Operator: Good morning, and welcome to the ANSYS Q4 and Fiscal Year End Conference Call. All participants will be in listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jim Cashman, President and CEO. Please go ahead.
James E. Cashman III - President and CEO: Thanks, Ashley. Good morning, and again, thank you, everyone, for joining us to discuss ANSYS' Fourth Quarter and Fiscal Year 2012 Financial Results. For you first-time attendees, and consistent with the protocol that we've used over the last couple of years, all of the general information and key topics relative to the quarter and the full year business results, as well as our future outlook are included in this morning's earnings release and in the prepared remarks that we posted on the home page of our Investor Relations website this morning. But before we get started, I'd like to introduce Maria Shields, our CFO, for our Safe Harbor statement. So Maria?
Maria T. Shields - VP and CFO: Thanks, Jim. Good morning, everybody. I'd like to remind you that in addition to any risks and uncertainties that we highlight during the course of this call, important factors that may affect our future results are discussed at length in our public filings with the SEC, all of which are also available via our website.
Additionally, the Company's reported results should not be considered an indication of future performance as there are risks and uncertainties that could impact our business in the future. These statements are based upon our view of the world and our business as of today, and ANSYS undertakes no obligation to update any such information unless we do so in a public forum.
Consistent with our standard practice, during the course of this call and in the prepared remarks, we will be making reference to non-GAAP financial measures. A discussion of the various items that are excluded and a full reconciliation of GAAP to comparable non-GAAP financial measures are included in this morning's earnings release materials and the related Form 8-K.
And on a last note I would like to remind everyone that the ANSYS team will be hosting an Investor Day here in Pittsburg on March 14th at the Renaissance Hotel. We're very excited about the event and if you're interested to learn more about it. Please see our website at ansys.com, for more details about the meeting and the webcast.
So, Jim, I'll turn the call back over to you.
James E. Cashman III - President and CEO: Okay. Thanks, Maria. Before we get into the Q&A, I'd like to briefly highlight a few important points about our Q4 and 2012 results and the assumptions that we use to build our Q1 and 2013 outlook.
So I'll begin by saying that Q4 and the full year were milestone period for ANSYS in many respects. We're really pleased that we're able to finish out the year with a strong close, this is evidenced by our record Q4 financial performance, it exceeded the upper end of guidance for both non-GAAP revenue and earnings.
In constant currency, we delivered 12% revenue growth in Q4 and an annual revenue growth of 17%. We also reported double-digit growth within most of our major geographic regions for both the fourth quarter and the full year and in both major categories of revenue license and maintenance for the full year.
The top line performance in turn yielded strong margins, cash flows and earnings for the quarter and for the year. In the fourth quarter ANSYS heightened our dedication to partnering with customers to achieve their vision delivering ANSYS 14.5. The many new features in this release are built on the Workbench platform to allow the evolution of streamlined workflows among simulation applications.
ANSYS 14.5 that delivers critical multiphysics solutions, enhancements to pre-processing and meshing capabilities, as well as a new parametric high performance computing or HPC licensing model to make design exploration more scalable and if you want any more information on this, there is a lot of detail. So check out the details at ansys.com.
Now, we really believe that the combination of the breadth and depth of our simulation capabilities combined with the power, scalability, flexibility, and openness of the Workbench platform puts us in a unique performance position not only to continue to increase our footprint and expand our relationships within our existing extensive installed base, but also to solve new classes of problems for emerging adopters.
So as we look back at our progress over the course of 2012, we continue to make important strides with the vast and broad array of customers spread across all geographies and industries. We continue to see the increasing importance of product innovation, integrity and quality as critical business issues requiring the use of advanced simulation. For example, in automotive, we see strong R&D investments continuing globally, led by sustainability, efficiencies and smart system development in addition to increasing utilization of electronics for safety, performance and entertainment systems.
Similarly, across most industries growth has been driven by increasing product complexity, emerging product segments and mobility and smart products and the increased adoption of electronics and software. All of these are areas that drive the increased interest in and need for our unique multiphysics capability.
In each of these cases, rapid understanding of extremely complex problems with a high degree of fidelity and accuracy is essential. These are the key tenants of the ANSYS vision and strategy.
Now, our vision basically is predicated on the ability to stimulate increasingly complex systems comprised of mechanical, electrical and software components all in a virtual environment at the speed of thought. The addition of Esterel enables us to co-stimulate the impact of software within our traditional system simulations. So in short, everything that we accomplished in 2012 I think you'd find that it was completely aligned with what we discussed as our key priorities and commitments at Investors Day last March, so I'd echo Maria's sentiments to not miss this upcoming one if you can make it.
So no doubt the array of global uncertainties and customer caution particularly in the back half of 2012 post challenges and from what we are seeing and hearing from our customer, those challenges will continue to some degree as we head into 2013. So the result of this is that we initiated your outlook on revenue and EPS for Q1.
So, we're looking at non-GAAP revenue in the range of $200 million to $206 million and EPS in the $0.67 to $0.70 range. Now we've also updated our fiscal year 2013 outlook to reflect movements in currency. Most notably the 13% negative swing in the rate of the Japanese yen and a 5% negative for the pound since – this is all since we provided our initial guidance in 2013 back in early November.
So what this means is our updated outlook is for non-GAAP revenue in the range of $880 million to $905 million and we maintained our 2013 EPS in the range of $3 to $3.12. Now more details around currency rates and other key assumptions are contained in the prepared remarks that we posted on our Investor Relations homepage earlier this morning.
From a qualitative perspective, our current guidance takes into account the uncertainty that is persisting in the various geographies throughout the world and a continued level of spending discipline that we're still seeing in our customers and just adds variability around any predictability and timing of deal closings. Basically, these are just realities of today's environment and there are the things that can and will happen that we have no control over. However, there are a couple of certainties; the first is the long-term confidence we have in the vision that we've been pursuing for more than a decade; and secondly is our commitment to invest from a long-term perspective in the realization of that vision. With this in mind, we'll continue to be cognizant of short-term realities and factor those into our business plan and our guidance.
With that, I am going to open up the phone now, and we'd be happy to take any questions that you might have.
Operator: Steve Ashley, Robert W. Baird.
Steve Ashley - Robert W. Baird & Co.: I guess a question on the North American business. Net revenue was up 5%. I know when we checked in last time in the third quarter, that business area had been soft, and I think you had expected it to remain challenging. I am sure it was fairly consistent with what you thought, but I am wondering if you could comment on deal slippage at the end of the period and what kind of pipeline domestically you enter the coming year with? If you've seen any improvement in the tone of business domestically here since we've crossed into the New Year?
James E. Cashman III - President and CEO: I wouldn't say we've seen either improvement or decay, frankly and in fact, it was pretty much in line with our expectations, largely around the fact of the Q4 comparable in North America was strong. We had that factored into all of our numbers. In other parts of the world, though, is where we saw some of the things where there was either surprising strength or resiliency, or in excess of what we had, so really no surprises, but North America is probably one of those hallmarks of the – some of the variability and unpredictability of things that we can see. So – and that's where you'll manifest things that trend, that go across multiple months which could then transcend quarters and years.
Steve Ashley - Robert W. Baird & Co.: Maria, just lastly, maybe on Esterel, I don't know if you want to comment on what kind of revenue you might expect in the first quarter and full year for Esterel?
Maria T. Shields - VP and CFO: Right now in our guidance we are thinking for Q1 around $5 million and roughly about $23 million for the full year and that's non-GAAP.
Operator: Richard Davis, Canaccord.
DJ Hynes - Canaccord: This is DJ on the call for Richard. So Jim, I guess when you think about the three drivers of growth that you guys have talked about in the past, those being number of users, density and intensity of use, can you talk about which lever has been the most effective, how you think about this evolving as you look at '13? Then maybe the follow-up would be on – can you touch on the high-performance computing initiatives and how that fits in the growth and strategy?
James E. Cashman III - President and CEO: To answer both part of the question, and the first thing, no doubt the intensity has gone up. You'll notice that we – customers that have been having difficulty hiring, well we've had difficulty hiring. You just – you check the website, we are really trying to do that, I mean we are not going to compromise on the quality of people that we bring in, but there is no secret there, it's that we've trying to build that up and our customers are doing the same thing. Actually they've probably been doing a lot of leveraging of the high performance computing to maybe compensate for some of the human asset things. With that in mind, I'd say probably right now there is probably – again there is dynamic of those three dimensions change quite a bit, but it's probably a just in second and third with not much separation between them, between probably the increase in users going up a little bit and at this point in time probably the – what we call in terms of the density or so is of some of the cross simulation, it's still progressing, but it's still in its early stages. So, I try to rank them that way and I wouldn't be totally surprised if intensity was still strong in middle of the year and if there was other, if some of the other factors kind of varied in their position, because all three of them are going to play out over the next ten years.
DJ Hynes - Canaccord: Then it's a good sideway into the – kind of the second question around density of usage, I mean, now you've heard us from next for a few months. What are you seeing in terms of appetite from existing customers, is that in line with expectations, better than expectations and then update us on where we are and what needs to be done from integration perspective?
James E. Cashman III - President and CEO: Well, actually the key thing is that from an integration standpoint there are already things that we've been able to do in terms of we're using that as a reduced order model kind of play, but obviously, in the first few months it's very, very early and from a technical elegant standpoint there is a lot of things we're going to be doing over the next year that actually kind of bring that in the manner in which people come to expect of the breadth of our ANSYS product. So right now, I'd say that what we're trying to do is make sure that our, let's say there is a lot of customer interest, what we're mostly trying to do is make sure that we're thoroughly qualifying embedding that interest such that the fairly large ANSYS indirect and direct sales force doesn't overwhelm the capacities of a relatively small best Esterel team. So what we're doing is we've been very selective in terms of kicking name targeted accounts that we always have been in discussion with and determine the most appropriate thing there. So I think you're going to see that kind of approach in there. So I guess summarizing is, the initial kind of data integration and tying together specific workflows already done. A lot of work remaining to be done in terms of the full embedding in terms of the ANSYS solution and very strong customer – let's see customer entry in terms of, yeah, these are kind of problems we are concerning with, but we are dealing with that advanced vanguard. We are really are looking at how we'll be able to effectively do co-simulation within the next year.
Operator: Ross MacMillan, Jefferies & Company, Inc.
Aashiv Shah - Jefferies & Company, Inc.: Aashiv on for Ross. Just a couple of quick questions here. One, can you give us an update on Japan? It looks like the growth rate there was better in the fourth quarter versus the third quarter. So have you seen any signs of improvement there?
James E. Cashman III - President and CEO: It's going to be long-term prospect not only from the Japanese economy standpoint, but from the things that we want to do to continue to build that out. So, yes, it is encouraging but I wouldn't say that the past is anywhere done at least to what we want to do. However, one thing that is in place – one thing that is actually measurable is we talked about some of the staffing and headcount things, we've actually made a lot of progress on that. Now one thing I will say is if you look at the fact that we were pretty unique in our market position, in our technology, it does take time for any new employee to kind of absorb and ramp up. So there is going to be a build in latency in there. However, it's a much better situation than saying, we're looking for people and then we'll have to ramp up. We are in that. I think we've seen some of the first glimmering signs of progress but mission is not accomplished yet.
Aashiv Shah - Jefferies & Company, Inc.: Your cash from operations was down year-over-year and can you walk me through what changed there?
Maria T. Shields - VP and CFO: Yes, it's just a change in tax payments. We had larger tax payments this year than we did a year ago. About $40 million, did you hear it?
Aashiv Shah - Jefferies & Company, Inc.: Yes, I got it. $40 million change in tax payments right.
Operator: Sterling Auty, JPMorgan.
Sterling Auty - JPMorgan: There was a question earlier that wasn't point to…
Maria T. Shields - VP and CFO: Sterling, we're having a hard time hearing you?
Sterling Auty - JPMorgan: I was saying, I think on an earlier question, with sequestration starting up in the (phase) and looking at North America have you seen any impact in the business and how did you factor that into your first quarter guidance?
Maria T. Shields - VP and CFO: I wouldn't say sequestration is – sequestration to me is just another level of uncertainty, there was a fiscal cliff before it. The reality is a lot of it, Sterling, as Jim commented, we're seeing a lot of the customer trends that we saw on the second half of 2012 as we head into 2013. So the interest is high, the pipelines are good, but there is customer caution and so we'll continue to work with our customers. So one good thing that we are seeing is, those customers who have multiple year projects are investing, because when the tide turns, they want to be prepared to go to market with really cool products.
James E. Cashman III - President and CEO: In general, we've heard very little of specific denotation of sequestration. There are a lot of people that are viewing that whole circus in different terms, but the fact that we haven't heard it ourselves doesn't mean there may be some people that it's factoring in their mind. What we do is we take the netting, as Maria said, combine it in with the aggregate insecurity that companies are feeling, and then that actually factors to our forecast. So, nothing that's spelled out for that, nor have we had a major rash of customers identifying that as the long pole in the tent.
Sterling Auty - JPMorgan: In the prepared remarks, I think you talked about four customers had $10 million or more in spend last year, up from $1 million the year before. Can you remind us, are those all lease revenues, so it's recurring?
James E. Cashman III - President and CEO: They are combinations. They're very heavily recurring-oriented, basically tax or lease, the enhancement subscriptions, the product support maintenance kind of thing and lease, and historically that's usually been about 70% to 75% of the buildup. So, if anything, kind of even above our normal recurring rates, which is kind of good as we've been talking about our major customers growing more and obviously, the rest of that is new business, which means they're also ramping up. The whole thing I'd see is just like it, 15 years ago when we had six bigger customers, eventually, they grew into $7 million and once they get over the threshold, it's a pretty broad band. What it is? It's just a continuing buildup. It's pretty consistent with the long-term market thesis that we've been presenting for many years.
Sterling Auty - JPMorgan: Last question. How should we think about organic growth in 2013? It feels to me like you've factored in some of that macro uncertainty, or maybe some acceleration as we move through the year, is that the right way to think about it?
Maria T. Shields - VP and CFO: Sterling, for the most part, everything is organic now. You've got a little bit of Esterel, but it's such a small piece, but the rest of the business is all what we consider organic.
Operator: Steve Koenig, Wedbush.
Steve Koenig - Wedbush: I want to ask you, Jim, when you think about the worldwide pipeline and you can (deal) it however you want to, but not just North America, but worldwide. When you look at the shape of that pipeline, starting out 2013 here, does it look back-end loaded? Kind of how does that look to you time-wise, compared to the normal?
James E. Cashman III - President and CEO: First of all, it's building, but that's easy – that's an easy thing to say. But the one thing is, if you look at what we're seeing, yeah, it is back-end loaded and the back-end loading, quite frankly, is, if anything, a measure of, with the uncertainty, things flow a little bit slower. So if things are – if new opportunities continue to pile up at the same or greater rate, but they come out of the spigot a little bit slower, yeah, there is going to be buildup and it does come out later in the year and that, in fact, is what we're seeing. We're not expecting a gangbuster remainder, I mean, last half of the year, but we are – but we do see modest improvements and disproportionately back half.
Steve Koenig - Wedbush: Jim, is any of that predicated on the notion of the economic improvement in the back half or is it just back-end loaded as-is, independent of your economic assumption?
James E. Cashman III - President and CEO: Frankly, it's difficult to decouple those and it's a little of both frankly.
Steve Koenig - Wedbush: Then maybe a related question, so what will it take to see kind of more of a low-teens level organic constant currency growth for ANSYS? Is that purely a function of the economic environment, or are there things you can do, etcetera?
James E. Cashman III - President and CEO: There are always things we can do. You have to make sure that they're not kind of like the – a form of stimulus that might cost more than it takes to put it in. We are always trying to balance those particular things and, in fact, you'll see that. As I mentioned, our long-term premise is we're investing. You look at the people that we're trying to hire, but I am talking about quality people that we'd be happy to have with us for 10 or 15 years, not six month stop-gap kind of people. That's the kind we've always gone for. So that investment is definitely continuing on.
Steve Koenig - Wedbush: Then maybe one last question. Jim, you picked my interest when you talked about the parametric licensing model for HPC. Can you talk about that a little bit more and kind of how that relates to revenue?
James E. Cashman III - President and CEO: Basically it is the overall issue of – there are two fundamentals premises to how utilize leverage computing and one of which is high performance computing which solves, can solve big problems, you also have parametric packs and that allow people look at design a broad range of design alternatives, but look at them in parallel as opposed to plowing through them serially which some people may say, so what, but if you're trying to race out a new cell phone or you're trying to race out something in times that's very calendar-dependent, being able to do that in parallel versus just stringing it out for months, or if you're trying to solve an environmental disaster of some sort or remediate some kind of a problem or market problem, you'll being able to go through that, it's particularly key and this has really been kind of evolving body, much as the way as we've had the Software-as-a-Service kind of model out there long before cloud was even a word and there is an evolving path in terms of how people are deploying and utilizing this thing. I talk about mobility solutions and some of the things we're doing there. So if you look at it, there is a whole range of additional things to make this software more available on a continual basis. Those models are continuing to evolve just like you see in almost any other kind of software distribution model. So HPC is one element of that that takes into account running classes of problems that just really weren't envisioned 10 years ago because the computing couldn't handle them. This is just one more step along that way. We're just trying to make it easier for customers to take advantage of that kind of capability and get the leverage from it.
Steve Koenig - Wedbush: Just lastly, just how we think about the impact on revenues from that?
James E. Cashman III - President and CEO: Well, it's actually built into the guidance and actually that's one reason why even you see that companies are adding a bunch of new uses and things like that, we have always talked about how that can continue to grow. So actually there is no doubt that the HPC is growing more fastly. It's really just a form of that intensity of usage metric that we're talking about on one of the earlier questions. It does speak to an increased usage of simulation albeit in this way in an automated form versus a brute force form.
Operator: Perry Huang, Goldman Sachs.
Perry Huang - Goldman Sachs: I was also hoping to ask a question on guidance. Full year revenue guidance, the range was lowered by about $5 million, was this due solely to FX or was this a net change? For example, maybe a decrease from FX offset by an increase to the core business on a constant currency basis?
James E. Cashman III - President and CEO: Bottom line is it was largely a currency correction, however, some of the forecast just show that there is a little – I mean we're not talking projecting an early massive ramp up of demand and revenue. However obviously, we didn't drop the guidance as much as you might imply from the currency rates and things like that, so yes, we're not heralding a major new trend here, but there are some positive aspects in there, but we also want to update on currency and really that's how it all nets out. So it's basically still – it's still a solid or possibly a tweak as it was back and when we talked about November.
Perry Huang - Goldman Sachs: If I could just for a follow-up a question about capital allocation. With the share repurchases in the quarter and the recent increase in the authorization so we think about any changes to your capital allocation strategy or more a continuation of being more opportunistic when it make sense?
James E. Cashman III - President and CEO: It's more continuous, more of a continuation but obviously with the number of peaks and valleys it seem to happen on a month-by-month basis, that obviously creates more opportunities for us and we want to be prepared to take advantage of those, because frankly if you look at over the long-term it's a pretty decent thing to do. I mean we still I'd just continue on saying we still were looking at number one on our list are sensible and strategic acquisitions, I mean, there is no doubt that that's our first one, but there is a very good case to be made for viewing ourselves as an investment.
Operator: Mark Schappel, Benchmark.
Mark Schappel - Benchmark: Jim, switching gears a little bit, the shale gas industry has been one of the bright spots in the U.S. manufacturing sector, and given that that is pretty much taking place in your backyard, I was wondering if you're seeing any meaningful impact on your business from shale gas drillers or related industries?
James E. Cashman III - President and CEO: Yes, it's been tough for us to find space to grow ourselves because they're taking all the – I mean, for their own operation, not for the drilling, but no, there is no doubt and actually what happens is, whenever there is money there, I wouldn't say that this is almost like, if you will, the equivalent of a manufacturing boom using pretty standard techniques that are already in place. However, when you have that, it always tends to bring in an additional interest in R&D for efficiency for safety, for sustainability, for all sorts of things like that and we start to see, not necessarily from these areas where mostly the drilling may be going on, but in the areas of the parent companies where the processes and equipment is being done. So we start to see a ramp-up in there. It's very (analogous) to what we saw where it used to be oil, petroleum is varies – there were very standard ways of doing things, but when the cost of oil got very costly, then now we're putting more R&D into how do we drill deeper, how do we look at alternate forms of energy, things like that. It's really, if you will, on a smaller scale, it's just kind of a microcosm of what we've witnessed in those other industries, but net-net, anytime you're seeing a rapid growth in something relatively new, it usually spells out at least good long-term opportunity for us.
Operator: Blair Abernethy, Stifel Nicolaus.
Blair Abernethy - Stifel Nicolaus: Jim, I wonder if I could just follow-up on the sequester question. Can you just give us a little more color on 2012, how much of your business was from the U.S. federal government in 2012? Was it a material amount? I don't think that – just to frame that up for us. Then, your pipeline going forward to, how much of your pipe is U.S. federal?
James E. Cashman III - President and CEO: Well, first of all, it's a very small part. Second of all, we've gone on record and it's in all our filings, we don't have any single customer or entity that represents – well, safely under 5% – more than 5%. It's actually smaller than that when you do the math. But apart from that, then you've got the other thing of there are customers we have that aren't technically part of the federal government. Some of them may or may not be buying under GSA, but they still may be affected, different contractors that may be involved. It gets really difficult sometimes to cut through that. So there are obviously issues, but sometimes, what we find is those shifts are actually now pushing away from old technologies, which were largely in the manufacturing stage, and more into new initiatives that are actually in the R&D stage, and that actually plays a little bit more into our sweet spot. So anytime you see an innovation cycle going on, it's pretty decent for us. I mean this is somewhat again analogous to what we might have seen in the electronics industry when electronics were going quite well for us, even if chip cycles were going down, because the innovation that was happening in R&D in rough times do bridge over into the next period, they wanted to be ready when it came out. We see that that pattern repeated number of times, but basically, net that out is, there still are opportunities that we're seeing in the federal government. Second of all, it's really not a major part of our business. So we're really, we're not really seeing huge amounts of impact again aggregated in with the overall demand function we're seeing and therefore coupled in with the guidance.
Blair Abernethy - Stifel Nicolaus: Second question is just around pricing and particularly on the maintenance pricing. Can you just comment on what the environments are like out there right now versus say year ago, is it staying the same getting better, getting worse?
James E. Cashman III - President and CEO: Well, it actually is – (could) stayed very stable, good after returning to it solid level. If anything it tends, right now it's tending to inch up, I don't think that's statistically significant because as we saw in 2009 companies need a lot of business. So they can temporarily tighten things, but right now the renewal rates are really good, it's just – I'd like to categorize it as, characteristically and historically strong and no major change. The other thing is, keep in mind though that we're also coming out with a pretty significant release with ANSYS 14.5, which I mentioned briefly on the call. That usually tends to solidify renewal rates too, because there is that almost instant gratification that comes back with it.
Operator: Greg Halter, Great Lakes Review.
Gregory Halter - Great Lakes Review: You obviously already commented briefly on your building there, but just wondered what the status is if you're ahead, behind or run into any problem so far with the new building?
Maria T. Shields - VP and CFO: No, well, there is actually two buildings that are 'involved' in the new headquarters. The brand new facility, we've not given broken ground yet. That's really for us we head into later in 2013. The other piece of property that we bought as the first step, we are on plan. You've done the demolition and we'll begin constructing it so that the back half you'll see it in what we have guided relative to capital and you'll also see in the back half of the year some one-time cost related to starting to move some of the functions out of this building into that new building. We are actually very fortunate we got that building because as an earlier caller mentioned, we are having a commercial real estate boom right here in our backyard. So we are happy and fortunate that we were able to get that as part of our expansion plans.
Gregory Halter - Great Lakes Review: Do you expect any sort of quantifiable cost benefits out of these moves that we will able to at some point?
Maria T. Shields - VP and CFO: Yes, the per person cost will go down, but probably quantifiable, the good thing is we will be able to now consolidate the workforce here in the Pittsburgh area. So instead of having an office here in Southpointe and office downtown, we could put those teams together. We have always seen that when we put the teams together, the amount of innovation that that can spark when they are on the same place and exchanging ideas always is a good thing for us and our customers.
James E. Cashman III - President and CEO: But the timeframe is that Maria mentioned, we haven't even broken ground yet and really the move is looking towards the last say at the end of 2014, so by the time you see that, but the key point is and one of the factors we looked at was the cost per headcount for just the housing really was going to go down. Now that's also on a growing body of people. But it was going to be more efficient and it was really one that was really kind of designed around our operations.
Gregory Halter - Great Lakes Review: One other quick one for you, it look like the Apache business was quite strong just wondered, I don't know if you touched on it, but if you could touch on what's going on there I think it's apples-to-apples because the deal was done in August?
James E. Cashman III - President and CEO: Yes, that's the earlier comment, but essentially we're organic to organic in the numbers we say, but Apache has continued to progress right on or a little bit ahead of projections. I think one of the key things that you will also start to see is that we've been able to actually they build in on the revenue as you look at it, they are probably even slightly ahead on the margin improvement as we start to build them into the ANSYS model. Secondarily, as I got to say the technology teams of our existing Electronics Group and the Apache Group in terms of combining, co-simulating some of the specific capabilities in terms of a pretty comprehensive chip package system. Our capability has also sparked a lot of interest, which I think is tended to help strengthen both of those. So I mean, we see all of those going on, but it's pretty much as expected with even some slight upside surprises.
Operator: Jay Vleeschhouwer, Griffin Securities.
Jay Vleeschhouwer - Griffin Securities: Jim, I'd like to ask first about your vertical markets specifically when you look at some of your largest verticals electronics, auto, industrial and so forth, are there any particular trends that stand out with respect to preferences within any or each with regard to perpetual versus lease revenues? The reason I ask is one of your large peers in the group recently spoke about a growing preference, at least among its customers, for product rentals and I'm wondering if you are beginning to see anything like that for yourselves and then a couple of follow-ups.
James E. Cashman III - President and CEO: Actually, the thing is, we're not seeing a whole lot of change in the customer procurement and demand, but even some of them are going through different views of the historical model of how do you implement internal dedicated systems versus private cloud versus public cloud. There could be some changes along those lines. We're really not seeing a major shift other than the fact that leases remain very strong. The overall mix really isn't changing, nor has the – at least the stated customer preference, but frankly, we've been agnostic on that for years.
Maria T. Shields - VP and CFO: One thing, Jay, is the Apache part of the business continues to be a time-based license business, as it was historically before the acquisition.
Jay Vleeschhouwer - Griffin Securities: Right, just a clarification from an earlier comment. You mentioned that renewal rates remained up high. Is that through across the board by vertical, or any further (patient knowhow) any verticals in terms of renewal activity?
James E. Cashman III - President and CEO: I have to say, in general, we've seen nothing that would indicate that it's mostly bearing varying. In fact, it varied widely than any industry. That couldn't happen without seeing some movement in there. It's just stayed so categorically high. We're not seeing anything on the vertical standpoint. I think the other comment on – at least some of our customers are at least wrestling with this. It's kind of like on something where there is a very intense shared kind of demand for something, they tend to like to keep that more inside, and probably distribute it through a private cloud kind of standpoint. It's one they're kind of testing the waters or they're only loosely involved with it, that they'll tend to look at that usually as kind of a trial period, but again we're very early in what appears to be some changing customer sentiments. Again, we've been prepared for years with any of the eventuality, so whichever way it comes, we're just interested in getting more people using it.
Jay Vleeschhouwer - Griffin Securities: Two last ones, a broader question about the competitive structure of simulation. You're aware, of course, that Siemens PLM bought LMS and LMS historically has not always competed with you widely necessarily. Nonetheless, with this acquisition, they do now seem to have become the second largest vendor in simulation, along with what they had already and totally. So if you could perhaps talk about just the structure of the market and then lastly, at your analyst meeting last year, you spoke about your intention to invest in services because you saw the importance of that to inducing license adoption. Could you talk about how you invested there last year and your plans for this year along those lines?
James E. Cashman III - President and CEO: I'm going to try it. I don't see the competitive landscape changing a whole lot because the traditional CAD or PLM players have been moving in this direction. Siemens had been involved in one of the early Nastran-related activities and with LMS, it's a good solid capability, a collection of more smaller products. As you correctly assess, sometimes we overlap with, but it's not really across the board. So I don't see an overall change there other than fact that companies are doing more with the acquisitions as part of their own capital buildup kind of strategy. Now, on the services aspect, we basically if you go to the website you'll also notice that there is a fair amount of support people. We added quite a few throughout the remainder of the year, but if you recall from the Investor Day, I also commented a little bit that that's kind of a slow ramp, because really what you're trying to do it, it's not like people need to put existing nuts on existing bolts, and therefore you just need more people to twist them on. There is really kind of a long-term engagement planning, auditing process that needs to go on. So it's one of those things that we view as being pretty essential to building up over the next five years, but we don't view that as hanging out a shingle and ramping up things in a three to four-month kind of timeframe. The kind of services we're talking about are not the traditional services that have been historically viewed in this market, and that's helping people build with models, demonstrating it will give them the right kind of solutions and building up their confidence along this way. It's really now evolving processes that really take advantage of the capabilities that simulation can do in terms of change in the landscape of their own internal development processes. Any time you change organizations and processes and things like that, it takes a long time and I don't – you can't vote on these because they – you don't want them throwing out good processes for better ones if they don't have a smooth transition and we're doing it. It's really something we've been talking about for year, simulation driven product development. It's a whole point of getting simulation upfront being able to answer what, if questions and that's why we think the virtual world is a really good staging ground for product innovation.
Operator: This concludes our question-and-answer session. I would now like to turn the conference back to Mr. Jim Cashman for any closing remarks.
James E. Cashman III - President and CEO: Okay, well, thanks everybody. But in closing, 2012, another strong year for ANSYS, but that one is in the books, but we're also excited about the opportunities that lie ahead in 2013. We acknowledge, like everybody is saying, there are going to be challenges along the way. We saw it in 2009, '10, '11, '12, but the emphasis on 2013 is going to be the ongoing integration of the Apache and Esterel businesses, combined with a continued focus on our own technological expansion and differentiation, execution, growth, customer engagement, all those key things, that they may sound boring but they've served us well over really a long timeframe. We believe, as it was mentioned on the questions, that if the economic environment does indeed improve into the back half of $2013 or into 2014, we are well-positioned to achieve even more robust financial targets. Again, I'll just give my normal shout out though but we continue to be propelled by a strong combination of we think a vision that's got a long life left in it and has served us over a long time, our business model that helps us navigate through a wide range of economic uncertainties, a real shout out to our customers many of which have been with us 20, 30 or more years, the partners' great technology, and of course, the exceptional employees that we are still trying to ramp up the numbers up. So thanks for joining us this morning and we look forward to talking to you at the next call, but more importantly, maybe even seeing many of you at our upcoming Investor Day here in Pittsburgh. So signing out from Pittsburgh, thanks.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.