Aspen Technology Announces Financial Results for First-Quarter 2006
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Nov. 8, 2005--Aspen Technology, Inc. (Nasdaq: AZPN), a leading provider of software and services to the process industries, today announced its financial results for its fiscal 2006 first quarter, ended September 30, 2005.
For the quarter ended September 30, 2005, AspenTech reported total revenue of $60.1 million. Within total revenue, software license revenue was $24.4 million and services revenue was $35.7 million.
For the quarter ended September 30, 2005, AspenTech's loss from operations and net loss applicable to common shareholders, determined in accordance with generally accepted accounting principles (GAAP), was ($4.0) million and ($8.9) million, respectively. This compares to a GAAP loss from operations of ($30.7) million and net loss applicable to common shareholders of ($33.6) million in the same period last year. GAAP loss per share applicable to common shareholders was ($0.21) for the quarter ended September 30, 2005, compared with a loss of ($0.80) in the same period last year.
For the quarter ended September 30, 2005, pro forma income from operations and net income, which exclude items covered in the attached non-GAAP reconciliation table, were $2.6 million and $1.5 million, respectively. This represented an improvement when compared with pro forma losses of ($4.3) million and ($3.7) million in the same period last year, respectively.
Pro forma earnings per share were $0.02 for the quarter ended September 30, 2005, compared to a pro forma loss per share of ($0.04) in the prior year period.
A reconciliation of GAAP to pro forma results has been provided in the financial statement tables included in the press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."
Mark Fusco, President and CEO of AspenTech, stated "We were pleased that our efforts to improve the operational efficiency of the Company enabled us to deliver profitability, on a pro-forma basis. In the past three quarters, we have improved our services margins, eliminated our convertible debt, and created an infrastructure that we believe can deliver improved performance over the long-term."
Fusco added, "Our total revenue was flat compared to the prior year, excluding the operator training services business we divested as part of the FTC settlement. With our infrastructure priorities addressed, management's focus is squarely on restoring top line growth during FY06 and beyond."
Other Quarterly Highlights:
-- Services gross margins increased by 9% sequentially to 52%, the highest quarterly services margin since the Company went public in Fiscal 1995. This was the result of improved services revenue and utilization, combined with a lower cost base.
-- Pro forma total costs and expenses came in at $57.4 million in the quarter, a reduction of 19% on a sequential basis and 15% on a year-over-year basis.
-- The energy industry represented the highest percentage of the Company's revenue, while the chemicals industry also made a solid contribution, delivering seven of the top ten deals closed during the quarter.
Conference Call and Webcast
AspenTech will host a conference call and webcast today, November 8, 2005, at 4:45 pm (EST) to discuss the Company's financial results, business outlook, and related corporate and financial matters. The live dial in number is: 877-239-3024. Interested parties may also listen to a live webcast of the call by logging on to AspenTech's website: http://www.aspentech.com and clicking on the "webcast" link under the Investor Relations section of the site. A replay of the call will be archived on AspenTech's website and will also be available via telephone at: 800-642-1687, confirmation code 1991434 for four days, beginning at 8:00 pm EST on November 8, 2005.
Non-GAAP Results
AspenTech reports non-GAAP financial results, which exclude certain non-operational, non-cash and other specified charges that management generally does not consider in evaluating the Company's ongoing operations. These results are provided as a complement to results provided in accordance with accounting principles generally accepted in the United States (known as "GAAP"). Management believes this pro forma measure helps indicate underlying trends in the Company's business, and uses this pro forma measure to establish budgets and operational goals that are communicated internally and externally, to manage the Company's business and to evaluate its performance. A reconciliation of non-GAAP financial results, to GAAP financial results, is included in the attached condensed consolidated financial statements.
About AspenTech
Aspen Technology, Inc. provides industry-leading software and professional services that help process companies improve efficiency and profitability by enabling them to model, manage and control their operations. The new generation of integrated aspenONE(TM) solutions are aligned with the key industry business processes, providing manufacturers the capabilities they need to optimize operational performance, make real-time decisions and synchronize the plant and supply chain. Over 1,500 leading companies already rely on AspenTech's software, including Bayer, BASD, BP, Chevron Corporation, DuPont, ExxonMobil, Fluor, GlaxoSmithKline, Sanofi-Aventis, Shell and Total. For more information, visit www.aspentech.com.
This press release may include certain "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may vary significantly from AspenTech's expectations based on a number of risks and uncertainties, including, without limitation: AspenTech's plan to improve operational performance may not be implemented effectively; AspenTech has identified material weaknesses in its internal controls with respect to software license revenue recognition and other matters, that, if not remedied effectively, could result in material misstatements; risks around securities litigation and investigations; AspenTech's lengthy sales cycle makes it difficult to predict quarterly operating results; fluctuations in AspenTech's quarterly operating results; AspenTech's dependence on customers in the cyclical chemicals, petrochemicals and petroleum industries; the possibility of new accounting standards or the interpretation of existing accounting standards affecting our financial results; AspenTech's ability to raise additional capital as required; intense competition; AspenTech's need to develop and market products successfully; reliance on relationships with strategic partners; challenges associated with international operations; and other risk factors described from time to time in AspenTech's periodic reports filed with the Securities and Exchange Commission. AspenTech cannot guarantee any future results, levels of activity performance or achievements. AspenTech expressly disclaims any current intention to update forward-looking statements after the date of this press release.
AspenTech, aspenONE, and the aspen leaf logo are trademarks of Aspen Technology, Inc., Cambridge, Mass.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended
September 30, September 30,
2005 2004
-------------- -------------
(Unaudited)
REVENUES:
Software licenses $24,317 $ 25,273
Service and other 35,736 37,997
--------- ---------
Total revenues 60,053 63,270
--------- ---------
COST OF REVENUES:
Cost of software licenses 3,782 3,941
Cost of service and other 17,244 22,108
Amortization of technology related
intangible assets 1,782 1,774
--------- ---------
Total cost of revenues 22,808 27,823
--------- ---------
Gross profit 37,245 35,447
OPERATING COSTS:
Selling and marketing (includes a
reversal of a sales tax exposure accrual
of $700 in the three months ended
September 30, 2005) (1) 18,647 22,375
Research and development 10,134 12,183
General and administrative (includes
litigation costs of $1,900 and $3,465
for the three months ended September 30,
2005 and 2004, respectively) (1) 10,185 10,427
Restructuring charges and FTC legal
costs 2,199 21,508
Loss (gain) on sales and disposals of
assets 61 (362)
--------- ---------
Total operating costs 41,226 66,131
--------- ---------
Income (loss) from operations (3,981) (30,684)
Other income (expense), net (663) (393)
Interest income (expense), net 151 654
--------- ---------
Income (loss) before provision for
income taxes (4,493) (30,423)
Income tax (provision) benefit (640) 340
--------- ---------
Net income (loss) (5,133) (30,083)
Accretion of preferred stock discount
and dividend (3,778) (3,528)
--------- ---------
Net income (loss) applicable to common
shareholders $(8,911) $(33,611)
========= =========
EARNINGS PER SHARE:
Net income (loss) per share applicable
to common shareholders -
Basic and Diluted $ (0.21) $ (0.80)
========= =========
Weighted average shares outstanding -
Basic and Diluted 43,237 41,796
========= =========
PRO FORMA (NON-GAAP) EARNINGS PER SHARE:
Pro forma (non-GAAP) net income excludes Accretion of preferred
stock discount and dividend, Amortization of technology related
intangible assets, Stock-based compensation costs, Litigation
costs, Restructuring charges and FTC legal costs, and Gain on sale
of the AXSYS product line. Pro forma (non-GAAP) weighted average
shares outstanding assumes the conversion of the Series D
preferred stock to common stock.
Net income (loss) $ 1,489 $ (3,670)
========= =========
Diluted net income (loss) per share $ 0.02 $ (0.04)
========= =========
Weighted average shares outstanding -
diluted 87,550 86,590
========= =========
(1) This parenthetical reference will not be presented in our Form
10-Q.
Supplemental information -
Three Months Ended
September 30, September 30,
2005 2004
------------- -------------
(Unaudited)
Stock-based compensation costs included in the Statement of Operations
Effective July 1, 2005, AspenTech adopted SFAS 123R, "Share-Based
Payment," and uses the modified prospective method to value its
share-based payments. Accordingly, for the three months ended
September 30, 2005, stock-based compensation was accounted for
under SFAS 123R while for the three months ended September 30,
2004, stock-based compensation was accounted for under APB 25,
"Accounting for Stock Issued to Employees," as permitted by SFAS
123. The amounts in the attached Statement of Operations include
stock-based compensation as follows:
Cost of service and other $ 230 $ -
Selling and marketing 408 -
Research and development 162 -
General and administrative 641 -
--------- ---------
Total stock-based compensation $ 1,441 $ -
========= =========
Reconciliation of total expenses to pro
forma (non-GAAP) total expenses
Total expenses (cost of revenues and
operating costs) $64,034 $ 93,954
Amortization of technology related
intangible assets (1,782) (1,774)
Stock-based compensation (1,441) -
Litigation costs, included in General
and Administrative costs (1,900) (3,465)
Sales-tax reserve accrual included in
Selling and Marketing costs 700 -
Restructuring charges and FTC legal
costs (2,199) (21,508)
Gain on sale of AXSYS product line,
included in loss (gain) on sales and
disposals of assets - 334
--------- ---------
Pro forma (non-GAAP) total expenses (cost
of revenues and operating costs) $57,412 $ 67,541
========= =========
Reconciliation of Income (loss) from
operations to pro forma (non-GAAP) Income
(loss) from operations
Income (loss) from operations $(3,981) $(30,684)
Adjustments to income (loss) from
operations
Net effect of adjustments to cost of
revenues and operating costs 6,622 26,413
--------- ---------
Pro forma (non-GAAP) Income (loss) from
operations $ 2,641 $ (4,271)
========= =========
Reconciliation of Net income (loss) to pro
forma (non-GAAP) Net income (loss)
Net income (loss) applicable to common
stockholders $(8,911) $(33,611)
Adjustments to net income (loss)
applicable to common stockholders
Net effect of adjustments to cost of
revenues and operating costs 6,622 26,413
Preferred stock discount and dividend
accretion 3,778 3,528
--------- ---------
Pro forma (non-GAAP) net income (loss) $ 1,489 $ (3,670)
========= =========
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
September 30, June 30,
2005 2005
------------- --------
ASSETS (Unaudited)
Current assets:
Cash, cash equivalents and short-term
investments $ 47,700 $ 68,149
Accounts receivable, net 45,139 52,254
Unbilled services 11,200 9,826
Current portion of long-term installments
receivable, net 5,903 5,355
Deferred tax asset 702 692
Prepaid expenses and other current assets 12,376 11,483
--------- ---------
Total current assets 123,020 147,759
--------- ---------
Long-term installments receivable, net 21,911 19,425
Retained interest in sold receivables 16,917 16,667
Equipment and leasehold improvements, net 9,829 11,388
Computer software development costs, net 17,307 17,411
Intangible assets, net 25,093 26,852
Purchased intellectual property, net 589 730
Deferred tax asset 1,392 1,354
Other assets 2,604 2,656
--------- ---------
Total assets $218,662 $244,242
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $ 775 $ 1,042
Accounts payable and accrued expenses 66,087 84,407
Unearned revenue 23,379 23,480
Deferred revenue 30,936 34,854
--------- ---------
Total current liabilities 121,177 143,783
--------- ---------
Long-term debt, less current maturities 287 338
Deferred revenue, less current portion 1,663 2,093
Deferred tax liability 2,781 2,760
Other liabilities 23,161 23,143
Redeemable preferred stock 124,988 121,210
Total stockholders' equity (deficit) (55,395) (49,085)
--------- ---------
Total liabilities and stockholders' equity
(deficit) $218,662 $244,242
========= =========
CONTACT:
Aspen Technology, Inc.
Media:
Robin Swanger, 281-504-3256
robin.swanger@aspentech.com
Integrated Corporate Relations
Investors:
Kori Doherty, 617-217-2084
kdoherty@icrinc.com