# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

# (Mark	One)

# ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

# For	the	fiscal	year	ended	December	31,	2012

# TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

Commission	File	Number	0-20853

# ANSYS,	Inc.

(Exact	name	of	registrant	as	specified	in	its	charter)

Delaware

(State	or	other	jurisdiction	of	incorporation	or	organization)

275	Technology	Drive,	Canonsburg,	PA

(Address	of	principal	executive	offices)

(I.R.S.	Employer	Identification	No.)

(Zip	Code)

(Registrant's	telephone	number,	including	area	code)

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Common	Stock,	$0.01	par	value	per	share

(Title	of	each	class)

The	NASDAQ	Stock	Market,	LLC

(Name	of	exchange	on	which	registered)

# Securities	registered	pursuant	to	Section	12(g)	of	the	Act:

(Title	of	class)

Indicate	by	a	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.				Yes		ý				No		¨

Indicate	by	a	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	15(d)	of	the	Act.				Yes		¨				No		ý

Indicate	by	a	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90 days.				Yes		ý				No		¨

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	website,	if	any,	every	Interactive	Data	File	required	to	be	submitted and	posted	pursuant	to	Rule	405	of	Regulation	S-T	(§232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	and post	such	files).				Yes		ý				No		¨

Indicate	by	a	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	(§229.405	of	this	chapter)	is	not	contained	herein	and	will	not	be contained,	to	the	best	of	the	Registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	PART	III	of	this	Form	10-K,	or	any	amendment	to	this Form	10-K.		¨

Indicate	by	a	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company	(as	defined	in Exchange	Act	Rule	12b-2).	(Check	one):

Large	accelerated	filer		x

Non-accelerated	filer		¨

Accelerated	filer		¨

Smaller	reporting	company		¨

Indicate	by	a	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Exchange	Act	Rule	12b-2).				Yes		¨				No		ý

The	aggregate	market	value	of	the	voting	stock	held	by	non-affiliates	of	the	Registrant,	based	upon	the	closing	sale	price	of	the	Common	Stock	on	 June	29,	2012	as	reported on	the	NASDAQ	Global	Select	Market,	was	$4,977,000,000.	Shares	of	Common	Stock	held	by	each	officer,	director	and	by	each	shareholder	who	owns	5%	or	more	of	the outstanding	Common	Stock	have	been	excluded	in	that	such	shareholders	may	be	deemed	to	be	affiliates.	This	determination	of	affiliate	status	is	not	necessarily	a	conclusive determination	for	other	purposes.

The	number	of	shares	of	the	Registrant's	Common	Stock,	par	value	$.01	per	share,	outstanding	as	of	February	20,	2013	was	92,939,969	shares.

# Documents	Incorporated	By	Reference:

Portions	of	the	Proxy	Statement	for	the	Registrant's	2013	Annual	Meeting	of	Stockholders	are	incorporated	by	reference	into	Part	III.

# ANNUAL	REPORT	ON	FORM	10-K	FOR	FISCAL	YEAR	2012

# Table	of	Contents

# PART	I

| Item	1. | Business | 3 |
| :--- | :--- | :--- |
| Item\t1A. | Risk\tFactors | 9 |
| Item\t1B. | Unresolved\tStaff\tComments | 16 |
| Item\t2. | Properties | 16 |
| Item\t3. | Legal\tProceedings | 17 |
| Item\t4. | Mine\tSafety\tDisclosures | 17 |
| PART\tII |  |  |
| Item\t5. | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 18 |
| Item\t6. | Selected\tFinancial\tData | 21 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 22 |
| Item\t7A. | Quantitative\tand\tQualitative\tDisclosures\tabout\tMarket\tRisk | 47 |
| Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 49 |
| Item\t9. | Changes\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 50 |
| Item\t9A. | Controls\tand\tProcedures | 50 |
| Item\t9B. | Other\tInformation | 50 |
| PART\tIII |  |  |
| Item\t10. | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 51 |
| Item\t11. | Executive\tCompensation | 51 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 51 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions\tand\tDirector\tIndependence | 51 |
| Item\t14. | Principal\tAccounting\tFees\tand\tServices | 51 |
| PART\tIV |  |  |
| Item\t15. | Exhibits\tand\tFinancial\tStatement\tSchedules | 52 |
| SIGNATURES |  | 82 |

# Important	Factors	Regarding	Future	Results

Information	provided	by	ANSYS,	Inc.	(hereafter	the	"Company"	or	"ANSYS"),	in	this	Annual	Report	on	Form	10-K,	may	contain	forward-looking	statements concerning	such	matters	as	projected	financial	performance,	market	and	industry	segment	growth,	product	development	and	commercialization,	acquisitions	or	other aspects	of	future	operations.	Such	statements,	made	pursuant	to	the	safe	harbor	established	by	the	securities	laws,	are	based	on	the	assumptions	and	expectations	of	the Company's	management	at	the	time	such	statements	are	made.	The	Company	cautions	investors	that	its	performance	(and,	therefore,	any	forward-looking	statement)	is subject	to	risks	and	uncertainties.	Various	important	factors	including,	but	not	limited	to,	those	discussed	in	Item	1A.	Risk	Factors,	may	cause	the	Company's	future results	to	differ	materially	from	those	projected	in	any	forward-looking	statement.	All	information	presented	is	as	of	December	31,	2012,	unless	otherwise	indicated.

# ITEM	1. BUSINESS

ANSYS,	a	Delaware	corporation	formed	in	1994,	develops	and	globally	markets	engineering	simulation	software	and	services	widely	used	by	engineers,	designers, researchers	and	students	across	a	broad	spectrum	of	industries	and	academia,	including	aerospace,	automotive,	manufacturing,	electronics,	biomedical,	energy	and defense.	Headquartered	south	of	Pittsburgh,	Pennsylvania,	the	Company	and	its	subsidiaries	employed	approximately	2,400	people	as	of	December	31,	2012	and	focus on	the	development	of	open	and	flexible	solutions	that	enable	users	to	analyze	designs	directly	on	the	desktop,	providing	a	common	platform	for	fast,	efficient	and	cost- conscious	product	development,	from	design	concept	to	final-stage	testing	and	validation.	The	Company	distributes	its	ANSYS	suite	of	simulation	technologies	through a	global	network	of	independent	resellers	and	distributors	(collectively,	channel	partners)	and	direct	sales	offices	in	strategic,	global	locations.	It	is	the	Company's intention	to	continue	to	maintain	this	hybrid	sales	and	distribution	model.

On	August	1,	2012,	the	Company	completed	its	acquisition	of	Esterel	Technologies,	S.A.	("Esterel"),	a	leading	provider	of	embedded	software	simulation	and	automatic generation	of	certified	code	solutions	for	mission	critical	applications.	Under	the	terms	of	the	acquisition	agreement,	ANSYS	acquired	100%	of	Esterel	for	a	purchase price	of	$58.2	million,	which	included	$13.1	million	in	acquired	cash.	The	acquisition	agreement	also	includes	retention	provisions	for	key	members	of	Esterel's management	and	employees.	The	Company	funded	the	transaction	entirely	with	existing	cash	balances.	The	complementary	combination	is	expected	to	accelerate development	of	new	and	innovative	products	to	the	marketplace	while	lowering	design	and	engineering	costs	for	customers.

# The	Company's	product	portfolio	consists	of	the	following:

# ANSYS®	Workbench™

ANSYS	Workbench	is	the	framework	upon	which	the	Company's	suite	of	advanced	engineering	simulation	technologies	is	built.	The	innovative	project	schematic	view ties	together	the	entire	simulation	process,	guiding	the	user	through	complex	multiphysics	analyses	with	drag-and-drop	simplicity.	With	bi-directional	computer-aided design	("CAD")	connectivity,	powerful	highly-automated	meshing,	a	project-level	update	mechanism,	pervasive	parameter	management	and	integrated	optimization tools,	the	ANSYS	Workbench	platform	delivers	unprecedented	productivity,	enabling	Simulation	Driven	Product	Development™.

# Multiphysics

The	Company's	multiphysics	product	suite	allows	engineers	and	designers	to	create	virtual	prototypes	of	their	designs	operating	under	real-world	multiphysics conditions.	As	the	range	of	need	for	simulation	expands,	companies	must	be	able	to	accurately	predict	how	complex	products	will	behave	in	real-world	environments, where	multiple	types	of	coupled	physics	interact.	ANSYS	multiphysics	software	enables	engineers	and	scientists	to	simulate	the	interactions	between	structural mechanics,	heat	transfer,	fluid	flow	and	electromagnetics	all	within	a	single,	unified	engineering	simulation	environment.

# Structural	Mechanics

The	Company's	structural	mechanics	product	suite	offers	simulation	tools	for	product	design	and	optimization	that	increase	productivity,	minimize	physical	prototyping and	help	to	deliver	better	and	more	innovative	products	in	less	time.	These	tools	tackle	real-world	analysis	problems	by	making	product	development	less	costly	and more	reliable.	In	addition,	these	tools	have	capabilities	that	cover	a	broad	range	of	analysis	types,	elements,	contacts,	materials,	equation	solvers	and	coupled	physics capabilities	all	targeted	toward	understanding	and	solving	complex	design	problems.

# Fluid	Dynamics

The	Company's	fluid	dynamics	product	suite	offers	modeling	of	fluid	flow	and	other	related	physical	phenomena.	Fluid	flow	analysis	capabilities	provide	all	the	tools needed	to	design	and	optimize	new	fluids	equipment	and	to	troubleshoot	already	existing	installations.	The	fluid	dynamics	product	suite	contains	general-purpose computational	fluid	dynamics	software	and	specialized	products	to	address	specific	industry	applications.

# Electromagnetics

The	Company's	electromagnetics	product	suite	provides	field	simulation	software	for	designing	high-performance	electronic	and	electromechanical	products.	The software	streamlines	the	design	process	and	predicts	performance,	all	prior	to	building	a	prototype,	of	mobile	communication	and	internet-access	devices,	broadband networking	components	and	systems,	integrated	circuits	("IC")	and	printed	circuit	boards	("PCB"),	as	well	as	electromechanical	systems	such	as	automotive	components and	power	electronics	equipment.

# System	Simulation

The	Company	delivers	a	unique	and	comprehensive	system	simulation	capability	that	is	ideal	for	the	design	of	today's	increasingly	automated	products.	This collaborative	environment	leverages	the	Company's	multiphysics,	multibody	dynamics,	circuit	and	embedded	software	simulation	capabilities,	enabling	users	to	simulate the	complex	interactions	between	components,	circuits	and	control	software	within	a	single	environment.	These	technologies	provide	a	complete	view	into	predicted product	performance,	which	creates	greater	design	confidence	for	engineers.

# Apache	Design	Low-Power	Electronic	Solutions

The	Company's	suite	of	Apache	software	delivers	power	analysis	and	optimization	platforms	along	with	comprehensive	and	integrated	methodologies	that	provide capabilities	for	managing	the	power	budget,	power	delivery	integrity,	and	power-induced	noise	in	an	electronic	design,	from	initial	prototyping	to	system	sign-off.	These solutions	deliver	accuracy	with	correlation	to	silicon	measurement;	the	capacity	to	handle	an	entire	electronic	system	including	IC,	package,	and	PCB;	efficiency	for ease-of-debug	and	fast	turnaround	time;	and	comprehensiveness	to	facilitate	cross-domain	communications	and	electronic	ecosystem	enablement.

# Esterel	Technologies	SCADE®	Solutions

The	Company's	SCADE	product	suite	is	a	formal,	comprehensive	solution	for	developing	critical	systems	and	automatic	generation	of	embedded	software,	supporting the	entire	development	workflow,	from	requirements	analysis	and	design	through	verification,	implementation	and	deployment.	SCADE	solutions	easily	integrate, allowing	for	development	optimization	and	increased	communication	among	team	members.

# Explicit	Dynamics

The	Company's	explicit	dynamics	product	suite	simulates	events	involving	short-duration,	large-strain,	large-deformation,	fracture,	complete	material	failure	or structural	problems	with	complex	interactions.	This	product	suite	is	ideal	for	simulating	physical	events	that	occur	in	a	short	period	of	time	and	may	result	in	material damage	or	failure.	Such	events	are	often	difficult	or	expensive	to	study	experimentally.

# Simulation	Process	and	Data	Management

ANSYS	Engineering	Knowledge	Manager™	("ANSYS	EKM")	is	a	comprehensive	solution	for	simulation-based	process	and	data	management	challenges.	ANSYS EKM	provides	solutions	and	benefits	to	all	levels	of	a	company,	enabling	an	organization	to	address	the	critical	issues	associated	with	simulation	data,	including	backup and	archival,	traceability	and	audit	trail,	process	automation,	collaboration	and	capture	of	engineering	expertise,	and	intellectual	property	protection.

# High-Performance	Computing

The	Company's	high-performance	computing	("HPC")	product	suite	enables	enhanced	insight	into	product	performance	and	improves	the	productivity	of	the	design process.	The	HPC	product	suite	delivers	cross-physics	parallel	processing	capabilities	for	the	full	spectrum	of	the	Company's	simulation	software	by	supporting structural,	fluids,	thermal	and	electromagnetic	simulations	in	a	single	HPC	solution.	This	product	suite	decreases	the	turnaround	time	for	individual	simulations,	allowing users	to	consider	multiple	design	ideas	and	make	the	right	design	decisions	early	in	the	design	cycle.

# Geometry	Interfaces

The	Company	offers	comprehensive	geometry	handling	solutions	for	engineering	simulation	in	an	integrated	environment	with	direct	interfaces	to	all	major	CAD systems,	support	of	additional	readers	and	translators,	and	an	integrated	geometry	modeler	exclusively	focused	on	analysis.

# Meshing

Creating	a	mesh	that	transforms	a	physical	model	into	a	mathematical	model	is	a	critical	and	foundational	step	in	almost	every	engineering	simulation	study.	Accurate meshing	is	especially	challenging	today	with	increasing	product	design	complexity	and	heightened	expectations	of	product	performance.	The	Company's	meshing technology	provides	a	means	to	balance	these	requirements,	obtaining	the	right	mesh	for	each	simulation	in	the	most	automated	way	possible.	The	technology	is	built	on the	strengths	of	world-class	leading	algorithms,	that	are	integrated	in	a	single	environment	to	produce	the	most	robust	and	reliable	meshing	available.

# Academic

The	Company's	academic	product	suite	provides	a	highly	scalable	portfolio	of	academic	products	based	on	several	usage	tiers:	associate,	research	and	teaching.	Each	tier includes	various	noncommercial	products	that	bundle	a	broad	range	of	physics	and	advanced	coupled	field	solver	capabilities.	The	academic	product	suite	provides entry-level	tools	intended	for	class	demonstrations	and	hands-on	instruction.	It	provides	flexible	terms	of	use	and	more	complex	analysis	suitable	for	doctoral	and	post- doctoral	research	projects.	The	Company	also	provides	a	low-cost,	problem-size-limited	product	suitable	for	student	use	at	home.

# PRODUCT	DEVELOPMENT

The	Company	makes	significant	investments	in	research	and	development	and	emphasizes	accelerated	new	integrated	product	releases.	The	Company's	product development	strategy	centers	on	ongoing	development	and	innovation	of	new	technologies	to	increase	productivity	and	to	provide	engineering	simulation	solutions	that customers	can	integrate	into	enterprise-wide	product	lifecycle	management	systems.	The	Company's	product	development	efforts	focus	on	extensions	of	the	full	product line	with	new	functional	modules,	further	integration	with	CAD,	electronic	CAD	("ECAD"),	product	lifecycle	management	("PLM")	products	and	the	development	of new	products.	The	Company's	products	run	on	the	most	widely	used	engineering	computing	platforms	and	operating	systems,	including	Windows,	Linux	and	most UNIX	workstations.

During	2012,	the	Company	completed	the	following	major	product	development	activities	and	releases:

•The	release	of	version	14.5	of	ANSYS	software,	which	delivers	many	new	and	critical	multiphysics	solutions,	enhancements	to	pre-processing	and	meshing capabilities,	a	groundbreaking	Chip-Package-System	solution,	as	well	as	a	new	parametric	HPC	licensing	model	to	make	design	exploration	more	scalable.	The new	HPC	Parametric	Pack	amplifies	the	available	licenses	for	individual	applications	(pre-processing,	meshing,	solve,	HPC,	post-processing),	enabling simultaneous	execution	of	multiple	design	points	while	consuming	just	one	set	of	application	licenses.	With	the	integration	of	ANSYS	TGrid™	functionalities in	the	ANSYS	Fluent®	environment,	users	of	the	new	release	can	create	higher-fidelity	simulation	results	faster.	The	release	introduces	extended	fluid-thermal capabilities,	such	as	two-way	coupling	between	fluid	simulation	and	electromagnetic	field	simulation.	The	ANSYS	Workbench	platform	supports	the	efficient coupling	of	multiple	physics	models	and,	when	paired	with	this	new	feature,	users	can	quickly	and	accurately	predict	losses	and	understand	the	effects	of temperature	on	material	performance	in	electromechanical	devices	such	as	motors	and	transformers.	With	the	integration	of	Esterel's	SCADE	Suite	with ANSYS	Simplorer®	in	version	14.5,	companies	can	virtually	validate	power	electronic	and	mechatronic	systems	earlier	in	the	design	process	by	simulating	the embedded	software	with	the	hardware,	including	electrical,	mechanical	and	fluidic	subsystems.	This	capability	increases	the	design	fidelity	and	boosts confidence	that	products	will	perform	as	expected.	The	release	also	further	streamlines	the	design	workflow	and	introduces	ANSYS	HFSS™	for	ECAD.

•The	release	of	ANSYS	Academic	Student,	a	new	simulation	solution	derived	from	ANSYS's	successful	teaching	software.	The	simulation	functionality	built into	Academic	Student	provides	access	to	the	same	solvers	and	user	environment	in	ANSYS's	industry	products.	The	inclusion	of	structural	mechanics,	rigid- body	dynamics,	fluid	dynamics	and	multiphysics	solvers	addresses	the	fundamental	educational	needs	of	students	across	many	disciplines,	such	as	mechanical, aerospace,	civil,	chemical,	biomedical	engineering	and	physics.	Students	with	multi-core	processors	on	their	personal	computers	(up	to	a	quad-core	processor) can	also	benefit	from	the	software's	ability	to	run	the	solvers	in	parallel,	allowing	for	more	advanced	simulations.

•The	release	of	Apache's	RedHawk™-3DX,	which	is	designed	to	meet	the	power,	performance	and	price	demands	of	low-power	mobile,	high-performance computing,	consumer	and	automotive	electronics.	The	release	improves	the	accuracy	and	coverage	of	dynamic	power	analysis	by	providing	enhanced	logic- handling	capabilities.	Its	new	event-	and	state-propagation	technologies	with	vector-based	and	VectorLess™	modes	utilize	both	the	functional	stimulus	and statistical	probability	to	determine	the	switching	scenario	of	the	design.	The	software	provides	a	hierarchical	extraction	methodology	and	a	re-architected transient	simulation	engine,	delivering	up	to	40	percent	speed	improvement	without	sacrificing	sign-off	accuracy.	The	software	enables	the	creation	of	an accurate,	low-drop-out	behavioral	model	for	full-chip	static	and	dynamic	simulations	to	help	detect	and	predict	excessive	load	and	line	regulations.

The	Company's	total	research	and	development	expenses	were	$132.6	million,	$108.5	million	and	$89.0	million	in	2012,	2011	and	2010,	respectively,	or	16.6%,	15.7% and	15.3%	of	total	revenue,	respectively.	As	of	December	31,	2012,	the	Company's	product	development	staff	consisted	of	approximately	900	employees,	most	of	whom hold	advanced	degrees	and	have	industry	experience	in	engineering,	mathematics,	computer	science	or	related	disciplines.	The	Company	has	traditionally	invested significant	resources	in	research	and	development	activities	and	intends	to	continue	to	make	investments	in	this	area,	particularly	as	it	relates	to	expanding	the	capabilities of	its	flagship	products	and	other	products	within	its	broad	portfolio	of	simulation	software,	evolution	of	its	ANSYS	Workbench	platform,	HPC	capabilities,	robust design	and	ongoing	integration.

# PRODUCT	QUALITY

The	Company's	employees	generally	perform	product	development	tasks	according	to	predefined	quality	plans,	procedures	and	work	instructions.	Certain	technical support	tasks	are	also	subject	to	a	quality	process.	These	plans	define	for	each	project	the	methods	to	be	used,	the	responsibilities	of	project	participants	and	the	quality objectives	to	be	met.	The	majority	of	software	products	are	developed	under	a	quality	system	that	is	certified	to	the	ISO	9001:2008	standard.	The	Company	establishes quality	plans	for	its	products	and	services,	and	subjects	product	designs	to	multiple	levels	of	testing	and	verification	in	accordance	with	processes	established	under	the Company's	quality	system.

# SALES	AND	MARKETING

The	Company	distributes	and	supports	its	products	through	a	global	network	of	independent	channel	partners,	as	well	as	through	its	own	direct	sales	offices.	This network	provides	the	Company	with	a	cost-effective,	highly	specialized	channel	of	distribution	and	technical	support.	It	also	enables	the	Company	to	draw	on	business and	technical	expertise	from	a	global	network,	provides	relative	stability	to	the	Company's	operations	to	offset	geography-specific	economic	trends	and	provides	the Company	with	an	opportunity	to	take	advantage	of	new	geographic	markets.	Approximately	26%	in	2012,	26%	in	2011	and	27%	in	2010	of	the	Company's	total	revenue was	derived	through	the	indirect	sales	channel.

The	channel	partners	sell	ANSYS	products	to	new	customers,	expand	installations	within	the	existing	customer	base,	offer	training	and	consulting	services,	and	provide the	first	line	of	ANSYS	technical	support.	The	Company's	channel	partner	certification	process	helps	to	ensure	that	each	channel	partner	has	the	ongoing	capability	to adequately	represent	the	Company's	expanding	product	lines	and	to	provide	an	acceptable	level	of	training,	consultation	and	customer	support.

The	Company	also	has	a	direct	sales	management	organization	in	place	to	develop	an	enterprise-wide,	focused	sales	approach	and	to	implement	a	worldwide	major account	strategy.	The	sales	management	organization	also	functions	as	a	focal	point	for	requests	to	ANSYS	from	the	channel	partners	and	provides	additional	support	in strategic	locations	through	the	presence	of	direct	sales	offices.	A	Vice	President	of	Worldwide	Sales	and	Support	heads	the	Company's	sales	management	organization.

During	2012,	the	Company	continued	to	invest	in	its	existing	domestic	and	international	strategic	sales	offices.	In	total,	the	Company's	direct	sales	offices	employ	1,100 employees	who	are	responsible	for	the	sales,	technical	support,	engineering	consulting	services,	marketing	initiatives	and	administrative	activities	designed	to	support	the Company's	overall	revenue	growth	and	expansion	strategies.

The	Company's	products	are	utilized	by	organizations	ranging	in	size	from	small	consulting	firms	to	the	world's	largest	industrial	companies.	No	single	customer accounted	for	more	than	5%	of	the	Company's	revenue	in	2012,	2011	or	2010.

Information	with	respect	to	foreign	and	domestic	revenue	may	be	found	in	Note	18	to	the	consolidated	financial	statements	in	Part	IV,	Item	15	of	this	Annual	Report	on Form	10-K	and	in	the	section	entitled	"Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations"	in	Part	II,	Item	7	of	this	Annual	Report on	Form	10-K.

# STRATEGIC	ALLIANCES	AND	MARKETING	RELATIONSHIPS

The	Company	has	established	and	continues	to	pursue	strategic	alliances	with	advanced	technology	suppliers,	and	marketing	relationships	with	hardware	vendors, specialized	application	developers,	and	CAD,	ECAD	and	PLM	providers.	The	Company	believes	that	these	relationships	facilitate	accelerated	incorporation	of advanced	technology	into	the	Company's	products,	provide	access	to	new	customers,	expand	the	Company's	sales	channels,	develop	specialized	product	applications	and provide	direct	integration	with	leading	CAD,	electronic	design	automation	("EDA"),	product	data	management	and	PLM	systems.

The	Company	has	technical	and	marketing	relationships	with	leading	CAD	vendors,	such	as	Autodesk,	Dassault	Systèmes,	Parametric	Technology	Corporation	and Siemens	Product	Lifecycle	Management	Software	Inc.,	to	provide	direct	links	between	products.	These	links	facilitate	the	transfer	of	electronic	data	models	between	the CAD	systems	and	ANSYS	products.

Similarly,	the	Company	maintains	marketing	and	software	development	relationships	with	leading	EDA	software	companies,	including	Cadence,	Synopsys,	Mentor Graphics,	Zuken	and	Agilent.	These	relationships	support	transfer	of	data	between	electronics	design	and	layout	packages	and	the	ANSYS	electronics	simulation portfolio.

The	Company	has	established	relationships	with	leading	suppliers	of	computer	hardware,	including	Intel,	AMD,	Microsoft,	NVIDIA,	Hewlett-Packard,	IBM,	Dell, Cray,	Mellanox	and	other	leading	regional	resellers	and	system	integrators.	These	relationships	provide	the	Company	with	joint	marketing	opportunities,	such	as advertising,	public	relations,	editorial	coverage	and	customer	events.	In	addition,	these	alliances	provide	the	Company	with	early	access	and	technical	collaboration	on new	and	emerging	computing	technologies,	ensuring	that	the	Company's	software	products	are	certified	to	run	effectively	on	the	most	current	hardware	platforms. Important	2012	milestones	included	expanded	support	for	NVIDIA	General-Purpose	Graphical	Processing	Units,	work	with	Intel	on	the	Xeon	Phi	many-core	processor and	demonstration	of	extreme	parallel	scaling	in	conjunction	with	Cray.

The	Company's	Enhanced	Solution	Partner	Program	actively	encourages	specialized	developers	of	software	solutions	to	use	the	Company's	technology	as	a	development platform	for	their	applications	and	provides	customers	with	enhanced	functionality	related	to	their	use	of	the	Company's	software.	With	over	100	active	enhanced solution	partnerships,	spanning	a	wide	range	of	technologies,	including	electronics,	mechanical	simulation,	fluid	simulation,	acoustics,	turbomachinery	and	CAD,	this partner	ecosystem	extends	the	depth	and	breadth	of	the	Company's	technology	offerings.

The	Company	has	a	software	license	agreement	with	Livermore	Software	Technology	Corporation	("LSTC")	whereby	LSTC	has	provided	LS-DYNA	software	for explicit	dynamics	solutions	used	in	applications	such	as	crash	test	simulations	in	automotive	and	other	industries.	Under	this	arrangement,	LSTC	assists	in	the	integration of	the	LS-DYNA	software	with	the	Company's	pre-	and	post-processing	capabilities	and	provides	updates	and	problem	resolution	in	return	for	royalties	from	sales	of	the ANSYS/LS-DYNA	combined	product.

An	improved	framework	and	streamlined	workflow	for	composites	modeling	was	introduced	in	2012,	leveraging	a	software	license	agreement	between	the	Company and	Evolutionary	Engineering	AG,	introducing	the	ability	to	efficiently	create	3-D	layered	composites	from	complex	geometry	and	combine	them	with	non-composite parts	in	global	assemblies.

The	Company	has	a	software	license	agreement	with	SpaceClaim	Corporation	("SpaceClaim")	that	provides	direct	modeling	geometry	creation	and	editing	capability through	the	ANSYS	SpaceClaim	Direct	Modeler	application,	leveraging	the	open	architecture	of	the	ANSYS	platform.	SpaceClaim	is	bundled	with	a	variety	of	ANSYS products	in	order	to	encourage	adoption	of	engineering	simulation	by	engineers	involved	with	early	concept	phase	design	work,	where	simulation	can	deliver	low-cost, high-impact	system	optimization,	upstream	of	building	the	first	physical	prototype.

The	Company	also	has	a	software	license	agreement	with	HBM	that	provides	the	advanced	fatigue	capabilities	of	nCode	DesignLife™,	a	leading	durability	software from	HBM.	ANSYS®	nCode	DesignLife™	technology	leverages	the	open	architecture	of	the	ANSYS	platform	and	enables	mechanical	engineers	to	more	easily	address complex	product	life	and	durability	issues,	all	before	a	prototype	is	ever	built.

# COMPETITION

The	Company	believes	that	the	principal	factors	affecting	sales	of	its	software	include	ease	of	use,	breadth	and	depth	of	functionality,	flexibility,	quality,	ease	of integration	with	other	software	systems,	file	compatibility	across	computer	platforms,	range	of	supported	computer	platforms,	performance,	price	and	total	cost	of ownership,	customer	service	and	support,	company	reputation	and	financial	viability,	and	effectiveness	of	sales	and	marketing	efforts.

The	Company	continues	to	experience	competition	across	all	markets	for	its	products	and	services.	Some	of	the	Company's	current	and	possible	future	competitors	have greater	financial,	technical,	marketing	and	other	resources	than	the	Company,	and	some	have	well	established	relationships	with	current	and	potential	customers	of	the Company.	The	Company's	current	and	possible	future	competitors	also	include	firms	that	have	or	may	in	the	future	elect	to	compete	by	means	of	open	source	licensing. These	competitive	pressures	may	result	in	decreased	sales	volumes,	price	reductions	and/or	increased	operating	costs,	and	could	result	in	lower	revenues,	margins	and net	income.

# PROPRIETARY	RIGHTS	AND	LICENSES

The	Company	regards	its	software	as	proprietary	and	relies	on	a	combination	of	trade	secret,	copyright,	patent	and	trademark	laws,	license	agreements,	nondisclosure and	other	contractual	provisions,	and	technical	measures	to	protect	its	proprietary	rights	in	its	products.	The	Company	distributes	its	software	products	under	software license	agreements	that	grant	customers	nonexclusive	licenses,	which	are	typically	nontransferable,	for	the	use	of	the	Company's	products.	License	agreements	for	the Company's	products	are	directly	between	the	Company	and	end-users.	Use	of	the	licensed	software	product	is	restricted	to	specified	sites	unless	the	customer	obtains	a multi-site	license	for	its	use	of	the	software	product.	Software	security	measures	are	also	employed	to	prevent	unauthorized	use	of	the	Company's	software	products	and the	licensed	software	is	subject	to	terms	and	conditions	prohibiting	unauthorized	reproduction.	Customers	may	purchase	a	perpetual	license	of	the	technology	with	the right	to	annually	purchase	ongoing	maintenance,	technical	support	and	upgrades,	or	may	lease	the	product	on	a	fixed-term	basis	for	a	fee	that	includes	the	license, maintenance,	technical	support	and	upgrades.

The	Company	licenses	its	software	products	utilizing	a	combination	of	web-based	and	hard	copy	license	terms	and	forms.	For	certain	software	products,	the	Company primarily	relies	on	"click-wrapped"	licenses.	The	enforceability	of	these	types	of	agreements	under	the	laws	of	some	jurisdictions	is	uncertain.

The	Company	also	seeks	to	protect	the	source	code	of	its	software	as	a	trade	secret	and	as	unpublished	copyrighted	work.	The	Company	has	obtained	federal	trademark registration	protection	for	ANSYS	and	other	marks	in	the	U.S.	and	in	foreign	countries.	Additionally,	the	Company	was	awarded	numerous	patents	by	the	U.S.	Patent and	Trademark	Office,	and	has	a	number	of	patent	applications	pending.	The	Company	does	not	always	choose	to	seek	patent	protection	for	its	intellectual	property,	as the	process	of	obtaining	patent	protection	is	expensive	and	time	consuming.	As	a	result,	the	Company	primarily	relies	on	the	protection	of	its	source	code	as	a	trade secret.

Employees	of	the	Company	have	signed	agreements	under	which	they	have	agreed	not	to	disclose	trade	secrets	or	confidential	information	and,	where	legally	permitted, that	restrict	engagement	in	or	connection	with	any	business	that	is	competitive	with	the	Company	anywhere	in	the	world	while	employed	by	the	Company	(and,	in	some cases,	for	specified	periods	thereafter),	and	that	any	products	or	technology	created	by	them	during	their	term	of	employment	are	the	property	of	the	Company.	In addition,	the	Company	requires	all	channel	partners	to	enter	into	agreements	not	to	disclose	the	Company's	trade	secrets	and	other	proprietary	information.

Despite	these	precautions,	there	can	be	no	assurance	that	misappropriation	of	the	Company's	technology	and	proprietary	information	(including	source	code)	will	not occur.	Further,	there	can	be	no	assurance	that	copyright,	trademark,	patent	and	trade	secret	protection	will	be	available	for	the	Company's	products	in	certain jurisdictions,	or	that	restrictions	on	the	ability	of	employees	and	channel	partners	to	engage	in	activities	competitive	with	the	Company	will	be	enforceable.	Costly	and time-consuming	litigation	could	be	necessary	in	the	future	to	enforce	the	Company's	rights	to	its	trade	secrets	and	proprietary	information	or	to	enforce	its	patent	rights and	copyrights,	and	it	is	possible	that	in	the	future	the	Company's	competitors	may	be	able	to	obtain	the	Company's	trade	secrets	or	to	independently	develop	unpatented technology	similar	to	the	Company's.

The	software	development	industry	is	characterized	by	rapid	technological	change.	Therefore,	the	Company	believes	that	factors	such	as	the	technological	and	creative skills	of	its	personnel,	new	product	developments,	frequent	product	enhancements,	name	recognition	and	reliable	product	maintenance	are	also	important	to	establishing and	maintaining	technology	leadership	in	addition	to	the	various	legal	protections	of	its	technology	that	may	be	available.

The	Company	does	not	believe	that	any	of	its	products	infringe	upon	the	proprietary	rights	of	third	parties.	There	can	be	no	assurance,	however,	that	third	parties	will not	claim	such	infringement	by	the	Company	or	its	licensors	or	licensees	with	respect	to	current	or	future	products.	The	Company	expects	that	software	suppliers	will increasingly	be	subject	to	the	risk	of	such

claims	as	the	number	of	products	and	suppliers	continues	to	expand	and	the	functionality	of	products	continues	to	increase.	Any	such	claims,	with	or	without	merit,	could be	time	consuming,	result	in	costly	litigation,	cause	product	shipment	delays	or	require	the	Company	to	enter	into	royalty	or	licensing	agreements.	Such	royalty	or licensing	agreements,	if	required,	may	not	be	available	on	terms	acceptable	to	the	Company.

# SEASONAL	VARIATIONS

The	Company's	business	has	experienced	seasonality,	including	quarterly	reductions	in	software	sales	resulting	from	the	slowdown	during	the	summer	months, particularly	in	Europe,	as	well	as	from	the	seasonal	purchasing	and	budgeting	patterns	of	the	Company's	global	customers.	The	Company's	revenue	is	typically	highest	in the	fourth	quarter.

# BACKLOG

The	Company	had	a	backlog	of	$55.2	million	and	$56.3	million	of	orders	received	but	not	invoiced	as	of	December	31,	2012	and	2011,	respectively.

# EMPLOYEES

As	of	December	31,	2012,	the	Company	and	its	subsidiaries	had	approximately	2,400	employees.	At	that	date,	there	were	also	contract	personnel	and	co-op	students providing	ongoing	development	services	and	technical	support.	Certain	employees	of	the	Company	are	subject	to	collective	bargaining	agreements	and	have	local	work councils.	The	Company	believes	that	its	relationship	with	its	employees	is	good.

# AVAILABLE	INFORMATION

The	Company's	website	is	www.ansys.com.	The	Company	makes	available	on	its	website,	free	of	charge,	Annual	Reports	on	Form	10-K,	Quarterly	Reports	on	Form	10- Q,	interactive	data	files,	Current	Reports	on	Form	8-K,	reports	filed	pursuant	to	Section	16	and	amendments	to	those	reports	filed	or	furnished	pursuant	to	Section	13(a) or	15(d)	of	the	Securities	Exchange	Act	of	1934,	as	amended,	as	soon	as	reasonably	practicable	after	such	materials	are	electronically	filed	or	furnished	to	the	Securities and	Exchange	Commission	("SEC").	The	Company's	reports	may	also	be	obtained	by	accessing	the	EDGAR	database	of	the	SEC's	website	at	www.sec.gov.	In	addition, the	Company	has	posted	the	charters	for	its	Audit	Committee,	Compensation	Committee,	Nominating	and	Corporate	Governance	Committee,	and	Strategy	Committee, as	well	as	the	Company's	Code	of	Business	Conduct	and	Ethics,	Standard	Business	Practices	and	Corporate	Governance	Guidelines	on	its	website.	Information	posted	on the	Company's	website	is	not	incorporated	by	reference	in	this	Annual	Report	on	Form	10-K.

# ITEM	1A. RISK	FACTORS

Information	provided	by	the	Company	or	its	spokespersons,	including	information	contained	in	this	Annual	Report	on	Form	10-K,	may	from	time	to	time	contain forward-looking	statements	concerning	projected	financial	performance,	market	and	industry	sector	growth,	product	development	and	commercialization	or	other aspects	of	future	operations.	Such	statements	will	be	based	on	the	assumptions	and	expectations	of	the	Company's	management	at	the	time	such	statements	are	made. The	Company	cautions	investors	that	its	performance	(and,	therefore,	any	forward-looking	statement)	is	subject	to	risks	and	uncertainties.	Various	important	factors including,	but	not	limited	to,	the	following	may	cause	the	Company's	future	results	to	differ	materially	from	those	projected	in	any	forward-looking	statement.

Global	Economic	Conditions.	The	financial	markets	in	certain	geographies	continue	to	experience	disruption,	including,	among	other	things,	volatility	in	securities prices,	diminished	liquidity	and	credit	availability,	ratings	downgrades	of	certain	investments,	declining	valuations	of	others	and	uncertainty	regarding	governmental fiscal	policies.	These	economic	conditions	may	negatively	impact	the	Company	as	some	of	its	customers	defer	purchasing	decisions,	thereby	lengthening	the	Company's sales	cycles.	In	addition,	certain	of	the	Company's	customers'	budgets	may	be	constrained	and	they	may	be	unable	to	purchase	the	Company's	products	at	the	same	level. The	Company's	customers'	ability	to	pay	for	the	Company's	products	and	services	may	also	be	impaired,	which	may	lead	to	an	increase	in	the	Company's	allowance	for doubtful	accounts	and	write-offs	of	accounts	receivable.	The	Company	is	unable	to	predict	the	likely	duration	and	severity	of	the	current	economic	conditions.	Should these	economic	conditions	result	in	the	Company	not	meeting	its	revenue	growth	objectives,	the	Company's	operating	results,	cash	flows	and	financial	condition	could be	adversely	affected.

Decline	in	Customers'	Business.	The	Company's	sales	are	based	significantly	on	end-user	demand	for	products	in	key	industrial	sectors.	Many	of	these	sectors periodically	experience	economic	declines,	which	may	be	exacerbated	by	other	economic	factors,	including	the	recent	global	economic	conditions.	These	factors	may adversely	affect	the	Company's	business	by	extending	sales	cycles	and	reducing	revenue.	These	economic	factors	may	cause	the	Company's	customers	to	reduce	the

size	of	their	workforce	or	cut	back	on	operations	and	may	lead	to	a	reduction	in	license	renewals	or	ongoing	maintenance	contracts	with	the	Company.	The	Company's customers	may	also	request	discounts	or	extended	payment	terms	on	new	products	or	seek	to	extend	payment	terms	on	existing	contracts,	all	of	which	may	cause fluctuations	in	the	Company's	future	operating	results.	The	Company	may	not	be	able	to	adjust	its	operating	expenses	to	offset	such	fluctuations	because	a	substantial portion	of	the	Company's	operating	expenses	is	related	to	personnel,	facilities	and	marketing	programs.	The	level	of	personnel	and	related	expenses	may	not	be	able	to be	adjusted	quickly	and	is	based,	in	significant	part,	on	the	Company's	expectation	for	future	revenue.

Risks	Associated	with	International	Activities.	A	majority	of	the	Company's	business	comes	from	outside	the	United	States	and	the	Company	has	customers	that	supply a	wide	spectrum	of	goods	and	services	in	virtually	all	of	the	world's	major	economic	regions.	As	the	Company	continues	to	expand	its	sales	presence	in	international regions,	the	portion	of	its	revenue,	expenses,	cash,	accounts	receivable	and	payment	obligations	denominated	in	foreign	currencies	continues	to	increase.	The	Company's revenues	and	operating	results	are	adversely	affected	when	the	U.S.	Dollar	strengthens	relative	to	other	currencies	and	are	positively	affected	when	the	U.S.	Dollar weakens.	As	a	result,	changes	in	currency	exchange	rates	will	affect	the	Company's	financial	position,	results	of	operations	and	cash	flows.	In	the	event	that	there	are economic	declines	in	countries	in	which	the	Company	conducts	transactions,	the	resulting	changes	in	currency	exchange	rates	may	affect	the	Company's	financial position,	results	of	operations	and	cash	flows.	The	Company	is	most	impacted	by	movements	in	and	among	the	Euro,	British	Pound,	Japanese	Yen,	Indian	Rupee, Korean	Won	and	the	U.S.	Dollar.	The	Company	seeks	to	reduce	these	risks	primarily	through	its	normal	operating	and	treasury	activities,	but	there	can	be	no	assurance that	it	will	be	successful	in	reducing	these	risks.

Additional	risks	inherent	in	the	Company's	international	business	activities	include	imposition	of	government	controls;	export	license	requirements;	restrictions	on	the export	of	critical	technology,	products	and	services;	political	and	economic	instability;	trade	restrictions;	changes	in	tariffs	and	taxes;	difficulties	in	staffing	and managing	international	operations;	longer	accounts	receivable	payment	cycles;	and	the	burdens	of	complying	with	a	wide	variety	of	foreign	laws	and	regulations. Effective	patent,	copyright,	trademark	and	trade	secret	protection	may	not	be	available	in	every	foreign	country	in	which	the	Company	sells	its	products	and	services. The	Company's	business,	financial	position,	results	of	operations	and	cash	flows	could	be	materially,	adversely	affected	by	any	of	these	risks.

Stock	Market	and	Stock	Price	Volatility.	Market	prices	for	securities	of	software	companies	have	generally	been	volatile.	In	particular,	the	market	price	of	the Company's	common	stock	has	been,	and	may	continue	to	be,	subject	to	significant	fluctuations	as	a	result	of	factors	affecting	the	Company,	the	software	industry	or	the securities	markets	in	general.	Such	factors	include,	but	are	not	limited	to,	declines	in	trading	price	that	may	be	triggered	by	the	Company's	failure	to	meet	the expectations	of	securities	analysts	and	investors.	Moreover,	the	trading	price	could	be	subject	to	additional	fluctuations	in	response	to	quarter-to-quarter	variations	in	the Company's	operating	results,	material	announcements	made	by	the	Company	or	its	competitors,	conditions	in	the	financial	markets	or	the	software	industry	generally	or other	events	and	factors,	many	of	which	are	beyond	the	Company's	control.

Rapidly	Changing	Technology;	New	Products;	Risk	of	Product	Defects.	The	Company	operates	in	an	industry	generally	characterized	by	rapidly	changing	technology and	frequent	new	product	introductions,	which	can	render	existing	products	obsolete	or	unmarketable.	A	major	factor	in	the	Company's	future	success	will	be	its	ability to	anticipate	technological	changes	and	to	develop	and	introduce,	in	a	timely	manner,	enhancements	to	its	existing	products,	products	acquired	in	acquisitions	and	new products	to	meet	those	changes.	If	the	Company	is	unable	to	introduce	new	products	and	to	respond	quickly	to	industry	changes,	its	business,	financial	position,	results of	operations	and	cash	flows	could	be	materially,	adversely	affected.

The	introduction	and	marketing	of	new	or	enhanced	products	require	the	Company	to	manage	the	transition	from	existing	products	in	order	to	minimize	disruption	in customer	purchasing	patterns.	There	can	be	no	assurance	that	the	Company	will	be	successful	in	developing	and	marketing,	on	a	timely	basis,	new	products	or	product enhancements,	that	its	new	products	will	adequately	address	the	changing	needs	of	the	marketplace	or	that	it	will	successfully	manage	the	transition	from	existing products.	Software	products	as	complex	as	those	offered	by	the	Company	may	contain	undetected	errors	or	failures	when	first	introduced,	or	as	new	versions	are released,	and	the	likelihood	of	errors	is	increased	as	a	result	of	the	Company's	commitment	to	the	frequency	of	its	product	releases.	There	can	be	no	assurance	that	errors will	not	be	found	in	any	new	or	enhanced	products	after	commencement	of	commercial	shipments.	Certain	products	require	a	higher	level	of	sales	and	support	expertise. The	ability	of	the	Company's	sales	channel,	particularly	the	indirect	channel,	to	obtain	this	expertise	and	to	sell	the	new	product	offerings	effectively	could	have	an adverse	impact	on	the	Company's	sales	in	future	periods.	Any	of	these	problems	may	result	in	the	loss	of	or	delay	in	customer	acceptance,	diversion	of	development resources,	damage	to	the	Company's	reputation,	or	increased	service	and	warranty	costs,	any	of	which	could	have	a	material,	adverse	effect	on	the	Company's	business, financial	position,	results	of	operations	and	cash	flows.

Product	Quality.	The	Company	has	separate	quality	systems	and	registrations	under	the	ISO	9001:2008	standard,	in	addition	to	other	governmental	and	industrial regulations.	The	Company's	continued	compliance	with	quality	standards	and	favorable

outcomes	in	periodic	examinations	is	important	to	retain	current	customers	and	vital	to	procure	new	sales.	If	the	Company	was	determined	not	to	be	compliant	with various	regulatory	or	ISO	9001/9000	standards,	its	certificates	of	registration	could	be	suspended,	requiring	remedial	action	and	a	time-consuming	re-registration process.	The	Company's	reputation	may	become	diminished,	resulting	in	a	material,	adverse	impact	on	revenue,	operating	margins,	net	income,	financial	position	and cash	flows.

Competition.	The	Company	continues	to	experience	competition	across	all	markets	for	its	products	and	services.	Some	of	the	Company's	current	and	possible	future competitors	have	greater	financial,	technical,	marketing	and	other	resources	than	the	Company,	and	some	have	well	established	relationships	with	current	and	potential customers	of	the	Company.	The	Company's	current	and	possible	future	competitors	also	include	firms	that	have	or	may	in	the	future	elect	to	compete	by	means	of	open source	licensing.	These	competitive	pressures	may	result	in	decreased	sales	volumes,	price	reductions	and/or	increased	operating	costs,	and	could	result	in	lower revenues,	margins	and	net	income.

Changes	in	the	Company's	Pricing	Models.		The	intense	competition	the	Company	faces	in	the	sales	of	its	products	and	services,	and	general	economic	and	business conditions,	can	put	pressure	on	the	Company	to	adjust	its	prices.	If	the	Company's	competitors	offer	deep	discounts	on	certain	products	or	services,	or	develop	products that	the	marketplace	considers	more	valuable,	the	Company	may	need	to	lower	prices	or	offer	other	favorable	terms	in	order	to	compete	successfully.	Any	such	changes may	reduce	operating	margins	and	could	adversely	affect	operating	results.	The	Company's	software	license	updates	and	product	support	fees	are	generally	priced	as	a percentage	of	its	new	software	license	fees.	The	Company's	competitors	may	offer	lower	percentage	pricing	on	product	updates	and	support	that	could	put	pressure	on the	Company	to	further	discount	its	new	license	prices.

Any	broad-based	change	to	the	Company's	prices	and	pricing	policies	could	cause	new	software	license	and	service	revenues	to	decline	or	be	delayed	as	its	sales	force implements	and	its	customers	adjust	to	the	new	pricing	policies.	Some	of	the	Company's	competitors	may	bundle	software	products	for	promotional	purposes	or	as	a long-term	pricing	strategy	or	provide	guarantees	of	prices	and	product	implementations.	These	practices	could,	over	time,	significantly	constrain	the	prices	that	the Company	can	charge	for	certain	of	its	products.	If	the	Company	does	not	adapt	its	pricing	models	to	reflect	changes	in	customer	use	of	its	products	or	changes	in customer	demand,	the	Company's	new	software	license	revenues	could	decrease.	Additionally,	increased	distribution	of	applications	through	application	service providers,	including	software-as-a-service	providers,	may	reduce	the	average	price	for	the	Company's	products	or	adversely	affect	other	sales	of	the	Company's	products, reducing	new	software	license	revenues	unless	the	Company	can	offset	price	reductions	with	volume	increases.	The	increase	in	open	source	software	distribution	may also	cause	the	Company	to	adjust	its	pricing	models.

Dependence	on	Senior	Management	and	Key	Technical	Personnel.	The	Company's	success	depends	upon	the	continued	services	of	the	Company's	senior	executives, key	technical	employees	and	other	employees.	Each	of	the	Company's	executive	officers,	key	technical	personnel	and	other	employees	could	terminate	his	or	her relationship	with	the	Company	at	any	time.	The	loss	of	any	of	the	Company's	senior	executives	might	significantly	delay	or	prevent	the	achievement	of	the	Company's business	objectives	and	could	materially	harm	the	Company's	business	and	customer	relationships.

In	addition,	because	of	the	highly	technical	nature	of	the	Company's	products,	the	Company	must	attract	and	retain	highly	skilled	engineering	and	development personnel,	many	of	whom	are	recruited	from	outside	of	the	United	States.	The	market	for	this	talent	is	highly	competitive.	The	Company	is	limited	in	its	ability	to	recruit internationally	by	restrictive	domestic	immigration	laws.	If	the	Company	has	less	success	in	recruiting	and	retaining	key	personnel,	the	Company's	business,	reputation and	operating	results	could	be	materially	and	adversely	affected.

Dependence	on	Proprietary	Technology.	The	Company's	success	is	highly	dependent	upon	its	proprietary	technology.	The	Company	generally	relies	on	contracts	and the	laws	of	copyright,	patents,	trademarks	and	trade	secrets	to	protect	its	technology.	The	Company	maintains	a	trade	secrets	program,	enters	into	confidentiality agreements	with	its	employees	and	channel	partners,	and	limits	access	to	and	distribution	of	its	software,	documentation	and	other	proprietary	information.	There	can	be no	assurance	that	the	steps	taken	by	the	Company	to	protect	its	proprietary	technology	will	be	adequate	to	prevent	misappropriation	of	its	technology	by	third	parties,	or that	third	parties	will	not	be	able	to	develop	similar	technology	independently.	Costly	and	time-consuming	litigation	could	be	necessary	to	enforce	and	determine	the scope	of	trade	secret	rights	and	related	confidentiality	and	nondisclosure	provisions.	Although	the	Company	is	not	aware	that	any	of	its	technology	infringes	upon	the rights	of	third	parties,	there	can	be	no	assurance	that	other	parties	will	not	assert	technology	infringement	claims	against	the	Company	or	that,	if	asserted,	such	claims will	not	prevail.

Risks	associated	with	security	of	our	products,	source	code	and	IT	systems.	We	make	significant	efforts	to	maintain	the	security	and	integrity	of	our	products,	source code	and	computer	systems	and	data.	Despite	significant	efforts	to	create	security	barriers	to	such	programs,	it	is	virtually	impossible	for	us	to	entirely	mitigate	this	risk. There	appears	to	be	an	increasing	number	of	computer	"hackers"	developing	and	deploying	a	variety	of	destructive	software	programs	(such	as	viruses,	worms,

and	the	like)	that	could	attack	our	products	and	computer	systems.	Like	all	software	products,	our	software	is	vulnerable	to	such	attacks.	The	impact	of	such	an	attack could	disrupt	the	proper	functioning	of	our	software	products,	cause	errors	in	the	output	of	our	customers'	work,	allow	unauthorized	access	to	sensitive,	proprietary	or confidential	information	of	ours	or	our	customers	and	other	destructive	outcomes.	If	this	were	to	occur,	our	reputation	may	suffer,	customers	may	stop	buying	our products,	we	could	face	lawsuits	and	potential	liability	and	our	financial	performance	could	be	negatively	impacted.

There	is	also	a	danger	of	industrial	espionage,	cyber-attacks,	misuse,	or	theft	of	information	or	assets	(including	source	code),	or	damage	to	assets	by	people	who	have gained	unauthorized	access	to	our	facilities,	systems,	or	information.	Such	cybersecurity	breaches,	misuse,	or	other	disruptions	could	lead	to	the	disclosure	of	portions	of our	product	source	code	or	other	confidential	information,	improper	usage	and	distribution	of	our	products	without	compensation,	illegal	usage	of	our	products jeopardize	the	security	of	information	stored	in	and	transmitted	through	our	computer	systems,	theft,	manipulation	and	destruction	of	private	and	proprietary	data, defective	products	and	production	downtimes.	Although	we	actively	employ	measures	to	combat	unlicensed	copying,	access	and	use	of	software	and	intellectual property	through	a	variety	of	techniques,	preventing	unauthorized	use	or	infringement	of	our	rights	is	inherently	difficult.	These	events	could	adversely	affect	our financial	results	or	could	result	in	significant	claims	for	damages	against	us,	and	participating	in	lawsuits	to	protect	against	any	such	unauthorized	access	to,	usage	of	or disclosure	of	any	of	our	products	or	any	portion	of	our	product	source	code,	or	in	prosecutions	in	connection	with	any	such	cybersecurity	breach,	could	be	costly	and time-consuming	and	may	divert	management's	attention	and	adversely	affect	the	market's	perception	of	us	and	our	products.

Policing	the	unauthorized	distribution	and	use	of	our	products	is	difficult,	and	software	piracy	(including	online	piracy)	is	a	persistent	problem.	Although	we	actively employ	measures	to	combat	unlicensed	copying,	access	and	use	of	software	and	intellectual	property	through	a	variety	of	techniques,	preventing	unauthorized	use	or infringement	of	our	rights	is	inherently	difficult.	The	proliferation	of	technology	designed	to	circumvent	typical	software	protection	measures	used	in	our	products,	and the	possibility	that	methods	of	circumventing	the	techniques	we	employ	in	our	products,	may	lead	to	an	expansion	in	piracy	or	misuse	of	our	products	and	intellectual property.	As	a	result,	and	despite	our	efforts	to	prevent	such	activities	and	to	prosecute	instances	of	such	activities,	we	may	nonetheless	lose	significant	revenue	due	to illegal	use	of	our	software,	and	management's	attention	may	be	diverted	to	address	specific	instances	of	piracy	or	misuse	or	address	piracy	and	misuse	in	general.

A	number	of	our	core	processes,	such	as	software	development,	sales	and	marketing,	customer	service	and	financial	transactions,	rely	on	our	IT	infrastructure	and applications.	Malicious	software,	sabotage	and	other	cybersecurity	breaches	of	the	types	discussed	above	could	cause	an	outage	of	our	infrastructure,	which	could	lead	to a	substantial	denial	of	service	and	ultimately	to	production	downtime,	recovery	costs,	and	customer	claims.	This	could	have	a	significant	negative	impact	on	our business,	financial	position,	profit,	or	cash	flows.

We	have	implemented	a	number	of	measures	designed	to	ensure	the	security	of	our	information,	IT	resources,	and	other	assets.	Nonetheless,	unauthorized	users	could gain	access	to	our	systems	through	cyber-attacks	and	steal,	use	without	authorization,	and	sabotage	our	intellectual	property	and	confidential	data.	Any	breach	of	our	IT security,	misuse,	or	theft	could	lead	to	loss	of	production,	to	recovery	costs,	or	to	litigation	brought	by	employees,	customers	or	business	partners,	which	could	have	a significant	negative	impact	on	our	business,	financial	position,	profit,	cash	flows	and	reputation.

Dependence	on	Channel	Partners.	The	Company	continues	to	distribute	a	meaningful	portion	of	its	products	through	its	global	network	of	independent,	regional channel	partners.	The	channel	partners	sell	the	Company's	software	products	to	new	and	existing	customers,	expand	installations	within	the	existing	customer	base,	offer consulting	services	and	provide	the	first	line	of	technical	support.	Consequently,	in	certain	geographies,	the	Company	is	highly	dependent	upon	the	efforts	of	the	channel partners.	Difficulties	in	ongoing	relationships	with	channel	partners,	such	as	failure	to	meet	performance	criteria	or	to	promote	the	Company's	products	as	aggressively as	the	Company	expects,	and	differences	in	the	handling	of	customer	relationships,	could	adversely	affect	the	Company's	performance.	Additionally,	the	loss	of	any major	channel	partner	for	any	reason,	including	a	channel	partner's	decision	to	sell	competing	products	rather	than	the	Company's	products,	could	have	a	material, adverse	effect	on	the	Company.	Moreover,	the	Company's	future	success	will	depend	substantially	on	the	ability	and	willingness	of	its	channel	partners	to	continue	to dedicate	the	resources	necessary	to	promote	the	Company's	portfolio	of	products	and	to	support	a	larger	installed	base	of	the	Company's	products.	If	the	channel	partners are	unable	or	unwilling	to	do	so,	the	Company	may	be	unable	to	sustain	revenue	growth.

During	times	of	significant	fluctuations	in	world	currencies,	certain	channel	partners	may	have	solvency	issues	to	the	extent	that	effective	hedge	transactions	are	not employed	or	there	is	not	sufficient	working	capital.	In	particular,	if	the	U.S.	Dollar	strengthens	relative	to	other	currencies,	certain	channel	partners	who	pay	the Company	in	U.S.	Dollars	may	have	trouble	paying	the	Company	on	time	or	may	have	trouble	distributing	the	Company's	products	due	to	the	impact	of	the	currency exchange	fluctuation	on	such	channel	partner's	cash	flows.	This	may	impact	the	Company's	ability	to	distribute	its	products	into	certain	regions	and	markets,	and	may have	an	adverse	effect	on	the	Company's	results	of	operations	and	cash	flows.

Reliance	on	Perpetual	Licenses.	Although	the	Company	has	historically	maintained	stable	recurring	revenue	from	the	sale	of	software	lease	licenses	and	software maintenance	subscriptions,	it	also	has	relied	on	sales	of	perpetual	licenses	that	involve	payment	of	a	single,	up-front	fee	and	that	are	more	typical	in	the	computer software	industry.	While	revenue	generated	from	software	lease	licenses	and	software	maintenance	subscriptions	currently	represents	a	portion	of	the	Company's revenue,	to	the	extent	that	perpetual	license	revenue	continues	to	represent	a	significant	percentage	of	total	revenue,	the	Company's	revenue	in	any	period	will	depend increasingly	on	sales	completed	during	that	period.

Renewal	Rates	for	Annual	Lease	and	Maintenance	Contracts.		A	substantial	portion	of	the	Company's	license	and	maintenance	revenue	is	derived	from	annual	lease and	maintenance	contracts.	These	contracts	are	generally	renewed	on	an	annual	basis	and	typically	have	a	high	rate	of	customer	renewal.	In	addition	to	the	recurring revenue	base	associated	with	these	contracts,	a	majority	of	customers	purchasing	new	perpetual	licenses	also	purchase	related	annual	maintenance	contracts.		If	the	rate of	renewal	for	these	contracts	is	adversely	affected	by	economic	or	other	factors,	the	Company's	license	and	maintenance	growth	will	be	adversely	affected	over	the	term that	the	revenue	for	those	contracts	would	have	otherwise	been	recognized.		As	a	result,	the	Company's	business,	financial	position,	results	of	operations	and	cash	flows may	also	be	adversely	impacted	during	those	periods.

Risks	Associated	with	Acquisitions.	Historically,	the	Company	has	consummated	acquisitions	in	order	to	support	the	Company's	long-term	strategic	direction,	accelerate innovation,	provide	increased	capabilities	to	its	existing	products,	supply	new	products	and	services,	expand	its	customer	base	and	enhance	its	distribution	channels.	In the	future,	the	Company	may	not	be	able	to	identify	suitable	acquisition	candidates	or,	if	suitable	candidates	are	identified,	the	Company	may	not	be	able	to	complete the	business	combination	on	commercially	acceptable	terms.	The	process	of	exploring	and	pursuing	acquisition	opportunities	may	result	in	devotion	of	significant management	and	financial	resources.

Even	if	the	Company	is	able	to	consummate	acquisitions	that	it	believes	will	be	successful,	such	transactions	present	many	risks.	Significant	risks	to	such	acquisitions include,	among	others:	failing	to	achieve	anticipated	synergies	and	revenue	increases;	difficulty	incorporating	and	integrating	the	acquired	technologies	or	products	with the	Company's	existing	product	lines;	difficulty	in	coordinating,	establishing	or	expanding	sales,	distribution	and	marketing	functions,	as	necessary;	disruption	of	the Company's	ongoing	business	and	diversion	of	management's	attention	to	transition	or	integration	issues;	unanticipated	and	unknown	liabilities;	the	loss	of	key employees,	customers,	partners	and	channel	partners	of	the	Company	or	of	the	acquired	company;	and	difficulties	implementing	and	maintaining	sufficient	controls, policies	and	procedures	over	the	systems,	products	and	processes	of	the	acquired	company.	If	the	Company	does	not	achieve	the	anticipated	benefits	of	its	acquisitions	as rapidly	or	to	the	extent	anticipated	by	the	Company's	management	and	financial	or	industry	analysts,	or	if	others	do	not	perceive	the	same	benefits	of	the	acquisition	as the	Company,	there	could	be	a	material,	adverse	effect	on	the	Company's	stock	price,	business,	financial	position,	results	of	operations	or	cash	flows.

In	addition,	for	companies	acquired,	limited	experience	will	exist	for	several	quarters	following	the	acquisition	relating	to	how	the	acquired	company's	sales	pipelines will	convert	into	sales	or	revenues	and	the	conversion	rate	post-acquisition	may	be	quite	different	than	the	historical	conversion	rate.	Because	a	substantial	portion	of	the Company's	sales	are	completed	in	the	latter	part	of	a	quarter,	and	its	cost	structure	is	largely	fixed	in	the	short-term,	revenue	shortfalls	may	have	a	negative	impact	on	the Company's	profitability.	A	delay	in	a	small	number	of	large,	new	software	license	transactions	could	cause	the	Company's	quarterly	software	license	revenues	to	fall significantly	short	of	its	predictions.

Risks	Associated	with	the	Esterel	Acquisition.	On	August	1,	2012,	the	Company	completed	its	acquisition	of	Esterel,	a	leading	provider	of	embedded	software simulation	and	automatic	generation	of	certified	code	solutions	for	mission	critical	applications.	Under	the	terms	of	the	acquisition	agreement,	ANSYS	acquired	100% of	Esterel	for	a	purchase	price	of	$58.2	million,	which	included	$13.1	million	in	acquired	cash.	The	acquisition	agreement	also	includes	retention	provisions	for	key members	of	Esterel's	management	and	employees.	The	Company	funded	the	transaction	entirely	with	existing	cash	balances.	While	the	acquisition	of	Esterel	is	expected to	accelerate	development	and	delivery	of	new	and	innovative	products	to	the	marketplace	while	lowering	design	and	engineering	costs	for	customers,	the	Company	will need	to	meet	significant	challenges	to	realize	the	expected	benefits	and	synergies	of	the	acquisition.	These	challenges	include:

•Integrating	the	management	teams,	strategies,	cultures	and	operations	of	the	two companies.

•Retaining	and	assimilating	the	key	personnel	of	each	company.

•Integrating	sales	and	business	development operations.

•Retaining	existing	customers	of	each	company.

•Developing	new	products	and	services	that	utilize	the	technologies	and	resources	of	both companies.

•Creating	uniform	standards,	controls,	procedures,	policies	and	information systems.

•Realizing	the	anticipated	cost	savings	in	the	combined company.

•Combining	the	businesses	of	the	Company	and	Esterel	in	a	manner	that	neither	materially	disrupts	Esterel's	existing	customer	relationships	nor	otherwise results	in	decreased	revenues	and	that	allows	the	Company	to	capitalize	on	Esterel's	growth	opportunities.

The	accomplishment	of	these	post-acquisition	objectives	will	involve	considerable	risks,	including:

•The	loss	of	key	employees	that	are	critical	to	the	successful	integration	and	future	operations	of	the companies.

•The	potential	disruption	of	each	company's	ongoing	business	and	distraction	of	their	respective	management teams.

•The	difficulty	of	incorporating	acquired	technology	and	rights	into	the	Company's	products	and services.

•Unanticipated	expenses	related	to	technology integration.

•Potential	disruptions	in	each	company's	operations;	loss	of	existing	customers;	loss	of	key	information,	expertise	or	know-how;	and	unanticipated additional	recruitment	and	training	costs.

•Possible	inconsistencies	in	standards,	controls,	procedures	and	policies	that	could	adversely	affect	the	Company's	ability	to	maintain	relationships	with customers	and	employees	or	to	achieve	the	anticipated	benefits	of	the	acquisition.

•Potential	unknown	liabilities	associated	with	the

acquisition.

The	market	price	of	the	Company's	common	stock	may	decline	as	a	result	of	the	acquisition	for	a	number	of	reasons,	including:

•The	integration	of	Esterel	by	the	Company	may	be

unsuccessful.

•The	Company	may	not	achieve	the	perceived	benefits	of	the	acquisition	as	rapidly	as,	or	to	the	extent	anticipated	by,	financial	or	industry analysts.

•The	effect	of	the	acquisition	on	the	Company's	financial	results	may	not	be	consistent	with	the	expectations	of	financial	or	industry analysts.

If	the	Company	does	not	succeed	in	addressing	these	challenges	or	any	other	problems	encountered	in	connection	with	the	acquisition,	its	operating	results	and	financial condition	could	be	adversely	affected.

Disruption	of	Operations	or	Infrastructure	Failures.	A	significant	portion	of	the	Company's	software	development	personnel,	source	code	and	computer	equipment	is located	at	operating	facilities	in	the	United	States,	Canada,	India,	Japan	and	throughout	Europe.	The	occurrence	of	a	natural	disaster	or	other	unforeseen	catastrophe	at any	of	these	facilities	could	cause	interruptions	in	the	Company's	operations,	services	and	product	development	activities.	Additionally,	if	the	Company	experiences problems	that	impair	its	business	infrastructure,	such	as	a	computer	virus,	telephone	system	failure	or	an	intentional	disruption	of	its	information	technology	systems	by a	third	party,	these	interruptions	could	have	a	material,	adverse	effect	on	the	Company's	business,	financial	position,	results	of	operations,	cash	flows	and	the	ability	to meet	financial	reporting	deadlines.	Further,	because	the	Company's	sales	are	not	generally	linear	during	any	quarterly	period,	the	potential	adverse	effects	resulting	from any	of	the	events	described	above	or	any	other	disruption	of	the	Company's	business	could	be	accentuated	if	it	occurs	close	to	the	end	of	a	fiscal	quarter.

Sales	Forecasts.	The	Company	makes	many	operational	and	strategic	decisions	based	upon	short-	and	long-term	sales	forecasts.	The	Company's	sales	personnel continually	monitor	the	status	of	all	proposals,	including	the	estimated	closing	date	and	the	value	of	the	sale,	in	order	to	forecast	quarterly	sales.	These	forecasts	are subject	to	significant	estimation	and	are	impacted	by	many	external	factors,	including	global	economic	conditions	and	the	performance	of	the	Company's	customers.	A variation	in	actual	sales	activity	from	that	forecasted	could	cause	the	Company	to	plan	or	to	budget	incorrectly	and,	therefore,	could	adversely	affect	the	Company's business,	financial	position,	results	of	operations	and	cash	flows.	The	Company's	management	team	forecasts	macroeconomic	trends	and	developments,	and	integrates them	through	long-range	planning	into	budgets,	research	and	development	strategies	and	a	wide	variety	of	general	management	duties.	Global	economic	conditions,	and the	effect	those	conditions	and	other	disruptions	in	global	markets	have	on	the	Company's	customers,	may	have	a	significant	impact	on	the	accuracy	of	the	Company's sales	forecasts.	These	conditions	may	increase	the	likelihood	or	the	magnitude	of	variations	between	actual	sales	activity	and	the	Company's	sales	forecasts	and,	as	a result,	the	Company's

performance	may	be	hindered	because	of	a	failure	to	properly	match	corporate	strategy	with	economic	conditions.	This,	in	turn,	may	adversely	affect	the	Company's business,	financial	position,	results	of	operations	and	cash	flows.

Risks	Associated	with	Significant	Sales	to	Existing	Customers.	A	significant	portion	of	the	Company's	sales	includes	follow-on	sales	to	existing	customers	that	invest	in the	Company's	broad	suite	of	engineering	simulation	software	and	services.	If	a	significant	number	of	current	customers	were	to	become	dissatisfied	with	the	Company's products	and	services,	or	choose	to	license	or	utilize	competitive	offerings,	the	Company's	follow-on	sales,	and	recurring	lease	and	maintenance	revenues,	could	be materially,	adversely	impacted,	resulting	in	reduced	revenue,	operating	margins,	net	income	and	cash	flows.

Income	Tax	Estimates.	The	Company	makes	significant	estimates	in	determining	its	worldwide	income	tax	provision.	These	estimates	involve	complex	tax	regulations in	a	number	of	jurisdictions	across	the	Company's	global	operations	and	are	subject	to	many	transactions	and	calculations	in	which	the	ultimate	tax	outcome	is	uncertain. The	final	outcome	of	tax	matters	could	be	different	than	the	estimates	reflected	in	the	historical	income	tax	provision	and	related	accruals.	Such	differences	could	have	a material	impact	on	income	tax	expense	and	net	income	in	the	periods	in	which	such	determinations	are	made.

The	amount	of	income	tax	paid	by	the	Company	is	subject	to	ongoing	audits	by	federal,	state	and	foreign	tax	authorities.	These	audits	can	often	result	in	additional assessments,	including	interest	and	penalties.	The	Company's	estimate	for	liabilities	associated	with	uncertain	tax	positions	is	highly	judgmental	and	actual	future outcomes	may	result	in	favorable	or	unfavorable	adjustments	to	the	Company's	estimated	tax	liabilities,	including	estimates	for	uncertain	tax	positions,	in	the	period	the assessments	are	made	or	resolved,	audits	are	closed	or	when	statutes	of	limitation	on	potential	assessments	expire.	As	a	result,	the	Company's	effective	tax	rate	may fluctuate	significantly	on	a	quarterly	or	annual	basis.

The	Company	allocates	a	portion	of	its	purchase	price	to	goodwill	and	intangible	assets.	Impairment	charges	associated	with	goodwill	are	generally	not	tax	deductible and	will	result	in	an	increased	effective	income	tax	rate	in	the	period	the	impairment	is	recorded.	The	Company	has	recorded	significant	deferred	tax	liabilities	related	to acquired	intangible	assets	that	are	not	deductible	for	tax	purposes.	These	deferred	tax	liabilities	are	based	on	future	statutory	tax	rates	in	the	locations	in	which	the intangible	assets	are	recorded.	Any	future	changes	in	statutory	tax	rates	would	be	recorded	as	an	adjustment	to	the	deferred	tax	liabilities	in	the	period	the	change	is announced,	and	could	have	a	material	impact	on	the	Company's	effective	tax	rate	during	that	period.

Periodic	Reorganization	of	Sales	Force.	The	Company	relies	heavily	on	its	direct	sales	force.	From	time	to	time,	the	Company	reorganizes	and	makes	adjustments	to	its sales	force	in	response	to	such	factors	as	management	changes,	performance	issues,	market	opportunities	and	other	considerations.	These	changes	may	result	in	a temporary	lack	of	sales	production	and	may	adversely	impact	revenue	in	future	quarters.	There	can	be	no	assurance	that	the	Company	will	not	restructure	its	sales	force in	future	periods	or	that	the	transition	issues	associated	with	such	a	restructuring	will	not	occur.

Regulatory	Compliance.	Like	all	other	public	companies,	the	Company	is	subject	to	the	rules	and	regulations	of	the	SEC,	including	those	that	require	the	Company	to report	on	and	receive	an	attestation	from	its	independent	registered	public	accounting	firm	regarding	the	Company's	internal	control	over	financial	reporting. Compliance	with	these	requirements	causes	the	Company	to	incur	additional	expenses	and	causes	management	to	divert	time	from	the	day-to-day	operations	of	the Company.	While	the	Company	anticipates	being	able	to	fully	comply	with	these	requirements,	if	it	is	not	able	to	comply	with	the	Sarbanes-Oxley	reporting	or	attestation requirements	relating	to	internal	control	over	financial	reporting,	the	Company	may	be	subject	to	sanctions	by	the	SEC	or	NASDAQ.	Such	sanctions	could	divert	the attention	of	the	Company's	management	from	implementing	its	business	plan	and	could	have	an	adverse	effect	on	the	Company's	business	and	results	of	operations.

As	the	Company's	stock	is	listed	on	the	NASDAQ	Global	Select	Market,	the	Company	is	subject	to	the	ongoing	financial	and	corporate	governance	requirements	of NASDAQ.	While	the	Company	anticipates	being	able	to	fully	comply	with	these	requirements,	if	it	is	not	able	to	comply,	the	Company's	name	may	be	published	on NASDAQ's	daily	Non-Compliant	Companies	list	until	NASDAQ	determines	that	it	has	regained	compliance	or	the	Company	no	longer	trades	on	NASDAQ.	If	the Company	were	unable	to	return	to	compliance	with	the	governance	requirements	of	NASDAQ,	the	Company	may	be	delisted	from	the	NASDAQ	Global	Select	Market, which	could	have	an	adverse	effect	on	the	market	value	of	the	Company's	equity	securities	and	the	ability	to	raise	additional	capital.

Governmental	Revenue	Sources.		The	Company's	sales	to	the	United	States	government	must	comply	with	Federal	Acquisition	Regulations.	Failure	to	comply	with these	regulations	could	result	in	penalties	being	assessed	against	the	Company	or	an	order	preventing	the	Company	from	making	future	sales	to	the	United	States government.	Further,	the	Company's	international	activities	must	comply	with	the	export	control	laws	of	the	United	States,	the	Foreign	Corrupt	Practices	Act	and	a variety	of	other	laws	and	regulations	of	the	United	States	and	other	countries	in	which	the	Company	operates.	Failure	to	comply	with	any	of	these	laws	and	regulations could	adversely	affect	the	Company's	business,	financial	position,	results	of	operations	and	cash	flows.

In	certain	circumstances,	the	United	States	government,	state	and	local	governments	and	their	respective	agencies,	and	certain	foreign	governments	may	have	the	right to	terminate	contractual	arrangements	at	any	time,	without	cause.	The	United	States,	European	Union	and	certain	other	government	contracts,	as	well	as	the	Company's state	and	local	level	contracts,	are	subject	to	the	approval	of	appropriations	or	funding	authorizations.		Certain	of	these	contracts	permit	the	imposition	of	various	civil and	criminal	penalties	and	administrative	sanctions,	including,	but	not	limited	to,	termination	of	contracts,	refund	of	a	portion	of	fees	received,	forfeiture	of	profits, suspension	of	payments,	fines	and	suspensions	or	debarment	from	future	government	business,	any	of	which	could	have	an	adverse	effect	on	the	Company's	results	of operations	and	cash	flows.

Contingencies.	The	Company	is	subject	to	various	investigations,	claims	and	legal	proceedings	that	arise	in	the	ordinary	course	of	business,	including	alleged infringement	of	intellectual	property	rights,	commercial	disputes,	labor	and	employment	matters,	tax	audits	and	other	matters.	Each	of	these	matters	is	subject	to	various uncertainties,	and	it	is	possible	that	an	unfavorable	resolution	of	one	or	more	of	these	matters	could	materially	affect	the	Company's	results	of	operations,	cash	flows	or financial	position.

Changes	in	Existing	Financial	Accounting	Standards.	Changes	in	existing	accounting	rules	or	practices,	new	accounting	pronouncements,	or	varying	interpretations	of current	accounting	pronouncements	could	have	a	significant,	adverse	effect	on	the	Company's	results	of	operations	or	the	manner	in	which	the	Company	conducts	its business.

Changes	in	Tax	Law.		The	Company's	operations	are	subject	to	income	and	transaction	taxes	in	the	United	States	and	in	multiple	foreign	jurisdictions.	A	change	in	the tax	law	in	the	jurisdictions	in	which	the	Company	does	business,	including	an	increase	in	tax	rates	or	an	adverse	change	in	the	treatment	of	an	item	of	income	or expense,	could	result	in	a	material	increase	in	tax	expense.	Currently,	a	substantial	portion	of	the	Company's	revenue	is	generated	from	customers	located	outside	the United	States,	and	a	substantial	portion	of	assets	are	located	outside	the	United	States.	United	States	income	taxes	and	foreign	withholding	taxes	have	not	been	provided on	undistributed	earnings	for	non-United	States	subsidiaries	to	the	extent	such	earnings	are	considered	to	be	indefinitely	reinvested	in	the	operations	of	those subsidiaries.	Changes	in	existing	taxation	rules	or	practices,	new	taxation	rules,	or	varying	interpretations	of	current	taxation	practices	could	have	a	material,	adverse effect	on	the	Company's	results	of	operations	or	the	manner	in	which	the	Company	conducts	its	business.

The	Company	has	significant	operations	in	India.		There	have	been	court	rulings	concerning	certain	Indian	tax	laws	that	have	been	inconsistent	with	tax	positions	taken by	the	Company	and	inconsistent	with	the	advice	provided	to	the	Company	by	its	tax	advisors.

An	Indian	subsidiary	of	the	Company	received	a	formal	inquiry	after	a	service	tax	audit.	The	service	tax	issues	raised	in	the	Company's	notice	are	very	similar	to	the case,	M/s	Microsoft	Corporation	(I)	(P)	Ltd.	Vs	Commissions	of	Service	Tax,	currently	being	appealed	to	the	Delhi	Customs,	Excise	and	Service	Tax	Appellate	Tribunal (CESTAT).	If	the	ruling	is	in	favor	of	Microsoft,	the	Company	expects	a	similar	outcome	for	its	audit	case.	If	the	ruling	is	unfavorable	in	the	case	of	Microsoft,	the Company	could	incur	tax	charges	and	related	liabilities,	including	those	related	to	the	service	tax	audit	case,	of	$6	million.	Of	the	two	judicial	members	assigned	to	the Microsoft	appeal,	one	member	has	ruled	in	favor	of	Microsoft	and	one	has	ruled	in	favor	of	the	Commission.	A	third	deciding	judge	will	be	appointed	for	a	final decision.	The	Company	can	provide	no	assurances	as	to	the	outcome	of	the	Microsoft	appeal	or	to	the	impact	of	the	Microsoft	appeal	on	the	Company's	audit	case.	The Company	is	uncertain	as	to	when	the	service	tax	audit	will	be	completed.

Other	court	cases	are	pending	in	India	that	could	have	a	material	impact	on	the	Company's	financial	position,	results	of	operations	or	cash	flows	if	the	ultimate	outcome of	those	cases	is	similarly	inconsistent	with	tax	positions	taken	by	the	Company.

# ITEM	1B. UNRESOLVED	STAFF	COMMENTS

The	Company	has	received	no	written	comments	regarding	our	periodic	or	current	reports	from	the	staff	of	the	SEC	that	were	issued	180	days	or	more	preceding	the	end of	our	fiscal	year	2012	and	that	remain	unresolved.

# ITEM	2. PROPERTIES

The	Company's	executive	offices	and	those	related	to	certain	domestic	product	development,	marketing,	production	and	administration	are	located	in	a	107,000	square foot	office	facility	in	Canonsburg,	Pennsylvania.	Total	required	minimum	payments	under	the	operating	lease	will	be	$1.4	million	per	annum	from	January	1,	2013 through	December	31,	2014.

On	September	14,	2012,	the	Company	entered	into	a	lease	agreement	for	186,000	square	feet	of	rentable	space	to	be	located	in	a	to-be-built	office	facility	in Canonsburg,	Pennsylvania,	which	will	serve	as	the	Company's	new	headquarters.	The	lease	was	effective	as	of	September	14,	2012,	but	because	the	leased	premises	are to-be-built,	the	Company	will	not	be	obligated	to	pay

rent	until	January	1,	2015	(the	"Commencement	Date").	The	term	of	the	lease	is	183	months,	beginning	on	the	Commencement	Date.	Absent	the	exercise	of	options	in the	lease	for	additional	rentable	space	or	early	lease	termination,	the	Company's	base	rent	will	be	$4.3	million	per	annum	for	the	first	five	years	of	the	lease	term,	$4.5 million	per	annum	for	years	six	through	ten	and	$4.7	million	for	years	eleven	through	fifteen.

As	part	of	the	acquisition	of	Apache	on	August	1,	2011,	the	Company	acquired	certain	leased	office	property,	including	executive	offices,	which	comprise	a	52,000 square	foot	office	facility	in	San	Jose,	California.	In	June	2012,	the	Company	entered	into	a	new	lease	for	this	property,	with	the	lease	term	commencing	July	1,	2012 and	ending	June	30,	2022.	Total	remaining	minimum	payments	under	the	operating	lease	as	of	December	31,	2012	are	$9.2	million,	of	which	$0.9	million	will	be	paid in	2013.

The	Company	also	leases	certain	office	property,	including	executive	offices,	which	comprise	a	28,000	square	foot	office	facility	in	Pittsburgh,	Pennsylvania.	In	August 2009,	the	Company	extended	the	executive	office	space	lease	agreement	for	this	property	for	a	period	of	three	years	and	ten	months,	commencing	February	15,	2011	and expiring	December	31,	2014.		Total	required	minimum	payments	under	the	operating	lease	will	be	$570,000	per	annum	from	January	1,	2013	through	December	31, 2014.

The	Company	owns	certain	office	property,	including	executive	offices,	which	comprise	a	94,000	square	foot	office	facility	in	Lebanon,	New	Hampshire.	In	May	2012, the	Company	acquired	a	60,000	square	foot	office	building	adjacent	to	its	Canonsburg	headquarters,	which	will	serve	primarily	as	a	data	center	and	customer	training space.	In	addition,	the	Company	owns	a	60,000	square	foot	facility	in	Pune,	India,	which	supports	worldwide	product	development,	marketing	and	sales	activities.

The	Company	and	its	subsidiaries	also	lease	office	space	in	various	locations	throughout	the	world.	The	Company	owns	substantially	all	equipment	used	in	its	facilities. Management	believes	that,	in	most	geographic	locations,	its	facilities	allow	for	sufficient	space	to	support	present	and	future	foreseeable	needs,	including	such	expansion and	growth	as	the	business	may	require.	In	other	geographic	locations,	the	Company	expects	that	it	will	be	required	to	expand	capacity	beyond	that	which	it	currently owns	or	leases.

In	the	opinion	of	management,	the	Company's	properties	and	its	equipment	are	in	good	operating	condition	and	are	adequate	for	the	Company's	current	needs.	The Company	does	not	anticipate	difficulty	in	renewing	existing	leases	as	they	expire	or	in	finding	alternative	facilities.

# ITEM	3. LEGAL	PROCEEDINGS

The	Company	is	subject	to	various	investigations,	claims	and	legal	proceedings	that	arise	in	the	ordinary	course	of	business,	including	alleged	infringement	of intellectual	property	rights,	commercial	disputes,	labor	and	employment	matters,	tax	audits	and	other	matters.	In	the	opinion	of	the	Company,	the	resolution	of	pending matters	is	not	expected	to	have	a	material,	adverse	effect	on	the	Company's	consolidated	results	of	operations,	cash	flows	or	financial	position.	However,	each	of	these matters	is	subject	to	various	uncertainties	and	it	is	possible	that	an	unfavorable	resolution	of	one	or	more	of	these	proceedings	could	in	the	future	materially	affect	the Company's	results	of	operations,	cash	flows	or	financial	position.

# ITEM	4. MINE	SAFETY	DISCLOSURES

Not	applicable.

# PART	II

# ITEM	5. MARKET	FOR	REGISTRANT'S	COMMON	EQUITY,	RELATED	STOCKHOLDER	MATTERS	AND	ISSUER	PURCHASES	OF	EQUITY SECURITIES

The	Company's	common	stock	trades	on	the	NASDAQ	Global	Select	Market	tier	of	the	NASDAQ	Stock	Market	under	the	symbol:	"ANSS."	The	following	table	sets forth	the	low	and	high	sale	price	of	the	Company's	common	stock	in	each	of	the	Company's	last	eight	fiscal	quarters.

|  | Fiscal	Quarter	Ended	2012 | Fiscal	Quarter	Ended	2012 | Fiscal	Quarter	Ended	2011 | Fiscal	Quarter	Ended	2011 |
| :--- | :--- | :--- | :--- | :--- |
|  | Low\tSale\nPrice | High\tSale\nPrice | Low\tSale\nPrice | High\tSale\nPrice |
| December\t31 | $63.22 | $73.51 | $45.96 | $62.30 |
| September\t30 | $55.45 | $74.37 | $45.72 | $57.15 |
| June\t30 | $59.28 | $69.34 | $51.22 | $57.50 |
| March\t31 | $55.21 | $66.56 | $49.71 | $56.86 |

On	February	8,	2013,	there	were	214	stockholders	of	record	and	75,265	beneficial	holders	of	the	Company's	common	stock.

The	Company	has	not	paid	cash	dividends	on	its	common	stock	as	it	has	retained	earnings	for	use	in	its	business.	The	Company	reviews	its	policy	with	respect	to	the payment	of	dividends	from	time	to	time;	however,	there	can	be	no	assurance	that	any	dividends	will	be	paid	in	the	future.

# Performance	Graph

Set	forth	below	is	a	line	graph	comparing	the	yearly	percentage	change	in	the	cumulative	total	stockholder	return	on	the	Company's	common	stock,	based	on	the	market price	of	the	Company's	common	stock,	with	the	total	return	of	companies	included	within	the	Russell	1000	Index,	the	NASDAQ	Composite	Stock	Market	Index	and	an industry	peer	group	of	four	companies	(Autodesk,	Inc.,	Parametric	Technology	Corporation,	Cadence	Design	Systems,	Inc.	and	Synopsys,	Inc.)	selected	by	the Company	pursuant	to	Item	201(e)	of	Regulation	S-K,	for	the	period	commencing	January	1,	2008	and	ending	December	31,	2012.	The	calculation	of	total	cumulative returns	assumes	a	$100	investment	in	the	Company's	common	stock,	the	Russell	1000	Index,	the	NASDAQ	Composite	Stock	Market	Index	and	the	Peer	Group	on January	1,	2008,	and	the	reinvestment	of	all	dividends,	and	accounts	for	all	stock	splits.	The	historical	information	set	forth	below	is	not	necessarily	indicative	of	future performance.

ASSUMES	$100	INVESTED	ON	JANUARY	1,	2008 ASSUMES	DIVIDENDS	REINVESTED FIVE	FISCAL	YEARS	ENDING	DECEMBER	31,	2012

# Equity	Compensation	Plan	Information	as	of	December	31,	2012

| Plan	Category | Number	of	Securities<br>to	be	Issued	Upon<br>Exercise	of<br>Outstanding	Options,<br>Warrants	and	Rights | Weighted	Average<br>Exercise	Price	of<br>Outstanding	Options,<br>Warrants	and	Rights | Under	Equity<br>Compensation	Plans<br>(excluding	securities<br>reflected	in	column<br>(a)) |
| :--- | :--- | :--- | :--- |
| Equity\tCompensation\tPlans\tApproved\tby\tSecurity\tHolders |  |  |  |
| 1996\tStock\tOption\tand\tGrant\tPlan | 6,790,421 | $40.80 | 4,924,794 |
| Ansoft\tCorporation\t2006\tStock\tIncentive\tPlan | 612,684 | $36.43 | — |
| Apache\tDesign\tSolutions,\tInc.\t2001\tStock/Option\tIssuance\tPlan | 306,217 | $19.16 | — |
| 1996\tEmployee\tStock\tPurchase\tPlan | (1) | (2) | 366,615 |
| Equity\tCompensation\tPlans\tNot\tApproved\tby\tSecurity\tHolders |  |  |  |
| None |  |  |  |
| Total | 7,709,322 |  | 5,291,409 |

(1) The	number	of	shares	issuable	with	respect	to	the	current	offering	period	is	not	determinable	until	the	end	of	the period.

(2) The	per	share	purchase	price	of	shares	issuable	with	respect	to	the	current	offering	period	is	not	determinable	until	the	end	of	the	offering period.

# Unregistered	Sale	of	Equity	Securities	and	Use	of	Proceeds

# None.

# Issuer	Purchases	of	Equity	Securities

| Period | Total	Number	of	Shares<br>Purchased | Average	Price	Paid	per<br>Share | Total	Number	of	Shares<br>Purchased	as	Part	of<br>Publicly	Announced<br>Plans	or	Programs | Maximum	Number	of<br>Shares	that	May	Yet	Be<br>Purchased	Under	Plans<br>or	Programs |
| :--- | :--- | :--- | :--- | :--- |
| October\t1\t-\tOctober\t31,\t2012 | — | — | — | 2,000,000 |
| November\t1\t-\tNovember\t30,\t2012 | 500,000 | $67.77 | 500,000 | 1,500,000 |
| December\t1\t-\tDecember\t31,\t2012 | — | — | — | 1,500,000 |
| Total | 500,000 | $67.77 | 500,000 | 1,500,000 |

# ITEM	6. SELECTED	FINANCIAL	DATA

The	following	table	sets	forth	selected	financial	data	as	of	and	for	the	last	five	years.	This	selected	financial	data	should	be	read	in	conjunction	with	the	consolidated financial	statements	and	related	notes	included	in	Part	IV,	Item	15	of	this	Annual	Report	on	Form	10-K.	The	results	of	acquired	companies	have	been	included	in	the consolidated	financial	statements	since	their	respective	dates	of	acquisition.

| (in	thousands,	except	per	share	data) | 2012 | 2011 | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Total\trevenue | $798,018 | $691,449 | $580,236 | $516,885 | $478,339 |
| Operating\tincome | 294,253 | 265,559 | 219,268 | 183,477 | 169,731 |
| Net\tincome | 203,483 | 180,675 | 153,132 | 116,391 | 111,671 |
| Earnings\tper\tshare\t–\tbasic | $2.20 | $1.96 | $1.69 | $1.32 | $1.35 |
| Weighted\taverage\tshares\t–\tbasic | 92,622 | 92,120 | 90,684 | 88,486 | 82,975 |
| Earnings\tper\tshare\t–\tdiluted | $2.14 | $1.91 | $1.64 | $1.27 | $1.29 |
| Weighted\taverage\tshares\t–\tdiluted | 94,954 | 94,381 | 93,209 | 91,785 | 86,768 |
| Total\tassets | $2,607,417 | $2,448,470 | $2,126,876 | $1,920,182 | $1,864,514 |
| Working\tcapital | 435,972 | 301,282 | 403,264 | 248,724 | 129,489 |
| Long-term\tliabilities | 189,739 | 255,246 | 285,578 | 340,785 | 413,951 |
| Stockholders'\tequity | 1,940,291 | 1,754,473 | 1,529,929 | 1,312,631 | 1,182,899 |
| Cash\tprovided\tby\toperating\tactivities | 298,415 | 307,661 | 166,884 | 173,689 | 196,708 |

In	the	table	above,	the	comparability	of	information	among	the	years	presented	is	impacted	by	the	August	1,	2012	acquisition	of	Esterel,	the	August	1,	2011	acquisition of	Apache	and	the	July	31,	2008	acquisition	of	Ansoft	Corporation.	For	further	information	on	Esterel	and	Apache,	see	the	"Acquisitions"	section	of	Management's Discussion	and	Analysis	in	Item	7	and	in	Note	3	to	the	consolidated	financial	statements	included	in	Part	IV,	Item	15	of	this	Annual	Report	on	Form	10-K.

# ITEM	7. MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION	AND	RESULTS	OF OPERATIONS

# Overview

ANSYS,	Inc.'s	results	for	the	year	ended	December	31,	2012	reflect	growth	in	revenues	of	15.4%,	operating	income	of	10.8%	and	diluted	earnings	per	share	of	12.0%	as compared	to	the	year	ended	December	31,	2011.	The	Company	experienced	higher	revenues	in	2012	from	growth	in	both	license	and	maintenance	revenue,	and	from	the acquisition	of	Apache	in	2011	and	Esterel	in	2012.	The	2012	results	of	operations	include	the	results	of	Esterel	for	the	period	from	the	date	of	acquisition	(August	1, 2012)	through	December	31,	2012.	The	2012	results	of	operations	include	a	full	year	of	Apache	results,	as	compared	to	five	months	of	activity	in	2011.	The	growth	in revenue	was	adversely	impacted	by	the	overall	strengthening	of	the	U.S.	Dollar	against	the	Company's	primary	foreign	currencies.	The	net	overall	strengthening	of	the U.S.	Dollar	resulted	in	decreased	revenue	and	operating	income	by	$15.4	million	and	$7.4	million,	respectively,	for	the	year	ended	December	31,	2012	as	compared	to the	year	ended	December	31,	2011.	The	growth	in	revenue	was	partially	offset	by	increased	operating	expenses	and	additional	amortization	from	intangible	assets	related to	the	Apache	and	Esterel	acquisitions.

The	Company's	non-GAAP	results	for	the	year	ended	December	31,	2012	reflect	increases	in	revenue	of	15.2%,	operating	income	of	14.9%	and	diluted	earnings	per share	of	15.0%	as	compared	to	the	year	ended	December	31,	2011.	The	non-GAAP	results	exclude	the	income	statement	effects	of	the	acquisition	accounting	adjustment to	deferred	revenue,	stock-based	compensation,	acquisition-related	amortization	of	intangible	assets	and	transaction	costs	related	to	business	combinations.	For	further disclosure	regarding	non-GAAP	results,	see	the	section	titled	"Non-GAAP	Results"	immediately	preceding	the	section	titled	"Liquidity	and	Capital	Resources".

During	the	year	ended	December	31,	2012,	the	Company	repurchased	1.5	million	shares	of	treasury	stock	for	$95.5	million	at	an	average	price	of	$63.65	per	share	and had	net	acquisition-related	cash	outlays	of	$45.1	million.	The	Company's	financial	position	includes	$577.2	million	in	cash	and	short-term	investments,	and	working capital	of	$436.0	million	as	of	December	31,	2012.	As	of	December	31,	2012,	remaining	outstanding	borrowings	on	the	Company's	term	loan	totaled	$53.1	million.

ANSYS	develops	and	globally	markets	engineering	simulation	software	and	services	widely	used	by	engineers,	designers,	researchers	and	students	across	a	broad spectrum	of	industries	and	academia,	including	aerospace,	automotive,	manufacturing,	electronics,	biomedical,	energy	and	defense.	Headquartered	south	of	Pittsburgh, Pennsylvania,	the	Company	and	its	subsidiaries	employed	approximately	2,400	people	as	of	December	31,	2012	and	focus	on	the	development	of	open	and	flexible solutions	that	enable	users	to	analyze	designs	directly	on	the	desktop,	providing	a	common	platform	for	fast,	efficient	and	cost-conscious	product	development,	from design	concept	to	final-stage	testing	and	validation.	The	Company	distributes	its	ANSYS	suite	of	simulation	technologies	through	a	global	network	of	independent channel	partners	and	direct	sales	offices	in	strategic,	global	locations.	It	is	the	Company's	intention	to	continue	to	maintain	this	hybrid	sales	and	distribution	model.

The	Company	licenses	its	technology	to	businesses,	educational	institutions	and	governmental	agencies.	Growth	in	the	Company's	revenue	is	affected	by	the	strength	of global	economies,	general	business	conditions,	currency	exchange	rate	fluctuations,	customer	budgetary	constraints	and	the	competitive	position	of	the	Company's products.	Please	see	the	sub-sections	entitled	"Global	Economic	Conditions,"	"Decline	in	Customers'	Business,"	"Risks	Associated	with	International	Activities," "Rapidly	Changing	Technology;	New	Products;	Risk	of	Product	Defects"	and	"Competition"	under	Item	1A.	Risk	Factors	above	for	a	complete	discussion	of	how	these factors	might	impact	the	Company's	financial	condition	and	operating	results.	The	Company	believes	that	the	features,	functionality	and	integrated	multiphysics capabilities	of	its	software	products	are	as	strong	as	they	have	ever	been.	However,	the	software	business	is	generally	characterized	by	long	sales	cycles.	These	long	sales cycles	increase	the	difficulty	of	predicting	sales	for	any	particular	quarter.	The	Company	makes	many	operational	and	strategic	decisions	based	upon	short-	and	long- term	sales	forecasts	that	are	impacted	not	only	by	these	long	sales	cycles	but	by	current	global	economic	conditions.	As	a	result,	the	Company	believes	that	its	overall performance	is	best	measured	by	fiscal	year	results	rather	than	by	quarterly	results.	Please	see	the	sub-section	entitled	"Sales	Forecasts"	under	Item	1A.	Risk	Factors above	for	a	complete	discussion	of	the	potential	impact	of	the	Company's	sales	forecasts	on	the	Company's	financial	condition,	cash	flows	and	operating	results.

The	Company's	management	considers	the	competition	and	price	pressure	that	it	faces	in	the	short-	and	long-term	by	focusing	on	expanding	the	breadth,	depth,	ease	of use	and	quality	of	the	technologies,	features,	functionality	and	integrated	multiphysics	capabilities	of	its	software	products	as	compared	to	its	competitors;	investing	in research	and	development	to	develop	new	and	innovative	products	and	increase	the	capabilities	of	its	existing	products;	supplying	new	products	and	services;	focusing on	customer	needs,	training,	consulting	and	support;	and	enhancing	its	distribution	channels.	From	time	to	time,	the	Company	also	considers	acquisitions	to	supplement its	global	engineering	talent,	product	offerings	and	distribution	channels.

# Geographic	Trends:

During	the	year	ended	December	31,	2012	North	America	contributed	consistent	and	strong	revenue	growth.	In	addition,	despite	the	ongoing	macroeconomic	concerns in	Europe,	the	overall	sales	pipeline,	renewal	rates	and	customer	engagements	remained	intact.	Revenue	growth	for	the	year	was	particularly	strong	in	Germany	and	the United	Kingdom	when	compared	to	the	prior	year.	While	overall,	the	Company's	General	International	Area,	which	includes	all	geographies	other	than	North	America and	Europe,	has	continued	to	show	improvement,	the	Company's	growth	in	the	Japan	market	has	slowed	due	to	the	strength	of	the	Japanese	Yen	and	a	general	weakness in	consumer	electronics.	Japan	is	the	Company's	second	largest	market	and,	as	such,	the	Company	is	focused	on	and	has	made	progress	on	its	Japan	organizational recovery	plan.	China,	Korea	and	Taiwan	were	also	notable	areas	of	sales	strength	during	the	year.

# Industry	Highlights:

During	the	year	ended	December	31,	2012,	the	Company	had	growth	from	a	combination	of	large	accounts,	multi-nationals,	emerging	markets	and	industry	verticals with	time-sensitive,	complex,	multiphysics	challenges.	The	Company's	revenue	is	derived	from	customers	in	many	different	industries,	with	no	industry	accounting	for more	than	20%	of	the	Company's	sales.	Although	customers	from	all	industries	contributed	to	the	2012	results,	there	were	a	few	sectors	where	the	activity	was	more notable	than	the	others,	as	explained	below.

# Automotive

The	Company	experienced	growth	in	the	automotive	industry,	particularly	in	North	America	and	its	General	International	Area.	A	variety	of	factors	positively	affected the	automotive	sector	from	a	simulation	perspective,	including	rising	gas	prices	and	government	regulations.	These	factors	caused,	and	continue	to	cause,	increased technology	development	with	respect	to	higher	mileage	cars,	including	suppliers	accelerating	electric	vehicle	and	hybrid	electric	vehicle	component	development.	In addition,	customers	are	making	investments	in	high	growth	product	areas	such	as	wireless	connectivity,	smart	products,	systems	design,	engine	and	transmission efficiency	improvements,	emissions	reductions	and	hydraulics,	all	of	which	are	areas	requiring	the	breadth	and	depth	of	the	Company's	product	portfolio.

# Aerospace	and	Defense

Despite	uncertainty	around	the	future	size	of	the	U.S.	Department	of	Defense	budget,	aerospace	and	defense	remained	strong	across	most	regions,	including	North America.	Shrinking	defense	spending,	volatile	security	environments,	fuel	cost	spikes	and	increased	regulations	are	driving	systems	engineering,	green	product development	and	operational	cost	reduction	initiatives.	Geopolitical	drivers	and	non-state	actors	in	the	Middle	East,	Eastern	Europe	and	Asia	have	changed	the	nature	of warfare.	This	has	led	to	a	significant	investment	in	the	development	of	remote	and	lower-human-risk	intelligence,	surveillance	and	reconnaissance	technologies	such	as unmanned	military	satellites	and	advanced	sensors,	along	with	supporting	infrastructures.	Commercial	space	exploration	provided	opportunities	for	the	Company's portfolio	of	solutions.	Key	areas	of	investment	in	both	commercial	and	military	aerospace,	including	engine	and	aerodynamic	efficiency,	the	development	of	bio-fuels, the	validation	of	design	processes	for	new	lightweight	materials,	the	development	of	electronic	systems,	noise	control	technologies	and	quality	control	all	require	the need	for	more	robust	simulation	requiring	the	use	of	the	Company's	software.

# Electronics	and	Semiconductors

The	Company	has	seen	some	recovery	in	the	electronics	and	semiconductor	sectors,	with	a	variety	of	market	trends	and	initiatives	driving	the	need	for	simulation.	The exploding	global	demand	for	increased	functionality,	higher	reliability	and	performance	within	ever-smaller,	more	portable	devices	is	placing	new	demands	on	designers and	is	providing	ANSYS	with	outstanding	opportunities	for	growth	well	into	the	future.	Engineers	designing	portable	electronic	devices	like	smart	phones	and	tablets are	driving	an	industry	trend	to	integrate	rich	digital	content	with	wireless	connectivity	and	extended	battery	life.	Modern	systems	integrate	Radio	Frequency ("RF")/Analog/Digital	System	on	Chip	solutions	with	memory,	graphics,	storage,	Global	System	for	Mobile	Communications	radio,	Bluetooth,	antenna,	LCD,	camera, MP3	and	broadcast	FM.	Extreme	integration	creates	new	challenges	for	RF	performance,	system	signal	integrity,	system-level	electromagnetic	interference,	low	power, and	communications	reliability.		ANSYS's	ability	to	combine	multiphysics,	circuit	and	embedded	software	simulation	in	a	cohesive	software	offering	is	especially tailored	to	meet	the	exacting	demands	of	electronic	design.

# Note	About	Forward-Looking	Statements

The	following	discussion	should	be	read	in	conjunction	with	the	audited	consolidated	financial	statements	and	notes	thereto	included	elsewhere	in	this	Annual	Report	on Form	10-K.	The	Company's	discussion	and	analysis	of	its	financial	condition	and	results	of	operations	are	based	upon	the	Company's	consolidated	financial	statements, which	have	been	prepared	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America	("GAAP").	The	preparation	of	these	financial statements	requires	the	Company	to	make	estimates	and	judgments	that	affect	the	reported	amounts	of	assets,	liabilities,	revenues	and	expenses,	and	related	disclosure	of contingent	assets	and	liabilities.	On	an	ongoing	basis,	the	Company	evaluates	its	estimates,	including	those	related	to	fair	value	of	stock,	bad	debts,	contract	revenue, valuation	of	goodwill,	valuation	of

intangible	assets,	income	taxes,	and	contingencies	and	litigation.	The	Company	bases	its	estimates	on	historical	experience,	market	experience,	estimated	future	cash flows	and	on	various	other	assumptions	that	management	believes	are	reasonable	under	the	circumstances,	the	results	of	which	form	the	basis	for	making	judgments about	the	carrying	value	of	assets	and	liabilities	that	are	not	readily	apparent	from	other	sources.	Actual	results	may	differ	from	these	estimates.

This	Annual	Report	on	Form	10-K	contains	forward-looking	statements	within	the	meaning	of	Section	27A	of	the	Securities	Act	of	1933	and	Section	21E	of	the Securities	Exchange	Act	of	1934,	including,	but	not	limited	to,	the	following	statements,	as	well	as	statements	that	contain	such	words	as	"anticipates,"	"intends," "believes,"	"plans"	and	other	similar	expressions:

•The	Company's	expectation	that	it	will	continue	to	make	targeted	investments	in	its	global	sales	and	marketing	organization	and	its	global	business infrastructure	to	enhance	major	account	sales	activities	and	to	support	its	worldwide	sales	distribution	and	marketing	strategies,	and	the	business	in	general.

•The	Company's	intentions	related	to	investments	in	research	and	development,	particularly	as	it	relates	to	expanding	the	capabilities	of	its	flagship	products	and other	products	within	its	broad	portfolio	of	simulation	software,	evolution	of	its	ANSYS®	Workbench™	platform,	HPC	capabilities,	robust	design	and	ongoing integration.

•The	Company's	plans	related	to	future	capital spending.

•The	Company's	intentions	regarding	its	hybrid	sales	and	distribution model.

•The	sufficiency	of	existing	cash	and	cash	equivalent	balances	to	meet	future	working	capital,	capital	expenditure	and	debt	service requirements.

•The	Company's	assessment	of	the	ultimate	liabilities	arising	from	various	investigations,	claims	and	legal proceedings.

•The	Company's	statement	regarding	the	competitive	position	and	strength	of	its	software products.

•The	Company's	assessment	of	its	ability	to	realize	deferred	tax assets.

•The	Company's	expectation	that	it	can	renew	existing	leases	as	they	expire,	or	find	alternative	facilities	without	difficulty	as needed.

•The	Company's	expectations	regarding	future	claims	related	to	indemnification obligations.

•The	Company's	estimates	regarding	expected	interest	expense	on	its	term loan.

•The	Company's	statements	regarding	the	impact	of	global	economic conditions.

•The	Company's	statement	regarding	increased	exposure	to	volatility	of	foreign	exchange	rates.

•The	Company's	intentions	related	to	investments	in	complementary	companies,	products,	services	and technologies.

•The	Company's	expectations	regarding	the	impact	of	the	merger	of	its	Japan	subsidiaries	on	future	income	tax	expense	and	cash	flows	from operations.

•The	Company's	estimates	regarding	the	expected	impact	on	reported	revenue	related	to	the	acquisition	accounting	treatment	of	deferred revenue.

•The	Company's	estimation	that	it	is	probable	the	key	member	of	Apache's	management	will	remain	an	employee	of	ANSYS	on	each	of	the	first	three anniversaries	of	the	acquisition	closing	date.

•The	Company's	anticipation	that	Apache	will	achieve	certain	revenue	and	operating	income	targets	whereby	it	is	probable	that	at	least	a	portion	of	the performance-based	restricted	stock	units	will	vest	and	that	the	recipients	will	continue	employment	through	the	measurement	period.

•The	Company's	expectations	regarding	the	accelerated	development	and	delivery	of	new	and	innovative	products	to	the	marketplace	while	lowering	design	and engineering	costs	for	customers	as	a	result	of	the	Esterel	acquisition.

Forward-looking	statements	should	not	be	unduly	relied	upon	because	they	involve	known	and	unknown	risks,	uncertainties	and	other	factors,	some	of	which	are beyond	the	Company's	control.	The	Company's	actual	results	could	differ	materially	from	those	set	forth	in	the	forward-looking	statements.	Certain	factors	that	might cause	such	a	difference	include	risks	and	uncertainties	detailed	in	Item	1A.	Risk	Factors.

# Acquisitions

# Esterel	Technologies,	S.A.

On	August	1,	2012,	the	Company	completed	its	acquisition	of	Esterel.	Under	the	terms	of	the	acquisition	agreement,	ANSYS	acquired	100%	of	Esterel	for	a	purchase price	of	$58.2	million,	which	included	$13.1	million	in	acquired	cash.	The	acquisition	agreement	also	includes	retention	provisions	for	key	members	of	Esterel's management	and	employees,	which	are	accounted	for	outside	of	the	business	combination.	The	Company	funded	the	transaction	entirely	with	existing	cash	balances.

Esterel's	software	enables	software	and	systems	engineers	to	design,	simulate	and	automatically	produce	certified	embedded	software,	which	is	the	control	code	built	into the	electronics	in	aircraft,	rail	transportation,	automotive,	energy	systems,	medical	devices	and	other	industrial	products	that	have	central	processing	units.	The complementary	combination	is	expected	to	accelerate	development	of	new	and	innovative	products	to	the	marketplace	while	lowering	design	and	engineering	costs	for customers.

The	operating	results	of	Esterel	have	been	included	in	the	Company's	consolidated	financial	statements	since	the	date	of	acquisition,	August	1,	2012.	The	assets	and liabilities	of	Esterel	have	been	recorded	based	upon	management's	estimates	of	their	fair	market	values	as	of	the	acquisition	date.	The	following	tables	summarize	the	fair value	of	consideration	transferred	and	the	fair	values	of	identified	assets	acquired	and	liabilities	assumed	at	the	acquisition	date:

# Fair	Value	of	Consideration	Transferred:

| (in	thousands) |  |
| :--- | :--- |
| Cash | $58,150 |
| Recognized\tAmounts\tof\tIdentifiable\tAssets\tAcquired\tand\tLiabilities\tAssumed: |  |
| (in\tthousands) |  |
| Cash | $13,075 |
| Accounts\treceivable\tand\tother\ttangible\tassets | 4,737 |
| Customer\trelationships\t(12-year\tlife) | 21,421 |
| Developed\tsoftware\t(10-year\tlife) | 10,717 |
| Platform\ttrade\tname\t(indefinite\tlife) | 2,695 |
| Accounts\tpayable\tand\tother\tliabilities | (4,936) |
| Deferred\trevenue | (1,139) |
| Net\tdeferred\ttax\tliabilities | (9,286) |
| Total\tidentifiable\tnet\tassets | $37,284 |
| Goodwill | $20,866 |

# Apache	Design,	Inc.

On	August	1,	2011,	the	Company	completed	its	acquisition	of	Apache,	a	leading	simulation	software	provider	for	advanced,	low-power	solutions	in	the	electronics industry.	Under	the	terms	of	the	merger	agreement,	ANSYS	acquired	100%	of	the	outstanding	shares	of	Apache	for	a	purchase	price	of	$314.0	million,	which	included $31.9	million	in	acquired	cash	and	short-term	investments	on	Apache's	balance	sheet,	$3.2	million	in	ANSYS	replacement	stock	options	issued	to	holders	of	partially- vested	Apache	stock	options	and	$9.5	million	in	contingent	consideration	that	is	based	on	the	retention	of	a	key	member	of	Apache's	management.	The	Company	funded the	transaction	entirely	with	existing	cash	balances.	The	operating	results	of	Apache	have	been	included	in	the	Company's	consolidated	financial	statements	since	the date	of	acquisition,	August	1,	2011.

The	assets	and	liabilities	of	Apache	have	been	recorded	based	on	management's	estimates	of	their	fair	market	values	as	of	the	acquisition	date.	The	following	tables summarize	the	fair	value	of	consideration	transferred	and	the	fair	values	of	identifiable	assets	acquired	and	liabilities	assumed	at	the	acquisition	date:

| (in	thousands) |  |
| :--- | :--- |
| Cash | $301,306 |
| Contingent\tconsideration | 9,501 |
| ANSYS\treplacement\tstock\toptions | 3,170 |
| Total\tconsideration\ttransferred\tat\tfair\tvalue | $313,977 |
| Recognized\tAmounts\tof\tIdentifiable\tAssets\tAcquired\tand\tLiabilities\tAssumed: |  |
| (in\tthousands) |  |
| Cash\tand\tshort-term\tinvestments | $31,948 |
| Accounts\treceivable\tand\tother\ttangible\tassets | 6,011 |
| Developed\tsoftware\t(7-year\tlife) | 82,500 |
| Customer\trelationships\t(15-year\tlife) | 36,100 |
| Contract\tbacklog\t(3-year\tlife) | 13,500 |
| Platform\ttrade\tnames\t(indefinite\tlives) | 21,900 |
| Apache\ttrade\tname\t(6-year\tlife) | 2,100 |
| Accounts\tpayable\tand\tother\tliabilities | (16,867) |
| Deferred\trevenue | (10,100) |
| Net\tdeferred\ttax\tliabilities | (47,229) |
| Total\tidentifiable\tnet\tassets | $119,863 |
| Goodwill | $194,114 |

In	valuing	deferred	revenue	on	the	Apache	and	Esterel	balance	sheets	as	of	their	respective	acquisition	dates,	the	Company	applied	the	fair	value	provisions	applicable	to the	accounting	for	business	combinations.	Although	this	acquisition	accounting	requirement	had	no	impact	on	the	Company's	business	or	cash	flow,	the	Company's reported	revenue	under	GAAP,	primarily	for	the	first	12	months	post-acquisition,	will	be	less	than	the	sum	of	what	would	otherwise	have	been	reported	by	Apache, Esterel	and	ANSYS	absent	the	acquisitions.	Acquired	deferred	revenue	of	$10.1	million	and	$1.1	million	were	recorded	on	the	opening	balance	sheets	of	Apache	and Esterel,	respectively.	Collectively,	these	amounts	were	$24.6	million	lower	than	their	historical	carrying	values.	The	impact	on	reported	revenue	for	the	year	ended December	31,	2012	was	$9.6	million.	The	expected	impact	on	reported	revenue	is	$1.8	million	and	$4.6	million	for	the	quarter	ending	March	31,	2013	and	the	year ending	December	31,	2013,	respectively.

# Results	of	Operations

For	purposes	of	the	following	discussion	and	analysis,	the	table	below	sets	forth	certain	consolidated	financial	data	for	the	years	2012,	2011	and	2010.	The	operating results	of	Esterel	and	Apache	have	been	included	in	the	results	of	operations	since	their	respective	acquisition	dates	of	August	1,	2012	and	2011.

| (in	thousands) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Revenue: |  |  |  |
| Software\tlicenses | $501,870 | $425,881 | $351,033 |
| Maintenance\tand\tservice | 296,148 | 265,568 | 229,203 |
| Total\trevenue | 798,018 | 691,449 | 580,236 |
| Cost\tof\tsales: |  |  |  |
| Software\tlicenses | 24,512 | 15,884 | 10,770 |
| Amortization | 40,889 | 33,728 | 32,757 |
| Maintenance\tand\tservice | 74,115 | 69,402 | 57,352 |
| Total\tcost\tof\tsales | 139,516 | 119,014 | 100,879 |
| Gross\tprofit | 658,502 | 572,435 | 479,357 |
| Operating\texpenses: |  |  |  |
| Selling,\tgeneral\tand\tadministrative | 205,178 | 180,357 | 155,096 |
| Research\tand\tdevelopment | 132,628 | 108,530 | 88,990 |
| Amortization | 26,443 | 17,989 | 16,003 |
| Total\toperating\texpenses | 364,249 | 306,876 | 260,089 |
| Operating\tincome | 294,253 | 265,559 | 219,268 |
| Interest\texpense | (2,661) | (3,332) | (4,488) |
| Interest\tincome | 3,360 | 3,000 | 1,911 |
| Other\texpense,\tnet | (1,405) | (369) | (297) |
| Income\tbefore\tincome\ttax\tprovision | 293,547 | 264,858 | 216,394 |
| Income\ttax\tprovision | 90,064 | 84,183 | 63,262 |
| Net\tincome | $203,483 | $180,675 | $153,132 |

# Revenue:

|  | Year	Ended	December	31, | Year	Ended	December	31, | Change | Change |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | 2012 | 2011 | Amount | % |
| Revenue: |  |  |  |  |
| Lease\tlicenses | $279,283 | $218,005 | $61,278 | 28.1 |
| Perpetual\tlicenses | 222,587 | 207,876 | 14,711 | 7.1 |
| Software\tlicenses | 501,870 | 425,881 | 75,989 | 17.8 |
| Maintenance | 275,498 | 246,546 | 28,952 | 11.7 |
| Service | 20,650 | 19,022 | 1,628 | 8.6 |
| Maintenance\tand\tservice | 296,148 | 265,568 | 30,580 | 11.5 |
| Total\trevenue | $798,018 | $691,449 | $106,569 | 15.4 |

The	Company's	revenue	increased	15.4%	in	2012	as	compared	to	2011,	including	increases	in	all	major	revenue	categories.	The	Company's	revenue	included	Apache operations	for	the	full	year	in	2012	of	$62.0	million	as	compared	to	five	months	in	2011	of	$14.5	million.	The	growth	was	partially	influenced	by	benefits	from	the Company's	continued	investment	in	its	global	sales	and	marketing	organization.	Revenue	from	lease	licenses	increased	28.1%	as	compared	to	the	prior	year	due	to	an increase	in	Apache-related	lease	license	revenue	and	growth	in	sales	of	other	lease	licenses.	Annual	maintenance	contracts	that	were	sold	with	new	perpetual	licenses, along	with	maintenance	contracts	sold	with	new	perpetual	licenses	in	previous	years,	contributed	to	maintenance	revenue	growth	of	11.7%.	Perpetual	license	revenue, which	is	derived	entirely	from	new	sales	during	the	period,	increased	7.1%	as	compared	to	the	prior	year.	Esterel-related	revenue	for	the	period	from	the	acquisition	date (August	1,	2012)	through	December	31,	2012	was	$3.3	million.	Service	revenue	increased	8.6%	as	compared	to	the	prior	year,	primarily	from	increased	revenue associated	with	engineering	consulting	services.

With	respect	to	revenue,	on	average	for	the	year	ended	December	31,	2012,	the	U.S.	Dollar	was	3.7%	stronger,	when	measured	against	the	Company's	primary	foreign currencies,	than	for	the	year	ended	December	31,	2011.	The	net	overall	strengthening	of	the	U.S.	Dollar	resulted	in	decreased	revenue	and	operating	income	during	2012, as	compared	to	2011,	of	$15.4	million	and	$7.4	million,	respectively.

A	substantial	portion	of	the	Company's	license	and	maintenance	revenue	is	derived	from	annual	lease	and	maintenance	contracts.	These	contracts	are	generally	renewed on	an	annual	basis	and	typically	have	a	high	rate	of	customer	renewal.	In	addition	to	the	recurring	revenue	base	associated	with	these	contracts,	a	majority	of	customers purchasing	new	perpetual	licenses	also	purchase	related	annual	maintenance	contracts.	As	a	result	of	the	significant	recurring	revenue	base,	the	Company's	license	and maintenance	revenue	growth	rate	in	any	period	does	not	necessarily	correlate	to	the	growth	rate	of	new	license	and	maintenance	contracts	sold	during	that	period.	To	the extent	the	rate	of	customer	renewal	for	lease	and	maintenance	contracts	is	high,	incremental	lease	contracts,	and	maintenance	contracts	sold	with	new	perpetual	licenses, will	result	in	license	and	maintenance	revenue	growth.	Conversely,	if	the	rate	of	renewal	for	these	contracts	is	adversely	affected	by	economic	or	other	factors,	the Company's	license	and	maintenance	growth	will	be	adversely	affected	over	the	term	that	the	revenue	for	those	contracts	would	have	otherwise	been	recognized.

International	and	domestic	revenues,	as	a	percentage	of	total	revenue,	were	66.7%	and	33.3%,	respectively,	during	the	year	ended	December	31,	2012,	and	68.8%	and 31.2%,	respectively,	during	the	year	ended	December	31,	2011.	The	Company	derived	26.0%	and	26.4%	of	its	total	revenue	through	the	indirect	sales	channel	for	the years	ended	December	31,	2012	and	2011,	respectively.

In	valuing	deferred	revenue	on	the	Esterel	and	Apache	balance	sheets	as	of	their	respective	acquisition	dates,	the	Company	applied	the	fair	value	provisions	applicable	to the	accounting	for	business	combinations	resulting	in	lower	amounts	of	revenue	than	Esterel	and	Apache	would	have	recognized	absent	the	acquisitions.	The	impact	on reported	revenue	for	the	year	ended	December	31,	2012	was	$9.6	million.

# Cost	of	Sales	and	Gross	Profit:

|  | 2012 |  | 2011 |  | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\nRevenue | Amount | %\tof\nRevenue | Amount | % |
| Cost\tof\tsales: |  |  |  |  |  |  |
| Software\tlicenses | $24,512 | 3.1 | $15,884 | 2.3 | $8,628 | 54.3 |
| Amortization | 40,889 | 5.1 | 33,728 | 4.9 | 7,161 | 21.2 |
| Maintenance\tand\tservice | 74,115 | 9.3 | 69,402 | 10.0 | 4,713 | 6.8 |
| Total\tcost\tof\tsales | 139,516 | 17.5 | 119,014 | 17.2 | 20,502 | 17.2 |
| Gross\tprofit | $658,502 | 82.5 | $572,435 | 82.8 | $86,067 | 15.0 |

Software	Licenses:	The	increase	in	software	license	costs	was	primarily	due	to	the	following:

•Increased	Apache-related	costs	of	$7.3	million,	primarily	as	a	result	of	a	full	year	of	Apache	activity	in	2012	as	compared	to	five	months	of	activity	in 2011.

compensation.

Amortization:	The	increase	in	amortization	expense	was	primarily	due	to	the	following:

•An	additional	$9.5	million	of	amortization	of	acquired	Apache	software	as	a	result	of	a	full	year	of	Apache	activity	in	2012	as	compared	to	five	months	of activity	in	2011.

•A	net	$2.8	million	decrease	in	amortization	of	other	acquired	software,	including

Esterel.

Maintenance	and	Service:	The	increase	in	maintenance	and	service	costs	was	primarily	due	to	the	following:

•Increased	salaries	and	headcount-related	costs	of	$2.3	million.

•Increased	depreciation	expense	of	$700,000.

•Esterel-related	maintenance	and	service	expenses	of	$600,000	for	the	period	from	the	acquisition	(August	1,	2012)	through	December	31, 2012.

The	improvement	in	gross	profit	was	a	result	of	the	increase	in	revenue	offset	by	a	smaller	increase	in	related	cost	of	sales.

# Operating	Expenses:

|  | 2012 |  | 2011 |  | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\nRevenue | Amount | %\tof\nRevenue | Amount | % |
| Operating\texpenses: |  |  |  |  |  |  |
| Selling,\tgeneral\tand\tadministrative | $205,178 | 25.7 | $180,357 | 26.1 | $24,821 | 13.8 |
| Research\tand\tdevelopment | 132,628 | 16.6 | 108,530 | 15.7 | 24,098 | 22.2 |
| Amortization | 26,443 | 3.3 | 17,989 | 2.6 | 8,454 | 47.0 |
| Total\toperating\texpenses | $364,249 | 45.6 | $306,876 | 44.4 | $57,373 | 18.7 |

Selling,	General	and	Administrative:	The	increase	in	selling,	general	and	administrative	costs	was	primarily	due	to	the	following:

•Increased	Apache-related	expenses	of	$6.2	million,	primarily	as	a	result	of	a	full	year	of	Apache	activity	in	2012	as	compared	to	five	months	of	activity	in 2011.

•Esterel-related	selling,	general	and	administrative	expenses	of	$5.5	million	for	the	period	from	the	acquisition	(August	1,	2012)	through	December	31, 2012.

•Increased	stock-based	compensation	of	$2.8	million.

The	Company	anticipates	that	it	will	continue	to	make	targeted	investments	in	its	global	sales	and	marketing	organization	and	its	global	business	infrastructure	to enhance	major	account	sales	activities	and	to	support	its	worldwide	sales	distribution	and	marketing	strategies,	and	the	business	in	general.

Research	and	Development:	The	increase	in	research	and	development	costs	was	primarily	due	to	the	following:

•Increased	stock-based	compensation	expense	of	$5.3	million.

•Increased	depreciation	expense	of	$1.5	million.

•Esterel-related	research	and	development	expenses	of	$1.4	million	for	the	period	from	the	acquisition	(August	1,	2012)	through	December	31, 2012.

•Decreased	incentive	compensation	of	$1.7	million.

The	Company	has	traditionally	invested	significant	resources	in	research	and	development	activities	and	intends	to	continue	to	make	investments	in	this	area,	particularly as	it	relates	to	expanding	the	capabilities	of	its	flagship	products	and	other	products	within	its	broad	portfolio	of	simulation	software,	evolution	of	its	ANSYS® Workbench™	platform,	HPC	capabilities,	robust	design	and	ongoing	integration.

•An	additional	$9.1	million	of	amortization	of	acquired	Apache	intangible	assets,	including	customer	lists,	contract	backlog	and	a	trade	name,	as	a	result	of	a	full year	of	Apache	activity	in	2012	as	compared	to	five	months	of	activity	in	2011.

•A	net	$500,000	decrease	in	amortization	of	other	acquired	customer	lists,	including

Interest	Expense:	The	Company's	interest	expense	consists	of	the	following:

| (in	thousands) | 2012 | 2011 |
| :--- | :--- | :--- |
| Term\tloan | $1,342 | $1,605 |
| Amortization\tof\tdebt\tfinancing\tcosts | 698 | 953 |
| Discounted\tobligations | 546 | 462 |
| Other | 75 | 312 |
| Total\tinterest\texpense | $2,661 | $3,332 |

Interest	Income:	Interest	income	for	the	year	ended	December	31,	2012	was	$3.4	million	as	compared	to	$3.0	million	during	the	year	ended	December	31,	2011.	Interest income	increased	as	a	result	of	both	an	increase	in	the	average	cash	balances	and	the	rate	of	return	on	those	balances.

Other	Expense,	net:	The	Company	recorded	other	expense	of	$1.4	million	during	the	year	ended	December	31,	2012	as	compared	to	$369,000	during	the	year	ended December	31,	2011.	The	activity	for	both	years	was	primarily	composed	of	net	foreign	currency	transaction	losses	on	transactions	denominated	in	a	currency	other	than the	Company	or	its	subsidiaries'	functional	currency.

Income	Tax	Provision:	The	Company	recorded	income	tax	expense	of	$90.1	million	and	had	income	before	income	taxes	of	$293.5	million	for	the	year	ended December	31,	2012,	representing	an	effective	tax	rate	of	30.7%.	During	the	year	ended	December	31,	2011,	the	Company	recorded	income	tax	expense	of	$84.2	million and	had	income	before	income	taxes	of	$264.9	million,	representing	an	effective	tax	rate	of	31.8%.

When	compared	to	the	federal	and	state	combined	statutory	rate,	these	rates	were	favorably	impacted	by	lower	statutory	tax	rates	in	many	of	the	Company's	foreign jurisdictions,	the	domestic	manufacturing	deduction,	research	and	experimentation	credits	and	tax	benefits	associated	with	the	merger	of	the	Company's	Japan subsidiaries	in	2010.	In	the	U.S.,	which	is	the	largest	jurisdiction	where	the	Company	receives	such	a	tax	credit,	the	availability	of	the	research	and	development	credit expired	at	the	end	of	2011.	In	January	2013,	the	U.S.	Congress	passed	legislation	that	reinstated	the	research	and	development	credit	retroactive	to	2012.	These	rates were	also	impacted	by	charges	or	benefits	associated	with	the	Company's	uncertain	tax	positions.

As	a	result	of	the	2010	subsidiary	merger	in	Japan,	the	Company	realized	a	reduction	in	its	2012	income	tax	expense	of	$9.0	million	related	to	tax	credits	in	the	U.S. associated	with	foreign	taxes	paid	in	Japan.	The	Company	also	expects	the	2010	Japan	subsidiary	merger	to	reduce	future	income	tax	expense	by	the	following	amounts:

Refer	to	the	section	titled,	"Liquidity	and	Capital	Resources"	for	the	estimated	impact	of	the	Japan	subsidiary	merger	on	future	cash	flows.

Net	Income:	The	Company's	net	income	for	the	year	ended	December	31,	2012	was	$203.5	million	as	compared	to	net	income	of	$180.7	million	for	the	year	ended December	31,	2011.	Diluted	earnings	per	share	was	$2.14	for	the	year	ended	December	31,	2012	and	$1.91	for	the	year	ended	December	31,	2011.	The	weighted	average shares	used	in	computing	diluted	earnings	per	share	were	95.0	million	and	94.4	million	during	the	years	ended	December	31,	2012	and	2011,	respectively.

|  | Year	Ended<br>December	31, |  | Change |  |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | 2011 | 2010 | Amount | % |
| Revenue: |  |  |  |  |
| Lease\tlicenses | $218,005 | $184,539 | $33,466 | 18.1 |
| Perpetual\tlicenses | 207,876 | 166,494 | 41,382 | 24.9 |
| Software\tlicenses | 425,881 | 351,033 | 74,848 | 21.3 |
| Maintenance | 246,546 | 211,465 | 35,081 | 16.6 |
| Service | 19,022 | 17,738 | 1,284 | 7.2 |
| Maintenance\tand\tservice | 265,568 | 229,203 | 36,365 | 15.9 |
| Total\trevenue | $691,449 | $580,236 | $111,213 | 19.2 |

The	Company's	revenue	increased	19.2%	in	2011	as	compared	to	2010,	including	increases	in	license	and	maintenance	revenue.	This	strong	growth	was	partially influenced	by	a	modest	improvement	in	the	global	economy	as	compared	to	the	prior	year,	including	the	effects	of	these	economic	improvements	on	year-end	spending patterns	in	certain	geographies,	benefits	from	the	Company's	continued	investment	in	its	global	sales	and	marketing	organization	and	$14.5	million	in	revenue	related	to the	acquisition	of	Apache	for	the	period	from	the	acquisition	date	(August	1,	2011)	through	December	31,	2011.	Perpetual	license	revenue,	which	is	derived	entirely from	new	sales	during	the	period,	increased	24.9%	as	compared	to	the	prior	year.	The	annual	maintenance	contracts	that	were	sold	with	the	new	perpetual	licenses,	along with	the	renewal	of	maintenance	contracts	sold	with	perpetual	licenses	in	previous	years,	contributed	to	maintenance	revenue	growth	of	16.6%.	Revenue	from	lease licenses	increased	18.1%	as	compared	to	the	prior	year,	due	to	growth	in	sales	of	lease	licenses	and	the	addition	of	Apache-related	lease	license	revenue	of	$14.0	million. Service	revenue	increased	7.2%	as	compared	to	the	prior	year.

With	respect	to	revenue,	on	average	for	the	year	ended	December	31,	2011,	the	U.S.	Dollar	was	5.3%	weaker,	when	measured	against	the	Company's	primary	foreign currencies,	than	for	the	year	ended	December	31,	2010.	The	net	overall	weakening	resulted	in	increased	revenue	and	operating	income	during	2011,	as	compared	with 2010,	of	$19.8	million	and	$12.6	million,	respectively.

International	and	domestic	revenues,	as	a	percentage	of	total	revenue,	were	68.8%	and	31.2%,	respectively,	during	the	year	ended	December	31,	2011,	and	67.5%	and 32.5%,	respectively,	during	the	year	ended	December	31,	2010.	The	Company	derived	26.4%	and	26.7%	of	its	total	revenue	through	the	indirect	sales	channel	during	the years	ended	December	31,	2011	and	2010,	respectively.

In	accordance	with	the	accounting	requirements	applicable	to	deferred	revenue	acquired	in	a	business	combination,	acquired	deferred	revenue	was	recorded	on	the Apache	opening	balance	sheet	at	an	amount	lower	than	the	historical	carrying	value.	The	impact	on	reported	revenue	for	the	year	ended	December	31,	2011	was	$9.6 million,	primarily	in	lease	license	revenue.

As	of	December	31,	2011,	the	Company	had	a	backlog	of	$56.3	million	of	orders	received	but	not	invoiced.

|  | 2011 | 2011 | 2010 | 2010 | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\nRevenue | Amount | %\tof\nRevenue | Amount | % |
| Cost\tof\tsales: |  |  |  |  |  |  |
| Software\tlicenses | $15,884 | 2.3 | $10,770 | 1.9 | $5,114 | 47.5 |
| Amortization | 33,728 | 4.9 | 32,757 | 5.6 | 971 | 3.0 |
| Maintenance\tand\tservice | 69,402 | 10.0 | 57,352 | 9.9 | 12,050 | 21.0 |
| Total\tcost\tof\tsales | 119,014 | 17.2 | 100,879 | 17.4 | 18,135 | 18.0 |
| Gross\tprofit | $572,435 | 82.8 | $479,357 | 82.6 | $93,078 | 19.4 |

•Apache-related	cost	of	sales	of	$3.1	million	for	the	period	from	the	acquisition	(August	1,	2011)	through	December	31, 2011.

•Increased	third-party	royalties	of	$1.2	million.

•Increased	stock-based	compensation	of	$400,000.

Amortization:	The	increase	in	amortization	expense	was	primarily	a	result	of	the	following:

•Amortization	of	acquired	Apache	software	of	$3.8	million.

•A	$300,000	increase	in	amortization	of	a	previously	acquired	trademark.

•A	$3.1	million	decrease	in	amortization	of	other	acquired	software.

•Increased	salaries	and	headcount-related	costs,	including	incentive	compensation,	of	$9.5 million.

•Increased	business	travel	expenses	of	$1.1	million.

•Decreased	third-party	technical	support	costs	of	$800,000.

•Increased	office	and	equipment	lease	expenses	of $600,000.

The	improvement	in	the	gross	profit	was	a	result	of	the	increase	in	revenue	offset	by	a	smaller	increase	in	related	cost	of	sales.

|  | 2011 | 2011 | 2010 | 2010 | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\nRevenue | Amount | %\tof\nRevenue | Amount | % |
| Operating\texpenses: |  |  |  |  |  |  |
| Selling,\tgeneral\tand\tadministrative | $180,357 | 26.1 | $155,096 | 26.7 | $25,261 | 16.3 |
| Research\tand\tdevelopment | 108,530 | 15.7 | 88,990 | 15.3 | 19,540 | 22.0 |
| Amortization | 17,989 | 2.6 | 16,003 | 2.8 | 1,986 | 12.4 |
| Total\toperating\texpenses | $306,876 | 44.4 | $260,089 | 44.8 | $46,787 | 18.0 |

•Increased	salaries	and	headcount-related	costs,	including	incentive	compensation,	of	$9.0 million.

•Apache-related	selling,	general	and	administrative	expenses	of	$8.4 million.

•Transaction	costs	totaling	$2.1	million	related	to	the	Apache acquisition.

•Increased	third-party	commissions	of	$1.8	million.

•Increased	discretionary	marketing	costs	of	$1.5	million.

•Increased	business	travel	expenses	and	maintenance-related	costs,	each	of	$800,000.

•Increased	stock-based	compensation	expense	of	$700,000.

•Decreased	franchise	tax	expenses	of	$1.8	million.

•Decreased	bad	debt	expense	of	$1.4

million.

Research	and	Development:	The	increase	in	research	and	development	expenses	was	primarily	due	to	the	following:

•Apache-related	research	and	development	expenses	of	$6.0 million.

•Increased	facilities	and	information	technology	maintenance	costs	of $600,000.

•Increased	consulting	expenses	of	$500,000.

Amortization:	The	increase	in	amortization	expense	was	primarily	the	result	of	$1.8	million	of	acquired	Apache	intangible	assets,	including	a	trademark,	customer	lists and	contract	backlog.

Interest	Expense:	The	Company's	interest	expense	consisted	of	the	following:

| (in	thousands) | 2011 | 2010 |
| :--- | :--- | :--- |
| Bank\tinterest\ton\tterm\tloans | $1,605 | $2,096 |
| Amortization\tof\tdebt\tfinancing\tcosts | 953 | 1,107 |
| Discounted\tobligations | 462 | 334 |
| Realized\tloss\ton\tinterest\trate\tswap\tagreement | — | 864 |
| Other | 312 | 87 |
| Total\tinterest\texpense | $3,332 | $4,488 |

The	decreased	interest	expense	shown	above	for	2011	is	primarily	a	result	of	the	June	30,	2010	expiration	of	the	interest	rate	swap	and	a	lower	average	outstanding	debt balance.

Interest	Income:	Interest	income	for	the	year	ended	December	31,	2011	was	$3.0	million	as	compared	to	$1.9	million	for	the	year	ended	December	31,	2010.	Interest income	increased	as	a	result	of	both	an	increase	in	the	average	cash	balances	and	the	rate	of	return	on	those	balances.

Other	Expense,	net:	The	Company	recorded	other	expense	of	$369,000	during	the	year	ended	December	31,	2011	as	compared	to	other	expense	of	$297,000	during	the year	ended	December	31,	2010.	The	activity	for	both	years	was	primarily	composed	of	net	foreign	currency	transaction	losses.

Income	Tax	Provision:	The	Company	recorded	income	tax	expense	of	$84.2	million	and	had	income	before	income	taxes	of	$264.9	million	for	the	year	ended December	31,	2011.	This	represents	an	effective	tax	rate	of	31.8%.	During	the	year	ended	December	31,	2010,	the	Company	recorded	income	tax	expense	of	$63.3 million	and	had	income	before	income	taxes	of	$216.4	million,	representing	an	effective	tax	rate	of	29.2%.

As	a	result	of	a	2010	subsidiary	merger	in	Japan,	the	Company	realized	a	reduction	in	its	2011	income	tax	expense	of	$9.0	million	related	to	tax	credits	in	the	U.S. associated	with	foreign	taxes	paid	in	Japan.

In	addition,	the	Company's	tax	expense	in	the	year	ended	December	31,	2011	was	unfavorably	impacted	by	reductions	to	the	Japanese	corporate	tax	rate,	beginning	with the	2013	tax	year.	This	legislation,	enacted	on	November	30,	2011,	resulted	in	an	additional	$4.8	million	in	deferred	tax	expense	due	to	the	reduction	in	the	value	of certain	net	deferred	tax	assets	of	the	Company's	Japanese	subsidiaries.	The	effect	of	this	adjustment	increased	the	2011	effective	tax	rate	from	30.0%	to	31.8%.

Net	Income:	The	Company's	net	income	for	the	year	ended	December	31,	2011	was	$180.7	million	as	compared	to	net	income	of	$153.1	million	for	the	year	ended December	31,	2010.	Diluted	earnings	per	share	was	$1.91	for	the	year	ended	December	31,	2011	and	$1.64	for	the	year	ended	December	31,	2010.	The	weighted average	shares	used	in	computing	diluted	earnings	per	share	were	94.4	million	and	93.2	million	during	the	years	ended	December	31,	2011	and	2010,	respectively.

# Non-GAAP	Results

The	Company	provides	non-GAAP	revenue,	non-GAAP	operating	income,	non-GAAP	operating	profit	margin,	non-GAAP	net	income	and	non-GAAP	diluted	earnings per	share	as	supplemental	measures	to	GAAP	measures	regarding	the	Company's	operational	performance.	These	financial	measures	exclude	the	impact	of	certain items	and,	therefore,	have	not	been	calculated	in	accordance	with	GAAP.	A	detailed	explanation	and	a	reconciliation	of	each	non-GAAP	financial	measure	to	its	most comparable	GAAP	financial	measure	are	described	below.

|  |  | 2012 |  |  |  | 2011 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages\tand\tper\tshare\tdata) | As\nReported | Adjustments |  | Non-GAAP\nResults | As\nReported | Adjustments |  | Non-GAAP\nResults |
| Total\trevenue | $798,018 | $9,636 | (1) | $807,654 | $691,449 | $9,621 | (4) | $701,070 |
| Operating\tincome | 294,253 | 110,290 | (2) | 404,543 | 265,559 | 86,550 | (5) | 352,109 |
| Operating\tprofit\tmargin | 36.9% |  |  | 50.1% | 38.4% |  |  | 50.2% |
| Net\tincome | $203,483 | $73,304 | (3) | $276,787 | $180,675 | $58,301 | (6) | $238,976 |
| Earnings\tper\tshare\t–\tdiluted: |  |  |  |  |  |  |  |  |
| Diluted\tearnings\tper\tshare | $2.14 |  |  | $2.91 | $1.91 |  |  | $2.53 |
| Weighted\taverage\tshares\t–\tdiluted | 94,954 |  |  | 94,954 | 94,381 |  |  | 94,381 |

(1) Amount	represents	the	revenue	not	reported	during	the	period	as	a	result	of	the	acquisition	accounting	adjustment	associated	with	accounting	for	deferred revenue	in	business	combinations.

(2) Amount	represents	$67.3	million	of	amortization	expense	associated	with	intangible	assets	acquired	in	business	combinations,	$32.4	million	of	stock-based compensation	expense,	the	$9.6	million	adjustment	to	revenue	as	reflected	in	(1)	above	and	$0.9	million	of	transaction	expenses	related	to	the	Esterel	acquisition.

(3) Amount	represents	the	impact	of	the	adjustments	to	operating	income	referred	to	in	(2)	above,	adjusted	for	the	related	income	tax	impact	of	$37.0 million.

(5) Amount	represents	$51.7	million	of	amortization	expense	associated	with	intangible	assets	acquired	in	business	combinations,	$23.1	million	of	stock-based compensation	expense,	the	$9.6	million	adjustment	to	revenue	as	reflected	in	(4)	above	and	$2.1	million	of	transaction	expenses	related	to	the	Apache acquisition.

(6) Amount	represents	the	impact	of	the	adjustments	to	operating	income	referred	to	in	(5)	above,	adjusted	for	the	related	income	tax	impact	of	$28.2 million.

Note:	The	2011	GAAP	and	non-GAAP	net	income	and	earnings	per	share	data	reflected	above	include	$4.8	million,	or	$0.05	per	share,	related	to	income	tax	expense associated	with	reductions	to	the	Japanese	corporate	tax	rate,	beginning	with	the	2013	tax	year.	This	legislation,	enacted	on	November	30,	2011,	resulted	in	an	additional $4.8	million	in	deferred	tax	expense	due	to	the	reduction	in	the	value	of	certain	net	deferred	tax	assets	of	the	Company's	Japanese	subsidiaries.

|  |  | 2011 |  |  |  | 2010 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages\tand\tper\nshare\tdata) | As\nReported | Non-GAAP\nAdjustments |  | Results | As\nReported | Non-GAAP\nAdjustments |  | Results |
| Total\trevenue | $691,449 | $9,621 | (1) | $701,070 | $580,236 |  |  | $580,236 |
| Operating\tincome | 265,559 | 86,550 | (2) | 352,109 | 219,268 | $67,749 | (4) | 287,017 |
| Operating\tprofit\tmargin | 38.4% |  |  | 50.2% | 37.8% |  |  | 49.5% |
| Net\tincome | $180,675 | $58,301 | (3) | $238,976 | $153,132 | $44,977 | (5) | $198,109 |
| Earnings\tper\tshare—diluted: |  |  |  |  |  |  |  |  |
| Diluted\tearnings\tper\tshare | $1.91 |  |  | $2.53 | $1.64 |  |  | $2.13 |
| Weighted\taverage\tshares—diluted | 94,381 |  |  | 94,381 | 93,209 |  |  | 93,209 |

(4) Amount	represents	$48.7	million	of	amortization	expense	associated	with	intangible	assets	acquired	in	business	combinations	and	a	$19.0	million	charge	for stock-based	compensation.

# Non-GAAP	Measures

Management	uses	non-GAAP	financial	measures	(a)	to	evaluate	the	Company's	historical	and	prospective	financial	performance	as	well	as	its	performance	relative	to its	competitors,	(b)	to	set	internal	sales	targets	and	spending	budgets,	(c)	to	allocate	resources,	(d)	to	measure	operational	profitability	and	the	accuracy	of	forecasting, (e)	to	assess	financial	discipline	over	operational	expenditures	and	(f)	as	an	important	factor	in	determining	variable	compensation	for	management	and	its	employees. In	addition,	many	financial	analysts	that	follow	the	Company	focus	on	and	publish	both	historical	results	and	future	projections	based	on	non-GAAP	financial	measures. The	Company	believes	that	it	is	in	the	best	interest	of	its	investors	to	provide	this	information	to	analysts	so	that	they	accurately	report	the	non-GAAP	financial information.	Moreover,	investors	have	historically	requested	and	the	Company	has	historically	reported	these	non-GAAP	financial	measures	as	a	means	of	providing consistent	and	comparable	information	with	past	reports	of	financial	results.

While	management	believes	that	these	non-GAAP	financial	measures	provide	useful	supplemental	information	to	investors,	there	are	limitations	associated	with	the	use of	these	non-GAAP	financial	measures.	These	non-GAAP	financial	measures	are	not	prepared	in	accordance	with	GAAP,	are	not	reported	by	all	of	the	Company's competitors	and	may	not	be	directly	comparable	to	similarly	titled	measures	of	the	Company's	competitors	due	to	potential	differences	in	the	exact	method	of calculation.	The	Company	compensates	for	these	limitations	by	using	these	non-GAAP	financial	measures	as	supplements	to	GAAP	financial	measures	and	by reviewing	the	reconciliations	of	the	non-GAAP	financial	measures	to	their	most	comparable	GAAP	financial	measures.

The	adjustments	to	these	non-GAAP	financial	measures,	and	the	basis	for	such	adjustments,	are	outlined	below:

Acquisition	accounting	for	deferred	revenue	and	its	related	tax	impact.	Historically,	the	Company	has	consummated	acquisitions	in	order	to	support	its	strategic	and other	business	objectives.	In	accordance	with	the	fair	value	provisions	applicable	to	the	accounting	for	business	combinations,	acquired	deferred	revenue	is	often recorded	on	the	opening	balance	sheet	at	an	amount	that	is	lower	than	the	historical	carrying	value.	Although	this	purchase	accounting	requirement	has	no	impact	on	the Company's	business	or	cash	flow,	it	adversely	impacts	the	Company's	reported	GAAP	revenue	in	the	reporting	periods	following	an	acquisition.	In	order	to	provide investors	with	financial	information	that	facilitates	comparison	of	both	historical	and	future	results,	the	Company	provides	non-GAAP	financial	measures	which	exclude the	impact	of	the	acquisition	accounting	adjustment.	The	Company	believes	that	this	non-GAAP	financial	adjustment	is	useful	to	investors	because	it	allows	investors	to (a)	evaluate	the	effectiveness	of	the	methodology	and	information	used	by	management	in	its	financial	and	operational	decision-making	and	(b)	compare	past	and	future reports	of	financial	results	of	the	Company	as	the	revenue	reduction	related	to	acquired	deferred	revenue	will	not	recur	when	related	annual	lease	licenses	and	software maintenance	contracts	are	renewed	in	future	periods.

Amortization	of	intangibles	from	acquisitions	and	its	related	tax	impact.	The	Company	incurs	amortization	of	intangibles,	included	in	its	GAAP	presentation	of amortization	expense,	related	to	various	acquisitions	it	has	made	in	recent	years.	Management	excludes	these	expenses	and	their	related	tax	impact	for	the	purpose	of calculating	non-GAAP	operating	income,	non-GAAP	operating	profit	margin,	non-GAAP	net	income	and	non-GAAP	diluted	earnings	per	share	when	it	evaluates	the continuing	operational	performance	of	the	Company	because	these	costs	are	fixed	at	the	time	of	an	acquisition,	are	then	amortized	over	a	period	of	several	years	after	the acquisition	and	generally	cannot	be	changed	or	influenced	by	management	after	the	acquisition.	Accordingly,	management	does	not	consider	these	expenses	for purposes	of	evaluating	the	performance	of	the	Company	during	the	applicable	time	period	after	the	acquisition,	and	it	excludes	such	expenses	when	making	decisions	to allocate	resources.	The	Company	believes	that	these	non-GAAP	financial	measures	are	useful	to	investors	because	they	allow	investors	to	(a)	evaluate	the	effectiveness of	the	methodology	and	information	used	by	management	in	its	financial	and	operational	decision-making	and	(b)	compare	past	reports	of	financial	results	of	the Company	as	the	Company	has	historically	reported	these	non-GAAP	financial	measures.

Stock-based	compensation	expense	and	its	related	tax	impact.	The	Company	incurs	expense	related	to	stock-based	compensation	included	in	its	GAAP	presentation of	cost	of	software	licenses;	cost	of	maintenance	and	service;	research	and	development	expense	and	selling,	general	and	administrative	expense.	Although	stock-based compensation	is	an	expense	of	the	Company	and	viewed	as	a	form	of	compensation,	management	excludes	these	expenses	for	the	purpose	of	calculating	non-GAAP operating	income,	non-GAAP	operating	profit	margin,	non-GAAP	net	income	and	non-GAAP	diluted	earnings	per	share	when	it	evaluates	the	continuing	operational performance	of	the	Company.	Specifically,	the	Company	excludes	stock-based	compensation	during	its	annual	budgeting	process	and	its	quarterly	and	annual assessments	of	the	Company's	and	management's	performance.	The	annual	budgeting	process	is	the	primary	mechanism	whereby	the	Company	allocates	resources	to various	initiatives	and	operational	requirements.	Additionally,	the	annual	review	by	the	board	of	directors	during	which	it	compares	the	Company's	historical	business model	and	profitability	to	the	planned	business	model	and	profitability	for	the	forthcoming	year	excludes	the	impact	of	stock-based	compensation.	In	evaluating	the performance	of	senior	management	and	department	managers,	charges	related	to	stock-based	compensation	are	excluded	from	expenditure	and	profitability	results.

In	fact,	the	Company	records	stock-based	compensation	expense	into	a	stand-alone	cost	center	for	which	no	single	operational	manager	is	responsible	or	accountable.	In this	way,	management	is	able	to	review,	on	a	period-to-period	basis,	each	manager's	performance	and	assess	financial	discipline	over	operational	expenditures	without the	effect	of	stock-based	compensation.	The	Company	believes	that	these	non-GAAP	financial	measures	are	useful	to	investors	because	they	allow	investors	to (a)	evaluate	the	Company's	operating	results	and	the	effectiveness	of	the	methodology	used	by	management	to	review	the	Company's	operating	results,	and	(b)	review historical	comparability	in	its	financial	reporting	as	well	as	comparability	with	competitors'	operating	results.

Transaction	costs	related	to	business	combinations.	The	Company	incurs	expenses	for	professional	services	rendered	in	connection	with	business	combinations, which	are	included	in	its	GAAP	presentation	of	selling,	general	and	administrative	expense.	These	expenses	are	generally	not	tax-deductible.	Management	excludes these	acquisition-related	transaction	costs	for	the	purpose	of	calculating	non-GAAP	operating	income,	non-GAAP	operating	profit	margin,	non-GAAP	net	income	and non-GAAP	diluted	earnings	per	share	when	it	evaluates	the	continuing	operational	performance	of	the	Company,	as	it	generally	would	not	have	otherwise	incurred	these expenses	in	the	periods	presented	as	a	part	of	its	continuing	operations.	The	Company	believes	that	these	non-GAAP	financial	measures	are	useful	to	investors	because they	allow	investors	to	(a)	evaluate	the	Company's	operating	results	and	the	effectiveness	of	the	methodology	used	by	management	to	review	the	Company's	operating results,	and	(b)	review	historical	comparability	in	its	financial	reporting	as	well	as	comparability	with	competitors'	operating	results.

Non-GAAP	financial	measures	are	not	in	accordance	with,	or	an	alternative	for,	GAAP.	The	Company's	non-GAAP	financial	measures	are	not	meant	to	be	considered in	isolation	or	as	a	substitute	for	comparable	GAAP	financial	measures,	and	should	be	read	only	in	conjunction	with	the	Company's	consolidated	financial	statements prepared	in	accordance	with	GAAP.

The	Company	has	provided	a	reconciliation	of	the	non-GAAP	financial	measures	to	the	most	directly	comparable	GAAP	financial	measures	as	listed	below:

# Liquidity	and	Capital	Resources

Cash,	cash	equivalents	and	short-term	investments:	As	of	December	31,	2012,	the	Company	had	cash,	cash	equivalents	and	short-term	investments	totaling	$577.2 million	and	working	capital	of	$436.0	million	as	compared	to	cash,	cash	equivalents	and	short-term	investments	of	$472.4	million	and	working	capital	of	$301.3	million at	December	31,	2011.

Cash	and	cash	equivalents	consist	primarily	of	highly	liquid	investments	such	as	money	market	mutual	funds	and	deposits	held	at	major	banks.	Short-term	investments consist	primarily	of	deposits	held	by	certain	foreign	subsidiaries	of	the	Company	with	original	maturities	of	three	months	to	one	year.	Cash,	cash	equivalents	and	short- term	investments	include	$177.9	million	held	by	the	Company's	foreign	subsidiaries	as	of	December	31,	2012.	If	these	foreign	balances	were	repatriated	to	the	U.S., they	would	be	subject	to	domestic	tax,	resulting	in	a	tax	obligation	in	the	period	of	repatriation.	The	amount	of	cash,	cash	equivalents	and	short-term	investments	held	by these	subsidiaries	is	subject	to	translation	adjustments	caused	by	changes	in	foreign	currency	exchange	rates	as	of	the	end	of	each	respective	reporting	period,	the	offset to	which	is	recorded	in	accumulated	other	comprehensive	income	on	the	Company's	consolidated	balance	sheet.

Cash	flows	from	operating	activities:	The	Company's	operating	activities	provided	cash	of	$298.4	million	in	2012,	$307.7	million	in	2011	and	$166.9	million	in	2010. The	net	$9.2	million	decrease	in	operating	cash	flows	for	the	year	ended	December	31,	2012	as	compared	to	the	year	ended	December	31,	2011	was	primarily	related	to:

•A	$41.6	million	decrease	in	cash	flows	from	operating	assets	and	liabilities	whereby	these	fluctuations	produced	a	net	cash	inflow	of	$8.9	million	during	the year	ended	December	31,	2012	as	compared	to	$50.4	million	during	the	year	ended	December	31,	2011.

Included	in	the	$8.9	million	net	cash	inflow	in	2012	was	a	reduction	of	$9.3	million	in	the	amount	of	income	tax	payments	that	otherwise	would	have	been made	in	2012	as	a	result	of	the	tax	impact	associated	with	the	merger	of	the	Company's	Japan	subsidiaries,	as	compared	to	a	reduction	of	$18.0	million	in	2011. Please	see	below	for	a	complete	discussion	of	the	expected	future	cash	flow	benefits	associated	with	the	merger	of	the	Company's	Japan	subsidiaries.

•An	increase	in	other	non-cash	operating	adjustments	of	$9.5	million	from	$76.6	million	for	the	year	ended	December	31,	2011	to	$86.1	million	for	the	year ended	December	31,	2012.

The	net	$140.8	million	increase	in	the	Company's	cash	flow	from	operating	activities	in	2011	as	compared	to	2010	was	primarily	the	result	of	a	$79.9	million	increase	in cash	flows	from	operating	assets	and	liabilities,	a	$33.3	million	increase	in	other	non-cash	operating	adjustments	and	a	$27.5	million	increase	in	net	income.	The	2010 operating	cash	flows	were	adversely	impacted	by	increased	tax	payments	of	$55.1	million	related	to	the	merger	of	the	Company's	Japan	subsidiaries.

Cash	flows	from	investing	activities:	The	Company's	investing	activities	used	net	cash	of	$69.0	million	and	$291.6	million	for	the	years	ended	December	31,	2012	and December	31,	2011,	respectively.	The	Company	had	net	acquisition-related	cash	outlays	of	$45.1	million	and	$269.5	million	during	the	years	ended	December	31,	2012 and	December	31,	2011,	respectively.	Total	capital	spending	was	$24.0	million	and	$22.1	million	for	the	years	ended	December	31,	2012	and	2011,	respectively.	In	May 2012,	the	Company	acquired	an	office	building	adjacent	to	its	Canonsburg	headquarters	for	$4.8	million.	This	building	will	serve	primarily	as	a	data	center	and customer	training	space,	and	will	provide	flexibility	for	future	expansion	and	the	growing	employee	population.	The	Company	currently	plans	capital	spending	of	$35 million	to	$45	million	during	fiscal	year	2013,	including	spending	on	the	Company's	new	headquarters	facilities	that	are	expected	to	be	completed	in	2014.		The Company	has	occupied	its	current	headquarters	facility	since	1997.		The	overall	level	of	capital	spending	in	2013	will	be	dependent	upon	various	factors,	including growth	of	the	business	and	general	economic	conditions.

The	Company's	investing	activities	used	net	cash	of	$291.6	million	and	$6.6	million	in	2011	and	2010,	respectively.	The	change	in	cash	used	was	primarily	driven	by	the $269.5	million	net	cash	outlay	for	the	acquisition	of	Apache	in	August	2011.

Cash	flows	used	in	financing	activities:	Financing	activities	used	cash	of	$124.8	million	and	$9.7	million	for	the	years	ended	December	31,	2012	and	2011,	respectively. This	change	of	$115.2	million	was	primarily	the	result	of	an	increase	in	cash	used	for	treasury	stock	repurchases	of	$82.8	million	and	a	$42.5	million	increase	in required	principal	payments	on	long-term	debt	in	2012	as	compared	to	2011.

Financing	activities	used	cash	of	$9.7	million	and	$29.6	million	in	2011	and	2010,	respectively.	This	change	of	$20.0	million	was	primarily	driven	by	a	$33.7	million decrease	in	principal	payments	on	long-term	debt,	partially	offset	by	$12.7	million	in	treasury	stock	repurchases	in	2011.	There	were	no	treasury	stock	repurchases	in 2010.

The	Company's	term	loan	includes	covenants	related	to	the	consolidated	leverage	ratio	and	the	consolidated	fixed	charge	coverage	ratio,	as	well	as	certain	restrictions	on additional	investments	and	indebtedness.	As	of	December	31,	2012,	the	Company	is	in	compliance	with	all	financial	covenants	as	stated	in	the	credit	agreement.	The Company's	term	loan	matures	on	July	31,	2013.

The	Company	believes	that	existing	cash	and	cash	equivalent	balances	of	$576.7	million,	together	with	cash	generated	from	operations,	will	be	sufficient	to	meet	the Company's	working	capital,	capital	expenditure	and	debt	service	requirements	through	the	next	twelve	months.	The	Company's	cash	requirements	in	the	future	may also	be	financed	through	additional	equity	or	debt	financings.	There	can	be	no	assurance	that	such	financings	can	be	obtained	on	favorable	terms,	if	at	all.

As	of	December	31,	2012,	1.5	million	shares	remain	authorized	for	repurchase	under	the	Company's	stock	repurchase	program.

The	Company	continues	to	generate	positive	cash	flows	from	operating	activities	and	believes	that	the	best	use	of	its	excess	cash	is	to	repay	its	long-term	debt,	to	invest in	the	business	and,	under	certain	favorable	conditions,	to	repurchase	stock.	Additionally,	the	Company	has	in	the	past,	and	expects	in	the	future,	to	acquire	or	make investments	in	complementary	companies,	products,	services	and	technologies.	Any	future	acquisitions	may	be	funded	by	available	cash	and	investments,	cash	generated from	operations,	existing	or	additional	credit	facilities,	or	from	the	issuance	of	additional	securities.

On	August	1,	2012,	the	Company	completed	its	acquisition	of	Esterel,	a	leading	provider	of	embedded	software	simulation	and	automatic	generation	of	certified	code solutions	for	mission	critical	applications.	Under	the	terms	of	the	acquisition	agreement,	ANSYS	acquired	100%	of	Esterel	for	a	purchase	price	of	$58.2	million,	which included	$13.1	million	in	acquired	cash.	The	acquisition	agreement	also	includes	retention	provisions	for	key	members	of	Esterel's	management	and	employees.	The Company	funded	the	transaction	entirely	with	existing	cash	balances.

The	Company's	operating	cash	flow	has	been	favorably	impacted	by	the	2010	merger	of	the	Company's	Japan	subsidiaries.	The	Company	saw	a	reduction	in	these	cash flow	savings	of	$16.8	million	for	the	year	ended	December	31,	2012	when	compared	to	the	year	ended	December	31,	2011.	This	merger	is	expected	to	favorably	impact the	Company's	cash	flow	from	operations	in	future	periods	as	follows:

With	respect	to	the	amounts	in	the	preceding	table	whereby	the	timing	is	listed	as	"uncertain,"	the	realization	of	these	benefits	is	affected	by	the	resolution	of	an	audit	of the	Company's	amended	tax	return	refund	claims,	which	the	Internal	Revenue	Service	("IRS")	began	in	the	second	quarter	of	2012.	The	Company	continues	to	expect that	it	will	realize	these	cash	flow	benefits.

# Off-Balance	Sheet	Arrangements

The	Company	does	not	have	any	special	purpose	entities	or	off-balance	sheet	financing.

# Contractual	Obligations

The	Company's	significant	contractual	obligations	as	of	December	31,	2012	are	summarized	below:

| (in	thousands) | Total | Within	1	year | 2	–	3	years | 4	–	5	years | After	5	years |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Long-term\tdebt |  |  |  |  |  |
| Principal\tpayments | $53,149 | $53,149 | $— | $— | $— |
| Interest\tpayments(1) | 215 | 215 | — | — | — |
| Capital\tlease\tobligations | — | — | — | — | — |
| Global\theadquarters\toperating\tleases(2) | 69,818 | 1,429 | 5,707 | 8,556 | 54,126 |
| Other\toperating\tleases(3) | 44,155 | 12,177 | 16,581 | 7,150 | 8,247 |
| Unconditional\tpurchase\tobligations(4) | 3,502 | 3,313 | 189 | — | — |
| Obligations\trelated\tto\tuncertain\ttax\tpositions,\tincluding\ninterest\tand\tpenalties(5) | — | — | — | — | — |
| Other\tlong-term\tobligations(6) | 34,198 | 9,676 | 16,776 | 5,364 | 2,382 |
| Total\tcontractual\tobligations | $205,037 | $79,959 | $39,253 | $21,070 | $64,755 |

(1) See	Note	8	to	the	consolidated	financial	statements	in	Part	IV,	Item	15	of	this	Annual	Report	on	Form	10-K.	The	interest	rate	on	the	outstanding	term	loan balance	of	$53.1	million	is	set	for	the	quarter	ending	March	31,	2013	at	1.06%,	which	is	based	on	LIBOR	+	0.75%.	The	estimated	payments	assume	an	interest rate	of	1.06%	on	the	remaining	loan	balance,	and	are	calculated	assuming	contractual	quarterly	principal	payments	are	made	with	no	additional	prepayments.

(2) On	September	14,	2012,	the	Company	entered	into	a	lease	agreement	for	a	to-be-built	office	facility	in	Canonsburg,	Pennsylvania,	which	will	serve	as	the Company's	new	headquarters.	The	lease	was	effective	as	of	September	14,	2012,	but	because	the	premises	are	to-be-built,	the	Company	will	not	be	obligated	to pay	rent	until	January	1,	2015	(the	"Commencement	Date").	The	term	of	the	lease	is	183	months,	beginning	on	the	Commencement	Date.	The	Company	shall have	a	one-time	right	to	terminate	the	lease	effective	upon	the	last	day	of	the	tenth	full	year	following	the	Commencement	Date	(anticipated	to	be	December	31, 2025),	by	providing	the	landlord	with	at	least	18	months'	prior	written	notice	of	such	termination.	The	Company's	lease	for	its	existing	headquarters	expires	on December	31,	2014.

(3) Other	operating	leases	primarily	include	noncancellable	lease	commitments	for	the	Company's	other	domestic	and	international	offices	as	well	as	certain operating	equipment.

(4) Unconditional	purchase	obligations	primarily	include	software	licenses	and	long-term	purchase	contracts	for	network,	communication	and	office	maintenance services,	which	are	unrecorded	as	of	December	31,	2012.

(5) The	Company	has	$36.9	million	of	unrecognized	tax	benefits,	including	estimated	interest	and	penalties,	that	have	been	recorded	as	liabilities	in	accordance	with income	tax	accounting	guidance	for	which	the	Company	is	uncertain	as	to	if	or	when	such	amounts	may	be	settled.	As	a	result,	such	amounts	are	excluded	from the	table	above.

(6) Includes	long-term	retention	bonus	and	Apache-related	deferred	compensation	of	$21.8	million	(including	estimated	imputed	interest	of	$520,000	within	1	year, $550,000	within	2-3	years	and	$210,000	within	4-5	years),	contingent	consideration	of	$6.6	million	(including	estimated	imputed	interest	of	$110,000	within	1 year	and	$200,000	within	2-3	years)	and	pension	obligations	of	$3.7	million	for	certain	foreign	locations	of	the	Company.

# Critical	Accounting	Policies	and	Estimates

The	Company	believes	that	the	following	critical	accounting	policies	affect	the	more	significant	judgments	and	estimates	used	in	the	preparation	of	its	consolidated financial	statements.

Revenue	is	derived	principally	from	the	licensing	of	computer	software	products	and	from	related	maintenance	contracts.	Revenue	from	perpetual	licenses	is	classified as	license	revenue	and	is	recognized	upon	delivery	of	the	licensed	product	and	the	utility	that	enables	the	customer	to	access	authorization	keys,	provided	that	acceptance has	occurred	and	a	signed	contractual	obligation	has	been	received,	the	price	is	fixed	and	determinable,	and	collectibility	of	the	receivable	is	probable.	The	Company determines	the	fair	value	of	post-contract	customer	support	("PCS")	sold	together	with	perpetual	licenses	based	on	the	rate	charged	for	PCS	when	sold	separately. Revenue	from	PCS	contracts	is	classified	as	maintenance	and	service	revenue	and	is	recognized	ratably	over	the	term	of	the	contract.

Revenue	for	software	lease	licenses	is	classified	as	license	revenue	and	is	recognized	over	the	period	of	the	lease	contract.	Typically,	the	Company's	software	leases include	PCS	which,	due	to	the	short	term	(principally	one	year	or	less)	of	the	Company's	software	lease	licenses,	cannot	be	separated	from	lease	revenue	for	accounting purposes.	As	a	result,	both	the	lease	license	and	PCS	are	recognized	ratably	over	the	lease	period.	Due	to	the	short-term	nature	of	the	software	lease	licenses	and	the frequency	with	which	the	Company	provides	major	product	upgrades	(typically	every	12–18	months),	the	Company	does	not	believe	that	a	significant	portion	of	the	fee paid	under	the	arrangement	is	attributable	to	the	PCS	component	of	the	arrangement	and,	as	a	result,	includes	the	revenue	for	the	entire	arrangement	within	software license	revenue	in	the	consolidated	statements	of	income.

The	Company's	Apache	products	are	typically	licensed	via	longer	term	leases	of	24–36	months.		The	Company	recognizes	revenue	for	these	licenses	over	the	term	of	the lease	contract.		Because	the	Company	does	not	have	vendor-specific	objective	evidence	of	the	fair	value	of	these	leases,	the	Company	also	recognizes	revenue	from perpetual	licenses	over	the	term	of	the	lease	contract	during	the	infrequent	occurrence	of	these	licenses	being	sold	with	Apache	leases	in	multiple-element	arrangements.

Revenue	from	training,	support	and	other	services	is	recognized	as	the	services	are	performed.	The	Company	applies	the	specific	performance	method	to	contracts	in which	the	service	consists	of	a	single	act,	such	as	providing	a	training	class	to	a	customer,	and	the	proportional	performance	method	to	other	service	contracts	that	are longer	in	duration	and	often	include	multiple	acts	(for	example,	both	training	and	consulting).	In	applying	the	proportional	performance	method,	the	Company	typically utilizes	output-based	estimates	for	services	with	contractual	billing	arrangements	that	are	not	based	on	time	and	materials,	and	estimates	output	based	on	the	total	tasks completed	as	compared	to	the	total	tasks	required	for	each	work	contract.	Input-based	estimates	are	utilized	for	services	that	involve	general	consultations	with contractual	billing	arrangements	based	on	time	and	materials,	utilizing	direct	labor	as	the	input	measure.

The	Company	also	executes	arrangements	through	independent	channel	partners	in	which	the	channel	partners	are	authorized	to	market	and	distribute	the	Company's software	products	to	end-users	of	the	Company's	products	and	services	in	specified	territories.	In	sales	facilitated	by	channel	partners,	the	channel	partner	bears	the	risk of	collection	from	the	end-user	customer.	The	Company	recognizes	revenue	from	transactions	with	channel	partners	when	the	channel	partner	submits	a	written	purchase commitment,	collectibility	from	the	channel	partner	is	probable,	a	signed	license	agreement	is	received	from	the	end-user	customer	and	delivery	has	occurred,	provided that	all	other	revenue	recognition	criteria	are	satisfied.	Revenue	from	channel	partner	transactions	is	the	amount	remitted	to	the	Company	by	the	channel	partners.	This amount	includes	a	fee	for	PCS	that	is	compensation	for	providing	technical	enhancements	and	the	second	level	of	technical	support	to	the	end-user,	which	is	based	on	the rate	charged	for	PCS	when	sold	separately,	and	is	recognized	over	the	period	that	PCS	is	to	be	provided.	The	Company	does	not	offer	right	of	return,	product	rotation	or price	protection	to	any	of	its	channel	partners.

Non-income	related	taxes	collected	from	customers	and	remitted	to	governmental	authorities	are	recorded	on	the	consolidated	balance	sheet	as	accounts	receivable	and accrued	expenses.	The	collection	and	payment	of	these	amounts	are	reported	on	a	net	basis	in	the	consolidated	statements	of	income	and	do	not	impact	reported	revenues or	expenses.

The	Company	warrants	to	its	customers	that	its	software	will	substantially	perform	as	specified	in	the	Company's	most	current	user	manuals.	The	Company	has	not experienced	significant	claims	related	to	software	warranties	beyond	the	scope	of	maintenance	support,	which	the	Company	is	already	obligated	to	provide,	and consequently,	the	Company	has	not	established	reserves	for	warranty	obligations.

The	Company's	agreements	with	its	customers	generally	require	it	to	indemnify	the	customer	against	claims	that	the	Company's	software	infringes	third-party	patent, copyright,	trademark	or	other	proprietary	rights.	Such	indemnification	obligations	are	generally	limited	in	a	variety	of	industry-standard	respects,	including	the Company's	right	to	replace	an	infringing	product.	As	of	December	31,	2012,	the	Company	had	not	experienced	any	losses	related	to	these	indemnification	obligations and	no	claims	with	respect	thereto	were	outstanding.	The	Company	does	not	expect	significant	claims	related	to	these	indemnification	obligations,	and	consequently,	the Company	has	not	established	any	related	reserves.

The	Company	makes	judgments	as	to	its	ability	to	collect	outstanding	receivables	and	provides	allowances	for	a	portion	of	receivables	when	collection	becomes doubtful.	Provisions	are	made	based	upon	a	specific	review	of	all	significant	outstanding	invoices	from	both	value	and	delinquency	perspectives.	For	those	invoices	not specifically	reviewed,	provisions	are	provided	at	differing	rates	based	upon	the	age	of	the	receivable	and	the	geographic	area	of	origin.	In	determining	these	percentages, the	Company	considers	its	historical	collection	experience	and	current	economic	trends	in	the	customer's	industry	and	geographic	region.	If	the	historical	data	used	to calculate	the	allowance	for	doubtful	accounts	does	not	reflect	the	future	ability	to	collect	outstanding	receivables,	additional	provisions	for	doubtful	accounts	may	be needed	and	future	results	of	operations	could	be	materially	affected.

The	Company	accounts	for	income	taxes	under	the	asset	and	liability	method,	which	requires	the	recognition	of	deferred	tax	assets	and	liabilities	for	the	expected	future tax	consequences	of	events	that	have	been	included	in	the	financial	statements.	Under	this	method,	deferred	tax	assets	and	liabilities	are	determined	based	on	the differences	between	the	financial	statement	and	tax	bases	of	assets	and	liabilities	using	enacted	tax	rates	in	effect	for	the	year	in	which	the	differences	are	expected	to reverse.	The	effect	of	a	change	in	tax	rates	on	deferred	tax	assets	and	liabilities	is	recognized	in	income	in	the	period	of	the	enactment	date.

The	Company	records	net	deferred	tax	assets	to	the	extent	it	believes	these	assets	will	more	likely	than	not	be	realized.	In	making	such	determination,	the	Company considers	all	available	positive	and	negative	evidence,	including	scheduled	reversals	of	deferred	tax	liabilities,	projected	future	taxable	income,	tax	planning	strategies and	recent	financial	operations.	In	the	event	the	Company	determines	that	it	will	be	able	to	realize	deferred	income	tax	assets	in	the	future	in	excess	of	their	net	recorded amount,	an	adjustment	to	the	valuation	allowance	would	be	recorded	that	would	reduce	the	provision	for	income	taxes.

Tax	benefits	related	to	uncertain	tax	positions	taken	or	expected	to	be	taken	on	a	tax	return	are	recorded	when	such	benefits	meet	a	more	likely	than	not	threshold. Otherwise,	these	tax	benefits	are	recorded	when	a	tax	position	has	been	effectively	settled,	which	means	that	the	statute	of	limitations	has	expired	or	the	appropriate taxing	authority	has	completed	their	examination	even	though	the	statute	of	limitations	remains	open.	The	Company	recognizes	interest	and	penalties	related	to unrecognized	tax	benefits	within	the	income	tax	expense	line	in	the	consolidated	statements	of	income.	Accrued	interest	and	penalties	are	included	within	the	related	tax liability	line	in	the	consolidated	balance	sheets.

The	Company	tests	goodwill	for	impairment	at	least	annually	by	performing	a	qualitative	assessment	of	whether	there	is	sufficient	evidence	that	it	is	more	likely	than	not that	the	fair	value	of	each	reporting	unit	exceeds	its	carrying	amount.	The	application	of	a	qualitative	assessment	requires	the	Company	to	assess	and	make	judgments regarding	a	variety	of	factors	which	potentially	impact	the	fair	value	of	a	reporting	unit,	including	general	economic	conditions,	industry	and	market-specific	conditions, customer	behavior,	cost	factors,	the	Company's	financial	performance	and	trends,	the	Company's	strategies	and	business	plans,	capital	requirements,	management	and personnel	issues,	and	the	Company's	stock	price,	among	others.	The	Company	then	considers	the	totality	of	these	and	other	factors,	placing	more	weight	on	the	events and	circumstances	that	are	judged	to	most	affect	a	reporting	unit's	fair	value	or	the	carrying	amount	of	its	net	assets,	to	reach	a	qualitative	conclusion	regarding	whether it	is	more	likely	than	not	that	the	fair	value	of	a	reporting	unit	is	less	than	its	carrying	amount.

If	it	is	determined	that	it	is	more	likely	than	not	that	the	reporting	unit's	fair	value	is	less	than	its	carrying	amount,	then	the	fair	value	of	the	reporting	unit	is	estimated and	an	impairment	loss	is	measured	(if	any).	Fair	value	is	estimated	using	discounted	cash	flow	and	other	valuation	methodologies.	In	preparing	the	estimate	of	fair value,	the	Company	relies	on	a	number	of	factors,	including	historical	operating	results,	business	plans,	anticipated	future	cash	flows,	economic	projections	and	other market	data.	Because	there	are	inherent	uncertainties	involved	in	these	factors,	the	Company's	estimates	of	fair	value	are	imprecise	and	the	resulting	carrying	value	of goodwill	and	intangible	assets	may	be	misstated.

The	Company	tests	indefinite-lived	intangible	assets	for	impairment	at	least	annually	by	comparing	the	estimated	fair	value	of	each	asset	to	its	carrying	value.	Fair	value is	estimated	using	a	discounted	cash	flow	valuation	methodology.	In	preparing	the	estimate	of	fair	value,	the	Company	relies	on	a	number	of	factors,	including	historical operating	results,	business	plans,	anticipated	future	cash	flows,	economic	projections	and	other	market	data.	Because	there	are	inherent	uncertainties	involved	in	these factors,	the	Company's	estimates	of	fair	value	are	imprecise	and	the	resulting	carrying	value	of	indefinite-lived	intangible	assets	may	be	misstated.	When	the	Company assigns	fair	value	to	a	trademark,	it	also	estimates	whether	it	has	a	finite	or	indefinite	life,	thus	impacting	whether	the	value	is	amortized	or	not.	Events	such	as	product and	naming	strategy	changes	can	occur	whereby	the	Company	may	reconsider	the	life	(whether	finite	or	indefinite),	resulting	in	changes	to	amortization	expense. Amortization	periods	may	also	be	reconsidered	for	identifiable	intangible	assets	with	finite	lives.

On	January	1,	2012,	the	Company	completed	the	annual	impairment	tests	for	goodwill	and	indefinite-lived	intangible	assets	and	determined	that	these	assets	had	not been	impaired	as	of	the	test	date.	For	goodwill,	the	Company	performed	a	qualitative	assessment,	and	as	of	the	test	date,	there	was	sufficient	evidence	that	it	was	more likely	than	not	that	the	fair	values	of	its	two	reporting	units	exceeded	their	carrying	amounts.	Due	to	the	August	1,	2012	acquisition	of	Esterel,	the	Company	now	has three	reporting	units.	The	fair	value	of	the	Company's	indefinite-lived	intangible	assets	substantially	exceeded	their	carrying	values	as	of	the	test	date.	The	key assumptions	utilized	in	determining	the	fair	value	of	the	indefinite-lived	intangible	assets	are

revenue	growth	rates,	growth	rates	of	cash	expenditures	and	related	operating	margin	percentages,	income	tax	rates,	and	factors	that	influence	the	Company's	weighted average	cost	of	capital,	including	interest	rates,	the	ratio	of	the	Company's	debt	capital	to	its	total	capital	and	the	Company's	systematic	risk	or	beta.

Of	the	preceding	factors,	fair	value	estimates	are	most	sensitive	to	changes	in	revenue	growth	rate	assumptions.	Factors	that	could	adversely	affect	the	Company's revenue	growth	rates	include	adverse	economic	conditions	in	certain	geographies	or	industries,	especially	key	industrial	and	electronics	industries;	enhanced	competition and	related	pricing	pressures;	integration	issues	associated	with	acquisitions;	strengthening	of	the	U.S.	Dollar	or	other	adverse	foreign	currency	fluctuations;	reduced renewal	rates	for	the	Company's	annual	lease	and	maintenance	contracts;	and	the	Company's	ability	to	attract	and	retain	key	personnel.	Any	of	these	factors	individually or	in	combination	could	cause	the	Company's	growth	rates	to	decline	over	a	defined	period	of	time.	The	Company	has	demonstrated	an	ability	in	the	past	to	adjust	its cost	structure	through	reductions	in	discretionary	spending,	delayed	hiring	or	workforce	reductions	when	faced	with	periods	of	reduced	revenue	growth.	If	adverse conditions	would	persist	over	a	longer	period	of	time	and	would	cause	a	revision	to	the	Company's	long-term	revenue	growth	rate	projections	without	a	similar	cost reduction	response,	or	if	other	factors	would	occur	that	would	result	in	a	similar	growth	rate	revision	or	a	material	revision	to	the	other	inputs	to	reporting	unit	fair	value, it	could	cause	the	fair	value	of	the	Company's	reporting	unit	to	fall	below	its	carrying	value,	potentially	resulting	in	an	impairment.

The	Company	is	involved	in	various	investigations,	claims	and	legal	proceedings	that	arise	in	the	ordinary	course	of	business	including	alleged	infringement	of intellectual	property	rights,	commercial	disputes,	labor	and	employment	matters,	tax	audits	and	other	matters.	The	Company	reviews	the	status	of	these	matters,	assesses its	financial	exposure	and	records	a	related	accrual	if	the	potential	loss	from	an	investigation,	claim	or	legal	proceeding	is	probable	and	the	amount	is	reasonably estimable.	Significant	judgment	is	involved	in	the	determination	of	probability	and	in	the	determination	of	whether	an	exposure	is	reasonably	estimable.	As	a	result	of the	uncertainties	involved	in	making	these	estimates,	the	Company	may	have	to	revise	its	estimates	as	facts	and	circumstances	change.	The	revision	of	these	estimates could	have	a	material	impact	on	the	Company's	financial	position	and	results	of	operations.

The	Company	grants	options	and	stock	awards	to	employees	and	directors	under	the	Company's	stock	option	and	grant	plan.	Eligible	employees	can	also	purchase shares	of	the	Company's	common	stock	at	a	discount	under	the	Company's	employee	stock	purchase	plan.	The	benefits	provided	under	these	plans	are	share-based payments	subject	to	the	provisions	of	share-based	payment	accounting	guidance.	The	Company	uses	the	fair	value	method	to	apply	the	provisions	of	share-based payment	accounting	guidance.	Share-based	compensation	expense	for	2012,	2011	and	2010	was	$32.4	million,	$23.1	million	and	$19.0	million,	respectively.	As	of December	31,	2012,	total	unrecognized	estimated	compensation	expense	related	to	unvested	stock	options	granted	prior	to	that	date	was	$61.9	million,	which	is	expected to	be	recognized	over	a	weighted	average	period	of	2.0	years.

The	value	of	each	share-based	award	was	estimated	on	the	date	of	grant	or	date	of	acquisition	for	options	issued	in	a	business	combination	using	the	Black-Scholes option	pricing	model	("Black-Scholes	model").	The	determination	of	the	fair	value	of	share-based	payment	awards	using	an	option	pricing	model	is	affected	by	the Company's	stock	price	as	well	as	assumptions	regarding	a	number	of	complex	and	subjective	variables.	These	variables	include	the	Company's	expected	stock	price volatility	over	the	term	of	the	awards,	actual	and	projected	employee	stock	option	exercise	behaviors,	risk-free	interest	rates	and	expected	dividends.	The	table	below presents	the	weighted	average	input	assumptions	used	and	resulting	fair	values	for	options	granted	or	issued	in	business	combinations	during	each	respective	year.	The stock-based	compensation	expense	for	options	is	recorded	ratably	over	their	requisite	service	period.	The	interest	rates	used	were	determined	by	using	the	five-year	U.S. Treasury	Note	yield	on	the	date	of	grant	or	date	of	acquisition.

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Risk-free\tinterest\trate | 0.59%\tto\t1.04% | 0.91%\tto\t2.11% | 1.27%\tto\t2.34% |
| Expected\tdividend\tyield | 0% | 0% | 0% |
| Expected\tvolatility | 38% | 39% | 39% |
| Expected\tterm | 6.0\tyears | 5.8\tyears | 6.1\tyears |
| Weighted\taverage\tfair\tvalue\tper\tshare | $24.82 | $25.84 | $19.41 |

Prior	to	2012,	the	Company	issued	both	non-qualified	and	incentive	stock	options;	however,	the	Company	no	longer	issues	incentive	stock	options.	The	tax	benefits associated	with	the	outstanding	incentive	stock	options	are	unpredictable,	as	they	are	predicated	upon	an	award	recipient	triggering	an	event	that	disqualifies	the	award and	that	then	results	in	a	tax	deduction	to	the	Company.	Share-based	payment	accounting	guidance	requires	that	these	tax	benefits	be	recorded	at	the	time	of	the triggering	event.	The	triggering	events	for	each	option	holder	are	not	easily	projected.	In	order	to	estimate	the	tax	benefits	related	to	incentive	stock	options,	the Company	makes	many	assumptions	and	estimates,	including	the	number	of	incentive	stock	options	that	will	be	exercised	during	the	period	by	U.S.	employees,	the number	of	incentive	stock	options	that	will	be	disqualified

during	the	period	and	the	fair	market	value	of	the	Company's	stock	price	on	the	exercise	dates.	Each	of	these	items	is	subject	to	significant	uncertainty.	Additionally,	a significant	portion	of	the	tax	benefits	related	to	disqualified	incentive	stock	options	is	accounted	for	as	an	increase	to	equity	(additional	paid-in	capital)	rather	than	as	a reduction	in	income	tax	expense.	Although	all	such	benefits	continue	to	be	realized	through	the	Company's	tax	filings,	this	accounting	treatment	has	the	effect	of increasing	tax	expense	and	reducing	net	income.	For	example,	the	Company	realized	a	tax	benefit	of	$7.6	million	during	the	year	ended	December	31,	2012	related	to disqualified	dispositions	of	incentive	stock	options;	however,	only	$1.7	million	of	such	amount	was	recorded	as	a	reduction	in	income	tax	expense.

Under	the	terms	of	the	ANSYS,	Inc.	Long-Term	Incentive	Plan,	in	the	first	quarter	of	2012,	2011	and	2010,	the	Company	granted	100,000,	92,500	and	80,500 performance-based	restricted	stock	units,	respectively.	Vesting	of	the	full	award	or	a	portion	thereof	is	based	on	the	Company's	performance	as	measured	by	total shareholder	return	relative	to	the	median	percentage	appreciation	of	the	NASDAQ	Composite	Index	over	a	specified	measurement	period,	subject	to	each	participant's continued	employment	with	the	Company	through	the	conclusion	of	the	measurement	period.	The	measurement	period	for	the	restricted	stock	units	granted	pursuant	to the	Long-Term	Incentive	Plan	is	a	three-year	period	beginning	January	1	of	the	year	of	the	grant.	Each	restricted	stock	unit	relates	to	one	share	of	the	Company's common	stock.	The	estimated	grant-date	value	of	each	restricted	stock	unit	granted	in	2012,	2011	and	2010	was	$33.16,	$32.05	and	$25.00,	respectively.	The	estimate	of the	grant-date	value	of	the	restricted	stock	units	was	made	using	a	Monte	Carlo	simulation	model.	The	determination	of	the	fair	value	of	the	awards	was	affected	by	the grant	date	and	a	number	of	variables,	each	of	which	has	been	identified	in	the	chart	below.	Share-based	compensation	expense	based	on	the	fair	value	of	the	award	is being	recorded	from	the	grant	date	through	the	conclusion	of	the	three-year	measurement	period.	On	December	31,	2012,	employees	earned	76,500	restricted	stock units,	which	will	be	issued	in	the	first	quarter	of	2013.

|  | 2012 | 2011	and	2010 |
| :--- | :--- | :--- |
| Risk-free\tinterest\trate | 0.16% | 1.35% |
| Expected\tdividend\tyield | 0% | 0% |
| Expected\tvolatility—ANSYS\tStock\tPrice | 28% | 40% |
| Expected\tvolatility—NASDAQ\tComposite\tIndex | 20% | 25% |
| Expected\tterm | 2.8\tyears | 2.9\tyears |
| Correlation\tfactor | 0.75 | 0.70 |

In	addition,	the	Company	grants	deferred	stock	units	to	non-affiliate	Independent	Directors,	which	are	rights	to	receive	shares	of	common	stock	upon	termination	of service	as	a	Director.	The	deferred	stock	units	are	issued	in	arrears	and	vest	immediately.	As	of	December	31,	2012,	95,227	deferred	stock	units	have	been	earned	with the	underlying	shares	remaining	unissued	until	the	service	termination	of	the	respective	Director	owners.	Of	this	amount,	28,523	units	were	earned	during	the	year	ended December	31,	2012.

In	accordance	with	the	Apache	merger	agreement,	the	Company	granted	performance-based	restricted	stock	units	to	key	members	of	Apache	management	and employees,	with	a	maximum	of	$13.0	million	to	be	earned	annually	over	a	three-fiscal-year	period	beginning	January	1,	2012.	Vesting	of	the	full	award	or	a	portion thereof	is	determined	discretely	for	each	of	the	three	fiscal	years	based	on	the	achievement	of	certain	revenue	and	operating	income	targets	by	the	Apache	subsidiary, and	the	recipient's	continued	employment	through	the	measurement	period.	The	value	of	each	restricted	stock	unit	on	the	August	1,	2011	grant	date	was	$50.30,	the closing	price	of	ANSYS	stock	as	of	that	date.	On	December	31,	2012,	employees	earned	76,658	restricted	stock	units,	which	will	be	issued	in	the	first	quarter	of	2013.

If	factors	change	and	the	Company	employs	different	assumptions	in	the	application	of	share-based	payment	accounting	guidance	in	future	periods,	the	compensation expense	that	the	Company	will	record	may	differ	significantly	from	what	the	Company	has	recorded	in	the	current	period.	Therefore,	it	is	important	for	investors	to	be aware	of	the	high	degree	of	subjectivity	involved	when	using	option	pricing	models	to	estimate	share-based	compensation.	Option	pricing	models	were	developed	for use	in	estimating	the	value	of	traded	options	that	have	no	vesting	or	hedging	restrictions,	are	fully	transferable	and	do	not	cause	dilution.	Because	the	Company's	share- based	payments	have	characteristics	significantly	different	from	those	of	freely-traded	options	and	because	changes	in	the	input	assumptions	can	materially	affect	the Company's	estimates	of	fair	values,	in	the	Company's	opinion,	existing	valuation	models	may	not	provide	reliable	measures	of	the	fair	values	of	the	Company's	share- based	compensation.	Consequently,	there	is	a	risk	that	the	Company's	estimates	of	the	fair	values	of	the	Company's	share-based	compensation	awards	on	the	grant	dates may	bear	little	resemblance	to	the	actual	values	realized	upon	the	exercise,	expiration,	early	termination	or	forfeiture	of	those	share-based	payments	in	the	future.	Certain share-based	payments,	such	as	employee	stock	options,	may	expire	worthless	or	otherwise	result	in	zero	intrinsic	value	as	compared	to	the	fair	values	originally estimated	on	the	grant	date	and	reported	in	the	Company's	financial	statements.	Alternatively,	value	may	be	realized	from	these	instruments	that	is	significantly	in excess	of	the	fair	values	originally	estimated	on	the	grant	date	and

reported	in	the	Company's	financial	statements.	There	is	currently	no	market-based	mechanism	or	other	practical	application	to	verify	the	reliability	and	accuracy	of	the estimates	stemming	from	these	valuation	models,	nor	is	there	a	means	to	compare	and	adjust	the	estimates	to	actual	values.	Although	the	fair	value	of	employee	share- based	awards	is	determined	in	accordance	with	share-based	payment	accounting	guidance	using	an	option	pricing	model,	that	value	may	not	be	indicative	of	the	fair value	observed	in	a	willing	buyer/seller	market	transaction.

Estimates	of	share-based	compensation	expenses	are	significant	to	the	Company's	financial	statements,	but	these	expenses	are	based	on	the	aforementioned	option valuation	models	and	will	never	result	in	the	payment	of	cash	by	the	Company.	For	this	reason,	and	because	the	Company	does	not	view	share-based	compensation	as related	to	its	operational	performance,	the	Board	of	Directors	and	management	exclude	estimated	share-based	compensation	expense	when	evaluating	the	Company's underlying	business	performance.

# Recent	Accounting	Guidance

For	information	regarding	recent	accounting	guidance	and	the	impact	of	this	guidance	on	the	Company's	consolidated	financial	statements,	see	Note	2	to	the consolidated	financial	statements	in	Part	IV,	Item	15	of	this	Annual	Report	on	Form	10-K.

# ITEM	7A. QUANTITATIVE	AND	QUALITATIVE	DISCLOSURES	ABOUT	MARKET RISK

Interest	Income	Rate	Risk.	Changes	in	the	overall	level	of	interest	rates	affect	the	interest	income	that	is	generated	from	the	Company's	cash	and	short-term investments.	For	the	year	ended	December	31,	2012,	total	interest	income	was	$3.4	million.	Cash	and	cash	equivalents	consist	primarily	of	highly	liquid	investments such	as	money	market	mutual	funds	and	deposits	held	at	major	banks.

Interest	Expense	Rate	Risk.	The	Company	entered	into	a	$355.0	million	term	loan	with	variable	interest	rates	as	of	July	31,	2008.	The	term	loan	is	scheduled	to	mature on	July	31,	2013	and	provides	for	tiered	pricing	with	the	initial	rate	at	the	prime	rate	+0.50%,	or	the	LIBOR	rate	+1.50%,	with	step	downs	permitted	after	the	initial	six months	under	the	credit	agreement	down	to	a	flat	prime	rate	or	the	LIBOR	rate	+0.75%.	Such	tiered	pricing	is	determined	by	the	Company's	consolidated	leverage	ratio. The	Company's	consolidated	leverage	ratio	has	been	reduced	to	the	lowest	pricing	tier	in	the	credit	agreement.	The	credit	agreement	includes	quarterly	financial covenants,	requiring	the	Company	to	maintain	certain	financial	ratios	and,	as	is	customary	for	facilities	of	this	type,	certain	events	of	default	that	permit	the	acceleration of	the	loan.	Borrowings	outstanding	under	this	facility	totaled	$53.1	million	as	of	December	31,	2012.

The	Company	entered	into	an	interest	rate	swap	agreement	in	order	to	hedge	a	portion	of	each	of	the	first	eight	forecasted	quarterly	variable	rate	interest	payments	on	the Company's	term	loan.	Under	the	swap	agreement,	the	Company	received	the	variable,	three-month	LIBOR	rate	required	under	its	term	loan	and	paid	a	fixed	LIBOR interest	rate	of	3.32%	on	the	notional	amount.	The	initial	notional	amount	of	$300.0	million	was	amortized	equally	at	an	amount	of	$37.5	million	per	quarter	over	eight quarters	through	June	30,	2010.	The	interest	rate	swap	agreement	terminated	on	June	30,	2010.

For	the	years	ended	December	31,	2012,	2011	and	2010,	the	Company	recorded	interest	expense	related	to	the	term	loan	at	average	interest	rates	of	1.22%,	1.05%	and 1.53%,	respectively.	If	the	Company	did	not	enter	into	the	interest	rate	swap	agreement,	the	weighted	average	interest	rate	would	have	been	1.08%	for	the	year	ended December	31,	2010.	The	interest	expense	on	the	term	loan	and	amortization	related	to	debt	financing	costs	were	as	follows:

| (in	thousands) | Interest<br>Expense | Amortization | Interest<br>Expense | Amortization | Interest<br>Expense | Amortization |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| July\t31,\t2008\tterm\tloan\t(interest\texpense |  |  |  |  |  |  |
| includes\t$0,\t$0\tand\t$864\tloss, |  |  |  |  |  |  |
| respectively,\ton\tinterest\trate\tswap) | $1,342 | $698 | $1,605 | $953 | $2,960 | $1,107 |

Based	on	the	effective	interest	rates	and	remaining	outstanding	borrowings	at	December	31,	2012,	a	0.50%	increase	in	interest	rates	would	not	impact	the	Company's interest	expense	for	the	quarter	ending	March	31,	2013.	Based	on	the	effective	interest	rates	and	remaining	outstanding	borrowings	at	December	31,	2012,	assuming contractual	quarterly	principal	payments	are	made,	a	0.50%	increase	in	interest	rates	would	increase	the	Company's	interest	expense	by	$45,000	for	the	seven	months ending	July	31,	2013,	also	the	maturity	date	of	the	term	loan.

The	interest	rate	on	the	outstanding	term	loan	balance	is	set	for	the	quarter	ending	March	31,	2013	at	1.06%,	which	is	based	on	LIBOR	+0.75%.	As	of	December	31, 2012,	the	fair	value	of	the	debt	approximated	the	recorded	value.

Foreign	Currency	Transaction	Risk.	As	the	Company	continues	to	expand	its	business	presence	in	international	regions,	the	portion	of	its	revenue,	expenses,	cash, accounts	receivable	and	payment	obligations	denominated	in	foreign	currencies	continues	to	increase.	As	a	result,	changes	in	currency	exchange	rates	will	affect	the Company's	financial	position,	results	of	operations	and	cash	flows.	The	Company	is	most	impacted	by	movements	in	and	among	the	Euro,	British	Pound,	Japanese	Yen, Indian	Rupee,	Korean	Won	and	the	U.S.	Dollar.

The	Company's	operating	results	are	favorably	impacted	when	the	U.S.	Dollar	weakens	against	the	Company's	primary	foreign	currencies	and	are	adversely	impacted when	the	U.S.	Dollar	strengthens	against	the	Company's	primary	foreign	currencies.	With	respect	to	revenue,	on	average	for	the	year	ended	December	31,	2012,	the U.S.	Dollar	was	3.7%	stronger,	when	measured	against	the	Company's	primary	foreign	currencies,	than	for	the	year	ended	December	31,	2011.	The	net	overall strengthening	resulted	in	decreased	revenue	and	operating	income	of	$15.4	million	and	$7.4	million,	respectively,	during	the	year	ended	December	31,	2012,	as compared	to	the	year	ended	December	31,	2011.

The	Company	has	foreign	currency	denominated	intercompany	payables/receivables	with	certain	foreign	subsidiaries.	In	order	to	provide	a	natural	hedge,	the	Company will	purchase	foreign	currencies	and	hold	these	currencies	in	cash	until	the	intercompany	payables/receivables	are	settled.	These	natural	hedges	mitigate	a	portion	of	the foreign	currency	exchange	risk	on	the	intercompany	payables/receivables.

In	August	2012,	the	Company	entered	into	a	foreign	currency	futures	contract	with	a	third-party	U.S.	financial	institution,	which	will	be	settled	in	July	2013.	The purpose	of	this	contract	is	to	mitigate	the	Company's	exposure	to	foreign	exchange	risk	arising	from	intercompany	receivables	from	a	United	Kingdom	subsidiary.	As	of December	31,	2012,	the	Company's	foreign	exchange	future	is	in	a	liability	position	of	$240,000.	The	foreign	exchange	future	is	measured	at	fair	value	each	reporting period,	with	gains	or	losses	recognized	in	other	expense	in	the	Company's	consolidated	statements	of	income.

The	most	significant	currency	impacts	on	revenue	and	operating	income	are	typically	attributable	to	U.S.	Dollar	exchange	rate	changes	against	the	Euro,	British	Pound and	Japanese	Yen.	The	exchange	rates	for	these	currencies	are	reflected	in	the	charts	below:

# ITEM	8. FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA

The	following	table	sets	forth	selected	unaudited	quarterly	information.	The	Company	believes	that	the	amounts	stated	below	present	fairly	the	results	of	such	periods when	read	in	conjunction	with	the	consolidated	financial	statements	and	related	notes	included	in	Part	IV,	Item	15	of	this	Annual	Report	on	Form	10-K.

Other	information	required	by	this	Item	is	included	in	Part	IV,	Item	15	of	this	Annual	Report	on	Form	10-K.

|  |  | Fiscal	Quarter	Ended | Fiscal	Quarter	Ended |  |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tper\tshare\tdata) | December\t31,\n2012 | September\t30,\n2012 | June\t30,\n2012 | March\t31,\n2012 |
| Revenue | $220,748 | $196,909 | $195,016 | $185,345 |
| Gross\tprofit | 184,067 | 163,153 | 160,279 | 151,003 |
| Operating\tincome | 81,639 | 73,652 | 71,134 | 67,828 |
| Net\tincome | 56,063 | 51,619 | 50,262 | 45,539 |
| Earnings\tper\tshare—basic | $0.61 | $0.56 | $0.54 | $0.49 |
| Earnings\tper\tshare—diluted | $0.59 | $0.54 | $0.53 | $0.48 |

|  |  | Fiscal	Quarter	Ended | Fiscal	Quarter	Ended |  |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tper\tshare\tdata) | December\t31,\n2011 | September\t30,\n2011 | June\t30,\n2011 | March\t31,\n2011 |
| Revenue | $198,209 | $172,935 | $162,258 | $158,047 |
| Gross\tprofit | 164,867 | 141,908 | 134,195 | 131,465 |
| Operating\tincome | 73,143 | 65,329 | 64,813 | 62,274 |
| Net\tincome | 47,457 | 45,546 | 45,431 | 42,241 |
| Earnings\tper\tshare—basic | $0.51 | $0.49 | $0.49 | $0.46 |
| Earnings\tper\tshare—diluted | $0.50 | $0.48 | $0.48 | $0.45 |

# ITEM	9. CHANGES	IN	AND	DISAGREEMENTS	WITH	ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL DISCLOSURE

# ITEM	9A. CONTROLS	AND

# PROCEDURES

Evaluation	of	Disclosure	Controls	and	Procedures.	As	required	by	Rules	13a-15	and	15d-15	of	the	Securities	Exchange	Act	of	1934,	as	amended,	or	the	Exchange	Act, the	Company	has	evaluated,	with	the	participation	of	management,	including	the	Chief	Executive	Officer	and	the	Chief	Financial	Officer,	the	effectiveness	of	the	design and	operation	of	its	disclosure	controls	and	procedures	as	of	the	end	of	the	period	covered	by	this	report.	Based	on	such	evaluation,	the	Chief	Executive	Officer	and Chief	Financial	Officer	have	concluded	that	such	disclosure	controls	and	procedures	are	effective,	as	defined	in	Rule	13a-15(e)	of	the	Exchange	Act.

The	Company	has	a	Disclosure	Review	Committee	to	assist	in	the	quarterly	evaluation	of	the	Company's	internal	disclosure	controls	and	procedures	and	in	the	review	of the	Company's	periodic	filings	under	the	Exchange	Act.	The	membership	of	the	Disclosure	Review	Committee	consists	of	the	Company's	Chief	Executive	Officer, Chief	Financial	Officer,	Apache	President,	Global	Controller,	General	Counsel,	Investor	Relations	and	Global	Insurance	Officer,	Vice	President	of	Worldwide	Sales and	Support,	Vice	President	of	Human	Resources,	Vice	President	of	Marketing	and	Business	Unit	General	Managers.	This	committee	is	advised	by	external	counsel, particularly	on	SEC-related	matters.	Additionally,	other	members	of	the	Company's	global	management	team	advise	the	committee	with	respect	to	disclosure	via	a	sub- certification	process.

The	Company	believes,	based	on	its	knowledge,	that	the	financial	statements	and	other	financial	information	included	in	this	report	fairly	present,	in	all	material respects,	the	financial	condition,	results	of	operations	and	cash	flows	of	the	Company	as	of	and	for	the	periods	presented	in	this	report.	The	Company	is	committed	to both	a	sound	internal	control	environment	and	to	good	corporate	governance.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Projections	of	any	evaluation	of	effectiveness	to future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	policies	or	procedures may	deteriorate.

From	time	to	time,	the	Company	reviews	the	disclosure	controls	and	procedures,	and	may	from	time	to	time	make	changes	to	enhance	their	effectiveness	and	to	ensure that	the	Company's	systems	evolve	with	its	business.

Report	on	Internal	Control	over	Financial	Reporting.	The	Company's	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over financial	reporting,	as	such	term	is	defined	in	Exchange	Act	Rules	13a-15(f).	Under	the	supervision	and	with	the	participation	of	the	Company's	management,	including the	Company's	Chief	Executive	Officer	and	Chief	Financial	Officer,	the	Company	has	conducted	an	evaluation	of	the	effectiveness	of	its	internal	control	over	financial reporting	based	upon	the	Internal	Control	–	Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	This	assessment excluded	the	acquisition	on	August	1,	2012	of	Esterel	as	described	in	Note	3	of	the	Notes	to	the	Consolidated	Financial	Statements.	Based	on	this	evaluation,	the Company's	Chief	Executive	Officer	and	Chief	Financial	Officer	have	concluded	that	the	Company's	internal	control	over	financial	reporting	was	effective	at December	31,	2012.

Additionally,	Deloitte	&	Touche	LLP,	an	independent	registered	public	accounting	firm,	has	issued	an	attestation	report	on	the	Company's	internal	control	over financial	reporting.	This	report	is	included	in	Item	15	of	this	Annual	Report	on	Form	10-K.

Changes	in	Internal	Controls.	The	Company	is	in	the	process	of	extending	its	internal	controls	to	its	acquisition	of	Esterel.	There	were	no	changes	in	the	Company's internal	controls	over	financial	reporting	that	occurred	during	the	three	months	ended	December	31,	2012	that	materially	affected,	or	were	reasonably	likely	to	materially affect,	the	Company's	internal	control	over	financial	reporting.

# ITEM	9B. OTHER	INFORMATION

# PART	III

# ITEM	10. DIRECTORS,	EXECUTIVE	OFFICERS	AND	CORPORATE	GOVERNANCE

The	information	required	by	this	Item	is	incorporated	by	reference	to	the	Company's	2013	Proxy	Statement	and	is	set	forth	under	"Our	Board	of	Directors,"	"Our Executive	Officers"	and	"Ownership	of	Our	Common	Stock"	therein.

# ITEM	11. EXECUTIVE	COMPENSATION

The	information	required	by	this	Item	is	incorporated	by	reference	to	the	Company's	2013	Proxy	Statement	and	is	set	forth	under	"Our	Board	of	Directors"	and	"Our Executive	Officers"	therein.

# ITEM	12. SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL	OWNERS	AND	MANAGEMENT	AND	RELATED	STOCKHOLDER	MATTERS

The	information	required	by	this	Item	is	incorporated	by	reference	to	the	Company's	2013	Proxy	Statement	and	is	set	forth	under	"Ownership	of	Our	Common	Stock" therein.

# ITEM	13. CERTAIN	RELATIONSHIPS	AND	RELATED	TRANSACTIONS	AND	DIRECTOR	INDEPENDENCE

The	information	required	by	this	Item	is	incorporated	by	reference	to	the	Company's	2013	Proxy	Statement	and	is	set	forth	under	"Our	Board	of	Directors"	therein.

# ITEM	14. PRINCIPAL	ACCOUNTANT	FEES	AND

# SERVICES

The	information	required	by	this	Item	is	incorporated	by	reference	to	the	Company's	2013	Proxy	Statement	and	is	set	forth	under	"Independent	Registered	Public Accounting	Firm"	therein.

# PART	IV

# ITEM	15. EXHIBITS	AND	FINANCIAL	STATEMENT	SCHEDULES

# (a) Documents	Filed	as	Part	of	this	Annual	Report	on	Form	10-

1. Financial	Statements:	The	following	consolidated	financial	statements	and	reports	of	independent	registered	public	accounting	firm	are	filed	as	part	of	this report:

2. Financial	Statement	Schedule:	The	following	financial	statement	schedule	is	filed	as	part	of	this	report	and	should	be	read	in	conjunction	with	the consolidated	financial	statements.

Schedules	not	listed	above	have	been	omitted	because	they	are	not	applicable,	or	are	not	required,	or	the	information	required	to	be	set	forth	therein	is included	in	the	consolidated	financial	statements	or	notes	thereto.

3. Exhibits:	The	Exhibits	listed	in	the	accompanying	Exhibit	Index	immediately	following	the	financial	statement	schedule	are	filed	as	part	of,	or incorporated	by	reference	into,	this	Annual	Report	on	Form	10-K.

# (b) Exhibits:

The	Company	hereby	files	as	part	of	this	Annual	Report	on	Form	10-K	the	Exhibits	listed	in	the	attached	Exhibit	Index	on	pages	85	through	87	of	this	Annual Report	on	Form	10-K.

# 1. Financial	Statement	Schedule

The	Company	hereby	files	as	part	of	this	Annual	Report	on	Form	10-K	the	financial	statement	schedule	listed	in	Item	15(a)(2)	as	set	forth	above.

# MANAGEMENT'S	REPORT	ON	INTERNAL	CONTROL	OVER	FINANCIAL	REPORTING

Management	is	responsible	for	establishing	and	maintaining	an	adequate	system	of	internal	control	over	financial	reporting	for	the	Company.	In	order	to	evaluate	the effectiveness	of	internal	control	over	financial	reporting,	management	has	conducted	an	assessment,	including	testing,	using	the	financial	reporting	criteria	in	the Internal	Control—Integrated	Framework,	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	This	assessment	excluded	the	acquisition on	August	1,	2012	of	Esterel	Technologies,	S.A.	("Esterel")	as	described	in	Note	3	of	the	Notes	to	Consolidated	Financial	Statements.	The	Esterel	financial	statements constitute	3%	of	total	assets,	2%	of	net	income	and	less	than	1%	of	revenue	of	the	consolidated	financial	statement	amounts	as	of	and	for	the	year	ended	December	31, 2012.	Management's	election	to	exclude	Esterel	was	a	result	of	the	Company	needing	additional	time	to	properly	evaluate	and	transition	Esterel's	existing	internal controls	over	financial	reporting	and	disclosures.

The	Company's	system	of	internal	control	over	financial	reporting	is	designed	to	provide	reasonable	assurance	to	the	Company's	management	and	board	of	directors regarding	the	reliability	of	financial	records	used	in	preparation	of	the	Company's	published	financial	statements.	As	all	internal	control	systems	have	inherent limitations,	even	systems	determined	to	be	effective	can	provide	only	reasonable	assurance	with	respect	to	financial	statement	preparation	and	presentation.	Based	on	its assessment,	management	has	concluded	that	the	Company	maintained	an	effective	system	of	internal	control	over	financial	reporting	as	of	December	31,	2012. Deloitte	&	Touche	LLP,	an	independent	registered	public	accounting	firm,	has	audited	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2012, as	stated	in	their	report	which	appears	on	page	55.

James	E.	Cashman	III

President	and	Chief	Executive	Officer

Maria	T.	Shields

Chief	Financial	Officer

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# To	the	Board	of	Directors	and	Stockholders	of	ANSYS,	Inc.

# Canonsburg,	Pennsylvania

We	have	audited	the	accompanying	consolidated	balance	sheets	of	ANSYS,	Inc.	and	subsidiaries	(the	"Company")	as	of	December	31,	2012	and	2011,	and	the	related consolidated	statements	of	income,	comprehensive	income,	stockholders'	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2012.	Our audits	also	included	the	financial	statement	schedule	listed	in	the	Index	at	Item	15.	These	financial	statements	and	financial	statement	schedule	are	the	responsibility	of the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	the	financial	statements	and	financial	statement	schedule	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	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,	such	consolidated	financial	statements	present	fairly,	in	all	material	respects,	the	financial	position	of	ANSYS,	Inc.	and	subsidiaries	as	of	December	31, 2012	and	2011,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2012,	in	conformity	with	accounting principles	generally	accepted	in	the	United	States	of	America.	Also,	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	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	Company's	internal	control	over financial	reporting	as	of	December	31,	2012,	based	on	the	criteria	established	in	Internal	Control—Integrated	Framework	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	and	our	report	dated	February	28,	2013	expressed	an	unqualified	opinion	on	the	Company's	internal	control	over	financial reporting.

/s/	Deloitte	&	Touche	LLP

Pittsburgh,	Pennsylvania

We	have	audited	the	internal	control	over	financial	reporting	of	ANSYS,	Inc.	and	subsidiaries	(the	"Company")	as	of	December	31,	2012,	based	on	criteria	established in	Internal	Control—Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	As	described	in	Management's	Report on	Internal	Control	over	Financial	Reporting,	management	excluded	from	its	assessment	the	internal	control	over	financial	reporting	at	Esterel	Technologies,	S.A.	which was	acquired	on	August	1,	2012,	and	whose	financial	statements	constitute	3%	of	total	assets,	2%	of	net	income,	and	less	than	1%	of	revenue	of	the	consolidated financial	statement	amounts	as	of	and	for	the	year	ended	December	31,	2012.	Accordingly,	our	audit	did	not	include	the	internal	control	over	financial	reporting	at Esterel	Technologies,	S.A.	The	Company's	management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the effectiveness	of	internal	control	over	financial	reporting,	included	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting.	Our responsibility	is	to	express	an	opinion	on	the	Company's	internal	control	over	financial	reporting	based	on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	testing	and	evaluating	the	design	and operating	effectiveness	of	internal	control	based	on	the	assessed	risk,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe that	our	audit	provides	a	reasonable	basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	by,	or	under	the	supervision	of,	the	company's	principal	executive	and	principal	financial officers,	or	persons	performing	similar	functions,	and	effected	by	the	company's	board	of	directors,	management,	and	other	personnel	to	provide	reasonable	assurance regarding	the	reliability	of	financial	reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting principles.	A	company's	internal	control	over	financial	reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable detail,	accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as necessary	to	permit	preparation	of	financial	statements	in	accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company are	being	made	only	in	accordance	with	authorizations	of	management	and	directors	of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	the	inherent	limitations	of	internal	control	over	financial	reporting,	including	the	possibility	of	collusion	or	improper	management	override	of	controls, material	misstatements	due	to	error	or	fraud	may	not	be	prevented	or	detected	on	a	timely	basis.	Also,	projections	of	any	evaluation	of	the	effectiveness	of	the	internal control	over	financial	reporting	to	future	periods	are	subject	to	the	risk	that	the	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of compliance	with	the	policies	or	procedures	may	deteriorate.

In	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2012,	based	on	the	criteria established	in	Internal	Control—Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	financial	statements	and financial	statement	schedule	as	of	and	for	the	year	ended	December	31,	2012	of	the	Company	and	our	report	dated	February	28,	2013	expressed	an	unqualified	opinion on	those	financial	statements	and	financial	statement	schedule.

# ANSYS,	INC.	AND	SUBSIDIARIES

# CONSOLIDATED	BALANCE	SHEETS

| (in	thousands,	except	share	and	per	share	data) | 2012 | 2011 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $576,703 | $471,828 |
| Short-term\tinvestments | 452 | 576 |
| Accounts\treceivable,\tless\tallowance\tfor\tdoubtful\taccounts\tof\t$4,800\tand\t$4,101,\trespectively | 96,598 | 84,602 |
| Other\treceivables\tand\tcurrent\tassets | 216,268 | 163,296 |
| Deferred\tincome\ttaxes | 23,338 | 19,731 |
| Total\tcurrent\tassets | 913,359 | 740,033 |
| Property\tand\tequipment,\tnet | 52,253 | 45,638 |
| Goodwill | 1,251,247 | 1,225,375 |
| Other\tintangible\tassets,\tnet | 351,173 | 383,420 |
| Other\tlong-term\tassets | 24,393 | 46,942 |
| Deferred\tincome\ttaxes | 14,992 | 7,062 |
| Total\tassets | $2,607,417 | $2,448,470 |
| LIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Current\tportion\tof\tlong-term\tdebt\tand\tcapital\tlease\tobligations | $53,149 | $74,423 |
| Accounts\tpayable | 4,924 | 6,987 |
| Accrued\tbonuses\tand\tcommissions | 42,601 | 36,164 |
| Accrued\tincome\ttaxes | 8,182 | 6,213 |
| Deferred\tincome\ttaxes | 1,409 | — |
| Other\taccrued\texpenses\tand\tliabilities | 61,329 | 55,809 |
| Deferred\trevenue | 305,793 | 259,155 |
| Total\tcurrent\tliabilities | 477,387 | 438,751 |
| Long-term\tliabilities: |  |  |
| Long-term\tdebt\tand\tcapital\tlease\tobligations,\tless\tcurrent\tportion | — | 53,149 |
| Deferred\tincome\ttaxes | 92,822 | 101,618 |
| Other\tlong-term\tliabilities | 96,917 | 100,479 |
| Total\tlong-term\tliabilities | 189,739 | 255,246 |
| Commitments\tand\tcontingencies |  |  |
| Stockholders'\tequity: |  |  |
|  | — | — |
| respectively | 932 | 927 |
| Additional\tpaid-in\tcapital | 927,368 | 905,662 |
| Retained\tearnings | 1,039,491 | 836,008 |
| Treasury\tstock,\tat\tcost:\t536,231\tand\t0\tshares,\trespectively | (36,151) | — |
| Accumulated\tother\tcomprehensive\tincome | 8,651 | 11,876 |
| Total\tstockholders'\tequity | 1,940,291 | 1,754,473 |
| Total\tliabilities\tand\tstockholders'\tequity | $2,607,417 | $2,448,470 |

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

# CONSOLIDATED	STATEMENTS	OF	INCOME

| (in	thousands,	except	per	share	data) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Revenue: |  |  |  |
| Software\tlicenses | $501,870 | $425,881 | $351,033 |
| Maintenance\tand\tservice | 296,148 | 265,568 | 229,203 |
| Total\trevenue | 798,018 | 691,449 | 580,236 |
| Cost\tof\tsales: |  |  |  |
| Software\tlicenses | 24,512 | 15,884 | 10,770 |
| Amortization | 40,889 | 33,728 | 32,757 |
| Maintenance\tand\tservice | 74,115 | 69,402 | 57,352 |
| Total\tcost\tof\tsales | 139,516 | 119,014 | 100,879 |
| Gross\tprofit | 658,502 | 572,435 | 479,357 |
| Operating\texpenses: |  |  |  |
| Selling,\tgeneral\tand\tadministrative | 205,178 | 180,357 | 155,096 |
| Research\tand\tdevelopment | 132,628 | 108,530 | 88,990 |
| Amortization | 26,443 | 17,989 | 16,003 |
| Total\toperating\texpenses | 364,249 | 306,876 | 260,089 |
| Operating\tincome | 294,253 | 265,559 | 219,268 |
| Interest\texpense | (2,661) | (3,332) | (4,488) |
| Interest\tincome | 3,360 | 3,000 | 1,911 |
| Other\texpense,\tnet | (1,405) | (369) | (297) |
| Income\tbefore\tincome\ttax\tprovision | 293,547 | 264,858 | 216,394 |
| Income\ttax\tprovision | 90,064 | 84,183 | 63,262 |
| Net\tincome | $203,483 | $180,675 | $153,132 |
| Earnings\tper\tshare\t–\tbasic: |  |  |  |
| Basic\tearnings\tper\tshare | $2.20 | $1.96 | $1.69 |
| Weighted\taverage\tshares\t–\tbasic | 92,622 | 92,120 | 90,684 |
| Earnings\tper\tshare\t–\tdiluted: |  |  |  |
| Diluted\tearnings\tper\tshare | $2.14 | $1.91 | $1.64 |
| Weighted\taverage\tshares\t–\tdiluted | 94,954 | 94,381 | 93,209 |

# CONSOLIDATED	STATEMENTS	OF	COMPREHENSIVE	INCOME

| (in	thousands) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $203,483 | $180,675 | $153,132 |
| Other\tcomprehensive\t(loss)\tincome,\tnet\tof\ttax: |  |  |  |
| Foreign\tcurrency\ttranslation\tadjustments | (3,225) | (5,086) | 7,618 |
| Net\tgains\ton\tinterest\trate\tswap | — | — | 532 |
| Comprehensive\tincome | $200,258 | $175,589 | $161,282 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

| (in	thousands) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome | $203,483 | $180,675 | $153,132 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 85,422 | 65,955 | 60,826 |
| Deferred\tincome\ttax\tbenefit | (18,896) | (3,021) | (26,641) |
| Provision\tfor\tbad\tdebts | 938 | 404 | 1,757 |
| Stock-based\tcompensation\texpense | 32,415 | 23,088 | 19,019 |
| Excess\ttax\tbenefits\tfrom\tstock\toptions | (13,888) | (10,046) | (11,753) |
| Other | 69 | 180 | 19 |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Accounts\treceivable | (12,401) | (8,086) | (11,149) |
| Other\treceivables\tand\tcurrent\tassets | (50,485) | (16,926) | (61,467) |
| Other\tlong-term\tassets | 5,027 | (1,390) | (60,365) |
| Accounts\tpayable,\taccrued\texpenses\tand\tcurrent\tliabilities | 9,548 | 18,222 | 16,542 |
| Accrued\tincome\ttaxes | 14,616 | 9,668 | 10,608 |
| Deferred\trevenue | 47,748 | 49,973 | 28,817 |
| Other\tlong-term\tliabilities | (5,181) | (1,035) | 47,539 |
| Net\tcash\tprovided\tby\toperating\tactivities | 298,415 | 307,661 | 166,884 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Acquisitions,\tnet\tof\tcash\tacquired | (45,075) | (269,486) | — |
| Capital\texpenditures | (23,977) | (22,063) | (14,260) |
| Purchases\tof\tshort-term\tinvestments | (228) | (351) | (1,075) |
| Maturities\tof\tshort-term\tinvestments | 324 | 257 | 8,687 |
| Net\tcash\tused\tin\tinvesting\tactivities | (68,956) | (291,643) | (6,648) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Principal\tpayments\ton\tlong-term\tdebt | (74,408) | (31,889) | (65,630) |
| Principal\tpayments\ton\tcapital\tleases | (14) | (87) | (283) |
| Purchase\tof\ttreasury\tstock | (95,477) | (12,704) | — |
| Contingent\tconsideration\tpayments | (3,241) | — | — |
| Proceeds\tfrom\tissuance\tof\tcommon\tstock\tunder\tEmployee\tStock\tPurchase\tPlan | 2,446 | 2,167 | 1,592 |
| Proceeds\tfrom\texercise\tof\tstock\toptions | 31,960 | 22,791 | 22,929 |
| Excess\ttax\tbenefits\tfrom\tstock\toptions | 13,888 | 10,046 | 11,753 |
| Net\tcash\tused\tin\tfinancing\tactivities | (124,846) | (9,676) | (29,639) |
| Effect\tof\texchange\trate\tfluctuations\ton\tcash\tand\tcash\tequivalents | 262 | (6,993) | 6,004 |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | 104,875 | (651) | 136,601 |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tperiod | 471,828 | 472,479 | 335,878 |
| Cash\tand\tcash\tequivalents,\tend\tof\tperiod | $576,703 | $471,828 | $472,479 |
| Supplemental\tdisclosures\tof\tcash\tflow\tinformation: |  |  |  |
| Income\ttaxes\tpaid | $103,196 | $64,731 | $131,861 |
| Interest\tpaid | 1,970 | 1,858 | 2,980 |

# CONSOLIDATED	STATEMENTS	OF	STOCKHOLDERS'	EQUITY

| (in	thousands) | Common	Stock<br>Shares | Amount | Additional<br>Paid-in<br>Capital | Retained<br>Earnings | Treasury	Stock<br>Shares | Amount | Accumulated<br>Other<br>Comprehensive<br>Income	(Loss) | Total<br>Stockholders'<br>Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance,\tJanuary\t1,\t2010 | 89,716 | $897 | $801,574 | $502,201 | 41 | $(853) | $8,812 | $1,312,631 |
| Stock-based\tcompensation |  |  |  |  |  |  |  |  |
| activity,\tincluding\ttax\tbenefit |  |  |  |  |  |  |  |  |
| of\t$12,022 | 1,883 | 19 | 53,552 |  | (41) | 853 |  | 54,424 |
| Issuance\tof\tcommon\tstock\tunder\nEmployee\tStock\tPurchase\tPlan | 48 | 48 | 1,592 |  |  |  |  | 1,592 |
| Net\tgains\ton\tinterest\trate\tswap,\nnet\tof\ttax\tof\t$321 |  |  |  |  |  |  | 532 | 532 |
| Other\tcomprehensive\tgain |  |  |  |  |  |  | 7,618 | 7,618 |
| Net\tincome\tfor\tthe\tyear |  |  |  | 153,132 |  |  |  | 153,132 |
| Balance,\tDecember\t31,\t2010 | 91,647 | 916 | 856,718 | 655,333 | — | — | 16,962 | 1,529,929 |
| Treasury\tshares\tacquired |  |  |  |  | 247 | (12,704) |  | (12,704) |
| Stock-based\tcompensation |  |  |  |  |  |  |  |  |
| awards\tissued\tin\tApache |  |  |  |  |  |  |  |  |
| acquisition |  |  | 3,170 |  |  |  |  | 3,170 |
| Stock-based\tcompensation |  |  |  |  |  |  |  |  |
| activity,\tincluding\ttax\tbenefit |  |  |  |  |  |  |  |  |
| of\t$9,984 | 955 | 10 | 43,608 |  | (247) | 12,704 |  | 56,322 |
| Issuance\tof\tcommon\tstock\tunder\nEmployee\tStock\tPurchase\tPlan | 50 | 1 | 2,166 |  |  |  |  | 2,167 |
| Other\tcomprehensive\tloss |  |  |  |  |  |  | (5,086) | (5,086) |
| Net\tincome\tfor\tthe\tyear |  |  |  | 180,675 |  |  |  | 180,675 |
| Balance,\tDecember\t31,\t2011 | 92,652 | 927 | 905,662 | 836,008 | — | — | 11,876 | 1,754,473 |
| Treasury\tshares\tacquired |  |  |  |  | 1,500 | (95,477) |  | (95,477) |
| Stock-based\tcompensation |  |  |  |  |  |  |  |  |
| activity,\tincluding\ttax\tbenefit |  |  |  |  |  |  |  |  |
| of\t$14,216 | 525 | 5 | 20,791 |  | (939) | 57,795 |  | 78,591 |
| Issuance\tof\tcommon\tstock |  |  |  |  |  |  |  |  |
| under\tEmployee\tStock |  |  |  |  |  |  |  |  |
| Purchase\tPlan | 25 |  | 915 |  | (25) | 1,531 |  | 2,446 |
| Other\tcomprehensive\tloss |  |  |  |  |  |  | (3,225) | (3,225) |
| Net\tincome\tfor\tthe\tyear |  |  |  | 203,483 |  |  |  | 203,483 |
| Balance,\tDecember\t31,\t2012 | 93,202 | $932 | $927,368 | $1,039,491 | 536 | $(36,151) | $8,651 | $1,940,291 |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# 1. Organization

ANSYS,	Inc.	(hereafter	the	"Company"	or	"ANSYS")	develops	and	globally	markets	engineering	simulation	software	and	services	widely	used	by	engineers,	designers, researchers	and	students	across	a	broad	spectrum	of	industries	and	academia,	including	aerospace,	automotive,	manufacturing,	electronics,	biomedical,	energy	and defense.

In	connection	with	its	acquisitions	of	Esterel	Technologies,	S.A.	("Esterel")	and	Apache	Design,	Inc.	("Apache")	on	August	1,	2012	and	2011,	respectively,	the Company	has	reviewed	the	accounting	guidance	issued	for	disclosures	about	segments	of	an	enterprise.	As	defined	by	the	accounting	guidance,	the	Company	operates as	three	segments.	However,	the	Company	determined	that	its	three	operating	segments	are	sufficiently	similar	and	should	be	aggregated	under	the	criteria	provided	in the	related	accounting	guidance.

Given	the	integrated	approach	to	the	multi-discipline	problem-solving	needs	of	the	Company's	customers,	a	single	sale	of	software	may	contain	components	from multiple	product	areas	and	include	combined	technologies.	The	Company	also	has	a	multi-year	product	and	integration	strategy	that	will	result	in	new,	combined products	or	changes	to	the	historical	product	offerings.	As	a	result,	it	is	impracticable	for	the	Company	to	provide	accurate	historical	or	current	reporting	among	its various	product	lines.

# 2. Accounting	Policies

ACCOUNTING	PRINCIPLES:	The	financial	statements	and	accompanying	notes	are	prepared	in	accordance	with	accounting	principles	generally	accepted	in	the United	States.

PRINCIPLES	OF	CONSOLIDATION:	The	accompanying	consolidated	financial	statements	include	the	accounts	of	the	Company	and	its	wholly	owned	subsidiaries. All	intercompany	accounts	and	transactions	have	been	eliminated.

USE	OF	ESTIMATES:	The	preparation	of	financial	statements	in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	requires	management	to make	estimates	and	assumptions	that	affect	the	reported	amounts	of	assets	and	liabilities	and	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	financial statements.	Estimates	also	affect	the	amounts	of	revenue	and	expenses	during	the	reported	periods.	Significant	estimates	included	in	these	consolidated	financial statements	include	allowances	for	doubtful	accounts	receivable,	income	tax	accruals,	uncertain	tax	positions	and	tax	valuation	reserves,	fair	value	of	stock-based compensation,	contract	revenue,	useful	lives	for	depreciation	and	amortization,	loss	contingencies,	valuation	of	goodwill	and	indefinite-lived	intangible	assets, contingent	consideration	and	deferred	compensation.	Actual	results	could	differ	from	these	estimates.	Changes	in	estimates	are	recorded	in	the	results	of	operations	in the	period	that	the	changes	occur.

REVENUE	RECOGNITION:	Revenue	is	derived	principally	from	the	licensing	of	computer	software	products	and	from	related	maintenance	contracts.	Revenue	from perpetual	licenses	is	classified	as	license	revenue	and	is	recognized	upon	delivery	of	the	licensed	product	and	the	utility	that	enables	the	customer	to	access	authorization keys,	provided	that	acceptance	has	occurred	and	a	signed	contractual	obligation	has	been	received,	the	price	is	fixed	and	determinable,	and	collectibility	of	the receivable	is	probable.	The	Company	determines	the	fair	value	of	post-contract	customer	support	("PCS")	sold	together	with	perpetual	licenses	based	on	the	rate	charged for	PCS	when	sold	separately.	Revenue	from	PCS	contracts	is	classified	as	maintenance	and	service	revenue	and	is	recognized	ratably	over	the	term	of	the	contract.

The	Company	also	executes	arrangements	through	independent	channel	partners	in	which	the	channel	partners	are	authorized	to	market	and	distribute	the	Company's software	products	to	end	end-users	of	the	Company's	products	and	services	in	specified	territories.	In	sales	facilitated	by	channel	partners,	the	channel	partner	bears	the risk	of	collection	from	the	end-user	customer.	The	Company	recognizes	revenue	from	transactions	with	channel	partners	when	the	channel	partner	submits	a	written purchase	commitment,	collectibility	from	the	channel	partner	is	probable,	a	signed	license	agreement	is	received	from	the	end-user	customer	and	delivery	has	occurred, provided	that	all	other	revenue	recognition	criteria	are	satisfied.	Revenue	from	channel	partner	transactions	is	the	amount	remitted	to	the	Company	by	the	channel partners.	This	amount	includes	a	fee	for	PCS	that	is	compensation	for	providing	technical	enhancements	and	the	second	level	of	technical	support	to	the	end-user,	which is	based	on	the	rate	charged	for	PCS	when	sold	separately,	and	is	recognized	over	the	period	that	PCS	is	to	be	provided.	The	Company	does	not	offer	right	of	return, product	rotation	or	price	protection	to	any	of	its	channel	partners.

CASH	AND	CASH	EQUIVALENTS:	Cash	and	cash	equivalents	consist	primarily	of	highly	liquid	investments	such	as	deposits	held	at	major	banks	and	money	market mutual	funds	with	original	maturities	of	three	months	or	less.	Cash	equivalents	are	carried	at	cost,	which	approximates	fair	value.	The	Company's	cash	and	cash equivalents	balances	comprise	the	following:

|  | December	31,	2012 |  | December	31,	2011 | December	31,	2011 |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\tTotal | Amount | %\tof\tTotal |
| Cash\taccounts | $369,724 | 64.1 | $289,298 | 61.3 |
| Money\tmarket\tmutual\tfunds | 206,979 | 35.9 | 181,198 | 38.4 |
| Time\tdeposits | — | — | 1,332 | 0.3 |
| Total | $576,703 |  | $471,828 |  |

The	Company	held	98%	and	100%	of	its	money	market	mutual	fund	balances	in	various	funds	of	a	single	issuer	as	of	December	31,	2012	and	December	31,	2011, respectively.

SHORT-TERM	INVESTMENTS:	Short-term	investments	consist	primarily	of	deposits	held	by	certain	foreign	subsidiaries	of	the	Company	with	original	maturities	of three	months	to	one	year.	The	Company	considers	investments	backed	by	government	agencies	or	financial	institutions	with	maturities	of	less	than	one	year	to	be	highly liquid	and	classifies	such	investments	as	short-term	investments.	Short-term	investments	are	recorded	at	fair	value.	The	Company	uses	the	specific	identification	method to	determine	the	realized	gain	or	loss	upon	the	sale	of	such	securities.

The	Company	is	averse	to	principal	loss	and	seeks	to	preserve	invested	funds	by	limiting	default	risk,	market	risk	and	reinvestment	risk	by	placing	its	investments	with high-quality	credit	issuers.

PROPERTY	AND	EQUIPMENT:	Property	and	equipment	is	stated	at	cost.	Depreciation	is	computed	on	the	straight-line	method	over	the	estimated	useful	lives	of	the various	classes	of	assets,	which	range	from	one	to	40	years.	Repairs	and	maintenance	are	charged	to	expense	as	incurred.	Gains	or	losses	from	the	sale	or	retirement	of property	and	equipment	are	included	in	operating	income.

RESEARCH	AND	DEVELOPMENT	COSTS:	Research	and	development	costs,	other	than	certain	capitalized	software	development	costs,	are	expensed	as	incurred.

CAPITALIZED	SOFTWARE:	Internally	developed	computer	software	costs	and	costs	of	product	enhancements	are	capitalized	subsequent	to	the	determination	of technological	feasibility;	such	capitalization	continues	until	the	product	becomes	available	for	commercial	release.	Judgment	is	required	in	determining	when technological	feasibility	of	a	product	is	established.	The	Company	has	determined	that	technological	feasibility	is	reached	after	all	high-risk	development	issues	have been	resolved	through	coding	and	testing.	Generally,	the	time	between	the	establishment	of	technological	feasibility	and	commercial	release	of	software	is	minimal, resulting	in	insignificant	or	no	capitalization	of	internally	developed	software	costs.	Amortization	of	capitalized	software	costs,	both	for	internally	developed	as	well	as for	purchased	software	products,	is	computed	on	a	product-by-product	basis	over	the	estimated	economic	life	of	the	product,	which	is	generally	three	years.

Amortization	is	the	greater	of	the	amount	computed	using:	(i)	the	ratio	of	the	current	year's	gross	revenue	to	the	total	current	and	anticipated	future	gross	revenue	for	that product	or	(ii)	the	straight-line	method	over	the	estimated	life	of	the	product.	Amortization	expense	related	to	capitalized	and	acquired	software	costs,	including	the related	trademarks,	was	$40.9	million,	$33.7	million	and	$32.8	million	for	the	years	ended	December	31,	2012,	2011	and	2010,	respectively.

The	Company	periodically	reviews	the	carrying	value	of	capitalized	software.	Impairments	are	recognized	in	the	results	of	operations	when	the	expected	future undiscounted	operating	cash	flow	derived	from	the	capitalized	costs	of	internally	developed	software	is	less	than	the	carrying	value.	No	impairment	charges	have	been required	to	date.

GOODWILL	AND	OTHER	INTANGIBLE	ASSETS:	Goodwill	represents	the	excess	of	the	consideration	transferred	over	the	fair	value	of	net	identifiable	assets acquired.	Intangible	assets	consist	of	trademarks,	customer	lists,	contract	backlog,	and	acquired	software	and	technology.

If	it	is	determined	that	it	is	more	likely	than	not	that	the	fair	value	of	a	reporting	unit	exceeds	its	carrying	value,	no	further	analysis	is	necessary.	If	it	is	determined	that	it is	more	likely	than	not	the	reporting	unit's	carrying	value	exceeds	its	fair	value,	a	quantitative	two-step	analysis	is	performed	where	the	fair	value	of	the	reporting	unit	is estimated	and	the	impairment	loss,	if	any,	is	recorded.

The	Company	tests	indefinite-lived	intangible	assets	for	impairment	at	least	annually	by	comparing	the	carrying	value	of	the	asset	to	its	estimated	fair	value.	The Company	performs	its	annual	goodwill	and	indefinite-lived	intangible	assets	impairment	test	on	January	1	of	each	year	unless	there	is	an	indicator	that	would	require	a test	during	the	year.

The	Company	periodically	reviews	the	carrying	value	of	other	intangible	assets	and	will	recognize	impairments	when	events	or	circumstances	indicate	that	such	assets may	be	impaired.

No	impairment	charges	have	been	required	to	date	for	the	Company's	goodwill	and	other	intangible	assets.

CONCENTRATIONS	OF	CREDIT	RISK:	The	Company	has	a	concentration	of	credit	risk	with	respect	to	revenue	and	trade	receivables	due	to	the	use	of	certain significant	channel	partners	to	market	and	sell	the	Company's	products.	The	Company	performs	periodic	credit	evaluations	of	its	customers'	financial	condition	and generally	does	not	require	collateral.	The	following	table	outlines	concentrations	of	risk	with	respect	to	the	Company's	revenue:

| (as	a	%	of	revenue,	except	customer	data) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Revenue\tfrom\tchannel\tpartners | 26% | 26% | 27% |
| Largest\tchannel\tpartner | 6% | 4% | 4% |
| 2nd\tlargest\tchannel\tpartner | 3% | 3% | 3% |
| Direct\tsale\tcustomers\texceeding\t5%\tof\trevenue | — | — | — |

In	addition	to	the	concentration	of	credit	risk	with	respect	to	trade	receivables,	the	Company's	cash	and	cash	equivalents	are	also	exposed	to	concentration	of	credit	risk. The	Company	maintains	certain	cash	and	cash	equivalent	accounts	that	are	currently	insured	by	the	Federal	Deposit	Insurance	Corporation	("FDIC")	for	up	to	$250,000 per	depositor	or	by	the	Securities	Investor	Protection	Corporation	("SIPC")	for	up	to	$500,000	per	customer.	As	of	December	31,	2012,	the	Company	had	cash	and	cash equivalent	balances	of	$394.6	million	held	in	the	U.S.	which	were	uninsured	by	the	FDIC	or	SIPC,	and	$164.5	million	of	uninsured	cash	and	cash	equivalent	balances held	outside	of	the	U.S.	The	Company	held	cash	and	cash	equivalent	balances	with	one	U.S.	financial	institution	as	of	December	31,	2012	in	the	amount	of	$296.3 million.

ALLOWANCE	FOR	DOUBTFUL	ACCOUNTS:	The	Company	makes	judgments	as	to	its	ability	to	collect	outstanding	receivables	and	provides	allowances	for	a portion	of	receivables	when	collection	becomes	doubtful.	Provisions	are	made	based	upon	a	specific	review	of	all	significant	outstanding	invoices	from	both	value	and delinquency	perspectives.	For	those	invoices	not	specifically	reviewed,	provisions	are	provided	at	differing	rates	based	upon	the	age	of	the	receivable	and	the	geographic area	of	origin.	In	determining	these	percentages,	the	Company	considers	its	historical	collection	experience	and	current	economic	trends	in	the	customer's	industry	and geographic	region.	The	Company	recorded	provisions	for	doubtful	accounts	of	$0.9	million,	$0.4	million	and	$1.8	million	for	the	years	ended	December	31,	2012,	2011 and	2010,	respectively.

INCOME	TAXES:	The	Company	accounts	for	income	taxes	under	the	asset	and	liability	method,	which	requires	the	recognition	of	deferred	tax	assets	and	liabilities	for the	expected	future	tax	consequences	of	events	that	have	been	included	in	the	financial	statements.	Under	this	method,	deferred	tax	assets	and	liabilities	are	determined based	on	the	differences	between	the	financial	statement	and	tax	bases	of	assets	and	liabilities	using	enacted	tax	rates	in	effect	for	the	year	in	which	the	differences	are expected	to	reverse.	The	effect	of	a	change	in	tax	rates	on	deferred	tax	assets	and	liabilities	is	recognized	in	income	in	the	period	of	the	enactment	date.

Tax	benefits	related	to	uncertain	tax	positions	taken	or	expected	to	be	taken	on	a	tax	return	are	recorded	when	such	benefits	meet	a	more	likely	than	not	threshold. Otherwise,	these	tax	benefits	are	recorded	when	a	tax	position	has	been	effectively	settled,	which	means	that	the	statute	of	limitations	has	expired	or	the	appropriate taxing	authority	has	completed	their	examination	even	though	the	statute	of	limitations	remains	open.	The	Company	recognizes	interest	and	penalties	related	to unrecognized	tax	benefits	within	the	income	tax	expense	line	in	the	accompanying	consolidated	statements	of	income.	Accrued	interest	and	penalties	are	included	within the	related	tax	liability	line	in	the	consolidated	balance	sheets.

FOREIGN	CURRENCIES:	Certain	of	the	Company's	sales	and	intercompany	transactions	are	denominated	in	foreign	currencies.	These	transactions	are	translated	to the	functional	currency	at	the	exchange	rate	on	the	transaction	date.	Accounts	receivable	and	intercompany	balances	in	foreign	currencies	at	year	end	are	translated	at the	effective	exchange	rate	on	the	balance	sheet	date.	Gains	and	losses	resulting	from	foreign	exchange	transactions	are	included	in	other	income.	The	Company recorded	net	foreign	exchange	losses	of	$1.4	million,	$0.4	million	and	$0.4	million	for	the	years	ended	December	31,	2012,	2011	and	2010,	respectively.

The	financial	statements	of	the	Company's	foreign	subsidiaries	are	translated	from	the	functional	(local)	currency	to	U.S.	Dollars.	Assets	and	liabilities	are	translated	at the	exchange	rates	on	the	balance	sheet	date.	Results	of	operations	are	translated	at	average	exchange	rates,	which	approximate	rates	in	effect	when	the	underlying transactions	occur.

ACCUMULATED	OTHER	COMPREHENSIVE	INCOME:	Accumulated	other	comprehensive	income	is	composed	entirely	of	foreign	currency	translation adjustments.

EARNINGS	PER	SHARE:	Basic	earnings	per	share	("EPS")	amounts	are	computed	by	dividing	earnings	by	the	weighted	average	number	of	common	shares outstanding	during	the	period.	Diluted	EPS	amounts	assume	the	issuance	of	common	stock	for	all	potentially	dilutive	equivalents	outstanding.	To	the	extent	stock options	are	anti-dilutive,	they	are	excluded	from	the	calculation	of	diluted	EPS.	The	details	of	basic	and	diluted	EPS	are	as	follows:

| (in	thousands,	except	per	share	data) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $203,483 | $180,675 | $153,132 |
| Weighted\taverage\tshares\toutstanding\t–\tbasic | 92,622 | 92,120 | 90,684 |
| Dilutive\teffect\tof\tstock\tplans | 2,332 | 2,261 | 2,525 |
| Weighted\taverage\tshares\toutstanding\t–\tdiluted | 94,954 | 94,381 | 93,209 |
| Basic\tearnings\tper\tshare | $2.20 | $1.96 | $1.69 |
| Diluted\tearnings\tper\tshare | $2.14 | $1.91 | $1.64 |
| Anti-dilutive\toptions | 1,506 | 1,421 | 1,867 |

STOCK-BASED	COMPENSATION:	The	Company	accounts	for	stock-based	compensation	in	accordance	with	share-based	payment	accounting	guidance.	The guidance	requires	an	entity	to	measure	the	cost	of	employee	services	received	in	exchange	for	an	award	of	equity	instruments	based	on	the	grant-date	fair	value	of	the award.	The	cost	is	recognized	over	the	period	during	which	an	employee	is	required	to	provide	service	in	exchange	for	the	award,	typically	the	vesting	period.

FAIR	VALUE	OF	FINANCIAL	INSTRUMENTS:	The	Company	accounts	for	certain	assets	and	liabilities	at	fair	value	in	accordance	with	the	accounting	guidance applicable	to	fair	value	measurements	and	disclosures.	The	carrying	values	of	cash,	cash	equivalents,	accounts	receivable,	accounts	payable,	accrued	expenses,	other accrued	liabilities	and	short-term	obligations	are	deemed	to	be	reasonable	estimates	of	their	fair	values	because	of	their	short-term	nature.	The	fair	values	of	investments are	based	on	quoted	market	prices	for	those	or	similar	investments.	The	carrying	value	of	long-term	debt	is	considered	a	reasonable	estimate	of	fair	value	due	to	the variable	interest	rate	underlying	the	Company's	credit	facility.

DERIVATIVE	FINANCIAL	INSTRUMENTS:	Until	its	maturity	on	June	30,	2010,	the	Company	held	a	derivative	financial	instrument	to	manage	interest	rate	risk	on its	term	loan.	The	Company	accounted	for	this	instrument	as	a	cash	flow	hedge	in	accordance	with	derivative	instruments	and	hedging	activities	accounting	guidance, which	requires	that	every	derivative	instrument	be	recorded	on	the	balance	sheet	as	either	an	asset	or	liability	measured	at	its	fair	value	as	of	the	reporting	date.	This guidance	also	requires	that	changes	in	the	Company's	derivative	fair	value	be	recognized	in	earnings	unless	specific	hedge	accounting	and	documentation	criteria	are met.	The	Company	recorded	the	effective	portion	of	its	derivative	financial	instrument	in	accumulated	other	comprehensive	income	on	the	consolidated	balance	sheets. Any	ineffective	portion	or	excluded	portion	of	the	designated	cash	flow	hedge	was	recognized	in	earnings.	The	Company's	cash	flow	hedge	did	not	have	an	ineffective or	excluded	portion.	The	Company	utilized	the	hypothetical	derivative	method	to	ensure	the	hedge	was	effective	in	offsetting	variability	in	interest	expense	associated with	its	credit	facility.	The	Company	used	the	dollar	offset	method	for	calculating	ineffectiveness	by	comparing	the	cumulative	fair	value	of	the	swap	to	the	cumulative fair	value	of	the	hypothetical	derivative.

# NEW	ACCOUNTING	GUIDANCE:

Fair	Value	Measurements:	In	May	2011,	new	accounting	guidance	was	issued	to	provide	a	consistent	definition	of	fair	value	and	to	ensure	that	the	fair	value measurement	and	disclosure	requirements	are	similar	between	generally	accepted	accounting	principles	in	the	United	States	and	International	Financial	Reporting Standards.	The	guidance	changes	certain	fair	value	measurement	principles	and	enhances	the	disclosure	requirements,	particularly	for	Level	3	fair	value	measurements. This	guidance	was	adopted	by	the	Company	effective	January	1,	2012,	and	it	did	not	have	any	impact	on	the	Company's	financial	position,	results	of	operations	or	cash flows.

Presentation	of	Comprehensive	Income:	In	June	2011,	new	accounting	guidance	was	issued	regarding	the	presentation	of	comprehensive	income	in	consolidated financial	statements.	This	guidance	requires	that	all	non-owner	changes	in	stockholders'	equity	be	presented	either	in	a	single	continuous	statement	of	comprehensive income	or	in	two	separate	but	consecutive	statements.	This	guidance	was	retrospectively	adopted	by	the	Company	effective	January	1,	2012,	and	all	non-owner	changes in	stockholders'	equity	were	presented	in	a	separate	statement.

Testing	Goodwill	for	Impairment:	In	September	2011,	new	accounting	guidance	was	issued	which	simplifies	how	entities	test	goodwill	for	impairment	and	permits	an entity	to	first	assess	qualitative	factors	to	determine	whether	it	is	more	likely	than	not	that	the	fair	value	of	a	reporting	unit	is	less	than	its	carrying	value	amount	and	as	a basis	for	determining	whether	it	is	necessary	to	perform	the	two-step	goodwill	impairment	test.	Alternatively,	the	Company	may	elect	to	proceed	directly	to	the	two-step goodwill	impairment	test.	If,	after	assessing	the	totality	of	qualitative	factors,	an	entity	determines	it	is	not	more	likely	than	not	that	the	fair	value	of	a	reporting	unit	is less	than	its	carrying	amount,	then	performing	the	two-step	impairment	test	is	unnecessary.	However,	if	an	entity	concludes	otherwise,	then	it	is	required	to	perform	the first	step	of	the	two-step	impairment	test.	This	guidance	was	adopted	by	the	Company	effective	January	1,	2012,	and	it	did	not	have	any	impact	on	the	Company's financial	position,	results	of	operations	or	cash	flows.

Testing	Indefinite-Lived	Intangible	Assets	for	Impairment:	In	July	2012,	new	accounting	guidance	was	issued	regarding	the	requirement	to	test	indefinite-lived intangible	assets	for	impairment	on	at	least	an	annual	basis.	Previous	guidance	required	an	entity	to	test	indefinite-lived	intangible	assets	for	impairment,	on	at	least	an annual	basis,	by	comparing	the	fair	value	of	the	asset	with	its	carrying	amount.	If	the	carrying	amount	of	the	intangible	asset	exceeds	its	fair	value,	an	entity	should recognize	an	impairment	loss	in	the	amount	of	that	excess.	Under	the	new	guidance,	an	entity	will	have	an	option	not	to	calculate	annually	the	fair	value	of	an	indefinite- lived	intangible	asset	if	the	entity	determines	that	it	is	not	more	likely	than	not	that	the	asset	is	impaired.	If,	after	assessing	the	totality	of	events	or	circumstances,	an entity	determines	it	is	not	more	likely	than	not	that	the	asset	is	impaired,	then	performing	the	quantitative	test	is	unnecessary.	However,	if	an	entity	concludes	otherwise, then	it	is	required	to	perform	the	quantitative	test	and	record	any	impairment	if	necessary.	This	guidance	will	be	effective	for	the	Company	as	of	January	1,	2013.

The	operating	results	of	Esterel	have	been	included	in	the	Company's	consolidated	financial	statements	since	the	date	of	acquisition,	August	1,	2012.	The	acquired business	contributed	revenues	of	$3.3	million	and	a	net	loss	of	$3.8	million	to	the	Company	during	the	period	from	August	1,	2012	to	December	31,	2012.

During	the	year	ended	December	31,	2012,	the	Company	incurred	$0.9	million	in	acquisition-related	transaction	costs.	These	costs	are	included	in	selling,	general	and administrative	expenses	in	the	Company's	consolidated	statements	of	income	for	the	year	ended	December	31,	2012.

In	valuing	deferred	revenue	on	the	Esterel	balance	sheet	as	of	the	acquisition	date,	the	Company	applied	the	fair	value	provisions	applicable	to	the	accounting	for business	combinations.	Although	this	acquisition	accounting	requirement	had	no	impact	on	the	Company's	business	or	cash	flow,	the	Company's	reported	revenue	under accounting	principles	generally	accepted	in	the	United	States,	primarily	for	the	first	12	months	post-acquisition,	will	be	less	than	the	sum	of	what	would	otherwise	have been	reported	by	Esterel	and	ANSYS	absent	the	acquisition.	Acquired	deferred	revenue	of	$1.1	million	was	recorded	on	the	opening	balance	sheet.	This	amount	was $11.0	million	lower	than	the	historical	carrying	value.	The	impact	on	reported	revenue	for	the	year	ended	December	31,	2012	was	$6.2	million.	The	expected	impact	on reported	revenue	is	$1.6	million	and	$4.1	million	for	the	quarter	ending	March	31,	2013	and	for	the	year	ending	December	31,	2013,	respectively.

The	assets	and	liabilities	of	Esterel	have	been	recorded	based	upon	management's	estimates	of	their	fair	market	values	as	of	the	acquisition	date.	The	following	tables summarize	the	fair	value	of	consideration	transferred	and	the	fair	values	of	identified	assets	acquired	and	liabilities	assumed	at	the	acquisition	date:

| (in	thousands) |  |
| :--- | :--- |
| Cash | $58,150 |
| Recognized\tAmounts\tof\tIdentifiable\tAssets\tAcquired\tand\tLiabilities\tAssumed: |  |
| (in\tthousands) |  |
| Cash | $13,075 |
| Accounts\treceivable\tand\tother\ttangible\tassets | 4,737 |
| Customer\trelationships\t(12-year\tlife) | 21,421 |
| Developed\tsoftware\t(10-year\tlife) | 10,717 |
| Platform\ttrade\tname\t(indefinite\tlife) | 2,695 |
| Accounts\tpayable\tand\tother\tliabilities | (4,936) |
| Deferred\trevenue | (1,139) |
| Net\tdeferred\ttax\tliabilities | (9,286) |
| Total\tidentifiable\tnet\tassets | $37,284 |
| Goodwill | $20,866 |

The	goodwill,	which	is	not	tax-deductible,	is	attributed	to	intangible	assets	that	do	not	qualify	for	separate	recognition,	including	the	assembled	workforce	of	the acquired	business	and	the	synergies	expected	to	arise	as	a	result	of	the	acquisition	of	Esterel.	The	fair	values	of	the	assets	acquired	and	liabilities	assumed	that	are	listed above	are	based	on	preliminary	calculations	and	the	estimates	and	assumptions	for	these	items	are	subject	to	change	as	additional	information	about	what	was	known	and knowable	at	the	acquisition	date	is	obtained	during	the	measurement	period	(up	to	one	year	from	the	acquisition	date).	The	purchase	price	for	Esterel	was	based	on	a preliminary	estimate	of	the	acquiree's	net	cash	position,	as	defined	in	the	merger	agreement.	As	a	result	of	the	post-acquisition	settlement	of	Esterel's	net	cash	position, the	purchase	price	was	reduced	by	$1.3	million,	resulting	in	a	reduction	to	goodwill	of	the	same	amount.

Pro	forma	results	of	operations	have	not	been	presented	as	the	effects	of	the	Esterel	business	combination	were	not	material	to	the	Company's	consolidated	results	of operations.

The	merger	agreement	includes	a	contingent	consideration	arrangement	that	requires	additional	payments	of	up	to	$12.0	million	to	be	paid	by	the	Company	in	equal installments	to	the	Apache	stockholders	and	holders	of	vested	Apache	options	on	each	of	the	first	three	anniversaries	of	the	closing	of	the	acquisition.	To	receive	these payments,	a	key	member	of	Apache's	management	must	remain	an	employee	of	ANSYS	on	each	of	the	first	three	anniversaries	of	the	acquisition	closing	date. Management	estimated	that	it	was	probable	that	all	three	payments	would	be	made,	and	recorded	the	fair	value	of	the	contingent	payments	as	a	liability	on	the	date	of acquisition.	The	portion	of	contingent	payments	attributable	to	the	key	member	of	Apache	management	was	determined	to	be	compensation,	and	is	accounted	for	outside of	the	business	combination.	The	portion	of	the	contingent	payments	attributable	to	other	shareholders	was	determined	to	be	contingent	purchase	price	consideration	and was	estimated	to	be	$9.5	million	based	on	the	net	present	value	of	the	expected	payments.	Refer	to	Note	9	for	a	description	of	the	valuation	technique	and	inputs	used	to estimate	the	fair	value	of	the	contingent	consideration.	The	Company	made	the	first	contingent	payment	of	$4.0	million	on	August	1,	2012.

In	accordance	with	the	merger	agreement,	the	Company	granted	performance-based	restricted	stock	units	to	key	members	of	Apache	management	and	employees,	with a	maximum	value	of	$13.0	million	to	be	earned	annually	over	a	three-fiscal-year	period	beginning	January	1,	2012.	Vesting	of	the	full	award	or	a	portion	thereof	is determined	discretely	for	each	of	the	three	fiscal	years	based	on	the	achievement	of	certain	revenue	and	operating	income	targets	by	the	Apache	subsidiary,	and	the recipient's	continued	employment	through	the	measurement	period.	The	value	of	each	restricted	stock	unit	on	the	August	1,

2011	grant	date	was	$50.30,	the	closing	price	of	ANSYS	stock	as	of	that	date.	Stock-based	compensation	expense	based	on	the	fair	value	of	the	awards	is	being	recorded from	the	January	1,	2012	service	inception	date	through	the	conclusion	of	the	three-year	measurement	period	based	on	management's	estimates	concerning	the probability	of	vesting.	As	of	December	31,	2012,	employees	earned	76,658	units,	which	will	be	issued	in	the	first	quarter	of	2013,	and	the	Company	recorded	related stock-based	compensation	expense	in	the	amount	of	$3.9	million	for	the	year	ended	December	31,	2012.

Under	the	merger	agreement,	holders	of	partially-vested	Apache	options	at	the	date	of	acquisition	received	options	to	purchase	ANSYS	shares	of	common	stock	based on	an	agreed-upon	conversion	ratio	("the	Replacement	Awards").	The	value	of	the	Replacement	Awards	attributable	to	pre-combination	service	was	estimated	to	be	$3.2 million	at	the	acquisition	date,	and	was	included	in	consideration	transferred.	The	value	of	the	Replacement	Awards	attributable	to	post-combination	service	is recognized	as	stock-based	compensation	in	earnings	during	the	post-acquisition	period.

In	valuing	deferred	revenue	on	the	Apache	balance	sheet	as	of	the	acquisition	date,	the	Company	applied	the	fair	value	provisions	applicable	to	the	accounting	for business	combinations.	Acquired	deferred	revenue	of	$10.1	million	was	recorded	on	the	opening	balance	sheet.	This	amount	was	$13.6	million	lower	than	the	historical carrying	value.	The	impact	on	reported	revenue	for	the	year	ended	December	31,	2012	was	$3.4	million,	primarily	in	lease	license	revenue.	The	expected	impact	on reported	revenue	is	$0.1	million	and	$0.5	million	for	the	quarter	ending	March	31,	2013	and	the	year	ending	December	31,	2013,	respectively.

The	goodwill,	which	is	not	tax-deductible,	is	attributed	to	intangible	assets	that	do	not	qualify	for	separate	recognition,	including	the	assembled	workforce	of	the acquired	business	and	the	synergies	expected	to	arise	as	a	result	of	the	acquisition	of	Apache.	During	the	one-year	measurement	period	since	the	Apache	acquisition	date, the	Company	increased	the	values	of	net	deferred	tax	liabilities	from	$46.1	million	to	$47.2	million,	and	identifiable	intangible	assets	from	$153.8	million	to	$156.1 million,	with	the	offset	recorded	to	goodwill.	These	adjustments	were	based	on	refinements	to	assumptions	used	in	the	preliminary	valuation	of	intangible	assets	and	new information	regarding	what	was	known	and	knowable	as	of	the	acquisition	date	in	the	calculation	of	the	net	deferred	tax	liabilities.

The	following	unaudited	pro	forma	information	presents	the	2010	and	2011	results	of	operations	of	the	Company	as	if	the	acquisition	had	occurred	on	January	1, 2010.	The	unaudited	pro	forma	results	are	not	necessarily	indicative	of	results	that	would	have	occurred	had	the	acquisition	been	in	effect	for	the	periods	presented,	nor are	they	necessarily	indicative	of	future	results.	The	2010	pro	forma	results	are	based	on	the	year	ended	December	31,	2010	for	ANSYS,	as	reported,	combined	with	the year	ended	December	31,	2010	results	of	Apache.	The	2011	pro	forma	results	are	based	on	ANSYS's	stand-alone	results	for	the	year	ended	December	31,	2011 combined	with	Apache's	results	for	the	year	ended	December	31,	2011.	The	unaudited	pro	forma	financial	information	for	all	periods	presented	includes	the	business combination	accounting	effects	on	amortization	expense	from	acquired	intangible	assets,	lost	interest	income	on	the	cash	paid	for	the	acquisition	and	the	related	tax effects.	The	unaudited	pro	forma	financial	information	excludes	contingent	payments,	transaction	costs,	IPO-related	costs	incurred	by	Apache	prior	to	the	acquisition, expenses	related	to	performance	awards	issued	as	part	of	the	acquisition	and	the	income	statement	effects	of	the	acquisition	accounting	adjustment	to	deferred	revenue. No	pro	forma	adjustments	were	made	to	stock-based	compensation	expense	previously	recorded	by	Apache.

|  | 2011 | 2010 |
| :--- | :--- | :--- |
| (in\tthousands,\texcept\tper\tshare\tdata) | (Unaudited) | (Unaudited) |
| Total\trevenue | $730,632 | $624,283 |
| Net\tincome | $181,718 | $144,605 |
| Earnings\tper\tshare: |  |  |
| Basic | $1.97 | $1.59 |
| Diluted | $1.93 | $1.55 |

# 4. Other Current Assets

The	Company	reports	accounts	receivable	related	to	the	current	portion	of	annual	lease	licenses	and	software	maintenance	that	has	not	yet	been	recognized	as	revenue	as components	of	other	receivables	and	current	assets.	The	amounts	reported	in	other	receivables	and	current	assets	totaled	$149.3	million	and	$112.8	million	as	of December	31,	2012	and	December	31,	2011,	respectively.

The	Company	reports	income	taxes	receivable,	including	amounts	related	to	overpayments	and	refunds,	as	a	component	of	other	receivables	and	current	assets.	These amounts	totaled	$48.9	million	and	$36.0	million	as	of	December	31,	2012	and	December	31,	2011,	respectively.

# 5. Other	Long-Term	Liabilities

The	Company	reports	reserves	for	uncertain	tax	positions,	including	estimated	penalties	and	interest,	as	a	component	of	other	long-term	liabilities.	These	amounts	totaled $37.0	million	and	$35.5	million	as	of	December	31,	2012	and	December	31,	2011,	respectively.

# 6. Property	and	Equipment

Property	and	equipment	consists	of	the	following:

| (dollars	in	thousands) | Estimated	Useful	Lives | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Equipment | 1-10\tyears | $59,580 | $55,221 |
| Computer\tsoftware | 1-5\tyears | 26,864 | 26,709 |
| Buildings | 10-40\tyears | 15,122 | 10,469 |
| Leasehold\timprovements | 1-10\tyears | 7,334 | 7,394 |
| Furniture | 1-13\tyears | 4,457 | 5,007 |
| Land |  | 2,178 | 1,749 |
|  |  | 115,535 | 106,549 |
| Less:\tAccumulated\tdepreciation\tand\tamortization |  | (63,282) | (60,911) |
|  |  | $52,253 | $45,638 |

Depreciation	and	amortization	expense	related	to	property	and	equipment,	including	the	amounts	acquired	through	capital	lease	commitments,	was	$17.4	million,	$13.3 million	and	$10.9	million	for	the	years	ended	December	31,	2012,	2011	and	2010,	respectively.

# 7. Goodwill	and	Intangible	Assets

Goodwill	represents	the	excess	of	the	fair	value	of	the	consideration	transferred	over	the	value	of	net	tangible	and	identifiable	intangible	assets	of	acquired	businesses. Identifiable	intangible	assets	acquired	in	business	combinations	are	recorded	based	upon	their	fair	values	on	the	date	of	acquisition.

During	the	first	quarter	of	2012,	the	Company	completed	the	annual	impairment	test	for	goodwill	and	indefinite-lived	intangible	assets	and	determined	that	these	assets had	not	been	impaired	as	of	the	test	date,	January	1,	2012.	The	Company	performed	a	qualitative	assessment	to	test	goodwill	for	impairment,	and	as	of	the	test	date,	there was	sufficient	evidence	that	it	was	not	more	likely	than	not	that	the	fair	values	of	its	reporting	units	were	less	than	their	carrying	amounts.

The	Company	tested	the	indefinite-lived	intangible	assets	utilizing	estimated	cash	flow	methodologies	and	market-based	information	to	estimate	the	fair	value	of	the assets,	and	determined	the	assets	were	not	impaired	as	of	the	test	date.

No	events	occurred	or	circumstances	changed	during	the	year	ended	December	31,	2012	that	would	indicate	that	the	fair	values	of	the	Company's	reporting	units	and indefinite-lived	intangible	assets	are	below	their	carrying	amounts.

As	of	December	31,	2012	and	December	31,	2011,	the	Company's	intangible	assets	and	estimated	useful	lives	are	classified	as	follows:

|  | December	31,	2012 | December	31,	2012 | December	31,	2011 | December	31,	2011 |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands) | Gross\nCarrying\nAmount | Accumulated\nAmortization | Gross\nCarrying\nAmount | Accumulated\nAmortization |
| Amortized\tintangible\tassets: |  |  |  |  |
| Developed\tsoftware\tand\tcore\ttechnologies\t(7\t–\t10\tyears) | $298,802 | $(175,988) | $287,392 | $(144,836) |
| Customer\tlists\tand\tcontract\tbacklog\t(3\t–\t15\tyears) | 241,721 | (100,702) | 223,037 | (76,630) |
| Trade\tnames\t(6\t–\t10\tyears) | 102,629 | (40,436) | 102,580 | (30,380) |
| Total | $643,152 | $(317,126) | $613,009 | $(251,846) |
| Unamortized\tintangible\tassets: |  |  |  |  |
| Trade\tnames | $25,147 |  | $22,257 |  |

The	increase	in	the	intangible	assets	reflected	above	was	due	to	the	August	1,	2012	acquisition	of	Esterel.	Amortization	expense	for	the	intangible	assets	reflected	above was	$67.3	million,	$51.7	million	and	$48.7	million	for	the	years	ended	December	31,	2012,	2011	and	2010,	respectively.

As	of	December	31,	2012,	estimated	future	amortization	expense	for	the	intangible	assets	reflected	above	is	as	follows:

| (in	thousands) |  |
| :--- | :--- |
| 2013 | $59,952 |
| 2014 | 53,832 |
| 2015 | 50,232 |
| 2016 | 43,079 |
| 2017 | 39,483 |
| Thereafter | 79,448 |
| Total\tintangible\tassets\tsubject\tto\tamortization | 326,026 |
| Indefinite-lived\ttrade\tnames | 25,147 |
| Other\tintangible\tassets,\tnet | $351,173 |

The	changes	in	goodwill	during	the	years	ended	December	31,	2012	and	2011	are	as	follows:

| (in	thousands) | 2012 | 2011 |
| :--- | :--- | :--- |
| Beginning\tbalance\t–\tJanuary\t1,\t2012 | $1,225,375 | $1,035,083 |
| Acquisitions\tof\tEsterel\tand\tApache,\trespectively | 20,866 | 190,947 |
| Currency\ttranslation\tand\tother | 5,006 | (655) |
| Ending\tbalance\t–\tDecember\t31,\t2012 | $1,251,247 | $1,225,375 |

# 8. Long-Term	Debt

Borrowings	consist	of	the	following:

| (in	thousands) | 2012 | 2011 |
| :--- | :--- | :--- |
| Term\tloan\tpayable\tin\tquarterly\tinstallments\twith\ta\tfinal\tmaturity\tof\tJuly\t31,\t2013 | $53,149 | $127,557 |
| Capitalized\tlease\tobligations | — | 15 |
| Total | 53,149 | 127,572 |
| Less\tcurrent\tportion | (53,149) | (74,423) |
| Long-term\tdebt\tand\tcapital\tlease\tobligations,\tnet\tof\tcurrent\tportion | $— | $53,149 |

On	July	31,	2008,	ANSYS	borrowed	$355.0	million	from	a	syndicate	of	banks.	The	interest	rate	on	the	indebtedness	provides	for	tiered	pricing	with	the	initial	rate	at	the prime	rate	+0.50%,	or	the	LIBOR	rate	+1.50%,	with	step	downs	permitted	after	the	initial	six	months	under	the	credit	agreement	down	to	a	flat	prime	rate	or	the	LIBOR rate	+0.75%.	Such	tiered	pricing	is	determined	by	the	Company's	consolidated	leverage	ratio.	The	Company's	consolidated	leverage	ratio	has	been	reduced	to	the	lowest pricing	tier	in	the	debt	agreement.	During	the	year	ended	December	31,	2012,	the	Company	made	the	required	quarterly	principal	payments	of	$74.4	million	in	the aggregate.

The	Company	entered	into	an	interest	rate	swap	agreement	in	order	to	hedge	a	portion	of	each	of	the	first	eight	forecasted	quarterly	variable	rate	interest	payments	on	the Company's	term	loan.	The	interest	rate	swap	agreement	terminated	on	June	30,	2010.

The	interest	rate	on	the	outstanding	term	loan	balance	of	$53.1	million	is	set	for	the	quarter	ending	March	31,	2013	at	1.06%,	which	is	based	on	LIBOR	+0.75%.	The required	future	principal	payments	on	the	Company's	term	loan	as	of	December	31,	2012	are	scheduled	as	follows:

The	credit	agreement	includes	covenants	related	to	the	consolidated	leverage	ratio	and	the	consolidated	fixed	charge	coverage	ratio,	as	well	as	certain	restrictions	on additional	investments	and	indebtedness.

# 9. Fair	Value

# Measurement

The	valuation	hierarchy	for	disclosure	of	assets	and	liabilities	reported	at	fair	value	prioritizes	the	inputs	for	such	valuations	into	three	broad	levels:

•Level	1:	quoted	prices	(unadjusted)	in	active	markets	for	identical	assets	or

liabilities;

•Level	2:	quoted	prices	for	similar	assets	and	liabilities	in	active	markets	or	inputs	that	are	observable	for	the	asset	or	liability,	either	directly	or	indirectly through	market	corroboration,	for	substantially	the	full	term	of	the	financial	instrument;	or

•Level	3:	unobservable	inputs	based	on	the	Company's	own	assumptions	used	to	measure	assets	and	liabilities	at	fair

value.

A	financial	asset's	or	liability's	classification	within	the	hierarchy	is	determined	based	on	the	lowest	level	input	that	is	significant	to	the	fair	value	measurement.

The	following	tables	provide	the	assets	and	liabilities	carried	at	fair	value	and	measured	on	a	recurring	basis:

| (in	thousands) | December	31,	2012 | Quoted	Prices	in<br>Active	Markets<br>(Level	1) | Significant	Other<br>Observable<br>Inputs<br>(Level	2) | Significant<br>Unobservable<br>Inputs<br>(Level	3) |
| :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |
| Cash\tequivalents | $206,979 | $206,979 | $— | $— |
| Short-term\tinvestments | $452 | $— | $452 | $— |
| Liabilities |  |  |  |  |
| Contingent\tconsideration | $(6,436) | $— | $— | $(6,436) |
| Deferred\tcompensation | $(1,394) | $— | $— | $(1,394) |
| Foreign\tcurrency\tfuture | $(240) | $— | $(240) | $— |

| (in	thousands) | December	31,	2011 | Quoted	Prices	in<br>Active	Markets<br>(Level	1) | Significant	Other<br>Observable<br>Inputs<br>(Level	2) | Significant<br>Unobservable<br>Inputs<br>(Level	3) |
| :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |
| Cash\tequivalents | $182,530 | $181,198 | $1,332 | $— |
| Short-term\tinvestments | $576 | $— | $576 | $— |
| Liabilities |  |  |  |  |
| Contingent\tconsideration | $(9,571) | $— | $— | $(9,571) |
| Deferred\tcompensation | $(2,073) | $— | $— | $(2,073) |

The	cash	equivalents	in	the	preceding	tables	represent	money	market	mutual	funds	and	time	deposits.

The	short-term	investments	in	the	preceding	tables	represent	deposits	held	by	certain	foreign	subsidiaries	of	the	Company.	The	deposits	have	fixed	interest	rates	with maturity	dates	ranging	from	three	months	to	one	year.	There	were	no	unrealized	gains	or	losses	associated	with	these	deposits	for	the	years	ended	December	31,	2012 and	2011.

On	August	1,	2011,	the	Company	completed	its	acquisition	of	Apache,	a	leading	simulation	software	provider	for	advanced,	low-power	solutions	in	the	electronics industry.	The	merger	agreement	includes	a	contingent	consideration	arrangement	that	requires	additional	payments	of	up	to	$12.0	million	to	be	paid	by	the	Company	in equal	installments	to	the	Apache	stockholders	and	holders	of	vested	Apache	options	on	each	of	the	first	three	anniversaries	of	the	closing	of	the	acquisition.	To	receive these

payments,	a	key	member	of	Apache's	management	must	remain	an	employee	of	ANSYS	on	each	of	the	first	three	anniversaries	of	the	acquisition	closing	date. Management	estimated	that	it	was	probable	that	all	three	payments	would	be	made,	and	recorded	the	fair	value	of	the	contingent	payments	as	a	liability	on	the	date	of acquisition.	The	portion	of	contingent	payments	attributable	to	the	key	member	of	Apache	management	was	determined	to	be	deferred	compensation,	and	is	accounted for	outside	of	the	business	combination.	The	Company	paid	the	first	$4.0	million	installment	for	these	contingent	payments	on	August	1,	2012.	A	liability	of	$1.4	million for	deferred	compensation	was	recorded	as	of	December	31,	2012	based	on	the	net	present	value	of	the	expected	remaining	payments.	The	portion	of	the	contingent payments	attributable	to	other	shareholders	was	determined	to	be	contingent	purchase	price	consideration	and	was	estimated	to	be	$6.4	million	based	on	the	net	present value	of	the	expected	remaining	payments	as	of	December	31,	2012.	The	net	present	value	calculations	for	the	deferred	compensation	and	contingent	consideration include	a	significant	unobservable	input	in	the	assumption	that	the	two	remaining	payments	will	be	made,	and	therefore	the	liabilities	were	classified	as	Level	3	in	the fair	value	hierarchy.

The	following	table	presents	the	changes	during	the	year	ended	December	31,	2012	in	the	Company's	Level	3	liabilities	for	contingent	consideration	and	deferred compensation	that	are	measured	at	fair	value	on	a	recurring	basis:

|  | Fair	Value	Measurement	Using<br>Significant	Unobservable	Inputs | Fair	Value	Measurement	Using<br>Significant	Unobservable	Inputs |
| :--- | :--- | :--- |
| (in\tthousands) | Contingent\nConsideration | Deferred\nCompensation |
| Balance\tas\tof\tJanuary\t1,\t2012 | $9,571 | $2,073 |
| Contingent\tpayments | (3,288) | (712) |
| Interest\texpense\tincluded\tin\tearnings | 153 | 33 |
| Balance\tas\tof\tDecember\t31,\t2012 | $6,436 | $1,394 |

The	Company	had	no	transfers	of	amounts	between	Level	1	or	Level	2	fair	value	measurements	during	the	year	ended	December	31,	2012.

The	carrying	values	of	cash,	accounts	receivable,	accounts	payable,	accrued	expenses,	other	accrued	liabilities	and	short-term	obligations	approximate	their	fair	values because	of	their	short-term	nature.	The	carrying	value	of	long-term	debt	approximates	its	fair	value	due	to	the	variable	interest	rate	underlying	the	Company's	credit facility.

# Taxes

Income	before	income	taxes	includes	the	following	components:

| (in	thousands) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Domestic | $234,497 | $205,966 | $162,921 |
| Foreign | 59,050 | 58,892 | 53,473 |
| Total | $293,547 | $264,858 | $216,394 |

The	provision	for	income	taxes	is	composed	of	the	following:

| (in	thousands) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Current: |  |  |  |
| Federal | $79,028 | $57,423 | $62,350 |
| State | 7,886 | 5,770 | 5,589 |
| Foreign | 22,046 | 24,011 | 21,964 |
| Deferred: |  |  |  |
| Federal | (21,026) | (11,768) | (15,173) |
| State | (3,913) | (1,314) | (2,102) |
| Foreign | 6,043 | 10,061 | (9,366) |
| Total | $90,064 | $84,183 | $63,262 |

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

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Federal\tstatutory\ttax\trate | 35.0\t% | 35.0\t% | 35.0\t% |
| State\tincome\ttaxes,\tnet\tof\tfederal\tbenefit | 1.2 | 1.1 | 0.7 |
| Stock-based\tcompensation | 1.0 | 1.0 | 1.4 |
| Changes\tin\ttax\trates | 0.8 | 2.2 | — |
| Net\ttax\t(benefit)\tof\tunrepatriated\tearnings | 0.7 | — | (0.3) |
| Uncertain\ttax\tpositions | 0.3 | 0.2 | (0.8) |
| Benefit\tfrom\trestructuring\tactivities | (3.1) | (3.5) | (1.0) |
| Domestic\tproduction\tactivity\tbenefit | (3.3) | (2.9) | (2.8) |
| Foreign\trate\tdifferential | (1.9) | (1.1) | (0.7) |
| Research\tand\texperimentation\tcredits | (0.1) | (0.9) | (0.7) |
| Adjustments\tof\tprior\tyear\ttaxes | (1.3) | (0.3) | (1.1) |
| Other | 1.4 | 1.0 | (0.5) |
|  | 30.7\t% | 31.8\t% | 29.2\t% |

In	general,	it	is	the	practice	and	intention	of	the	Company	to	repatriate	previously	taxed	earnings	and	to	reinvest	all	other	earnings	of	its	non-U.S.	subsidiaries.	The Company	has	not	made	a	provision	for	U.S.	taxes	on	$145.6	million,	representing	the	excess	of	the	amount	for	financial	reporting	over	the	tax	bases	of	investments	in foreign	subsidiaries	that	are	essentially	permanent	in	duration.	Generally,	such	amounts	become	subject	to	U.S.	taxation	upon	the	remittance	of	dividends	and	under certain	other	circumstances.	The	residual	U.S.	tax	cost	associated	with	this	difference	is	estimated	to	be	$35.1	million.	The	Company	has	made	a	tax	provision	of	$2.0 million	related	to	$22	million	of	earnings	that	it	expects	to	repatriate	from	a	foreign	subsidiary.

The	components	of	deferred	tax	assets	and	liabilities	are	as	follows:

| (in	thousands) | 2012 | 2011 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Net\toperating\tloss\tcarryforwards | $26,228 | $18,624 |
| Employee\tbenefits | 17,670 | 16,697 |
| Stock-based\tcompensation | 16,092 | 11,888 |
| Foreign\ttax\tcredits | 558 | 7,219 |
| Other\taccruals\tnot\tcurrently\tdeductible | 1,207 | 6,090 |
| Research\tand\tdevelopment\tcredits | 2,254 | 4,542 |
| Uncertain\ttax\tpositions | 7,790 | 3,145 |
| Deferred\trevenue | 5,139 | 3,096 |
| Allowance\tfor\tdoubtful\taccounts | 1,661 | 1,259 |
| Other | 2,227 | 1,241 |
| Valuation\tallowance | (14) | (8) |
|  | 80,812 | 73,793 |
| Deferred\ttax\tliabilities: |  |  |
| Other\tintangible\tassets | (128,671) | (141,949) |
| Property\tand\tequipment | (5,838) | (6,529) |
| Unremitted\tforeign\tearnings | (2,204) | (140) |
|  | (136,713) | (148,618) |
| Net\tdeferred\ttax\tliabilities | $(55,901) | $(74,825) |

As	of	December	31,	2012,	the	Company	had	federal	net	operating	loss	carryforwards	of	$4.6	million.	These	losses	expire	between	2020	-	2028,	and	are	subject	to limitations	on	their	utilization.	The	Company	had	state	net	operating	loss	carryforwards	of	$4.1	million,	which	expire	between	2014	and	2020,	of	which	$4.1	million	are subject	to	limitations	on	their	utilization.	The	Company	had	total	foreign	net	operating	loss	carryforwards	of	$70.5	million,	of	which	$20.0	million	are	not

currently	subject	to	expiration	dates.	The	remainder,	$50.5	million,	expires	between	2019	and	2021.	The	Company	had	tax	credit	carryforwards	of	$4.9	million,	of	which $1.5	million	are	subject	to	limitations	on	their	utilization.	Approximately	$2.5	million	of	these	tax	credit	carryforwards	are	not	currently	subject	to	expiration	dates.	The remainder,	$2.4	million,	expires	in	various	years	between	2029	and	2032.

The	following	is	a	reconciliation	of	the	total	amounts	of	unrecognized	tax	benefits:

| (in	thousands) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Unrecognized\ttax\tbenefit\tas\tof\tJanuary\t1 | $31,582 | $19,993 | $10,041 |
| Acquired\tunrecognized\ttax\tbenefit | 3,845 | 5,813 | — |
| Gross\tincreases—tax\tpositions\tin\tprior\tperiod | 2,048 | 6,814 | 177 |
| Gross\tdecreases—tax\tpositions\tin\tprior\tperiod | (2,167) | (2,697) | (2,415) |
| Gross\tincreases—tax\tpositions\tin\tcurrent\tperiod | 2,660 | 2,297 | 13,001 |
| Reductions\tdue\tto\ta\tlapse\tof\tthe\tapplicable\tstatute\tof\tlimitations | (1,314) | (190) | (674) |
| Changes\tdue\tto\tcurrency\tfluctuation | 625 | (448) | (84) |
| Settlements | (76) | — | (53) |
| Unrecognized\ttax\tbenefit\tas\tof\tDecember\t31 | $37,203 | $31,582 | $19,993 |

The	Company	does	not	expect	any	uncertain	tax	positions	to	be	resolved	within	the	next	twelve	months.	Of	the	total	unrecognized	tax	benefit	as	of	December	31,	2012, $3.8	million	would	not	affect	the	effective	tax	rate,	if	recognized.

The	Company	recognizes	interest	and	penalties	related	to	unrecognized	tax	benefits	as	income	tax	expense.	As	of	December	31,	2012,	the	Company	accrued	a	liability for	penalties	of	$2.1	million	and	interest	of	$2.5	million.	As	of	December	31,	2011,	the	Company	accrued	a	liability	for	penalties	of	$2.2	million	and	interest	of	$2.6 million.

The	Company	is	subject	to	taxation	in	the	U.S.	and	various	states	and	foreign	jurisdictions.	The	Company's	2008	through	2011	tax	years	are	open	to	examination	by	the Internal	Revenue	Service.	The	2009	and	2010	federal	returns	are	currently	under	examination.	The	Company	also	has	various	foreign	and	state	tax	filings	subject	to examination	for	various	years.

# 11. Pension	and	Profit-Sharing

# Plans

The	Company	has	a	401(k)/profit-sharing	plan	for	all	qualifying	full-time	domestic	employees	that	permits	participants	to	make	contributions	by	salary	reduction pursuant	to	Section	401(k)	of	the	Internal	Revenue	Code.	The	Company	makes	matching	contributions	on	behalf	of	each	eligible	participant	in	an	amount	equal	to	100% of	the	first	3%	and	an	additional	25%	of	the	next	5%,	for	a	maximum	total	of	4.25%	of	the	employee's	compensation.	The	Company	may	make	a	discretionary contribution	based	on	the	participant's	eligible	compensation,	provided	the	employee	is	employed	at	the	end	of	the	year	and	has	worked	at	least	1,000	hours.	The qualifying	domestic	employees	of	the	Company's	Apache	subsidiary,	which	was	acquired	on	August	1,	2011,	also	participated	in	a	401(k)	plan,	which	was	merged	into the	ANSYS	401(k)	plan	in	2012.	There	is	no	matching	employer	contribution	associated	with	the	former	Apache	401(k)	plan	as	of	December	31,	2012.	The	Company also	maintains	various	defined	contribution	and	defined	benefit	pension	arrangements	for	its	international	employees.	The	Company	funds	the	foreign	defined	benefit and	contribution	plans	with	at	least	the	minimum	required	deposits	according	to	the	local	statutory	requirements.	The	unfunded	portion	of	the	defined	benefit	obligation for	each	plan	is	accrued	in	other	long-term	liabilities.

# 12. Non-Compete	and	Employment

# Agreements

The	Company	has	an	employment	agreement	with	the	Chairman	of	its	Board	of	Directors.	In	the	event	the	Chairman	is	terminated	without	cause,	his	employment agreement	provides	for	severance	at	an	annual	rate	of	$300,000	for	the	earlier	of	a

period	of	one	year	after	termination	or	when	he	accepts	other	employment.	The	Chairman	is	subject	to	a	one-year	restriction	on	competition	following	termination	of employment	under	the	circumstances	described	in	the	contract.

The	Company	has	an	employment	agreement	with	the	Chief	Executive	Officer.	This	agreement	provides	for,	among	other	things,	minimum	severance	payments	equal	to his	base	salary,	target	bonus	and	then-existing	benefits	through	the	earlier	of	the	second	anniversary	of	the	termination	date	if	the	Chief	Executive	Officer	is	terminated without	cause	or	when	he	accepts	other	employment.	The	Chief	Executive	Officer	is	subject	to	a	two-year	restriction	on	competition	following	termination	of employment	under	the	circumstances	described	in	the	contract.

The	Company	also	has	employment	agreements	with	several	other	employees,	primarily	in	foreign	jurisdictions.	The	terms	of	these	employment	agreements	generally include	annual	compensation,	severance	payment	provisions	and	non-compete	clauses.

# 13. Stock	Option	and	Grant

The	Company	has	a	stock	option	and	grant	plan—the	Fourth	Amended	and	Restated	1996	Stock	Option	and	Grant	Plan	("Stock	Plan").	The	Stock	Plan,	as	amended, authorizes	the	grant	of	up	to	30,400,000	shares	of	the	Company's	common	stock	in	the	form	of:	(i)	incentive	stock	options	("ISOs"),	(ii)	nonqualified	stock	options	or (iii)	the	issuance	or	sale	of	common	stock	with	or	without	vesting	or	other	restrictions.	Additionally,	the	Stock	Plan	permits	(a)	the	grant	of	common	stock	upon	the attainment	of	specified	performance	goals,	(b)	the	grant	of	the	right	to	receive	cash	dividends	with	the	holders	of	the	common	stock	as	if	the	recipient	held	a	specified number	of	shares	of	the	common	stock,	(c)	the	grant	of	deferred	stock	awards,	(d)	the	grant	of	stock	appreciation	rights	and	(e)	the	grant	of	cash-based	awards.

The	Stock	Plan	provides	that:	(i)	the	exercise	price	of	an	ISO	must	be	no	less	than	the	fair	value	of	the	stock	at	the	date	of	grant	and	(ii)	the	exercise	price	of	an	ISO	held by	an	optionee	who	possesses	more	than	10%	of	the	total	combined	voting	power	of	all	classes	of	stock	must	be	no	less	than	110%	of	the	fair	market	value	of	the	stock at	the	time	of	grant.	The	Compensation	Committee	of	the	Board	of	Directors	has	the	authority	to	set	expiration	dates	no	later	than	ten	years	from	the	date	of	grant	(or	five years	for	an	optionee	who	meets	the	10%	criteria),	payment	terms	and	other	provisions	for	each	grant.	The	majority	of	options	granted	have	a	four	year	vesting	period. Shares	associated	with	unexercised	options	or	reacquired	shares	of	common	stock	(except	those	shares	withheld	as	a	result	of	tax	withholding	or	net	issuance)	become available	for	options	or	issuances	under	the	Stock	Plan.	The	Compensation	Committee	of	the	Board	of	Directors	may,	at	its	sole	discretion,	accelerate	or	extend	the	date or	dates	on	which	all	or	any	particular	award	or	awards	granted	under	the	Stock	Plan	may	vest	or	be	exercised.

In	the	event	of	a	"sale	event"	as	defined	in	the	Stock	Plan,	all	outstanding	awards	will	be	assumed	or	continued	by	the	successor	entity,	with	appropriate	adjustment	in the	awards	to	reflect	the	transaction.	In	such	event,	except	as	the	Compensation	Committee	may	otherwise	specify	with	respect	to	particular	awards	in	the	award agreements,	if	the	service	relationship	of	the	holder	of	an	award	is	terminated	without	cause	within	18	months	after	the	sale	event,	then	all	awards	held	by	such	holder will	become	fully	vested	and	exercisable	at	that	time.	If	there	is	a	sale	event	in	which	the	successor	entity	refuses	to	assume	or	continue	outstanding	awards,	then	subject to	the	consummation	of	the	sale	event,	all	awards	with	time-based	vesting	conditions	will	become	fully	vested	and	exercisable	at	the	effective	time	of	the	sale	event	and all	awards	with	performance-based	vesting	conditions	may	become	vested	and	exercisable	in	accordance	with	the	award	agreements	at	the	discretion	of	the Compensation	Committee.	If	awards	are	not	assumed	or	continued	after	a	sale	event,	then	all	such	awards	will	terminate	at	the	time	of	the	sale	event.	In	the	event	of	the termination	of	stock	options	or	stock	appreciation	rights	in	connection	with	a	sale	event,	the	Compensation	Committee	may	either	make	or	provide	for	a	cash	payment	to the	holders	of	such	awards	equal	to	the	difference	between	the	per	share	transaction	consideration	and	the	exercise	price	of	such	awards	or	permit	each	holder	to	have	at least	a	15	day	period	to	exercise	such	awards	prior	to	their	termination.	In	addition,	options	granted	to	Independent	Directors	and	certain	key	executives	prior	to February	17,	2011	vest	automatically	upon	a	sale	event.

The	Company	grants	deferred	stock	units	to	non-affiliate	Independent	Directors,	which	are	rights	to	receive	shares	of	common	stock	upon	termination	of	service	as	a Director.	The	deferred	stock	units	are	issued	in	arrears	and	vest	immediately.	As	of	December	31,	2012,	95,227	deferred	stock	units	have	been	earned	with	the underlying	shares	remaining	unissued	until	the	service	termination	of	the	respective	Director	owners.	Of	this	amount,	28,523	units	were	earned	during	the	year	ended December	31,	2012.

The	Company	currently	issues	shares	related	to	exercised	stock	options	from	its	existing	pool	of	treasury	shares	and	has	no	specific	policy	to	repurchase	treasury	shares as	stock	options	are	exercised.	If	the	treasury	pool	is	depleted,	the	Company	will	issue	new	shares.

# Information	regarding	stock	option	transactions	is	summarized	below:

Historical	and	future	expected	forfeitures	have	not	been	significant	and,	as	a	result,	the	outstanding	option	amounts	reflected	in	the	tables	above	approximate	the	options expected	to	vest.

Total	stock-based	compensation	expense	recognized	for	the	years	ended	December	31,	2012,	2011	and	2010	is	as	follows:

| (in	thousands,	except	per	share	amounts) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Cost\tof\tsales: |  |  |  |
| Software\tlicenses | $1,478 | $556 | $135 |
| Maintenance\tand\tservice | 2,232 | 1,897 | 1,541 |
| Operating\texpenses: |  |  |  |
| Selling,\tgeneral\tand\tadministrative | 15,278 | 12,501 | 11,755 |
| Research\tand\tdevelopment | 13,427 | 8,134 | 5,588 |
| Stock-based\tcompensation\texpense\tbefore\ttaxes | 32,415 | 23,088 | 19,019 |
| Related\tincome\ttax\tbenefits | (8,509) | (5,552) | (4,254) |
| Stock-based\tcompensation\texpense,\tnet\tof\ttaxes | $23,906 | $17,536 | $14,765 |
| Net\timpact\ton\tearnings\tper\tshare: |  |  |  |
| Basic\tearnings\tper\tshare | $(0.26) | $(0.19) | $(0.16) |
| Diluted\tearnings\tper\tshare | $(0.25) | $(0.19) | $(0.16) |

The	fair	value	of	each	option	grant	is	estimated	on	the	date	of	grant	or	date	of	acquisition	for	options	issued	in	a	business	combination	using	the	Black-Scholes	option pricing	model,	which	was	developed	for	use	in	estimating	the	fair	value	of	traded	options	that	have	no	vesting	restrictions	and	are	fully	transferable.	The	Company's options	have	characteristics	significantly	different	from	those	of	traded	options,	and	changes	in	input	assumptions	can	materially	affect	the	fair	value	estimates.	The interest	rates	used	were	determined	by	using	the	five-year	Treasury	Note	yield	at	the	date	of	grant	or	date	of	acquisition	for	options	issued	in	a	business	combination.	The volatility	was	determined	based	on	the	historic	volatility	of	the	Company's	stock	during	the	preceding	six	years	for	2012,	2011	and	2010.

The	table	below	presents	the	weighted	average	input	assumptions	used	and	resulting	fair	values	for	options	granted	or	issued	in	business	combinations	during	each respective	year:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Risk-free\tinterest\trate | 0.59%\tto\t1.04% | 0.91%\tto\t2.11% | 1.27%\tto\t2.34% |
| Expected\tdividend\tyield | 0% | 0% | 0% |
| Expected\tvolatility | 38% | 39% | 39% |
| Expected\tterm | 6.0\tyears | 5.8\tyears | 6.1\tyears |
| Weighted\taverage\tfair\tvalue\tper\tshare | $24.82 | $25.84 | $19.41 |

As	stock-based	compensation	expense	recognized	in	the	consolidated	statements	of	income	is	based	on	awards	ultimately	expected	to	vest,	it	must	be	reduced	for estimated	forfeitures.	Forfeitures	are	estimated	at	the	time	of	grant	and	revised,	if	necessary,	in	subsequent	periods	if	actual	forfeitures	differ	from	those	estimates.	The effect	of	pre-vesting	forfeitures	on	the	Company's	recorded	expense	has	historically	been	negligible	due	to	the	relatively	low	turnover	of	stock	option	holders.

The	Company's	determination	of	fair	value	of	share-based	payment	awards	on	the	date	of	grant	using	an	option	pricing	model	is	affected	by	the	Company's	stock	price as	well	as	assumptions	regarding	a	number	of	variables.	The	total	estimated	grant	date	fair	values	of	stock	options	that	vested	during	the	years	ended	December	31,	2012, 2011	and	2010	were	$23.3	million,	$20.2	million	and	$16.7	million,	respectively.	At	December	31,	2012,	total	unrecognized	estimated	compensation	cost	related	to unvested	stock	options	granted	prior	to	that	date	was	$61.9	million,	which	is	expected	to	be	recognized	over	a	weighted	average	period	of	2.0	years.	The	total	intrinsic values	of	stock	options	exercised	during	the	years	ended	December	31,	2012,	2011	and	2010	were	$64.7	million,	$42.6	million	and	$88.0	million,	respectively.	At December	31,	2012,	3.0	million	unvested	options	with	an	aggregate	intrinsic	value	of	$37.9	million	are	expected	to	vest	and	have	a	weighted	average	exercise	price	of $54.94	and	a	weighted	average	remaining	contractual	term	of	8.5	years.	The	Company	recorded	cash	received	from	the	exercise	of	stock	options	of	$32.0	million	and related	tax	benefits	of	$18.6	million	(including	an	excess	tax	benefit	of	$13.9	million)	for	the	year	ended	December	31,	2012.

Information	regarding	stock	options	outstanding	as	of	December	31,	2012	is	summarized	below:

| Range	of	Exercise	Prices | Options | Average<br>Remaining<br>Contractual<br>Life	(years) | Weighted<br>Average<br>Exercise<br>Price | Options | Weighted<br>Average<br>Exercise<br>Price |
| :--- | :--- | :--- | :--- | :--- | :--- |
| $\t3.77\t-\t$24.01 | 1,530 | 4.15 | $19.71 | 1,264 | $19.75 |
| $\t25.32\t-\t$40.87 | 1,425 | 5.16 | $33.36 | 1,406 | $33.34 |
| $\t40.89\t-\t$48.97 | 1,962 | 7.25 | $45.13 | 1,153 | $44.38 |
| $\t51.52\t-\t$67.34 | 1,139 | 8.67 | $58.69 | 271 | $58.43 |
| $\t67.44\t-\t$69.70 | 1,066 | 9.82 | $67.66 | — | $— |

Under	the	terms	of	the	ANSYS,	Inc.	Long-Term	Incentive	Plan,	in	the	first	quarter	of	2012,	2011	and	2010,	the	Company	granted	100,000,	92,500	and	80,500 performance-based	restricted	stock	units,	respectively.	Vesting	of	the	full	award	or	a	portion	thereof	is	based	on	the	Company's	performance	as	measured	by	total shareholder	return	relative	to	the	median	percentage	appreciation	of	the	NASDAQ	Composite	Index	over	a	specified	measurement	period,	subject	to	each	participant's continued	employment	with	the	Company	through	the	conclusion	of	the	measurement	period.	The	measurement	period	for	the	restricted	stock	units	granted	pursuant	to the	Long-Term	Incentive	Plan	is	a	three-year	period	beginning	January	1	of	the	year	of	the	grant.	Each	restricted	stock	unit	relates	to	one	share	of	the	Company's common	stock.	The	value	of	each	restricted	stock	unit	granted	in	2012,	2011	and	2010	was	estimated	on	the	grant	date	to	be	$33.16,	$32.05	and	$25.00,	respectively.	The estimate	of	the	grant-date	value	of	the	restricted	stock	units	was	made	using	a	Monte	Carlo	simulation	model.	The	determination	of	the	fair	value	of	the	awards	was affected	by	the	grant	date	and	a	number	of	variables,	each	of	which	has	been	identified	in	the	chart	below.	Share-based	compensation	expense	based	on	the	fair	value	of the	award	is	being	recorded	from	the	grant	date	through	the	conclusion	of	the	three-year	measurement	period.	On	December	31,	2012,	employees	earned	76,500 restricted	stock	units,	which	will	be	issued	in	the	first	quarter	of	2013.	Total	compensation	expense	associated	with	the	awards	recorded	for	the	years	ended	December 31,	2012,	2011	and	2010	was	$2.6	million,	$1.6	million	and	$590,000,	respectively.	Total	compensation	expense	associated	with	the	awards	granted	for	the	years	ending December	31,	2013	and	2014	is	expected	to	be	$2.2	million	and	$1.2	million,	respectively.

| Assumption	used	in	Monte	Carlo	lattice	pricing	model | 2012 | 2011	and	2010 |
| :--- | :--- | :--- |
| Risk-free\tinterest\trate | 0.16% | 1.35% |
| Expected\tdividend\tyield | 0% | 0% |
| Expected\tvolatility—ANSYS\tStock\tPrice | 28% | 40% |
| Expected\tvolatility—NASDAQ\tComposite\tIndex | 20% | 25% |
| Expected\tterm | 2.80 | 2.90 |
| Correlation\tfactor | 0.75 | 0.70 |

In	accordance	with	the	merger	agreement,	the	Company	granted	performance-based	restricted	stock	units	to	key	members	of	Apache	management	and	employees,	with a	maximum	value	of	$13.0	million	to	be	earned	annually	over	a	three-fiscal-year	period	beginning	January	1,	2012.	Additional	details	regarding	these	awards	are provided	within	Note	3.

# 14. Stock	Repurchase	Program

In	February	2012,	ANSYS	announced	that	its	Board	of	Directors	approved	an	increase	to	its	authorized	stock	repurchase	program.	Under	the	Company's	stock repurchase	program,	ANSYS	repurchased	1.5	million	shares	during	the	year	ended	December	31,	2012	at	an	average	price	per	share	of	$63.65,	for	a	total	cost	of	$95.5 million.	During	the	year	ended	December	31,	2011,	the	Company	repurchased	247,443	shares	at	an	average	price	per	share	of	$51.34,	for	a	total	cost	of	$12.7	million. As	of	December	31,	2012,	1.5	million	shares	remained	authorized	for	repurchase	under	the	program.

# 15. Employee Stock Purchase Plan

The	Company's	1996	Employee	Stock	Purchase	Plan	(the	"Purchase	Plan")	was	adopted	by	the	Board	of	Directors	on	April	19,	1996	and	was	subsequently	approved	by the	Company's	stockholders.	The	stockholders	approved	an	amendment	to	the	Purchase	Plan	on	May	6,	2004	to	increase	the	number	of	shares	available	for	offerings	to 1.6	million	shares.	The	Purchase	Plan	was	amended	and	restated	in	2007.	The	Purchase	Plan	is	administered	by	the	Compensation	Committee.	Offerings	under	the Purchase	Plan	commence	on	each	February	1	and	August	1,	and	have	a	duration	of	six	months.	An	employee	who	owns	or	is	deemed	to	own	shares	of	stock representing	in	excess	of	5%	of	the	combined	voting	power	of	all	classes	of	stock	of	the	Company	may	not	participate	in	the	Purchase	Plan.

During	each	offering,	an	eligible	employee	may	purchase	shares	under	the	Purchase	Plan	by	authorizing	payroll	deductions	of	up	to	10%	of	his	or	her	cash	compensation during	the	offering	period.	The	maximum	number	of	shares	that	may	be	purchased	by	any	participating	employee	during	any	offering	period	is	limited	to	3,840	shares (as	adjusted	by	the	Compensation	Committee	from	time	to	time).	Unless	the	employee	has	previously	withdrawn	from	the	offering,	his	accumulated	payroll	deductions will	be	used	to	purchase	common	stock	on	the	last	business	day	of	the	period	at	a	price	equal	to	90%	of	the	fair	market	value	of	the	common	stock	on	the	first	or	last	day of	the	offering	period,	whichever	is	lower.	Under	applicable	tax	rules,	an	employee	may	purchase	no	more	than	$25,000	worth	of	common	stock	in	any	calendar	year. At	December	31,	2012,	1,233,385	shares	of	common	stock	had	been	issued	under	the	Purchase	Plan,	of	which	1,184,082	were	issued	as	of	December	31,	2011.	The	total compensation	expense	recorded	under	the	Purchase	Plan	during	the	years	ended	December	31,	2012,	2011	and	2010	was	$710,000,	$650,000	and	$500,000,	respectively.

The	Company's	executive	offices	and	those	related	to	certain	domestic	product	development,	marketing,	production	and	administration	are	located	in	a	107,000	square foot	office	facility	in	Canonsburg,	Pennsylvania.	In	May	2004,	the	Company	entered	into	the	first	amendment	to	its	existing	lease	agreement	on	this	facility,	effective January	1,	2004.	The	lease	was	extended	from	its	original	period	to	a	period	through	2014.	The	Company	incurred	lease	rental	expense	related	to	this	facility	of	$1.3 million	in	each	of	the	years	ended	December	31,	2012,	2011	and	2010.	The	future	minimum	lease	payments	are	$1.4	million	per	annum	from	January	1,	2013	through December	31,	2014.

On	September	14,	2012,	the	Company	entered	into	a	lease	agreement	for	186,000	square	feet	of	rentable	space	to	be	located	in	a	to-be-built	office	facility	in Canonsburg,	Pennsylvania,	which	will	serve	as	the	Company's	new	headquarters.	The	lease	was	effective	as	of	September	14,	2012,	but	because	the	leased	premises	are to-be-built,	the	Company	will	not	be	obligated	to	pay	rent	until	the	later	of	(i)	three	months	following	the	date	that	the	leased	premises	are	delivered	to	ANSYS,	which delivery,	subject	to	certain	limited	exceptions,	shall	occur	no	later	than	October	1,	2014,	or	(ii)	January	1,	2015	(such	later	date,	the	"Commencement	Date").	The	term of	the	lease	is	183	months,	beginning	on	the	Commencement	Date.	Absent	the	exercise	of

options	in	the	lease	for	additional	rentable	space	or	early	lease	termination,	the	Company's	base	rent	will	be	$4.3	million	per	annum	for	the	first	five	years	of	the	lease term,	$4.5	million	per	annum	for	years	six	through	ten	and	$4.7	million	for	years	eleven	through	fifteen.

The	Company	has	entered	into	various	other	noncancellable	operating	leases	for	office	space.

The	Company	has	entered	into	various	renewable,	nonexclusive	license	agreements	under	which	the	Company	has	been	granted	access	to	the	licensor's	technology	and the	right	to	sell	the	technology	in	the	Company's	product	line.	Royalties	are	payable	to	developers	of	the	software	at	various	rates	and	amounts,	which	generally	are based	upon	unit	sales	or	revenue.	Royalty	fees	are	reported	in	cost	of	goods	sold	and	were	$9.3	million,	$8.4	million	and	$6.8	million	for	the	years	ended	December	31, 2012,	2011	and	2010,	respectively.

# 18. Geographic	Information

Revenue	to	external	customers	is	attributed	to	individual	countries	based	upon	the	location	of	the	customer.	Revenue	by	geographic	area	is	as	follows:

| (in	thousands) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| United\tStates | $265,436 | $215,924 | $188,649 |
| Japan | 122,437 | 112,171 | 95,498 |
| Germany | 82,008 | 72,301 | 60,399 |
| Canada | 12,384 | 12,069 | 9,875 |
| Other\tEuropean | 177,069 | 166,551 | 138,157 |
| Other\tinternational | 138,684 | 112,433 | 87,658 |
| Total\trevenue | $798,018 | $691,449 | $580,236 |

Property	and	equipment	by	geographic	area	is	as	follows:

| (in	thousands) | 2012 | 2011 |
| :--- | :--- | :--- |
| United\tStates | $36,716 | $30,917 |
| United\tKingdom | 3,532 | 3,077 |
| India | 3,392 | 3,092 |
| France | 2,378 | 2,388 |
| Germany | 2,087 | 1,843 |
| Japan | 1,253 | 1,447 |
| Canada | 753 | 938 |
| Other\tEuropean | 1,173 | 957 |
| Other\tinternational | 969 | 979 |
| Total\tproperty\tand\tequipment | $52,253 | $45,638 |

# 19. Unconditional	Purchase

# Obligations

The	Company	has	entered	into	various	unconditional	purchase	obligations	which	primarily	include	software	licenses	and	long-term	purchase	contracts	for	network, communication	and	office	maintenance	services.	The	Company	expended	$4.0	million,	$5.0	million	and	$2.9	million	related	to	unconditional	purchase	obligations	that existed	as	of	the	beginning	of	each	year	for	the	years	ended	December	31,	2012,	2011	and	2010,	respectively.	Future	expenditures	under	these	obligations	in	effect	at December	31,	2012	are	$3.3	million	in	2013,	$0.2	million	in	2014	and	$30,000	in	2015.

# 20. Contingencies	and	Commitments

The	Company	is	subject	to	various	investigations,	claims	and	legal	proceedings	that	arise	in	the	ordinary	course	of	business,	including	alleged	infringement	of intellectual	property	rights,	commercial	disputes,	labor	and	employment	matters,	tax	audits	and	other	matters.	In	the	opinion	of	the	Company,	the	resolution	of	pending matters	is	not	expected	to	have	a	material,	adverse	effect	on	the	Company's	consolidated	results	of	operations,	cash	flows	or	financial	position.	However,	each	of	these matters	is	subject	to	various	uncertainties	and	it	is	possible	that	an	unfavorable	resolution	of	one	or	more	of	these	proceedings	could	materially	affect	the	Company's results	of	operations,	cash	flows	or	financial	position.

The	Company	sells	software	licenses	and	services	to	its	customers	under	proprietary	software	license	agreements.	Each	license	agreement	contains	the	relevant	terms	of the	contractual	arrangement	with	the	customer,	and	generally	includes	certain	provisions	for	indemnifying	the	customer	against	losses,	expenses	and	liabilities	from damages	that	are	incurred	by	or	awarded	against	the	customer	in	the	event	the	Company's	software	or	services	are	found	to	infringe	upon	a	patent,	copyright	or	other proprietary	right	of	a	third	party.	To	date,	the	Company	has	not	had	to	reimburse	any	of	its	customers	for	any	losses	related	to	these	indemnification	provisions	and	no material	claims	asserted	under	these	indemnification	provisions	are	outstanding	as	of	December	31,	2012.	For	several	reasons,	including	the	lack	of	prior	material indemnification	claims,	the	Company	cannot	determine	the	maximum	amount	of	potential	future	payments,	if	any,	related	to	such	indemnification	provisions.

# 21. Subsidiary	Merger	Activities

To	improve	the	effectiveness	of	the	Company's	operations	in	Japan,	the	Company	completed	the	merger	of	its	Japan	subsidiaries	during	the	third	quarter	of	2010.	For tax	purposes	in	Japan,	this	transaction	resulted	in	a	step-up	in	the	tax	basis	of	certain	assets	and	liabilities	of	the	merged	subsidiary	to	fair	value	as	of	the	date	of	the merger	and	gave	rise	to	a	taxable	gain	in	Japan,	resulting	in	a	liability	of	$77.3	million	which	was	paid	during	the	fourth	quarter	of	2010.	The	unamortized	portion	of	the corresponding	prepaid	tax,	which	is	deductible	over	the	succeeding	five-year	period	in	Japan	for	the	stepped-up	tax	basis	of	the	assets	and	liabilities,	is	included	on	the consolidated	balance	sheets	as	of	December	31,	2012	and	2011.

For	U.S.	tax	purposes,	this	taxable	gain	in	Japan	gave	rise	to	a	foreign	tax	credit	that	reduced	the	current	U.S.	tax	on	foreign	income.	The	Company's	U.S.	tax	payments were	reduced	by	$22.4	million	in	2010	as	a	result	of	this	credit.	The	Company	filed	an	amended	tax	return	in	order	to	request	a	refund	of	$26.3	million	for	a	portion	of this	foreign	tax	credit	which	can	be	carried	back	to	reduce	the	tax	obligation	of	previous	years.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	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.

Vice	President,	Finance	and	Administration

# POWER	OF	ATTORNEY

KNOW	ALL	PERSONS	BY	THESE	PRESENTS,	that	each	person	whose	signature	appears	below	constitutes	and	appoints	James	E.	Cashman	III,	his	or	her	attorney- in-fact,	with	the	power	of	substitution,	for	such	person	in	any	and	all	capacities,	to	sign	any	amendments	to	this	Report	on	Form	10-K,	and	to	file	the	same,	with	exhibits thereto	and	other	documents	in	connection	therewith,	with	the	Securities	and	Exchange	Commission,	hereby	ratifying	and	confirming	all	that	said	attorney-in-fact,	or substitute	or	substitutes,	may	do	or	cause	to	be	done	by	virtue	hereof.

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	Annual	Report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	Registrant	and in	the	capacities	and	on	the	dates	indicated	below.

# SCHEDULE	II

# Valuation	and	Qualifying	Accounts

| (in	thousands)<br>Description | Balance		at<br>Beginning<br>of	Year | Additions–<br>Charges	to	Costs<br>and	Expenses | Deductions–<br>Returns	and<br>Write-Offs | Balance	at<br>End<br>of	Year |
| :--- | :--- | :--- | :--- | :--- |
| Year\tended\tDecember\t31,\t2012\nAllowance\tfor\tdoubtful\taccounts | $4,101 | $938 | $239 | $4,800 |
| Year\tended\tDecember\t31,\t2011\nAllowance\tfor\tdoubtful\taccounts | $4,503 | $404 | $806 | $4,101 |
| Year\tended\tDecember\t31,\t2010\nAllowance\tfor\tdoubtful\taccounts | $4,418 | $1,757 | $1,672 | $4,503 |

10.30 Form	of	Non-Employee	Director	Non-Qualified	Stock	Option	Agreement	under	the	Fourth	Amended	and	Restated	ANSYS,	Inc.	1996	Stock	Option and	Grant	Plan	(filed	as	Exhibit	10.2	to	the	Company's	Quarterly	Report	on	Form	10-Q,	filed	August	2,	2012,	and	incorporated	herein	by reference).*

# * Indicates	management	contract	or	compensatory	plan,	contract	or	arrangement.



Question: what is the range , in thousands , for united states' revenue from 2010-2012?
Calculation:     us_revenue = 265436 - 188649
 answer = us_revenue
Answer: 76787