PTC (PTC) 10-K risk factor changes: FY2017 vs FY2016

You should consider them carefully when evaluating an investment in [removed: PTC’s] [added: PTC] securities or any forward-looking statements made by us, including those contained in this Annual Report, because these factors could cause actual results to differ materially from historical results or the performance projected in forward-looking statements.

We now offer our solutions as subscriptions, which has adversely affected, and may continue to adversely affect, our [added: near-term] revenue and earnings in the transition period and make predicting our revenue and earnings more difficult.

We began offering most of our solutions under a subscription option in 2015, in addition to [removed: our] [added: a] perpetual license option.

Our support revenue (which comprises a significant portion of our revenue) [removed: may] [added: has] also [removed: decrease] [added: decreased] due to support services being included in the subscription offering and to customers converting their support contracts into subscriptions.

If a greater percentage of our customers elect to purchase our solutions as subscriptions in a period than we assumed, our revenue and earnings will likely fall below our expectations for that period (as occurred in [added: 2017 and] 2016), which could cause our stock price to decline.

We may not achieve the expected bookings and revenue growth if the markets we serve do not grow at expected rates, if customers do not [removed: purchase] [added: purchase, renew,] or [removed: renew] [added: expand] subscriptions as we expect, if we are not able to deliver solutions desired by customers and potential customers, and/or if acquired businesses do not generate the revenue growth that we expect.

We have made [removed: a] significant [removed: investment] [added: investments] in recent years in our IoT business, including five acquisitions totaling approximately $550 million.

In 2016 and 2015, the manufacturing sector was weak worldwide, which we believe adversely impacted our sales and [removed: operating results.]

Although [removed: we have seen some improvement in the latter part of 2016,] [added: conditions improved during 2017,] if manufacturing economic conditions do not continue to improve, or if they deteriorate, [removed: sales] [added: our revenue and earnings] could be adversely affected.

| • | larger, more well-known enterprise software providers with [added: less product overlap, but] greater financial, technical, sales and marketing, and other resources; and |

Despite efforts to create security barriers to such threats, it is impossible for us to [removed: entirely] eliminate this risk.

| • | if we were to issue a significant amount of equity securities in connection with future acquisitions, existing stockholders [removed: may] [added: would] be diluted and earnings per share [removed: may] [added: would likely] decrease. |

Errors, defects or other performance problems in our products could also cause us to lose revenue, lose customers and lose market share, and could subject [added: us] to liability.

As of September 30, [removed: 2016,] [added: 2017,] approximately 90% of our cash and cash equivalents balance was held by subsidiaries outside the United States, with the remainder of the balance held by the U.S. parent company or its subsidiaries in the United States.

However, if these sources of cash are insufficient to meet our future financial obligations in the United States, we will be required to seek other available funding sources or [removed: means to] repatriate cash to the United [removed: States,] [added: States with potentially incremental tax costs,] which could negatively impact our results of operations, financial position and the market price of our securities.

As of November [removed: 15, 2016,] [added: 29, 2017,] our total debt outstanding was [removed: approximately$818] [added: approximately $768] million, approximately [removed: $318] [added: $268] million of which was under our [removed: $900] [added: $600] million secured credit facility (which matures in September 2019) and $500 million of which was associated with the [removed: 2024] 6% [added: Senior] Notes [removed: (which] [added: issued May 2016, which] mature in May 2024 and are [removed: unsecured).][added: unsecured (see Liquidity and Capital Resources-Outstanding Notes in Item 7.]

As of November [removed: 15, 2016,] [added: 29, 2017,] we had unused commitments under our credit facility of approximately [removed: $582] [added: $319] million.

Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors [added: some of which are] beyond our control.

[removed: Our failure to comply with any of these covenants or to meet any debt] payment obligations could result in an event of default which, if not cured or waived, would result in any amounts outstanding, including any accrued interest and/or unpaid fees, becoming immediately due and payable.

[removed: In August 2014, we announced a new] [added: Our] capital allocation [removed: strategy, a component of which is] [added: strategy includes] a long-term goal of returning approximately 40% of free cash flow (cash flow from operations less capital expenditures) to shareholders through share repurchases.

Meeting this goal requires [removed: PTC] [added: us] to generate consistent free cash flow and have available capital in the years ahead in an amount sufficient to enable us to continue investing in organic and inorganic growth as well as to return a significant portion of the cash generated to stockholders in the form of share repurchases.

We may not meet this goal if we do not generate the free cash flow we expect, if we use our available cash to satisfy other [removed: priorities or] [added: priorities, if we] have insufficient funds available to make such [added: repurchases, or if we are unable to borrow funds under our credit facility to make such] repurchases.

[removed: Specifically,] [added: For example, covenant limitations under] our [added: credit facility, specifically, our] leverage ratio, as a result of lower earnings due to our subscription transition, limited our ability to [removed: borrow.][added: repurchase shares in 2017 and 2016.]

We intend to discontinue sales of perpetual licenses in the Americas and Western Europe as of January 1, 2018, which will likely accelerate these effects on our revenue until we complete the subscription transition.

We may not be able to predict subscription renewal rates and their impact on our future revenue and operating results.

Although our subscription solutions are designed to increase the number of customers that purchase our solutions as subscriptions and create a recurring revenue stream that increases and is more predictable over time, our customers are not required to renew their subscriptions for our solutions and they may elect not to renew when or as we expect.

Customer renewal rates may decline or fluctuate due to a number of factors, including offering pricing, competitive offerings, customer satisfaction, and reductions in customer spending levels or customer activity due to economic downturns or other market uncertainty.

If our customers do not renew their subscriptions when or as we expect, or if they renew on less favorable terms, our revenues and earnings may decline.

Further, our customers and potential customers often begin the process of implementing IoT with a proof-of-concept evaluation, in some cases with multiple different technology vendors.

Our pace of growth in this emerging market will depend on our ability to engage with customers to ensure that their investment moves beyond planning to broader deployment and yields value at their desired speed and expected costs.

We may be unable to hire or retain personnel with the technical skills necessary to further develop our software products, which could adversely affect our ability to compete.

Our success depends upon our ability to attract and retain highly skilled technical personnel to develop our products.

Competition for such personnel in our industry is intense, especially for personnel with augmented and virtual reality and analytics expertise as there are comparatively fewer persons with those skills.

If we are unable to attract and retain technical personnel with the requisite skills, our product development efforts could be delayed, which could adversely affect our ability to compete and thereby adversely our revenues and profitability.

operating results.

On September 7, 2017, PTC entered into a lease for a new worldwide headquarters location in the Boston Seaport District, beginning in January 2019.

Because our current headquarters lease will not expire until November 2022, our rent obligations for those premises will overlap, which could adversely affect our financial condition if we are unable to successfully exit our current headquarters lease or sublease that space.

Under our current headquarters lease, we pay approximately $7.4 million in annual base rent plus operating expenses (together, an annual total of approximately $12.0 million).

We will begin paying rent under our new headquarters lease on July 1, 2020.

Our rent under the new lease when we begin paying rent will be an annual base rent amount of $11.3 million plus our pro rata portions of building operating expenses and real estate taxes (approximately 63% of such amounts, estimated to be approximately $7.1 million in 2020).

The base rent will increase by $0.3 million each year over the term of the lease.

Accordingly, we will be required to pay rent for both locations from July 1, 2020 until November 30, 2022 unless we can successfully negotiate to exit our current lease or sublease our current premises.

We may be unable to negotiate a financially desirable termination of our current lease or to sublease our current premises for an amount at least equal to our rent obligations under the current lease, which could adversely affect our cash flow and financial condition.

"Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report).

Our failure to comply with any of these covenants or to meet any debt

Our restructuring actions and reorganization may be disruptive and could harm our operations.

Over the past few years, we have taken a number of restructuring actions and reorganizations designed to realign our global workforce to our business needs, reduce our expenses and enable us to increase investment in our IoT business.

These actions may not have the expected long-term effect on our expenses or may not be sufficient to fully offset additional investments we may make in our business.

Disruptions in operations have occurred and will likely continue to occur as a result of these actions.

Disruptions may include attrition beyond our planned reduction in workforce, a negative effect on employee morale or our ability to attract highly skilled employees.

Further, we could experience delays, business disruptions, decreased productivity, unanticipated employee turnover and increased litigation-related costs in connection with the restructuring and other efficiency initiatives.

For example, as of September 30, 2016, although we had unused commitments under our credit facility of approximately $641.9 million, due to the financial covenants only approximately $100 million would have been available for borrowing.

For example, in 2016 we made no repurchases due to limits on our borrowing capacity as a result of covenant limitations under our credit facility.

We use certain operating measures, including our [removed: Bookings Measure,] [added: Subscription Measures,] and non-GAAP financial measures when discussing our business and results.

We discuss these measures, how we use them and how they are calculated in [removed: “Bookings Measure”] [added: “Subscription Measures”] and “Non-GAAP Financial Measures” below.

License and subscription bookings grew [removed: 16%] [added: 4%] in [removed: 2016] [added: 2017] over [removed: 2015, with license and subscription bookings of $401 million in] 2016, [added: to $419 million,] and grew [removed: 2%] [added: 21%] over [removed: 2014.][added: 2015.]

We used the net proceeds from the issuance of the [removed: notes] [added: 2024 6% Notes] to repay a portion of [removed: the] [added: our] outstanding revolving loan under our credit facility.

Because the interest rate on the notes is higher than the variable rate we [removed: now pay] [added: paid] under our credit facility, our annual interest expense [removed: will increase by about $20 million.][added: has increased.]

| | | Year Ended | | | | | | | | | | | [removed: Constant Currency Change | | |]

| | [removed: |] September 30, [removed: 2016] [added: 2017] | | | | September 30, [removed: 2015 | | |] [added: 2016] | | | | [added: September 30, 2015] | | |

| Subscription | [added: $] | [added: 279.2 | | |] $ | 118.3 | | | [added: 136 | % | | 135 | % | |] $ | 65.2 | | | 81 | % | | 83 | % | [removed: |]

| Support | [added: 574.7] | [added: | | |] 651.8 | | | | [added: (12 | )% | | (12 | )% | |] 681.5 | | | | (4 | )% | | (2 | )% | [removed: |]

| Total recurring [removed: software] revenue | [added: 853.9] | [added: | | |] 770.1 | | | | [added: 11 | % | | 11 | % | |] 746.8 | | | | 3 | % | | 5 | % | [removed: |]

| Perpetual license | [added: 133.4] | [added: | | |] 173.5 | | | | [added: (23 | )% | | (23 | )% | |] 282.8 | | | | (39 | )% | | (37 | )% | [removed: |]

| Total [removed: software] [added: subscription, support and license] revenue | [added: 987.3] | [added: | | |] 943.6 | | | | [added: 5 | % | | 5 | % | |] 1,029.5 | | | | (8 | )% | | (6 | )% | [removed: |]

| Professional services | [added: 176.7] | [added: | | |] 196.9 | | | | [added: (10 | )% | | (11 | )% | |] 225.7 | | | | (13 | )% | | (10 | )% | [removed: |]

| Total revenue | [added: 1,164.0] | [removed: $] | [added: | |] 1,140.5 | | | [removed: $] | [added: 2 | % | | 2 | % | |] 1,255.2 | | | [added: |] (9 | )% | | (7 | )% | [removed: |]

| [removed: Other Operating] [added: Earnings] Measures | | | | Change | | | | | | | | | [removed: | | |]

| Operating [removed: Margin] [added: margin (1)] | [added: 3.5] | [added: | % | |] (3.2 | | )% | | [added: | | | | | |] 3.3 | | % | | [removed: (198] | [removed: )%] | | [removed: (188] | [removed: )%] | [removed: |]

| [removed: Earnings (Loss) Per Share] [added: Diluted earnings (loss) per share (2)] | [added: $] | [added: 0.05 | | |] $ | (0.48 | ) | | [added: | | | | | |] $ | 0.41 | | | [removed: (216] | [removed: )%] | | [removed: (207] | [removed: )%] | [removed: |]

| Non-GAAP [removed: Operating Margin(1)] [added: operating margin (1)] | [added: 16.1] | [added: | % | |] 15.1 | | % | | [added: | | | | | |] 24.2 | | % | | [removed: (38] | [removed: )%] | | [removed: (37] | [removed: )%] | [removed: |]

| Non-GAAP EPS(1) | | $ | [removed: 1.19] [added: 1.17] | | | $ | [removed: 2.23 | | | (47] [added: 1.19] | [removed: )%] | | [removed: (44] [added: (2] | )% | |

| (1) Non-GAAP measures are reconciled to GAAP results under Results of Operations - Non-GAAP Measures below. | | | | | | | | | | | | | [removed: | | |]

[removed: In 2015, our GAAP results reflect a tax benefit of $19] [added: $18.7] million related to the reversal of a portion of the U.S. valuation allowance related to reducing deferred tax assets in connection with settling the U.S. pension plan.

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | Percent [removed: Change 2015 to] [added: change] 2016 [added: to 2017] | | | | | | [removed: 2014] [added: 2015] | | | | Percent [removed: Change 2014 to] [added: change] 2015 [added: to 2016] | | | | |

| Total recurring [removed: software] revenue | [removed: 770.1] | [removed: | |] [added: 853.9] | [removed: 746.8] | | | [added: 770.1] | [removed: 3] | [removed: %] | | [removed: 5] [added: 11] | % | | [removed: 715.6 | | | | 4] [added: 11] | % | | [removed: 12 | % |]

| Perpetual license | [removed: 173.5] | [removed: | |] [added: 133.4] | [removed: 282.8] | | | [added: 173.5] | [removed: (39] | [removed: )%] | | [removed: (37] [added: (23] | )% | | [removed: 362.6 | | | | (22] [added: (23] | )% | | [removed: (15 | )% |]

| Professional services [removed: revenue] | [removed: 196.9] | [removed: | |] [added: 176.7] | [removed: 225.7] | | | [added: 196.9] | [removed: (13] | [removed: )%] | | (10 | )% | | [removed: 278.7 | | | | (19] [added: (11] | )% | | [removed: (12 | )% |]

| Total revenue | [removed: 1,140.5] | [removed: | | | 1,255.2 | | | | (9 | )% |] [added: $] | [removed: (7] [added: 1,164.0] | [removed: )%] | | [removed: 1,357.0] [added: $] | [added: 1,140.5] | | | [removed: (7] [added: 2] | [removed: )%] [added: %] | | [removed: —] [added: 2] | % | [added: |]

| Total cost of revenue | [removed: 325.7] [added: 329.0] | | | | [removed: 334.7] [added: 325.7] | | | | [removed: (3] [added: 1] | [removed: )%] [added: %] | | | | | [removed: 373.7] [added: 334.7] | | | | [removed: (10] [added: (3] | )% | | | |

| Gross margin | [removed: 814.9] [added: 835.0] | | | | [removed: 920.5] [added: 814.9] | | | | [removed: (11] [added: 2] | [removed: )%] [added: %] | | | | | [removed: 983.3] [added: 920.5] | | | | [removed: (6] [added: (11] | )% | | | |

| Operating expenses | [removed: 851.9] [added: 794.1] | | | | [removed: 878.9] [added: 851.9] | | | | [removed: (3] [added: (7] | )% | | | | | [removed: 786.7] [added: 878.9] | | | | [removed: 12] [added: (3] | [removed: %] [added: )%] | | | |

| Total costs and expenses (1) | [removed: 1,177.5] [added: 1,123.1] | | | | [removed: 1,213.6] [added: 1,177.5] | | | | [removed: (3] [added: (5] | )% | | [removed: (1] [added: (4] | )% | | [removed: 1,160.4] [added: 1,213.6] | | | | [removed: 5] [added: (3] | [removed: %] [added: )%] | | [removed: 9] [added: (1] | [removed: %] [added: )%] |

| Operating income (loss) (1) | $ | [removed: (37.0] [added: 40.9] | [removed: )] | | $ | [removed: 41.6] [added: (37.0] | [added: )] | | [removed: (189] [added: 211] | [removed: )%] [added: %] | | [removed: (182] [added: 214] | [removed: )%] [added: %] | | $ | [removed: 196.6] [added: 41.6] | | | [removed: (79] [added: (189] | )% | | [removed: (57] [added: (182] | )% |

| Non-GAAP operating income (1) | $ | [removed: 172.7] [added: 188.4] | | | $ | [removed: 304.3] [added: 172.7] | | | [removed: (43] [added: 9] | [removed: )%] [added: %] | | [removed: (41] [added: 7] | [removed: )%] [added: %] | | $ | 340.3 | | | [removed: (11] [added: (49] | )% | | [removed: 5] [added: (41] | [removed: %] [added: )%] |

| [removed: Operating] [added: GAAP operating] margin [removed: (1)] | [removed: (3.2 | | )% | | 3.3] [added: 3.5] | | % | | [removed: | |] [added: (3.2] | | [added: )%] | | [removed: 14.5] [added: 3.3] | | % | [removed: | | | | | |]

| Non-GAAP operating margin [removed: (1)] | [removed: 15.1] [added: 16.1] | | % | | [removed: 24.2] [added: 15.1] | | % | | [removed: | | | | | | 25.1] [added: 24.2] | | % | [removed: | | | | | |]

| [removed: Diluted] [added: GAAP diluted] earnings (loss) per share [removed: (2)] | $ | [removed: (0.48] [added: 0.05] | [removed: )] | | $ | [removed: 0.41 | | | | | |] [added: (0.48] | [added: )] | | $ | [removed: 1.34 | | | | | |] [added: 0.41] | |

| Non-GAAP diluted earnings per share (2) | $ | [removed: 1.19] [added: 1.17] | | | $ | [removed: 2.23] [added: 1.19] | | | | | | | | | $ | [removed: 2.17] [added: 2.23] | | | | | | | |

| Cash flow from operations | $ | [removed: 183.2] [added: 134.6] | | | $ | [removed: 179.9] [added: 183.2] | | | | | | | | | $ | [removed: 304.6] [added: 179.9] | | | | | | | |

| (1) | Costs and expenses in [added: 2017 included $7.9 million of restructuring charges. Costs and expenses in] 2016 included $76.3 million of restructuring charges, a $3.2 million legal accrual, and $3.5 million of acquisition-related costs. Costs and expenses in 2015 included $73.2 million of pension plan termination-related costs, $43.4 million of restructuring charges, a $28.2 million legal accrual, and $8.9 million of acquisition-related costs. [removed: Costs and expenses in 2014 included $28.4 million of restructuring charges and $13.1 million of acquisition-related and pension plan termination costs.] These restructuring, acquisition-related, pension plan termination and legal accrual costs have been excluded from non-GAAP operating income, non-GAAP operating margin and non-GAAP diluted EPS. |

| (2) | Income taxes for non-GAAP diluted earnings per share reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments described in Non-GAAP [added: Financial] Measures, and also exclude [removed: the following] [added: certain] non-operating income and tax items. The GAAP diluted earnings per share in 2015 reflect a tax benefit of [removed: $18.7 million related to the reversal of a portion of the U.S. valuation allowance related to reducing deferred tax assets in connection with settling the U.S. pension plan. GAAP diluted earnings per share in 2014 includes (i) tax benefits of $18.1 million related to the release of a portion of the valuation allowance as a result of deferred] |

[removed: Additionally, our] [added: Our] results have been impacted, and we expect will continue to be impacted, by our ability to close large transactions.

We executed well across our key strategic and operational objectives in 2017.

Bookings grew year over year, reflecting broad-based strength across our IoT, CAD and PLM businesses and strength in Europe, the Americas and our global channel.

Our subscription transition initiative also progressed well throughout 2017, with subscription bookings constituting 69% of all software license bookings for the year and subscription revenue up 136% over 2016.

Finally, we improved our operating margins over 2016, despite a higher than expected subscription mix for the year.


| Subscription | | $ | 279.2 | | | $ | 118.3 | | | 136 | % | | 135 | % | |

| Support | | 574.7 | | | | 651.8 | | | | (12 | )% | | (12 | )% | |

| Total subscription, support and license revenue | | 987.3 | | | | 943.6 | | | | 5 | % | | 5 | % | |

The increase in total revenue and subscription revenue reflects our exit from the trough in revenue and EPS growth that occurs when transitioning from a perpetual to subscription business model.

As our mix of subscription sales relative to perpetual license sales has increased, perpetual license revenue and support revenue have declined.

Additionally, professional services revenue has declined in accordance with our strategy to migrate more services engagements to our partners and to deliver products that require less consulting and training services.


Excluding a $20 million SLM mega deal from the fourth quarter of 2016, license and subscription bookings grew 10% in 2017 over 2016.


The increase in subscription revenue relative to perpetual license revenue has resulted in an increase in our recurring software revenue, with approximately 73% of our total revenue in 2017 from recurring software revenue streams, compared to 68% in 2016 and 59% in 2015.

Annualized Recurring Revenue was approximately $905 million as of the fourth quarter of 2017, an increase of 12% compared to the fourth quarter of 2016.

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| | | September 30, 2017 | | | | September 30, 2016 | | | | | | |

| | | | | | | | | | | | | |

| Operating Margin | | 3.5 | | % | | (3.2 | | )% | | 208 | % | |

| | | | | | | | | | | | | |

Additionally, operating margin improved due to lower restructuring charges in 2017, which were $68.3 million lower in 2017 compared to 2016.

Our GAAP and non-GAAP earnings reflect an additional $12.5 million in interest expense due to our 2016 issuance of $500 million of 6.0% senior, unsecured long-term notes and a higher GAAP and non-GAAP tax rate in 2017 compared to 2016.

We ended 2017 with cash, cash equivalents and marketable securities of $330 million, up from $328 million at the end of 2016.

We generated $135 million of cash from operations in 2017, which included $37 million of restructuring payments and a $3 million legal settlement payment.

We used cash from operations to repurchase $51 million of common stock and to repay $40 million of borrowings under our credit facility in 2017.

At September 30, 2017, the balance outstanding under our credit facility was $218 million and total debt outstanding was $718 million.

Our transition to a subscription model has been a headwind for revenue and earnings in 2017, the effect of which is moderating as the subscription business matures and we exit the subscription trough.

higher mix of subscription bookings is expected to benefit us over the long term, but results in lower revenue and lower earnings in the near term.

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| | | |

|  | Expand Subscription | Through 2014, the majority of our software licenses were sold as perpetual licenses, under which customers own the software license and revenue is recognized at the time of sale. We began offering subscription licensing for our core Solutions Group products in 2015 and expanded our subscription program in 2016. Under a subscription, customers pay a periodic fee to license our software and access technical support over a specified period of time. As part of our expanded subscription program, we also launched a program for our existing customers to convert their support contracts to subscription contracts. A number of customers converted their support contracts to subscriptions in 2016 and 2017, and we expect there will be continued opportunities to convert existing support contracts to subscription contracts in 2018 and beyond. Given the subscription adoption rates we have seen in the Americas and Western Europe, effective January 1, 2018, new software licenses for our core solutions and ThingWorx solutions will be available only by subscription in the Americas and Western Europe. We plan to continue to offer both perpetual and subscription licenses to customers outside the Americas and Western Europe until such time as we believe a change may be appropriate. This could affect customer purchasing decisions, particularly in the affected regions, as customers may accelerate purchases of perpetual licenses before January 1, 2018 or, conversely, may delay purchases. |

|  | Cost Controls and Margin Expansion | We continue to proactively manage our cost structure and invest in what we believe are high return opportunities in our business. Our goal is to drive continued margin expansion over the long term. We expect to deliver continued operating margin expansion in 2018, and we expect further margin expansion in 2019 and beyond, when we expect we will realize the compounding benefit of our maturing subscription model. |

Subscription ACV increased 25% over 2016 to $143 million due to continued adoption of our subscription offerings around the globe.

License and subscription bookings for 2017 were $419 million, up 4% over 2016.

Excluding a $20 million booking from a mega-deal in 2016, bookings increased 10% over 2016.

CAD and PLM bookings grew 14% and 6%, respectively, for the full year and our IoT bookings grew above the market growth rate of 30%-40% organically and in total.

2016 Business Developments

Subscription Acceleration

In 2016, we saw an acceleration in the adoption of subscription licensing by our customers, including the conversion by some customers of their support contracts into subscriptions.

Subscription bookings as a percentage of license and subscription bookings grew to 56% for 2016, up from 17% in 2015 and 8% in 2014.

Subscription bookings grew to $226 million in 2016 from $60 million in 2015 and $32 million in 2014.

Our success with our subscription initiative contributed to the decline in both revenue, including perpetual license revenue, and earnings in 2016.

Approximately 68% of our revenue in 2016 came from recurring revenue streams, compared to 59% in 2015 and 53% in 2014.

Approximately 82% of our software revenue in 2016 came from recurring revenue streams, compared to 73% in 2015 and 66% in 2014.

Debt Offering

In May 2016, we issued $500 million of 6.0% senior, unsecured long-term notes at par value, due in 2024 (the 2024 6% Notes).

The first interest payment on the notes is due in November 2016.

2016 Restructuring of Our Workforce

On October 23, 2015, we initiated a plan to restructure our workforce and consolidate select facilities to reduce our cost structure to enable us to invest in our identified growth opportunities.

The restructuring resulted in charges of $37 million in the first quarter of 2016, $5 million in the second quarter of 2016, $3 million in the third quarter of 2016, and $32 million in the fourth quarter of 2016 primarily related to termination benefits associated with 810 employees.

We expect to complete facility-related restructuring actions in the first half of 2017 and to record approximately $3 million of charges associated with excess facilities.

Acquisitions

We closed two acquisitions in fiscal 2016, both of which enhanced our IoT portfolio.

In November 2015, we acquired the Vuforia business from Qualcomm for approximately $65 million in cash.

At the time of the acquisition, Vuforia had approximately 80 employees and its historical annualized revenues were not material.

In January 2016, we acquired Kepware Inc., a software development company that provides communications connectivity to industrial automation environments, for approximately $99 million in cash and up to $18 million of contingent earn-out.

At the time of the acquisition, Kepware had approximately 115 employees and historical annualized revenues of approximately $20 million.

Results for 2016

Revenue was down year over year, despite growth in license and subscription bookings, due to:

| | |

| --- | --- |

| • | a higher mix of subscription revenue in 2016 compared to 2015 as we transition from selling perpetual licenses to a subscription-based licensing model, where revenue is recognized over the subscription term; |

| • | a decline in professional services revenue of 13%, consistent with our strategy to migrate more service engagements to our partners; |

| • | a challenging macroeconomic environment; and |

| • | the impact of foreign currency exchange rates on our reported revenue due to an increase in the strength of the U.S. Dollar relative to international currencies, most notably the Euro and the Yen. |

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

We delivered strong growth in our IoT Group, closing a number of significant deals with large, industrial companies that are adopting our platform for their IoT initiatives.

IoT Group software revenue represented approximately 8% of our total software revenue in 2016, compared to 5% in 2015.

Additionally, although revenue declined year over year due to our subscription transition, we had strong bookings growth in CAD, PLM and SLM.

From a geographic perspective, total license and subscriptions bookings grew in all regions.

Due to the higher mix of subscription bookings, total software revenue in 2016, compared to 2015, decreased by 5% in the Americas, 6% on a constant currency basis in Europe, 7% on a constant currency basis in the Pacific Rim and 14% on a constant currency basis in Japan.

GAAP and non-GAAP operating income reflect lower revenue, higher incentive-based compensation and costs from acquired businesses, partially offset by reductions in operating expenses driven by cost savings from restructuring actions.

Our GAAP operating margin in 2016 included restructuring charges of $76 million.

Our GAAP operating margin in 2015 included a $66 million pension settlement loss due to the termination of our U.S. pension plan, a $28 million accrual associated with the China Investigation and restructuring charges of $43 million.

Both GAAP and non-GAAP EPS benefited from a lower tax rate.

In [added: 2017,] 2016, [removed: 2015,] and [removed: 2014,] [added: 2015,] approximately two-thirds of our revenue and half of our expenses were transacted in currencies other than the U.S. dollar.

Based on current revenue and expense levels (excluding restructuring charges and stock-based compensation), a $0.10 change in the USD to European exchange rates and a 10 Yen change in [removed: the Yen to USD exchange rate would impact operating income by approximately $8 million and $7 million, respectively.]

As of September 30, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] we had outstanding forward contracts for derivatives not designated as hedging instruments with notional amounts equivalent to the following:

| Currency Hedged | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Canadian/U.S. Dollar | $ | [removed: 14,685] [added: 12,809] | | | $ | [removed: 17,448] [added: 14,685] | |

| Euro/U.S. Dollar | [removed: 174,120] [added: 244,000] | | | | [removed: 82,917] [added: 174,120] | | |

| Israeli Sheqel/U.S. Dollar | [removed: 7,271] [added: 8,820] | | | | [removed: 4,607] [added: 7,271] | | |

| Japanese Yen/Euro | [removed: 32,782] [added: 17,694] | | | | [removed: 25,133] [added: 32,782] | | |

| Japanese [removed: Yen/USD] [added: Yen/U.S. Dollar] | [removed: 6,716] [added: 3,198] | | | | [removed: —] [added: 6,716] | | |

| Total | $ | [removed: 249,534] [added: 318,519] | | | $ | [removed: 157,255] [added: 249,534] | |

As of September 30, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] we had outstanding forward contracts designated as cash flow hedges with notional amounts equivalent to the following:

| Currency Hedged | September 30, [removed: 2016] [added: 2017] | | | | September 30, [removed: 2015] [added: 2016] | | |

| Euro / U.S. Dollar | $ | [removed: 26,181] [added: 64,831] | | | $ | [removed: —] [added: 26,181] | |

| Japanese Yen / U.S. Dollar | [removed: 8,800] [added: 22,675] | | | | [removed: —] [added: 8,800] | | |

| SEK / U.S. Dollar | [removed: 4,078] [added: 14,091] | | | | [removed: —] [added: 4,078] | | |

| Total | $ | [removed: 39,059] [added: 101,597] | | | $ | [removed: —] [added: 39,059] | |

In addition to amounts due under our 2024 6% Notes as described above, as of September 30, [removed: 2016,] [added: 2017,] we had [removed: $258.1] [added: $218.1] million outstanding under our variable-rate credit facility.

As of September 30, [removed: 2016,] [added: 2017,] the annual rate on the credit facility loans was [removed: 2.56%.][added: 3.125%.]

If there was a hypothetical 100 basis point change in interest rates, the annual net impact to earnings and cash flows would be [removed: $2.6] [added: $2.2] million.

This hypothetical change in cash flows and earnings has been calculated based on the borrowings outstanding at September 30, [removed: 2016] [added: 2017] and a 100 basis point per annum change in interest rate applied over a one-year period.

As of September 30, [removed: 2016,] [added: 2017,] cash equivalents were invested in highly liquid investments with maturities of three months or less when purchased.

At September 30, [removed: 2016,] [added: 2017,] we had cash and cash equivalents of [removed: $27.3] [added: $26.8] million in the United States, [removed: $104.5] [added: $128.1] million in Europe, [removed: $101.8] [added: $68.1] million in the Pacific Rim (including India), [removed: $24.3] [added: $30.2] million in Japan and [removed: $20.0] [added: $26.8] million in other non-U.S. countries.

Given the short maturities and investment grade quality of the portfolio holdings at September 30, [removed: 2016,] [added: 2017,] a hypothetical 10% change in interest rates would not materially affect the fair value of our cash and cash equivalents.

Our consolidated cash balances were impacted favorably by [added: $1.1 million and] $6.8 million in [removed: 2016] [added: 2017] and [added: 2016, respectively and] unfavorably by $17.9 [removed: million,] [added: million in 2015, due to changes in foreign currencies relative to the U.S. dollar, particularly the Euro] and [removed: $9.4][added: the Japanese Yen.]

the Yen to USD exchange rate would impact operating income by approximately $14 million and $5 million, respectively.

| Swiss Franc / Euro | 7,157 | | | | — | | |

| Swedish Krona / U.S. Dollar | 4,627 | | | | 3,852 | | |

| Chinese Yuan offshore / Euro | 10,423 | | | | — | | |

| Singapore Dollar / U.S. Dollar | 1,186 | | | | 1,448 | | |

| All other | 8,605 | | | | 8,660 | | |

| British Pound/Euro | 1,382 | | | | 9,409 | | |

| Swiss Franc/U.S. Dollar | 730 | | | | 5,149 | | |

| All other | 11,848 | | | | 12,592 | | |

million in 2015 and 2014, respectively, due to changes in foreign currencies relative to the U.S. dollar, particularly the Euro and the Japanese Yen.

[removed: We offer] [added: Our Solutions Group offers] a portfolio of innovative [removed: CAD modeling,] [added: Computer-Aided Design (CAD),] Product Lifecycle Management (PLM) and Service Lifecycle Management (SLM) solutions [removed: for] [added: that enable] manufacturers to create, [added: innovate,] operate, and service products.

[added: |] IoT Group [added: | | Solutions Group | | |]

[added: | Enabling connectivity, application development. | Applications for smart, connected products and environments. | Effective and collaborative product design across the globe. |] Efficient and consistent management of product development, including embedded software development, from concept to retirement across functional processes and distributed teams. [added: | Planning and delivery of service, including product intelligence, connected service, predictive service, and remote diagnostics. |]

We see greater opportunity for market growth in our [removed: IoT solutions,] [added: IIoT and Augmented Reality solutions for the enterprise,] followed by [removed: SLM, PLM, and then CAD solutions, which is a] more [removed: highly penetrated and slower] [added: moderate market] growth [removed: market.][added: for our CAD, SLM and PLM solutions.]

[added: |  | Our] KEPServerEX® [added: solution] provides communications connectivity to industrial automation [removed: environments] [added: environments, enabling users] to [removed: connect] [added: connect, manage, monitor, and control] disparate devices and [removed: control systems,] [added: software applications,] providing users with a single source of real-time industrial sensor and machine data [removed: for operational intelligence] to improve operations, accelerate troubleshooting, perform preventative maintenance, and improve productivity. [added: |]

[added: |  | Our Vuforia Studio™ solution is a powerful, easy-to-use tool that enables industrial enterprises to rapidly author and publish augmented reality experiences.] These augmented reality experiences overlay important digital information from [removed: IoT,] [added: IoT] onto the view of the physical things on which the user is [removed: working --] [added: working,] such as a dashboard of sensors and analytics data, or 3D step-by-step operating or repair instructions. [added: |]

[added: |  | Our Vuforia® augmented reality technology platform enables users to build applications that see and interact with things in the physical world.] Using computer vision technologies and building them for mobile platforms, the technology is accessible through an application programming interface and developer workflows. [added: |]

[added: |  | Our] Creo® [removed: is an] interoperable suite of product design software [removed: that] provides a scalable set of packages for design engineers to meet a variety of specialized needs. [added: Creo provides capabilities for design flexibility, advanced assembly design, piping and cabling design, advanced surfacing, comprehensive virtual prototyping and other essential design functions. |]

[added: |  | Our Mathcad® engineering math software enables users to solve, analyze and share vital engineering calculations.] Mathcad combines the ease and familiarity of an engineering notebook with the powerful features of a dedicated engineering calculations application. [added: |]

Our PLM products are designed to address common challenges that companies, particularly manufacturing companies, [added: face over the life of their products, from concept to retirement.]

[added: |  | Our Integrity™ solution provides a set of Application Lifecycle Management and Model Based Systems Engineering capabilities that enable users to manage system models, software configurations, test plans and defects.] With Integrity, engineering teams can improve productivity and quality, streamline compliance, and gain greater product visibility, ultimately enabling them to bring more innovative products to market. [added: |]

[removed: Navigate™, our new] [added: |  | Our ThingWorx Navigate™ solution, a] ThingWorx-based PLM offering launched in 2016, is a collection of focused, role-based applications that provides complete, contextual, up-to-date and accurate product information from Windchill and other systems of record. [added: Leveraging ThingWorx technology, ThingWorx Navigate applications can easily be tailored and deployed to roles across an enterprise, and extended to include data from other systems of record and even data from smart, connected products. |]

[added: |  | Our Servigistics® suite of SLM software products integrates service planning, delivery and analysis to optimize service outcomes.] Servigistics products enable a systematic approach to service lifecycle management by providing a single view of service throughout the service network, enabling customers to continuously improve their products and services and increase customer satisfaction. [added: |]

[added: | | Our Servigistics] Arbortext® [removed: is an] enterprise software suite [removed: that allows] [added: enables] manufacturers to create, illustrate, manage and publish technical and service parts information to improve the operation, maintenance, service and upgrade of equipment throughout its lifecycle. [added: These products are available in stand-alone configurations as well as integrated with our Windchill products to deliver dynamic, product-centric service and parts information. |]

We offer consulting, implementation, training and cloud services through our Global Professional Services Organization, with approximately [removed: 1,100] [added: 900] professionals worldwide, as well as through third-party resellers and other strategic partners.

Our services [removed: create value by helping] [added: help] customers improve product development performance through technology enabled process improvement and multiple deployment paths.

We have three operating and reportable segments: (1) the [removed: Solutions] [added: IoT] Group, which includes license, subscription, support and cloud services revenue for our [removed: core CAD, PLM] [added: IoT, analytics] and [removed: SLM products;] [added: augmented reality solutions;] (2) the [removed: IoT] [added: Solutions] Group, which includes license, subscription, support and cloud services revenue for our [removed: IoT, analytics] [added: core CAD, PLM] and [removed: augmented reality solutions,] [added: SLM products,] and (3) Professional Services, which includes consulting, implementation and training revenue.

Our research and development expenses were [removed: $229.3] [added: $236.1] million in [removed: 2016, $227.5] [added: 2017, $229.3] million in [removed: 2015,] [added: 2016,] and [removed: $226.5] [added: $227.5] million in [removed: 2014.][added: 2015.]

Approximately 20% to [removed: 25%] [added: 30%] of our sales of products and services are through third-party resellers and other strategic partners.

In our IoT business, we compete with large established companies like [added: Amazon,] IBM Corporation, Microsoft, Cisco, Oracle, SAP, and General Electric.

As of September 30, [removed: 2016,] [added: 2017,] we had [removed: 5,800] [added: 6,041] employees, including [removed: 1,875] [added: 2,052] in product development; [removed: 1,810] [added: 1,805] in customer support, training, consulting, cloud services and product distribution; [removed: 1,442] [added: 1,497] in sales and marketing; and [removed: 673] [added: 687] in general and administration.

Of these [removed: employees, 2,122] [added: employees 2,183] were located in the United States and [removed: 3,678] [added: 3,858] were located outside the United States.

PTC is a global software and services company that delivers a technology platform and solutions to help companies design, manufacture, operate, and service things for a smart, connected world.

Our Internet of Things Group offers Industrial Internet of Things (IIoT) solutions that enable companies to connect smart things and environments, manage and analyze data generated by those things and environments, and create IIoT applications and Augmented Reality (AR) experiences that transform the way users create, operate, and service products.

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| PTC | | | | |

| Internet of Things (IoT) | Augmented Reality (AR) | Computer Aided Design (CAD) | Product Lifecycle Management (PLM) | Service Lifecycle Management (SLM) |

The IIoT market is a nascent, high growth market in which we compete with a number of well-established large companies as well as many small companies.

Our IIoT products enable companies to connect, operate, analyze and service smart, connected products and environments and to create immersive augmented reality experiences for those smart, connected products.

| | |

|  | Our ThingWorx® industrial innovation platform delivers tools and technologies that empower companies to rapidly develop and deploy powerful industrial IoT applications and augmented reality (AR) experiences, enabling customers to transform their products and services and unlock new business models. ThingWorx enables customers to reduce the time, cost, and risk required to build IoT applications and AR experiences; connect devices, systems, and applications; manage connected products; and analyze industrial IoT data. Our ThingWorx solutions include cloud-based tools that allow customers to easily and more securely connect products and devices to the cloud, and intelligently process and store product and sensor data. Additionally, ThingWorx offers sophisticated artificial intelligence and machine learning technology that enables customers to simplify and automate complex analytical processes that enhance industrial IoT solutions through real-time insights, predictions and recommendations from information collected from smart, connected products. |

| | |

| --- | --- |

| | |

| | |

| --- | --- |

| | |

Our PLM products enable efficient and consistent product data management from inception through design, as well as communication and collaboration across the entire enterprise, including product development, manufacturing and the supply chain.

| | |

| --- | --- |

| | |

|  | Our Windchill® suite of PLM software provides product lifecycle management capabilities - from design to service. Windchill offers a single repository for all product information. As such, it is designed to create a “single source of truth” for all product-related content such as CAD models, documents, technical illustrations, embedded software, calculations and requirement specifications for all phases of the product lifecycle to help companies streamline enterprise-wide communication and make informed decisions. Additionally, our Windchill product family includes solutions that allow manufacturers, distributors and retailers to collaborate across product development and the supply chain, including sourcing and procurement, to identify an optimal set of parts, materials and suppliers. This functionality provides automated cost modeling and visibility into supply chain risk information to balance cost and quality, and enables customers to design products that meet compliance requirements and performance targets. |

|  | Our Creo® View™ solution allows users to share 3D CAD information internally and with partners and suppliers outside the organization and supports drawings and documents from a multitude of sources. Creo View provides access to designs and related data without requiring the original authoring tool. |

| | |

| --- | --- |

| | |

Customer Success Solutions and Services

Our Customer Success solutions and services help customers unleash the full value of our software offerings.

These include advisory services designed to provide strategic insights for operational, organizational and technological IoT transformation; implementation services; adoption services that include digital learning solutions and change enablement services; success management services that leverage data and systems to monitor and improve the customer experience; cloud services; and customer support resources and tools.

Our principal Customer Success offerings are described below.

We believe our ThingWorx IoT platform is complementary to the offerings of many of our competitors and we have partnerships with many of the named competitors.

| | |

| --- | --- |

PTC is a global computer software and services company.

We also offer a suite of Internet of Things (IoT) solutions that enables our customers to securely connect smart things, manage and analyze data, and quickly create applications.

Additionally, our Vuforia Augmented Reality (AR) platform empowers developers and others in the industrial enterprise to build AR experiences that transform the way users create, operate, and service products.

As the IoT gains momentum.

Software, sensors, and IP-enabled connectivity are increasingly embedded into the design and build of products and are becoming integral to the manufacturing process.

This transformation is taking shape across all manufacturing sectors.

With smart connected products, manufacturers can now experience true closed-loop, product lifecycle management where they can track, manage and control product information at any phase of its lifecycle at any time and any place in the world.

We are organized in two primary business units:

- the IoT Group comprised of our IoT, analytics and augmented reality software; and

- the Solutions Group comprised of our core CAD, PLM and SLM solutions and software.

Our two business units develop solutions and software products in the following areas:

IoT and Augmented Reality

Enabling connectivity, application development, analysis, and augmented reality software applications for smart, connected products and environments.

Solutions Group

Computer-Aided Design (CAD)

Effective and collaborative product design across the globe.

Product Lifecycle Management (PLM)

Service Lifecycle Management (SLM)

Planning and delivery of service, including product intelligence, connected service, predictive service, and remote diagnostics.

Business Developments

Important business developments for the year are described under “2016 Business Developments” in Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Executive Overview” below.

You should read that discussion, which is incorporated into this section by reference.

Our IoT products enable customers to design, connect, operate and service smart, connected products and to improve the user experience.

ThingWorx® is a technology platform that enables users to create and deploy applications and solutions for today’s smart, connected world, enabling customers to transform their products and services and unlock new business models.

ThingWorx allows customers to reduce the time, cost, and risk required to connect, manage, and develop applications for smart, connected products such as predictive maintenance, system monitoring, and usage-based product design requirements.

Our ThingWorx solutions include cloud-based tools that allow customers to easily and more securely connect products and devices to the cloud, and intelligently process, transform, organize and store product and sensor data.

Additionally, our ThingWorx offerings include a predictive intelligence tool that uses artificial intelligence technology to simplify and automate the processes of creating and operationalizing predictions inside ThingWorx-powered solutions and other systems of record.

This machine learning tool complements our IoT portfolio by introducing data analytics to information collected from smart, connected products.

Vuforia Studio™ combines ThingWorx, Vuforia, and Creo technologies to bring AR and Virtual Reality into the world of industrial IoT.

Studio, which is sold as part of our ThingWorx platform, is a powerful new tool for authoring and publishing augmented reality experiences.

Vuforia® is an augmented reality technology platform that enables applications to see and interact with things in the physical world.

Creo provides capabilities for design flexibility, advanced assembly design, piping and cabling design, advanced surfacing, comprehensive virtual prototyping and other essential design functions.

Mathcad® is software for solving, analyzing and sharing vital engineering calculations.

face over the life of their products, from concept to retirement.

These software products help customers manage product configuration information through each stage of the product lifecycle, and communicate and collaborate across the entire enterprise, including product development, manufacturing and the supply chain, including sourcing and procurement.

Windchill® is a suite of PLM software that offers lifecycle intelligence - from design to service.

Windchill offers a single repository for all product information.

As such, it is designed to create a “single source of truth” for all product-related content such as CAD models, documents, technical illustrations, embedded software, calculations and requirement specifications for all phases of the product lifecycle to help companies streamline enterprise-wide communication and make informed decisions.

Additionally, our Windchill product family includes supply chain management (SCM) solutions that allow manufacturers, distributors and retailers to collaborate across product development and the supply chain, including sourcing and procurement, to identify an optimal set of parts, materials and suppliers.

None.

On March 7, 2016, a putative class action lawsuit captioned Matthew Crandall v.

PTC Inc. et al., No. 1:16-cv-10471, was filed against us and certain of our current and former officers and directors in the U.S. District Court for the District of Massachusetts ostensibly on behalf of purchasers of our stock during the period November 24, 2011 through July 29, 2015.

The lawsuit, which seeks unspecified damages, interest, attorneys’ fees and costs, alleges (among other things) that, during that period, PTC’s public disclosures concerning investigations by the U.S. Securities and Exchange Commission and the U.S. Department of Justice into U.S. Foreign Corrupt Practices Act matters in China (the "China Investigation") were false and/or misleading.

We have reached an agreement-in-principle with the plaintiff to settle this lawsuit for an amount that is not material to our results of operations and the associated liability has been accrued in our fiscal 2016 results.

The settlement is conditioned on execution and final court approval of formal settlement documents.

Accordingly, we cannot predict the outcome of this action nor when it will be resolved.

For the Fiscal Year Ended: September 30, [removed: 2016][added: 2017]

The aggregate market value of our voting stock held by non-affiliates was approximately [removed: $3,742,819,047] [added: $6,020,802,164] on April [removed: 2, 2016] [added: 1, 2017] based on the last reported sale price of our common stock on the Nasdaq Global Select Market on [removed: April 1, 2016.][added: March 31, 2017.]

There were [removed: 114,620,630] [added: 115,807,774] shares of our common stock outstanding on that day and [removed: 115,604,111] [added: 116,125,277] shares of our common stock outstanding on November [removed: 16, 2016.][added: 27, 2017.]

Portions of the definitive Proxy Statement in connection with the [removed: 2017] [added: 2018] Annual Meeting of Stockholders [removed: (2017] [added: (2018] Proxy Statement) are incorporated by reference into Part III.

ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR [removed: 2016][added: 2017]

| Item 1. | [removed: [Business](#s08711460337A0E06A78C6CD5839AB583)] [added: [Business](#sD3ECFA167F685B5AA1E02500F4002106)] | [removed: [1](#s08711460337A0E06A78C6CD5839AB583)] [added: [1](#sD3ECFA167F685B5AA1E02500F4002106)] |

| Item 1A. | [Risk [removed: Factors](#s0DB6A7F25B46B270F6F66CD583CB2DC1)] [added: Factors](#s4C2EFD47B99A5EFFBE4C2B13F2DF9D2B)] | [removed: [5](#s0DB6A7F25B46B270F6F66CD583CB2DC1)] [added: [6](#s4C2EFD47B99A5EFFBE4C2B13F2DF9D2B)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s8101658640B95F5CB51D6CD583ED8C10)] [added: Comments](#s082ABD84BF7E55FFBBD6C6FD80AF6F13)] | [removed: [12](#s8101658640B95F5CB51D6CD583ED8C10)] [added: [14](#s082ABD84BF7E55FFBBD6C6FD80AF6F13)] |

| Item 2. | [removed: [Properties](#sD91186713C83EBA6F5C26CD5841F6A21)] [added: [Properties](#s653198A1B6FE50EEB5558AB1951E14BC)] | [removed: [12](#sD91186713C83EBA6F5C26CD5841F6A21)] [added: [15](#s653198A1B6FE50EEB5558AB1951E14BC)] |

| Item 3. | [Legal [removed: Proceedings](#sD795C844EC638110D0786CD5844078A1)] [added: Proceedings](#s2FB07C8CE520573E9D8FC9A9B2C30579)] | [removed: [12](#sD795C844EC638110D0786CD5844078A1)] [added: [15](#s2FB07C8CE520573E9D8FC9A9B2C30579)] |

| Item 4. | [Mine Safety [removed: Disclosures](#sF59C1D2470312D5BD8716CD58472D9F8)] [added: Disclosures](#s57DEF553AD8B5119B31A6A0C0ADB932B)] | [removed: [12](#sF59C1D2470312D5BD8716CD58472D9F8)] [added: [15](#s57DEF553AD8B5119B31A6A0C0ADB932B)] |

| [PART [removed: II.](#s3502F1ED87B06585EC026CD58499D157)] [added: II.](#sA1E6BD53190E524782FBFFF4C8F24971)] | | |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sCCD604A4C31352851AE56CD55BF4D6DC)] [added: Securities](#s97E8D19116DE5225B55EAB8893660768)] | [removed: [12](#sCCD604A4C31352851AE56CD55BF4D6DC)] [added: [15](#s97E8D19116DE5225B55EAB8893660768)] |

| Item 6. | [Selected Financial [removed: Data](#sD8EF385289E9034902FA6CD584EB6040)] [added: Data](#sFAF00D5C62FC55989CC98E6D2018A7EE)] | [removed: [13](#sD8EF385289E9034902FA6CD584EB6040)] [added: [16](#sFAF00D5C62FC55989CC98E6D2018A7EE)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sA738AF069EF55472B8B56CD58519FC49)] [added: Operations](#sAD1B7DF522AB5F13BD1B0A9E8F561D4E)] | [removed: [13](#sA738AF069EF55472B8B56CD58519FC49)] [added: [16](#sAD1B7DF522AB5F13BD1B0A9E8F561D4E)] |

| Item 7A. | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s7FB5834E1178E34129136CD56DB08F49)] [added: Risk](#sD408B8CB950553A094A35F9D25C515C1)] | [removed: [41](#s7FB5834E1178E34129136CD56DB08F49)] [added: [49](#sD408B8CB950553A094A35F9D25C515C1)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#s8A797B9FBDC8996505006CD58734444A)] [added: Data](#s87A28375DE7B5CCDBDE26DD448B82D09)] | [removed: [43](#s8A797B9FBDC8996505006CD58734444A)] [added: [51](#s87A28375DE7B5CCDBDE26DD448B82D09)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s7720D16C75F134CD38896CD587821E7E)] [added: Disclosure](#s34868119EFE85E04871D695580A3D24C)] | [removed: [43](#s7720D16C75F134CD38896CD587821E7E)] [added: [51](#s34868119EFE85E04871D695580A3D24C)] |

| Item 9A. | [Controls and [removed: Procedures](#sA130F7FCC55C9AAF55F76CD58785003B)] [added: Procedures](#sEB5F79946596593686EC57E81F384CFC)] | [removed: [43](#sA130F7FCC55C9AAF55F76CD58785003B)] [added: [51](#sEB5F79946596593686EC57E81F384CFC)] |

| Item 9B. | [Other [removed: Information](#sA3E4EF62CDB063FA7DB86CD587B5EB71)] [added: Information](#sA5589220FB765BC29308B207B75A89EF)] | [removed: [44](#sA3E4EF62CDB063FA7DB86CD587B5EB71)] [added: [52](#sA5589220FB765BC29308B207B75A89EF)] |

| [PART [removed: III.](#s89FA5DFB330BD5C1F7806CD587D93A48)] [added: III.](#sB8C13A357C4E533CB53EC0B2E11044B0)] | | |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s9E802948D131866E6B116CD58829D454)] [added: Governance](#sC5A962553CA455D09A08CA005B465A30)] | [removed: [44](#s9E802948D131866E6B116CD58829D454)] [added: [52](#sC5A962553CA455D09A08CA005B465A30)] |

| Item 11. | [Executive [removed: Compensation](#sBD66E5136EBD05899D6A6CD5882E6B4B)] [added: Compensation](#sC19A3F8E08C55D3A9465BD4A87A9A1A1)] | [removed: [45](#sBD66E5136EBD05899D6A6CD5882E6B4B)] [added: [54](#sC19A3F8E08C55D3A9465BD4A87A9A1A1)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s548DF412811C013A0A046CD5885AC49F)] [added: Matters](#s634F5AE7812356EBBF4EF564181F7A10)] | [removed: [45](#s548DF412811C013A0A046CD5885AC49F)] [added: [54](#s634F5AE7812356EBBF4EF564181F7A10)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#sBC90001CF01E8F0FEAFA6CD58880A1CA)] [added: Independence](#sBDB5E8A73E895A8EB6172A6C8C7EF49F)] | [removed: [45](#sBC90001CF01E8F0FEAFA6CD58880A1CA)] [added: [54](#sBDB5E8A73E895A8EB6172A6C8C7EF49F)] |

| Item 14. | [Principal Accounting Fees and [removed: Services](#s9808D2E8147F0A4E247D6CD588D06DFF)] [added: Services](#s13B713A649615D27B7EAC78DF2F7687B)] | [removed: [45](#s9808D2E8147F0A4E247D6CD588D06DFF)] [added: [54](#s13B713A649615D27B7EAC78DF2F7687B)] |

| [PART [removed: IV.](#sBB7FCA72A1A260AD5FCB6CD588D3FE6A)] [added: IV.](#s7FABB6185EAA5EA5B22E87999B5C4F50)] | | |

| Item 15. | [Exhibits and Financial Statement [removed: Schedules](#s0D914854905FCD0DD88E6CD58923B087)] [added: Schedules](#s98722203D5DD5002873BA8B5952C520F)] | [removed: [46](#s0D914854905FCD0DD88E6CD58923B087)] [added: [55](#s98722203D5DD5002873BA8B5952C520F)] |

| Item 16. | [Form 10-K [removed: Summary](#s58fde9f67bb3421c83e573987e0d13ca)] [added: Summary](#s2FF0DE4633855B24BCA7546FA7C5DFC2)] | [removed: [46](#s58fde9f67bb3421c83e573987e0d13ca)] [added: [55](#s2FF0DE4633855B24BCA7546FA7C5DFC2)] |

| [Exhibit [removed: Index](#s145A2D05A10286D4D46A6CD56EAD34BF)] [added: Index](#s3D83F85D39A75EA28101C9C05269834C)] | | [removed: [49](#s145A2D05A10286D4D46A6CD56EAD34BF)] [added: [56](#s3D83F85D39A75EA28101C9C05269834C)] |

| | [Report of Independent Registered Public Accounting [removed: Firm](#s8F127D95D5E94405248A6CD589C9F97E)] [added: Firm](#s1217134C7C3350AA8B97442A2F8CF680)] | [removed: [F-1](#s8F127D95D5E94405248A6CD589C9F97E)] [added: [F-1](#s1217134C7C3350AA8B97442A2F8CF680)] |

| | [Consolidated Financial [removed: Statements](#sE85190488387AB76C5AC6CD555EDA893)] [added: Statements](#s0A4747A7101A5B7EA34E2CD0E6107F6C)] | [removed: [F-2](#sE85190488387AB76C5AC6CD555EDA893)] [added: [F-2](#s0A4747A7101A5B7EA34E2CD0E6107F6C)] |

| | [Notes to Consolidated Financial [removed: Statements](#s38A551D70CD07C73FD426CD58AF6C5C1)] [added: Statements](#s71820C381C5E59D69E572A24D377EBC1)] | [removed: [F-7](#s38A551D70CD07C73FD426CD58AF6C5C1)] [added: [F-7](#s71820C381C5E59D69E572A24D377EBC1)] |

| | [Selected Financial [removed: Data](#sAF54E94AC77ED754E12B6CD55F05F926)] [added: Data](#sBA272BF8EA62524893EE85CDCB690917)] | [removed: [A-1](#sAF54E94AC77ED754E12B6CD55F05F926)] [added: [A-1](#sBA272BF8EA62524893EE85CDCB690917)] |

10-K 1 ptc9-30x1710xk.htm 10-K

| | | | Emerging growth company o |

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.

| [PART I.](#sA85897443E1F58C386D589756AC20377) | | |

| [Signatures](#s624E9F9CAA4C5DB19A5311F92ADECD8E) | | [59](#s624E9F9CAA4C5DB19A5311F92ADECD8E) |

| [APPENDIX A](#s679FBE739EDF58ADB9340758553A88C2) | | |

10-K 1 ptc9-30x1610xk.htm 10-K

| [PART I.](#s82343117D9E739737CBF6CD58378F102) | | |

| [Signatures](#sBFDCBB4E438E8C21D0EF6CD5892670EF) | | [47](#sBFDCBB4E438E8C21D0EF6CD5892670EF) |

| [APPENDIX A](#s5FA0A6CBB7C0B75C9E246CD5897A38BE) | | |

We currently lease [removed: 107] [added: 94] offices used in operations in the United States and internationally, predominately as sales and/or support offices and for research and development work.

Of our total of approximately [removed: 1,396,000] [added: 1,367,000] square feet of leased facilities used in operations, approximately [removed: 586,000] [added: 541,000] square feet are located in the U.S., including 321,000 square feet at our headquarters facility located in Needham, Massachusetts, and approximately [removed: 260,000] [added: 297,000] square feet are located in India, where a significant amount of our research and development is conducted.

In addition, we entered into a new lease in September 2017 for 250,000 square feet in the Boston Seaport District.

We expect to relocate our headquarters to this location in the second quarter of 2019.

Information with respect to the market for our common stock is [removed: located] in Selected Consolidated Financial Data beginning on page [removed: A-1] [added: F-1] of this Form 10-K and is incorporated herein by reference.

On September 30, [removed: 2016,] [added: 2017,] the close of our fiscal year, and on November [removed: 16, 2016,] [added: 27, 2017,] our common stock was held by [removed: 1,308] [added: 1,219] and [removed: 1,299] [added: 1,209] shareholders of record, respectively.

The table below shows the shares of our common stock we repurchased in the fourth quarter of 2017.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| Period (1) | Total Number of Shares (or Units) Purchased | | Average Price Paid per Share (or Unit) | | | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | | Approximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |

| July 2, 2017 - July 29, 2017 | — | | — | | | — | | $375,066,435 (2) |

| July 30, 2017 - August 26, 2017 | 73,000 | | $ | 54.59 | | 73,000 | | $371,081,478 (2) |

| August 27, 2017 - September 30, 2017 | 216,100 | | $ | 55.58 | | 216,100 | | $0 (2) |

| Total | 289,100 | | $ | 55.33 | | 289,100 | | $0 (2) |

(1) Periods are our fiscal months within the fiscal quarter.

(2) In 2014, our Board authorized us to repurchase up to $600 million worth of our shares in the period August 4, 2014 through September 30, 2017, which repurchase program we announced on August 4, 2014.

On September 14, 2017, our Board of Directors authorized us to repurchase up to $500 million of our

common stock for the period October 1, 2017 through September 30, 2020, which program we announced on September 19, 2017.

| | |

| --- | --- |

Based on this evaluation, we concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, [removed: 2016.][added: 2017.]

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, [removed: 2016] [added: 2017] using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on this assessment and those criteria, our management concluded that, as of September 30, [removed: 2016,] [added: 2017,] our internal control over financial reporting was effective.

The effectiveness of our internal control over financial reporting as of September 30, [removed: 2016] [added: 2017] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears under Item 8.

There was no change in our internal control over financial reporting that occurred during the quarter ended September 30, [removed: 2016] [added: 2017] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The information required by this item with respect to our directors and executive officers may be found in the sections captioned “Proposal 1: Election of Directors,” “Corporate Governance,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Transactions With Related Persons” appearing in our [removed: 2016] [added: 2018] Proxy Statement.

| James [removed: Heppelmann | | 52 | |] [added: Heppelmann,] President and Chief Executive [removed: Officer] [added: Officer, Age 53] | [added: |]

| Andrew [removed: Miller | | 56 | |] [added: Miller,] Executive Vice President, Chief Financial [removed: Officer] [added: Officer, Age 57] | [added: |]

| Barry [removed: Cohen | | 72 | |] [added: Cohen,] Executive Vice President, [added: Chief] Strategy [added: Officer, Age 73] | [added: |]

| Matthew [removed: Cohen | | 40 | |] [added: Cohen,] Executive Vice President, [removed: Global Services] [added: Customer Success, Age 41] | [added: |]

| Anthony [removed: DiBona | | 61 | |] [added: Dibona,] Executive Vice President, [removed: Global Support] [added: Focused Solutions Group, Age 61] | [added: |]

| Aaron [removed: von Staats | | 50 | |] [added: Von Staats,] Corporate Vice President, General Counsel and [removed: Secretary] [added: Secretary, Age 51] | [added: |]

[added: |  | Mr. Heppelmann has been our President and Chief Executive Officer since October 2010. Mr. Heppelmann was our President and Chief Operating Officer from March 2009 through September 2010.] Prior to that, Mr. Heppelmann served as our Executive Vice President and Chief Product Officer from February 2003 to March 2009. [added: Mr. Heppelmann joined PTC in 1998. |]

[added: |  | Mr. Hayman has been our Solutions Group President since November 2015 when he joined PTC. Mr. Hayman was the President of eBay’s enterprise business, an e-commerce platform business, from July 2014 to November 2015.] Before that, Mr. Hayman was the General Manager of the Software as a Service and Industry Solutions business at IBM, an information technology and services company, from August 2010 to June 2014. [added: Before that, Mr. Hayman held a number of other executive positions at IBM. |]

[added: |  |] Mr. Miller [added: has been our Executive Vice President, Chief Financial Officer since February 2015 when he joined PTC. Mr. Miller] was Executive Vice President, Chief Financial Officer of Cepheid, a publicly-traded medical technology company from April 2008 to February 2015. [added: Prior to that, Mr. Miller was employed by Autodesk Inc., a publicly-traded software company, where he was the Vice President of Finance and Chief Accounting Officer. |]

[added: |  |] Mr. [added: Barry] Cohen [added: has been our Executive Vice President, Strategy since October 2010. Mr. Cohen] was our Executive Vice President, Strategic Services and Partners from August 2002 through September 2010. [added: Mr. Cohen joined PTC in 1998. |]

[added: |  |] Mr. Matthew Cohen has been our Executive Vice President, Global Services since April 2014. [added: Mr. Cohen was a Divisional Vice President, Global Services from September 2010 to March 2014. Mr. Cohen joined PTC in 2001. |]

[added: |  |] Mr. von Staats has been Corporate Vice President, General Counsel and Secretary since March 2008. [added: Prior to that, he served as Senior Vice President, General Counsel and Clerk from February 2003 to February 2008. Mr. von Staats joined PTC in 1997. |]

| | |

| --- | --- |

| | |

| Craig Hayman, Chief Operating Officer, Age 54 | |

|  | Mr. DiBona became our Executive Vice President, for our Focused Solutions Group in October 2017. Mr. DiBona was our Executive Vice President for Renewal Sales from October 2016 to September 2017 and our Executive Vice President, Global Support from April 2003 to September 2016. Mr. DiBona joined PTC in 1998. |

| | | | | |

| --- | --- | --- | --- | --- |

| Name | | Age | | Position |

| Craig Hayman | | 53 | | Group President, Solutions |

| Robert Gremley | | 51 | | Group President, IoT Group |

Mr. Heppelmann has been our President and Chief Executive Officer since October 2010.

Mr. Heppelmann was our President and Chief Operating Officer from March 2009 through September 2010.

Mr. Heppelmann joined PTC in 1998.

Mr. Hayman has been our Solutions Group President since November 2015 when he joined PTC.

Mr. Hayman was the President of eBay’s enterprise business, an e-commerce platform business, from July 2014 to November 2015.

Before that, Mr. Hayman held a number of other executive positions at IBM.

Mr. Miller has been our Executive Vice President, Chief Financial Officer since February 2015 when he joined PTC.

Prior to that, Mr. Miller was employed by Autodesk Inc., a publicly-traded software company, where he was the Vice President of Finance and Chief Accounting Officer.

Mr. Barry Cohen has been our Executive Vice President, Strategy since October 2010.

Mr. Cohen joined PTC in 1998.

Mr. Cohen was a Divisional Vice President, Global Services from September 2010 to March 2014.

Mr. Cohen joined PTC in 2001.

Mr. DiBona has been our Executive Vice President, Global Support since April 2003.

Mr. DiBona joined PTC in 1998.

Mr. Gremley has been our IoT Group President since October 1, 2015.

Prior to that, Mr. Gremley served as Group President of our Internet of Things business from February 2012 to September 2015 and as Executive Vice President, Corporate Marketing from March 2009 to January 2012.

Mr. Gremley joined PTC in 1989.

Prior to that, he served as Senior Vice President, General Counsel and Clerk from February 2003 to February 2008.

Mr. von Staats joined PTC in 1997.

Information with respect to director and executive compensation may be found under the headings “Director Compensation,” “Compensation Discussion and Analysis,” “Executive Compensation,” and “Compensation Committee Report” appearing in our [removed: 2017] [added: 2018] Proxy Statement.

Information required by this item may be found under the heading “Information about PTC Common Stock Ownership” in our [removed: 2017] [added: 2018] Proxy Statement.

| EQUITY COMPENSATION PLAN INFORMATION as of SEPTEMBER 30, [removed: 2016] [added: 2017] | | | | | | | | | | [added: |]

| Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans | | [added: |]

| Equity compensation plans approved by security holders: | | | | | | | | | | [added: |]

| (1) All of the shares issuable upon vesting are restricted stock units, which have no exercise price. | | | | | | | | | | [added: |]

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | |

| 2000 Equity Incentive Plan (1) | | 3,486,669 | | | — | | (1) | 3,739,910 | | |

| 2016 Employee Stock Purchase Plan (2) | | — | | | — | | | 1,730,865 | | (2) |

| Total | | 3,486,669 | | | — | | | 5,470,775 | | |

| | | | | | | | | | | |

| (2) This amount represents the total number of shares remaining available under the 2016 Employee Stock Purchase Plan, of which 165,820 shares are subject to purchase during the current offering period. | | | | | | | | | | |

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2000 Equity Incentive Plan (1) | | 3,775,980 | | | — | | (1) | 5,118.675 | |

| Total | | 3,775,980 | | | — | | (1) | 5,118.675 | |

Information with respect to this item may be found under the headings “Independence of Our Directors,” “Review of Transactions with Related Persons” and “Transactions with Related Persons” in our [removed: 2017] [added: 2018] Proxy Statement.

Information with respect to this item may be found under the headings “Engagement of Independent Auditor and Approval of Professional Services and Fees” and “PricewaterhouseCoopers LLP Professional Services and Fees” in our [removed: 2017] [added: 2018] Proxy Statement.

| | [Report of Independent Registered Public Accounting [removed: Firm](#s8F127D95D5E94405248A6CD589C9F97E)] [added: Firm](#s1217134C7C3350AA8B97442A2F8CF680)] | [removed: [F-1](#s8F127D95D5E94405248A6CD589C9F97E)] [added: [F-1](#s1217134C7C3350AA8B97442A2F8CF680)] |

| | [Consolidated Balance Sheets as of September 30, [removed: 2016] [added: 2017] and [removed: 2015](#sE85190488387AB76C5AC6CD555EDA893)] [added: 2016](#s0A4747A7101A5B7EA34E2CD0E6107F6C)] | [removed: [F-2](#sE85190488387AB76C5AC6CD555EDA893)] [added: [F-2](#s0A4747A7101A5B7EA34E2CD0E6107F6C)] |

| | [Consolidated Statements of Operations for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#sA4CBF91D2357768750B66CD555124A21)] [added: 2015](#s3D774050B7E75DD894D0720F4503F43E)] | [removed: [F-3](#sA4CBF91D2357768750B66CD555124A21)] [added: [F-3](#s3D774050B7E75DD894D0720F4503F43E)] |

| | [Consolidated Statements of Comprehensive Income (Loss) for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#sE408FAF9F5BA9F8070C76CD554A54162)] [added: 2015](#sF3AD5BA389045908B68265174A51C6DB)] | [removed: [F-4](#sE408FAF9F5BA9F8070C76CD554A54162)] [added: [F-4](#sF3AD5BA389045908B68265174A51C6DB)] |

| | [Consolidated Statements of Cash Flows for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#s0DD689B0B7B0977877466CD5561C217F)] [added: 2015](#s62D068E72DC75B2C9B06F9DB74C9D26E)] | [removed: [F-5](#s0DD689B0B7B0977877466CD5561C217F)] [added: [F-5](#s62D068E72DC75B2C9B06F9DB74C9D26E)] |

| | [Consolidated Statements of Stockholders’ Equity for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#sA24C75313ECA7046E1AC6CD5558F5761)] [added: 2015](#sDD12FC3F4B8252868CB4FEFB86D08D10)] | [removed: [F-6](#sA24C75313ECA7046E1AC6CD5558F5761)] [added: [F-6](#sDD12FC3F4B8252868CB4FEFB86D08D10)] |

| | [Notes to Consolidated Financial [removed: Statements](#s38A551D70CD07C73FD426CD58AF6C5C1)] [added: Statements](#s71820C381C5E59D69E572A24D377EBC1)] | [removed: [F-7](#s38A551D70CD07C73FD426CD58AF6C5C1)] [added: [F-7](#s71820C381C5E59D69E572A24D377EBC1)] |

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 on the [removed: 18th] [added: 29th] day of November, [removed: 2016.][added: 2017.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below, on the [removed: 18th] [added: 29th] day of November, [removed: 2016.][added: 2017.]

| Exhibit Number | | [removed: |] Exhibit |

| [removed: 2.1 |] [added: 10.7*] | — | [removed: Asset Purchase] [added: [Amendment to Executive] Agreement [removed: dated as of October 9, 2015] by and between PTC Inc. and [removed: Qualcomm Connected Experiences, Inc.] [added: James Heppelmann dated August 4, 2015] (filed as Exhibit 10.1 to our Current Report on Form 8-K dated [removed: October 13,] [added: August 10,] 2015 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700515000027/exec1.htm)] |

| 3.1 | [removed: |] — | [removed: Restated] [added: [Restated] Articles of Organization of PTC Inc. adopted August 4, 2015 (filed as exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2015 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700515000042/ptc9302015ex31.htm)] |

| 3.2 | [removed: |] — | [removed: By-Laws,] [added: [By-Laws,] as amended and restated, of PTC Inc. (filed as Exhibit 3.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2014 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700514000010/ptc3292014by-lawsex32.htm)] |

| 4.1 | [removed: |] — | [removed: Indenture,] [added: [Indenture,] dated as of May 12, 2016, by and between the Company and The Bank of New York Mellon, as Trustee (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312516594669/d167845dex41.htm)] |

| 4.2 | [removed: |] — | [removed: First] [added: [First] Supplemental Indenture, dated as of May 12, 2016, by and between the Company and The Bank of New York Mellon, as Trustee (filed as Exhibit 4.2 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312516594669/d167845dex42.htm)] |

| 4.3 | [removed: |] — | [removed: 6.000%] [added: [6.000%] Senior Notes due 2024 (filed as Exhibit 4.3 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312516594669/d167845dex43.htm)] |

| 10.1.2* | [removed: |] — | [removed: Form] [added: [Form] of Restricted Stock Agreement (Non-Employee Director) (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2009 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312509111423/dex102.htm)] |

| 10.1.3* | [removed: |] — | [removed: Form] [added: [Form] of Restricted Stock Agreement (Employee) (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2005 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312505165325/dex102.htm)] |

| 10.1.4 | [removed: |] — | [removed: Form] [added: [Form] of Restricted Stock Unit Certificate (Non-U.S.) (filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2005 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312505165325/dex104.htm)] |

| 10.1.5 | [removed: |] — | [removed: Form] [added: [Form] of Incentive Stock Option Certificate (filed as Exhibit 10.5 to our Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2005 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312505165325/dex105.htm)] |

| 10.1.6* | [removed: |] — | [removed: Form] [added: [Form] of Nonstatutory Stock Option Certificate (filed as Exhibit 10.6 to our Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2005 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312505165325/dex106.htm)] |

| 10.1.7* | [removed: |] — | [removed: Form] [added: [Form] of Stock Appreciation Right Certificate (filed as Exhibit 10.7 to our Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2005 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312505165325/dex107.htm)] |

| 10.1.8* | [removed: |] — | [removed: Form] [added: [Form] of Restricted Stock Unit Certificate (Non-Employee Director) (filed as Exhibit 10.1.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2013 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700513000018/exhibit1011formofrsucertif.htm)] |

| 10.2* | [removed: |] — | [removed: 2009] [added: [2009] Executive Cash Incentive Performance Plan (filed as Exhibit 10.5 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2012 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700512000031/ptc9302012ex105.htm)] |

| 10.4* | [removed: |] — | [removed: Amended] [added: [Amended] and Restated Executive Agreement with James Heppelmann, President and Chief Executive Officer, dated May 7, 2010 (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2010 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312510118795/dex102.htm)] |

| 10.5* | [removed: |] — | [removed: Amendment] [added: [Amendment] to Executive Agreement dated as of November 18, 2011 by and between PTC Inc. and James Heppelmann to Amended and Restated Executive Agreement dated as of May 7, 2010 by and between PTC and James Heppelmann (filed as Exhibit 10.2 to our Current Report on Form 8-K dated November 15, 2011 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700511000030/amendexec.htm)] |

| 10.6* | [removed: |] — | [removed: Amendment] [added: [Amendment] to Executive Agreement by and between PTC Inc. and James Heppelmann dated May 13, 2013 (filed as Exhibit 10.9 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2013 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700513000038/ptc9302013ex109.htm)] |

| [removed: 10.7* |] [added: 10.12*] | — | [added: [Form of] Amendment to Executive Agreement [added: dated August 4, 2015] by and between PTC Inc. and [removed: James Heppelmann dated August 4, 2015] [added: each of Andrew Miller, Barry Cohen, Matthew Cohen, Anthony DiBona, and Aaron von Staats] (filed as Exhibit [removed: 10.1] [added: 10.2] to our Current Report on Form 8-K dated August 10, 2015 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700515000027/exec2.htm)] |

| 10.8* | [removed: |] — | [removed: Form] [added: [Form] of Amended and Restated Executive Agreement by and between PTC Inc. and each of Barry Cohen, Anthony DiBona, and Aaron von Staats (filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter dated April 3, 2010 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312510118795/dex103.htm)] |

| 10.9* | [removed: |] — | [removed: Form] [added: [Form] of Amendment to Amended and Restated Executive Agreement entered into as of November 18, 2011 by and between PTC Inc. and each of Barry Cohen, Anthony DiBona, and Aaron von Staats (filed as Exhibit 10.3 to our Current Report on Form 8-K dated November 15, 2011 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700511000030/formamend.htm)] |

| 10.10* | [removed: |] — | [removed: Executive] [added: [Executive] Agreement dated April 16, 2014 between PTC Inc. and Matthew Cohen (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2014 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700514000010/ptc03292014ex101q2.htm)] |

| 10.11* | [removed: |] — | [removed: Executive] [added: [Executive] Agreement dated February 11, 2015 between PTC Inc. and Andrew Miller (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2015 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700515000021/ptc04042015ex102executivea.htm)] |

| [removed: 10.13* |] [added: 10.13] | — | [removed: Amended and Restated Executive] [added: [Executive] Agreement dated [removed: May 7, 2010, as amended,] [added: December 2, 2015] between PTC Inc. and [removed: Robert Gremley] [added: Craig Hayman] (filed as [removed: exhibit 10.12] [added: Exhibit 10.14] to our Annual Report on Form 10-K for the fiscal year ended September 30, [removed: 2015] [added: 2016] (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex1014.htm)] |

| [removed: 10.15 |] [added: 10.14] | — | [removed: Lease] [added: [Lease] dated December 14, 1999 by and between PTC Inc. and Boston Properties Limited Partnership (filed as Exhibit 10.21 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2000 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000092701600004477/0000927016-00-004477-0009.txt)] |

| [removed: 10.16 |] [added: 10.15] | — | [removed: Third] [added: [Third] Amendment to Lease Agreement dated as of October 27, 2010 by and between Boston Properties Limited Partnership and PTC Inc. (filed as Exhibit 10.1 to our Current Report on Form 8-K dated November 8, 2010 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700510000023/lease.htm)] |

| [removed: 10.17 |] [added: 10.16] | — | [removed: Credit] [added: [Credit] Agreement dated as of November 4, 2015 by and among PTC Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (filed as Exhibit 10 to our Current Report on Form 8-K dated November 4, 2015 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000119312515366087/d58407dex10.htm)] |

| [removed: 10.18 |] [added: 10.17] | — | [removed: Amendment] [added: [Amendment] No. 1 dated April 18, 2016 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JP Morgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (filed as Exhibit 99.3 to our Current Report on Form 8-K filed on April 20, 2016 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000056/amend.htm)] |

| [removed: 10.19 |] [added: 10.18] | — | [removed: Amendment] [added: [Amendment] No. 2 dated June 1, 2016 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JP Morgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2016 (File No. 0-18059) and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000068/ptc07022016ex102.htm)] |

| [removed: 10.20 |] [added: 10.19] | — | [removed: Amendment] [added: [Amendment] No. 3 dated September 21, 2016 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JP Morgan Chase Bank, N.A., as Administrative Agent, and the lenders party [removed: thereto.] [added: thereto (filed as Exhibit 10.20 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex1020.htm)] |

| 23.1 | [removed: |] — | [removed: Consent] [added: [Consent] of PricewaterhouseCoopers LLP, an independent registered public accounting [removed: firm.] [added: firm.](https://www.sec.gov/Archives/edgar/data/857005/000085700517000021/ptc9302017ex231.htm)] |

| 31.1 | [removed: |] — | [removed: Certification] [added: [Certification] of the Chief Executive Officer Pursuant to Exchange Act Rules 13(a)-14(a) and [removed: 15d-14(a).] [added: 15d-14(a).](https://www.sec.gov/Archives/edgar/data/857005/000085700517000021/ptc9302017ex311.htm)] |

| 31.2 | [removed: |] — | [removed: Certification] [added: [Certification] of the Chief Financial Officer Pursuant to Exchange Act Rules 13(a)-14(a) and [removed: 15d-14(a).] [added: 15d-14(a).](https://www.sec.gov/Archives/edgar/data/857005/000085700517000021/ptc9302017ex312.htm)] |

| 32 | [removed: |] — | [removed: Certification] [added: [Certification] of Periodic Financial Report Pursuant to 18 U.S.C. Section [removed: 1350.] [added: 1350.](https://www.sec.gov/Archives/edgar/data/857005/000085700517000021/ptc9302017ex32.htm)] |

| 101 | [removed: |] — | The following materials from PTC Inc.'s Annual Report on Form 10-K for the year ended September 30, [removed: 2016,] [added: 2017,] formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, [removed: 2016] [added: 2017] and [removed: 2015;] [added: 2016;] (ii) Consolidated Statements of Operations for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014;] [added: 2015;] (iii) Consolidated Statements of Comprehensive Income for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014;] [added: 2015;] (iv) Consolidated Statements of Cash Flows for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014;] [added: 2015;] (v) Consolidated Statements of Stockholders’ Equity for the years ended September 30, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014;] [added: 2015;] and (vi) Notes to Consolidated Financial Statements. |

In our opinion, the accompanying consolidated balance sheets and the related [added: consolidated] statements of operations, [added: of] comprehensive income (loss), of stockholders’ equity, and [added: of] cash flows present fairly, in all material respects, the financial position of PTC Inc. and its subsidiaries [removed: at] [added: as of] September 30, [removed: 2016] [added: 2017] and September 30, [removed: 2015,] [added: 2016,] and the results of their operations and their cash flows for each of the three years in the period ended September 30, [removed: 2016] [added: 2017] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As discussed in Note B to the consolidated financial statements, the Company changed the manner in which it [removed: classifies deferred taxes] [added: accounts for debt issuance costs] in [removed: 2016.][added: 2017.]

| 10.1.1* | — | [2000 Equity Incentive Plan.](https://www.sec.gov/Archives/edgar/data/857005/000085700517000021/ptc93017ex1011.htm) |

| 10.1.9 | — | [Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.9 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex1019.htm) |

| 10.1.10 | — | [Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.10 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10110.htm) |

| 10.1.11 | — | [Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.11 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10111.htm) |

| 10.1.12 | — | [Form of Restricted Stock Unit Certificate (U.S. EVP) (filed as Exhibit 10.1.12 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10112.htm) |

| 10.1.13* | — | [Form of Restricted Stock Unit Certificate (U.S. Section 16) (filed as Exhibit 10.1.13 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10113.htm) |

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| 10.1.14 | — | [Form of Restricted Stock Unit Certificate (U.S. EVP) (filed as Exhibit 10.1.14 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10114.htm) |

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| 10.1.15 | — | [Form of Restricted Stock Unit Certificate (U.S.) (filed as Exhibit 10.1.15 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016(File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10115.htm) |

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| 10.1.16* | — | [Form of Restricted Stock Unit Certificate (U.S. Section 16) (filed as Exhibit 10.1.16 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10116.htm) |

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| 10.1.17* | — | [Form of Restricted Stock Unit Certificate (U.S. Section 16) (filed as Exhibit 10.1.17 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2012 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex10117.htm) |

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| 10.3* | — | [2016 Employee Stock Purchase Plan (filed as Exhibit 10.3 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700516000071/ptc93016ex103.htm) |

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| 10.20 | — | [Amendment No. 4 dated January 13, 2017 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JP Morgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2016 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000085700517000004/ptc12312016ex101q1.htm) |

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| 10.21 | — | [Amendment No. 5 dated March 24, 2017 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JP Morgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (filed as Exhibit 10 to our Current Report on Form 8-K filed on March 30, 2017 (File No. 0-18059) and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/857005/000165495417002769/amendmentno5toarcreditagr.htm) |

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POWER OF ATTORNEY

We, the undersigned officers and directors of PTC Inc., hereby severally constitute Andrew Miller and Aaron von Staats, Esq., and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below any and all subsequent amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact may do or cause to be done by virtue hereof.

| /s/ RENATO ZAMBONINI | | Director |

| Renato Zambonini | | |

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| --- | --- | --- | --- |

| 1 | | — | Underwriting Agreement, dated May 4, 2016, by and between PTC Inc. and J.P. Morgan Securities LLC, as the representative of the several underwriters named therein (filed as Exhibit 1.1 to our Current Report on Form 8-K filed on May 5, 2016 (File No. 0-18059) and incorporated herein by reference). |

| 2.2 | | — | Stock Purchase Agreement dated December 22, 2015 by and among PTC Inc., EAP Holdings, Inc., Kepware, Inc., and the Seller Owners listed on Schedule I of the Stock Purchase Agreement (filed as Exhibit 10.1 to our Current Report on Form 8-K dated December 22, 2015 (File No. 0-18059) and incorporated herein by reference). |

| 10.1.1* | | — | 2000 Equity Incentive Plan (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on March 2, 2016 and incorporated herein by reference). |

| 10.1.9 | | — | Form of Restricted Stock Unit Certificate (U.S.). |

| 10.1.10 | | — | Form of Restricted Stock Unit Certificate (U.S.). |

| 10.1.11 | | — | Form of Restricted Stock Unit Certificate (U.S.). |

| 10.1.12 | | — | Form of Restricted Stock Unit Certificate (U.S. EVP). |

| 10.1.13* | | — | Form of Restricted Stock Unit Certificate (U.S. Section 16). |

| 10.1.14 | | — | Form of Restricted Stock Unit Certificate (U.S. EVP). |

| 10.1.15 | | — | Form of Restricted Stock Unit Certificate (U.S). |

| 10.1.16* | | — | Form of Restricted Stock Unit Certificate (U.S. Section 16). |

| 10.1.17* | | — | Form of Restricted Stock Unit Certificate (U.S. Section 16). |

| 10.3* | | — | 2016 Employee Stock Purchase Plan. |

| 10.12* | | — | Form of Amendment to Executive Agreement dated August 4, 2015 by and between PTC Inc. and each of Andrew Miller, Barry Cohen, Matthew Cohen, Anthony DiBona, and Aaron von Staats (filed as Exhibit 10.2 to our Current Report on Form 8-K dated August 10, 2015 (File No. 0-18059) and incorporated herein by reference). |

| 10.14 | | — | Executive Agreement dated December 2, 2015 between PTC Inc. and Craig Hayman. |

| 21.1 | | — | Subsidiaries of PTC Inc. |

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| --- | --- |

November 18, 2016

| | | | | | | | |

| Other assets | 41,820 | | | | 40,794 | | |

| Total assets | $ | 2,352,253 | | | $ | 2,209,913 | |

| Long term debt, net of current portion | 758,125 | | | | 618,125 | | |

| Total liabilities | 1,509,587 | | | | 1,349,742 | | |

| Total liabilities and stockholders’ equity | $ | 2,352,253 | | | $ | 2,209,913 | |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Cash and cash equivalents, beginning of year | 273,417 | | | | 293,654 | | | | 241,913 | | |

| Balance as of October 1, 2013 | 118,446 | | | $ | 1,185 | | | $ | 1,786,820 | | | $ | (810,365 | ) | | $ | (51,160 | ) | | $ | 926,480 | |

| Repurchases of common stock | (5,068 | ) | | (51 | | ) | | (187,364 | | ) | | — | | | | — | | | | (187,415 | | ) |

| Common stock repurchase holdback | — | | | — | | | | (37,500 | | ) | | — | | | | — | | | | (37,500 | | ) |

Our technology solutions are complemented by our services and support organizations, as well as third-party resellers and other strategic partners, who provide services and support to customers worldwide.

In 2015, we classified 2015 and 2014 revenue and cost of revenue in three categories: 1) license and subscription ("L&S"), 2) support and 3) professional services.

Effective with the beginning of the first quarter of 2016, we are combining cost of license and subscription revenue with cost of support revenue and reporting it as cost of software revenue.