# 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,	2016

o 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)

2600	ANSYS	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		x				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		x

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		x				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		x				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		x

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	30,	2016	as	reported on	the	NASDAQ	Global	Select	Market,	was	$6,086,000,000.	Shares	of	Common	Stock	held	by	each	officer	and	director,	and	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	14,	2017	was	85,373,363	shares.

# Documents	Incorporated	By	Reference:

Portions	of	the	Proxy	Statement	for	the	Registrant's	2017	Annual	Meeting	of	Stockholders	are	incorporated	by	reference	into	Part	III.

# ANNUAL	REPORT	ON	FORM	10-K	FOR	FISCAL	YEAR	2016

# Table	of	Contents

# PART	I

| Item	1. | Business | 3 |
| :--- | :--- | :--- |
| Item\t1A. | Risk\tFactors | 10 |
| Item\t1B. | Unresolved\tStaff\tComments | 18 |
| Item\t2. | Properties | 18 |
| Item\t3. | Legal\tProceedings | 19 |
| Item\t4. | Mine\tSafety\tDisclosures | 19 |
| PART\tII |  |  |
| Item\t5. | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 20 |
| Item\t6. | Selected\tFinancial\tData | 23 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 24 |
| Item\t7A. | Quantitative\tand\tQualitative\tDisclosures\tabout\tMarket\tRisk | 49 |
| Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 50 |
| Item\t9. | Changes\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 51 |
| Item\t9A. | Controls\tand\tProcedures | 51 |
| Item\t9B. | Other\tInformation | 51 |
| PART\tIII |  |  |
| Item\t10. | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 52 |
| Item\t11. | Executive\tCompensation | 52 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement,\tand\tRelated\tStockholder\tMatters | 52 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 52 |
| Item\t14. | Principal\tAccounting\tFees\tand\tServices | 52 |
| PART\tIV |  |  |
| Item\t15. | Exhibits\tand\tFinancial\tStatement\tSchedules | 53 |
| Item\t16. | Form\t10-K\tSummary | 90 |
| SIGNATURES |  | 84 |

# 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,	2016,	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	and	defense,	automotive,	industrial	equipment,	electronics,	biomedical, energy,	materials	and	chemical	processing,	and	semiconductors.	Headquartered	south	of	Pittsburgh,	Pennsylvania,	the	Company	and	its	subsidiaries	employed approximately	2,800	people	as	of	December	31,	2016.	The	Company	focuses	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.

The	Company's	product	portfolio	consists	of	the	following:

# Simulation	Platform:	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™.

# 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 structures,	fluids,	thermal	and	electronics	simulations.	This	product	suite	decreases	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	extremely	robust	and	reliable	meshing.

# Customization

ANSYS	Workbench	enables	companies	to	create	a	customized	simulation	environment	to	deploy	specialized	simulation	best	practices	and	automations	unique	to	their product	development	process	or	industry.	With	ANSYS	ACT,	end	users	or	ANSYS	partners	can	modify	the	user	interface,	process	simulation	data	or	embed	third-party applications	to	create	specialized	tools	based	on	ANSYS	Workbench.

# Structures

The	Company's	structural	analysis	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.

# 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	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.

# Composites

Composites	blend	two	or	more	materials	that	possess	very	different	properties.	The	Company's	composite	analysis	and	optimization	technology	efficiently	defines materials,	plies	and	stacking	sequences,	and	also	offers	a	wide	choice	of	state-of-the-art	failure	criteria.	The	Company's	composite	software	provides	all	necessary functionalities	for	finite	element	analysis	of	layered	composites	structures.

# Fluids

The	Company's	fluids	product	suite	enables	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	suite	contains	general-purpose	computational	fluid	dynamics	software and	specialized	products	to	address	specific	industry	applications.

# Electronics

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

# Semiconductors

Advancements	in	semiconductor	design	and	manufacturing	enable	smaller	electronic	architectures.	Shrinking	geometries,	especially	in	the	emerging	3D	IC,	FinFET	and stacked-die	architectures,	reveal	design	challenges	related	to	power	and	reliability.	The	Company's	power	analysis	and	optimization	software	suite	manages	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,	efficiently	for	ease-of-debug	and	fast	turnaround time;	and	comprehensiveness	to	facilitate	cross-domain	communications	and	electronic	ecosystem	enablement.

# Multiphysics

The	Company's	Workbench	framework	allows	engineers	and	designers	to	incorporate	the	compounding	effects	of	multiple	physics	into	a	virtual	prototype	of	their	design and	simulate	its	operation	under	real-world	conditions.	As	product	architectures	become	smaller,	lighter	and	more	complex,	companies	must	be	able	to	accurately predict	how	products	will	behave	in	real-world	environments,	where	multiple	types	of	physics	interact	in	a	coupled	way.	ANSYS	multiphysics	software	enables engineers	and	scientists	to	simulate	the	interactions	between	structures,	heat	transfer,	fluids	and	electronics	all	within	a	single,	unified	engineering	simulation environment.

AIM	is	a	single-window	application	which	integrates	structural,	fluids	and	electromagnetics	simulation	and	includes	all	aspects	of	the	simulation	workflow.	Its	easy-to- use	interface	and	guided	workflows	are	designed	for	casual	simulation	users,	and	its	integrated	3-D	modeling	and	optimization	tools	are	well-suited	for	exploring	designs early	in	the	product	lifecycle.	AIM's	user	interface	is	easily	customized	to	comply	with	a	company's	standards	for	simulation	or	to	create	simulation	templates	for	unique industry	applications.	AIM	is	based	on	the	same,	industry-proven	solver	technology	from	the	fluids,	structures	and	electronics	suites	and	provides	fast	and	accurate results.

# Embedded	Software

The	Company's	SCADE	product	suite	is	a	comprehensive	solution	for	embedded	software	simulation,	code	production	and	automated	certification.	It	has	been developed	specifically	for	use	in	critical	systems	with	high	dependability	requirements,	including	aerospace,	rail	transportation,	nuclear,	industrial	and,	more	recently, automotive	applications.	SCADE	software	supports	the	entire	development	workflow,	from	requirements	analysis	and	design,	through	verification,	implementation	and deployment.	SCADE	solutions	easily	integrate	with	each	other	and	the	rest	of	the	ANSYS	product	suite,	allowing	for	development	optimization	and	increased communication	among	team	members.

# Systems

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.

# 3-D	Direct	Modeling

The	Company's	3-D	direct	modeling	technology	provides	a	CAD-neutral	environment	to	modify	and	prepare	geometry	for	simulation.	This	approach	allows	engineers	to dramatically	reduce	the	pre-processing	step	in	simulation,	and	ultimately	delivers	product	design	insights	much	faster	in	the	earliest	stages	of	development.

# Academic

The	Company's	academic	product	suite	provides	a	highly	scalable	portfolio	of	academic	products	based	on	several	usage	tiers,	including	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	includes	flexible	terms	of	use	and	more	complex	analysis	suitable	for doctoral	and	post-doctoral	research	projects.	The	Company	also	provides	a	special	product	at	no	cost	to	students	that	is	suitable	for	use	away	from	the	classroom	and	in non-commercial	applications.

# PRODUCT	DEVELOPMENT

The	Company	makes	significant	investments	in	research	and	development	and	emphasizes	frequent,	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	("PLM")	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"),	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	the	year	ended	December	31,	2016	and	in	the	period	from	January	1,	2017	until	the	filing	date,	the	Company	completed	the	following	major	product development	activities	and	releases:

•In	January	2017,	the	Company	announced	the	release	of	ANSYS	18.0	with	major	advancements	in	the	entire	product	portfolio	to	create	complete	and	accurate digital	prototypes	across	the	major	physics	areas.	ANSYS	18.0	expanded	the	boundaries	of	simulation	with	new	developments	to	enable	simulation	earlier	in the	product	lifecycle,	as	well	as	downstream	in	the	operation	phase,	using	digital	twins.	A	digital	twin	is	a	real-time,	virtual	copy	of	an	actual	operating	machine that	provides	insight	into	individual	product	performance	and	maintenance.	Additionally,	ANSYS	18.0	introduced	a	new,	comprehensive	fluids	product,	which includes	full	versions	of	all	ANSYS	fluids	solvers	for	customers	solving	the	toughest	and	broadest	range	of	fluid	dynamics	problems.	New	technology	in	the structures	product	line	was	delivered	to	design	and	optimize	products	for	additive	manufacturing	methods,	and	a	new	automotive	embedded	software	package was	introduced	for	developing	advanced	driver	assistance	systems	applications.

•In	August	2016,	ANSYS	17.2	was	released	with	new	functionality	for	antenna	design	to	meet	the	growing	demand	of	wireless	devices	and	the	Internet	of Things,	as	well	as	enhanced	multiphysics	coupling	for	electronics	and	electric	motors.	ANSYS	17.2	also	included	improved	links	to	other	tools	in	the	product development	lifecycle.	The	embedded	software	suite	added	new	interoperability	with	third-party	requirement	management	tools,	and	the	fluids	suite	was extended	to	allow	detailed	combustion	models	to	be	included	in	third-party	1-D	simulation	products.

•In	May	2016,	the	Company	announced	the	release	of	ANSYS	17.1	which	featured	enhancements	to	the	electronics,	semiconductor,	structures	and	fluids product	lines.	AIM,	the	Company's	immersive,	multiphysics	user	environment,	was	enhanced	to	support	magnetostatics	and	coupled	magnetic-thermal- structural	analysis	to	rapidly	design	electromechanical	products.	Polymer	extrusion	simulation	was	also	added	in	AIM.	With	ANSYS	17.1,	structures, electronics	and	embedded	software	customers	gained	access	to	entry-level	system	simulation	capabilities	to	analyze	how	detailed	component	physics	and embedded	controls	affect	overall	system	design.

•In	the	second	quarter	of	2016,	the	Company	announced	ANSYS	SeaScape™,	a	unique	architecture	which	provides	services	for	elastic	computing,	machine learning	and	big	data	analytics	for	engineering	simulation	applications.	With	the	SeaScape	architecture,	computation	can	be	easily	scaled	across	commodity hardware	to	deliver	broad	and	rapid	simulation	coverage.	Additionally,	SeaScape	provides	a	high-level	programming	interface	to	perform	data	analytics	on large	simulation	datasets	to	identify	actionable	design	changes.	ANSYS	SeaHawk™	is	the	first	new	product	to	take	advantage	of	the	new	architecture	for electronic	design	automation.	ANSYS	SeaScape	allows	designers	of	advanced	system-on-chip	designs	to	assess	more	electromigration	and	voltage	drop scenarios	per	day	than	with	traditional	architectures	and	develop	a	high	level	of	confidence	of	their	design	prior	to	sign-off.

•In	January	2016,	the	Company	released	ANSYS	17.0.	Demonstrable	order	of	magnitude	speed-ups	were	made	across	fluids,	structures	and	electromagnetic simulation	with	HPC	solutions.	Engineering	teams	can	leverage	this	power	from	their	desktop	or	Cloud	environments.	Significant	innovation	was	delivered across	all	physics	domains	in	ANSYS	17.0	as	well	as	in	the	area	of	complete	virtual	prototyping,	allowing	for	full	systems	simulations.	The	ANSYS Workbench	platform	expanded	its	integrated	interface	for	customization	to	cover	virtually	the	entire	portfolio	as	well	as	third-party	solutions,	sustaining	its leadership	as	the	industry's	broadest	engineering	simulation	platform.

The	Company's	total	research	and	development	expenses	were	$183.1	million,	$168.8	million	and	$165.4	million	in	2016,	2015	and	2014,	respectively,	or	18.5%,	17.9% and	17.7%	of	total	revenue,	respectively.	As	of	December	31,	2016,	the	Company's	product	development	staff	consisted	of	approximately	1,000	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	expanding	the	ease	of	use	and	capabilities	of	its broad	portfolio	of	simulation	software	products.	More	specifically,	this	includes	the	evolution	of	its	ANSYS	Workbench	platform,	expansion	of	high-performance computing	capabilities,	ANSYS	AIM	immersive	user	interface,	offerings	on	ANSYS	Enterprise	Cloud™,	robust	design	and	ongoing	integration	of	acquired	technology.

# 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 channel	partner	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.	The	Company	derived	24.4%,	24.2%	and	24.9%	of	its	total	revenue	through the	indirect	sales	channel	for	the	years	ended	December	31,	2016,	2015	and	2014,	respectively.

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.

During	2016,	the	Company	continued	to	invest	in	its	existing	domestic	and	international	strategic	sales	offices.	In	total,	the	Company's	direct	sales	organization comprises	1,300	employees	who	are	responsible	for	the	sales,	technical	support,	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	2016,	2015	or	2014.

Information	with	respect	to	foreign	and	domestic	revenue	may	be	found	in	Note	16	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,	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,	PTC	and	Siemens	Product	Lifecycle	Management	Software,	to provide	direct	links	between	products.	These	links	facilitate	the	transfer	of	electronic	data	models	between	the	CAD	systems	and	ANSYS	products.

The	Company	also	has	a	relationship	with	Spatial	Corp.	to	provide	the	3-D	modeling	kernel	technology	upon	which	the	Company's	in-house	geometry	modeling software	solutions	are	built.

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

The	Company	has	established	various	initiatives	with	partners	to	increase	customers'	engineering	productivity	by	simplifying	and	increasing	the	adoption	of	HPC.	For example,	the	Company	has	partnered	with	companies	like	Fujitsu,	HPE	and	Lenovo,	and	developed	turn-key	HPC	appliances	which	are	out-of-the-box,	plug-and- simulate,	externally	managed	HPC	clusters,	optimized	for	ANSYS	applications,	and	pre-configured	with	ANSYS	software	and	job	management	software.	In	addition, the	Company	joined	the	OpenHPC	community	to	enable	customers	to	reduce	risk	and	to	save	time	with	specifying,	deploying	and	managing	HPC	systems.	In	2015, ANSYS	and	Cray,	working	in	conjunction	with	the	NCSA	and	NERSC	supercomputing	centers,	established	a	new	simulation	world	record	by	scaling	ANSYS	Fluent® to	129,000	compute	cores.

In	the	area	of	cloud	computing,	the	Company	has	tightened	its	partnership	with	Amazon	Web	Services	by	providing	enterprise	customers	a	reference	architecture	for end-to-end	simulation	that	can	be	globally	deployed	in	a	virtual	private	cloud	on	demand.	The	Company's	open	cloud	strategy	allows	it	to	work	with	various	public	cloud providers	and	cloud	hosting	partners.	Due	to

the	Company's	participation	in	the	AWS	Partner	Network,	the	Company	was	able	to	work	with	other	partners	who	had	extensive	expertise	running	workloads	in	the Cloud,	such	as	Cycle	Computing	and	NICE	Software,	to	develop	the	new	ANSYS	Enterprise	Cloud	solution.	This	solution	makes	it	easy	for	customers	to	use	the	same work	flows	on-premise	and	on	the	Cloud.	In	addition,	the	Company	strengthened	its	other	cloud-hosting	service	partnerships	by	further	improving	best	practices	for executing	engineering	simulation	in	the	Cloud.

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	optimization,	electronics,	mechanical	simulation,	fluid	simulation	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.

The	Company	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	before	a	prototype	is	built.

The	Company	has	a	software	license	agreement	with	NICE	that	targets	the	emerging	paradigm	of	data-center-based	deployment	of	simulation.	EnginFrame	from	NICE is	bundled	with	ANSYS	EKM	and	facilitates	running	interactive	ANSYS	applications	on	remote	data	centers.

# 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	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.	To	the	extent	the	Company	does	not	choose	to	seek	patent	protection	for	its	intellectual	property,	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.	These	agreements,	where legally	permitted,	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	state	that	any	products	or	technology	created	by	employees	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	be prevented.	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	similar, unpatented	technology.

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	release	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	slowdowns	of	customer	activities	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.

# DEFERRED	REVENUE	AND	BACKLOG

Deferred	revenue	consists	of	billings	made	or	payments	received	in	advance	of	revenue	recognition	from	software	license	and	maintenance	agreements.	The	deferred revenue	on	the	Company's	consolidated	balance	sheets	does	not	represent	the	total	value	of	annual	or	multi-year,	noncancellable	software	license	and	maintenance agreements.	The	Company's	backlog	represents	installment	billings	for	periods	beyond	the	current	quarterly	billing	cycle	and	customer	orders	received	but	not processed.	The	Company's	deferred	revenue	and	backlog	as	of	December	31,	2016	and	2015	consisted	of	the	following:

| (in	thousands) | Total | Current | Long-Term |
| :--- | :--- | :--- | :--- |
| Deferred\trevenue | $415,846 | $403,279 | $12,567 |
| Backlog | 221,994 | 64,361 | 157,633 |
| Total | $637,840 | $467,640 | $170,200 |

| (in	thousands) | Total | Current | Long-Term |
| :--- | :--- | :--- | :--- |
| Deferred\trevenue | $379,740 | $364,644 | $15,096 |
| Backlog | 124,290 | 47,015 | 77,275 |
| Total | $504,030 | $411,659 | $92,371 |

Revenue	associated	with	deferred	revenue	and	backlog	that	will	be	recognized	in	the	subsequent	twelve	months	is	classified	as	current	in	the	table	above.

# EMPLOYEES

As	of	December	31,	2016,	the	Company	employed	approximately	2,800	people.	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.

# ACQUISITIONS

The	Company	makes	targeted	acquisitions	in	order	to	support	its	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.

During	the	twelve	months	ended	December	31,	2016	and	2015,	the	Company	completed	various	acquisitions	to	accelerate	the	development	of	new	and	innovative products	to	the	marketplace	while	lowering	design	and	engineering	costs	for	customers.	The	acquisitions	were	not	individually	significant.	The	combined	purchase	prices of	the	acquisitions	were	approximately	$10.3	million	and	$49.7	million	for	the	years	ended	December	31,	2016	and	2015,	respectively.

During	the	year	ended	December	31,	2014,	the	combined	purchase	price	for	acquisitions	was	$104.0	million.	These	acquisitions	are	further	described	in	the	table	below:

For	further	information	on	the	Company's	business	combinations,	see	Note	3	to	the	consolidated	financial	statements	included	in	Part	IV,	Item	15	of	this	Annual	Report on	Form	10-K.

# AVAILABLE	INFORMATION

The	Company's	website	is	www.ansys.com.	The	Company	also	maintains	a	presence	on	social	media	through	its	blog	at	www.ansys-blog.com,	Facebook	page	at www.facebook.com/ANSYSInc,	Twitter	account	at	twitter.com/ANSYS,	YouTube	account	at	www.youtube.com/user/ansysinc	and	LinkedIn	page	at www.linkedin.com/company/ansys-inc.	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,	and	Nominating	and	Corporate	Governance	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 or	social	media	accounts	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	Company's	operations	and	performance	depend	significantly	on	foreign	and	domestic	economic	conditions.	Uncertainty	in	the macroeconomic	environment,	as	well	as	geopolitical	conditions,	have	resulted	in	significant	volatility	in	credit,	equity	and	foreign	currency	markets.	This	volatility	and the	related	economic	conditions	may	negatively	impact	the	Company	as	customers	defer	spending	in	response	to	tighter	credit,	higher	unemployment,	financial	market volatility,	government	austerity	programs,	negative	financial	news,	declining	valuations	of	investments	and	other	factors.	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	as	they	have	in	prior	periods.	Customer	spending levels	may	be	impacted	by	decreased	government	spending	in	certain	countries	as	concerns	continue	regarding	economic	conditions	and	government	debt	levels.	These conditions	may	persist	or	further	deteriorate	for	an	extended	period	of	time.	As	the	global	economy	continues	to	experience	volatility,	the	Company	may	be	exposed	to impairments	of	certain	assets	as	their	values	deteriorate.

Tighter	credit	due	to	economic	conditions	may	diminish	the	Company's	future	borrowing	ability.	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.	Since	the Company	is	exposed	to	the	majority	of	major	world	markets,	uncertainty	in	any	significant	market	may	negatively	impact	the	Company's	performance	and	results, particularly	with	respect	to	the	Company's	largest	geographic	customer	bases.	The	Company	is	unable	to	predict	the	likely	duration	and	severity	of	changing	economic conditions	or	the	likelihood	of	additional	uncertainty	arising	in	any	of	the	Company's	key	markets.	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'	Businesses.	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.	These	factors	may	also	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	renewals	of	licenses	or	maintenance	contracts	with	the	Company.	The	Company's	customers	may	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.	If	any	of	the foreign	economies	in	which	the	Company	does	business	deteriorate	or	suffer	periods	of	uncertainty,	the	Company's	business	and	performance	may	be	negatively impacted	through	reduced	customer	spending,	changes	in	purchasing	cycles	or	timing,	reduced	access	to	credit	for	its	customers,	or	other	factors	impacting	the Company's	international	sales	and	collections.	The	Company's	results	may	also	be	negatively	impacted	by	geopolitical	tensions,	which	may	result	in	increased	economic volatility.

As	a	result	of	its	increasing	international	activities,	the	Company	has	revenue,	expenses,	cash,	accounts	receivable	and	payment	obligations	denominated	in	foreign currencies.	As	a	result,	the	Company	is	subject	to	currency	exchange	risk.	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	Japanese	Yen,	Euro,	British	Pound,	South	Korean	Won,	Indian	Rupee,	Canadian	Dollar	and	U.S.	Dollar.	The	Company	seeks to	reduce	currency	exchange	transaction	risks	primarily	through	its	normal	operating	and	treasury	activities,	but	there	can	be	no	assurance	that	it	will	be	successful	in reducing	these	risks.

In	June	2016,	the	United	Kingdom	voted	to	leave	the	European	Union.	The	long-term	impact	of	the	decision	is	uncertain.	As	a	result,	the	Company's	business	in	the United	Kingdom	and	Europe	could	be	adversely	impacted	due	to	political	and	economic	instability,	fluctuations	in	currency	exchange	rates,	changes	in	laws	and regulations,	and	other	factors.	These	risks	could	negatively	impact	the	Company's	financial	position,	results	of	operations	and	cash	flows.

In	May	2018,	a	new	set	of	data	protection	rules	will	go	into	effect	in	the	European	Union.	These	rules	provide	a	unified	and	comprehensive	set	of	requirements	for	data protection	of	individuals	within	the	European	Union.	The	Company	will	be	subject	to	these	requirements,	which	include	potentially	significant	monetary	penalties	for noncompliance.	If	the	Company	fails	to	comply	with	the	new	regulations,	its	reputation	may	suffer	and	its	financial	position,	results	of	operations	and	cash	flows	may	be negatively	impacted.

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;	the	violation	of	anti-corruption	laws	and	regulations,	which	are	applicable	to	the	Company,	by	third	parties	in countries	where	such	conduct	may	be	permissible	or	commonplace;	political	and	economic	instability;	trade	restrictions;	changes	in	tariffs	and	taxes;	difficulties	in staffing	and	managing	international	operations;	changes	in	data	privacy	regulations;	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.

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	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.

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	Errors.	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	the	new	products	will	adequately	address	the	changing	needs	of	the	marketplace	or	that	the	Company	will	successfully	manage	the	transition	from existing	products.	Software	products	as	complex	as	those	offered	by	the	Company	may	contain	undetected	errors	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	the	commencement	of	commercial	shipments.	Certain	products	require	a	higher	level	of	sales	and	support	expertise. Failure	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.	Product	quality	issues	or	failures	could	result	in	the	Company's	reputation becoming	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	competed	or	may	in	the	future	elect	to	compete	by means	of	open	source	licensing.	Parties	among	the	Company's	current	or	future	strategic	alliances	may	diminish	or	sever	technical,	software	development	and	marketing relationships	with	the	Company	for	competitive	purposes.	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	discounts	or	other	favorable	terms	in	order	to	compete	successfully.	Any such	changes	may	reduce	operating	margins	and	could	adversely	affect	operating	results.	The	Company's	maintenance	products,	which	include	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	or	product	support	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,	product	implementations	or	wider	geographical	license	usage	provisions.	These	practices	could,	over	time, significantly	constrain	the	prices	that	the	Company	can	charge	for	certain	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	immigration	laws	become	stricter	or	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	copyrights,	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	the	Company's	Products,	Source	Code	and	IT	Systems.	The	Company	makes	significant	efforts	to	maintain	and	improve	the	security and	integrity	of	its	products,	source	code,	computer	systems	and	data.	Despite	significant	efforts	to	create	security	barriers	to	such	programs,	it	is	virtually	impossible	for the	Company	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	the	Company's	products	and	computer	systems.	Because	the	techniques	used	to	obtain	unauthorized access	to	networks	or	to	sabotage	systems	change	frequently	and	generally	are	not	recognized	until	launched	against	a	target,	the	Company	may	be	unable	to	anticipate these	techniques	or	to	implement	adequate	preventative	measures.	Like	all	software	products,	the	Company's	software	is	vulnerable	to	such	attacks.	The	impact	of	such an	attack	could	disrupt	the	proper	functioning	of	the	Company's	software	products,	cause	errors	in	the	output	of	its	customers'	work,	allow	unauthorized	access	to sensitive,	proprietary	or	confidential	information	of	the	Company	or	its	customers	and	result	in	other	destructive	outcomes.	If	this	were	to	occur,	the	Company's reputation	may	suffer,	customers	may	stop	buying	products,	the	Company	could	face	lawsuits	and	potential	liability,	and	the	Company's	financial	performance	could	be negatively	impacted.

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

Policing	the	unauthorized	distribution	and	use	of	the	Company's	products	is	difficult,	and	software	piracy	(including	online	piracy)	is	a	persistent	problem.	The proliferation	of	technology	designed	to	circumvent	typical	software	protection	measures	used	in	the	Company's	products,	and	the	possibility	of	methods	that	circumvent the	techniques	it	employs	in	its	products,	may	lead	to	an	expansion	in	piracy	or	misuse	of	its	products	and	intellectual	property.	As	a	result,	and	despite	the	Company's efforts	to	prevent	such	activities	and	to	prosecute	instances	of	such	activities,	the	Company	may	nonetheless	lose	significant	revenue	due	to	illegal	use	of	its	software, and	management's	attention	may	be	diverted	to	address	specific	instances	of	piracy	or	misuse,	or	to	address	piracy	and	misuse	in	general.

A	number	of	the	Company's	core	processes,	such	as	software	development,	sales	and	marketing,	customer	service	and	financial	transactions,	rely	on	its	IT	infrastructure and	applications.	The	Company	also	relies	upon	third-party	products,	which	are	exposed	to	various	security	vulnerabilities.	Malicious	software,	sabotage	and	other cybersecurity	breaches	of	the	types	discussed	above	could	cause	an	outage	of	the	Company's	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	the	Company's	business,	financial	position, profit	and	cash	flows.

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

Implementation	of	IT	Systems.	The	Company	is	currently	implementing	a	new	Customer	Relationship	Management	(CRM)	system	and	moving	the	billing	and	revenue recognition	processes	from	the	Company's	existing	ERP	accounting	system	to	an	application	of	the	new	CRM	system.	While	these	systems,	along	with	the	re-design	of the	processes	described	above,	are	anticipated	to	simplify	the	sales	and	order	processing	efforts	and	to	enhance	customer	service	and	aid	in	the	application	of	the	new revenue	accounting	standard,	there	is	a	risk	that	the	project	will	not	achieve	the	anticipated	benefits	or	that	the	benefits	will	not	be	achieved	as	quickly	as	anticipated.	The project	implementation	timeline	and	scope	may	change	and	become	longer	and	broader	as	new	facets	of	the	design	and	implementation	efforts	are	undertaken.	This	may take	the	attention	of	key	operational	management	away	from	other	aspects	of	the	business,	including	the	integration	of	acquisitions,	and	also	result	in	increased consulting	and	software	costs.	These	factors	may	have	a	significant	negative	impact	on	the	Company's	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.

The	Company	has	been	increasing	its	number	of	channel	partners,	particularly	in	international	locations.	The	business	relationships	with	these	channel	partners	are recently	established	and	could	result	in	additional	compliance	burdens	for	the	Company.	These	partners	also	have	a	less-established	payment	history	with	the	Company and	revenue	from	these	partners	could	come	with	a	higher	rate	of	bad	debt	expense.

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	the	payment	of	a	single,	up-front	fee.	Historically,	these	licenses	have	been	more typical	in	the	computer	software	industry	and	remain	as	the	preferred	licensing	approach	in	certain	markets.	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	significantly	on	sales	completed	during	that	period.	If	customer	purchasing patterns	shift	toward	a	stronger	preference	for	lease	licenses	and	fewer	perpetual	licenses,	as	the	Company	has	recently	experienced,	there	could	be	a	short-term,	adverse impact	on	the	Company's	revenue	and	profitability.

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	existing	products,	supply	new	products	and	services,	expand	its	customer	base	and	enhance	its	distribution	channels.	The Company	has	completed	a	number	of	acquisitions	in	recent	years	and	expects	to	make	additional	acquisitions	in	the	future,	but	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	including,	among	others,	difficulty	in integrating	the	management	teams,	strategies,	cultures	and	operations	of	the	companies;	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;	difficulty	in	training	the	global	sales	team	to	sell	the	acquired	products;	failure	to	develop	new	products	and	services that	utilize	the	technologies	and	resources	of	the	companies;	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,	resulting	in	the	loss	of	key	information,	expertise	or	know-how,	and	unanticipated	additional	recruitment	and	training	costs;	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,	there	could	be	a	material adverse	effect	on	the	Company's	stock	price,	business,	financial	position,	results	of	operations	and	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.

The	Company	may	periodically	be	involved	in	business	combinations	with	enterprises	that	are	developmental	in	nature.	While	these	entities	have	leading-edge technology,	they	may	not	have	developed	direct	or	indirect	distribution	channels	and	may	not	have	software	revenues	which	cover	the	ongoing	expenses.	Therefore,	the Company	may	have	a	decrease	in	operating	margin	and	profitability	while	these	types	of	acquisitions	are	integrated	and	the	distribution	channel	incorporates	the	new product	offerings.

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.

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.

Industry	Consolidation.	Consolidation	in	industries	that	utilize	the	Company's	software	may	result	in	combined	workforces where	economies	of	scale	and	synergies	are	achieved,	and	fewer	ANSYS	software	licenses	are	required.	Consolidation	may also	result	in	the	newly	combined/surviving	entity	wanting	the	most	favorable	pricing	from	the	former	contracts	and	expecting

larger	volume	discounts	on	future	purchases.	If	a	customer	is	acquired	by	an	entity	that	does	not	utilize	ANSYS	in	favor	of	a	competing	product,	the	Company	may	not have	future	orders	from	the	enterprise.	Further,	consolidation	of	the	Company's	competitors	may	result	in	synergies	that	allow	those	competitors	to	benefit	from	broader sales	channels	and	increased	access	to	capital.	Any	of	these	impacts	could	adversely	affect	the	Company's	business,	financial	position,	results	of	operations	and	cash flows.

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	leadership	and/or	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.

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	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.

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	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	and	other	countries,	the	Foreign	Corrupt	Practices	Act,	the United	Kingdom	Bribery	Act	of	2010	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	commercial disputes,	labor	and	employment	matters,	tax	audits,	alleged	infringement	of	intellectual	property	rights	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	and 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.

In	addition,	the	Company	could	incur	significant	costs	for	changes	to	its	business	systems,	processes	and	internal	controls	as	a	result	of	the	transition.	These	costs	could have	a	significant	adverse	impact	on	the	Company's	results	of	operations	and	cash	flows.	The	transition	could	also	cause	management	to	divert	time	from	the	day-to-day operations	of	the	Company,	which	could	impact	the	Company's	business.	If	the	Company	is	unable	to	successfully	transition	its	business	systems,	processes	and	internal controls	before	the	guidance	effective	date,	it	could	impact	the	ability	to	meet	financial	reporting	deadlines.	For	further	information	on	the	impact	of	recently	issued accounting	guidance	on	the	Company,	see	Note	2	to	the	consolidated	financial	statements	included	in	Part	IV,	Item	15	of	this	Annual	Report	on	Form	10-K.

Of	particular	importance	to	the	Company's	business,	the	Financial	Accounting	Standards	Board	(FASB)	issued	Accounting	Standards	Update	No.	2014-09,	Revenue from	Contracts	with	Customers	(Topic	606),	effective	for	annual	periods	beginning	after	December	15,	2017,	which	supersedes	most	current	revenue	recognition guidance,	including	industry-specific	guidance.	This	update	is	expected	to	affect	the	timing	and	amounts	of	revenue	recognized,	which	could	have	an	adverse	impact	on the	Company's	revenue	and	results	of	operations.	The	Company	could	also	incur	significant	costs	for	implementing	the	new	guidance,	including	costs	to	change	internal controls,	systems,	processes	and	customer	contracts.	Efforts	to	implement	the	guidance	by	the	effective	date	could	divert	management's	attention	from	other	aspects	of the	business,	which	could	have	a	significant	adverse	impact	on	the	Company's	results	of	operations,	cash	flows	and	financial	position.

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,	an	adverse	change	in	the	treatment	of	an	item	of	income	or	expense, or	a	decrease	in	tax	rates	in	a	jurisdiction	in	which	the	Company	has	significant	deferred	tax	assets,	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	has	several	service	tax	audits	pending	that	have	resulted	in	formal	inquiries	being	received	on	transactions	through	mid-2012.	The Company	could	incur	tax	charges	and	related	liabilities,	including	those	related	to	the	service	tax	audit	case,	of	approximately	$7	million.	The	service	tax	issues	raised	in the	Company's	notices	and	inquiries	are	very	similar	to	the	case,	M/s	Microsoft	Corporation	(I)	(P)	Ltd.	Vs	Commissioner	of	Service	Tax,	New	Delhi,	wherein	the	Delhi Customs,	Excise	and	Service	Tax	Appellate	Tribunal	(CESTAT)	has	passed	a	favorable	ruling	to	Microsoft.	The	Company	can	provide	no	assurances	on	whether	the Microsoft	case's	favorable	ruling	will	be	challenged	in	higher	courts	or	on	the	impact	that	the	present	Microsoft	case's	decision	will	have	on	the	Company's	cases.	The Company	is	uncertain	as	to	when	these	service	tax	matters	will	be	concluded.

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

A	French	subsidiary	of	the	Company	received	notice	that	the	French	taxing	authority	rejected	the	Company's	2012	research	and	development	credit.	The	Company	has contested	the	decision.	However,	if	the	Company	does	not	receive	a	favorable	outcome,	it	could	incur	charges	of	approximately	$0.8	million.	In	addition,	an	unfavorable outcome	could	result	in	the	authorities	reviewing	or	rejecting	$3.8	million	of	similar	research	and	development	credits	for	2013	through	the	current	year	that	are currently	reflected	as	an	asset.	The	Company	can	provide	no	assurances	on	the	timing	or	outcome	of	this	matter.

# 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	2016	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	186,000	square foot	office	facility	in	Canonsburg,	Pennsylvania.	The	lease	for	this	facility	was	effective	as	of	September	14,	2012.	The	term	of	the	lease	is	183	months,	beginning	on October	1,	2014.

The	Company	owns:	a	65,000	square	foot	office	facility	in	Lebanon,	New	Hampshire;	a	62,000	square	foot	office	building	near	its	current	Canonsburg	headquarters; and	a	59,000	square	foot	facility	in	Pune,	India.

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.

The	Company's	properties	and	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	commercial	disputes,	labor	and employment	matters,	tax	audits,	alleged	infringement	of	intellectual	property	rights	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	prices	of	the	Company's	common	stock	in	each	of	the	Company's	last	eight	fiscal	quarters:

|  | Fiscal	Quarter	Ended	2016 | Fiscal	Quarter	Ended	2016 | Fiscal	Quarter	Ended	2015 | Fiscal	Quarter	Ended	2015 |
| :--- | :--- | :--- | :--- | :--- |
|  | Low\tSale\nPrice | High\tSale\nPrice | Low\tSale\nPrice | High\tSale\nPrice |
| December\t31 | $82.28 | $96.21 | $85.33 | $98.39 |
| September\t30 | $88.30 | $98.99 | $84.90 | $97.59 |
| June\t30 | $81.41 | $92.48 | $84.09 | $92.46 |
| March\t31 | $80.51 | $91.62 | $78.76 | $88.96 |

On	February	14,	2017,	there	were	151	stockholders	of	record	and	63,151	beneficial	holders	of	the	Company's	common	stock.

The	Company	has	not	paid	cash	dividends	on	its	common	stock	as	it	has	retained	earnings	primarily	for	acquisitions,	for	future	business	opportunities	and	to	repurchase stock	when	authorized	by	the	Board	of	Directors	and	when	such	repurchase	meets	the	Company's	objectives.	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.,	PTC	Inc.,	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,	2012	and	ending	December	31,	2016.	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,	2012,	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.

# anssstockgraph2016.jpg

ASSUMES	DIVIDENDS	REINVESTED

FIVE	FISCAL	YEARS	ENDING	DECEMBER	31,	2016

# Equity	Compensation	Plan	Information	as	of	December	31,	2016

| 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 | 2,900,006 | $58.54 | 10,134,170(3) |
| Ansoft\tCorporation\t2006\tStock\tIncentive\tPlan | 150,675 | $35.77 | — |
| Apache\tDesign\tSolutions,\tInc.\t2001\tStock/Option\tIssuance\tPlan | 71,229 | $19.27 | — |
| SpaceClaim\tCorporation\t2005\tStock\tIncentive\tPlan | 7,698 | $23.75 | — |
| Gear\tDesign\tSolutions,\tInc.\tStock\tIncentive\tPlan | 6,328 | $12.26 | — |
| 1996\tEmployee\tStock\tPurchase\tPlan | (1) | (2) | 350,772 |
| Equity\tCompensation\tPlans\tNot\tApproved\tby\tSecurity\tHolders |  |  |  |
| None |  |  |  |
| Total | 3,135,936 |  | 10,484,942 |

(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 period.

(3) The	number	of	securities	remaining	available	for	future	issuance	assumes	attainment	of	100%	for	awards	with	a	performance	condition	or	a	market condition.

# 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(1) |
| :--- | :--- | :--- | :--- | :--- |
| October\t1\t-\tOctober\t31,\t2016 | — | $— | — | 2,300,000 |
| November\t1\t-\tNovember\t30,\t2016 | 640,331 | $92.62 | 640,331 | 1,659,669 |
| December\t1\t-\tDecember\t31,\t2016 | 359,669 | $93.80 | 359,669 | 1,300,000 |
| Total | 1,000,000 | $93.05 | 1,000,000 | 1,300,000 |

(1)	The	Company	initially	announced	its	stock	repurchase	program	in	February	2000,	and	subsequently	announced	various	amendments	to	the	program.	The	most	recent amendment	to	the	program,	authorizing	the	repurchase	of	up	to	5,000,000	shares,	was	approved	by	the	Company's	Board	of	Directors	in	February	2017.	There	is	no expiration	date	to	this	amendment.

# ITEM	6. SELECTED	FINANCIAL	DATA

The	following	table	sets	forth	selected	financial	data	as	of	and	for	the	year	ended	December	31	for	each	of	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.

| (in	thousands,	except	per	share	data) | 2016 | 2015 | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Total\trevenue | $988,465 | $942,753 | $936,021 | $861,260 | $798,018 |
| Operating\tincome | 376,242 | 353,679 | 347,450 | 321,863 | 294,253 |
| Net\tincome | 265,636 | 252,521 | 254,690 | 245,327 | 203,483 |
| Earnings\tper\tshare\t–\tbasic | $3.05 | $2.82 | $2.77 | $2.65 | $2.20 |
| Weighted\taverage\tshares\t–\tbasic | 87,227 | 89,561 | 92,067 | 92,691 | 92,622 |
| Earnings\tper\tshare\t–\tdiluted | $2.99 | $2.76 | $2.70 | $2.58 | $2.14 |
| Weighted\taverage\tshares\t–\tdiluted | 88,969 | 91,502 | 94,194 | 95,139 | 94,954 |
| Total\tassets | $2,800,526 | $2,729,904 | $2,752,879 | $2,702,097 | $2,589,641 |
| Working\tcapital | 630,301 | 592,280 | 617,240 | 601,183 | 414,043 |
| Long-term\tliabilities | 53,021 | 51,331 | 70,303 | 125,469 | 173,372 |
| Stockholders'\tequity | 2,208,405 | 2,194,427 | 2,217,501 | 2,136,246 | 1,940,291 |
| Cash\tprovided\tby\toperating\tactivities | 356,827 | 367,523 | 385,307 | 332,983 | 298,415 |

In	the	table	above,	the	comparability	of	information	among	the	years	presented	is	impacted	by	the	Company's	acquisitions.	The	operating	results	of	the	Company's acquisitions	have	been	included	in	the	results	of	operations	since	their	respective	acquisition	dates.	For	further	information,	see	the	"Acquisitions"	section	of Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	in	Item	7	and	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

The	Company's	GAAP	results	for	the	year	ended	December	31,	2016	reflect	growth	in	revenue	of	4.8%,	operating	income	of	6.4%	and	diluted	earnings	per	share	of	8.3% as	compared	to	the	year	ended	December	31,	2015.	The	Company	experienced	higher	revenue	in	2016	due	to	growth	in	lease	license	and	maintenance	revenue,	partially offset	by	decreased	perpetual	license	revenue.	The	Company	also	experienced	increased	operating	expenses	primarily	due	to	increased	personnel	costs.	Reductions	in amortization	expense	partially	offset	these	cost	increases.

The	Company's	non-GAAP	results	for	the	year	ended	December	31,	2016	reflect	growth	in	revenue	of	4.7%,	operating	income	of	3.6%	and	diluted	earnings	per	share	of 6.1%	as	compared	to	the	year	ended	December	31,	2015.	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,	restructuring	charges	and	transaction	costs	related	to	business combinations.	For	further	disclosure	regarding	non-GAAP	results,	see	the	section	titled	"Non-GAAP	Results"	preceding	the	section	titled	"Liquidity	and	Capital Resources".

The	Company	incurred	$3.4	million	in	restructuring	charges,	or	$2.4	million	net	of	tax,	during	the	year	ended	December	31,	2016.	The	Company	expects	to	incur additional	charges	of	$10	million	-	$15	million,	or	$7	million	-	$10	million	net	of	tax,	primarily	during	the	first	quarter	of	2017.	These	charges	are	excluded	from	the Company's	non-GAAP	results.

The	Company's	comparative	financial	results	were	impacted	by	fluctuations	in	the	U.S.	Dollar	during	the	year	ended	December	31,	2016	as	compared	to	the	year	ended December	31,	2015.	The	impacts	on	the	Company's	revenue	and	operating	income	due	to	currency	fluctuations	are	reflected	in	the	table	below.

The	amounts	in	the	table	represent	the	difference	between	the	actual	2016	results	and	the	same	results	calculated	at	the	2015	exchange	rates.	Amounts	in	brackets indicate	a	net	adverse	impact	from	currency	fluctuations.

(1)	Constant	currency	amounts	exclude	the	effect	of	foreign	currency	fluctuations	on	the	reported	results.	To	present	this	information,	the	results	for	2016	for	entities whose	functional	currency	is	a	currency	other	than	the	U.S.	Dollar	were	converted	to	U.S.	Dollars	at	rates	that	were	in	effect	for	2015,	rather	than	the	actual	exchange rates	in	effect	for	2016.

The	Company's	financial	position	includes	$822.9	million	in	cash	and	short-term	investments,	and	working	capital	of	$630.3	million	as	of	December	31,	2016.

During	the	year	ended	December	31,	2016,	the	Company	repurchased	3.7	million	shares	for	$336.3	million	at	an	average	price	of	$90.90	per	share	under	the	Company's stock	repurchase	program.

# Business

On	August	29,	2016,	the	Board	of	Directors	(the	"Board")	of	the	Company	appointed	Dr.	Ajei	S.	Gopal,	a	member	of	the	Board,	as	President	and	Chief	Operating Officer	of	the	Company,	effective	as	of	such	date.	In	addition,	effective	as	of	January	1,	2017,	Dr.	Gopal	assumed	the	role	of	Chief	Executive	Officer	of	the	Company and	Mr.	James	E.	Cashman	III,	who	was	the	Chief	Executive	Officer	of	the	Company	as	of	December	31,	2016,	became	Chairman	of	the	Board.	In	connection	therewith, Ronald	W.	Hovsepian,	the	Chairman	of	the	Board	as	of	December	31,	2016,	became	the	Board's	Lead	Independent	Director.

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	and	defense,	automotive,	industrial	equipment,	electronics,	biomedical,	energy,	materials	and	chemical processing,	and	semiconductors.	Headquartered	south	of	Pittsburgh,	Pennsylvania,	the	Company	employed	approximately	2,800	people	as	of	December	31,	2016. ANSYS	focuses	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	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	Item	1A.	Risk	Factors	for	a	complete	discussion	of	factors	that	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	also	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	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

The	following	table	presents	the	Company's	geographic	constant	currency	revenue	growth	during	the	year	ended	December	31,	2016	as	compared	to	the	year	ended December	31,	2015:

|  | Twelve	Months	Ended<br>December	31,	2016 |
| :--- | :--- |
| North\tAmerica | 3.7% |
| Europe | 2.9% |
| Asia-Pacific | 9.0% |
| Total | 5.1% |

In	North	America,	results	were	impacted	by	a	combination	of	factors,	including	a	partial	shift	in	the	preference	for	time-based	licenses.	Aerospace	and	defense performed	well	due	to	a	robust	commercial	sector,	loosening	defense	spending	and	the	aggressive	space	race.	Automotive	companies	continued	to	invest	in	research	and development	to	support	ongoing	fuel	economy,	emissions	requirements	and	accelerated	development	of	autonomous	driving	systems.	The	renewable	energy	and	nuclear sectors	remained	strong,	but	were	offset	by	the	negative	impact	of	the	oil	and	gas	sector.

The	Company	continues	to	focus	on	a	number	of	sales	improvement	activities	across	the	geographic	regions,	including	sales	hiring,	pipeline	building,	productivity initiatives	and	customer	engagement	activities.

# 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	values	of	stock	awards,	bad	debts,	contract revenue,	the	valuation	of	goodwill	and	other	intangible	assets,	deferred	compensation,	income	taxes,	uncertain	tax	positions,	tax	valuation	reserves,	and	useful	lives	for depreciation	and	amortization,	and	contingencies	and	litigation.	The	Company	bases	its	estimates	on	historical	experience,	market	experience,	estimated	future	cash flows	and	various	other	assumptions	that	management	believes	are	reasonable	under	the	circumstances,	the	results	of	which	form	the	basis	for	making	judgments	about the	carrying	values	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	intentions	regarding	its	hybrid	sales	and	distribution

model.

•The	Company's	intentions	related	to	investments	in	research	and	development,	particularly	as	it	relates	to	expanding	the	ease	of	use	and	capabilities	of	its	broad portfolio	of	simulation	software	products.	More	specifically,	this	includes	the	evolution	of	its	ANSYS	Workbench	platform,	expansion	of	high-performance computing	capabilities,	ANSYS	AIM	immersive	user	interface,	offerings	on	ANSYS	Enterprise	Cloud,	robust	design	and	ongoing	integration	of	acquired technology.

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

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

•The	Company's	expectations	regarding	the	outcome	of	its	service	tax	audit

case.

•The	Company's	expectations	regarding	the	realization	of	the	French	research	and	development

credit.

•The	Company's	belief	that,	in	most	geographical	locations,	its	facilities	allow	for	sufficient	space	to	support	present	and	future	foreseeable	needs,	including	such expansion	and	growth	as	the	business	may	require.

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

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

•The	Company's	expectations	regarding	future	restructuring charges.

•The	Company's	statement	regarding	the	strength	of	the	features,	functionality	and	integrated	multiphysics	capabilities	of	its	software products.

•The	Company's	belief	that	its	overall	performance	is	best	measured	by	fiscal-year	results	rather	than	by	quarterly results.

•The	Company's	expectations	regarding	the	adverse	impact	on	license	and	maintenance	revenue	growth	in	the	near	term	due	to	an	increased	customer	preference for	time-based	licenses.

•The	Company's	expectation	that	it	will	continue	to	make	targeted	investments	in	its	global	sales	and	marketing	organizations	and	its	global	business infrastructure	to	enhance	and	support	its	revenue-generating	activities.

•The	Company's	intention	to	repatriate	previously	taxed	earnings	and	to	reinvest	all	other	earnings	of	its	non-U.S. subsidiaries.

•The	Company's	plans	related	to	future	capital

spending.

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

•The	Company's	belief	that	the	best	uses	of	its	excess	cash	are	to	invest	in	the	business	and	repurchase	stock	in	order	to	both	offset	dilution	and	return	capital,	in excess	of	its	requirements,	to	stockholders	with	the	goal	of	increasing	stockholder	value.

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

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

•The	Company's	estimates	regarding	total	compensation	expense	associated	with	granted	stock-based	awards	for	future years.

•The	Company's	expectations	regarding	the	impacts	of	new	accounting guidance.

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

assets.

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.

During	the	year	ended	December	31,	2014,	the	combined	purchase	price	for	acquisitions	was	$104.0	million.	The	acquisitions	during	2014	are	further	described	in	the table	below:

# Results	of	Operations

For	purposes	of	the	following	discussion	and	analysis,	the	table	below	sets	forth	certain	consolidated	financial	data	for	the	years	2016,	2015	and	2014.	The	operating results	of	the	Company's	acquisitions	have	been	included	in	the	results	of	operations	since	their	respective	acquisition	dates.

| (in	thousands) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Revenue: |  |  |  |
| Software\tlicenses | $568,174 | $555,105 | $564,502 |
| Maintenance\tand\tservice | 420,291 | 387,648 | 371,519 |
| Total\trevenue | 988,465 | 942,753 | 936,021 |
| Cost\tof\tsales: |  |  |  |
| Software\tlicenses | 28,860 | 29,105 | 30,607 |
| Amortization | 38,092 | 38,755 | 37,653 |
| Maintenance\tand\tservice | 79,908 | 79,386 | 85,126 |
| Total\tcost\tof\tsales | 146,860 | 147,246 | 153,386 |
| Gross\tprofit | 841,605 | 795,507 | 782,635 |
| Operating\texpenses: |  |  |  |
| Selling,\tgeneral\tand\tadministrative | 269,515 | 253,603 | 246,376 |
| Research\tand\tdevelopment | 183,093 | 168,831 | 165,421 |
| Amortization | 12,755 | 19,394 | 23,388 |
| Total\toperating\texpenses | 465,363 | 441,828 | 435,185 |
| Operating\tincome | 376,242 | 353,679 | 347,450 |
| Interest\texpense | (221) | (325) | (779) |
| Interest\tincome | 4,209 | 2,829 | 3,002 |
| Other\tincome\t(expense),\tnet | 85 | 582 | (1,534) |
| Income\tbefore\tincome\ttax\tprovision | 380,315 | 356,765 | 348,139 |
| Income\ttax\tprovision | 114,679 | 104,244 | 93,449 |
| Net\tincome | $265,636 | $252,521 | $254,690 |

# Revenue:

|  | Year	Ended	December	31, | Year	Ended	December	31, | Change | Change |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | 2016 | 2015 | Amount | % |
| Revenue: |  |  |  |  |
| Lease\tlicenses | $340,331 | $316,367 | $23,964 | 7.6 |
| Perpetual\tlicenses | 227,843 | 238,738 | (10,895) | (4.6) |
| Software\tlicenses | 568,174 | 555,105 | 13,069 | 2.4 |
| Maintenance | 394,745 | 364,591 | 30,154 | 8.3 |
| Service | 25,546 | 23,057 | 2,489 | 10.8 |
| Maintenance\tand\tservice | 420,291 | 387,648 | 32,643 | 8.4 |
| Total\trevenue | $988,465 | $942,753 | $45,712 | 4.8 |

The	Company's	revenue	increased	4.8%	during	the	year	ended	December	31,	2016	as	compared	to	the	year	ended	December	31,	2015,	while	revenue	grew	5.1%	in constant	currency.	The	growth	rate	was	favorably	impacted	by	the	Company's	continued	investment	in	its	global	sales,	support	and	marketing	organizations	and	was adversely	impacted	by	a	recent	shift	in	the	licensing	preference	of	certain	customers	from	perpetual	licenses	to	lease	licenses.	Lease	license	revenue	increased	7.6%	as compared	to	the	prior	year.	Perpetual	license	revenue,	which	is	derived	primarily	from	new	sales,	decreased	4.6%	as	compared	to	the	prior	year.	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	8.3%.

With	respect	to	revenue,	on	average	for	the	year	ended	December	31,	2016,	the	U.S.	Dollar	was	0.5%	stronger,	when	measured	against	the	Company's	primary	foreign currencies,	than	for	the	year	ended	December	31,	2015.	The	net	overall	strengthening	resulted	in	decreased	revenue	of	$2.2	million	during	the	year	ended	December	31, 2016	as	compared	to	the	year	ended	December	31,	2015.	The	impact	on	revenue	was	primarily	driven	by	$5.6	million,	$3.9	million,	$1.7	million	and	$0.9	million	of adverse	impact	due	to	a	weaker	Euro,	British	Pound,	South	Korean	Won	and	Indian	Rupee,	respectively,	partially	offset	by	$10.4	million	of	favorable	impact	due	to	a stronger	Japanese	Yen.	The	fluctuations	in	the	U.S.	Dollar	resulted	in	increased	operating	income	of	$0.9	million	during	the	year	ended	December	31,	2016	as	compared to	the	year	ended	December	31,	2015.

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	in	constant	currency.	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.

The	Company	is	starting	to	experience	an	increased	interest	by	some	of	its	larger	customers	in	enterprise	agreements	that	often	include	longer-term,	time-based	licenses involving	a	larger	number	of	the	Company's	software	products.	While	these	arrangements	typically	involve	a	higher	overall	transaction	price,	the	revenue	from	these contracts	is	typically	deferred	and	recognized	over	the	period	of	the	contract,	resulting	in	increased	deferred	revenue	and	backlog.	To	the	extent	these	types	of	contracts replace	sales	of	perpetual	licenses,	there	could	be	a	near-term	adverse	impact	on	software	license	and	maintenance	revenue	growth.	The	Company	is	similarly experiencing	a	shifting	preference	from	perpetual	licenses	to	time-based	licenses	across	a	broader	spectrum	of	its	customers,	particularly	in	the	more	mature	geographic markets,	such	as	the	U.S.	and	Japan.	To	the	extent	this	shift	continues	or	becomes	more	prevalent,	the	result	could	be	a	similar	and	incremental	near-term	adverse	impact on	software	license	and	maintenance	revenue	growth.

International	and	domestic	revenues,	as	a	percentage	of	total	revenue,	were	62.8%	and	37.2%,	respectively,	during	the	year	ended	December	31,	2016,	and	62.4%	and 37.6%,	respectively,	during	the	year	ended	December	31,	2015.	The	Company	derived	24.4%	and	24.2%	of	its	total	revenue	through	the	indirect	sales	channel	for	the years	ended	December	31,	2016	and	2015,	respectively.

In	valuing	deferred	revenue	on	the	balance	sheets	of	the	Company's	recent	acquisitions	as	of	their	respective	acquisition	dates,	the	Company	applied	the	fair	value provisions	applicable	to	the	accounting	for	business	combinations,	resulting	in	a	reduction	of	deferred	revenue	as	compared	to	its	historical	carrying	amount.	As	a	result, the	Company's	post-acquisition	revenue	will	be	less	than	the	sum	of	what	would	have	otherwise	been	reported	by	ANSYS	and	each	acquiree	absent	the	acquisitions.	The impacts	on	reported	revenue	for	the	years	ended	December	31,	2016	and	2015	were	$0.1	million	and	$1.7	million,	respectively.

# Cost	of	Sales	and	Gross	Profit:

The	table	below	reflects	the	Company's	operating	results	as	presented	on	the	consolidated	statements	of	income,	which	are	inclusive	of	foreign	currency	translation impacts.	Amounts	included	in	the	discussion	that	follows	are	provided	in	constant	currency.	The	impact,	where	material,	of	foreign	exchange	translation	on	each	expense line	is	provided	separately.

|  | 2016 |  | 2015 |  | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\nRevenue | Amount | %\tof\nRevenue | Amount | % |
| Cost\tof\tsales: |  |  |  |  |  |  |
| Software\tlicenses | $28,860 | 2.9 | $29,105 | 3.1 | $(245) | (0.8) |
| Amortization | 38,092 | 3.9 | 38,755 | 4.1 | (663) | (1.7) |
| Maintenance\tand\tservice | 79,908 | 8.1 | 79,386 | 8.4 | 522 | 0.7 |
| Total\tcost\tof\tsales | 146,860 | 14.9 | 147,246 | 15.6 | (386) | (0.3) |
| Gross\tprofit | $841,605 | 85.1 | $795,507 | 84.4 | $46,098 | 5.8 |

Software	Licenses:	Contributing	to	the	minimal	change	in	costs	of	software	were	the	following	two	offsetting	factors:

•Decreased	salaries	and	other	headcount-related	costs	of	$1.2	million,	primarily	due	to	a	decrease	in

headcount.

•Increased	third-party	royalties	of	$1.2	million.

Amortization:	The	net	decrease	in	amortization	expense	was	primarily	due	to	a	net	decrease	in	the	amortization	of	acquired	technology,	partially	offset	by	a	net	increase in	the	amortization	of	trade	names.

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

•Net	increase	in	salaries,	incentive	compensation	and	other	headcount-related	costs	of	$3.5	million.

•Increased	IT-related	maintenance	and	software	hosting	costs	of	$0.5

million.

•Decreased	depreciation	and	severance	costs,	each	of	$0.7	million.

•Decreased	facility	costs	of	$0.4	million.

•Cost	reduction	related	to	foreign	exchange	translation	of	$0.4	million	due	to	a	stronger	U.S. Dollar.

•Decreased	business	travel	and	stock-based	compensation,	each	of	$0.3 million.

The	improvement	in	gross	profit	was	a	result	of	the	increase	in	revenue	and	decrease	in	related	cost	of	sales.

# Operating	Expenses:

|  | 2016 |  | 2015 |  | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\nRevenue | Amount | %\tof\nRevenue | Amount | % |
| Operating\texpenses: |  |  |  |  |  |  |
| Selling,\tgeneral\tand\tadministrative | $269,515 | 27.3 | $253,603 | 26.9 | $15,912 | 6.3 |
| Research\tand\tdevelopment | 183,093 | 18.5 | 168,831 | 17.9 | 14,262 | 8.4 |
| Amortization | 12,755 | 1.3 | 19,394 | 2.1 | (6,639) | (34.2) |
| Total\toperating\texpenses | $465,363 | 47.1 | $441,828 | 46.9 | $23,535 | 5.3 |

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

•$4.7	million	of	costs	associated	with	an	employment-related	settlement

agreement.

•Increased	severance	costs	of	$3.2	million.

•Increased	IT-related	maintenance	and	software	hosting	costs	of	$2.1

•Increased	government	charges	and	taxes	of	$1.4	million.

•Increased	marketing	costs	of	$1.2	million.

The	Company	anticipates	that	it	will	continue	to	make	targeted	investments	in	its	global	sales	and	marketing	organizations	and	its	global	business	infrastructure	to enhance	and	support	its	revenue-generating	activities.

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

•Increased	salaries,	incentive	compensation	and	other	headcount-related	costs	of	$10.6 million.

•Increased	IT-related	maintenance	and	software	hosting	costs	of	$2.1 million.

•Increased	stock-based	compensation	of	$0.9	million.

•Cost	reduction	due	to	foreign	exchange	translation	of	$1.6	million.

The	Company	has	traditionally	invested	significant	resources	in	research	and	development	activities	and	intends	to	continue	to	make	investments	in	expanding	the	ease of	use	and	capabilities	of	its	broad	portfolio	of	simulation	software	products.	More	specifically,	this	includes	the	evolution	of	its	ANSYS	Workbench	platform, expansion	of	high-performance	computing	capabilities,	ANSYS	AIM	immersive	user	interface,	offerings	on	ANSYS	Enterprise	Cloud,	robust	design	and	ongoing integration	of	acquired	technology.

Amortization:	The	decrease	in	amortization	expense	was	primarily	due	to	a	decrease	in	the	amortization	of	acquired	customer	lists	that	became	fully	amortized.

Interest	Income:	Interest	income	for	the	year	ended	December	31,	2016	was	$4.2	million	as	compared	to	$2.8	million	for	the	year	ended	December	31,	2015.	Interest income	increased	as	a	result	of	an	increase	in	both	the	Company's	average	invested	cash	balances	and	the	average	rate	of	return	on	those	balances.

Other	Income,	net:	The	Company's	other	income	consists	of	the	following:

| (in	thousands) | 2016 | 2015 |
| :--- | :--- | :--- |
| Foreign\tcurrency\tgains,\tnet | $77 | $486 |
| Other | 8 | 96 |
| Total\tother\tincome,\tnet | $85 | $582 |

Income	Tax	Provision:	The	Company	recorded	income	tax	expense	of	$114.7	million	and	had	income	before	income	taxes	of	$380.3	million	for	the	year	ended December	31,	2016,	representing	an	effective	tax	rate	of	30.2%.	During	the	year	ended	December	31,	2015,	the	Company	recorded	income	tax	expense	of	$104.2 million	and	had	income	before	income	taxes	of	$356.8	million,	representing	an	effective	tax	rate	of	29.2%.

The	increase	in	the	effective	tax	rate	from	the	prior	year	is	primarily	due	to	tax	benefits	related	to	the	merger	of	the	Company's	Japan	subsidiaries	in	2010	recognized	in 2015	that	did	not	recur	in	2016,	partially	offset	by	tax	benefits	from	restructuring	activities	in	2016.	When	compared	to	the	federal	and	state	combined	statutory	rate,	the effective	tax	rates	for	the	years	ended	December	31,	2016	and	2015	were	favorably	impacted	by	the	domestic	manufacturing	deduction	and	research	and	development credits.	The	quarterly	benefit	of	approximately	$3.1	million	associated	with	the	merger	of	the	Company's	Japan	subsidiaries	was	fully	amortized	in	the	third	quarter	of 2015.	There	will	be	no	additional	ongoing	benefit	from	this	transaction.	The	rates	were	also	favorably	impacted	by	the	recurring	item	of	lower	statutory	tax	rates	in	many of	the	Company's	foreign	jurisdictions.

Net	Income:	The	Company's	net	income	for	the	year	ended	December	31,	2016	was	$265.6	million	as	compared	to	net	income	of	$252.5	million	for	the	year	ended December	31,	2015.	Diluted	earnings	per	share	was	$2.99	for	the	year	ended	December	31,	2016	and	$2.76	for	the	year	ended	December	31,	2015.	The	weighted	average shares	used	in	computing	diluted	earnings	per	share	were	89.0	million	and	91.5	million	for	the	years	ended	December	31,	2016	and	2015,	respectively.

|  | Year	Ended	December	31, | Year	Ended	December	31, | Change | Change |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | 2015 | 2014 | Amount | % |
| Revenue: |  |  |  |  |
| Lease\tlicenses | $316,367 | $318,041 | $(1,674) | (0.5) |
| Perpetual\tlicenses | 238,738 | 246,461 | (7,723) | (3.1) |
| Software\tlicenses | 555,105 | 564,502 | (9,397) | (1.7) |
| Maintenance | 364,591 | 346,698 | 17,893 | 5.2 |
| Service | 23,057 | 24,821 | (1,764) | (7.1) |
| Maintenance\tand\tservice | 387,648 | 371,519 | 16,129 | 4.3 |
| Total\trevenue | $942,753 | $936,021 | $6,732 | 0.7 |

The	Company's	revenue	increased	0.7%	during	the	year	ended	December	31,	2015	as	compared	to	the	year	ended	December	31,	2014,	while	revenue	grew	7.8%	in constant	currency.	The	growth	rate	was	favorably	impacted	by	the	Company's	continued	investment	in	its	global	sales,	support	and	marketing	organizations.	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	5.2%.	This	growth	was	primarily	due	to	maintenance	contracts	sold	with	electronics	products.	Perpetual	license	revenue,	which	is derived	primarily	from	new	sales,	decreased	3.1%	as	compared	to	the	prior	year.	While	lease	licenses,	perpetual	licenses	and	service	revenue	declined	as	compared	to	the prior	year,	all	were	higher	in	constant	currency.

With	respect	to	revenue,	on	average	for	the	year	ended	December	31,	2015,	the	U.S.	Dollar	was	12.5%	stronger,	when	measured	against	the	Company's	primary	foreign currencies,	than	for	the	year	ended	December	31,	2014.	The	net	overall	strengthening	resulted	in	decreased	revenue	of	$65.9	million	during	the	year	ended	December	31, 2015	as	compared	to	the	year	ended	December	31,	2014.	The	impact	on	revenue	was	primarily	driven	by	$42.7	million,	$14.6	million,	$2.9	million	and	$2.9	million	of adverse	impact	due	to	a	weaker	Euro,	Japanese	Yen,	South	Korean	Won	and	British	Pound,	respectively.	The	net	overall	stronger	U.S.	Dollar	also	resulted	in	decreased operating	income	of	$38.0	million	during	the	year	ended	December	31,	2015	as	compared	to	the	year	ended	December	31,	2014.

In	valuing	deferred	revenue	on	the	balance	sheets	of	the	Company's	recent	acquisitions	as	of	their	respective	acquisition	dates,	the	Company	applied	the	fair	value provisions	applicable	to	the	accounting	for	business	combinations,	resulting	in	a	reduction	of	deferred	revenue	as	compared	to	its	historical	carrying	amount.	As	a	result, the	Company's	post-acquisition	revenue	will	be	less	than	the	sum	of	what	would	have	otherwise	been	reported	by	ANSYS	and	each	acquiree	absent	the	acquisitions.	The impacts	on	reported	revenue	for	the	years	ended	December	31,	2015	and	2014	were	$1.7	million	and	$5.4	million,	respectively.

|  | 2015 |  | 2014 |  | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\nRevenue | Amount | %\tof\nRevenue | Amount | % |
| Cost\tof\tsales: |  |  |  |  |  |  |
| Software\tlicenses | $29,105 | 3.1 | $30,607 | 3.3 | $(1,502) | (4.9) |
| Amortization | 38,755 | 4.1 | 37,653 | 4.0 | 1,102 | 2.9 |
| Maintenance\tand\tservice | 79,386 | 8.4 | 85,126 | 9.1 | (5,740) | (6.7) |
| Total\tcost\tof\tsales | 147,246 | 15.6 | 153,386 | 16.4 | (6,140) | (4.0) |
| Gross\tprofit | $795,507 | 84.4 | $782,635 | 83.6 | $12,872 | 1.6 |

Software	Licenses:	The	net	decrease	in	costs	of	software	licenses	was	primarily	due	to	the	following:

•Decreased	stock-based	compensation	of	$1.0	million.

•Cost	reduction	from	foreign	exchange	translation	of	$0.9

•Decreased	salaries	and	incentive	compensation	of	$0.9	million.

•Increased	SpaceClaim-related	costs	of	software	licenses	of	$0.6	million,	primarily	as	a	result	of	twelve	months	of	SpaceClaim	activity	in	2015	as	compared	to eight	months	of	activity	in	2014.

•Increased	facilities	and	IT-related	maintenance	of	$0.4	million.

•Increased	third-party	royalties	of	$0.2	million.

Amortization:	The	net	increase	in	amortization	expense	was	primarily	due	to	an	increase	in	the	amortization	of	trade	names,	partially	offset	by	a	cost	reduction	related	to foreign	exchange	translation.

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

•Cost	reduction	related	to	foreign	exchange	translation	of	$7.6

•Increased	salaries	and	severance	costs,	each	of	$0.7	million.

•Increased	third-party	technical	support	costs	of	$0.6	million.

|  | 2015 |  | 2014 |  | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\nRevenue | Amount | %\tof\nRevenue | Amount | % |
| Operating\texpenses: |  |  |  |  |  |  |
| Selling,\tgeneral\tand\tadministrative | $253,603 | 26.9 | $246,376 | 26.3 | $7,227 | 2.9 |
| Research\tand\tdevelopment | 168,831 | 17.9 | 165,421 | 17.7 | 3,410 | 2.1 |
| Amortization | 19,394 | 2.1 | 23,388 | 2.5 | (3,994) | (17.1) |
| Total\toperating\texpenses | $441,828 | 46.9 | $435,185 | 46.5 | $6,643 | 1.5 |

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

•Increased	salaries,	incentive	compensation	and	other	headcount-related	costs	of	$18.4	million,	primarily	due	to	an	increase	in headcount.

•Increased	third-party	commissions	of	$1.7	million.

•Increased	business	travel	and	meals	of	$1.6

•Increased	consulting	costs	of	$1.4	million.

•Increased	office	lease	and	utility	costs	of	$1.0 million.

•Decreased	severance	costs	of	$3.1	million.

•Increased	salaries	and	other	headcount-related	costs	of	$7.5	million.

•Increased	SpaceClaim-related	research	and	development	costs	of	$1.8	million,	primarily	as	a	result	of	twelve	months	of	SpaceClaim	activity	in	2015	as compared	to	eight	months	of	activity	in	2014.

•Increased	office	lease	and	utility	costs	of	$0.6

•Decreased	stock-based	compensation	of	$1.8	million.

Amortization:	The	decrease	in	amortization	expense	was	primarily	due	to	a	net	decrease	in	the	amortization	of	acquired	customer	lists	and	a	cost	reduction	related	to foreign	exchange	translation.

Other	Income	(Expense),	net:	The	Company's	other	income	(expense)	consists	of	the	following:

| (in	thousands) | 2015 | 2014 |
| :--- | :--- | :--- |
| Foreign\tcurrency\tgains\t(losses),\tnet | $486 | $(1,649) |
| Other | 96 | 115 |
| Total\tother\tincome\t(expense),\tnet | $582 | $(1,534) |

Income	Tax	Provision:	The	Company	recorded	income	tax	expense	of	$104.2	million	and	had	income	before	income	taxes	of	$356.8	million	for	the	year	ended December	31,	2015,	representing	an	effective	tax	rate	of	29.2%.	During	the	year	ended

December	31,	2014,	the	Company	recorded	income	tax	expense	of	$93.4	million	and	had	income	before	income	taxes	of	$348.1	million,	representing	an	effective	tax rate	of	26.8%.

The	increase	in	the	effective	tax	rate	from	the	prior	year	is	primarily	due	to	a	decrease	in	benefits	related	to	legal	entity	restructuring	activities.	When	compared	to	the federal	and	state	combined	statutory	rate,	the	effective	tax	rates	for	the	years	ended	December	31,	2015	and	2014	were	favorably	impacted	by	the	domestic manufacturing	deduction,	research	and	development	credits	and	tax	benefits	associated	with	the	merger	of	the	Company's	Japan	subsidiaries	in	2010.	The	quarterly benefit	of	approximately	$3.1	million	associated	with	the	merger	of	the	Company's	Japan	subsidiaries	was	fully	amortized	in	the	third	quarter	of	2015.	There	will	be	no additional	ongoing	benefit	from	this	transaction.	The	rates	were	also	favorably	impacted	by	the	recurring	item	of	lower	statutory	tax	rates	in	many	of	the	Company's foreign	jurisdictions.

Net	Income:	The	Company's	net	income	for	the	year	ended	December	31,	2015	was	$252.5	million	as	compared	to	net	income	of	$254.7	million	for	the	year	ended December	31,	2014.	Diluted	earnings	per	share	was	$2.76	for	the	year	ended	December	31,	2015	and	$2.70	for	the	year	ended	December	31,	2014.	The	weighted average	shares	used	in	computing	diluted	earnings	per	share	were	91.5	million	and	94.2	million	for	the	years	ended	December	31,	2015	and	2014,	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	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.

|  |  | 2016 |  |  |  | 2015 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages\tand\tper\tshare\tdata) | As\nReported | Adjustments |  | Non-GAAP\nResults | As\nReported | Adjustments |  | Non-GAAP\nResults |
| Total\trevenue | $988,465 | $103 | (1) | $988,568 | $942,753 | $1,725 | (4) | $944,478 |
| Operating\tincome | 376,242 | 88,114 | (2) | 464,356 | 353,679 | 94,665 | (5) | 448,344 |
| Operating\tprofit\tmargin | 38.1% |  |  | 47.0% | 37.5% |  |  | 47.5% |
| Net\tincome | $265,636 | $57,286 | (3) | $322,922 | $252,521 | $60,854 | (6) | $313,375 |
| Earnings\tper\tshare\t–\tdiluted: |  |  |  |  |  |  |  |  |
| Earnings\tper\tshare | $2.99 |  |  | $3.63 | $2.76 |  |  | $3.42 |
| Weighted\taverage\tshares | 88,969 |  |  | 88,969 | 91,502 |  |  | 91,502 |

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

(2) Amount	represents	$50.8	million	of	amortization	expense	associated	with	intangible	assets	acquired	in	business	combinations,	$33.3	million	of	stock-based compensation	expense,	the	$0.1	million	adjustment	to	revenue	as	reflected	in	(1)	above,	$3.4	million	of	restructuring	charges	and	$0.4	million	of	transaction expenses	related	to	business	combinations.

(3) Amount	represents	the	impact	of	the	adjustments	to	operating	income	referred	to	in	(2)	above,	adjusted	for	the	related	income	tax	impact	of	$30.8 million.

(5) Amount	represents	$58.1	million	of	amortization	expense	associated	with	intangible	assets	acquired	in	business	combinations,	$34.0	million	of	stock-based compensation	expense,	the	$1.7	million	adjustment	to	revenue	as	reflected	in	(4)	above	and	$0.8	million	of	transaction	expenses	related	to	business	combinations.

(6) Amount	represents	the	impact	of	the	adjustments	to	operating	income	referred	to	in	(5)	above,	adjusted	for	the	related	income	tax	impact	of	$33.8 million.

|  |  | 2015 |  |  |  | 2014 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages\tand\tper\tshare\tdata) | As\nReported | Adjustments |  | Non-GAAP\nResults | As\nReported | Adjustments |  | Non-GAAP\nResults |
| Total\trevenue | $942,753 | $1,725 | (1) | $944,478 | $936,021 | $5,421 | (4) | $941,442 |
| Operating\tincome | 353,679 | 94,665 | (2) | 448,344 | 347,450 | 104,403 | (5) | 451,853 |
| Operating\tprofit\tmargin | 37.5% |  |  | 47.5% | 37.1% |  |  | 48.0% |
| Net\tincome | $252,521 | $60,854 | (3) | $313,375 | $254,690 | $68,719 | (6) | $323,409 |
| Earnings\tper\tshare\t–\tdiluted: |  |  |  |  |  |  |  |  |
| Earnings\tper\tshare | $2.76 |  |  | $3.42 | $2.70 |  |  | $3.43 |
| Weighted\taverage\tshares | 91,502 |  |  | 91,502 | 94,194 |  |  | 94,194 |

(5) Amount	represents	$61.0	million	of	amortization	expense	associated	with	intangible	assets	acquired	in	business	combinations,	$36.9	million	of	stock-based compensation	expense,	the	$5.4	million	adjustment	to	revenue	as	reflected	in	(4)	above	and	$1.1	million	of	transaction	expenses	related	to	business	combinations.

# 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	acquisition	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	intangible	assets	from	acquisitions	and	its	related	tax	impact.	The	Company	incurs	amortization	of	intangible	assets,	included	in	its	GAAP presentation	of	amortization	expense,	related	to	various	acquisitions	it	has	made.	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.	Stock-based compensation	expense	(benefit)	incurred	in	connection	with	the	Company's	deferred	compensation	plan	held	in	a	rabbi	trust	includes	an	offsetting	benefit	(charge) recorded	in	other	income	(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.	Management	similarly	excludes	income	(expense)	related	to	assets	held	in	a	rabbi trust	in	connection	with	the	Company's	deferred	compensation	plan.	Specifically,	the	Company	excludes	stock-based	compensation	and	income	related	to	assets	held	in the	deferred	compensation	plan	rabbi	trust	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	the	Company's	financial reporting	as	well	as	comparability	with	competitors'	operating	results.

Restructuring	charges	and	the	related	tax	impact.	The	Company	occasionally	incurs	expenses	for	restructuring	its	workforce	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.	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,	as	it	generally	generally	does	not	incur	these	expenses	as	a	part	of	its	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	the	Company's	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	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,	as	it	generally	would	not	have	otherwise	incurred these	expenses	in	the	periods	presented	as	a	part	of	its	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	the	Company's	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

| (in	thousands,	except	percentages) | 2016 | 2015 | Amount | % |
| :--- | :--- | :--- | :--- | :--- |
| Cash,\tcash\tequivalents\tand\tshort-term\tinvestments | $822,860 | $784,614 | $38,246 | 4.9 |
| Working\tcapital | $630,301 | $592,280 | $38,021 | 6.4 |

# Cash,	Cash	Equivalents	and	Short-Term	Investments

Cash	and	cash	equivalents	consist	primarily	of	highly	liquid	investments	such	as	money	market	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.	The	following	table	presents	the Company's	foreign	and	domestic	holdings	of	cash,	cash	equivalents	and	short-term	investments:

| (in	thousands,	except	percentages) | 2016 | %	of	Total | 2015 | %	of	Total |
| :--- | :--- | :--- | :--- | :--- |
| Domestic | $593,348 | 72.1 | $539,031 | 68.7 |
| Foreign | 229,512 | 27.9 | 245,583 | 31.3 |
| Total | $822,860 |  | $784,614 |  |

If	the	foreign	balances	were	repatriated	to	the	U.S.,	unless	previously	taxed	in	the	U.S.,	they	would	be	subject	to	domestic	tax,	resulting	in	a	tax	obligation	in	the	period of	repatriation.	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	amount	of	cash,	cash	equivalents	and	short-term	investments	held	by	foreign	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	loss	on	the Company's	consolidated	balance	sheet.

# Cash	Flows	from	Operating	Activities

|  |  | Year	Ended	December	31, |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands) | 2016 | 2015 | 2014 | 2016\tvs.\t2015 | 2015\tvs.\t2014 |
| Net\tcash\tprovided\tby\toperating\tactivities | $356,827 | $367,523 | $385,307 | $(10,696) | $(17,784) |

# Fiscal	year	2016	as	compared	to	fiscal	year	2015

Net	cash	provided	by	operating	activities	decreased	during	the	current	fiscal	year	due	to	decreased	net	cash	flows	from	operating	assets	and	liabilities	of	$19.0	million, partially	offset	by	increased	net	income	(net	of	non-cash	operating	adjustments)	of	$8.3	million.	The	Company	experienced	an	increase	in	net	tax	payments	of	$8.5 million	in	2016	as	compared	to	2015	as	the	current	year	benefited	less	from	prior	year	overpayments.

Net	cash	provided	by	operating	activities	decreased	during	the	prior	fiscal	year	due	to	decreased	net	cash	flows	from	operating	assets	and	liabilities	of	$18.2	million, primarily	due	to	a	$26.8	million	refund	received	in	2014	related	to	the	Company's	2009	and	2010	federal	income	tax	years.

# Cash	Flows	from	Investing	Activities

|  |  | Year	Ended	December	31, |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands) | 2016 | 2015 | 2014 | 2016\tvs.\t2015 | 2015\tvs.\t2014 |
| Net\tcash\tused\tin\tinvesting\tactivities | $(32,173) | $(62,032) | $(129,270) | $29,859 | $67,238 |

Net	cash	used	in	investing	activities	decreased	during	the	current	fiscal	year	due	primarily	to	decreased	acquisition-related	net	cash	outlays	of	$38.2	million	and decreased	capital	expenditures	of	$3.7	million,	partially	offset	by	increased	net	cash	outlays	of	$12.1	million	for	other	investing	activities.	The	Company	currently	plans capital	spending	of	$15	million	to	$20	million	during	fiscal	year	2017	as	compared	to	the	$12.4	million	that	was	spent	in	2016.	The	level	of	spending	will	be	dependent upon	various	factors,	including	growth	of	the	business	and	general	economic	conditions.

Net	cash	used	in	investing	activities	decreased	during	the	prior	fiscal	year	due	primarily	to	decreased	acquisition-related	net	cash	outlays	of	$56.9	million	and	decreased capital	expenditures	of	$9.9	million.

# Cash	Flows	from	Financing	Activities:

|  |  | Year	Ended	December	31, |  | Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (in\tthousands) | 2016 | 2015 | 2014 | 2016\tvs.\t2015 | 2015\tvs.\t2014 |
| Net\tcash\tused\tin\tfinancing\tactivities | $(279,477) | $(291,751) | $(185,642) | $12,274 | $(106,109) |

Net	cash	used	in	financing	activities	decreased	during	the	current	fiscal	year	due	primarily	to	increased	proceeds	from	shares	issued	for	stock-based	compensation	of $10.2	million.

Net	cash	used	in	financing	activities	increased	during	the	prior	fiscal	year	due	primarily	to	increased	stock	repurchases	of	$104.1	million.

# Other	Cash	Flow	Information

The	Company	believes	that	existing	cash	and	cash	equivalent	balances	of	$822.5	million,	together	with	cash	generated	from	operations,	will	be	sufficient	to	meet	the Company's	working	capital	and	capital	expenditure	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.

Under	the	Company's	stock	repurchase	program,	the	Company	repurchased	shares	as	follows:

| (in	thousands,	except	per	share	data) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Number\tof\tshares\trepurchased | 3,700 | 3,833 | 2,977 |
| Average\tprice\tpaid\tper\tshare | $90.90 | $88.16 | $78.54 |
| Total\tcost | $336,335 | $337,910 | $233,793 |

In	February	2017,	the	Company's	Board	of	Directors	increased	the	number	of	shares	authorized	for	repurchase	to	a	total	of	5.0	million	shares	under	the	stock	repurchase program.	As	of	December	31,	2016,	1.3	million	shares	remained	available	for	repurchase	under	the	program.

The	Company	continues	to	generate	positive	cash	flows	from	operating	activities	and	believes	that	the	best	uses	of	its	excess	cash	are	to	invest	in	the	business	and repurchase	stock	in	order	to	both	offset	dilution	and	return	capital,	in	excess	of	its	requirements,	to	stockholders	with	the	goal	of	increasing	stockholder value.	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,	credit	facilities,	or	the	issuance	of	additional securities.

# 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,	2016	are	summarized	below:

| (in	thousands) | Total | Within	1	year | 2	–	3	years | 4	–	5	years | After	5	years |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Global\theadquarters\toperating\tlease(1) | $40,859 | $4,278 | $8,556 | $8,928 | $19,097 |
| Other\toperating\tleases(2) | 29,808 | 9,861 | 12,814 | 4,752 | 2,381 |
| Unconditional\tpurchase\tobligations(3) | 37,415 | 14,134 | 20,012 | 3,269 | — |
| Obligations\trelated\tto\tuncertain\ttax\tpositions,\tincluding\ninterest\tand\tpenalties(4) | 2 | 2 | — | — | — |
| Other\tlong-term\tobligations(5) | 30,846 | 13,292 | 11,472 | 1,763 | 4,319 |
| Total\tcontractual\tobligations | $138,930 | $41,567 | $52,854 | $18,712 | $25,797 |

(1) On	September	14,	2012,	the	Company	entered	into	a	lease	agreement	for	186,000	square	feet	of	rentable	space	located	in	an	office	facility	in	Canonsburg, Pennsylvania,	which	serves	as	the	Company's	headquarters.	The	lease	was	effective	as	of	September	14,	2012,	but	because	the	leased	premises	were	under construction,	the	Company	was	not	obligated	to	pay	rent	until	three	months	following	the	date	that	the	leased	premises	were	delivered	to	ANSYS,	which occurred	on	October	1,	2014.	The	term	of	the	lease	is	183	months,	beginning	on	October	1,	2014.	The	Company	has	a	one-time	right	to	terminate	the	lease effective	upon	the	last	day	of	the	tenth	full	year	following	the	date	of	possession	(December	31,	2024)	by	providing	the	landlord	with	at	least	18	months'	prior written	notice	of	such	termination.

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

(3) 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,	2016.

(4) The	Company	has	$18.4	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.

(5) Other	long-term	obligations	primarily	include	third-party	commissions	of	$15.0	million,	deferred	compensation	of	$7.4	million	(including	estimated	imputed interest	of	$161,000	within	1	year	and	$87,000	within	2-3	years)	and	post-employment	benefits,	including	pension	obligations,	of	$6.5	million	for	certain	foreign locations	of	the	Company.	These	amounts	include	the	related	current	portions	when	applicable.

# 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	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.

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	licenses	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	annually),	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.

Many	of	the	Company's	semiconductor	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	semiconductor	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	license	agreement	signed	by	the	end-user	customer	is	received	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.

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,	2016,	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.

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.	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.

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.

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	tax	assets	for	which	a	valuation	allowance	was	used	to	reduce their	carrying	value,	the	adjustment	to	the	valuation	allowance	will	be	recorded	as	a	reduction	to	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	income taxes	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.

Goodwill	and	Indefinite-Lived	Intangible	Assets:	The	Company	tests	goodwill	and	indefinite-lived	intangible	assets	for	impairment	at	least	annually	by	performing	a quantitative	assessment	of	whether	the	fair	value	of	each	reporting	unit	or	asset	exceeds	its	carrying	amount.	Goodwill	is	tested	at	the	reporting	unit	level	and	indefinite- lived	intangible	assets	are	tested	at	the	individual	asset	level.	This	requires	the	Company	to	assess	and	make	judgments	regarding	a	variety	of	factors	which	impact	the fair	value	of	the	reporting	unit	or	asset	being	tested,	including	business	plans,	anticipated	future	cash	flows,	economic	projections	and	other	market	data.	Because	there are	inherent	uncertainties	involved	in	these	factors,	significant	differences	between	these	estimates	and	actual	results	could	result	in	future	impairment	charges	and	could materially	impact	the	Company's	future	financial	results.	During	the	first	quarter	of	2016,	the	Company	completed	the	annual	impairment	test	for	goodwill	and	the indefinite-lived	intangible	asset	and	determined	that	these	assets	had	not	been	impaired	as	of	the	test	date,	January	1,	2016.	No	other	events	or	circumstances	changed during	the	twelve	months	ended	December	31,	2016	that	would	indicate	that	the	fair	values	of	the	Company's	reporting	unit	and	indefinite-lived	intangible	asset	are below	their	carrying	values.

Contingencies:	The	Company	is	involved	in	various	investigations,	claims	and	legal	proceedings	that	arise	in	the	ordinary	course	of	business,	including	commercial disputes,	labor	and	employment	matters,	tax	audits,	alleged	infringement	of	intellectual	property	rights	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.

Stock-Based	Compensation:	The	Company	grants	options	and	other	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.	Stock-based	compensation expense	for	2016,	2015	and	2014	was	$33.3	million,	$34.0	million	and	$36.9	million,	respectively.	As	of	December	31,	2016,	total	unrecognized	estimated	compensation expense	related	to	unvested	stock	options	and	awards	granted	prior	to	that	date	was	$65.1	million,	which	is	expected	to	be	recognized	over	a	weighted-average	period	of 1.9	years.

The	value	of	each	stock	option	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	the	requisite	service	period.	The	interest	rate	assumptions	were	determined	by	using	the	five-year U.S.	Treasury	Note	yield	on	the	date	of	grant	or	date	of	acquisition.

|  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Risk-free\tinterest\trate | 1.19%\tto\t1.93% | 1.18%\tto\t1.65% | 1.49%\tto\t1.76% |
| Expected\tdividend\tyield | —% | —% | —% |
| Expected\tvolatility | 24% | 25% | 35% |
| Expected\tterm | 5.7\tyears | 5.6\tyears | 5.7\tyears |
| Weighted-average\tfair\tvalue\tper\tshare | $23.96 | $30.83 | $32.26 |

The	Company	issues	various	restricted	stock	awards	which	contain	a	market	condition,	a	performance	condition,	a	service	condition,	or	any	combination	of	the	three. Restricted	stock	awards	are	valued	based	on	the	grant-date	fair	value	of	the	award.	Stock	compensation	expense	is	recognized	over	the	employee's	requisite	service period	for	awards	with	only	a	service	condition.	For	awards	with	a	performance	condition,	stock-based	compensation	expense	is	recorded	from	the	service	inception	date through	the	conclusion	of	the	measurement	period	based	on	management's	estimates	concerning	the	probability	of	vesting.

Vesting	of	restricted	stock	awards	with	a	market	condition	is	based	on	the	Company's	performance	as	measured	by	total	shareholder	return	relative	to	the	appreciation	of a	specified	stock	index	over	the	measurement	period,	subject	to	each	participant's	continued	employment	with	the	Company	through	the	conclusion	of	the	measurement period.	The	fair	value	of	the	restricted	stock	awards	with	a	market	condition	is	estimated	using	a	Monte	Carlo	simulation	model.	The	determination	of	the	fair	value	of	the awards	is	affected	by	the	grant	date	and	a	number	of	variables,	each	of	which	has	been	identified	in	the	chart	below	for	awards	granted	during	each	respective	period. Share-based	compensation	expense	based	on	the	fair	value	of	the	award	is	being	recorded	from	the	grant	date	through	the	conclusion	of	the	measurement	period.

| Assumptions	used	in	Monte	Carlo	lattice	pricing	model | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Risk-free\tinterest\trate | 1.0% | 1.1% | 0.7% |
| Expected\tdividend\tyield | —% | —% | —% |
| Expected\tvolatility—ANSYS\tstock\tprice | 21% | 23% | 25% |
| Expected\tvolatility—NASDAQ\tComposite\tIndex | 16% | 14% | 15% |
| Expected\tterm | 2.8\tyears | 2.8\tyears | 2.8\tyears |
| Correlation\tfactor | 0.65 | 0.60 | 0.70 |
| Weighted-average\tfair\tvalue\tper\tshare | $78.71 | $81.61 | $65.94 |

The	Company	also	grants	deferred	stock	awards	to	non-affiliate	Independent	Directors,	which	are	rights	to	receive	shares	of	common	stock	upon	termination	of	service as	a	Director.	In	2015	and	prior,	the	deferred	stock	awards	were	issued	quarterly	in	arrears	and	vested	immediately	upon	grant.	In	2016,	the	Company	issued	the	deferred stock	awards	immediately,	but	the	awards	vest	in	full	on	the	one-year	anniversary	of	the	grant.

To	the	extent	the	Company	changes	the	terms	of	its	stock-based	compensation	programs,	experiences	market	volatility	in	the	pricing	of	its	common	stock	that	increases the	implied	volatility	assumption	used	in	the	Black-Scholes	model,	refines	different

assumptions	in	future	periods	such	as	forfeiture	rates	that	differ	from	current	estimates,	or	assumes	stock	awards	from	acquired	companies	that	are	different	in	nature than	the	Company's	stock	award	arrangements,	among	other	potential	impacts,	the	stock-based	compensation	expense	recorded	in	future	periods	and	the	related	tax benefits	may	differ	significantly	from	what	was	recorded	in	previous	reporting	periods.

Estimates	of	stock-based	compensation	expense	are	significant	to	the	Company's	financial	statements,	but	this	expense	is	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	stock-based	compensation	as	related	to	its operational	performance,	the	Board	of	Directors	and	management	exclude	stock-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,	cash	equivalents	and short-term	investments.	For	the	year	ended	December	31,	2016,	total	interest	income	was	$4.2	million.	Cash	and	cash	equivalents	consist	primarily	of	highly	liquid investments	such	as	money	market	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.

Foreign	Currency	Transaction	Risk.	As	the	Company	operates	in	international	regions,	a	portion	of	its	revenue,	expenses,	cash,	accounts	receivable	and	payment obligations	are	denominated	in	foreign	currencies.	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	Japanese	Yen,	Euro,	British	Pound,	South	Korean	Won,	Indian	Rupee,	Canadian	Dollar	and U.S.	Dollar.

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

| As	of | GBP/USD | EUR/USD | USD/JPY | USD/KRW |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013 | 1.656 | 1.375 | 105.263 | 1,055.743 |
| December\t31,\t2014 | 1.557 | 1.210 | 119.703 | 1,094.930 |
| December\t31,\t2015 | 1.474 | 1.086 | 120.337 | 1,176.886 |
| December\t31,\t2016 | 1.234 | 1.051 | 116.918 | 1,208.313 |

| Twelve	Months	Ended | GBP/USD | EUR/USD | USD/JPY | USD/KRW |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014 | 1.648 | 1.329 | 105.592 | 1,052.715 |
| December\t31,\t2015 | 1.528 | 1.110 | 121.018 | 1,131.542 |
| December\t31,\t2016 | 1.355 | 1.107 | 108.530 | 1,160.699 |

# ITEM	8. FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA

The	following	tables	set	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,\n2016 | September\t30,\n2016 | June\t30,\n2016 | March\t31,\n2016 |
| Revenue | $270,628 | $245,862 | $246,069 | $225,906 |
| Gross\tprofit | 231,650 | 210,276 | 209,058 | 190,621 |
| Operating\tincome | 96,966 | 100,099 | 94,155 | 85,022 |
| Net\tincome | 69,983 | 69,557 | 69,628 | 56,468 |
| Earnings\tper\tshare\t–\tbasic | $0.81 | $0.80 | $0.79 | $0.64 |
| Earnings\tper\tshare\t–\tdiluted | $0.80 | $0.78 | $0.78 | $0.63 |

|  |  | Fiscal	Quarter	Ended | Fiscal	Quarter	Ended |  |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tper\tshare\tdata) | December\t31,\n2015 | September\t30,\n2015 | June\t30,\n2015 | March\t31,\n2015 |
| Revenue | $251,647 | $237,840 | $235,485 | $217,781 |
| Gross\tprofit | 214,655 | 201,259 | 197,700 | 181,893 |
| Operating\tincome | 96,943 | 90,183 | 86,495 | 80,058 |
| Net\tincome | 68,021 | 66,033 | 62,335 | 56,132 |
| Earnings\tper\tshare\t–\tbasic | $0.77 | $0.74 | $0.69 | $0.62 |
| Earnings\tper\tshare\t–\tdiluted | $0.75 | $0.72 | $0.68 | $0.61 |

# 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;	Global	Controller;	General	Counsel;	Senior	Director,	Global	Investor	Relations;	Vice	President	of	Worldwide	Sales	and	Support;	Vice	President	of Human	Resources;	Vice	President	of	Marketing;	and	Chief	Product	Officer.	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	periodically	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	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	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,	2016.

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.	There	were	no	changes	in	the	Company's	internal	controls	over	financial	reporting	that	occurred	during	the	three	months	ended December	31,	2016	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	2017	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	2017	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	2017	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	2017	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	2017	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,	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	Exhibit	Index	immediately	following	the	financial	statement schedule	of	this	Annual	Report	on	Form	10-K.

# (c) 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	(2013),	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

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,	2016. Deloitte	&	Touche	LLP,	an	independent	registered	public	accounting	firm,	has	audited	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2016, as	stated	in	their	report	which	appears	in	Part	IV,	Item	15	of	this	Annual	Report	on	Form	10-K.

Ajei	S.	Gopal

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,	2016	and	2015,	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,	2016.	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, 2016	and	2015,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2016,	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,	2016,	based	on	the	criteria	established	in	Internal	Control	-	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	and	our	report	dated	February	23,	2017	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,	2016,	based	on	criteria	established	in Internal	Control	-	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	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,	2016,	based	on	the	criteria established	in	Internal	Control	-	Integrated	Framework	(2013)	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,	2016	of	the	Company	and	our	report	dated	February	23,	2017	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) | 2016 | 2015 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $822,479 | $784,168 |
| Short-term\tinvestments | 381 | 446 |
| Accounts\treceivable,\tless\tallowance\tfor\tdoubtful\taccounts\tof\t$5,700\tand\t$5,200,\trespectively | 107,192 | 91,579 |
| Other\treceivables\tand\tcurrent\tassets | 239,349 | 200,233 |
| Total\tcurrent\tassets | 1,169,401 | 1,076,426 |
| Property\tand\tequipment,\tnet | 54,677 | 61,924 |
| Goodwill | 1,337,215 | 1,332,348 |
| Other\tintangible\tassets,\tnet | 172,619 | 220,553 |
| Other\tlong-term\tassets | 24,287 | 5,757 |
| Deferred\tincome\ttaxes | 42,327 | 32,896 |
| Total\tassets | $2,800,526 | $2,729,904 |
| LIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Accounts\tpayable | $7,395 | $4,865 |
| Accrued\tbonuses\tand\tcommissions | 49,487 | 46,141 |
| Accrued\tincome\ttaxes | 5,263 | 4,695 |
| Other\taccrued\texpenses\tand\tliabilities | 73,676 | 63,801 |
| Deferred\trevenue | 403,279 | 364,644 |
| Total\tcurrent\tliabilities | 539,100 | 484,146 |
| Long-term\tliabilities: |  |  |
| Deferred\tincome\ttaxes | 2,259 | 2,091 |
| Other\tlong-term\tliabilities | 50,762 | 49,240 |
| Total\tlong-term\tliabilities | 53,021 | 51,331 |
| Commitments\tand\tcontingencies |  |  |
| Stockholders'\tequity: |  |  |
|  | — | — |
|  | 932 | 932 |
| Additional\tpaid-in\tcapital | 883,010 | 894,469 |
| Retained\tearnings | 2,057,665 | 1,792,029 |
| Treasury\tstock,\tat\tcost:\t7,548,188\tand\t5,096,505\tshares,\trespectively | (675,550) | (440,839) |
| Accumulated\tother\tcomprehensive\tloss | (57,652) | (52,164) |
| Total\tstockholders'\tequity | 2,208,405 | 2,194,427 |
| Total\tliabilities\tand\tstockholders'\tequity | $2,800,526 | $2,729,904 |

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

# CONSOLIDATED	STATEMENTS	OF	INCOME

| (in	thousands,	except	per	share	data) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Revenue: |  |  |  |
| Software\tlicenses | $568,174 | $555,105 | $564,502 |
| Maintenance\tand\tservice | 420,291 | 387,648 | 371,519 |
| Total\trevenue | 988,465 | 942,753 | 936,021 |
| Cost\tof\tsales: |  |  |  |
| Software\tlicenses | 28,860 | 29,105 | 30,607 |
| Amortization | 38,092 | 38,755 | 37,653 |
| Maintenance\tand\tservice | 79,908 | 79,386 | 85,126 |
| Total\tcost\tof\tsales | 146,860 | 147,246 | 153,386 |
| Gross\tprofit | 841,605 | 795,507 | 782,635 |
| Operating\texpenses: |  |  |  |
| Selling,\tgeneral\tand\tadministrative | 269,515 | 253,603 | 246,376 |
| Research\tand\tdevelopment | 183,093 | 168,831 | 165,421 |
| Amortization | 12,755 | 19,394 | 23,388 |
| Total\toperating\texpenses | 465,363 | 441,828 | 435,185 |
| Operating\tincome | 376,242 | 353,679 | 347,450 |
| Interest\texpense | (221) | (325) | (779) |
| Interest\tincome | 4,209 | 2,829 | 3,002 |
| Other\tincome\t(expense),\tnet | 85 | 582 | (1,534) |
| Income\tbefore\tincome\ttax\tprovision | 380,315 | 356,765 | 348,139 |
| Income\ttax\tprovision | 114,679 | 104,244 | 93,449 |
| Net\tincome | $265,636 | $252,521 | $254,690 |
| Earnings\tper\tshare\t–\tbasic: |  |  |  |
| Earnings\tper\tshare | $3.05 | $2.82 | $2.77 |
| Weighted\taverage\tshares | 87,227 | 89,561 | 92,067 |
| Earnings\tper\tshare\t–\tdiluted: |  |  |  |
| Earnings\tper\tshare | $2.99 | $2.76 | $2.70 |
| Weighted\taverage\tshares | 88,969 | 91,502 | 94,194 |

# CONSOLIDATED	STATEMENTS	OF	COMPREHENSIVE	INCOME

| (in	thousands) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $265,636 | $252,521 | $254,690 |
| Other\tcomprehensive\tloss: |  |  |  |
| Foreign\tcurrency\ttranslation\tadjustments | (5,488) | (20,410) | (29,110) |
| Comprehensive\tincome | $260,148 | $232,111 | $225,580 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

| (in	thousands) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome | $265,636 | $252,521 | $254,690 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 69,587 | 77,670 | 81,924 |
| Deferred\tincome\ttax\tbenefit | (10,921) | (15,196) | (18,859) |
| Provision\tfor\tbad\tdebts | 2,009 | 1,304 | 2,104 |
| Stock-based\tcompensation\texpense | 33,347 | 33,951 | 36,861 |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | (9,153) | (8,176) | (14,531) |
| Other | 1,290 | 1,413 | 868 |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Accounts\treceivable | (17,388) | 6,044 | (5,554) |
| Other\treceivables\tand\tcurrent\tassets | (39,644) | (17,662) | (877) |
| Other\tlong-term\tassets | (7,167) | 273 | (1,838) |
| Accounts\tpayable,\taccrued\texpenses\tand\tcurrent\tliabilities | 16,919 | (6,993) | 8,208 |
| Accrued\tincome\ttaxes | 9,052 | 5,770 | 12,102 |
| Deferred\trevenue | 41,430 | 40,566 | 35,548 |
| Other\tlong-term\tliabilities | 1,830 | (3,962) | (5,339) |
| Net\tcash\tprovided\tby\toperating\tactivities | 356,827 | 367,523 | 385,307 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Acquisitions,\tnet\tof\tcash\tacquired | (7,891) | (46,117) | (103,016) |
| Capital\texpenditures | (12,443) | (16,145) | (26,023) |
| Other\tinvesting\tactivities | (11,839) | 230 | (231) |
| Net\tcash\tused\tin\tinvesting\tactivities | (32,173) | (62,032) | (129,270) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Purchase\tof\ttreasury\tstock | (336,335) | (337,910) | (233,793) |
| Restricted\tstock\twithholding\ttaxes\tpaid\tin\tlieu\tof\tissued\tshares | (5,057) | (4,446) | (5,108) |
| Contingent\tconsideration\tpayments | (1,048) | (1,173) | (4,504) |
| Proceeds\tfrom\tshares\tissued\tfor\tstock-based\tcompensation | 53,811 | 43,623 | 43,323 |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | 9,153 | 8,176 | 14,531 |
| Other\tfinancing\tactivities | (1) | (21) | (91) |
| Net\tcash\tused\tin\tfinancing\tactivities | (279,477) | (291,751) | (185,642) |
| Effect\tof\texchange\trate\tfluctuations\ton\tcash\tand\tcash\tequivalents | (6,866) | (17,636) | (24,817) |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | 38,311 | (3,896) | 45,578 |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tperiod | 784,168 | 788,064 | 742,486 |
| Cash\tand\tcash\tequivalents,\tend\tof\tperiod | $822,479 | $784,168 | $788,064 |
| Supplemental\tdisclosures\tof\tcash\tflow\tinformation: |  |  |  |
| Income\ttaxes\tpaid | $118,455 | $107,218 | $118,004 |
| Interest\tpaid | $822 | $620 | $643 |
| Fair\tvalue\tof\tstock\toptions\tand\trestricted\tstock\tawards\tassumed\tin\tconnection\twith\tacquisitions | $— | $3,528 | $68 |
| Construction-in-progress\t-\tleased\tfacility | $— | $— | $(18,136) |

# 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>Loss | Total<br>Stockholders'<br>Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance,\tJanuary\t1,\t2014 | 93,236 | $932 | $926,031 | $1,284,818 | 918 | $(72,891) | $(2,644) | $2,136,246 |
| Treasury\tshares\tacquired |  |  |  |  | 2,977 | (233,793) |  | (233,793) |
| Stock-based\tcompensation |  |  |  |  |  |  |  |  |
| activity,\tincluding\ttax\tbenefit\tof |  |  |  |  |  |  |  |  |
| $14,970 |  |  | (20,628) |  | (1,424) | 110,674 |  | 90,046 |
| Other\tcomprehensive\tloss |  |  |  |  |  |  | (29,110) | (29,110) |
| Net\tincome\tfor\tthe\tyear |  |  |  | 254,690 |  |  |  | 254,690 |
| Acquisition-related\tactivity |  |  | (578) |  |  |  |  | (578) |
| Balance,\tDecember\t31,\t2014 | 93,236 | 932 | 904,825 | 1,539,508 | 2,471 | (196,010) | (31,754) | 2,217,501 |
| Treasury\tshares\tacquired |  |  |  |  | 3,833 | (337,910) |  | (337,910) |
| Stock-based\tcompensation |  |  |  |  |  |  |  |  |
| activity,\tincluding\ttax\tbenefit\tof |  |  |  |  |  |  |  |  |
| $6,068 |  |  | (8,434) |  | (1,139) | 87,631 |  | 79,197 |
| Other\tcomprehensive\tloss |  |  |  |  |  |  | (20,410) | (20,410) |
| Net\tincome\tfor\tthe\tyear |  |  |  | 252,521 |  |  |  | 252,521 |
| Acquisition-related\tactivity |  |  | (1,922) |  | (68) | 5,450 |  | 3,528 |
| Balance,\tDecember\t31,\t2015 | 93,236 | 932 | 894,469 | 1,792,029 | 5,097 | (440,839) | (52,164) | 2,194,427 |
| Treasury\tshares\tacquired |  |  |  |  | 3,700 | (336,335) |  | (336,335) |
| Stock-based\tcompensation |  |  |  |  |  |  |  |  |
| activity,\tincluding\ttax\tbenefit\tof |  |  |  |  |  |  |  |  |
| $8,065 |  |  | (11,459) |  | (1,249) | 101,624 |  | 90,165 |
| Other\tcomprehensive\tloss |  |  |  |  |  |  | (5,488) | (5,488) |
| Net\tincome\tfor\tthe\tyear |  |  |  | 265,636 |  |  |  | 265,636 |
| Balance,\tDecember\t31,\t2016 | 93,236 | $932 | $883,010 | $2,057,665 | 7,548 | $(675,550) | $(57,652) | $2,208,405 |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# 1. Organization

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

As	defined	by	the	accounting	guidance	for	segment	reporting,	the	Company	operates	as	one	segment.

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

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	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.

# Cash	and	Cash	Equivalents

Cash	and	cash	equivalents	consist	primarily	of	highly	liquid	investments	such	as	deposits	held	at	major	banks	and	money	market	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,	2016 | December	31,	2016 | December	31,	2015 | December	31,	2015 |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands,\texcept\tpercentages) | Amount | %\tof\tTotal | Amount | %\tof\tTotal |
| Cash\taccounts | $488,504 | 59.4 | $427,244 | 54.5 |
| Money\tmarket\tfunds | 333,975 | 40.6 | 356,924 | 45.5 |
| Total | $822,479 |  | $784,168 |  |

The	Company's	money	market	fund	balances	are	held	in	various	funds	of	a	single	issuer.

# Property	and	Equipment

Property	and	equipment	is	stated	at	cost.	Depreciation	is	computed	using	the	straight-line	method	over	the	estimated	useful	lives	of	the	various	classes	of	assets,	which range	from	one	to	forty	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

Research	and	development	costs,	other	than	certain	capitalized	software	development	costs,	are	expensed	as	incurred.

# Software	Development	Costs

Internally	developed	software	costs	required	to	be	capitalized	as	defined	by	the	accounting	guidance	are	not	material	to	the	Company's	consolidated	financial	statements.

# Business	Combinations

When	the	Company	consummates	an	acquisition,	the	assets	acquired	and	the	liabilities	assumed	are	recognized	separately	from	goodwill	at	their	acquisition	date	fair values.	Goodwill	as	of	the	acquisition	date	is	measured	as	the	excess	of	the	fair	value	of	consideration	transferred	over	the	net	of	the	acquisition	date	fair	values	of	the assets	acquired	and	the	liabilities	assumed.	While	best	estimates	and	assumptions	are	used	to	accurately	value	assets	acquired	and	liabilities	assumed	at	the	acquisition date	as	well	as	contingent	consideration,	where	applicable,	the	Company's	estimates	are	inherently	uncertain	and	subject	to	refinement.	As	a	result,	during	the measurement	period,	which	may	be	up	to	one	year	from	the	acquisition	date,	the	Company	records	adjustments	to	the	assets	acquired	and	liabilities	assumed	with	the corresponding	offset	to	goodwill	as	the	Company	obtains	new	information	about	facts	and	circumstances	that	existed	as	of	the	acquisition	date	that,	if	known,	would have	affected	the	measurement	of	the	amounts	recognized	as	of	that	date.	Upon	the	earlier	of	the	conclusion	of	the	measurement	period	or	final	determination	of	the values	of	assets	acquired	or	liabilities	assumed,	any	subsequent	adjustments	are	recorded	in	the	consolidated	statements	of	income.

# Goodwill	and	Other	Intangible	Assets

Goodwill	represents	the	excess	of	the	consideration	transferred	over	the	fair	value	of	net	identifiable	assets	acquired.	Other	intangible	assets	consist	of	trade	names, customer	lists,	contract	backlog	and	acquired	software	and	technology.	Intangible	assets	that	are	not	considered	to	have	an	indefinite	useful	life	are	amortized	over	their useful	lives,	which	are	generally	two	to	fifteen	years.	Amortization	expense	for	intangible	assets	was	$50.8	million,	$58.1	million	and	$61.0	million	for	the	years	ended December	31,	2016,	2015	and	2014,	respectively.

The	Company	tests	goodwill	and	indefinite-lived	intangible	assets	for	impairment	at	least	annually	by	performing	a	quantitative	assessment	of	whether	the	fair	value	of each	reporting	unit	or	asset	exceeds	its	carrying	amount.	Goodwill	is	tested	at	the	reporting	unit	level	and	indefinite-lived	intangible	assets	are	tested	at	the	individual asset	level.	This	requires	the	Company	to	assess	and	make	judgments	regarding	a	variety	of	factors	which	impact	the	fair	value	of	the	reporting	unit	or	asset	being	tested, including	business	plans,	anticipated	future	cash	flows,	economic	projections	and	other	market	data.

The	Company	performs	its	annual	impairment	tests	for	goodwill	and	indefinite-lived	intangible	assets	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.

# 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) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Revenue\tfrom\tchannel\tpartners | 24% | 24% | 25% |
| Largest\tchannel\tpartner | 5% | 5% | 4% |
| 2nd\tlargest\tchannel\tpartner | 2% | 2% | 2% |

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's	cash	and	cash	equivalent	accounts	are	insured	through	various	public	and	private	bank	deposit	insurance	programs,	foreign	and	domestic;	however,	a significant	portion	of	the	Company's	funds	are	not	insured.	The	following	table	outlines	concentrations	of	risk	with	respect	to	the	Company's	cash	and	cash	equivalents:

| (in	thousands) | 2016 | 2015 |
| :--- | :--- | :--- |
| Cash\tand\tcash\tequivalents\theld\tdomestically | $593,348 | $539,031 |
| Cash\tand\tcash\tequivalents\theld\tby\tforeign\tsubsidiaries | 229,131 | 245,137 |
| Cash\tand\tcash\tequivalents\theld\tin\texcess\tof\tdeposit\tinsurance,\tforeign\tand\tdomestic | 805,374 | 763,400 |
| Largest\tbalance\tof\tcash\tand\tcash\tequivalents\theld\twith\tone\tfinancial\tinstitution,\tforeign\tand\tdomestic | 377,602 | 440,650 |

# 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	estimated	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	$2.0	million,	$1.3	million	and	$2.1	million	for	the	years	ended	December	31,	2016,	2015	and	2014,	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	income	taxes	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.	Assets	and	liabilities	denominated	in	a	currency	other	than	the	Company's	or	subsidiary's	functional	currency	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	(expense),	net.	The Company	recorded	net	foreign	exchange	gains	of	$0.1	million	and	$0.5	million	for	the	years	ended	December	31,	2016	and	2015,	respectively,	and	net	foreign	exchange losses	of	$1.6	million	for	the	year	ended	December	31,	2014.

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	occurred.

# Accumulated	Other	Comprehensive	Loss

Accumulated	other	comprehensive	loss	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) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $265,636 | $252,521 | $254,690 |
| Weighted\taverage\tshares\toutstanding\t–\tbasic | 87,227 | 89,561 | 92,067 |
| Dilutive\teffect\tof\tstock\tplans | 1,742 | 1,941 | 2,127 |
| Weighted\taverage\tshares\toutstanding\t–\tdiluted | 88,969 | 91,502 | 94,194 |
| Basic\tearnings\tper\tshare | $3.05 | $2.82 | $2.77 |
| Diluted\tearnings\tper\tshare | $2.99 | $2.76 | $2.70 |
| Anti-dilutive\toptions | 260 | 206 | 718 |

# 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,	short-term	investments,	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.

# New	Accounting	Guidance

Business	combinations:	In	January	2017,	the	Financial	Accounting	Standards	Board	(FASB)	issued	Accounting	Standards	Update	No.	2017-01,	Business	Combinations (Topic	805):	Clarifying	the	Definition	of	a	Business	(ASU	2017-01).	This	update	narrows	the	definition	of	a	business.	If	substantially	all	the	fair	value	of	the	gross	assets acquired	is	concentrated	in	a	single	identifiable	asset	or	group	of	similar	identifiable	assets,	the	acquiree	is	not	a	business.	The	update	also	requires	a	business	to

include	an	input	and	a	substantive	process	that	significantly	contributes	to	the	ability	to	create	outputs.	This	definition	is	expected	to	reduce	the	number	of	acquisitions accounted	for	as	business	combinations,	which	will	impact	the	accounting	treatment	of	certain	items,	including	the	accounting	treatment	of	contingent	consideration	and transaction	expenses.	ASU	2017-01	is	effective	for	annual	periods	beginning	after	December	15,	2017,	including	interim	periods	within	that	reporting	period.	Early adoption	is	permitted	and	the	update	will	be	applied	prospectively.	The	effect	of	the	implementation	will	depend	upon	the	nature	of	the	Company's	future	acquisitions,	if any.	Historically,	the	Company	has	entered	into	acquisitions	that	would	meet	the	definition	of	a	business	under	ASU	2017-01.

Income	taxes:	In	October	2016,	the	FASB	issued	Accounting	Standards	Update	No.	2016-16,	Income	Taxes	(Topic	740):	Intra-Entity	Transfers	of	Assets	Other	Than Inventory	(ASU	2016-16).	Previous	guidance	requires	the	tax	effects	from	intra-entity	asset	transfers	to	be	deferred	until	that	asset	is	sold	to	a	third	party	or	recovered through	use.	ASU	2016-16	eliminates	this	deferral	for	all	intra-entity	asset	transfers	other	than	inventory.	The	standard	is	effective	for	annual	periods	beginning	after December	15,	2017,	including	interim	periods	within	that	reporting	period.	Early	adoption	is	permitted	and	a	modified	retrospective	transition	is	required	upon	adoption. The	Company	plans	to	adopt	ASU	2016-16	beginning	in	2018	and	expects	adoption	to	have	an	immaterial	effect,	if	any,	on	its	financial	results.

Employee	share-based	payment	accounting:	In	March	2016,	the	FASB	issued	Accounting	Standards	Update	No.	2016-09,	Compensation	-	Stock	Compensation	(Topic 718):	Improvements	to	Employee	Share-Based	Payment	Accounting	(ASU	2016-09).	This	update	includes	various	areas	for	simplification	related	to	aspects	of	the accounting	for	share-based	payment	transactions.	One	simplification	is	that	the	tax	effects	of	share-based	payment	settlements	will	be	recorded	in	the	income	statement. Prior	guidance	required	tax	windfalls	at	settlement,	and	tax	shortfalls	to	the	extent	of	previous	windfalls,	to	be	recorded	in	equity.	This	provision	is	required	to	be adopted	prospectively.	These	tax	effects	will	be	reported	as	operating	cash	flows	according	to	the	new	guidance	as	opposed	to	financing	cash	flows	in	the	prior	guidance. Other	simplifications	involve	the	classification	of	awards	as	either	equity	or	liabilities	and	classification	on	the	statements	of	cash	flows.	ASU	2016-09	is	effective	for annual	periods	beginning	after	December	15,	2016,	including	interim	periods	within	that	reporting	period.	The	primary	impact	of	adoption	will	be	the	recognition	of excess	tax	benefits	or	deficiencies	in	the	Company's	provision	for	income	taxes	rather	than	paid-in	capital,	and	the	related	change	in	classification	of	such	benefits	on	the consolidated	statements	of	cash	flows.

Leases:	In	February	2016,	the	FASB	issued	Accounting	Standards	Update	No.	2016-02,	Leases	(Topic	842)	(ASU	2016-02).	ASU	2016-02	requires	virtually	all	leases, other	than	leases	that	meet	the	definition	of	a	short-term	lease,	to	be	recorded	on	the	balance	sheet	with	a	right-of-use	asset	and	corresponding	lease	liability.	As	a	result, the	Company's	assets	and	liabilities	will	increase	upon	adoption.	Leases	will	be	classified	as	either	operating	or	finance	leases	based	on	certain	criteria.	This classification	will	determine	the	timing	and	presentation	of	expenses	on	the	income	statement,	as	well	as	the	presentation	of	related	cash	flows.	The	standard	is	effective for	annual	periods	beginning	after	December	15,	2018,	including	interim	periods	within	that	reporting	period.	Early	adoption	is	permitted	and	a	modified	retrospective transition	is	required	upon	adoption.	The	Company	does	not	expect	to	early	adopt	and	is	currently	in	the	data-gathering	phase	of	implementation.	The	Company	is currently	evaluating	the	effect	that	implementation	of	this	update	will	have	on	its	financial	results	upon	adoption.

Revenue	from	contracts	with	customers:	In	May	2014,	the	FASB	issued	Accounting	Standards	Update	No.	2014-09,	Revenue	from	Contracts	with	Customers	(Topic 606)	(ASU	2014-09).	ASU	2014-09	supersedes	most	current	revenue	recognition	guidance,	including	industry-specific	guidance.	Previous	guidance	requires	an	entity	to recognize	revenue	when	persuasive	evidence	of	an	arrangement	exists,	delivery	has	occurred	or	services	have	been	rendered,	the	seller's	price	to	the	buyer	is	fixed	or determinable,	and	collectibility	is	reasonably	assured.	Under	the	new	guidance,	an	entity	is	required	to	evaluate	revenue	recognition	by	identifying	a	contract	with	a customer,	identifying	the	performance	obligations	in	the	contract,	determining	the	transaction	price,	allocating	the	transaction	price	to	the	performance	obligations	in	the contract	and	recognizing	revenue	when	(or	as)	the	entity	satisfies	a	performance	obligation.	The	standard	also	requires	disclosure	of	the	nature,	amount,	timing	and uncertainty	of	revenue	and	cash	flows	arising	from	contracts	with	customers.

ASU	2015-14,	Revenue	from	Contracts	with	Customers	(Topic	606):	Deferral	of	the	Effective	Date,	delayed	the	effective	date	of	ASU	2014-09	to	annual	periods beginning	after	December	15,	2017,	including	interim	periods	within	that	reporting	period.	This	standard	is	effective	for	the	Company	on	January	1,	2018.	Entities	have the	option	of	using	a	full	retrospective,	cumulative	effect	or	modified	approach	to	adopt	ASU	2014-09.	The	Company	expects	to	utilize	the	full	retrospective	method	to restate	each	prior	period	presented	upon	adoption.

This	update	will	impact	the	timing	and	amounts	of	revenue	recognized.	The	Company's	preliminary	assessment	is	that	the	adoption	of	this	standard	will	have	a	material impact	on	the	Company's	consolidated	financial	statements.	While	the	Company	expects	that	the	standard	will	impact	various	elements	of	its	business,	the	Company's initial	assessment	is	that	the	most	significant	impact	will	be	on	the	recognition	of	revenue	related	to	software	lease	licenses.	These	licenses	include	the	right	to	use	the software	and	PCS	over	the	term	of	the	license.	These	licenses	are	currently	recognized	as	revenue	ratably	over	the	term

of	the	license.	Under	the	new	standard	and	the	existing	interpretations,	the	Company	expects	to	recognize	a	meaningful	portion	of	the	revenue	related	to	these	licenses up-front	at	the	time	the	license	is	delivered.	However,	the	Company's	preliminary	assessment	could	change	as	additional	interpretations	relating	to	the	new	standard	are provided	and	as	issues	identified	by	software	industry	groups	are	addressed.

The	operating	results	of	each	acquisition	have	been	included	in	the	Company's	consolidated	financial	statements	since	each	respective	date	of	acquisition.	The	effects	of the	business	combinations	were	not	material	to	the	Company's	consolidated	results	of	operations	individually	or	in	the	aggregate.

In	valuing	deferred	revenue	on	the	balance	sheets	of	the	Company's	2016	and	2015	acquisitions	as	of	their	respective	acquisition	dates,	the	Company	applied	the	fair value	provisions	applicable	to	the	accounting	for	business	combinations,	resulting	in	a	reduction	of	deferred	revenue	as	compared	to	the	historical	carrying	amounts. During	2015,	acquired	deferred	revenues	with	a	combined	historical	carrying	value	of	$0.9	million	were	ascribed	no	fair	value	on	the	opening	balance	sheets.	As	a	result, the	Company's	post-acquisition	revenue	will	be	less	than	the	sum	of	what	would	have	otherwise	been	reported	by	ANSYS	and	each	acquiree	absent	the	acquisitions.	The impacts	on	reported	revenue	for	the	years	ended	December	31,	2016	and	2015	were	$0.1	million	and	$0.8	million,	respectively.

# SpaceClaim	Corporation

On	April	30,	2014,	the	Company	completed	the	acquisition	of	SpaceClaim,	a	leading	provider	of	3-D	modeling	technology.	Under	the	terms	of	the	agreement,	ANSYS acquired	SpaceClaim	for	a	purchase	price	of	$85.0	million,	which	was	paid	almost	entirely	in	cash.

SpaceClaim's	software	provides	customers	with	a	powerful	and	intuitive	3-D	direct	modeling	solution	to	author	new	concepts	and	then	leverage	the	power	of	simulation to	rapidly	iterate	on	these	designs	to	drive	innovation.	The	broad	appeal	of	the	SpaceClaim	technology	can	help	the	Company	deliver	simulation	tools	to	any	engineer	in any	industry.	The	complementary	combination	accelerates	the	development	of	new	and	innovative	products	to	the	marketplace	while	lowering	design	and	engineering costs	for	customers.

The	operating	results	of	SpaceClaim	have	been	included	in	the	Company's	consolidated	financial	statements	from	April	30,	2014,	the	date	of	acquisition.

The	assets	and	liabilities	of	SpaceClaim	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,	as	adjusted within	the	one-year	measurement	period:

# Fair	Value	of	Consideration	Transferred:

| (in	thousands) |  |
| :--- | :--- |
| Cash | $84,892 |
| ANSYS\treplacement\tstock\toptions | 68 |
| Total\tconsideration\ttransferred\tat\tfair\tvalue | $84,960 |
| Recognized\tAmounts\tof\tIdentifiable\tAssets\tAcquired\tand\tLiabilities\tAssumed: |  |
| (in\tthousands) |  |
| Cash | $723 |
| Accounts\treceivable\tand\tother\ttangible\tassets | 1,857 |
| Developed\ttechnology\t(10-year\tlife) | 15,800 |
| Customer\trelationships\t(6-year\tlife) | 9,400 |
| Trade\tname\t(6-year\tlife) | 1,300 |
| Contract\tbacklog\t(6-year\tlife) | 550 |
| Non-compete\tagreement\t(2-year\tlife) | 300 |
| Net\tdeferred\ttax\tassets | 9,288 |
| Accounts\tpayable\tand\tother\tliabilities | (2,011) |
| Deferred\trevenue | (700) |
| Total\tidentifiable\tnet\tassets | $36,507 |
| Goodwill | $48,453 |

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	SpaceClaim.

During	the	one-year	measurement	period	since	the	SpaceClaim	acquisition	date,	the	Company	adjusted	the	fair	values	of	the	assets	acquired	and	liabilities	assumed,	with the	offset	recorded	as	a	$4.8	million	decrease	to	goodwill.	These	adjustments	were	made	as	the	Company	obtained	new	information	about	facts	and	circumstances	that existed	as	of	the	acquisition	date	that,	if	known,	would	have	affected	the	measurement	of	the	amounts	recognized	as	of	that	date.

In	valuing	deferred	revenue	on	the	SpaceClaim	balance	sheet	as	of	the	acquisition	date,	the	Company	applied	the	fair	value	provisions	applicable	to	the	accounting	for business	combinations.	Acquired	deferred	revenue	with	a	historical	carrying	value	of	$3.3	million	was	ascribed	a	fair	value	of	$0.7	million	on	the	opening	balance	sheet. As	a	result,	the	Company's	post-acquisition	revenue	was	less	than	the	sum	of	what	would	have	otherwise	been	reported	by	ANSYS	and	SpaceClaim	absent	the acquisition.	The	impacts	on	reported	revenue	for	the	twelve	months	ended	December	31,	2015	and	2014	were	$0.6	million	and	$2.0	million,	respectively.

# Reaction	Design

On	January	3,	2014,	the	Company	completed	the	acquisition	of	Reaction	Design,	a	leading	developer	of	chemistry	simulation	software.	Under	the	terms	of	the agreement,	ANSYS	acquired	Reaction	Design	for	a	purchase	price	of	$19.1	million	in	cash.	Reaction	Design's	solutions	enable	transportation	manufacturers	and	energy companies	to	rapidly	achieve	their	clean	technology	goals	by	automating	the	analysis	of	chemical	processes	via	computer	simulation	and	modeling	solutions.

The	operating	results	of	Reaction	Design	have	been	included	in	the	Company's	consolidated	financial	statements	since	the	date	of	acquisition,	January	3,	2014.	The	total consideration	transferred	was	allocated	to	the	assets	and	liabilities	of	Reaction	Design	based	on	management's	estimates	of	the	fair	values	of	the	assets	acquired	and	the liabilities	assumed.	The	allocation	included	$7.0	million	to	identifiable	intangible	assets,	including	core	technology,	customer	lists	and	trade	names,	to	be	amortized	over periods	between	two	and	eleven	years,	and	$9.2	million	to	goodwill,	which	is	not	tax-deductible.	These	amounts	include	measurement-period	adjustments.	During	the one-year	measurement	period	since	the	Reaction	Design	acquisition	date,	the	Company	adjusted	the	fair	values	of	the	assets	acquired	and	liabilities	assumed,	with	the offset	recorded	as	an	increase	to

goodwill	of	$1.9	million	and	a	reduction	in	noncontrolling	interest	of	$0.6	million.	These	adjustments	were	made	as	the	Company	obtained	new	information	about	facts and	circumstances	that	existed	as	of	the	acquisition	date	that,	if	known,	would	have	affected	the	measurement	of	the	amounts	recognized	as	of	that	date.

In	valuing	deferred	revenue	on	the	Reaction	Design	balance	sheet	as	of	the	acquisition	date,	the	Company	applied	the	fair	value	provisions	applicable	to	the	accounting for	business	combinations.	Acquired	deferred	revenue	with	a	historical	carrying	value	of	$2.3	million	was	ascribed	no	fair	value	on	the	opening	balance	sheet.	As	a result,	the	Company's	post-acquisition	revenue	was	less	than	the	sum	of	what	would	have	otherwise	been	reported	by	ANSYS	and	Reaction	Design	absent	the acquisition.	The	impacts	on	reported	revenue	for	the	twelve	months	ended	December	31,	2015	and	2014	were	$0.3	million	and	$2.0	million,	respectively.

# 4. Other Receivables and Current Assets

The	Company's	other	receivables	and	current	assets	comprise	the	following	balances:

| (in	thousands) | 2016 | 2015 |
| :--- | :--- | :--- |
| Receivables\trelated\tto\tunrecognized\trevenue | $199,119 | $170,186 |
| Income\ttaxes\treceivable,\tincluding\toverpayments\tand\trefunds | 15,718 | 7,877 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 24,512 | 22,170 |
| Total\tother\treceivables\tand\tcurrent\tassets | $239,349 | $200,233 |

Receivables	for	unrecognized	revenue	represent	the	current	portion	of	billings	made	for	annual	lease	licenses	and	software	maintenance	that	have	not	yet	been recognized	as	revenue.

Property	and	equipment	consists	of	the	following:

| (in	thousands) | Estimated	Useful	Lives | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Equipment | 1-10\tyears | $78,614 | $78,932 |
| Computer\tsoftware | 1-5\tyears | 30,867 | 33,710 |
| Buildings | 10-40\tyears | 25,472 | 25,041 |
| Leasehold\timprovements | 1-15\tyears | 11,571 | 12,621 |
| Furniture | 1-13\tyears | 8,618 | 8,601 |
| Land |  | 1,759 | 1,759 |
| Property\tand\tequipment,\tgross |  | 156,901 | 160,664 |
| Less:\tAccumulated\tdepreciation |  | (102,224) | (98,740) |
| Property\tand\tequipment,\tnet |  | $54,677 | $61,924 |

Depreciation	expense	related	to	property	and	equipment	was	$18.7	million,	$19.5	million	and	$20.9	million	for	the	years	ended	December	31,	2016,	2015	and	2014, respectively.

# 6. 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	on	their	fair	values	on	the	date	of	acquisition.

During	the	first	quarter	of	2016,	the	Company	completed	the	annual	impairment	test	for	goodwill	and	the	indefinite-lived	intangible	asset	and	determined	that	these assets	had	not	been	impaired	as	of	the	test	date,	January	1,	2016.	No	other	events	or	circumstances	changed	during	the	twelve	months	ended	December	31,	2016	that would	indicate	that	the	fair	values	of	the	Company's	reporting	unit	and	indefinite	lived	intangible	asset	are	below	their	carrying	values.

The	Company's	intangible	assets	and	estimated	useful	lives	are	classified	as	follows:

|  | December	31,	2016 | December	31,	2016 | December	31,	2015 | December	31,	2015 |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands) | Gross\nCarrying\nAmount | Accumulated\nAmortization | Gross\nCarrying\nAmount | Accumulated\nAmortization |
| Finite-lived\tintangible\tassets: |  |  |  |  |
| Developed\tsoftware\tand\tcore\ttechnologies\t(3\t–\t11\tyears) | $338,594 | $(275,130) | $336,262 | $(251,201) |
| Customer\tlists\tand\tcontract\tbacklog\t(5\t–\t15\tyears) | 159,549 | (88,414) | 159,885 | (76,160) |
| Trade\tnames\t(2\t–\t10\tyears) | 127,952 | (90,289) | 127,903 | (76,493) |
| Total | $626,095 | $(453,833) | $624,050 | $(403,854) |
| Indefinite-lived\tintangible\tassets: |  |  |  |  |
| Trade\tnames | $357 |  | $357 |  |

Amortization	expense	for	the	intangible	assets	reflected	above	was	$50.8	million,	$58.1	million	and	$61.0	million	for	the	years	ended	December	31,	2016,	2015	and 2014,	respectively.

As	of	December	31,	2016,	estimated	future	amortization	expense	for	the	intangible	assets	reflected	above	is	as	follows:

| (in	thousands) |  |
| :--- | :--- |
| 2017 | $47,937 |
| 2018 | 34,643 |
| 2019 | 21,332 |
| 2020 | 20,325 |
| 2021 | 16,199 |
| Thereafter | 31,826 |
| Total\tintangible\tassets\tsubject\tto\tamortization,\tnet | 172,262 |
| Indefinite-lived\ttrade\tname | 357 |
| Other\tintangible\tassets,\tnet | $172,619 |

The	changes	in	goodwill	during	the	years	ended	December	31,	2016	and	2015	are	as	follows:

| (in	thousands) | 2016 | 2015 |
| :--- | :--- | :--- |
| Beginning\tbalance\t-\tJanuary\t1 | $1,332,348 | $1,312,182 |
| Acquisitions | 6,184 | 28,561 |
| Adjustments(1) | (1) | (4,573) |
| Currency\ttranslation | (1,316) | (3,822) |
| Ending\tbalance\t-\tDecember\t31 | $1,337,215 | $1,332,348 |

(1)	In	accordance	with	the	accounting	for	business	combinations,	the	Company	recorded	adjustments	to	goodwill	for	the	effect	of	changes	in	the	provisional	fair	values	of the	assets	acquired	and	liabilities	assumed	during	the	measurement	period	(up	to	one	year	from	the	acquisition	date)	as	the	Company	obtained	new	information	about facts	and	circumstances	that	existed	as	of	the	acquisition	date	that,	if	known,	would	have	affected	the	measurement	of	the	amounts	recognized	as	of	that	date.

# 7. 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,	2016 | Quoted	Prices	in<br>Active	Markets<br>(Level	1) | Observable<br>Inputs<br>(Level	2) | Unobservable<br>Inputs<br>(Level	3) |
| :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |
| Cash\tequivalents | $333,975 | $333,975 | $— | $— |
| Short-term\tinvestments | $381 | $— | $381 | $— |
| Deferred\tcompensation\tplan\tinvestments | $459 | $459 | $— | $— |

# Fair	Value	Measurements	at	Reporting	Date	Using:

|  |  | Fair	Value	Measurements	at	Reporting	Date	Using: | Fair	Value	Measurements	at	Reporting	Date	Using: | Fair	Value	Measurements	at	Reporting	Date	Using: |
| :--- | :--- | :--- | :--- | :--- |
| (in\tthousands) | December\t31,\t2015 | Quoted\tPrices\tin\nActive\tMarkets\n(Level\t1) | Significant\tOther\nObservable\nInputs\n(Level\t2) | Significant\nUnobservable\nInputs\n(Level\t3) |
| Assets |  |  |  |  |
| Cash\tequivalents | $356,924 | $356,924 | $— | $— |
| Short-term\tinvestments | $446 | $— | $446 | $— |
| Liabilities |  |  |  |  |
| Contingent\tconsideration | $(1,376) | $— | $— | $(1,376) |

The	cash	equivalents	in	the	preceding	tables	represent	money	market	funds.

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 original	maturities	ranging	from	three	months	to	one	year.

The	deferred	compensation	plan	investments	in	the	preceding	table	represent	trading	securities	held	in	a	rabbi	trust	for	the	benefit	of	the	non-affiliate	Independent Directors.	These	securities	consist	of	mutual	funds	traded	in	an	active	market	with	quoted	prices.	As	a	result,	the	plan	assets	were	classified	as	Level	1	in	the	fair	value hierarchy.	The	plan	assets	are	recorded	within	other	long-term	assets	on	the	Company's	consolidated	balance	sheet.

The	contingent	consideration	in	the	table	above	represents	the	final	payment	related	to	the	2013	acquisition	of	EVEN	-	Evolutionary	Engineering	AG	("EVEN").	The	net present	value	calculation	for	the	contingent	consideration,	which	was	paid	during	the	quarter	ended	March	31,	2016,	included	significant	unobservable	inputs	as	of December	31,	2015	in	the	assumption	that	the	remaining	payment	would	be	made,	and,	therefore,	the	liability	was	classified	as	Level	3	in	the	fair	value	hierarchy.	The liability	was	recorded	within	other	accrued	expenses	and	liabilities	on	the	Company's	consolidated	balance	sheet.

The	following	table	presents	the	changes	during	the	years	ended	December	31,	2016	and	2015	in	the	Company's	Level	3	liability	for	contingent	consideration	that	is measured	at	fair	value	on	a	recurring	basis:

|  | Fair	Value	Measurement	Using<br>Significant	Unobservable	Inputs |
| :--- | :--- |
| (in\tthousands) | Contingent\nConsideration |
| Balance\tas\tof\tJanuary\t1,\t2015 | $2,621 |
| Contingent\tpayments | (1,456) |
| Interest\texpense\tand\tforeign\texchange\tactivity\tincluded\tin\tearnings | 211 |
| Balance\tas\tof\tDecember\t31,\t2015 | $1,376 |
| Contingent\tpayments | (1,448) |
| Interest\texpense\tand\tforeign\texchange\tactivity\tincluded\tin\tearnings | 72 |

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.

# 8. Income

# Taxes

Income	before	income	taxes	includes	the	following	components:

| (in	thousands) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Domestic | $340,251 | $325,097 | $291,042 |
| Foreign | 40,064 | 31,668 | 57,097 |
| Total | $380,315 | $356,765 | $348,139 |

The	provision	for	income	taxes	is	composed	of	the	following:

| (in	thousands) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Current: |  |  |  |
| Federal | $99,783 | $93,853 | $80,620 |
| State | 8,338 | 7,733 | 7,192 |
| Foreign | 17,479 | 17,854 | 24,495 |
| Deferred: |  |  |  |
| Federal | (13,368) | (14,472) | (18,536) |
| State | (1,036) | (1,987) | (1,915) |
| Foreign | 3,483 | 1,263 | 1,593 |
| Total | $114,679 | $104,244 | $93,449 |

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

|  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Federal\tstatutory\ttax\trate | 35.0\t% | 35.0\t% | 35.0\t% |
| State\tincome\ttaxes,\tnet\tof\tfederal\tbenefit | 1.6 | 1.1 | 1.2 |
| Uncertain\ttax\tpositions | (0.2) | (0.4) | (0.9) |
| Research\tand\tdevelopment\tcredits | (1.0) | (1.1) | (1.1) |
| Benefit\tfrom\trestructuring\tactivities | (2.2) | (2.7) | (4.1) |
| Domestic\tproduction\tactivity\tbenefit | (3.7) | (3.1) | (3.5) |
| Other | 0.7 | 0.4 | 0.2 |
|  | 30.2\t% | 29.2\t% | 26.8\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	approximately	$199	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	million.

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

| (in	thousands) | 2016 | 2015 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Net\toperating\tloss\tcarryforwards | $32,969 | $40,939 |
| Stock-based\tcompensation | 23,652 | 23,258 |
| Employee\tbenefits | 17,187 | 17,044 |
| Uncertain\ttax\tpositions | 11,562 | 10,233 |
| Deferred\trevenue | 6,382 | 8,603 |
| Research\tand\tdevelopment\tcredits | 3,889 | 3,562 |
| Allowance\tfor\tdoubtful\taccounts | 2,078 | 1,888 |
| Other | 3,163 | 3,240 |
| Valuation\tallowance | (1,625) | (603) |
|  | 99,257 | 108,164 |
| Deferred\ttax\tliabilities: |  |  |
| Other\tintangible\tassets | (56,195) | (73,933) |
| Property\tand\tequipment | (2,994) | (3,426) |
|  | (59,189) | (77,359) |
| Net\tdeferred\ttax\tassets | $40,068 | $30,805 |

The	Company	excluded	from	the	above	table	a	$13.2	million	deferred	tax	asset	associated	with	foreign	net	operating	loss	carryforwards	and	a	corresponding	$13.2 million	valuation	allowance	in	a	jurisdiction	where	the	Company	determined	utilization	is	remote.

The	net	increase	in	the	gross	valuation	allowance	was	$1.0	million.	This	increase	was	primarily	due	to	a	change	in	circumstances	related	to	the	ability	to	utilize	a	net operating	loss	in	a	foreign	jurisdiction.	As	of	each	reporting	date,	management	considers	new	evidence,	both	positive	and	negative,	that	could	affect	the	future realization	of	deferred	tax	assets.	If	management	determines	it	is	more	likely	than	not	that	an	asset,	or	a	portion	of	an	asset,	will	not	be	realized,	a	valuation	allowance	is recorded.

As	of	December	31,	2016,	the	Company	had	federal	net	operating	loss	carryforwards	of	$28.7	million.	These	losses	expire	between	2020	-	2034,	and	are	subject	to limitations	on	their	utilization.	Deferred	tax	assets	of	$1.2	million	have	been	recorded	for	state	operating	loss	carryforwards.	These	losses	expire	between	2017	-	2035, and	are	subject	to	limitations	on	their	utilization.	The	Company	had	total	foreign	net	operating	loss	carryforwards	of	$76.9	million,	of	which	$28.2	million	are	not currently	subject	to	expiration	dates.	The	remainder,	$48.7	million,	expires	between	2019	-	2025.	The	Company	had	tax	credit	carryforwards	of	$5.2	million,	of	which $3.0	million	are	subject	to	limitations	on	their	utilization.	Approximately	$0.9	million	of	these	tax	credit	carryforwards	are	not	currently	subject	to	expiration	dates.	The remainder,	$4.3	million,	expires	in	various	years	between	2017	-	2036.

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

| (in	thousands) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Unrecognized\ttax\tbenefit\tas\tof\tJanuary\t1 | $16,067 | $16,342 | $19,590 |
| Gross\tincreases—tax\tpositions\tin\tprior\tperiod | 983 | 64 | 488 |
| Gross\tdecreases—tax\tpositions\tin\tprior\tperiod | (2,502) | (850) | (3,715) |
| Gross\tincreases—tax\tpositions\tin\tcurrent\tperiod | 2,725 | 4,064 | 2,513 |
| Reductions\tdue\tto\ta\tlapse\tof\tthe\tapplicable\tstatute\tof\tlimitations | (927) | (2,808) | (1,924) |
| Changes\tdue\tto\tcurrency\tfluctuation | (348) | (653) | (610) |
| Settlements | (789) | (92) | — |
| Unrecognized\ttax\tbenefit\tas\tof\tDecember\t31 | $15,209 | $16,067 | $16,342 |

The	Company	believes	that	it	is	reasonably	possible	that	approximately	$0.1	million	of	uncertain	tax	positions	may	be	resolved	within	the	next	twelve	months	as	a	result of	settlement	with	a	taxing	authority	or	a	lapse	of	the	statute	of	limitations.	Of	the	total	unrecognized	tax	benefit	as	of	December	31,	2016,	$9.2	million	would	affect	the effective	tax	rate,	if	recognized.

The	Company	recognizes	interest	and	penalties	related	to	income	taxes	as	income	tax	expense.	During	the	year	ended	December	31,	2016,	the	Company	recorded	$0.8 million	of	penalty	expense	and	$0.1	million	of	interest	benefit.	As	of	December	31,	2016,	the	Company	accrued	a	liability	for	penalties	of	$2.7	million	and	interest	of $2.8	million.	As	of	December	31,	2015,	the	Company	accrued	a	liability	for	penalties	of	$1.9	million	and	interest	of	$2.7	million.

The	Company	is	subject	to	taxation	in	the	U.S.	and	various	states	and	foreign	jurisdictions.	In	the	U.S.,	the	Company's	only	major	tax	jurisdiction,	the	2013	-	2016	tax years	are	open	to	examination	by	the	Internal	Revenue	Service.

# 9. Pension	and	Profit-Sharing

# Plans

The	Company	has	a	401(k)/profit-sharing	plan	for	all	qualifying	salaried	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 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	based	on	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.

# 10. Non-Compete	and	Employment

# Agreements

Employees	of	the	Company	have	signed	agreements	under	which	they	have	agreed	not	to	disclose	trade	secrets	or	confidential	information	that,	where	legally	permitted, 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.

The	Company	has	an	employment	agreement	with	the	Chief	Executive	Officer.	This	agreement	provides	for,	among	other	things,	in	the	case	of	termination	for	reasons other	than	death,	disability	or	cause	and	subject	to	non-compete	and	non-solicit	clauses,	minimum	severance	payments	equal	to	two	times	his	base	salary	and	target bonus	paid	out	over	two	years	from	the	date	of	termination	and	two	years	of	health	care	coverage	from	the	date	of	termination.	The	Chief	Executive	Officer	is	subject	to a	two-year	restriction	on	competition	and	solicitation	following	termination	of	employment	under	the	circumstances	described	in	the	contract.

The	Company	has	a	transition	agreement	with	its	Chairman	of	the	Board.	This	agreement	provides	for,	among	other	things,	that	the	Chairman	of	the	Board	shall	be employed	by	the	Company	until	April	30,	2019	unless	terminated	earlier	in	accordance	with	the	terms	of	the	agreement.	The	Chairman	of	the	Board	shall	receive	salary paid	in	bi-monthly	installments	as	specified	in	the	transition	agreement	and	restricted	stock	units	vesting	in	part	in	February	2018	and	the	remainder	at	the	end	of	the transition	agreement,	subject	to	the	Chairman	of	the	Board's	continued	employment,	in	accordance	with	the	terms	of	the	transition	agreement.	The	Chairman	of	the	Board will	not	be	entitled	to	bonus	payments	during	his	employment	pursuant	to	the	transition	agreement,	but	he	will	be	eligible	to	participate	in	all	of	the	Company's	benefit plans	subject	to	the	terms	of	such	plans.	The	transition	agreement	provides	for	an	additional	payment	(less	salary	received	and	equity	calculations	as	set	forth	in	the transition	agreement)	in	the	event	that	the	Chairman	of	the	Board's	employment	is	terminated	without	cause	prior	to	April	30,	2019.

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.

The	Company	has	a	stock	option	and	grant	plan—the	Fifth	Amended	and	Restated	1996	Stock	Option	and	Grant	Plan	("Stock	Plan").	The	Stock	Plan,	as	amended, authorizes	the	grant	of	up	to	39.8	million	shares	of	the	Company's	common	stock	in	the	form	of:	(i)	incentive	stock	options	("ISOs"),	(ii)	nonqualified	stock	options, (iii)	common	stock	with	or	without	vesting	or	other	restrictions,	(iv)	common	stock	upon	the	attainment	of	specified	performance	goals,	(v)	restricted	stock	awards, (vi)	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,	(vii)	deferred stock	awards,	(viii)	restricted	stock	unit	awards,	(ix)	stock	appreciation	rights	and	(x)	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%	criterion),	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	option	grants	and	common	stock	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,"	defined	in	the	Stock	Plan	as	a	"Transaction,"	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.

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

Total	stock-based	compensation	expense	recognized	for	the	years	ended	December	31,	2016,	2015	and	2014	is	as	follows:

| (in	thousands,	except	per	share	amounts) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Cost\tof\tsales: |  |  |  |
| Software\tlicenses | $701 | $745 | $1,776 |
| Maintenance\tand\tservice | 1,578 | 1,868 | 2,035 |
| Operating\texpenses: |  |  |  |
| Selling,\tgeneral\tand\tadministrative | 15,990 | 17,153 | 17,073 |
| Research\tand\tdevelopment | 15,078 | 14,185 | 15,977 |
| Stock-based\tcompensation\texpense\tbefore\ttaxes | 33,347 | 33,951 | 36,861 |
| Related\tincome\ttax\tbenefits | (10,538) | (11,656) | (10,927) |
| Stock-based\tcompensation\texpense,\tnet\tof\ttaxes | $22,809 | $22,295 | $25,934 |
| Net\timpact\ton\tearnings\tper\tshare: |  |  |  |
| Basic\tearnings\tper\tshare | $(0.26) | $(0.25) | $(0.28) |
| Diluted\tearnings\tper\tshare | $(0.26) | $(0.24) | $(0.28) |

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.

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	2016,	2015	and	2014.

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:

|  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Risk-free\tinterest\trate | 1.19%\tto\t1.93% | 1.18%\tto\t1.65% | 1.49%\tto\t1.76% |
| Expected\tdividend\tyield | —% | —% | —% |
| Expected\tvolatility | 24% | 25% | 35% |
| Expected\tterm | 5.7\tyears | 5.6\tyears | 5.7\tyears |
| Weighted-average\tfair\tvalue\tper\tshare | $23.96 | $30.83 | $32.26 |

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,	2016, 2015	and	2014	were	$7.4	million,	$12.3	million	and	$19.5	million,	respectively.	As	of	December	31,	2016,	total	unrecognized	estimated	compensation	cost	related	to unvested	stock	options	granted	prior	to	that	date	was	$8.2	million,	which	is	expected	to	be	recognized	over	a	weighted-average	period	of	2.1	years.	The	total	intrinsic values	of	stock	options	exercised	during	the	years	ended	December	31,	2016,	2015	and	2014	were	$49.8	million,	$47.1	million	and	$60.6	million,	respectively.	As	of December	31,	2016,	0.4	million	unvested	options	with	an	aggregate	intrinsic	value	of	$1.4	million	are	expected	to	vest	and	have	a	weighted-average	exercise	price	of $90.12	and	a	weighted-average	remaining	contractual	term	of	8.9	years.	The	Company	recorded	cash	received	from	the	exercise	of	stock	options	of	$49.3	million	and tax	benefits	related	to	stock	activity	of	$18.6	million	for	the	year	ended	December	31,	2016.

Information	regarding	stock	options	outstanding	as	of	December	31,	2016	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 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| $5.91\t-\t$40.89 | 874 | 2.35 | $34.25 | 868 | $34.39 |
| $41.33\t-\t$58.67 | 1,175 | 4.25 | $54.02 | 1,175 | $54.02 |
| $61.68\t-\t$69.70 | 641 | 5.71 | $67.38 | 641 | $67.38 |
| $73.45\t-\t$95.09 | 446 | 8.47 | $90.11 | 78 | $83.78 |

Under	the	terms	of	the	ANSYS,	Inc.	Long-Term	Incentive	Plan,	the	Company	issues	various	restricted	stock	awards,	which	may	have	a	market	condition,	an	operating performance	condition	or	a	service	condition,	or	any	combination	of	the	three.	The	Company	granted	35,000,	34,450	and	47,000	performance-based	restricted	stock units	with	a	market	condition	in	2016,	2015	and	2014,	respectively.	The	percentage	of	the	award	that	vests	is	based	on	the	Company's	performance	as	measured	by	total shareholder	return	relative	to	the	appreciation	of	a	specified	stock	index	over	the	measurement	period,	subject	to	each	participant's	continued	employment	with	the Company	through	the	conclusion	of	the	measurement	period.	As	of	December	31,	2016,	5,973	units	of	the	total	2014	awards	granted	were	earned	and	will	be	issued	in 2017.	The	measurement	periods	for	the	restricted	stock	units	granted	pursuant	to	the	Long-Term	Incentive	Plan	are	one-,	two-	and	three-year	periods	beginning	January	1 of	the	year	of	the	grant.	Each	restricted	stock	unit	relates	to	one	share	of	the	Company's	common	stock.	The	weighted-average	fair	value	of	each	restricted	stock	unit granted	in	2016,	2015	and	2014	was	estimated	on	the	grant	date	to	be	$78.71,	$81.61	and	$65.94,	respectively.	The	fair	value	of	the	restricted	stock	units	was	estimated 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.	Total	compensation	expense	associated	with	the	market	condition	awards	recorded	for	the	years	ended	December	31,	2016,	2015 and	2014	was	$2.2	million,	$3.1	million	and	$2.5	million,	respectively.

| Assumptions	used	in	Monte	Carlo	lattice	pricing	model | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Risk-free\tinterest\trate | 1.0% | 1.1% | 0.7% |
| Expected\tdividend\tyield | —% | —% | —% |
| Expected\tvolatility—ANSYS\tstock\tprice | 21% | 23% | 25% |
| Expected\tvolatility—NASDAQ\tComposite\tIndex | 16% | 14% | 15% |
| Expected\tterm | 2.8\tyears | 2.8\tyears | 2.8\tyears |
| Correlation\tfactor | 0.65 | 0.60 | 0.70 |

The	Company	issued	35,000,	115,485	and	39,900	performance-based	restricted	stock	awards	during	2016,	2015	and	2014,	respectively.	Of	the	cumulative	performance- based	restricted	stock	awards	issued,	defined	operating	metrics	were	assigned	to	63,462,	51,795	and	20,667	awards	with	grant-date	fair	values	of	$84.61,	$86.38	and $81.52	during	2016,	2015	and	2014,	respectively.	The	grant-date	fair	value	of	the	awards	is	being	recorded	from	the	grant	date	through	the	conclusion	of	the measurement	period	associated	with	each	operating	metric	based	on	management's	estimates	concerning	the	probability	of	vesting.	As	of	December	31,	2016,	7,625	units of	the	total	2014	awards	granted	were	earned	and	will	be	issued	in	2017.	Total	compensation	expense	associated	with	the	awards	recorded	for	the	years	ended December	31,	2016,	2015	and	2014	was	$0.4	million,	$0.4	million	and	$0.1	million,	respectively.

In	conjunction	with	a	2015	acquisition,	ANSYS	issued	68,451	shares	of	replacement	restricted	stock	with	a	weighted-average	grant-date	fair	value	of	$90.48.	Of	the $6.2	million	grant-date	fair	value,	$3.5	million,	related	to	partially	vested	awards,	was	recorded	as	non-cash	purchase	price	consideration.	The	remaining	fair	value	will be	recognized	as	stock	compensation	expense	through	the	conclusion	of	the	service	period.	During	the	years	ended	December	31,	2016	and	2015,	the	Company	recorded $1.2	million	and	$0.6	million,	respectively,	of	stock	compensation	expense	related	to	these	awards.

In	conjunction	with	a	2011	acquisition,	the	Company	granted	performance-based	restricted	stock	awards.	Vesting	was	determined	based	on	the	achievements	of	certain revenue	and	operating	income	targets	of	the	entity	post-acquisition.	Total	compensation	expense	associated	with	the	awards	recorded	for	the	year	ended	December	31, 2014	was	$4.7	million.

The	Company	has	granted	deferred	stock	awards	to	non-affiliate	Independent	Directors,	which	are	rights	to	receive	shares	of	common	stock	upon	termination	of	service as	a	Director.	In	2015	and	prior,	the	deferred	stock	awards	were	granted	quarterly	in	arrears	and	vested	immediately	upon	grant.	Associated	with	these	awards,	the Company	established	a	non-qualified	409(a)	deferred	compensation	plan	with	assets	held	under	a	rabbi	trust	to	provide	Directors	an	opportunity	to	diversify	their	vested awards.	During	open	trading	windows	and	at	their	elective	option,	the	Directors	may	convert	their	Company	shares	into	a	variety	of	non-Company-stock	investment options	in	order	to	diversify	their	holdings.	As	of	December	31,	2016,	5,000	shares	have	been	diversified	and	184,099	undiversified	deferred	stock	awards	have	vested with	the	underlying	shares	remaining	unissued	until	the	service	termination	of	the	respective	Director	owners.	In	May	2016,	the	Company	granted	38,400	deferred	stock awards	which	will	vest	in	full	on	the	one-year	anniversary	of	the	grant.	Total	compensation	expense	associated	with	the	awards	recorded	for	the	years	ended	December 31,	2016,	2015	and	2014	was	$1.9	million,	$4.0	million	and	$3.5	million,	respectively.

# 12. Stock	Repurchase	Program

# 13. 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	in	May	2016	to	increase	the	number	of	shares	available	for	offerings	to	1.8 million	shares.	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	or	her	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	not	accrue	the	right	to	purchase	more	than	$25,000	of	common stock,	based	on	the	grant-date	fair	value,	in	any	calendar	year.	As	of	December	31,	2016,	1.4	million	shares	of	common	stock	had	been	issued	under	the	Purchase	Plan. The	total	compensation	expense	recorded	under	the	Purchase	Plan	during	the	years	ended	December	31,	2016,	2015	and	2014	was	$1.2	million,	$1.0	million	and	$0.9 million,	respectively.

# Office	Space

The	Company's	executive	offices	and	those	related	to	certain	domestic	product	development,	marketing,	production	and	administration	are	located	in	a	186,000	square foot	office	facility	in	Canonsburg,	Pennsylvania.	The	lease	was	effective	as	of	September	14,	2012,	but	because	the	leased	premises	were	under	construction,	the Company	was	not	obligated	to	pay	rent	until	three	months	following	the	date	that	the	leased	premises	were	delivered	to	ANSYS,	which	occurred	on	October	1,	2014. The	term	of	the	lease	is	183	months,	beginning	on	October	1,	2014.	Absent	the	exercise	of	options	in	the	lease	for	additional	rentable	space	or	early	lease	termination,	the Company's	base	rent	(inclusive	of	property	taxes	and	certain	operating	expenses)	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	per	annum	for	years	eleven	through	fifteen.	The	Company	incurred	$4.4	million,	$4.4	million	and	$0.8	million	in	lease expense	related	to	this	facility	during	the	years	ended	December	31,	2016,	2015	and	2014,	respectively.

The	Company's	corporate	headquarters	was	previously	located	in	a	separate	office	facility,	also	in	Canonsburg,	Pennsylvania.	The	Company	occupied	this	space	until November	2014,	and	the	lease	term	expired	on	December	31,	2014.	Lease	expense	related	to	this	facility	was	$1.4	million	during	the	year	ended	December	31,	2014.

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

Office	space	lease	expense	totaled	$16.9	million,	$16.5	million	and	$15.8	million	for	the	years	ended	December	31,	2016,	2015	and	2014,	respectively.	Future	minimum lease	payments,	including	termination	fees,	under	noncancellable	operating	leases	for	office	space	in	effect	at	December	31,	2016	are	as	follows:

| (in	thousands) |  |
| :--- | :--- |
| 2017 | $12,516 |
| 2018 | 9,901 |
| 2019 | 9,178 |
| 2020 | 6,961 |
| 2021 | 6,132 |
| Thereafter | 21,204 |
| Total | $65,892 |

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,	revenue	or	flat	fees.	Royalty	fees	are	reported	in	cost	of	goods	sold	and	were	$13.1	million,	$11.8	million	and	$11.5	million	for	the	years	ended December	31,	2016,	2015	and	2014,	respectively.

# 16. 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) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| United\tStates | $367,937 | $354,433 | $320,327 |
| Japan | 120,160 | 104,299 | 108,757 |
| Germany | 99,814 | 94,546 | 99,714 |
| South\tKorea | 56,790 | 55,142 | 55,606 |
| France | 49,294 | 49,444 | 58,785 |
| Canada | 13,284 | 13,314 | 14,034 |
| Other\tEuropean | 139,813 | 145,985 | 159,011 |
| Other\tinternational | 141,373 | 125,590 | 119,787 |
| Total\trevenue | $988,465 | $942,753 | $936,021 |

Property	and	equipment	by	geographic	area	is	as	follows:

| (in	thousands) | 2016 | 2015 |
| :--- | :--- | :--- |
| United\tStates | $43,810 | $47,971 |
| Europe | 4,753 | 6,808 |
| India | 3,033 | 3,286 |
| Other\tinternational | 3,081 | 3,859 |
| Total\tproperty\tand\tequipment,\tnet | $54,677 | $61,924 |

# 17. 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	$7.2	million,	$5.3	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,	2016,	2015	and	2014,	respectively.	Future	expenditures	under	unconditional	purchase obligations	in	effect	as	of	December	31,	2016	are	as	follows:

| (in	thousands) |  |
| :--- | :--- |
| 2017 | $14,134 |
| 2018 | 10,288 |
| 2019 | 9,724 |
| 2020 | 2,617 |
| 2021 | 652 |
| Total | $37,415 |

# 18. Restructuring

During	the	fourth	quarter	of	2016,	the	Company	initiated	workforce	realignment	activities.	The	Company	incurred	$3.4	million	in	restructuring	charges,	or	$2.4	million net	of	tax,	during	the	year	ended	December	31,	2016.	The	Company	expects	to	incur	additional	charges	of	$10	million	-	$15	million,	or	$7	million	-	$10	million	net	of tax,	primarily	during	the	first	quarter	of	2017.

# 19. Employment-Related	Settlement

On	February	15,	2017,	the	Company	entered	into	an	employment-related	settlement	agreement.	In	connection	with	the	settlement	agreement,	the	Company	will	make	a lump-sum	payment	of	$4.7	million.	The	charges	related	to	this	agreement	are	included	in	selling,	general	and	administrative	expense	in	the	2016	consolidated	statement of	income.	As	part	of	the	settlement	agreement,	all	the	claims	initiated	against	the	Company	will	be	withdrawn	and	a	general	release	of	all	claims	in	favor	of	the Company	and	all	of	its	related	entities	was	executed.

# 20. Contingencies	and	Commitments

The	Company	is	subject	to	various	investigations,	claims	and	legal	proceedings	that	arise	in	the	ordinary	course	of	business,	including	commercial	disputes,	labor	and employment	matters,	tax	audits,	alleged	infringement	of	intellectual	property	rights	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,	2016.	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.

# 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.

# POWER	OF	ATTORNEY

KNOW	ALL	PERSONS	BY	THESE	PRESENTS,	that	each	person	whose	signature	appears	below	constitutes	and	appoints	Ajei	S.	Gopal,	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,\t2016\nAllowance\tfor\tdoubtful\taccounts | $5,200 | $2,009 | $1,509 | $5,700 |
| Year\tended\tDecember\t31,\t2015\nAllowance\tfor\tdoubtful\taccounts | $5,500 | $1,304 | $1,604 | $5,200 |
| Year\tended\tDecember\t31,\t2014\nAllowance\tfor\tdoubtful\taccounts | $5,700 | $2,104 | $2,304 | $5,500 |

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

# SUMMARY



Question: what is the proportion of total global headquarters leases to total other operating leases?
Calculation:   global_headquarters_leases = 40859
other_leases = 29808
global_headquarters_leases_percent = global_headquarters_leases / other_leases
answer = global_headquarters_leases_percent
Answer: 1.371:1