of the grant.
As permitted under Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation," the Company has elected
to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB 25"), and related Interpretations, in accounting for
stock-based awards to employees. Under APB 25, because the exercise price of the
Company's employee stock options generally equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized in
the Company's consolidated financial statements for all periods presented other
than the $33 discussed above.
Pro forma information regarding net income and earnings (loss) per share is
required by SFAS 123. This information is required to be determined as if the
Company had accounted for its employee stock options (including shares issued
under the Stock Purchase Plan, collectively called "options") granted subsequent
to April 30, 1995 under the fair value method prescribed by SFAS 123. The fair
value of options granted in fiscal
F-13
<PAGE> 56
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
years 1996 and 1997 and the six months ended October 31, 1996 and 1997, reported
below has been estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted average assumptions:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31,
------------------ -------------------
1996 1997 1996 1997
---- ----- ----- -----
<S> <C> <C> <C> <C>
Risk-free rate (%)...... 6.00 6.00 6.00 6.00
Volatility (%).......... n/a 55.92 55.92 55.92
Expected Life (in
years)................ 10.0 10.0 10.0 10.0
Dividend Yield (%)...... 0.00 0.00 0.00 0.00
</TABLE>
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in the opinion
of management, the existing models do not necessarily provide a reliable single
measure of the fair value of its options. However, based solely on this
analysis, the weighted average estimated fair value of employee stock options
granted through April 30, 1996, 1997 and October 31, 1997 was $1.06, $3.94 and
$2.79 per share, respectively.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows unaudited:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31,
------------------ ------------------
1996 1997 1996 1997
------ ------- ------- ------
<S> <C> <C> <C> <C>
Pro forma net income
(loss).................. $1,060 $(6,711) $(2,534) $1,245
Pro forma net income
(loss) per common
share................... $ 0.15 $ (0.84) $ (0.32) $ 0.13
</TABLE>
Because the Company anticipates making additional grants and options vest
over several years, the effects on pro forma disclosures of applying SFAS 123
are not likely to be representative of the effects on pro forma disclosures of
future years. SFAS 123 is applicable only to options granted subsequent to April
30, 1995.
The following table summarizes information about stock options outstanding
as of October 31, 1997.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED- ----------------------------
NUMBER AVERAGE WEIGHTED- NUMBER WEIGHTED
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE AT OCTOBER 31, CONTRACTUAL EXERCISE AT OCTOBER 31, EXERCISE
PRICES 1997 LIFE PRICE 1997 PRICE
- ----------------- -------------- ----------- -------- -------------- ---------
<S> <C> <C> <C> <C> <C>
1.00-$2.00 482 6.34 $ 1.82 482 $1,82
$3.50 105 7.95 $ 3.50 98 $3.50
$5.00-$7.625 882 8.89 $ 5.46 127 $5.19
$10.125-$11.375 30 9.96 $10.66 0 $0.00
</TABLE>
F-14
<PAGE> 57
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
9. EXPORT SALES, MAJOR CUSTOMERS AND CREDIT RISK
Export sales, principally to Asia, accounted for 31%, 33% and 41% of total
revenue in 1995, 1996 and 1997, respectively and 39% and 48% of total revenue
for the six months ended October 31, 1996 and 1997. Included in export sales to
Asia were sales to Japan, which accounted for approximately 14%, 13% and 13% of
total revenue in fiscal 1995, 1996, and 1997, respectively, and 9% and 15% of
total revenue for the six months ended October 31, 1996 and 1997. No other
foreign country accounted for more than 10% of total revenue during these
periods.
Revenue from one distributor accounted for approximately $684 of total
revenue in fiscal 1995.
The Company entered into a distribution arrangement with Hewlett-Packard
Corporation ("HP") under which HP formerly distributed the Company's HFSS
product on an exclusive basis (the "HP Agreement"). The HP Agreement has since
expired, although HP retains the right to distribute HFSS 4.0 through January
1998. The Company currently sells the latest version of its HFSS product, Ansoft
HFSS 5.0, through its own sales force and other distributors. Revenue from the
HP Agreement accounted for 18%, 13% and 12% of total revenue in fiscal 1995,
1996 and 1997, respectively, and 6% and 13% of total revenue in the six-month
periods ended October 31, 1997 and 1996, respectively. The Company expects that
HP will account for a decreasing percentage of its total revenues over the next
three months. Management believes that the expiration of the HP Agreement will
not have a material adverse effect on the consolidated financial condition or
results of operations.
The Company markets its software products to customers throughout the world
directly and through distributors and generally does not require collateral.
However, letters of credit are obtained from certain international customers
prior to shipment. The Company performs ongoing credit evaluations of its
customers and maintains an allowance for potential credit losses. The Company
believes that it has adequately provided for credit losses.
10. INCOME TAX
The provisions for income taxes consisted of the following:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
------------------------- ---------------
1995 1996 1997 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Current:
Federal............. $ -- $ 14 $ -- $ -- $ --
Foreign............. -- 72 -- -- --
State............... -- 2 -- -- --
----- ----- ----- ----- -----
Total............ -- 88 -- -- --
Deferred:
Federal............. -- (638) (316) -- (331)
State............... -- ( 62) (104) -- (59)
----- ----- ----- ----- -----
Total............ -- (700) (420) -- (390)
----- ----- ----- ----- -----
Total benefit for
income taxes........ $ -- $(612) $(420) $ -- $(390)
===== ===== ===== ===== =====
</TABLE>
F-15
<PAGE> 58
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
The Company's actual income tax expense (benefit) differs from the expected
income tax benefit computed by applying the statutory federal income before
income taxes as a result of the following:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
----------------------------- ---------------
1995 1996 1997 1996 1997
------- ----- ------- ----- -----
<S> <C> <C> <C> <C> <C>
Income tax expense (benefit) at statutory
rate..................................... $ (104) $ 234 $(2,335) $(817) $ 427
State income tax, net of federal offset.... (18) 41 (419) (144) 75
Net deductible intangible assets........... -- -- -- -- 51
Expiration of state net operating losses... -- 91 61 30 --
Change in valuation allowance.............. 114 (992) 2,258 921 (975)
Other, net................................. 8 14 15 10 32
----- ----- ------- ----- -----
Actual income tax benefit.................. $ -- $(612) $ (420) $ -- $(390)
===== ===== ======= ===== =====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
----------------- -----------
1996 1997 1997
------ ------ -----------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss
carryforward................. $1,245 $3,885 $ 3,272
Allowance for doubtful
accounts..................... 51 75 75
Alternative minimum tax credit
carryforward................. 14 6 6
Foreign Tax Credit
carryforward................. 72 -- --
Intangible Assets............... -- 141 194
------ ------ -------
Total gross deferred tax assets... $1,382 $4,107 $ 3,547
Less valuation allowance.......... 599 2,857 1,882
------ ------ -------
Net deferred tax assets........... 783 1,250 1,665
------ ------ -------
Deferred tax liabilities:
Property, plant, and
equipment.................... (83) (130) (155)
------ ------ -------
Total gross deferred tax
liability....................... (83) (130) (155)
------ ------ -------
Net deferred taxes................ $ 700 $1,120 $ 1,510
====== ====== =======
</TABLE>
The Company has established a valuation allowance against its net deferred
tax assets due to the uncertainty surrounding the realization of such assets
pursuant to SFAS No. 109. The increase in the valuation allowance during the
year ended April 30, 1997 was due in part to the successful competition of the
Company's acquisitions of the EBU and Compact, which resulted in an acquired in
process research and development charge of $8,754, creating additional federal
tax net operating losses. A valuation allowance has been established on a
portion of these net operating losses because management has determined that it
is more likely than not that a portion of the net operating losses will not be
realized due to a lack of sufficient taxable income. The ultimate realization of
the remaining deferred tax assets is dependent upon the generation of future
taxable income beyond that which is deemed more likely than not at this time.
Management evaluates on a quarterly basis the recoverability of the deferred tax
assets and the level of the valuation allowance. Due to the uncertainty of the
future financial results of the company, a valuation allowance is maintained for
the remaining deferred tax assets. The valuation allowance will be reduced at
such time as it is determined that it is more likely than not that the remaining
F-16
<PAGE> 59
ANSOFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(INFORMATION AS OF OCTOBER 31, 1996 AND 1997 AND FOR THE SIX MONTHS THEN ENDED
IS UNAUDITED)
deferred tax assets are realizable or increased if estimates of future taxable
income during the carryforward period are reduced.
As of April 30, 1997, the Company had net operating loss carryforwards for
federal income tax purposes of $9,984 which are available to offset future
federal taxable income, if any, and expire in increments of between $112 and
$884, beginning April 30, 2004 through April 30, 2010, and $6,652 in April 30,
2012.
11. RELATED PARTY TRANSACTIONS
Certain of the Company's principal stockholders are also members of the
Board of Directors and executive management.
In 1992, the Company entered into an agreement with a distributor under
which distribution rights in Japan were granted for certain Company products. In
addition, the distributor purchased 120 shares of the Company's Common Stock at
a price of $2.50 per share. Sales through the distributor were approximately
$684 in 1995. These transactions were on terms no less favorable to the Company
than could be obtained from unrelated third parties. In fiscal 1995, the Company
terminated the distribution agreement.
12. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) savings and retirement plan which covers its
full-time employees who have attained the age of 21 and have completed six
months of service. Eligible employees make voluntary contributions to the plan
up to 15% of their annual compensation. The Company is not required to
contribute, nor has it contributed, to the 401(k) Plan.
13. COMMITMENTS AND CONTINGENCIES
The Company is not a party to any litigation and is not aware of any
threatened litigation, unasserted claims or assessments that could have a
material adverse effect on the Company's business, consolidated operating
results or consolidated financial condition.
F-17
<PAGE> 60
[Excerpts from computer screens detailing computer models of components and
systems including RF ICs, IC packages, connectors, sensors and solenoids.]
<PAGE> 61
============================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING
SHAREHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary................. 3
Risk Factors....................... 5
The Company........................ 10
Use of Proceeds.................... 10
Dividend Policy.................... 10
Price Range of Common Stock........ 11
Capitalization..................... 12
Selected Consolidated Financial
Data............................. 13
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 14
Business........................... 22
Management......................... 30
Certain Transactions............... 35
Principal and Selling
Stockholders..................... 36
Description of Capital Stock....... 37
Underwriting....................... 39
Legal Matters...................... 40
Experts............................ 40
Available Information.............. 40
Index to Consolidated Financial
Statements....................... F-1
</TABLE>
============================================================
============================================================
3,500,000 SHARES
LOGO
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
HAMBRECHT & QUIST
WESSELS, ARNOLD & HENDERSON
, 1997
============================================================
<PAGE> 62
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
All of the expenses listed below are estimated except for the SEC
registration fee and the NASD filing fee. The itemized statement below includes
all expenses in connection with the distribution of the securities being
registered, other than underwriting discounts and commissions:
<TABLE>
<S> <C>
SEC registration fee...................................................... $ 19,296
NASD filing fee and expenses.............................................. 6,868
Nasdaq National Market additional listing fee............................. 17,500
Printing and engraving expenses........................................... 100,000
Accounting fees and expenses.............................................. 50,000
Legal fees and expenses................................................... 130,000
Blue Sky fees and expenses................................................ 10,000
Transfer agent and registrar fees......................................... 10,000
Miscellaneous............................................................. 56,336
--------
Total................................................................ $400,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation provides, in part, that the
Company shall indemnify its directors, officers, employees and agents to the
fullest extent permitted by law.
The Delaware General Corporation Law ("DGCL"), the law of the Company's
incorporation, permits Delaware corporations to indemnify their directors and
officers against all reasonable expenses incurred in the defense of any lawsuit
to which they are made parties by reason of being directors or officers, in
cases of successful defense, and against expenses in other cases, subject to
specified conditions and exclusions. Such indemnification is not exclusive of
any other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders, or otherwise.
Pursuant to the DGCL, the Company's Certificate of Incorporation contains a
provision eliminating the personal liability of a director to a corporation or
its stockholders for monetary damages for breach of, or failure to perform, any
duty resulting solely from his status as a director, except with respect to (i)
any breach of the director's duty of loyalty to the Corporation, (ii) for acts
or omissions not in good faith which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Company maintains directors' and officers' and corporate liability
insurance for each of the Company's directors and officers with an aggregate
coverage of up to $3.0 million for losses, including costs of defense, arising
from securities claims and certain other claims.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has made sales of the following
unregistered securities:
Common Stock. (i) On December 31, 1994, two executive officers/directors
of the Company purchased a total of 400,000 shares of Common Stock from the
Company for an aggregate price of $500,000. No underwriters were involved and no
commission was paid. The shares were sold in reliance on the exemption from
registration contained in Section 4(2) of the Securities Act for transactions
not involving a public offering.
(ii) On March 15, 1995, a corporation, whose sole stockholders had been
directors and officers of the Company since the formation of the Company,
purchased 151,500 shares of the Company's Common Stock for an aggregate price of
$303,000. No underwriters were involved and no commission was paid. The shares
were
II-1
<PAGE> 63
sold in reliance on the exemption from registration contained in Section 4(2) of
the Securities Act for transactions not involving a public offering.
(iii) On April 30, 1995, the chairman of the board of directors of the
Company received an option to purchase 200,000 shares of the Company's Common
Stock at an exercise price of $5.00 per share, at that time considered to be
above the fair market value of the Company's Common Stock. The options have not
been exercised. The issuance of the options was made in reliance on the
exemption from registration contained in Section 4(2) of the Securities Act for
transactions not involving a public offering.
(iv) In January 1995, an executive officer received a stock option to
purchase 32,500 shares of the Company's stock at an exercise price of $1.75 per
share, at that time considered to be fair market value. In March 1995, said
executive officer received a stock option to purchase 40,000 shares of the
Company's stock at an exercise price of $2.00 per share, at that time considered
to be fair market value. In November 1995, said executive officer received a
stock option to purchase 40,000 shares of the Company's stock at an exercise
price of $3.50 per share, at that time considered to be fair market value. The
options have not been exercised. The issuance of the options was made in
reliance on the exemption from registration contained in Section 4(2) of the
Securities Act for transactions not involving a public offering.
(v) From May 1, 1994 to the present, 48 employees of the Company exercised
employee stock options granted prior to April 3, 1996 to purchase 363,225 shares
of stock for exercise prices ranging from $0.32 to $5.00, in each case
reflecting fair market value of the stock at the time of the grant of such
options by the Company. The issuances were exempt from registration pursuant to
Rule 701 under the Securities Act.
(vi) From May 1, 1994 to April 3, 1996, 64 employees of the Company
received employee stock options to purchase 515,508 shares of stock at exercise
prices ranging from $1.75 to $5.00, in each case reflecting fair market value of
the stock at the time of such grant. The grants of such options were exempt from
registration pursuant to Rule 701 under the Securities Act.
(vii) On April 9, 1997, the Company in connection with the acquiring of all
of the issued and outstanding shares of Compact issued 1,272,728 shares of the
Company's Common Stock. The shares were sold in reliance on the exemption from
registration contained in Section 4(2) of the Securities Act for transactions
not involving a public offering.
(viii) August 7, 1997, the Company issued 108,182 shares of Common Stock in
connection with the acquisition of all of the issued and outstanding shares of
Boulder Microwave Technologies, Inc. The shares were sold in reliance on the
exemption from registration contained in Section 4(2) of the Securities Act for
transactions not involving a public offering.
Preferred Stock. There were no issuances of preferred stock during such
period.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------
<S> <C>
*1.1 Underwriting Agreement
*3.1 Amended and Restated Certificate of Incorporation of the Company
*3.2 Certificate of Amendment to the Company's Amended and Restated Certificate of
Incorporation
3.3 Bylaws of the Company (incorporated by reference from Registration Statement No.
333-1398).
*5.1 Opinion of Buchanan Ingersoll Professional Corporation regarding the legality of
the shares of common stock of Ansoft Corporation being registered.
10.1 1988 Stock Option Plan of the Company (incorporated by reference from Registration
Statement No. 333-1398).
10.2 1995 Stock Option Plan of the Company (incorporated by reference from Registration
Statement No. 333-1398).
</TABLE>
II-2
<PAGE> 64
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------
<S> <C>
10.3 Zoltan Cendes Stock Option Agreement, dated April 30, 1995 (incorporated by
reference from Registration Statement No. 333-1398).
10.4 Office Lease Agreement between Commerce Court Associates and the Company dated June
7, 1989 (incorporated by reference from Registration Statement No. 333-1398).
10.5 Amendment No. 1 to Office Lease Agreement between Commerce Court Associates and the
Company dated March 17, 1994 (incorporated by reference from Registration Statement
No. 333-1398).
10.6 Software Distribution Agreement, by and between the Company and Hewlett-Packard,
dated January 1, 1994 (incorporated by reference from Registration Statement No.
333-1398).
10.7 First Amendment to Software Distribution Agreement, by and between the Company and
Hewlett-Packard, dated May 9, 1995 (incorporated by reference from Registration
Statement No. 333-1398).
10.8 Second Amendment to Software Distribution Agreement, by and between the Company and
Hewlett-Packard, dated September 7, 1995 (incorporated by reference from
Registration Statement No. 333-1398).
10.9 Underwriting Agreement dated April 3, 1996 by and between Registrant and Janney
Montgomery Scott Inc. and Pennsylvania Merchant Group Ltd., as representatives for
the Underwriters identified therein (incorporated by reference from Registration
Statement No. 333-1398).
*10.10 Jacob K. White Stock Option Agreement dated February 1, 1996, as amended.
*10.11 John N. Whelihan Stock Option Agreement dated February 1, 1996, as amended.
10.12 Asset Purchase Agreement by and between Ansoft Corporation and The
MacNeal-Schwendler Corporation dated as of July 24, 1996 for the Electronic
Business Unit (incorporated by reference from the Company's Current Report filed on
Form 8-K dated August 9, 1996, as amended by the Company's Current Report filed on
Form 8-K/A dated October 8, 1997).
10.13 Stock Purchase Agreement by and between Ansoft Corporation and Dr. Ulrich L. Rohde
and Dr. Meta Rohde dated as of April 9, 1997 (incorporated by reference from the
Company's Current Report filed on Form 8-K dated April 22, 1997, as amended by the
Company's Current Report filed on Form 8-K/A dated June 26, 1997).
*10.14 Registration Rights Agreement between the Company and Dr. Ulrich L. Rohde and Dr.
Meta Rohde dated as of April 9, 1997.
*11.1 Calculation of Earnings Per Share (filed herewith).
21.1 Subsidiaries of the registrant (incorporated by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended April 30, 1997).
*23.1 Consent of Buchanan Ingersoll Professional Corporation (contained in their opinion
filed as Exhibit 5.1 herewith).
*23.2 Consent of KPMG Peat Marwick LLP, independent certified public accountants
(including opinion on Schedule II to the Financial Statements).
*24.1 Powers of Attorney (included as part of the signature pages hereof).
*27.1 Financial Data Schedule (filed herewith).
</TABLE>
- ---------
*Filed herewith
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
For purposes of determining any liability under the Securities Act of 1933,
as amended (the "Securities Act"), the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance
II-3
<PAGE> 65
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.
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.
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 indemnification provisions described under Item 14
above, 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.
II-4
<PAGE> 66
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Pittsburgh, Pennsylvania,
on November 13, 1997.
ANSOFT CORPORATION
By /s/ NICHOLAS CSENDES
------------------------------------
Nicholas Csendes
President
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on November 13, 1997.
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Nicholas Csendes and Thomas A.N. Miller, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and revocation, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and any additional Registration
Statements relating to the same offering, filed pursuant to Rule 462 and to file
the same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<C> <S>
/s/ NICHOLAS CSENDES Director and President and Chief Executive
- --------------------------------------------- Officer (Principal Executive Officer)
Nicholas Csendes
/s/ THOMAS A.N. MILLER Director
- ---------------------------------------------
Thomas A.N. Miller
/s/ ZOLTAN J. CENDES Director and Chairman of the Board of
- --------------------------------------------- Directors
Zoltan J. Cendes
/s/ JACOB K. WHITE Director
- ---------------------------------------------
Jacob White
/s/ JOHN N. WHELIHAN Director
- ---------------------------------------------
John N. Whelihan
Director
- ---------------------------------------------
Ulrich L. Rohde, Ph.D.
/s/ ANTHONY L. RYAN Chief Financial Officer (Principal Financial
- --------------------------------------------- and Accounting Officer)
Anthony L. Ryan
</TABLE>
II-5
<PAGE> 67
EXHIBIT INDEX
(PURSUANT TO ITEM 601 OF REGULATION S-K)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------
<S> <C>
*1.1 Underwriting Agreement
*3.1 Amended and Restated Certificate of Incorporation of the Company
*3.2 Certificate of Amendment to the Company's Amended and Restated Certificate of
Incorporation
3.3 Bylaws of the Company (incorporated by reference from Registration Statement No.
333-1398).
*5.1 Opinion of Buchanan Ingersoll Professional Corporation regarding the legality of
the shares of common stock of Ansoft Corporation being registered.
10.1 1988 Stock Option Plan of the Company (incorporated by reference from Registration
Statement No. 333-1398).
10.2 1995 Stock Option Plan of the Company (incorporated by reference from Registration
Statement No. 333-1398).
10.3 Zoltan Cendes Stock Option Agreement, dated April 30, 1995 (incorporated by
reference from Registration Statement No. 333-1398).
10.4 Office Lease Agreement between Commerce Court Associates and the Company dated June
7, 1989 (incorporated by reference from Registration Statement No. 333-1398).
10.5 Amendment No. 1 to Office Lease Agreement between Commerce Court Associates and the
Company dated March 17, 1994 (incorporated by reference from Registration Statement
No. 333-1398).
10.6 Software Distribution Agreement, by and between the Company and Hewlett-Packard,
dated January 1, 1994 (incorporated by reference from Registration Statement No.
333-1398).
10.7 First Amendment to Software Distribution Agreement, by and between the Company and
Hewlett- Packard, dated May 9, 1995 (incorporated by reference from Registration
Statement No. 333-1398).
10.8 Second Amendment to Software Distribution Agreement, by and between the Company and
Hewlett-Packard, dated September 7, 1995 (incorporated by reference from
Registration Statement No. 333-1398).
10.9 Underwriting Agreement dated April 3, 1996 by and between Registrant and Janney
Montgomery Scott Inc. and Pennsylvania Merchant Group Ltd., as representatives for
the Underwriters identified therein (incorporated by reference from Registration
Statement No. 333-1398).
*10.10 Jacob K. White Stock Option Agreement dated February 1, 1996, as amended.
*10.11 John N. Whelihan Stock Option Agreement dated February 1, 1996, as amended.
10.12 Asset Purchase Agreement by and between Ansoft Corporation and The
MacNeal-Schwendler Corporation dated as of July 24, 1996 for the Electronic
Business Unit (incorporated by reference from the Company's Current Report filed on
Form 8-K dated August 9, 1996, as amended by the Company's Current Report filed on
Form 8-K/A dated October 8, 1997).
10.13 Stock Purchase Agreement by and between Ansoft Corporation and Dr. Ulrich L. Rohde
and Dr. Meta Rohde dated as of April 9, 1997 (incorporated by reference from the
Company's Current Report filed on Form 8-K dated April 22, 1997, as amended by the
Company's Current Report filed on Form 8-K/A dated June 26, 1997).
*10.14 Registration Rights Agreement between the Company and Dr. Ulrich L. Rohde and Dr.
Meta Rohde dated as of April 9, 1997.
*11.1 Calculation of Earnings Per Share (filed herewith).
21.1 Subsidiaries of the registrant (incorporated by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended April 30, 1997).
</TABLE>
<PAGE> 68
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------
<S> <C>
*23.1 Consent of Buchanan Ingersoll Professional Corporation (contained in their opinion
filed as Exhibit 5.1 herewith).
*23.2 Consent of KPMG Peat Marwick LLP, independent certified public accountants
(including opinion on Schedule II to the Financial Statements).
*24.1 Powers of Attorney (included as part of the signature pages hereof).
*27.1 Financial Data Schedule (filed herewith).
</TABLE>
- ---------
*Filed herewith
<PAGE> 69
Schedule II-Valuation and Qualifying Accounts
(In thousands)
<TABLE>
<CAPTION>
Balance as of Additions Balance as of
the Beginning Charged to Costs the End of
of the Period and Expenses Deductions the Period
------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Six months ended October 31, 1997
Allowance for doubtful accounts 125 -- -- 125
Year ended April 30, 1997
Allowance for doubtful accounts 125 -- -- 125
Year ended April 30, 1996
Allowance for doubtful accounts 70 55 -- 125
Year ended April 30, 1995
Allowance for doubtful accounts 60 10 -- 70
</TABLE>
<PAGE> 1
Exhibit 1.1
ANSOFT CORPORATION
3,500,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
_________, 1997
HAMBRECHT & QUIST LLC
WESSELS, ARNOLD & HENDERSON, L.L.C.
c/o Hambrecht & Quist LLC
One Bush Street
San Francisco, CA 94104
Ladies and Gentlemen:
Ansoft Corporation, a Delaware corporation (herein called the Company),
proposes to issue and sell 2,550,000 shares of its authorized but unissued
Common Stock, $.01 par value per share (herein called the Common Stock), and the
stockholders of the Company named in Schedule II hereto (herein collectively
called the Selling Stockholders) propose to sell an aggregate of 950,000
shares of Common Stock of the Company (said 3,500,000 shares of Common Stock
being herein called the Underwritten Stock). The Company proposes to grant to
the Underwriters (as hereinafter defined) an option to purchase up to 525,000
additional shares of Common Stock (herein called the Option Stock and with the
Underwritten Stock herein collectively called the Stock). The Common Stock is
more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
The Company and the Selling Stockholders severally hereby confirm the
agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent and
warrant that you have been authorized by each of the other Underwriters to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities
and Exchange Commission (herein called the Commission) a registration statement
on Form S-1 (No. 333-[____]), including the related Preliminary Prospectus, for
the registration under the
__________
(1) Plus an option to purchase from the Company up to 525,000 additional
shares to cover over-allotments.
<PAGE> 2
Securities Act of 1933, as amended (herein called the Securities Act), of the
Stock. Copies of such registration statement and of each amendment thereto, if
any, including the related Preliminary Prospectus (meeting the requirements of
Rule 430A of the rules and regulations of the Commission) heretofore filed by
the Company with the Commission have been delivered to you.
The term Registration Statement as used in this Agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, and any registration statement filed pursuant
to Rule 462(b) of the rules and regulations of the Commission with respect to
the Stock (herein called a Rule 462(b) registration statement) in the form in
which it became effective and, in the event of any amendment thereto after the
effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended including any Rule 462(b) registration
statement. The term Prospectus as used in this Agreement shall mean the
prospectus relating to the Stock first filed with the Commission pursuant to
Rule 424(b) and Rule 430A or (if no such filing is required) as included in the
Registration Statement, and, in the event of any supplement or amendment to such
prospectus after the Effective Date, shall also mean (from and after the filing
with the Commission of such supplement or of the effectiveness of such
amendment) such prospectus as so supplemented or amended. The term Preliminary
Prospectus as used in this Agreement shall mean each preliminary prospectus
included in such registration statement prior to the time it becomes effective.
For purposes of this Agreement, all references to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or supplement to any
of the foregoing shall, if applicable, be deemed to include the copy filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
-2-
<PAGE> 3
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS.
(a) Each of the Company and the Selling Stockholders hereby
represents and warrants as follows:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement and the
Prospectus and as currently being conducted, and is duly qualified as a
foreign corporation and in good standing in all jurisdictions in which
the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary (except where
the failure to be so qualified would not have a material adverse effect
on the business, operations, financial condition or income of the
Company and its subsidiaries, taken as a whole). The outstanding shares
of capital stock of each such subsidiary have been duly authorized and
validly issued, are fully paid and nonassessable and are owned by the
Company free and clear of all liens, encumbrances and security
interests; 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 any
such subsidiary are outstanding.
(ii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any material adverse change in the business, operations, financial
condition, income or business prospects of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions
in the ordinary course of business, other than as set forth in the
Registration Statement and the Prospectus, and since such dates, except
in the ordinary course of business, neither the Company nor any of its
subsidiaries has entered into any material transaction not referred to
in the Registration Statement and the Prospectus.
(iii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, nor
instituted proceedings for that purpose. The Registration Statement and
the Prospectus comply, and on the Closing Date (as hereinafter defined)
and any later date on which Option Stock is to be purchased, the
Prospectus will comply in all material respects with the provisions of
the Securities Act and the rules and regulations of the Commission
thereunder; on the Effective Date and on the Closing Date and any later
date on which Option Stock may be purchased, neither the Registration
Statement nor any amendment thereto, and neither the Prospectus nor any
supplements thereto, contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact required
to be stated therein or necessary in order to make the statements
therein not misleading; provided, however, that none of the
-3-
<PAGE> 4
representations and warranties in this subparagraph (iii) shall apply
to statements in, or omissions from, the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
herein or otherwise furnished in writing to the Company by or on behalf
of the Underwriters for use in the Registration Statement or the
Prospectus. There are no contracts or documents of the Company which
would be required by the Securities Act or by the rules and regulations
of the Commission to be filed as exhibits to the Registration Statement
which have not been so filed.
(iv) The capitalization of the Company is, and upon
consummation of the transactions contemplated hereby will be, as set
forth in the Prospectus under the caption "Capitalization"; the
outstanding shares of Common Stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable;
the capital stock of the Company conforms to the description thereof in
the Registration Statement under the caption "Description of Capital
Stock"; the Stock is duly and validly authorized, is (or, in the case
of shares of the Stock to be sold by the Company, will be, when issued
and sold to the Underwriters as provided herein) duly and validly
issued, fully paid, nonassessable, free of pre-emptive rights and
conforms to the description thereof in the Prospectus. There are no
outstanding options, warrants or other rights granted to or by the
Company to purchase shares of Common Stock or other securities of the
Company other than as described in the Registration Statement; and no
such option, warrant or other right has been granted to any person, the
exercise of which would cause such person to own more than five percent
of the Common Stock outstanding immediately after the offering other
than as described in the Prospectus. No person or entity holds a right
to require or participate in the registration under the Securities Act
of shares of Common Stock of the Company which right has not been
waived by the holder thereof as of the date hereof with respect to the
registration of shares pursuant to the Registration Statement, and
except as described in the Prospectus, no person holds a right to
require registration under the Securities Act of shares of Common Stock
of the Company at any other time. No person or entity has a right of
participation with respect to the sale of shares of the Stock by the
Company. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the issuance and
sale of the Stock as contemplated herein.
(v) The Company and its subsidiaries now hold, and at the
Closing Date (as defined in Section 5(a) hereof) will hold, all
material licenses, certificates and permits from state, federal and
other regulatory authorities which are necessary for the conduct of the
business of the Company and its subsidiaries taken as a whole; neither
the Company nor any of its subsidiaries is in violation of its
corporate charter or by-laws, or in default in the performance or
observance of any provision of any obligation, agreement, covenant or
condition contained in any bond, debenture or in any contract,
indenture, mortgage, loan agreement, joint venture or other agreement
or instrument to which the Company or such subsidiary is a party or by
which it or any of its properties is bound or, to the best of the
Company's or the Selling Stockholders' knowledge, is in violation of
any law, order,
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<PAGE> 5
rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign.
(vi) The Company owns, or possesses adequate rights to use or
sublicense, all patents, patent rights, inventions, trade secrets,
licenses, know-how, proprietary techniques, including processes,
trademarks, service marks, trade names, copyrights and other
intellectual property described or referred to in the Registration
Statement and the Prospectus as owned or used by it or which are
necessary for the conduct of its business as now conducted and as
described in the Registration Statement and the Prospectus. All such
patents, patent rights, licenses, trademarks, service marks and
copyrights are (i) valid and enforceable and (ii) not being infringed
by any third parties which infringement could, whether singly or in the
aggregate, materially and adversely affect the business, properties,
operations, condition (financial or otherwise), results of operations,
income or business prospects or the Company, as presently being
conducted or as proposed to be conducted in the Prospectus. Neither the
Company nor any Selling Stockholder has any knowledge of, or has
received any notice of, infringement of or conflict with asserted
rights of others with respect to any patents, patent rights,
inventions, trade secrets, licenses, know-how, proprietary techniques,
including processes and substances, trademarks, service marks, trade
names, copyrights or other intellectual property which, singly or in
the aggregate, is, or is reasonably likely to be, the subject of an
unfavorable decision, ruling or finding that could materially and
adversely affect the business, properties, operations, condition
(financial or otherwise), results of operations, income or business
prospects of the Company, as now conducted or as proposed to be
conducted in the Registration Statement and the Prospectus.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and by the Attorney-in-Fact for the Selling
Stockholders; the performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, (A) any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the property
of the Company or any of the subsidiaries is bound, (B) the corporate
charter or by-laws of the Company or any of the subsidiaries or (C)
(assuming the making of all filings required under Rule 424(b) or Rule
430A and the due qualification of the Stock for public offering by the
Underwriters under state and foreign securities laws) any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of the subsidiaries or
over the properties of the Company.
(viii) Except as set forth in the Prospectus, there is not any
action, suit or proceeding, at law or in equity, pending against the
Company or any subsidiary before any court or administrative agency,
which, if determined adversely to the Company or any subsidiary, would
materially adversely affect the business, operations, financial
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<PAGE> 6
condition, income or business prospects of the Company and the
subsidiaries taken as a whole, or prevent consummation of the
transactions contemplated hereby.
(ix) The consolidated financial statements of the Company and
its subsidiaries, together with the related notes and schedules as set
forth in the Registration Statement, present fairly the consolidated
financial position and the results of operations of the Company and its
subsidiaries, at the indicated dates and for the indicated periods.
Such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, 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 present fairly the information shown therein and have been
compiled on a basis consistent with the financial statements presented
therein.
(x) The Company and its subsidiaries have filed all federal,
state and foreign income tax returns which have been required to be
filed (or have filed extensions therefor or obtained any required
extensions in connection therewith), and have paid all taxes indicated
by said returns and all assessments received by them or any of them to
the extent that such taxes have become due and are not being contested
in good faith.
(xi) Each approval, consent, order, authorization,
designation, declaration or filing by or with any United States
regulatory, administrative or other governmental body necessary in
connection with the execution and delivery by the Company and the
Selling Stockholders of this Agreement and the consummation by the
Company and the Selling Stockholders of the transactions herein
contemplated (except (A) such additional steps as may be required by
the National Association of Securities Dealers, Inc. (the "NASD"), (B)
as may be necessary to make the Registration Statement effective (and
to maintain such effectiveness) and to qualify the Stock for public
offering by the Underwriters under state and foreign securities laws or
(C) filings required under Rule 424(b) or Rule 430(A)) has been
obtained or made and is in full force and effect.
(xii) KPMG Peat Marwick LLP, who have certified the financial
statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the
Securities Act and the rules and regulations thereunder.
(xiii) The Company and the subsidiaries have good and
marketable title to all of the properties and assets reflected in the
financial statements (or as described in the Registration Statement)
described as owned by them, 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.
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<PAGE> 7
(xiv) Neither the Company nor any of its subsidiaries is
involved in any material labor dispute nor, to the knowledge of the
Company, is any such dispute threatened.
(xv) The Common Stock is registered pursuant to Section 12(g)
of the Securities Exchange Act of 1934, as amended (hereinafter the
Exchange Act), and is listed on the Nasdaq National Market, and the
Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Nasdaq National Market, nor
has the Company received any notification that the Commission or the
NASD is contemplating terminating such registration or listing has been
approved, subject to notice of issuance of the Stock.
(xvi) Neither the Company nor, to its knowledge, any of its
officers, directors or affiliates have taken, and at the Closing Date
and at each purchase of the Option Stock, neither the Company nor, to
its knowledge, any of its officers, directors or affiliates will have
taken, directly or indirectly, any action which has constituted, or
might reasonably be expected to constitute, the stabilization or
manipulation of the price of sale or resale of the Stock.
(xvii) Neither the Company nor any Subsidiary has been an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(xviii) The Company has timely and properly filed with the
Commission all reports and other documents required to have been filed
with the Commission.
(b) Each of the Selling Stockholders represents and warrants as
follows:
(i) Such Selling Stockholder has good and marketable title to all
the shares of Stock to be sold by such Selling Stockholder hereunder, free and
clear of all liens, encumbrances, equities, security interests and claims
whatsoever, with full right and authority to deliver the same hereunder,
subject, in the case of each Selling Stockholder, to the rights of the Company,
as custodian (herein called the Custodian), and that upon the delivery of and
payment for such shares of the Stock hereunder, the several Underwriters will
receive good and marketable title thereto, free and clear of all liens,
encumbrances, equities, security interests and claims whatsoever.
(ii) Certificates in negotiable form for the shares of the Stock to
be sold by such Selling Stockholder have been placed in custody under a Letter
of Transmittal and Custodian Agreement (herein called the Custody Agreement) for
delivery under this Agreement with the Custodian; such Selling Stockholder
specifically agrees that the shares of the Stock represented by the certificates
so held in custody for such Selling Stockholder are subject to the
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<PAGE> 8
interests of the several Underwriters and the Company, that the arrangements
made by such Selling Stockholder for such custody, including the Selling
Stockholder's Irrevocable Power of Attorney (herein called the Power of
Attorney) provided for in the Custody Agreement, are to that extent irrevocable,
and that the obligations of such Selling Stockholder shall not be terminated by
any act of such Selling Stockholder or by operation of law, whether by the death
or incapacity of such Selling Stockholder or the occurrence of any other event;
if any such death, incapacity, dissolution, liquidation or other such event
should occur before the delivery of such shares of the Stock hereunder,
certificates for such shares of the Stock shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such death,
incapacity, dissolution, liquidation or other event had not occurred, regardless
of whether the Custodian shall have received notice of such death, incapacity,
dissolution, liquidation or other event.
(iii) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder of this
Agreement, the Power of Attorney and the Custody Agreement, and (assuming the
making of all filings required under Rule 424(b) or Rule 430A and the due
qualification of the Stock for public offering by the Underwriters under state
and foreign securities laws) for the sale and delivery of the Stock to be sold
by the Selling Stockholder hereunder, have been obtained; and the Selling
Stockholder has the right, power and authority to enter into this Agreement, the
Power of Attorney and Custody Agreement and to sell, assign, transfer and
deliver the Stock to be sold by the Selling Stockholder hereunder; the Power of
Attorney and the Custody Agreement constitute valid and binding obligations and
agreements of such Selling Stockholder in accordance with their respective
terms.
(iv) The performance of this Agreement, the Selling
Stockholder's Irrevocable Power of Attorney and the Custody Agreement and the
consummation of the transactions herein and therein contemplated will not result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder is bound, or (assuming the making of all filings
required under Rule 424(b) or Rule 430A and the due qualification of the Stock
for public offering by the Underwriters under state and foreign securities laws)
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over such Selling Stockholder or the property of
such Selling Stockholder.
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which has constituted, or which is designed
to or might reasonably be expected to cause or result in, stabilization or
manipulation of the price of sale or resale of the Stock.
(vi) The Selling Stockholder has reviewed the Registration
Statement and Prospectus and nothing has come to the attention of the Selling
Stockholder that would lead the Selling Stockholder to believe that either (A)
on the Effective Date, the Registration Statement
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<PAGE> 9
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or (B) on the Effective Date the Prospectus
contained and, on the Closing Date and any later date on which Option Stock is
to be purchased, contains any untrue statement of a material fact or omitted or
omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
2,600,000 shares of the Underwritten Stock to the several Underwriters, each
Selling Stockholder agrees to sell to the several Underwriters the number of
shares of the Underwritten Stock set forth in Schedule II opposite the name of
such Selling Stockholder, and each of the Underwriters agrees to purchase from
the Company and the Selling Stockholders the respective aggregate number of
shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company
and the Selling Stockholders and purchased by the several Underwriters shall be
$[_____] per share. The obligation of each Underwriter to the Company and each
of the Selling Stockholders shall be to purchase from the Company and the
Selling Stockholders that number of shares of the Underwritten Stock which
represents the same proportion of the total number of shares of the Underwritten
Stock to be sold by each of the Company and the Selling Stockholders pursuant to
this Agreement as the number of shares of the Underwritten Stock set forth
opposite the name of such Underwriter in Schedule I hereto represents of the
total number of shares of the Underwritten Stock to be purchased by all
Underwriters pursuant to this Agreement, as adjusted by you in such manner as
you deem advisable to avoid fractional shares. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as provided in
paragraphs (b) and (c) of this Section 3, the agreement of each Underwriter is
to purchase only the respective number of shares of the Underwritten Stock
specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the non-defaulting Underwriters shall have the
right within twenty-four (24) hours after receipt by you of such notice to
purchase, or procure one or more other Underwriters to purchase, in such
proportions as may be agreed upon between you and such purchasing Underwriter or
Underwriters and upon the terms herein set forth, all or any part of the shares
of the Stock which such defaulting Underwriter or Underwriters agreed to
purchase. If the non-defaulting Underwriters fail so to make such arrangements
with respect to all such shares and portion, the number of shares of the Stock
which each non-defaulting Underwriter is otherwise obligated to purchase under
this Agreement shall be automatically increased on a pro rata basis to absorb
the remaining shares and portion which the defaulting
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<PAGE> 10
Underwriter or Underwriters agreed to purchase; provided, however, that the
non-defaulting Underwriters shall not be obligated to purchase the shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase if
the aggregate number of such shares of the Stock exceeds 10% of the total number
of shares of the Stock which all Underwriters agreed to purchase hereunder. If
the total number of shares of the Stock which the defaulting Underwriter or
Underwriters agreed to purchase shall not be purchased or absorbed in accordance
with the two preceding sentences, the Company and the Selling Stockholders shall
have the right, within twenty-four (24) hours next succeeding the 24-hour period
above referred to, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such shares and portion on the terms herein
set forth. In any such case, either you or the Company and the Selling
Stockholders shall have the right to postpone the Closing Date determined as
provided in Section 5 hereof for not more than seven business days after the
date originally fixed as the Closing Date pursuant to said Section 5 in order
that any necessary changes in the Registration Statement, the Prospectus or any
other documents or arrangements may be made. If neither the non-defaulting
Underwriters nor the Company and the Selling Stockholders shall make
arrangements within the 24-hour periods stated above for the purchase of all the
shares of the Stock which the defaulting Underwriter or Underwriters agreed to
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company or the Selling
Stockholders to any non-defaulting Underwriter and without any liability on the
part of any non-defaulting Underwriter to the Company or the Selling
Stockholders. Nothing in this paragraph (b), and no action taken hereunder,
shall relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth, the
Company grants an option to the several Underwriters to purchase, severally and
not jointly, up to 525,000 shares in the aggregate, of the Option Stock from the
Company at the same price per share as the Underwriters shall pay for the
Underwritten Stock. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the 30th
day after the date of this Agreement upon written or telegraphic notice by you
to the Company setting forth the aggregate number of shares of the Option Stock
as to which the several Underwriters are exercising the option. Delivery of
certificates for the shares of Option Stock, and payment therefor, shall be made
as provided in Section 5 hereof. The number of shares of the Option Stock to be
purchased by each Underwriter shall be the same percentage of the total number
of shares of the Option Stock to be purchased by the several Underwriters as
such Underwriter is purchasing of the Underwritten Stock, as adjusted by you in
such manner as you deem advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change
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<PAGE> 11
the public offering price after the closing of the public offering and increase
or decrease the concessions and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front cover
page and under "Underwriting" in the Registration Statement, any Preliminary
Prospectus or the Prospectus relating to the Stock (insofar as such information
relates to the Underwriters) constitutes the only information furnished by the
Underwriters to the Company for inclusion in the Registration Statement, any
Preliminary Prospectus, and the Prospectus, and you on behalf of the respective
Underwriters represent and warrant to the Company that the statements made
therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten Stock
and the (if the option granted by Section 3(c) hereof shall have been exercised
not later than 7:00 a.m., San Francisco time, on the date two business days
preceding the Closing Date), and payment therefor, shall be made at the office
of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109 at 7:00 a.m.,
San Francisco time, on the fourth business day after the date of this Agreement,
or at such time on such other day, not later than seven full business days after
such fourth business day, as shall be agreed upon in writing by the Company, the
Selling Stockholders and you. The date and hour of such delivery and payment
(which may be postponed as provided in Section 3(b) hereof) are herein called
the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, and on or before the 30th day after the date of this Agreement,
delivery of certificates for the shares of Option Stock, and payment therefor,
shall be made at the office of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109 at 7:00 a.m., San Francisco time, on the third business day
after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order, and payment for the Stock purchased from the Selling
Stockholders shall be made to the Custodian, for the account of the Selling
Stockholders, in each case by one or more wire transfers or one or more
certified or official bank check or checks in same day funds. Such payment shall
be made upon delivery of certificates for the Stock to you for the respective
accounts of the several Underwriters against receipt therefor signed by you.
Certificates for the Stock to be delivered to you shall be registered in such
name or names and shall be in such denominations as you may request at least one
business day before the Closing Date, in the case of Underwritten Stock, and at
least one business day prior to the purchase thereof, in the case of the Option
Stock. Such certificates will be made available to the Underwriters for
inspection, checking and packaging at the offices of Lewco Securities
Corporation, 2 Broadway, New York, New York 10004 not less than one full
business day prior to the Closing Date or, in the case of the Option Stock, by
3:00 p.m., New York time, on the business day preceding the date of purchase.
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<PAGE> 12
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Stockholders for shares to be purchased by any Underwriter whose
check shall not have been received by you on the Closing Date or any later date
on which Option Stock is purchased for the account of such Underwriter. Any such
payment by you shall not relieve such Underwriter from any of its obligations
hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. Each
of the Company and the Selling Stockholders respectively covenants and agrees as
follows:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A and
(ii) not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you shall have reasonably objected in writing or which
is not in compliance in all material respects with the Securities Act or the
rules and regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by the Company of notice
of the initiation or threatening of any proceeding for such purpose. The Company
and the Selling Stockholders will make every reasonable effort to prevent the
issuance of such a stop order and, if such an order shall at any time be issued,
to obtain the withdrawal thereof at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you
a signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any, to the Registration Statement (together with,
in each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of each of the foregoing (but without exhibits)
so that one copy of each may be distributed to each Underwriter, (ii) as
promptly as possible deliver to you and send to the several Underwriters, at
such office or offices as you may designate, as many copies of the Prospectus as
you may reasonably request, and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, likewise send to the Underwriters as many additional
copies of the Prospectus and as many copies of any supplement to the Prospectus
and of any amended prospectus, filed by the Company with the Commission, as you
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<PAGE> 13
may reasonably request for the purposes contemplated by the
Securities Act. The copies of the Registration Statement, any Preliminary
Prospectus or Prospectus and each amendment or supplement thereto furnished to
the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the reasonable opinion
of counsel for the Company or of counsel for the Underwriters, to supplement or
amend the Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is delivered to a purchaser of the
Stock, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus so that the Prospectus as
so supplemented or amended will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time such
Prospectus is delivered to such purchaser, not misleading. If, after the public
offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the reasonable opinion either
of counsel for the Company or of counsel for the Underwriters such proposed
variation requires that the Prospectus be supplemented or amended, the Company
will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The Company
authorizes the Underwriters and all dealers to whom any of the Stock may be sold
by the several Underwriters to use the Prospectus, as from time to time amended
or supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or blue sky
laws; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. 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 you may reasonably request for distribution of the Stock.
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<PAGE> 14
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to stockholders of
the Company and of all information, documents and reports filed with the
Commission.
(h) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including all costs and
expenses incident to (i) the preparation, printing and filing with the
Commission and the NASD of the Registration Statement, any Preliminary
Prospectus and the Prospectus, (ii) the furnishing to the Underwriters of copies
of any Preliminary Prospectus and of the several documents required by paragraph
(c) of this Section 6 to be so furnished, (iii) the printing of this Agreement
and related documents delivered to the Underwriters, (iv) the preparation,
printing and filing of all supplements and amendments to the Prospectus referred
to in paragraph (d) of this Section 6, (v) the furnishing to you and the
Underwriters of the reports and information referred to in paragraph (g) of this
Section 6 and (vi) the printing and issuance of stock certificates, including
the transfer agent's fees. The Selling Stockholders will pay any transfer taxes
incident to the transfer to the Underwriters of the shares of the Stock being
sold by the Selling Stockholders.
(i) The Company and the Selling Stockholders jointly and severally
agree to reimburse you, for the account of the several Underwriters, for blue
sky fees and related disbursements (including reasonable counsel fees and
disbursements and cost of printing memoranda for the Underwriters) paid by or
for the account of the Underwriters or their counsel in qualifying the Stock
under state securities or blue sky laws and for filing fees incident to the
review of the offering by the NASD.
(j) The provisions of paragraphs (h) and (i) of this Section are
intended to relieve the Underwriters from the payment of the expenses and costs
which the Company and the Selling Stockholders hereby agree to pay and shall not
affect any agreement which the Company and the Selling Stockholders may make, or
may have made, for the sharing of any such expenses and costs.
(k) The Company and each of the Selling Stockholders hereby agree that,
without the prior written consent of Hambrecht & Quist LLC on behalf of the
Underwriters, the Company or such Selling Stockholder, as the case may be, will
not, for a period of 90 days following the Effective Date, directly or
indirectly, (i) sell, offer, contract to sell, make any short sale, pledge, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase or otherwise transfer or dispose
of any shares of Common Stock or any securities convertible into or exchangeable
or exercisable for or any rights to purchase or acquire Common Stock or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences or ownership of Common Stock, whether any such
transaction described in clause (i) or (ii) above is settled by delivery of
Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (i) the Stock to be sold to the Underwriters
pursuant to this Agreement, (ii) shares of Common Stock issued by
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<PAGE> 15
the Company upon the exercise of options granted under the stock option plans of
the Company (the "Option Plans") or upon the exercise of options outstanding as
of the date hereof, all as described in the Prospectus and (iii) options to
purchase Common Stock granted under the Option Plans. For purposes of this
paragraph (k), a sale, offer, or other disposition shall be deemed to include
any sale to an institution which can, following such sale, sell Common Stock to
the public in reliance on Rule 144A.
(l) Until the termination of the offering of the Stock, the Company
will timely file all documents, and any amendments to previously filed
documents, required to be filed by it pursuant to Sections 13, 14 or 15(d) of
the Exchange Act.
(m) The Company is familiar with the Investment Company Act of 1940, as
amended, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not be an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
(n) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the "effective date of the
Registration Statement" (as defined in Rule 158(c) of the Securities Act), the
Company will make generally available an earnings statement in accordance with
Section 11(a) of the Securities Act and Rule 158 thereunder.
(o) The Company covenants that it will not, any time prior to April 30,
1999 (i) invest more than 25% in book value of its liquid assets, as outstanding
from time to time, in securities or instruments with a maturity greater than one
year ("Long-term Securities") or (ii) enter into any margin loan or similar
financing arrangement pursuant to which securities or instruments in which the
Company has invested proceeds of the offering are pledged to secure
indebtedness, other than with a commercial bank or insurance company. With
respect to the Long-term Securities, such securities, during the period set
forth above, shall be investment-grade (as such term is defined by Standard &
Poor's), interest-bearing, denominated in U.S. dollars and have a maturity
within ten years of the date of purchase by the Company.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) below, the Company and
the Selling Stockholders jointly and severally agree to indemnify and hold
harmless each Underwriter and each person (including each partner or officer
thereof) who controls any Underwriter within the meaning of Section 15 of the
Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Exchange Act, or the common law
or otherwise, and the Company and the Selling Stockholders jointly and severally
agree to reimburse each such Underwriter and controlling person for any legal or
other expenses (including, except as
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<PAGE> 16
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement), or 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, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that (1) the indemnity agreements of the Company and the
Selling Stockholders contained in this paragraph (a) shall not apply to any such
losses, claims, damages, liabilities or expenses if such statement or omission
was made in reliance upon and in conformity with information furnished as herein
stated or otherwise furnished in writing to the Company by or on behalf of any
Underwriter for use in any Preliminary Prospectus or the Registration Statement
or the Prospectus or any such amendment thereof or supplement thereto, and (2)
the indemnity agreement contained in this paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Stock which is the subject thereof (or to the benefit of
any person controlling such Underwriter) if at or prior to the written
confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof. The indemnity agreements of
the Company and the Selling Stockholders contained in this paragraph (a) and the
representations and warranties of the Company and the Selling Stockholders
contained in Section 2 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery of any payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its officers who signs the Registration Statement on his
own behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act, and the Selling Stockholders from and against any and
all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
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<PAGE> 17
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus and any 462(b) registration
statement as part thereof) or any post-effective amendment thereto (including
any 462(b) registration statement) or 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 or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished as herein stated or otherwise
furnished in writing to the Company by or on behalf of such indemnifying
Underwriter for use in the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto. The indemnity agreement of each
Underwriter contained in this paragraph (b) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and
(b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against it, in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such 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 such indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding against,
or investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the Notice of Defense) to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying
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<PAGE> 18
party or parties, then counsel for the indemnified party or parties shall be
entitled to conduct the defense to the extent reasonably determined by such
counsel to be necessary to protect the interests of the indemnified party or
parties and (ii) in any event, the indemnified party or parties shall be
entitled, to have counsel chosen by such indemnified party or parties
participate in, but not conduct, the defense. If, within a reasonable time after
receipt of the Notice, an indemnifying party gives a Notice of Defense and the
counsel chosen by the indemnifying party or parties is reasonably satisfactory
to the indemnified party or parties, the indemnifying party or parties will not
be liable under paragraphs (a) through (c) of this Section 7 for any legal or
other expenses subsequently incurred by the indemnified party or parties in
connection with the defense of the action, suit, investigation, inquiry or
proceeding, except that (A) the indemnifying party or parties shall bear the
legal and other expenses of not more than one separate counsel for the
indemnified party or parties incurred in connection with the conduct of the
defense as referred to in clause (i) of the proviso to the preceding sentence
and (B) the indemnifying party or parties shall bear such other expenses as it
or they have authorized to be incurred by the indemnified party or parties. If,
within a reasonable time after receipt of the Notice, no Notice of Defense has
been given, the indemnifying party or parties shall be responsible for any legal
or other expenses incurred by the indemnified party or parties in connection
with the defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party shall, in
lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Stock received by the Company and the Selling
Stockholders and the total underwriting discount received by the Underwriters,
as set forth in the table on the cover page of the Prospectus, bear to the
aggregate public offering price of the Stock. 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 each indemnifying party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
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<PAGE> 19
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be 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 into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparation to defend or defense against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Stock purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling Stockholders will, without the
prior written consent of each Underwriter, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding. No Underwriter shall be liable for any settlement of
any proceeding entered into without its written consent.
(f) The liability of each Selling Stockholder under such Selling
Stockholder's representations and warranties contained in paragraph (a) of
Section 2 hereof and under the indemnity and reimbursement agreements contained
in the provisions of this Section 7 and Section 11 hereof shall be limited to an
amount equal to the net proceeds received by the Selling Stockholders for the
Stock sold by such Selling Stockholders to the Underwriters. The Company and the
Selling Stockholders may agree, as among themselves and without limiting the
rights of the Underwriters under this Agreement, as to the respective amounts of
such liability for which they each shall be responsible.
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<PAGE> 20
8. TERMINATION. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company and the
Selling Stockholders if after the date of this Agreement trading in the Common
Stock shall have been suspended, or if there shall have occurred (i) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions in the financial markets of the United States would, in the
Underwriters' reasonable judgment, make the offering or delivery of the Stock
impracticable, (iii) suspension of trading in securities generally or a material
adverse decline in the value of securities generally on the New York Stock
Exchange, the American Stock Exchange, or the Nasdaq National Market, or
limitation on prices (other than limitations on hours or numbers of days of
trading) for securities on either such exchange or system, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of, or commencement of any proceeding or investigation
by, any court, legislative body, agency or other governmental authority which in
the Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company or the Selling
Stockholders to the Underwriters and no liability of the Underwriters to the
Company or the Selling Stockholders; provided, however, that in the event of any
such termination the Company and the Selling Stockholders agree to indemnify and
hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Stockholders under
this Agreement, including all costs and expenses referred to in paragraphs (h)
and (i) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and by the Selling Stockholders of all their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Option Stock is to be purchased, as the case may be,
and to the following further conditions:
(a) The Registration Statement shall have become effective; and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder and
the validity and form of the certificates representing the Stock, all corporate
proceedings and other legal matters incident to the foregoing, and the form of
the Registration Statement and of the Prospectus
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<PAGE> 21
(except as to the financial statements contained therein), shall have been
approved at or prior to the Closing Date by Hale and Dorr LLP, counsel for the
Underwriters.
(c) You shall have received from Buchanan Ingersoll Professional
Corporation, counsel for the Company and the Selling Stockholders, an opinion,
addressed to the Underwriters and dated the Closing Date, covering the matters
set forth in Annex A hereto. If Option Stock is purchased at any date after the
Closing Date, you shall receive an additional opinion from the aforementioned
counsel, addressed to the Underwriters and dated such later date, confirming
that the statements expressed as of the Closing Date in each such opinion remain
valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct in all material respects and neither the Registration Statement nor the
Prospectus omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, respectively, not misleading,
(ii) since the Effective Date, no event has occurred which should have been set
forth in a supplement or amendment to the Prospectus which has not been set
forth in such a supplement or amendment, (iii) since the respective dates as of
which information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the business, properties, financial
condition or earnings of the Company and its subsidiaries as a whole, whether or
not arising from transactions in the ordinary course of business, and, since
such dates, except in the ordinary course of business, neither the Company nor
any of its subsidiaries has entered into any material transaction not referred
to in the Registration Statement in the form in which it originally became
effective and the Prospectus contained therein, (iv) neither the Company nor any
of its subsidiaries has any material contingent obligations which are not
disclosed in the Registration Statement and the Prospectus, (v) there are not
any pending or known threatened legal proceedings to which the Company or any of
its subsidiaries is a party or of which property of the Company or any of its
subsidiaries is the subject which are material and which are not disclosed in
the Registration Statement and the Prospectus, (vi) there are not any
franchises, contracts, leases or other documents which are required to be filed
as exhibits to the Registration Statement which have not been filed as required,
(vii) the representations and warranties of the Company herein are true and
correct in all material respects as of the Closing Date or any later date on
which Option Stock is to be purchased, as the case may be, and (viii) there has
not been any material change in the market for securities in general or in
political, financial or economic conditions from those reasonably foreseeable as
to render it impracticable in your reasonable judgment to make a public offering
of the Stock, or a material adverse change in market levels for securities in
general (or those of companies in particular) or financial or economic
conditions which render it inadvisable to proceed.
(e) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or such
later date, as the case may
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<PAGE> 22
be, and signed by the Chief Executive Officer and the Chief Financial Officer of
the Company, stating that the respective signers of said certificate have
carefully examined the Registration Statement in the form in which it originally
became effective and the Prospectus contained therein and any supplements or
amendments thereto, and that the statements included in clauses (i) through
(vii) of paragraph (d) of this Section 9 are true and correct.
(f) You shall have received from KPMG Peat Marwick LLP, a letter or
letters, addressed to the Underwriters and dated the Closing Date and any later
date on which Option Stock is purchased, confirming that they are independent
public accountants with respect to the Company within the meaning of the
Securities Act and the applicable published rules and regulations thereunder and
based upon the procedures described in its letter delivered to you concurrently
with the execution of this Agreement (herein called the Original Letter), but
carried out to a date not more than five business days prior to the Closing Date
or such later date on which Option Stock is purchased (i) confirming, to the
extent true, that the statements and conclusions set forth in the Original
Letter are accurate as of the Closing Date or such later date, as the case may
be, and (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to reflect any
changes in the facts described in the Original Letter since the date of the
Original Letter or to reflect the availability of more recent financial
statements, data or information. The letters shall not disclose any change, or
any development involving a prospective change, in or affecting the business or
properties of the Company or any of its subsidiaries which, in your sole
judgment, makes it impractical or inadvisable to proceed with the public
offering of the Stock or the purchase of the Option Stock as contemplated by the
Prospectus.
(g) You shall have received on the Closing Date a certificate from each
Selling Stockholder stating that (i) the representations and warranties made by
such Selling Stockholder herein are true and correct on the Closing Date; and
(ii) such Selling Stockholder has complied with each obligation which is
required to be performed on his or its part at or prior to the Closing Date.
(h) You shall have received from KPMG Peat Marwick LLP a letter stating
that their review of the Company's system of internal accounting controls, to
the extent they deemed necessary in establishing the scope of their examination
of the Company's financial statements as of and as at April 30, 1997 and October
31, 1997, did not disclose any weakness in internal controls that they
considered to be material weaknesses.
(i) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several states, or
other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(j) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been duly authorized for inclusion on the Nasdaq National
Market upon official notice of issuance.
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<PAGE> 23
(k) On or prior to the Closing Date, you shall have received from all
directors, executive officers,[and beneficial holders (known to the Company) of
more than 5% of the outstanding Common Stock, and all Selling Stockholders,
stockholders agreements in form reasonably satisfactory to Hambrecht & Quist
LLC, stating that without the prior written consent of Hambrecht & Quist LLC on
behalf of the Underwriters, such person or entity will not, for a period of 90
days following the Effective Date, directly or indirectly (i) sell, offer,
contract to sell, make any short sale, pledge, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any shares of Common
Stock or any securities convertible into or exchangeable or exercisable for or
any right to purchase or acquire Common Stock or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Hale and Dorr LLP, counsel for the Underwriters, shall
be reasonably satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Stockholders. Any such termination shall be without
liability of the Company or the Selling Stockholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Stockholders; provided, however, that (i) in the event of such termination, the
Company and the Selling Stockholders agree to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company and the Selling Stockholders under this Agreement,
including all costs and expenses referred to in paragraphs (h) and (i) of
Section 6 hereof, and (ii) if this Agreement is terminated by you because of any
refusal, inability or failure on the part of the Company or the Selling
Stockholders to perform any agreement herein, to fulfill any of the conditions
herein, or to comply with any provision hereof other than by reason of a default
by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
STOCKHOLDERS. The obligation of the Company and the Selling Stockholders to
deliver the Stock shall be subject to the conditions that (a) the Registration
Statement shall have become effective and (b) no stop order suspending the
effectiveness thereof shall be in effect and no proceedings therefor shall be
pending or threatened by the Commission.
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<PAGE> 24
In case either of the conditions specified in this Section 10 shall not
be fulfilled, this Agreement may be terminated by the Company and the Selling
Stockholders by giving notice to you. Any such termination shall be without
liability of the Company and the Selling Stockholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Stockholders; provided, however, that (i) in the event of any such termination
the Company and the Selling Stockholders jointly and severally agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Stockholders under this Agreement, including all costs and expenses referred to
in paragraphs (h) and (i) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement and subject, in the case of a
Selling Stockholders, to the provisions of paragraph (f) of Section 7, the
Company and the Selling Stockholders hereby jointly and severally agree to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of the Company, the Selling Stockholders and the several
Underwriters and, with respect to the provisions of Section 7 hereof, the
several parties (in addition to the Company, the Selling Stockholders and the
several Underwriters) indemnified under the provisions of said Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Hambrecht & Quist LLC, One Bush Street,
San Francisco, California 94104; and if to the Company, shall be mailed,
telegraphed or delivered to it at its office, Four Station Square, Suite 660,
Pittsburgh, PA 15219, Attention: Chief Executive Officer; and if to the Selling
Stockholders, shall be mailed, telegraphed or delivered to the Selling
Stockholders in care of the Custodian, Ansoft Corporation, Four Station Square,
Suite 660, Pittsburgh, PA 15219. All notices given by telegraph shall be
promptly confirmed by letter.
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<PAGE> 25
14. DEFAULT BY SELLING STOCKHOLDERS. If on any Closing Date any Selling
Stockholder fails to sell the Stock which such Selling Stockholder 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 the shares of Stock which such Selling
Stockholder has failed to so sell, as set forth in Schedule II hereto, or such
fewer number of shares as may be requested by the Underwriters.
15. 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 Underwriter or controlling person thereof, or by or on behalf of
the Company or the Selling Stockholders or their respective directors or
officers, and (c) delivery and payment for the Stock under this Agreement;
provided, however, that if this Agreement is terminated prior to the Closing
Date, the provisions of paragraph (k) of Section 6 hereof shall be of no further
force or effect.
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 California.
Any person executing and delivering this Agreement as Attorney-in-Fact
for the Selling Stockholders represents by so doing that he has been duly
appointed as Attorney-in-Fact by each such Selling Stockholder pursuant to a
validly existing and binding Power of Attorney which authorizes such
Attorney-in-Fact to take such action.
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<PAGE> 26
Please sign and return to the Company and to the Selling Stockholders
in care of the Company the enclosed duplicates of this letter, whereupon this
letter will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters in accordance with its terms.
Very truly yours,
ANSOFT CORPORATION
By: _________________________
Nicholas Cendes
President and Chief Executive
Officer
SELLING STOCKHOLDERS LISTED ON SCHEDULE II HERETO
By: _________________________
Attorney-in-Fact
The foregoing Agreement
is hereby confirmed and
accepted as of the date
first above written.
HAMBRECHT & QUIST LLC
WESSELS, ARNOLD & HENDERSON, L.L.C.
By Hambrecht & Quist LLC
By: _________________________
Managing Director
Acting on behalf of the several
Underwriters, including themselves,
named in Schedule I hereto.
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<PAGE> 27
SCHEDULE I
UNDERWRITERS
Number of Shares
to be
Underwriters Purchased
------------ ---------
Hambrecht & Quist LLC
Wessels, Arnold & Henderson, L.L.C.
-27-
<PAGE> 28
SCHEDULE II
SELLING STOCKHOLDERS
Number of
Name and Address* Shares
of Selling Stockholders to be Sold
----------------------- ----------
Thomas A.N. Miller 200,000
Nicholas Csendes 200,000
Ulrich L. and Meta M. Rohde 130,000
Zoltan J. Cendes 120,000
Linda Rosenson Trustee 50,000
Susan Lisa Elmore Trustee 50,000
Maier Family Trust, Residual Fund #2 100,000
Doris I. Wu and Paul Schroeder 50,000
Padmanabhan Premkumar 40,000
Jack Parkes 10,000
Total 950,000
* Address of each Selling Stockholder is c/o Ansoft Corporation, Four Station
Square, Suite 660, Pittsburgh, PA 15219.
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<PAGE> 29
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
COUNSEL FOR THE COMPANY
AND THE SELLING STOCKHOLDERS
(i) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified as a foreign corporation in
each state of the United States of America in which its ownership or leasing of
property requires such qualification except where the failure to be so qualified
would not have a material adverse effect on the business, properties, financial
condition or results of operations of the Company and its subsidiaries taken as
a whole, and has full corporate power and authority to own or lease its
properties and to conduct its business as described in the Registration
Statement; all the issued and outstanding capital stock of each of the
subsidiaries has been duly authorized and validly issued and is fully paid and
nonassessable, and is owned by the Company free and clear of all liens,
encumbrances and security interests, 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 such
subsidiary are outstanding;
(ii) Following the closing of the sale of the Stock under the
Underwriting Agreement, the duly authorized capital stock of the Company
consists of [_________] shares of Preferred Stock, $.01 par value, of which no
shares are outstanding, and [__________] shares of Common Stock, $.01 par value,
of which there will be [___________] shares outstanding (including the
Underwritten Stock); proper corporate proceedings have been taken validly to
authorize such authorized capital stock; all of the outstanding shares of such
capital stock (including the Stock to be sold by the Selling Stockholders) have
been duly and validly issued and are fully paid and nonassessable; the
certificates evidencing the Stock delivered to the Representatives for the
several accounts of the Underwriters are in due and proper form under Delaware
law, and when duly countersigned by the Company's transfer agent and registrar
and delivered to you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions of the Underwriting
Agreement, the Stock represented thereby will be duly authorized and validly
issued, fully paid and non-assessable; any Option Stock purchased after the
Closing Date when issued and delivered to and paid for by the Underwriters as
provided in the Underwriting Agreement, will have been duly and validly issued
and fully paid and non-assessable; no preemptive rights of, or rights of refusal
in favor of, stockholders exist with respect to the Stock, or the issuance and
sale thereof, pursuant to the Certificate of Incorporation or By-Laws of the
Company and, to such counsel's knowledge, there are no contractual preemptive
rights with respect to the issuance and sale of the Stock that have not been
waived or
-1-
<PAGE> 30
rights of first refusal or rights of co-sale which exist with respect to the
issuance and sale of the Stock or with respect to the Stock being sold by the
Selling Stockholders;
(iii) The Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus is in effect and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission;
(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained therein,
as to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and with the rules
and regulations of the Commission thereunder;
(v) the information required to be set forth in the Registration
Statement in answer to Item 9, Item 10 (insofar as it relates to such counsel)
and Item 11(c) of Form S-1 is to such counsel's knowledge accurately and
adequately set forth therein in all material respects or no response is required
with respect to such Items; and, to such counsel's knowledge the description of
the Company's stock option plans and the options granted and which may be
granted thereunder and the options granted otherwise than under such plans set
forth in the Registration Statement accurately and fairly presents in all
material respects the information required to be shown with respect to said
plans and options to the extent required by the Securities Act and the rules and
regulations of the Commission thereunder;
(vi) such counsel does not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion of
such counsel are of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement, which are not described and filed as required;
(vii) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the Underwriting Agreement has been duly executed and delivered
by or on behalf of the Selling Stockholders and the Letter of Transmittal and
Custodian Agreement between the Selling Stockholders and the Company, as
Custodian, and the Power of Attorney referred to in such Letter of Transmittal
and Custodian Agreement have been duly executed and delivered by the several
Selling Stockholders;
(ix) to such counsel's knowledge each Selling Stockholder has full
legal right, power and authority, and any approval required by law (other than
any approval required by the applicable federal or state securities and Blue Sky
laws) to sell, assign, transfer and deliver the Stock to be sold by him in the
manner provided in the Underwriting Agreement and the Letter of Transmittal
Custody Agreement and the Selling Stockholder's Irrevocable Power of Attorney;
-2-
<PAGE> 31
(x) the issuance and sale by the Company of the shares of Stock sold by
the Company as contemplated by the Underwriting Agreement will not conflict
with, or result in a breach of, the Certificate of Incorporation or By-Laws of
the Company or any agreement or instrument known to such counsel to which the
Company or its subsidiary is a party or any applicable law or regulation (other
than federal or state securities or blue sky laws), or so far as is known to
such counsel, any order, writ, injunction or decree, of any jurisdiction, court
or governmental instrumentality;
(xi) all holders of securities of the Company having rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company are selling all or a
portion of such securities in the Offering pursuant to such rights, have waived
such rights or such rights have expired by reason of lapse of time following
notification of the Company's intent;
(xii) upon delivery to the Underwriters of a certificate for such of
the Stock that is being sold by each Selling Stockholder under the Underwriting
Agreement and payment for such Stock by the Underwriters, each Underwriter will
acquire all of the rights of such Selling Stockholder in such Stock, and each
Underwriter will also acquire such Stock free of any "adverse claim" (within the
meaning of Section 8-302(2) of the Uniform Commercial Code);
(xiii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated in the Underwriting Agreement, except such as have been obtained
under the Securities Act and such as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the Stock by
the Underwriters; and
(xiv) the Stock sold by the Selling Stockholders is listed and duly
admitted to trading on the Nasdaq Stock Market, and the Stock issued and sold by
the Company will have been duly authorized for listing by the Nasdaq Stock
Market upon official notice of issuance.
In addition to the matters set forth above, counsel rendering the
foregoing opinion shall also include a statement to the effect that nothing has
come to the attention of such counsel that leads them to believe that the
Registration Statement (except as to the financial statements and schedules, or
notes thereto, and other financial data contained or incorporated by reference
therein, as to which such counsel need not express any opinion or belief) at the
Effective Date contained any 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, or that the Prospectus (except as to the
financial statements and schedules, or notes thereto, and other financial data
contained or incorporated by reference therein as to which such counsel need not
express any opinion or belief) as of its date or at the Closing Date (or any
later date on which Option Stock is purchased), contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
---------------------------------------
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<PAGE> 32
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States, the State of Delaware or of the
Commonwealth of Pennsylvania, upon opinions of local counsel satisfactory in
form and scope to counsel for the Underwriters. Copies of any opinions so relied
upon shall be delivered to the Underwriters and to counsel for the Underwriters
and the foregoing opinion shall also state that counsel knows of no reason the
Underwriters are not entitled to rely upon the opinions of such local counsel.
-4-
<PAGE> 1
Exhibit 3.1
AMENDED AND
RESTATED CERTIFICATE
OF INCORPORATION
OF ANSOFT CORPORATION
(Certificate of Incorporation filed March 17, 1989)
ANSOFT CORPORATION (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Law"), does hereby certify:
I. That the Board of Directors of the Corporation, by unanimous
written consent without a meeting pursuant to Section 141(f) of the Law,
adopted a resolution setting forth the Amended and Restated Certificate of
Incorporation set forth below, declaring it advisable and submitting it to the
stockholders entitled to vote in respect thereof for their consideration of
such Amended and Restated Certificate of Incorporation.
II. That by written consent executed in accordance with Section 228 of
the Law, the holders of a majority of the outstanding stock entitled to vote
thereon voted in favor of the adoption of the Second Amended and Restated
Certificate of Incorporation as set forth below, and written notice of such
action has been given as provided in Section 228(c) of the Law.
III. That the First Restated Certificate of Incorporation and Original
Certificate of Incorporation of the Corporation are hereby superseded in their
entirety by this Second Amended and Restated Certificate of Incorporation.
IV. That the Second Amended and Restated Certificate of Incorporation
of the Corporation set forth below has been duly adopted in accordance with
Section 242 and 245 of the Law.
FIRST: The name of the Corporation is ANSOFT CORPORATION.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is the Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the Law.
FOURTH: The total number of shares of capital stock of all classes
which the Corporation shall have authority to issue is 11,000,000 shares which
shall be divided as follows:
<PAGE> 2
(i) 10,000,000 shares of Common Stock, par value $0.01 per share (the "Common
Stock"); and (ii) 1,000,000 shares of Preferred Stock, par value $0.01 per
share (the "Preferred Stock"). The designations and the powers, preferences and
relative, participating, optional or other rights of the capital stock and the
qualifications, limitations or restrictions thereof are as follows:
A. COMMON STOCK PROVISIONS
1. Voting Rights. Except as otherwise required by law or expressly
provided herein, the holder of each share of the Common Stock shall have one
vote on each matter submitted to a vote of the stockholders of the Corporation.
2. Dividend Rights. The holders of the Common Stock shall be entitled
to receive dividends at such times and in such amounts as may be determined by
the Board of Directors of the Corporation.
3. Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, and subject to
the preferential rights, if any, of any outstanding Preferred Stock, such
preferential rights to be determined by the Board, the holders of the Common
Stock shall be entitled to share ratably in the remaining assets of the
Corporation.
B. PREFERRED STOCK PROVISIONS
1. The Board of Directors is hereby expressly authorized, at any time
or from time to time, to divide any or all of the shares of Preferred Stock
into one or more series, and in the resolution or resolutions establishing a
particular series, before issuance of any of the shares thereof, to fix and
determine the number of shares and the designation of such series, so as to
distinguish it from the shares of all other series and to fix and determine the
voting rights (which may be full, limited, multiple or fractional or none),
designations, preferences, qualifications, privileges, limitations, options,
conversion rights, restrictions and other special or relative rights of the
Preferred Stock of such series, to the fullest extent now or hereafter
permitted by the laws of the State of Delaware; provided, however that neither
the terms of the class nor any such series shall be established by the Board of
Directors without the approval of the holders of the series Preferred Stock
then outstanding, voting separately as a class, if such approval would then be
required by law to authorize a class or series of stock having such terms, and
until such approval shall have been obtained the class or any such series of
Preferred Stock shall not be deemed to be authorized. The Board of Directors
may in its discretion, at any time or from time to time, issue or cause to be
issued all or any part of the authorized and unissued shares of Preferred Stock
for consideration of such character and value as the Board of Directors shall
from time to time fix or determine.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute and unless otherwise provided herein, the Board of Directors is, by
action of the full Board of Directors, expressly authorized to make, alter or
repeal the By-Laws of the Corporation.
-2-
<PAGE> 3
SIXTH: Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors of the Corporation or in
the By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws of the Corporation so provide.
SEVENTH: The Corporation shall indemnify, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time, all persons who it may indemnify
pursuant thereto. The personal liability of a director of the Corporation to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director shall be limited to the fullest extent permitted
by the General Corporation Law of the State of Delaware, as it now exists or
may hereafter be amended.
EIGHTH: No amendment to or repeal of Article SEVENTH or this Article
EIGHTH of this Certificate of Incorporation shall apply to or have any effect
on the rights of any individual referred to in Article SEVENTH for or with
respect to acts or omissions of such individual occurring prior to such
amendment or repeal.
NINTH: The certificate of incorporation of the Corporation, as herein
amended, shall constitute a restatement of and shall supersede the certificate
of incorporation of the Corporation, as previously restated.
IN WITNESS WHEREOF, The Corporation has caused this Certificate of
Incorporation to be signed by its President and its Secretary, all on ___ day
of February, 1996.
ANSOFT CORPORATION
ATTEST: By: Nicholas Csendes
----------------
President
Thomas A.N. Miller
-------------------
Assistant Secretary
-3-
<PAGE> 1
Exhibit 3.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ANSOFT CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is Ansoft Corporation.
2. The Certificate of Incorporation of the Corporation is hereby
amended by striking out Article FOURTH thereof and substituting in lieu of said
Article the following new Article:
FOURTH: The total number of shares of capital stock of all
classes which the Corporation shall have authority to issue is
26,000,000 shares which shall be divided as follows: (i) 25,000,000
shares of Common Stock, par value $0.01 per share (the "Common
Stock"); and (ii) 1,000,000 shares of Preferred Stock, par value $0.01
per share (the "Preferred Stock"). The designations and the powers,
preferences and relative, participating, optional or other rights of
the capital stock and the qualifications, limitations or restrictions
thereof are as follows:
A. COMMON STOCK PROVISIONS
1. Voting Rights. Except as otherwise required by
law or expressly provided herein, the holder of each
share of the Common Stock shall have one vote on
each matter submitted to a vote of the stockholders
of the Corporation.
2. Dividend Rights. The holders of the Common Stock
shall be entitled to receive dividends at such times
and in such amounts as may be determined by the
Board of Directors of the Corporation.
3. Liquidation Rights. In the event of any
liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and
subject to the preferential rights, if any, of any
outstanding Preferred Stock, such preferential
rights to be determined by the Board, the holders of
the Common Stock shall be entitled to share ratably
in the remaining assets of the Corporation.
B. PREFERRED STOCK PROVISIONS
<PAGE> 2
The Board of Directors is hereby expressly
authorized, at any time or from time to time, to
divide any or all of the shares of Preferred Stock
into one or more series, and in the resolution or
resolutions establishing a particular series, before
issuance of any of the shares thereof, to fix and
determine the number of shares and the designation
of such series, so as to distinguish it from the
shares of all other series and to fix and determine
the voting rights (which may be full, limited,
multiple or fractional or none), designations,
preferences, qualifications, privileges,
limitations, options, conversion rights,
restrictions and other special or relative rights of
the Preferred Stock of such series, to the fullest
extent now or hereafter permitted by the laws of the
State of Delaware; provided, however that neither
the terms of the class nor any such series shall be
established by the Board of Directors without the
approval of the holders of the series Preferred
Stock then outstanding, voting separately as a
class, if such approval would then be required by
law to authorize a class or series of stock having
such terms, and until such approval shall have been
obtained the class or any such series of Preferred
Stock shall not be deemed to be authorized. The
Board of Directors may in its discretion, at any
time or from time to time, issue or cause to be
issued all or any part of the authorized and
unissued shares of Preferred Stock for consideration
of such character and value as the Board of
Directors shall from time to time fix or determine.
3. The amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
Signed on October 6, 1997
ANSOFT CORPORATION
By: /s/ Nicholas Csendes
----------------------
Nicholas Csendes
President
-2-
<PAGE> 1
Exhibit 5.1
Buchanan Ingersoll Professional Corporation
One Oxford Centre, 301 Grant Street, 20th Floor
Pittsburgh, PA 15219
FAX: (412) 562-1041
November 13, 1997
Ansoft Corporation
Commerce Court Building
Four Station Square, Suite 660
Pittsburgh, PA 15219
Re: Ansoft Corporation Public Offering
of Common Stock
-------------------------------------
Dear Sirs:
We have acted as counsel to Ansoft Corporation, a Delaware Corporation
(the "Company"), in connection with the public offering by the Company and
certain Selling Stockholders identified in the Underwriting Agreement
(as herein defined), of up to 4,025,000 shares of the Company's Common Stock,
par value $0.01 per share (the "Common Stock"), including 525,000 shares
issuable by the Company upon exercise of the Underwriters' over-allotment
option, pursuant to the terms of an Underwriting Agreement proposed to be
entered into by and between the Company and Hambrecht & Quist LLC and Wessels,
Arnold & Henderson, L.L.C., as representative of the underwriters (the
"Underwriting Agreement").
In connection with the proposed public offering by the Company, we
have examined the Amended and Restated Certificate of Incorporation of the
Company, as amended, the Bylaws of the Company, as amended, the relevant
corporate proceedings of the Company, the Registration Statement on Form S-1
covering the proposed public offering (the "Registration Statement"), the
Underwriting Agreement in the form filed as Exhibit 1.1 to the Registration
Statement, and such other documents, records, certificates of public officials,
statutes and decisions as we considered necessary to express the opinions
contained herein. In the examination of such documents, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted
to us as originals and the conformity to the original documents of all documents
submitted to us as certified or photostatic copies.
We understand that the shares of Common Stock are to offered and sold
in the manner described in the Prospectus which is a part of the Registration
Statement.
<PAGE> 2
November 13, 1997
Page -2-
Based on the foregoing and assuming the due execution and delivery of
the Underwriting Agreement, we are of the opinion that when the Registration
Statement shall have been declared effective by order of the Securities and
Exchange Commission, and when certificates representing the shares of Common
Stock offered and sold by the Company and the Selling Stockholders have been
duly executed, issued and delivered pursuant to the terms of the Underwriting
Agreement, the shares of Common Stock will have been validly issued, fully-paid
and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus under the
heading "Legal Matters."
Very truly yours,
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
By: /s/ Ronald W. Schuler
----------------------------------------
Ronald W. Schuler
<PAGE> 1
Exhibit 10.10
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR
RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
ANSOFT COMPANY
AMENDED AND RESTATED
NONQUALIFIED STOCK OPTION AGREEMENT
Date of Grant of this Option: February 1, 1996
THIS AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT dated as
of September 10, 1996 is made by and between ANSOFT CORPORATION, a corporation
organized under the laws of the State of Delaware (the "Company"), and JACOB K.
WHITE (the "Optionee") and is intended to be effective as of the above date and
is being entered into for the purposes of amending and restating in its
entirety the agreement by and between the Optionee and the Company concerning
the issuance of a nonqualified stock option grant on the date of grant
referenced above.
WHEREAS, the Company wishes to compensate the Optionee for the time
and energy that the Optionee is expected to exert on behalf of the Company as a
member on the Board of Directors.
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree that the Company shall grant the Optionee, and the Optionee shall accept,
the Option to purchase 30,000 shares of the Company's Common Stock, par value
$0.01 per share (the "Common Shares"), at an exercise price of $6.00 per share,
subject to the terms and conditions set forth below (the "Option").
1. Option Period. The Optionee may not exercise the Option
after February 1, 2006 (the "Option Period").
2. Vesting Rate. The Option vests (become exercisable by the
Optionee) at a rate of 6,000 shares of the Company's Common
Stock per year beginning on February 1, 1997 and continuing
on each anniversary for five (5) years.
3. Status of the Option. It is the intention of the parties
that the Option be classified as Nonqualified Stock Option,
as determined by Sections 83 and 421 of the
<PAGE> 2
Internal Revenue Code, which do not have, and are not
projected to have, a readily ascertainable value because the
Options are not traded, and are not expected to be traded, on
an established market.
4. Non-Transferability of the Option. The Option may be
exercised during the lifetime of the Optionee only by the
Optionee or the Optionee's guardian or legal representative
and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. If the
Optionee shall die, the Option may be exercised only within
90 calendar days after the death of the Optionee and within
the Option Period and then only to the extent unexercised
and exercisable by the Optionee on the date of death, by the
Optionee's legal representative or by any person empowered
to do so under the deceased Optionee's will or under the
then applicable laws of descent and distribution.
5. Restrictions on Grant of the Option and Issuance of Shares.
The grant of the Option and the issuance of Common Shares
upon exercise of the Option shall be subject to compliance
with all applicable requirements of federal, state or
foreign law with respect to such securities. The Option may
not be exercised if the issuance of Common Shares upon such
exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or
regulations. In addition, the Option may not be exercised
unless (i) a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), and any
applicable state securities law shall at the time of
exercise of the Option be in effect with respect to the
Common Shares issuable upon exercise of the Option or (ii)
in the opinion of legal counsel to the Company, the Common
Shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from
the registration requirements of the Securities Act of any
applicable state and securities law. The Optionee is
cautioned that the Option may not be exercisable unless the
foregoing conditions are satisfied. Accordingly, the
Optionee may not be able to exercise the Option when desired
even though the Option is vested. Questions concerning this
restriction should be directed to the President of the
Company. As a condition to the exercise of the Option, the
Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation
and to make any representation or warranty with respect
thereto as may be requested by the Company.
6. Restriction on the Sale of Shares. The Common Shares of the
Company issued upon the exercise of the Option may not sold,
transferred, assigned or hypothecated unless the sale is
made in accordance with Rule 144 under the Act, or the
Company receives an opinion of counsel for the holder of
these securities reasonably satisfactory to the Company,
stating that such sale, transfer, assignment or
hypothecation is exempt from the registration and prospectus
delivery requirements of such Act.
<PAGE> 3
7. Effect of Change in Stock Subject to the Option. Appropriate
adjustments shall be made in the number, exercise price and
class of shares of stock subject to the Option in the event
of a stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event
of a majority of shares which are of the same class as the
shares that are subject to the Option are exchanged for,
converted into, or otherwise become shares of another
Company (the "New Shares"), the Company may unilaterally
amend the Option to provide that the Option is exercisable
for New Shares. In the event of any such amendment, the
number of shares and the exercise price shall be adjusted in
a fair and equitable manner.
8. Ownership Change and Transfer of Control. In the event of an
Ownership Change, the Option shall (i) become fully vested
to the extent it is not otherwise fully vested and (ii)
terminate and cease to be outstanding effective as of the
date of the Ownership Change to the extent that the Option
is neither assumed or substituted for in connection with the
Ownership Change nor exercised as of the date of the
Ownership Change. An "Ownership Change" shall be deemed to
have occurred in the event any of the following occurs with
respect to the Company:
(a) the direct or indirect sale or exchange by the
shareholders of the Company of all or substantially
all of the stock of the Company where the
shareholders of the Company before such sale or
exchange do not retain, directly or indirectly, at
least a majority of the beneficial interest in the
voting stock of the Company after such sale or
exchange;
(b) a merger or consolidation in which the Company is a
party;
(c) the sale, exchange, or transfer of all or
substantially all of the assets of the Company
(other than a sale, exchange, or transfer to one or
more parent or subsidiary companies of the Company);
or
(d) A liquidation or dissolution of the Company.
9. Legends. The Company may at any time place legends
referencing the restriction on the sale of Common Shares
referred to in Paragraph 6, and any applicable federal or
state securities law restrictions, on all certificates
representing Common Shares of the Company subject to the
provisions of this Option Agreement. The Optionee shall, at
the request of the Company, promptly present to the Company
any and all certificates representing Common Shares acquired
pursuant to the Option in the possession of the Optionee in
order to effectuate the provisions of this paragraph 9.
Unless otherwise specified by the Company, legends place on
such certificates may include, but shall not be limited to,
the following:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN
<PAGE> 4
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
10. Binding Effect. This Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, executors, administrators, successors and
assigns.
11. Integrated Agreement. This Option Agreement constitutes the
entire understanding and agreement of the Optionee and the
Company with respect to the subject matter contained herein,
and there are no agreements, understandings, restrictions,
representation, or warranties among the Optionee and the
Company other than those as set forth or provided for
herein. To the extent contemplated herein, the provisions
of this Option Agreement shall survive any exercise of the
Option and shall remain in force and effect.
12. Governing Law. This Option Agreement shall be governed by
the laws of the Commonwealth of Pennsylvania as such laws
are applied to agreements between Pennsylvania residents
entered into and to be performed entirely within the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the undersigned have executed this Nonqualified
Stock Option Agreement as of the date first above written.
OPTIONEE ANSOFT COMPANY
/s/ Jacob K. White /s/ Nicholas Csendes
- ------------------------ ----------------------------
Jacob White Nicholas Csendes
President
<PAGE> 1
Exhibit 10.11
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR
RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
ANSOFT COMPANY
AMENDED AND RESTATED
NONQUALIFIED STOCK OPTION AGREEMENT
Date of Grant of this Option: March 12, 1996
THIS AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT dated as
of September 10, 1996 is made by and between ANSOFT CORPORATION, a corporation
organized under the laws of the State of Delaware (the "Company"), and JOHN N.
WHELIHAN (the "Optionee"), is intended to be effective as of the above date and
is being entered into for the purposes of amending and restating in its
entirety the agreement by and between the Optionee and the Company concerning
the issuance of a nonqualified stock option grant on the date of grant
referenced above.
WHEREAS, the Company wishes to compensate the Optionee for the time
and energy that the Optionee is expected to exert on behalf of the Company as a
member on the Board of Directors.
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree that the Company shall grant the Optionee, and the Optionee shall accept,
the Option to purchase 30,000 shares of the Company's Common Stock, par value
$0.01 per share (the "Common Shares"), at an exercise price of $6.00 per share,
subject to the terms and conditions set forth below (the "Option").
1. Option Period. The Optionee may not exercise the Option after
March 12, 2006 (the "Option Period").
2. Vesting Rate. The Option vests (become exercisable by the
Optionee) at a rate of 6,000 shares of the Company's Common
Stock per year beginning on March 12, 1997 and continuing on
each anniversary for five (5) years.
3. Status of the Option. It is the intention of the parties that
the Option be classified as Nonqualified Stock Option, as
determined by Sections 83 and 421 of the
<PAGE> 2
Internal Revenue Code, which do not have, and are not
projected to have, a readily ascertainable value because the
Options are not traded, and are not expected to be traded, on
an established market.
4. Non-Transferability of the Option. The Option may be
exercised during the lifetime of the Optionee only by the
Optionee or the Optionee's guardian or legal representative
and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. If the
Optionee shall die, the Option may be exercised only within
90 calendar days after the death of the Optionee and within
the Option Period and then only to the extent unexercised and
exercisable by the Optionee on the date of death, by the
Optionee's legal representative or by any person empowered to
do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution.
5. Restrictions on Grant of the Option and Issuance of Shares.
The grant of the Option and the issuance of Common Shares
upon exercise of the Option shall be subject to compliance
with all applicable requirements of federal, state or foreign
law with respect to such securities. The Option may not be
exercised if the issuance of Common Shares upon such exercise
would constitute a violation of any applicable federal, state
or foreign securities laws or other law or regulations. In
addition, the Option may not be exercised unless (i) a
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), and any applicable state
securities law shall at the time of exercise of the Option be
in effect with respect to the Common Shares issuable upon
exercise of the Option or (ii) in the opinion of legal
counsel to the Company, the Common Shares issuable upon
exercise of the Option may be issued in accordance with the
terms of an applicable exemption from the registration
requirements of the Securities Act of any applicable state
and securities law. The Optionee is cautioned that the Option
may not be exercisable unless the foregoing conditions are
satisfied. Accordingly, the Optionee may not be able to
exercise the Option when desired even though the Option is
vested. Questions concerning this restriction should be
directed to the President of the Company. As a condition to
the exercise of the Option, the Company may require the
Optionee to satisfy any qualifications that may be necessary
or appropriate, to evidence compliance with any applicable
law or regulation and to make any representation or warranty
with respect thereto as may be requested by the Company.
6. Restriction on the Sale of Shares. The Common Shares of the
Company issued upon the exercise of the Option may not sold,
transferred, assigned or hypothecated unless the sale is made
in accordance with Rule 144 under the Act, or the Company
receives an opinion of counsel for the holder of these
securities reasonably satisfactory to the Company, stating
that such sale, transfer, assignment or hypothecation is
exempt from the registration and prospectus delivery
requirements of such Act.
<PAGE> 3
7. Effect of Change in Stock Subject to the Option. Appropriate
adjustments shall be made in the number, exercise price and
class of shares of stock subject to the Option in the event
of a stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event
of a majority of shares which are of the same class as the
shares that are subject to the Option are exchanged for,
converted into, or otherwise become shares of another Company
(the "New Shares"), the Company may unilaterally amend the
Option to provide that the Option is exercisable for New
Shares. In the event of any such amendment, the number of
shares and the exercise price shall be adjusted in a fair and
equitable manner.
8. Ownership Change and Transfer of Control. In the event of an
Ownership Change, the Option shall (i) become fully vested to
the extent it is not otherwise fully vested and (ii)
terminate and cease to be outstanding effective as of the
date of the Ownership Change to the extent that the Option is
neither assumed or substituted for in connection with the
Ownership Change nor exercised as of the date of the
Ownership Change. An "Ownership Change" shall be deemed to
have occurred in the event any of the following occurs with
respect to the Company:
(a) the direct or indirect sale or exchange by the
shareholders of the Company of all or substantially
all of the stock of the Company where the
shareholders of the Company before such sale or
exchange do not retain, directly or indirectly, at
least a majority of the beneficial interest in the
voting stock of the Company after such sale or
exchange;
(b) a merger or consolidation in which the Company is a
party;
(c) the sale, exchange, or transfer of all or
substantially all of the assets of the Company
(other than a sale, exchange, or transfer to one or
more parent or subsidiary companies of the Company);
or
(d) A liquidation or dissolution of the Company.
9. Legends. The Company may at any time place legends
referencing the restriction on the sale of Common Shares
referred to in Paragraph 6, and any applicable federal or
state securities law restrictions, on all certificates
representing Common Shares of the Company subject to the
provisions of this Option Agreement. The Optionee shall, at
the request of the Company, promptly present to the Company
any and all certificates representing Common Shares acquired
pursuant to the Option in the possession of the Optionee in
order to effectuate the provisions of this paragraph 9.
Unless otherwise specified by the Company, legends place on
such certificates may include, but shall not be limited to,
the following:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN
<PAGE> 4
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
10. Binding Effect. This Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, executors, administrators, successors and
assigns.
11. Integrated Agreement. This Option Agreement constitutes the
entire understanding and agreement of the Optionee and the
Company with respect to the subject matter contained herein,
and there are no agreements, understandings, restrictions,
representation, or warranties among the Optionee and the
Company other than those as set forth or provided for herein.
To the extent contemplated herein, the provisions of this
Option Agreement shall survive any exercise of the Option and
shall remain in force and effect.
12. Governing Law. This Option Agreement shall be governed by the
laws of the Commonwealth of Pennsylvania as such laws are
applied to agreements between Pennsylvania residents entered
into and to be performed entirely within the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF, the undersigned have executed this Nonqualified
Stock Option Agreement as of the date first above written.
OPTIONEE ANSOFT COMPANY
/s/ John N. Whelihan /s/ Nicholas Csendes
- ------------------------------- ----------------------------
John N. Whelihan Nicholas Csendes
President
<PAGE> 1
Exhibit 10.14
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT, made as of this 9th day of April, 1997, by
and among DR. ULRICH L. ROHDE and DR. META ROHDE (individually each a "Holder"
and collectively the "Holders") and ANSOFT CORPORATION, a Delaware corporation
(the "Company").
WITNESSETH:
WHEREAS, Holders are the record and beneficial holders of
1,272,728 shares (the "Shares") of the Company's Common Stock, par value $.01
per share (the "Common Stock");
WHEREAS, the Holders and the Company are parties to a Stock
Purchase Agreement dated as of April 9, 1997 (the "Purchase Agreement")
pursuant to which the Holders acquired the Shares;
WHEREAS, the execution and delivery of this Agreement is a
condition of the Purchase Agreement; and
WHEREAS, Holders desire to have the Shares subject to the
rights described herein.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) The term "Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same are in effect
from time to time;
(b) The term "Commission" means the Securities and Exchange
Commission or any other federal agency at the time primarily
responsible for administering the Act;
(c) The term "Registrable Securities" means (1) the Shares and
(2) any capital stock of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in
replacement of, the Shares, in each case, which are held by a
Holder.
2. Demand Registration.
(a) At any time after the first anniversary of the date hereof, a
majority-in-interest of the Holders may request registration
under the Securities Act of all or any portion of their
Registrable Securities on Form S-1 or any similar long-form
registration (a "Demand Registration"). Within ten days after
receipt of any such request, the Company shall give written
notice of such requested registration to all other
<PAGE> 2
Holders and shall include in such registration all
Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15
days after the receipt of the Company's notice.
(b) Holders shall be entitled to two Demand Registrations in the
aggregate pursuant to this Agreement.
(c) Holders shall promptly notify the Company in writing of any
sales made pursuant to any registration statement filed
pursuant to this Agreement.
3. Piggyback Registration.
(a) Whenever the Company proposes to register any of its
securities under the Securities Act (other than pursuant to a
Demand Registration) and the registration form to be used may
be used for the registration of Registrable Securities, other
than pursuant to a registration statement on Forms S-4 or S-8
or their successor forms (a "Piggyback Registration"), the
Company shall give prompt written notice (in any event within
three business days after its receipt of notice of any
exercise of demand registration rights other than under this
Agreement) to all Holders of its intention to effect such a
registration and shall include in such registration all
Registrable Securities with respect to which the Company has
received written requests for inclusion therein before 30
days prior to the Company's anticipated effective date of
such Piggyback Registration. The Company hereby represents
and warrants to the Holders that, as of the date hereof, no
stockholder of the Company has any outstanding Piggyback
Registration Rights.
(b) In the event that any registration pursuant to this Section 3
shall be, in whole or in part, a firm commitment underwritten
offering of securities of the Company, the registration
statement for such offering shall, if so elected by the
Company, specify that such Registrable Securities are to be
included in the underwriting on the same terms and conditions
as the shares of Common Stock, if any, otherwise being sold
through underwriters under such registration.
(c) The Holders of Registrable Securities shall be permitted to
withdraw all or any part of the Registrable Securities of
such Holders from any Piggyback Registration at any time
prior to the effective date of such Piggyback Registration
unless such Holders of Registrable Securities shall have
entered into a written agreement with the Company's
underwriters establishing the terms and conditions under
which such Holders would be obligated to sell such securities
in such Piggyback Registration.
4. Registration Procedures. Whenever required under Sections 2 or 3 to
use its best efforts to effect the registration of any Registrable
Securities, the Company shall:
(a) Prepare and file with the Commission, as soon as practicable,
a registration statement with respect to such Registrable
Securities and use its best efforts to
- 2 -
<PAGE> 3
cause such registration statement to become and remain
effective. In connection therewith, the Company shall notify
Holders of the happening of any event during the period a
registration statement is effective which makes any statement
made in such registration statement or the related prospectus
untrue in any material respect or which requires the making
of any changes in such registration statement or prospectus
so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading (which advice shall be accompanied by
an instruction to suspend the use of the prospectus until the
requisite changes have been made) and consistent with
Company's past practices, prepare a supplement or
post-effective amendment to a registration statement or the
related prospectus or any document incorporated therein by
reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable
Securities, such prospectus will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, that the Company
shall not be required to update, pursuant to this Section 4,
any such document during a period where the Company shall, in
good faith and using reasonable business judgment, believe
that the premature disclosure of any event or information
would have a material effect on the Company;
Each Holder agrees that, upon receipt of any such notice from
the Company of the happening of any event of the kind
described herein, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to such
registration statement until such Holder's receipt of the
copies of the supplemented or amended prospectus, and, if so
directed by the Company, such Holder will deliver to the
Company (at its expense) all copies in its possession, other
than permanent file copies then in such Holder's possession,
of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered by such
registration statement;
(c) Furnish to Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of
the Registrable Securities owned by them;
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other
securities or Blue Sky laws of such United States
jurisdictions as shall be reasonably requested by Holders for
the distribution of the securities covered by the
registration statement, provided that
- 3 -
<PAGE> 4
the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or
jurisdictions;
(e) Notwithstanding anything to the contrary in this Agreement,
if for any reason (other than the fault of a Holder demanding
registration), a Demand Registration is withdrawn or fails to
become effective or is not applicable to all the Registrable
Shares specified by the Holder, or the effectiveness is not
maintained for at least 60 days or the Company otherwise
fails to perform all its obligations under this Section 4
with respect to that registration, such Demand Registration
shall not reduce the number of Demand Registrations available
to that demanding Holder;
(f) enter into underwriting agreements and all such other
customary agreements in order to facilitate the disposition
of the Registrable Securities;
(g) make available for inspection on a confidential basis by any
Holder, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such Holder or
underwriter (in each case after reasonable prior notice), all
financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to
supply on a confidential basis all information reasonably
requested by any such Holder, underwriter, attorney,
accountant or agent in connection with such Registration
Statement;
(h) permit any Holder of Registrable Securities which holder, in
its sole and exclusive judgment, might be deemed to be an
underwriter or a controlling person of the Company within the
meaning of Section 15 of the Securities Act, to participate
in the preparation of such registration or comparable
statement and to permit the insertion therein of material,
furnished to the Company in writing, which in the reasonable
judgment of such holder and its counsel should be included,
provided that such material shall be furnished under such
circumstances as shall cause it to be subject to the
indemnification provisions provided pursuant to Section 10
hereof;
(i) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order
suspending or preventing the use of any related Prospectus or
suspending the qualification of any Registrable Securities
included in such Registration Statement for sale in any
jurisdiction, the Company will use its best efforts promptly
to obtain the withdrawal of such order;
(j) if requested by the managing underwriter or underwriters or
any holder of Registrable Securities in connection with any
sale pursuant to a Registration Statement, promptly
incorporate in a Prospectus supplement or post-effective
amendment such information relating to such underwriting as
the managing underwriter or underwriters or such holder
reasonably requests to be included
- 4 -
<PAGE> 5
therein, and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable
after being notified of the matters incorporated in such
Prospectus supplement or post-effective amendment;
(k) cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate
the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing Registrable
Securities to be sold under such registration, and enable
such Registrable Securities to be in such denominations and
registered in such names as the managing underwriter or
underwriters, if any, or such holders may request, provided
that the Company may exclude such material if, in the
reasonable judgment of the Company and its counsel, the
inclusion of such material would constitute a violation of
the Company's duties under the Act;
(l) use its best efforts to cause the Registrable Securities to
be registered with or approved by such other governmental
agencies or authorities within the United States and having
jurisdiction over the Company as may reasonably be necessary
to enable the seller to sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such
Registrable Securities;
(m) use its best efforts to obtain:
(i) at the time of effectiveness of each registration with
respect to an underwritten offering, a "comfort
letter" from the Company's independent certified
public accountants covering such matters of the type
customarily covered by "cold comfort letters" as the
Holders of a majority of the Registrable Securities
covered by such registration and the underwriters
reasonable request; and
(ii) at the time of an underwritten sale pursuant to a
Registration Statement, a "bring-down comfort letter",
dated as of the date of such sale, from the Company's
independent certified public accountants covering such
matters of the type customarily covered by comfort
letters as the Holders of a majority of the
Registrable Securities covered by such Registration
Statement and the underwriters reasonably request.
(n) use its best efforts to obtain, at the time of the
effectiveness of each Piggyback Registration with respect to
an underwritten offering and at the time of any sale pursuant
to each registration with respect to an underwritten
offering, an opinion or opinions, favorable in form and scope
to the Holders of the Registrable Securities covered by such
registration, from counsel to the Company in customary form;
and
(o) otherwise comply with all applicable rules and regulations of
the Commission, and make generally available to its security
holders (as contemplated by Section 11(a) under the
Securities Act) an earnings statement satisfying the
provisions of
- 5 -
<PAGE> 6
Rule 158 under the Securities Act no later than ninety (90)
days after the end of the twelve month period beginning with
the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration
Statement, which statement shall cover said twelve month
period.
5. Obligation to Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this
Agreement that each Holder shall furnish to the Company such
information regarding such Holder, or the Registrable Securities held
by them, and the intended method of disposition of such securities, as
the Company shall reasonably request and as shall be required in
connection with the action to be taken by the Company hereunder.
6. Expenses of Registration. (a) All expenses incurred in connection with
a registration effected pursuant to Section 2 (excluding underwriters'
fees, discounts and commissions and counsel fees (except as set forth
in Section 6(b)), advisory or consultant fees of any selling Holder),
including without limitation all registration and qualification fees,
printers' and accounting fees, and fees and disbursements of counsel
for the Company, shall be borne by the Company. Any expenses of a
registered offering under Section 2 not required to be borne by the
Company shall be borne pro rata by the selling Holders.
(b) The Company agrees to reimburse Holders, pro rata, for
reasonable counsel fees documented to the Company and
incurred directly by such Holders in connection with such
Holders selling their Registrable Securities pursuant to a
registration statement under Section 2 and Section 3, in an
aggregate amount not to exceed a total of $15,000 for each
registration.
7. Company Registration Expenses. In the case of any registration
effected pursuant to Section 3, the Company shall bear any additional
registration and qualification fees and expenses (excluding additional
underwriters' fees, discounts and commissions), and any additional
costs and disbursements of counsel for the Company that result from
the inclusion of securities held by the Holders in such registration.
Any such additional expenses of the registration not required to be
borne by the Company shall be borne by the selling Holders and all
other stockholders participating in the registration, pro rata on the
basis of the amount of securities so registered; provided, however,
that if any such additional cost or expense is attributable solely to
a selling Holder and does not constitute a normal cost or expense of
such a registration, such cost or expense shall be allocated to such
Holder. In addition, each Holder shall bear the fees and costs of its
own counsel (except as set forth in Section 6(b) hereof), advisors and
consultants.
8. Underwriting Requirements.
(a) If a Piggyback Registration is an underwritten registration
on behalf of the Company, and the managing underwriters
advise the Company in writing that in their opinion the
number of securities requested to be included in such
registration exceeds the number which can be sold in an
orderly manner in such offering within a price range
acceptable to the Company, the Company shall include in
- 6 -
<PAGE> 7
such registration (i) first, the securities the Company
proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration, pro rata among
the holders of such Registrable Securities on the basis of
the number of shares owned by such holder and (iii) third,
other securities requested to be included in such
registration.
(b) If a Piggyback Registration is an underwritten registration
on behalf of holders of the Company's securities other than
the Holders, and the managing underwriters advise the Company
in writing that in their opinion the number of securities
requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such
offering within a price range acceptable to the holders
initially requesting such registration, the Company shall
include in such registration (i) first, the securities
requested to be included therein by the holders requesting
such registration and the Holders' Registrable Securities
requested to be included in such registration, pro rata among
the Holders and holders of such securities on the basis of
the number of shares so requested to be included therein
owned by each such holder or Holder, and (ii) second, other
securities requested to be included in such registration.
9. Delay of Registration. Holders shall not have any right to take any
action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
10. Indemnification. In the event any Registrable Securities are included
in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will defend,
indemnify and hold harmless each Holder joining in a
registration, any underwriter (as defined in the Act) for it,
and each person, if any, who controls such underwriter within
the meaning of the Act, against any losses, claims, damages,
or liabilities, joint or several, to which they may become
subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based on any untrue or alleged
untrue statement of any material fact contained in such
registration statement, including any preliminary prospectus
or final prospectus, or any amendments or supplements
thereto, or arise out of or are based upon 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, or arise out of any violation by the Company
of any rule or regulation promulgated under the Act
applicable to the Company and relating to action or inaction
required of the Company in connection with any registration;
and will reimburse such Holder, such underwriter, or
controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in
this Section 10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability,
expenses or
- 7 -
<PAGE> 8
action if such settlement is effected without the consent of
the Company nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, expenses, or
action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such registration
statement, preliminary prospectus, final prospectus, or
amendments or supplements thereto, in reliance upon and in
conformity with written information furnished expressly for
use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) To the extent permitted by law, each Holder will defend,
indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the
registration statement, each person, if any, who controls the
Company within the meaning of the Act, and each agent and any
underwriter for the Company (within the meaning of the Act)
against any losses, claims, damages, or liabilities, joint or
several, to which the Company and/or any such director,
officer, controlling person, agent, or underwriter may become
subject, under the Act or otherwise, insofar as such losses,
claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
such registration statement, including any preliminary
prospectus or final prospectus, or any amendments or
supplements thereto, or arise out of or are based upon 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 each case to the
extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was
made in such registration statement, preliminary or final
prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished by
such Holder expressly for use in connection with such
registration; and Holder will reimburse any legal or other
expenses reasonably incurred by the Company and/or any such
director, officer, controlling person, agent, or underwriter
in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that
the indemnity agreement contained in this Section 10(b) shall
not apply to amounts paid in settlement of any such loss,
claim, damage, liability, expense or action if such
settlement is effected without the consent of such Holder.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to
be made against any indemnifying party under this Section,
notify the indemnifying party in writing of the commencement
thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to notify an
indemnifying party promptly of the commencement of any such
action, if prejudicial to his ability to defend such action,
shall relieve such indemnifying party of any liability to the
indemnified party under this Section, but
- 8 -
<PAGE> 9
the omission so to notify the indemnifying party will not
relieve him of any liability that he may have to any
indemnified party otherwise than under this Section.
11. Lockup Agreement. In consideration for the Company agreeing to its
obligations under this Agreement, each Holder agrees in connection
with any registration of the Company's securities, upon the request of
the Company or the underwriters managing any underwritten offering of
the Company's securities, not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than, subject to the requirements of
Sections 12 and 14, (a) those included in the registration and (b)
sale transactions not involving a public offering, provided that the
transferee of such Holder as a condition thereto and in connection
therewith, agrees to be bound by and joins into this Section 11),
without the prior written consent of the Company or such underwriters,
as the case may be, for such period of time not to exceed 120 days
from the effective date of such registration as the Company or the
underwriters may specify; provided, however, that the Holders may
assign securities of the Company in a bona fide pledge to secure
indebtedness or other obligations, so long as the pledgee thereof
agrees to be bound by the restrictions in this Section 11. The Company
hereby agrees to give the Holders written notice of the filing of a
registration statement for a proposed underwritten offering to which
the restrictions in this Section 11 could apply if so requested.
12. Limitations on Transfer. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their successors
and assigns. The registration rights granted to the Holders in Section
2 and Section 3 hereof may be assigned or transferred in whole or in
part by any of the Holders to any transferee of Holder's Registrable
Securities who agrees to be bound by and joins in this Agreement.
13. Information. The Company covenants and agrees to make and keep public
information available, as required by Rule 144(c) under the Act, at
all times from the first anniversary of the date hereof to the second
anniversary of the date hereof, and for so long thereafter as either
of the Holders may be an affiliate of the Company.
14. Restrictions on Resale. Except as provided in Section 12, the Holders
each agree not to offer, sell, pledge, transfer or otherwise dispose
of any Registrable Securities from the date hereof to the date one
year following the date hereof, without the written consent of the
Company. Appropriate legends shall be placed on the certificates
representing the Registrable Securities to reflect any applicable
limitations on transfer or sale.
15. Termination. Unless sooner terminated pursuant to the terms of this
Agreement, the obligations of the Company pursuant to Sections 2 and 3
hereof shall expire upon the earlier of: (i) the sale or other
disposition of the Registrable Securities by the Holders, other than
by a transfer permitted by Section 12 hereof, or (ii) as to any
Holder, the date when such Holder's Registrable Securities then
outstanding may be resold during the succeeding three-month period
without such Holder being required to deliver a
- 9 -
<PAGE> 10
prospectus with respect thereto under the Act or the rules and
regulations promulgated thereunder. In addition to the foregoing, the
obligations of the Company pursuant to this Agreement shall terminate
as to any Holder which notifies the Company in writing that it does
not wish to have its Shares registered hereunder.
16. Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and
negotiations relating thereto.
17. Governing Law. This Agreement, together with the rights and
obligations of the parties hereunder shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware without regard to any jurisdiction's conflicts of laws
provisions.
18. Counterparts. 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.
19. Titles and Subtitles. The titles and subtitles used in this Agreement
are for convenience only and are not to be considered in construing or
interpreting this Agreement.
20. Notices. Any notice, request or other communication required or
permitted under this Agreement shall be given in writing and shall be
deemed to be effectively given upon (i) personal delivery, (ii)
delivery by U.S. Express Mail or other overnight courier service which
provides evidence of delivery, (iii) legible facsimile transmission,
or (iv) the expiration of three (3) days following deposit with the
United States Postal Service, by registered or certified mail, postage
prepaid, addressed, in each case, as follows:
If to the Company:
Ansoft Corporation
Four Station Square, Suite 660
Pittsburgh, Pennsylvania 15219
Attention: Nicholas Csendes
Facsimile No.: (412) 471-9427
with a copy to:
Buchanan Ingersoll Professional Corporation
301 Grant Street
One Oxford Centre, 20th Floor
Pittsburgh, PA 15219
Attention: Ronald W. Schuler, Esq.
Facsimile No.: (412) 562-1041
If to the Holders:
- 10 -
<PAGE> 11
Dr. Ulrich L. Rohde and Dr. Meta Rohde
52 Hillcrest Drive
Upper Saddle River, NJ 07458
Facsimile No.: (201) 825-7966
with a copy to:
Walter, Conston, Alexander & Green, P.C.
90 Park Avenue
New York, NY 10016-1301
Attention: David W. Detjen, Esquire
Facsimile No.: (212) 210-9444
or at such other address as any party may designate by ten (10) days advance
written notice to the other party in accordance with the provisions of this
Section.
21. Amendments. This Agreement may not be amended without the written
consent of the Company and the holders of at least a majority of the
then outstanding Registrable Securities.
- 11 -
<PAGE> 12
IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be executed by a duly authorized representative as of the day
first above written.
HOLDERS:
/s/ DR. ULRICH L. ROHDE
------------------------------
Dr. Ulrich L. Rohde
/s/ DR. META ROHDE
------------------------------
Dr. Meta Rohde
COMPANY:
ANSOFT CORPORATION
By: /s/ NICHOLAS CSENDES
------------------------------
Nicholas Csendes
President
- 12 -
<PAGE> 1
Exhibit 11.1
STATEMENT RE PER SHARE EARNINGS (1)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended
Years Ended April 30, October 31,
1997 1996 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net income (loss) $(6,450) $1,300 $ (305) $(2,404) $1,641
======= ====== ====== ======= ======
Common and Common Equivalent Shares:
Weighted average number of shares of
common stock outstanding 7,779 6,235 5,207 7,642 9,059
Weighted average common
equivalent shares outstanding (2) 176 638 320 235 800
------- ------ ------ ------- ------
Weighted average number of shares of
common and common equivalent
stock outstanding 7,955 6,873 5,527 7,878 9,859
------- ------ ------ ------- ------
Net income (loss) per common share $ (0.81) $ 0.19 $(0.06) $ (0.31) $ 0.17
======= ====== ====== ======= ======
</TABLE>
(1) Fully diluted net income per share has not been separately presented, as
the amounts would not be materially different from primary net income per
share.
(2) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, certain common and common equivalent shares issued by the Company
during the twelve months immediately preceding the initial filing of the
registration statement relating to the Company's initial public offering
have been included in the calculation of weighted average shares, using the
treasury stock method and the initial public offering price, as if these
shares were outstanding for all periods prior to the initial public
offering.
<PAGE> 1
Exhibit 23.2
The Board of Directors
Ansoft Corporation:
The audits referred to in our report dated May 27, 1997, included the related
financial statement schedule as of April 30, 1997, and for each of the years in
the three-year period ended April 30, 1997, included in the registration
statement. The financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits. In our opinion, such
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 set forth therein.
We consent to the use of our reports included herein and to the reference to
our firm under the headings "Experts" and "Selected Consolidated Financial
Data" in the prospectus.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
November 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000849433
<NAME> ANSOFT CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 1,040
<SECURITIES> 0
<RECEIVABLES> 2,982
<ALLOWANCES> 125
<INVENTORY> 0
<CURRENT-ASSETS> 7,067
<PP&E> 2,628
<DEPRECIATION> 270
<TOTAL-ASSETS> 21,762
<CURRENT-LIABILITIES> 3,971
<BONDS> 0
0
0
<COMMON> 92
<OTHER-SE> 17,503
<TOTAL-LIABILITY-AND-EQUITY> 21,762
<SALES> 8,907
<TOTAL-REVENUES> 11,619
<CGS> 0
<TOTAL-COSTS> 10,555
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,251
<INCOME-TAX> 390
<INCOME-CONTINUING> 1,641
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,641
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
