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EX-31.1 - CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER - ACCELRYS, INC.d334801dex311.htm
EX-31.2 - CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER - ACCELRYS, INC.d334801dex312.htm
EX-32.1 - CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - ACCELRYS, INC.d334801dex321.htm
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

Form 10-K

(Amendment No. 1)

(Mark One)

 

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

For the fiscal year ended December 31, 2011

 

¨ 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: 0-27188

Accelrys, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   33-0557266

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

10188 Telesis Court, Suite 100, San Diego, California   92121
(Address of principal executive offices)   (Zip Code)

(858) 799-5000

(Registrant’s telephone number, including area code)

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

 

Title of Each Class

 

Name of Each Exchange on Which Registered

Common Stock, par value $0.0001 per share   NASDAQ Global Market

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

None

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

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

Note—checking the box above will not relieve any registrant required to file reports pursuant to Section 13 of 15(d) of the Exchange Act from their obligations under those Sections.

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  x    No  ¨

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 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 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.  x

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

 

Large accelerated filer  ¨   Accelerated filer  x
Non-accelerated filer  ¨   Smaller reporting company  ¨
(Do not check if a smaller reporting company)  

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

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2011 was $237 million (based upon the June 30, 2011 closing price for shares of the registrant’s common stock as reported by the NASDAQ Global Market). Shares of common stock held by each officer, director and holder of 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of outstanding shares of the registrant’s common stock, par value $0.0001 per share, as of April 16, 2012 was 55,626,305, net of treasury shares.

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

 


Table of Contents

ACCELRYS, INC.

FORM 10-K—ANNUAL REPORT

For the Fiscal Year Ended December 31, 2011

Table of Contents

 

          Page  

PART I

     
Item 1   

Business

     3   

PART IV

     
Item 15   

Exhibits, Financial Statement Schedules

     11   
Signatures      12   

 

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EXPLANATORY NOTE

This Amendment No. 1 (this “Amendment”) to the Annual Report on Form 10-K of Accelrys, Inc. (the “Company”) amends the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which was filed with the Securities and Exchange Commission (“SEC”) on March 13, 2012 (the “Original 10-K”). The Company is filing this Amendment solely to correct a clerical error in the Company’s disclosure of backlog. In Item 1 of the Original 10-K, under the heading “Backlog of Committed Revenue,” the Company indicated that its backlog as of December 31, 2011 was approximately $216.0 million, whereas the correct amount is approximately $145.1 million. In addition, the Company indicated that it expected to recognize approximately $94.7 million of its December 31, 2011 backlog during fiscal 2012, whereas the correct amount is approximately $110.9 million. The foregoing changes are reflected in this Amendment. Except as described above, no other changes have been made to the Original 10-K, and this Amendment does not modify, amend or update in any way any of the financial or other information contained in the Original 10-K. This Amendment does not reflect events that may have occurred subsequent to the filing date of the Original 10-K. Pursuant to Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, the complete text of Item 1, as amended, is repeated in this Amendment.

Forward-Looking Statements

This Amendment (together with the Original 10-K, this “Report”) contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. These statements are often identified by the use of words such as “expect”, “believe”, “anticipate”, “estimate”, “intend”, “plan” and similar expressions and variations or negatives of these words These forward-looking statements may include statements addressing our future financial and operating results. We have based these forward-looking statements on our current expectations about future events. Such statements are subject to certain risks and uncertainties including those related to the execution of our strategic plans, the successful release and acceptance of new products, the demand for new and existing products, additional competition, changes in economic conditions and those described in documents we have filed with the SEC, including this Report in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” and subsequent reports on Form 10-Q. All forward-looking statements in this document are qualified entirely by the cautionary statements included in this document and such other filings. These forward-looking statements speak only as of the date of this document. We disclaim any undertaking to publicly update or revise any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Unless the context requires otherwise, in this Report the terms “we,” “us” and “our” refer to Accelrys, Inc. and its wholly owned or indirect subsidiaries, and their predecessors.

PART I

 

Item 1. Business

Change in Fiscal Year

On August 3, 2010, our board of directors approved a change in our fiscal year end from March 31 to December 31. The fiscal year end change was effective December 31, 2010 and resulted in a nine- month reporting period from April 1, 2010 to December 31, 2010. All references to “years”, unless otherwise noted, refer to the twelve-month fiscal year, which prior to April 1, 2010, ended on March 31, and beginning with January 1, 2011, ends on December 31, of each year.

 

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Overview

On July 1, 2010, pursuant to the terms of the Agreement and Plan of Merger and Reorganization, dated April 5, 2010 (the “Merger Agreement”), by and among us, Alto Merger Sub, Inc., our wholly-owned subsidiary (“Merger Sub”), and Symyx Technologies, Inc. (“Symyx”), Merger Sub merged with and into Symyx, with Symyx surviving as our wholly-owned subsidiary (the “Symyx Merger”). Symyx’s operating results are included in our consolidated financial statements and results of operations beginning July 1, 2010.

On May 19, 2011, we completed the acquisition of Contur Software AB (“Contur”), whereby Contur became our wholly owned subsidiary (the “Contur Acquisition”). Contur’s operating results are included in our consolidated financial statements and results of operations beginning May 19, 2011.

On December 30, 2011 we completed the acquisition of VelQuest Corporation (“VelQuest”), whereby VelQuest became our wholly owned subsidiary (the “VelQuest Acquisition” and, together with the Symyx Merger and the Contur Acquisition, the “Acquisitions”). VelQuest’s operating results are included in our consolidated financial statements and results of operations beginning December 30, 2011.

Our Business

We develop and commercialize scientific informatics software products and services for industries and organizations that rely on scientific innovation to differentiate themselves in the marketplace. Historically, our products were primarily utilized by our customers’ research organizations. As a result of the Acquisitions, we increased the breadth and depth of our scientific product portfolio by adding a set of complementary scientific applications, content databases, technologies and domain expertise. In addition, we have expanded our focus to include products that are utilized by our customers’ development and early manufacturing organizations. In particular, the addition of the VelQuest suite of products gives us even greater capability downstream, extending our solutions into the quality assurance and quality control areas in large pharmaceutical companies. Collectively, our products and services are intended to optimize our customers’ research and development value chain, from early research through development into early manufacturing. Our software is used by our customers’ scientists, biologists, chemists and information technology professionals to design, execute and manage scientific experiments in-silico or in the lab and to aggregate, mine, manage, analyze and interactively report on the scientific data from those experiments. Our solutions also enable the development process to scale more effectively and bring increased automation to the transition from development to early manufacturing. The ability to integrate and access data from diverse data sources and to make that information accessible throughout the scientific value chain enables our customers to reduce costs, enhance productivity and more efficiently provide innovative and effective products to their customers.

Our customers include leaders from a variety of industries, including pharmaceutical, biotechnology, agricultural, energy, chemicals, aerospace, consumer packaged goods and industrial products, as well as various government and academic entities. We market our software products and services worldwide, principally through our direct sales force, augmented by the use of third party distributors. We are headquartered in San Diego, California and were incorporated in Delaware in 1993.

Description of Our Markets and Business

Our customers differentiate themselves through scientific innovation. As a result, innovation in the discovery and development of new products, compliance with applicable regulations, rapid, cost-effective commercialization of such products and the ability to protect the intellectual property therein is crucial to our customers’ success. Therefore, they invest considerable resources in technologies that help identify productive new pathways for research projects, help develop new materials, increase the efficiency of discovery and development processes, and otherwise enable them to maximize the use of scientific data, information and knowledge. Our software solutions allow our customers to effectively design, plan and execute scientific experiments in a repeatable process and in compliance with regulations; leverage the vast amounts of information

 

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stored in both corporate databases and public data sources to optimize their processes and accelerate innovation; model, predict and analyze potential scientific outcomes; and access comprehensive, integrated and cross-referenced databases and reference works.

The pharmaceutical and biotechnology industries are a very important part of our business. Our products have been widely adopted within the research functions of businesses in these industries, but less widely adopted by the development functions of such businesses. In addition, these markets present challenges due to industry consolidation, the maturity of these markets, patent expirations, reduction in the level of discovery research activity, increased competition, including competition from open source software and outsourcing of research to other entities. The other industries to which we market our products, including energy, material, agricultural, aerospace and consumer packaged goods, are earlier in the adoption curve for such scientific software products, which we view as both a challenge and an opportunity.

Business Strategy

Scientific research and development organizations face several challenges that impact their ability to comply with applicable regulations, protect their intellectual property and rapidly and cost-effectively bring products to market. Among these challenges is the fact that scientific data is often found in disparate databases and that research, development and early manufacturing processes are disconnected, manually intensive, inefficient and repetitive.

Our overall strategy is to extend beyond our historically strong presence in research downstream into development and early manufacturing, covering the entire research and development value chain; to move into new scientific domains, including biology; and to expand our presence outside of the pharmaceutical and biotech industries into other key industries such as food and beverage, fine and specialty chemicals and aerospace. We do this by addressing the core challenges faced by research and development organizations, offering them an open enterprise-scale scientific software platform and a broad portfolio of scientific software applications leveraging our deep domain expertise in chemistry, biology and the materials sciences. We believe the combination of our enterprise R&D platform and associated set of applications, including the Electronic Lab Notebook (“ELN”), computer aided design modeling and simulation software, data management and informatics software, content and professional services, help optimize our customers’ scientific value chain.

We believe that the combination of Accelrys products with the products and domain expertise we acquired as a result of the Acquisitions (most significantly the ELN and the VelQuest product suite) enables us to provide greater value to the development and early manufacturing functions of our customers’ organizations. Our plan is to continue to integrate and augment our offerings in order to further enhance the value of the products we acquired and the value of our products’ collective portfolio to these organizations, thus enabling us to expand upon our presence in the research and development organizations of our existing customers. The VelQuest acquisition extended our software portfolio into pharmaceutical development quality assurance and quality control, offering significant productivity improvements, faster cycle times, lower operational costs and reduced compliance risks for regulated life sciences organizations. We also intend to continue to develop advanced analysis, scientific and reporting component collections in order to extend our platform’s value to and use by our customers

Our strategy also includes offering professional services to further tailor our enterprise R&D platform to our customers’ individual business needs, thereby increasing its utility and value. Because our enterprise R&D platform is the underlying operating platform for many products in our broad portfolio, and integration with the applications obtained as part of our Acquisitions continues to be a development priority, we expect the use of these products to expand as the use of our platform grows, thus further increasing our sales and value to our customers.

Our enterprise R&D platform is an open platform. We partner with third party organizations and academic institutions which develop scientific software and services, and we enable and encourage these companies to develop applications that operate on our platform, further proliferating its utility and value to our customers.

 

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We also focus on industries in markets where scientific innovation is a key differentiator, but the use of scientific software solutions has not been widely adopted. As we develop a greater presence in these markets, we believe our ability to attract additional customers will increase.

Products and Services

The following is a brief description of each of our product lines:

Pipeline Pilot, Accelrys Enterprise R&D Platform. Our enterprise R&D platform forms the basis of our software and services offerings. Its open service-oriented architecture allows users to aggregate, integrate and mine the vast quantities of both structured and unstructured scientific data, such as chemical structures, biological sequences and complex digital images. It also filters, normalizes and performs statistical analysis on this scientific data and provides interactive visual reports to both scientists and scientific managers. We continue to develop component collections that operate with our enterprise R&D platform to offer our customers advanced scientific functions such as image, text and chemical analysis. In addition, our enterprise R&D platform provides the underlying platform on which we have built many of our modeling and simulation and informatics solutions. We are integrating many of the products we acquired through the Symyx Merger in order to enhance the value of both these products and our platform. The openness of the enterprise R&D platform allows our users to integrate not only Accelrys solutions, but also best of breed scientific applications they have built themselves, or solutions they have acquired from academic collaborators or other commercial independent software vendors (“ISVs”). We have built an ecosystem of scientific innovation by partnering with many ISVs who build scientific and technology solutions based on our enterprise R&D platform.

Computer Aided Design Modeling and Simulation Software. We have a broad array of software products based on proprietary and licensed technologies that employ fundamental scientific principles, advanced computer visualization, molecular modeling techniques and computational chemistry. These products allow scientists to perform computations of chemical, biological and materials properties, to simulate, visualize and analyze chemical and biological systems, and to communicate the results to other scientists. Our computer aided design modeling and simulation products are used by scientists in the life science industry, primarily by pharmaceutical and biotechnology companies, and scientists in materials sciences industries, such as energy, chemicals, aerospace and consumer packaged goods companies.

Our Discovery Studio life science modeling and simulation application features an open architecture allowing users to “plug and play” best of breed computational solutions from Accelrys, academia, other ISVs or solutions the customers have developed themselves. This open architecture also helps expert modelers to connect and communicate more effectively to the wider research organization. Our computer aided design modeling and simulation offerings are intended to assist our customers in the discovery of new materials or the enhancement of existing materials. Our Materials Studio modeling and simulation application enables our customers to apply modeling and simulation capabilities to large and complex systems, and can be accessed from our enterprise R&D platform.

Enterprise Lab Notebook. The ELN replaces paper notebooks traditionally used by scientists, providing a digital environment in which scientists can plan, execute, record, store, back-up and share their daily research activities. The ELN in combination with Pipeline Pilot, our enterprise R&D platform, offers scientists the opportunity to streamline the processes associated with experiment planning, design, execution and analysis by standardizing on a single notebook that handles multiple scientific disciplines and bringing the scientific analysis and reporting capabilities from the Pipeline Pilot platform into the notebook.

We continue to develop domain-specific capabilities for scientists engaged in discovery, process, analytical, formulations and biology functions that are designed with their specific functions in mind. The Contur Acquisition has given us the ability to address an even broader portion of the ELN market. Contur is focused on serving organizations that need an easy to deploy, web enabled flexible tool for moving their scientists from the paper notebook to an electronic approach. Contur`s product can be deployed in a traditional on premise software

 

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model, but is also available as a cloud delivered service. Whether customers deploy the ELN from Accelrys or our new Contur product, they see significant productivity gains resulting from the development of domain-specific capabilities that optimize the use of research data across the scientific enterprise, improve data and documentation quality and ensure compliance with standard operating procedures.

Lab Execution Systems. The VelQuest Acquisition has allowed us to broaden our solutions in the development and early manufacturing segments. The VelQuest lab execution and instrument data capture software is sold primarily to pharmaceutical and medical device manufacturers. VelQuest solutions for lab information management, lab execution, batch record execution, and electronic data capture replace manual paper-based documentation processes, helping manufacturers to improve efficiency and reduce Good Manufacturing Practices compliance risks in quality control and manufacturing operations. This is a natural extension of our current ELN activities and is key to our strategy to move more effectively downstream from research to development and early manufacturing.

Content Databases. To support their research activities, scientists can access our comprehensive, integrated and cross-referenced collection of factual databases and reference works covering bioactivity, chemical sourcing, molecular properties, synthetic methodology, metabolism and toxicology information. These resources can be accessed easily through the ELN, data management and informatics applications or via the Internet through the Discovery Gate portal and chemicals marketplace.

Data Management & Informatics Software. We are a leading provider of software-based solutions designed to capture, store, manage and mine scientific data information. Our data management and informatics software is based on standard database architectures such as Oracle ®. As leaders in the space prior to the Symyx Merger, we have developed a go-forward roadmap that leverages the best technology from each of the product portfolios. This roadmap preserves our customers’ investments, while offering a solution that addresses the needs of today’s scientific organizations. Through this combined portfolio, we provide comprehensive data visualization and analysis software components based on a services oriented architecture enabling users to search, retrieve and use chemical structures, biological and chemical data, experimental data and registration information. Many of these tools use industry standard software components and are compatible with applications such as Microsoft Excel ® and Microsoft SharePoint ® , allowing chemists to interact with chemical data within familiar productivity tools. We also use this component technology, combined with our enterprise R&D platform and our database architectures, to build enterprise-wide systems for our clients.

Services. The value of our software is enhanced by robust service offerings that provide a variety of options to our clients and create greater returns on their investments.

Our professional services team delivers integrated scientific solutions and enhances the value of our software products by creating extensions to functionality to address a client’s specific business needs. Our scientific informatics platform is highlighted as one of the primary technologies used in these solutions. The group delivers a range of solutions, from software wrappers that allow customers to run their own algorithms on our enterprise R&D platform to enterprise-wide informatics systems that integrate customers’ internal systems with software from many vendors, including Accelrys. The group specializes in deploying systems for use by customers in all scientific domains, from early research to early product manufacturing.

Our contract research services team provides solutions to clients’ proprietary business-critical scientific problems. The world-wide client base for this service ranges from those who do not have expert modeling resources on staff to those who have expert modelers, but need to accommodate peaks in resource requirements or to fill a special skill set. We work on a project-by-project basis, or provide longer term resources that are located at client sites for a year or more. This scientific collaboration enhances our partnerships with our clients and helps them achieve their research goals. Our value is enhanced by the broad set of scientific domain expertise among our staff, our years of experience solving industrial “real-world” application problems, our commitment to maintaining confidentiality and to protecting our clients’ intellectual property, the accessibility we offer to the extensive Accelrys ecosystem and all of our modeling tools.

 

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Both internally and through our distribution channels, we offer training conducted by staff knowledgeable in both the theory and application of our products. Our implementation and training services ensure that our clients are able to quickly install our products and become expert users of our solutions. We offer onsite training and implementation services, web-based training and data migration services.

Our support services give customers access to new releases, technical notes, documentation addenda and other support which collectively enable customers to utilize our products more effectively, including access to our technical and scientific support personnel during extended business hours. Technical newsletters and bulletins are sent to customers to keep them informed and to help them with resource allocation and scheduling. To maintain an ongoing understanding of customer requirements, we hold user group meetings throughout the year.

We are committed to providing customers with superior support, including: telephone, e-mail, fax and Internet-based technical support services; training; user group conferences; and targeted contract services involving application of our technology and scientific expertise to particular research needs of customers. We believe that customer service, support and training are part of the successful adoption and utilization of our products.

Customers

Our customer base consists of companies that differentiate themselves from the competition on the basis of scientific innovation. These customers include commercial, governmental and academic organizations, including many of the world’s largest pharmaceutical, biotechnology, energy, chemicals, aerospace, consumer packaged goods and industrial products companies. No single customer accounted for more than 10% of our revenue during any of the three most recently completed fiscal years. Our three largest customers accounted for approximately 14% of total revenue during the year ended December 31, 2011.

Strategic and Academic Alliances

We have entered into a number of strategic alliances relating to product development, product distribution and joint marketing. We plan to continue to cultivate relationships with academic, governmental and commercial research organizations for purposes of identifying and licensing new technology to use in product development. In addition, we plan to maintain and expand our alliances focusing on the compatibility of our products with databases and database management systems, other computational chemistry and molecular simulation products, and products in related markets such as imaging and clinical informatics. We also intend to continue to enter into integration and joint marketing arrangements with systems integrators and original equipment manufacturer partners.

Sales and Marketing

We market our products and services worldwide. During the year ended December 31, 2011, we generated 47%, 29% and 24% of our revenues from the U.S., Europe and the Asia/Pacific region, respectively. Please refer to Note 2 to our consolidated financial statements included elsewhere in this Report for a breakdown of revenues and long-lived assets by geographic region. Our continuing reliance on sales in international markets exposes us to risks attendant to foreign sales, as described more fully in Item 1A of this Report.

We sell our products and services through our direct sales force, telesales and, in some markets, arrangements with distributors. Our direct sales representatives focus on a defined list of customers or cover an assigned geographic territory. These direct sales representatives typically work closely with our pre-sales scientists in order to demonstrate our products and their applicability to various research and development efforts. Our telesales effort is directed at smaller sized commercial accounts and academic institutions. Our distributor relationships primarily exist in the Asia/Pacific region, specifically in Japan, China and Korea, and complement our direct sales force in those markets.

 

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In support of our sales activities, we participate in industry trade shows, publish our own newsletter, advertise in industry publications and via Internet search engines, publish articles in industrial and scientific publications, conduct direct e-mail campaigns, sponsor industry conferences and seminars, and maintain a website that contains information about us and our product and service offerings.

Our products, together with the associated product literature, are generally delivered to our customers at the time of placing and processing their order. Our electronic software distribution program allows our customers to download our products over the Internet.

Our customers’ buying habits have historically resulted in a higher concentration of sales in the fourth quarter of the calendar year, due to traditionally higher purchasing activity in the month of December in many commercial organizations.

Product Development

Development of our software is focused on expanding product lines, designing enhancements to our core technology and integrating existing and new products into our principal software architecture and platform technology. We intend to offer regular updates to our products and to continue to look for opportunities to expand our existing product suite.

We develop most of our products internally and, during the year ended December 31, 2011 and the nine months ended December 31, 2010, we incurred product development expenses of $34.0 and $22.1 million, respectively, and during each of the years ended March 31, 2010 and 2009, we incurred product development expenses totaling approximately $16.0 million. We have also licensed products or have otherwise acquired products, or portions of our products, from the open source community, as well as corporate, governmental and academic institutions. These arrangements sometimes involve joint development efforts and frequently require the payment of royalties by us. The development and royalty obligations, scope of distribution rights, duration and other terms of these arrangements vary depending on the product, the market, resource requirements, the other parties with which we contract and other factors. We intend to continue to license or otherwise acquire technology or products from third parties.

Competitors

We believe our scientific informatics platform is unique, and that the market for the platform is at an early stage, with limited established competition from commercial software vendors. The competition for our enterprise R&D platform includes our customers’ own proprietary software, open source software such as Knime, and workflow and data-pipeline applications of smaller commercial software vendors such as IDBS.

The markets for our informatics software products and our computer aided design modeling and simulation products for the pharmaceutical and biotechnology industries are mature and intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants. Our competitors offer a variety of products and services to address this market. We believe that the principal competitive factors in this market are product quality, flexibility, ease-of-use, scientific validation and performance, functionality and features, open architecture, quality of support and service, reputation and price. Competition currently comes from open source software, our customers’ internal tools, and the following commercial software vendors (listed by product type and competitors that supply such products): other software packages for analysis of chemical and biological data (IDBS); desktop software applications (Perkin Elmer/CambridgeSoft and Tripos), including chemical drawing applications (Perkin Elmer/CambridgeSoft); molecular modeling and analytical data simulation applications (Chemical Computing Group, OpenEye, Schrodinger and Tripos); and database management systems and information technology (IDBS).

Our ELN solutions face competition from commercial software vendors in two primary areas: enterprise-wide deployments (Perkin Elmer/CambridgeSoft and IDBS); and smaller, department-focused initiatives (Perkin Elmer/CambridgeSoft, IDBS and Recentris).

 

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The market for our computer aided design modeling and simulation offerings aimed at the energy, chemicals, aerospace and consumer packaged goods industries is in its early stages with limited and fragmented competition from established software vendors. The industries that these offerings target generally rely on data from experiments, rather than utilizing computer aided design modeling and simulation software to obtain such data. Our limited competition from commercial software vendors in these industries currently comes from smaller competitors such as Gaussian Inc., Atomistix and Scienomics.

Backlog of Committed Revenue

As of December 31, 2011, our backlog was approximately $145.1 million, compared with $145.0 million as of December 31, 2010. We expect to recognize approximately $110.9 million of our December 31, 2011 backlog during fiscal 2012. Our backlog consists of contractual commitments from our customers for products to be shipped, research, consulting and maintenance services to be provided, and license and content revenue. Because of the occasional customer-driven changes in delivery schedules or cancellation of orders without significant penalty, we do not believe our backlog, as of any particular date, is necessarily indicative of actual revenue for any future period.

Intellectual Property and Other Proprietary Rights

We rely primarily on a combination of copyright, trademark and trade secret laws, confidentiality procedures and contractual provisions to protect our proprietary rights. We also have 116 U.S. and foreign patents and several pending patent applications. Some of our patents begin to expire as early as 2012. We believe that factors such as the technological and creative skills of our personnel, new product development, frequent product enhancements, name recognition and reliable product maintenance are essential to establishing and maintaining a technological leadership position. There can be no assurance that our means of protecting our proprietary rights in the U.S. or abroad will be adequate. We seek to protect our software, documentation and other written materials under trade secret and copyright laws, which afford only limited protection. Further, there can be no assurance that our patents will offer any protection or that they will not be challenged, invalidated or circumvented.

Employees

As of December 31, 2011, we had 601 full-time employees. None of our employees are covered by collective bargaining agreements. Substantially all of our employees, other than certain of our executive officers and employees with customary employment arrangements within Europe and Asia are at will employees, which means that each employee can terminate his or her relationship with us and we can terminate our relationship with him or her at any time. We offer industry competitive wages and benefits and are committed to maintaining a workplace environment that promotes employee productivity and satisfaction. We believe our relations with our employees are good.

Website Access to SEC Filings

We are subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Consequently, we are required to file reports and information with the SEC, including reports on the following forms: annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports and other information concerning us may be accessed through the SEC’s website at http://www.sec.gov and on our website at www.accelrys.com. Such filings are placed on our website as soon as reasonably practical after they are filed with the SEC. Any information contained in, or that can be accessed through our website, is not incorporated by reference into, nor is it in any way part of this Report.

 

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PART IV

 

Item 15. Exhibits, Financial Statement Schedules

(a)(3) Exhibits:

 

Exhibit
Number

 

Description

  31.1*   Section 302 Certification of the Principal Executive Officer
  31.2*   Section 302 Certification of the Principal Financial Officer
  32.1*   Section 906 Certification of the Chief Executive Officer and Chief Financial Officer
  101.INS**   XBRL Instance Document.
  101.SCH**   XBRL Taxonomy Extension Schema Document.
  101.CAL**   XBRL Taxonomy Extension Calculation Linkbase Document.
  101.DEF**   XBRL Taxonomy Extension Definition Linkbase Document.
  101.LAB**   XBRL Taxonomy Extension Label Linkbase Document.
  101.PRE**   XBRL Taxonomy Extension Presentation Linkbase Database.

 

** This exhibit was previously filed as an exhibit to the Annual Report on Form 10-K for Accelrys, Inc. for the year ended December 31, 2011, filed with the Securities and Exchange Commission on March 13, 2012. Pursuant to Rule 406T of Regulation S-T, this Interactive Data File is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
* Filed herewith

 

(b) Exhibits

See Item 15(a)(3) above.

 

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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.

 

ACCELRYS, INC.

By:   /S/    MICHAEL A. PIRAINO         
 

Michael A. Piraino

Executive Vice President and

Chief Financial Officer

Date: April 18, 2012

 

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