Long-Term Debt

9 Months Ended

Sep. 30, 2011

Long-Term Debt [Abstract]

Long-Term Debt

7. Long-Term Debt

Borrowings consist of the following:

(in thousands)	September 30, 2011			December 31, 2010
Term loan payable in quarterly installments with a final maturity of July 31, 2013	$	138,187		$	159,446
Capitalized lease obligations		30			79
Total		138,217			159,525
Less current portion		(58,494	)		(31,962	)
Long-term debt and capital lease obligations, net of current portion	$	79,723		$	127,563

On July 31, 2008, in association with the acquisition of Ansoft Corporation ("Ansoft"), ANSYS borrowed $355.0 million from a syndicate of banks. The interest rate on the indebtedness provides for tiered pricing with the initial rate at the prime rate + 0.50%, or the LIBOR rate + 1.50%, with step downs permitted after the initial six months under the credit agreement down to a flat prime rate or the LIBOR rate + 0.75%. Such tiered pricing is determined by the Company's consolidated leverage ratio. The Company's consolidated leverage ratio has been reduced to the lowest level in the debt agreement. During the nine months ended September 30, 2011, the Company made the required quarterly principal payments of $21.3 million in the aggregate. As of September 30, 2011, required future principal payments total $10.6 million for the remainder of 2011, $74.4 million in 2012 and $53.1 million in 2013.

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

For the three and nine months ended September 30, 2011, the Company recorded interest expense related to the term loan at weighted average interest rates of 1.00% and 1.04%, respectively. For the three and nine months ended September 30, 2010, the Company recorded interest expense related to the term loan at weighted average interest rates of 1.28% and 1.66%, respectively. If the Company did not enter into the interest rate swap agreement, the weighted average interest rate would have been 1.10% for the nine months ended September 30, 2010. There was no swap-related impact on the weighted average interest rate for the three and nine months ended September 30, 2011, or for the three months ended September 30, 2010, as the interest rate swap agreement terminated on June 30, 2010. The interest expense on the term loan and amortization related to debt financing costs were as follows:

	Three Months Ended
	September 30, 2011				September 30, 2010
(in thousands)	Interest Expense		Amortization		Interest Expense		Amortization
July 31, 2008 term loan	$	379	$	236	$	558	$	256
	Nine Months Ended
	September 30, 2011				September 30, 2010
(in thousands)	Interest Expense		Amortization		Interest Expense		Amortization
July 31, 2008 term loan (interest expense includes $0 loss and $864 loss, respectively, on interest rate swap)	$	1,210	$	733	$	2,523	$	873

The interest rate on the outstanding term loan balance of $138.2 million is set for the quarter ending December 31, 2011 at 1.12%, which is based on LIBOR + 0.75%.

The credit agreement includes covenants related to the consolidated leverage ratio and the consolidated fixed charge coverage ratio, as well as certain restrictions on additional investments and indebtedness. As of September 30, 2011, the Company is in compliance with all financial covenants as stated in the credit agreement.