10-Q 1 anss-20210930.htm 10-Q anss-20210930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 0-20853
ANSYS, Inc.
(Exact name of registrant as specified in its charter)
Delaware
04-3219960
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2600 ANSYS Drive,
Canonsburg,
PA
15317
(Address of Principal Executive Offices)
(Zip Code)
844-462-6797
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Common Stock, $0.01 par value per shareANSSNasdaq Stock Market LLC
(Nasdaq Global Select Market)
Indicate by 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    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     No  
The number of shares of the Registrant's Common Stock, $0.01 par value per share, outstanding as of October 31, 2021 was 87,252,950 shares.



ANSYS, INC. AND SUBSIDIARIES
INDEX
  
Page No.

2

PART I – FINANCIAL INFORMATION
Item 1.Financial Statements:

ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share data)September 30,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$1,080,838 $912,672 
Short-term investments527 479 
Accounts receivable, less allowance for doubtful accounts of $14,600 and $14,000, respectively
475,829 537,564 
Other receivables and current assets199,491 268,522 
Total current assets1,756,685 1,719,237 
Long-term assets:
Property and equipment, net90,793 96,503 
Operating lease right-of-use assets119,938 137,730 
Goodwill3,101,623 3,038,306 
Other intangible assets, net667,268 694,865 
Other long-term assets215,259 225,119 
        Deferred income taxes23,186 28,830 
Total long-term assets4,218,067 4,221,353 
Total assets$5,974,752 $5,940,590 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$12,590 $18,691 
Accrued bonuses and commissions83,537 112,491 
Accrued income taxes8,024 26,116 
Other accrued expenses and liabilities178,248 199,466 
Deferred revenue318,032 372,061 
Total current liabilities600,431 728,825 
Long-term liabilities:
Deferred income taxes84,566 110,321 
Long-term operating lease liabilities102,842 120,940 
Long-term debt753,451 798,118 
Other long-term liabilities94,218 84,514 
Total long-term liabilities1,035,077 1,113,893 
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 2,000,000 shares authorized; zero shares issued or outstanding
  
Common stock, $0.01 par value; 300,000,000 shares authorized; 95,267,307 and 95,266,320 shares issued, respectively
953 953 
Additional paid-in capital1,428,419 1,434,203 
Retained earnings4,056,049 3,804,593 
Treasury stock, at cost: 8,055,219 and 8,693,809 shares, respectively
(1,097,051)(1,124,102)
Accumulated other comprehensive loss(49,126)(17,775)
Total stockholders' equity4,339,244 4,097,872 
Total liabilities and stockholders' equity$5,974,752 $5,940,590 

The accompanying notes are an integral part of the condensed consolidated financial statements.
3


ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months EndedNine Months Ended
(in thousands, except per share data)September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
Revenue:
Software licenses$200,394 $141,622 $547,820 $398,793 
Maintenance and service240,774 225,343 703,228 658,818 
Total revenue441,168 366,965 1,251,048 1,057,611 
Cost of sales:
Software licenses8,289 7,251 23,960 20,688 
Amortization15,189 9,911 45,163 29,227 
Maintenance and service39,268 36,223 119,884 107,446 
Total cost of sales62,746 53,385 189,007 157,361 
Gross profit378,422 313,580 1,062,041 900,250 
Operating expenses:
Selling, general and administrative165,368 132,642 471,993 391,862 
Research and development102,023 86,616 303,381 258,861 
Amortization3,403 4,237 12,244 12,562 
Total operating expenses270,794 223,495 787,618 663,285 
Operating income107,628 90,085 274,423 236,965 
Interest income541 754 1,544 4,463 
Interest expense(2,943)(1,853)(9,594)(8,544)
Other (expense) income, net(1,328)1,158 14,008 3,169 
Income before income tax provision103,898 90,144 280,381 236,053 
Income tax provision 18,556 14,517 28,925 17,798 
Net income$85,342 $75,627 $251,456 $218,255 
Earnings per share – basic:
Earnings per share$0.98 $0.88 $2.89 $2.55 
Weighted average shares87,239 85,798 87,072 85,749 
Earnings per share – diluted:
Earnings per share$0.97 $0.87 $2.86 $2.50 
Weighted average shares88,169 87,224 88,069 87,176 

The accompanying notes are an integral part of the condensed consolidated financial statements.
4


ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months EndedNine Months Ended
(in thousands)September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
Net income$85,342 $75,627 $251,456 $218,255 
Other comprehensive (loss) income:
Foreign currency translation adjustments(16,304)28,048 (31,351)14,044 
Comprehensive income$69,038 $103,675 $220,105 $232,299 

The accompanying notes are an integral part of the condensed consolidated financial statements.
5


ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months Ended
(in thousands)September 30,
2021
September 30,
2020
Cash flows from operating activities:
Net income$251,456 $218,255 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and intangible assets amortization80,500 62,197 
Operating lease right-of-use assets expense16,896 15,336 
Deferred income tax benefit(22,459)(22,627)
Provision for bad debts827 5,799 
Stock-based compensation expense122,148 103,256 
Gain on equity investment(15,139) 
Other1,940 2,294 
Changes in operating assets and liabilities:
Accounts receivable86,098 62,184 
Other receivables and current assets57,992 12,735 
Other long-term assets(2,548)(12,341)
Accounts payable, accrued expenses and current liabilities(58,520)(76,517)
Accrued income taxes(18,997)22,010 
Deferred revenue(46,467)(29,978)
Other long-term liabilities(5,898)10,940 
Net cash provided by operating activities447,829 373,543 
Cash flows from investing activities:
Acquisitions, net of cash acquired(105,141)(100,194)
Capital expenditures(18,133)(24,195)
Other investing activities(382)(6,201)
Net cash used in investing activities(123,656)(130,590)
Cash flows from financing activities:
Principal payments on long-term debt(45,000)(75,000)
Purchase of treasury stock(35,993)(161,029)
Restricted stock withholding taxes paid in lieu of issued shares(92,143)(66,774)
Proceeds from shares issued for stock-based compensation26,321 26,957 
Other financing activities(50) 
Net cash used in financing activities(146,865)(275,846)
Effect of exchange rate fluctuations on cash and cash equivalents(9,142)5,540 
Net increase (decrease) in cash and cash equivalents168,166 (27,353)
Cash and cash equivalents, beginning of period912,672 872,094 
Cash and cash equivalents, end of period$1,080,838 $844,741 
Supplemental disclosure of cash flow information:
Income taxes paid$59,973 $35,576 
Interest paid$8,721 $9,985 

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


6

ANSYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury StockAccumulated Other Comprehensive (Loss)/IncomeTotal
Stockholders'
Equity
(in thousands)SharesAmountSharesAmount
Balance, January 1, 202195,266$953 $1,434,203 $3,804,593 8,694 $(1,124,102)$(17,775)$4,097,872 
Stock-based compensation activity
(87,602)(565)48,565 (39,037)
Other comprehensive loss(19,264)(19,264)
Net income72,398 72,398 
Balance, March 31, 202195,266$953 $1,346,601 $3,876,991 8,129$(1,075,537)$(37,039)$4,111,969 
Acquisition of Analytical Graphics, Inc.1328 328 
Stock-based compensation activity
34,661 (63)5,327 39,988 
Other comprehensive income
4,217 4,217 
Net income
93,716 93,716 
Balance, June 30, 202195,267$953 $1,381,590 $3,970,707 8,066$(1,070,210)$(32,822)$4,250,218 
Acquisition of Analytical Graphics, Inc.454 (2)152 606 
Treasury shares acquired97 (35,993)(35,993)
Stock-based compensation activity
46,375 (106)9,000 55,375 
Other comprehensive loss(16,304)(16,304)
Net income
85,342 85,342 
Balance, September 30, 202195,267$953 $1,428,419 $4,056,049 8,055 $(1,097,051)$(49,126)$4,339,244 
    
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury StockAccumulated
Other
Comprehensive (Loss)/Income
Total
Stockholders'
Equity
(in thousands)SharesAmountSharesAmount
Balance, January 1, 202094,628$946 $1,188,939 $3,370,706 8,893 $(1,041,831)$(65,381)$3,453,379 
Treasury shares acquired690 (161,029)(161,029)
Stock-based compensation activity
(70,769)(541)48,997 (21,772)
Other comprehensive loss(24,292)(24,292)
Net income46,064 46,064 
Balance, March 31, 202094,628$946 $1,118,170 $3,416,770 9,042$(1,153,863)$(89,673)$3,292,350 
Acquisition of Livermore Software Technology, LLC1,030 (6)501 1,531 
Stock-based compensation activity
24,993 (146)12,322 37,315 
Other comprehensive income10,288 10,288 
Net income96,564 96,564 
Balance, June 30, 202094,628$946 $1,144,193 $3,513,334 8,890$(1,141,040)$(79,385)$3,438,048 
Stock-based compensation activity
37,934 (116)9,956 47,890 
Other comprehensive income28,048 28,048 
Net income75,627 75,627 
Balance, September 30, 202094,628$946 $1,182,127 $3,588,961 8,774 $(1,131,084)$(51,337)$3,589,613 

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

7

ANSYS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(Unaudited)

1.Organization
ANSYS, Inc. (Ansys, we, us, our) 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, electronics, semiconductors, energy, turbomachinery, consumer products, and healthcare.
As defined by the accounting guidance for segment reporting, we operate as one segment.
Given the integrated approach to the multi-discipline problem-solving needs of our customers, a single sale of software may contain components from multiple product areas and include combined technologies. We also have 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 us to provide accurate historical or current reporting among our various product lines.

2.Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information for commercial and industrial companies, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) included in our Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K). The condensed consolidated December 31, 2020 balance sheet presented is derived from the audited December 31, 2020 balance sheet included in the 2020 Form 10-K. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for any future period.
Recently Adopted Accounting Guidance
Income taxes: In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminated certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarified and simplified other aspects of the accounting for income taxes. We adopted ASU 2019-12 on January 1, 2021 with no material impact to our condensed consolidated financial statements.
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. Cash equivalents are carried at cost, which approximates fair value. Our cash and cash equivalents balances comprise the following:
 September 30, 2021December 31, 2020
(in thousands, except percentages)Amount% of TotalAmount% of Total
Cash accounts$960,228 88.8 $571,587 62.6 
Money market funds120,610 11.2 341,085 37.4 
Total$1,080,838 $912,672 

Our money market fund balances are held in various funds of two issuers.
8


3.Revenue from Contracts with Customers
Disaggregation of Revenue
The following table summarizes revenue:
Three Months EndedNine Months Ended
(in thousands, except percentages)September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
Revenue:
Lease licenses$120,516 $78,917 $315,387 $237,000 
Perpetual licenses79,878 62,705 232,433 161,793 
Software licenses200,394 141,622 547,820 398,793 
Maintenance223,872 211,942 655,843 615,609 
Service16,902 13,401 47,385 43,209 
Maintenance and service240,774 225,343 703,228 658,818 
Total revenue$441,168 $366,965 $1,251,048 $1,057,611 
Direct revenue, as a percentage of total revenue74.4 %74.9 %74.0 %75.7 %
Indirect revenue, as a percentage of total revenue25.6 %25.1 %26.0 %24.3 %

Our software license revenue is recognized up front, while maintenance and service revenue is generally recognized over the term of the contract.
Deferred Revenue
Deferred revenue consists of billings made or payments received in advance of revenue recognition from customer agreements. The timing of revenue recognition may differ from the timing of billings to customers. Payment terms vary by the type and location of customer and the products or services offered. The time between invoicing and when payment is due is not significant.
The changes in deferred revenue, inclusive of both current and long-term deferred revenue, during the nine months ended September 30, 2021 and 2020 were as follows:
(in thousands)20212020
Beginning balance – January 1$388,810 $365,274 
Acquired deferred revenue746 1,405 
Deferral of revenue1,202,547 1,025,057 
Recognition of revenue(1,251,048)(1,057,611)
Currency translation(8,591)4,307 
Ending balance – September 30$332,464 $338,432 

Total revenue allocated to remaining performance obligations as of September 30, 2021 will be recognized as revenue as follows:
(in thousands) 
Next 12 months$575,771 
Months 13-24171,906 
Months 25-3693,487 
Thereafter58,331 
Total revenue allocated to remaining performance obligations$899,495 

9

Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes both deferred revenue and backlog. Our backlog represents installment billings for periods beyond the current quarterly billing cycle. Revenue recognized during the nine months ended September 30, 2021 and 2020 included amounts in deferred revenue and backlog at the beginning of the period of $507.0 million and $465.5 million, respectively.

4.Acquisitions
During the nine months ended September 30, 2021 we completed several acquisitions to expand our solution offerings and enhance our customers' experience. The effects of the acquisitions were not material to our condensed consolidated results of operations individually or in the aggregate. The combined purchase price of the acquisitions during the nine months ended September 30, 2021 was approximately $110.7 million, which was paid in cash.
The assets and liabilities of the acquisitions have been recorded based upon management's estimates of their fair market values as of each respective date of acquisition. The following tables summarize the fair value of consideration transferred and the fair values of identified assets acquired and liabilities assumed for the combined acquisitions at each respective date of acquisition:
Fair Value of Consideration Transferred:
(in thousands)
Cash$110,739 
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
(in thousands)
Cash$4,320 
Accounts receivable and other tangible assets3,013 
Developed software and core technologies (11 year weighted-average life)
32,200 
Customer lists (7 year weighted-average life)
2,300 
Trade names (10 year weighted-average life)
1,000 
Accounts payable and other liabilities(2,852)
Deferred revenue(746)
Net deferred tax liabilities(7,311)
Total identifiable net assets$31,924 
Goodwill$78,815 
The goodwill, which is not tax-deductible, is attributed to intangible assets that do not qualify for separate recognition, including the assembled workforces of the acquired businesses and the synergies expected to arise as a result of the acquisitions.
The fair values of the assets acquired and liabilities assumed are based on preliminary calculations. The estimates and assumptions for these items are subject to change as additional information about what was known and knowable at each respective acquisition date is obtained during the measurement period (up to one year from the acquisition date).
On December 1, 2020, we acquired 100% of the shares of Analytical Graphics, Inc. (AGI), a premier provider of mission-simulation, modeling, testing and analysis software for aerospace, defense and intelligence applications. The acquisition expands the scope of our offerings, empowering users to solve challenges by simulating from the chip level all the way to a customer's entire mission. The purchase price was approximately $720.6 million, inclusive of net working capital adjustments.
On April 1, 2020, we acquired 100% of the shares of Lumerical Inc. (Lumerical), a leading developer of photonic design and simulation tools, for a purchase price of approximately $107.5 million, which was paid in cash. The acquisition adds best-in-class photonic products to our multiphysics portfolio, providing customers with a full set of solutions to solve their next-generation product challenges.
The operating results of each acquisition have been included in our condensed consolidated financial statements since each respective date of acquisition.
See Note 16, Subsequent Event, for information on our acquisition of Zemax, LLC (Zemax).
10

5.Other Receivables and Current Assets and Other Accrued Expenses and Liabilities
Our other receivables and current assets and other accrued expenses and liabilities comprise the following balances:
(in thousands)September 30,
2021
December 31,
2020
Receivables related to unrecognized revenue$119,073 $192,154 
Income taxes receivable, including overpayments and refunds29,947 31,628 
Prepaid expenses and other current assets50,471 44,740 
Total other receivables and current assets$199,491 $268,522 
Accrued vacation38,396 34,132 
Consumption, VAT and sales tax liabilities26,123 45,156 
Accrued expenses and other current liabilities113,729 120,178 
Total other accrued expenses and liabilities$178,248 $199,466 

Receivables related to unrecognized revenue represent the current portion of billings made for customer contracts that have not yet been recognized as revenue.

6.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 awards are anti-dilutive, they are excluded from the calculation of diluted EPS.
The details of basic and diluted EPS are as follows:
 Three Months EndedNine Months Ended
(in thousands, except per share data)September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
Net income$85,342 $75,627 $251,456 $218,255 
Weighted average shares outstanding – basic87,239 85,798 87,072 85,749 
Dilutive effect of stock plans930 1,426 997 1,427 
Weighted average shares outstanding – diluted88,169 87,224 88,069 87,176 
Basic earnings per share$0.98 $0.88 $2.89 $2.55 
Diluted earnings per share$0.97 $0.87 $2.86 $2.50 
Anti-dilutive shares32 30 30 28 

11

7.Goodwill and Intangible Assets
Intangible assets are classified as follows:
 September 30, 2021December 31, 2020
(in thousands)Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Finite-lived intangible assets:
Developed software and core technologies
$887,926 $(409,288)$859,620 $(370,338)
Customer lists194,047 (54,546)288,085 (136,093)
Trade names 175,785 (127,013)175,626 (122,392)
Total$1,257,758 $(590,847)$1,323,331 $(628,823)
Indefinite-lived intangible asset:
Trade name$357 $357 
Finite-lived intangible assets are amortized over their estimated useful lives of two years to seventeen years. Amortization expense for the intangible assets reflected above was $18.6 million and $14.1 million for the three months ended September 30, 2021 and 2020, respectively. Amortization expense for the intangible assets reflected above was $57.4 million and $41.8 million for the nine months ended September 30, 2021 and 2020, respectively
As of September 30, 2021, estimated future amortization expense for the intangible assets reflected above was as follows:
(in thousands) 
Remainder of 2021$18,000 
202278,125 
202380,348 
202479,784 
202577,509 
202675,325 
Thereafter257,820 
Total intangible assets subject to amortization666,911 
Indefinite-lived trade name357 
Other intangible assets, net$667,268 

The changes in goodwill during the nine months ended September 30, 2021 and 2020 were as follows:
(in thousands)20212020
Beginning balance – January 1$3,038,306 $2,413,280 
Acquisitions and adjustments(1)
79,905 69,598 
Currency translation(16,588)8,712 
Ending balance – September 30$3,101,623 $2,491,590 
(1) In accordance with the accounting for business combinations, we 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 we 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.
During the first quarter of 2021, we 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, 2021. No other events or circumstances changed during the nine months ended September 30, 2021 that would indicate that the fair values of our reporting unit and indefinite-lived intangible asset are below their carrying amounts.

12

8.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 our 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.
Our long-term debt is classified within Level 2 of the fair value hierarchy because these borrowings are not actively traded and have a variable interest rate structure based upon market rates. The carrying amount of our long-term debt approximates the estimated fair value. See Note 10, "Debt", for additional information on our borrowings.
The following tables provide the assets carried at fair value and measured on a recurring basis:
  Fair Value Measurements at Reporting Date Using:
(in thousands)September 30,
2021
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Cash equivalents$120,610 $120,610 $ $ 
Short-term investments$527 $ $527 $ 
Deferred compensation plan investments$1,602 $1,602 $ $ 
Equity securities$2,642 $2,642 $ $ 
  Fair Value Measurements at Reporting Date Using:
(in thousands)December 31, 2020Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Cash equivalents$341,085 $341,085 $ $ 
Short-term investments$479 $ $479 $ 
Deferred compensation plan investments$1,602 $1,602 $ $ 

The cash equivalents in the preceding tables represent money market funds, valued at net asset value, with carrying values which approximate their fair values because of their short-term nature.
The short-term investments in the preceding tables represent deposits held by certain foreign subsidiaries. The deposits have fixed interest rates with original maturities ranging from three months to one year.
The deferred compensation plan investments in the preceding tables represent trading securities held in a rabbi trust for the benefit of non-employee directors. These securities consist of mutual funds traded in an active market with quoted prices. As a result, the plan assets are classified as Level 1 in the fair value hierarchy. The plan assets are recorded within other long-term assets on our condensed consolidated balance sheets.
The equity securities represent our investment in a publicly traded company. These securities are traded in an active market with quoted prices. As a result, the securities are classified as Level 1 in the fair value hierarchy. The securities are recorded within other long-term assets on our condensed consolidated balance sheets.

13

9.Leases
Our right-of-use (ROU) assets and lease liabilities primarily include operating leases for office space. Our 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 term of the lease is 183 months, which began on October 1, 2014 and expires on December 31, 2029. The lease agreement includes options to renew the contract through August 2044, an option to lease additional space in January 2025 and an option to terminate the lease in December 2025. No options are included in the lease liability as renewal is not reasonably certain. In addition, we are reasonably certain we will not terminate the lease agreement. Absent the exercise of options in the lease, our remaining base rent (inclusive of property taxes and certain operating costs) is $4.5 million per annum through 2024 and $4.7 million per annum for 2025 - 2029.
The components of our global lease cost reflected in the condensed consolidated statements of income are as follows:
 Three Months EndedNine Months Ended
(in thousands)September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
Lease liability cost$7,139 $6,206 $21,278 $18,704 
Variable lease cost not included in the lease liability(1)
1,017 1,033 3,203 3,354 
     Total lease cost$8,156 $7,239 $24,481 $22,058 
(1) Variable lease cost includes common area maintenance, property taxes, utilities and fluctuations in rent due to a change in an index or rate.
Other information related to operating leases is as follows:
 Three Months EndedNine Months Ended
(in thousands)September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
Cash paid for amounts included in the measurement of the lease liability:
     Operating cash flows from operating leases$(7,217)$(5,921)$(21,183)$(17,322)
Right-of-use assets obtained in exchange for new operating lease liabilities1,301 1,076 6,895 21,319 
As of September 30,
20212020
Weighted-average remaining lease term of operating leases
6.7 years7.5 years
Weighted-average discount rate of operating leases
3.0 %