<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 9, 1997
Ansoft Corporation
(Exact name of registrant as specified in its charter)
Delaware 0000849433 72-1001909
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
Four Station Square, Suite 660, Pittsburgh, PA 15219
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (412) 261-3200
<PAGE> 2
The undersigned Registrant hereby amends the following items, financial
statements, exhibits, and other portions of its Current Report on Form 8-K
originally filed with the Securities and Exchange Commission on April 9, 1997:
Item 2. Acquisition or Disposition of Assets.
On April 9, 1997 the registrant acquired all of the outstanding capital stock
of Compact Software, Inc., a Delaware corporation (the "Seller"). The
registrant and the selling stockholders of the Seller, Dr. Ulrich L. Rohde and
Dr. Meta Rohde (jointly the "Selling Stockholders"), entered into a Stock
Purchase Agreement dated as of April 9, 1997 (the "Agreement"), pursuant to
which the Selling Stockholders received in the aggregate, $3,000,000 and
1,272,728 shares of the registrant's authorized but unissued common stock, par
value $.01 per share (see also note 3 to the Compact financial statements
included herein). The registrant determined that the consideration paid to the
Selling Stockholders fairly represented the long-term intrinsic value of the
Seller. The source of the cash component of the registrant's purchase price in
the transaction was derived in part from the proceeds of the registrant's
initial public offering on April 3, 1996 and in part from the registrant's
operating cash flow.
In connection with the transaction, one of the Selling Stockholders, Dr. Ulrich
L. Rohde, was elected to the registrant's board of directors and was named an
executive officer of the registrant.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of the business acquired
Audited financial statements of Compact, including balance sheets as of
December 31, 1996 and 1995, and the related statements of operations,
shareholders' equity and cash flows for the years ended December 31, 1996 and
1995, together with the accompanying accountants' report are filed herein.
(b) Pro forma financial information
The Company has also attached hereto the following pro forma financial
information reflecting the Company's best estimates of the pro forma effect of
Compact on the Company had the acquisition previously described been
consummated as of May 1, 1995, the beginning of the Registrant's fiscal 1996
year, based on the financial statements described in Item 7(a) above.
2
<PAGE> 3
(c) Exhibit Table
<TABLE>
<S> <C>
2.01 ............................. Stock Purchase Agreement between Ansoft Corporation and Dr. Ulrich L. Rohde and
Dr. Meta Rohde dated April 9, 1997 (previously filed on Form 8-K dated April 9, 1997)
99.01............................ Press Release dated April 9, 1997 (previously filed on Form 8-K dated April 9, 1997)
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANSOFT CORPORATION
Dated: June 26, 1997 By: /s/ NICHOLAS CSENDES
- --------------------
Nicholas Csendes
President
3
<PAGE> 4
COMPACT SOFTWARE, INC.
Financial Statements
Years Ended December 31, 1996 and 1995
<PAGE> 5
Independent Auditors' Report
The Board of Directors and Stockholders
Ansoft Corporation:
We have audited the accompanying balance sheets of Compact Software, Inc.
as of December 31, 1996 and 1995, and the related statements of operations,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements 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 financial statements referred to above present fairly, in
all material respects, the financial position of Compact Software, Inc. as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
June 13, 1997
<PAGE> 6
COMPACT SOFTWARE, INC.
Balance Sheets
December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Assets
------
Cash and cash equivalents $ 1,120,364 459,587
Accounts receivable (net of allowance for doubtful accounts of
$52,000 and $25,000, respectively) 1,445,168 724,174
Other current assets 2,800 4,100
State deferred taxes 139,474 146,642
----------- ----------
Total current assets 2,707,806 1,334,503
Plant and equipment (note 2) 397,031 257,542
State deferred taxes 170,343 270,343
----------- ----------
Total assets $ 3,275,180 1,862,388
=========== ==========
Liabilities and Shareholders' Equity
------------------------------------
Accounts payable 518,089 228,176
Deferred revenue 284,999 252,359
Accrued liabilities 107,381 91,045
----------- ----------
Total current liabilities 910,469 571,580
Shareholders' equity:
Common stock, par value $.01 per share; 1,000 shares
authorized, issued and outstanding 10 10
Additional paid in capital (note 3) 5,427,423 5,437,097
Accumulated deficit (3,062,722) (4,146,299)
----------- ----------
Total shareholders' equity 2,364,711 1,290,808
----------- ----------
Total liabilities and shareholders' equity $ 3,275,180 1,862,388
=========== ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 7
COMPACT SOFTWARE, INC.
Statements of Operations
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues:
License and support $ 3,428,159 2,182,088
Research contracts (including services to
affiliate of $1,050,375 in 1995) (note 4) 2,898,460 2,887,338
----------- ---------
Total revenues 6,326,619 5,069,426
Costs and expenses
Sales and marketing 1,216,826 1,093,414
Research and development 3,391,714 3,209,282
General and administration 612,904 438,946
----------- ---------
Total costs and expenses 5,221,444 4,741,642
----------- ---------
Income from operations 1,105,175 327,784
Other income (expense):
Interest income 25,570 8,142
Gain on sale of equipment 60,000 --
----------- ----------
Income before state income taxes 1,190,745 335,926
Deferred state income taxes (note 6) 107,168 30,233
----------- ---------
Net income $ 1,083,577 305,693
=========== =========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 8
COMPACT SOFTWARE, INC.
Statements of Shareholders' Equity
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
Additional
Common paid-in Accumulated
stock capital deficit Total
----- ------- ------- -----
<S> <C> <C> <C> <C>
Balance as of December 31, 1994 $ 10 5,755,885 (4,451,992) 1,303,903
Net income -- -- 305,693 305,693
Distribution to shareholders -- (318,788) -- (318,788)
---- --------- ---------- ---------
Balance as of December 31, 1995 10 5,437,097 (4,146,299) 1,290,808
Net income -- -- 1,083,577 1,083,577
Distribution to shareholders -- (9,674) -- (9,674)
---- --------- ---------- ---------
Balance as of December 31, 1996 $ 10 5,427,423 (3,062,722) 2,364,711
==== ========= ========== =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 9
COMPACT SOFTWARE, INC.
Statement of Cash Flows
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net income $ 1,083,577 305,693
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 129,312 111,374
Deferred state tax charge 107,168 30,233
Gain on sale of equipment (60,000) --
Changes in assets and liabilities:
Accounts receivable (720,994) 384,084
Other current assets 1,300 1,835
Accounts payable 289,913 66,918
Deferred revenue 32,640 (51,413)
Accrued liabilities 16,336 8,770
----------- --------
Net cash provided by operating activities 879,252 857,494
Cash used for investing activities:
Purchases of plant and equipment (268,801) (101,413)
Proceeds from the sale of equipment 60,000 --
----------- --------
Net cash used for investing activities (208,801) (101,413)
Cash used for financing activities:
Distribution to shareholders (9,674) (318,788)
----------- --------
Net cash used for financing activities (9,674) (318,788)
----------- --------
Net increase in cash and cash equivalents 660,777 437,293
Cash and temporary investments at beginning of year 459,587 22,294
----------- --------
Cash and temporary investments at end of year $ 1,120,364 459,587
=========== ========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 10
COMPACT SOFTWARE, INC.
Notes to Financial Statements
Years Ended December 31, 1996 and 1995
(1) Nature of Business and Summary of Significant Accounting Policies
Nature of Business
Compact Software, Inc. (Compact or the Company) develops, markets and
supports electronic design automation software used by engineers to
design circuits for wireless communication systems and other
electronic products. Compact is also a participant in several
research projects being sponsored by the Federal government. On April
9, 1997, Ansoft Corporation acquired all of the issued and outstanding
common stock of Compact pursuant to the terms of the Stock Purchase
Agreement (the Agreement).
Cash Equivalents
Cash equivalents include only highly liquid debt instruments purchased
with original maturity dates of three months or less.
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 five to seven years.
Revenue Recognition
The Company recognizes revenue in accordance with the provisions of the
American Institute of Certified Public Accountants Statement of
Position No. 91-1, Software Revenue Recognition.
Revenue consists primarily of fees for licenses of the Company's software
products, fees for customer service and support and revenue earned
under contracts to perform research for the Federal government.
Revenue from sale of software licenses is recognized upon shipment of
the products and fulfillment of acceptance terms, if any. No
significant obligations, including the performance of services
essential to the functionality of the software, remain unfulfilled at
the time revenue is recognized on software licenses and, with respect
to any remaining insignificant obligations, either the related revenue
is unbundled and deferred, based on the estimated fair value of
related services, or the related estimated costs are accrued. Revenue
from research contracts, customer training, support and other services
is recognized as the service is performed.
(Continued)
6
<PAGE> 11
COMPACT SOFTWARE, INC.
Notes to Financial Statements, Continued
Years Ended December 31, 1996 and 1995
Software Development Costs
Under Statement of Financial Accounting Standards (SFAS) No. 86, software
development costs are capitalized beginning when a product's
technological feasibility has been established and ending when a
product is available for general release to customers. Technological
feasibility is deemed to have been established upon completion of a
detail program design or, in its absence, completion of a working
model. Generally, the establishment of technological feasibility of
the Company's products and general release have coincided. As a
result, the Company has not capitalized any software development costs
because any costs meeting the requirements of SFAS No. 86 have not
been significant.
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.
Income Taxes
The Company is not directly liable for Federal income taxes since it has
elected to be treated as an S Corporation.
State 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 amount expected to
be realized.
(Continued)
7
<PAGE> 12
COMPACT SOFTWARE, INC.
Notes to Financial Statements, Continued
Years Ended December 31, 1996 and 1995
(2) Fixed Assets
Fixed assets consisted of the following as of December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Computer equipment $ 849,021 599,118
Furniture and fixtures 31,850 12,952
--------- -------
880,871 612,070
Less accumulated depreciation 483,840 354,528
--------- -------
$ 397,031 257,542
========= =======
</TABLE>
(3) Equity
Additional paid in capital includes all amounts advanced to the Company by
the shareholders less all distributions to such shareholders. In
connection with the sale of the Company to Ansoft, the shareholders
retained the balance of cash and cash equivalents as of the closing
date plus certain accounts receivable.
(4) Related Party Transactions
The Company had the following transactions with related parties during the
years ended December 31, 1996 and 1995.
Services for Affiliate - In 1995, the Company performed engineering
services totaling $1,050,375 for a company wholly owned by the
shareholders of Compact. No such services were performed in
1996.
Building Lease - The Company leases its primary office space in a
building owned by the majority shareholder. The lease, as amended in
connection with the acquisition, expires on August 8, 1997, or
earlier if the Company vacates the facility. Rent paid under this
agreement totaled $90,000 in 1996 and $60,000 in 1995.
(Continued)
8
<PAGE> 13
COMPACT SOFTWARE, INC.
Notes to Financial Statements, Continued
Years Ended December 31, 1996 and 1995
Executive Services - The positions of President and Chief Financial
Officer were held by the shareholders of the Company. No
compensation was paid to these individuals for the years ended
December 31, 1996 and 1995.
Equipment Purchases - In 1996, the Company purchased computer
equipment totaling $186,000 from a company wholly owned by the
shareholders of Compact.
Transactions with Distributor - The Company markets its products
internationally through distributors. The shareholders of the
Company have an ownership interest in the companies which control two
of these distributors. Transactions with these distributors as of
and for the years ended December 31, 1996 and 1995, were as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Sales $ 961,209 31,295
Accounts receivable 195,871 22,042
</TABLE>
The sales are net of commissions retained by the distributors which
generally approximate 28%. In addition, one of the above
distributors was reimbursed for operating expenses totaling $224,279
and $135,400 for the years ended December 31, 1996 and 1995,
respectively.
(5) Export Sales, Major Customers and Credit Risk
Revenues earned under research contracts directly with or funded by the
United States government accounted for 48% and 37% of total revenues
in 1996 and 1995, respectively. No other customer accounted for more
than 10% of total revenue in 1996 and 1995.
Export sales, principally to Europe and Asia, account for 36% and 16% of
total revenues in 1996 and 1995, respectively. No individual country
accounted for more than 10% of total revenue in 1996 or 1995.
(Continued)
9
<PAGE> 14
COMPACT SOFTWARE, INC.
Notes to Financial Statements, Continued
Years Ended December 31, 1996 and 1995
The Company markets its software products to customers throughout the
world directly through distributors and generally does not require
collateral. 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.
(6) Income Taxes
The Company is not directly liable for Federal income taxes since it has
elected to be treated as an S Corporation. The provision for state
income taxes consists of deferred tax expense in 1996 and 1995.
The Company had New Jersey net operating loss carryforwards as of December
31, 1996 and 1995, of $3,003,825 and $4,264,763, respectively. All
net operating loss carryforwards expire on December 31, 2001.
The Company's actual state income tax expense differs from the expected
income tax expense computed by applying the statutory state income tax
rate to income before income taxes as a result of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Expected state income tax $ 113,485 26,395
Other, net (6,317) 3,838
--------- ------
Actual deferred state tax expense $ 107,168 30,233
========= ======
</TABLE>
(Continued)
10
<PAGE> 15
COMPACT SOFTWARE, INC.
Notes to Financial Statements, Continued
Years Ended December 31, 1996 and 1995
The tax effects of temporary differences that give rise to significant
portions of the state deferred tax assets are presented below:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward $ 270,343 383,829
Accrued vacation 9,144 8,194
Allowance for doubtful accounts 4,680 2,250
Deferred revenues 25,650 22,712
--------- -------
Total gross deferred tax
asset 309,817 416,985
Less valuation allowance -- --
--------- -------
Net deferred taxes $ 309,817 416,985
========= =======
</TABLE>
The valuation allowance for deferred tax assets as of the beginning of the
fiscal years 1996 and 1995 was zero. The net change in the total
valuation allowance for the years ended December 31, 1996 and 1995,
was zero. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this assessment.
Based upon the level of historical taxable income and projections for
future taxable income over the periods in which the net operating loss
carryforwards are available and the deferred tax assets are
deductible, management believes it is more likely than not the Company
will realize the benefits of these net operating loss carryforwards
and deductible differences and, accordingly, has recorded no valuation
allowance against the gross deferred tax assets as of December 31,
1996 and 1995.
(7) Employee Benefit Plan
The Company has a 401(k) savings and retirement plan which covers
substantially all of its full-time employees. Eligible employees make
voluntary contributions to the plan. The Company is not required to
contribute, nor has it contributed, to the 401(k) plan.
11
<PAGE> 16
ANSOFT CORPORATION
Unaudited Proforma Combined Financial Statements
The unaudited proforma combined financial statements give effect to the
acquisition of Compact Software, Inc. (Compact) by Ansoft Corporation (Ansoft
or the Corporation) in a transaction to be accounted for by the purchase method
of accounting. The following unaudited proforma combined financial statements
are included in this report:
Unaudited proforma combined balance sheet as of January 31, 1997
Unaudited proforma combined statements of operations:
- For the nine months ended January 31, 1997
- For the year ended April 30, 1996
The unaudited proforma combined balance sheet as of January 31, 1997, is based
on the individual unaudited balance sheet of Ansoft as of January 31, 1997, and
of Compact as of December 31, 1996, and gives effect to the acquisition as if
it occurred on January 31, 1997.
The unaudited proforma combined statements of operations are based on the
individual statements of operations of Ansoft and Compact for the nine months
ended January 31, 1997, and December 31, 1996, respectively, and the years
ended April 30, 1996, and March 31, 1996, respectively, and combine the results
of operations of Ansoft and Compact to give effect to the acquisition as if it
occurred at the beginning of each period presented.
The proforma adjustments included in this unaudited proforma financial
information relating to the allocation of the purchase price for Compact are
based on preliminary assumptions and estimates which are subject to revision.
The unaudited proforma combined financial statements are not necessarily
indicative of the results of operations or financial position that would have
occurred had the Compact acquisition been consummated on the dates assumed.
These financial statements are not intended to be a projection of future
results or financial position and do not reflect any synergies that might be
achieved from combined operations.
These unaudited proforma combined financial statements should be read in
conjunction with the Corporation's financial statements and notes contained in
its Annual Report on Form 10-K for the year ended April 30, 1996, and in its
quarterly reports on Form 10-Q for the quarters ended July 31, 1996, October
31, 1996, and January 31, 1997, and the financial statements of Compact
referred to in Item 7(a) of this report.
<PAGE> 17
ANSOFT CORPORATION
Unaudited Proforma Combined Balance Sheet
January 31, 1997
(In thousands)
<TABLE>
<CAPTION>
Historical Pro forma
-------------------------------- ---------------------------------
Compact
Ansoft Software, Inc.
January 31, December 31,
1997 1996 Adjustments Combined
---- ---- ----------- --------
<S> <C> <C> <C> <C>
Assets
------
Current assets:
Cash and cash equivalents $ 584 1,120 (1,120) (1) 584
Accounts receivable 2,791 1,445 (311) (1) 3,925
Marketable securities 454 -- -- 454
Deferred taxes 700 140 (140) (6) 700
Other assets 510 3 -- 513
-------- -------- ------- -------
Total current assets 5,039 2,708 (1,571) 6,176
Plant and equipment 1,211 397 -- 1,608
Marketable securities 11,110 -- (3,000) (4) 8,110
Other assets 3 -- -- 3
Intangible assets 2,783 -- 3,844 (5) 6,627
Deferred taxes -- 170 (170) (6) --
-------- -------- ------- -------
Total assets $ 20,146 3,275 (897) 22,524
======== ======== ======= =======
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Line of credit 6,023 -- -- 6,023
Accounts payable 246 518 -- 764
Accrued expenses 511 107 185 (5) 803
Accrued wages 130 -- -- 130
Deferred revenue 748 285 -- 1,033
-------- -------- ------- -------
Total current liabilities 7,658 910 185 8,753
Stockholders' equity:
Common stock 77 -- 13 (3) 90
Additional paid-in capital 17,338 5,428 4,605 (1,2,3,6) 27,371
Accumulated deficit (4,927) (3,063) (5,700) (5) (13,690)
-------- -------- ------- -------
Total stockholders' equity 12,488 2,365 (1,082) 13,771
-------- -------- ------- -------
Total liabilities and
stockholders' equity $ 20,146 3,275 (897) 22,524
======== ======== ======= =======
</TABLE>
<PAGE> 18
ANSOFT CORPORATION
Unaudited Proforma Combined Statement of Operations
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine months ended January 31, 1997
---------------------------------------------------------------------------------------
Historical Pro forma Pro forma Historical Pro forma Pro forma
Ansoft EBU Subtotal Compact Adjustments Combined
------ --- -------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
License, service and other 9,032 845 9,877 2,824 -- 12,701
Research contracts 195 -- 195 2,114 -- 2,309
------- ------- ------ ----- ---- ------
Total revenue 9,227 845 10,072 4,938 -- 15,010
Cost and expenses:
Sales and marketing 5,325 390 5,715 1,010 -- 6,725
Research and development 1,967 491 2,458 2,645 -- 5,103
General and administrative 1,363 278 1,641 468 483 (7) 2,592
In-process research and devilment 3,054 -- 3,054 -- -- 3,054
------- ----- ------ ----- ---- ------
Total costs and expenses 11,709 1,159 12,868 4,123 483 17,474
------- ----- ------ ----- ---- ------
Income (loss) from
operations (2,482) (314) (2,796) 815 (483) (2,464)
Interest income 676 -- 676 21 (180) (8) 517
Interest expense (131) -- (131) -- -- (131)
Gain on sale of equipment -- -- -- 60 -- 60
------- ---- ------ ----- ---- ------
Income (loss) before
income taxes (1,937) (314) (2,251) 896 (663) (2,018)
Income taxes (charge) benefit -- -- -- (81) -- (9) (81)
------- ----- ------ ----- ----- ------
Net income (loss) $(1,937) (314) (2,251) 815 (663) (2,099)
======= ===== ====== ===== ==== ======
Net income (loss) per share (0.25) (0.26)
==== ====
Weighted average shares outstanding 7,864 8,146
===== =====
</TABLE>
<PAGE> 19
ANSOFT CORPORATION
Unaudited Proforma Combined Statement of Operations
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended April 30, 1996
---------------------------------------------------------------------------------------
Historical Pro forma Pro forma Historical Pro forma Pro forma
Ansoft EBU Subtotal Compact Adjustments Combined
------ --- -------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
License, service and other $ 8,565 3,778 12,343 2,180 -- 14,523
Research contracts (including
services to affiliates of $787) 130 -- 130 2,980 -- 3,110
------- ----- ------ ------ ---- ------
Total revenue 8,695 3,778 12,473 5,160 -- 17,633
Cost and expenses:
Sales and marketing 5,007 1,246 6,253 1,127 -- 7,380
Research and development 1,766 1,505 3,271 3,264 -- 6,535
General and administrative 1,269 1,110 2,379 487 644 (7) 3,510
------- ----- ------ ------ ---- ------
Total costs and expenses 8,042 3,861 11,903 4,878 644 17,425
------- ----- ------ ------ ---- ------
Income (loss) from
operations 653 (83) 570 282 (644) 208
Interest income 41 -- 41 13 -- 54
Interest expense (6) -- (6) -- -- (6)
------- ----- ------ ------ ---- ------
Income (loss) before
income taxes 688 (83) 605 295 (644) 256
Income taxes (charge) benefit 612 -- 612 (27) -- (9) 585
------- ----- ------ ------ ---- ------
Net income (loss) $ 1,300 (83) 1,217 268 (644) 841
======= ===== ====== ====== ==== ======
Net income (loss) per share 0.19 0.10
==== ====
Weighted average shares outstanding 6,873 8,146
===== =====
</TABLE>
<PAGE> 20
ANSOFT CORPORATION
Notes to Unaudited Proforma Combined Financial Statements
(Dollars in thousands, except par value and per share amounts)
The unaudited proforma combined financial statements have been prepared to
reflect the acquisition of Compact Software, Inc. (Compact) by Ansoft
Corporation (Ansoft) for an aggregate purchase price of approximately $10,000
consisting of $3,000 in cash and 1,272,728 shares of Ansoft common
stock. These unaudited proforma combined financial statements reflect the
allocation of the purchase price to the assets acquired and liabilities assumed
based on their estimated fair values as of the date of the acquisition.
Ansoft's fiscal year ends on April 30. The fiscal year end of Compact is
December 31. The unaudited proforma combined statements of operations for the
year ended April 30, 1996, and the nine months ended January 31, 1997, include
Compact's results of operations for the year ended March 31, 1996, and the nine
months ended December 31, 1996, respectively.
On July 24, 1996, Ansoft acquired the assets of The MacNeal-Schwendler
Corporation's (MSC) Electronics Business Unit (the EBU) as described in the
Company's 8-K/A filed on October 7, 1996. The proforma statement of operations
for the year ended April 30, 1996, includes the EBU's results for the year
ended January 31, 1996, plus proforma adjustments to reflect amortization of
intangible assets totaling $543 and additional general and administrative
expenses of $567 as more fully described in above referenced 8-K/A dated
October 7, 1996. The proforma statement of operations for the nine months
ended January 31, 1997, includes the EBU's actual results for the period from
July 24, 1996, through January 31, 1997, plus proforma results for the period
from May 1, 1996, through July 23, 1996, which are based on the EBU's actual
results for the 3 months ended April 30, 1996, plus proforma adjustments to
record amortization of intangible assets ($136) and additional general and
administrative costs ($142).
Certain reclassifications have been made to the Ansoft historical financial
statements to set forth the unaudited proforma combined financial statements
after giving effect to the acquisition.
Proforma adjustments giving effect to the Compact acquisition in the unaudited
proforma combined balance sheet reflect the following:
(1) Retention of cash and cash equivalents and certain accounts
receivable by the shareholders of Compact in accordance with the
stock purchase agreement.
(2) The elimination of predecessor shareholders' equity totaling $624,
net of adjustments (1) and (6).
<PAGE> 21
ANSOFT CORPORATION
Notes to Unaudited Proforma Combined Financial Statements, Continued
(3) Issuance of 1,272,728 shares of Ansoft common stock, $.01 par
value, valued at $5.50 per share totaling $7,000, less issuance
costs of $17.
(4) Sale of marketable securities to fund the $3,000 cash payment to
the shareholders of Compact.
(5) Allocation of the purchase price to intangible assets which will be
amortized on a straight-line basis over lives of 3 to 7 years
($3,844), accrued transaction costs ($185) and to expense the
portion of the purchase price applicable to acquired in-process
research and development ($5,700).
The in-process research and development charge of $5,700 was
recorded by Ansoft in the fourth quarter of fiscal 1997. This
charge is not reflected in the proforma combined statements of
operations.
(6) Elimination of state deferred tax assets, which will not be
available to Ansoft.
Proforma adjustments giving effect to the acquisition in the unaudited proforma
combined statements of operations reflect the following:
(7) To record amortization on intangible assets of $3,844 on a
straight-line basis over estimated useful lives of three years for
work force in place ($500) and seven years for goodwill and
customer list ($3,344).
(8) Reduction in interest income resulting from use of the proceeds of
the Company's initial public offering in the acquisition, using an
assumed rate of return of 8% on an investment of $3,000 for a
period of nine months.
(9) Had Ansoft acquired Compact (a subchapter S corporation) as of
the beginning of the period presented, Compact's income would have
been subject to Federal income tax. However, the combined company
would have had sufficient net operating loss carryforwards to
offset the higher level of taxable income.
