AspenTech Logo

News Release

View printer-friendly version
<< Back

Aspen Technology Reports Eighteen Percent Year-Over-Year Growth in Software License Revenues

10/29/03
Quarter Highlighted by Profitability and Strengthened Balance Sheet

CAMBRIDGE, Mass., Oct 29, 2003 (BUSINESS WIRE) -- Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of software and services to the process industries, today reported financial results for its fiscal 2004 first quarter ended September 30, 2003.

Total revenues for the first quarter were $77.0 million, with software license revenues totaling $35.1 million, and services revenue totaling $41.9 million. On a Generally Accepted Accounting Principles (GAAP) basis, AspenTech reported diluted earnings per share to common shareholders of $0.10 per share. GAAP earnings included a one-time gain of $6.5 million relating to the retirement of the Series B preferred stock. On a pro forma basis, excluding this one-time gain as well as preferred stock dividend and discount accretion, AspenTech posted net income of $0.5 million, or $0.01 per diluted share.

"We are extremely pleased to have delivered profitability in the first quarter, which is our seasonally weakest quarter," said David McQuillin, President & CEO of AspenTech. "These results indicate that our focus on improving execution and financial performance is yielding success. With the closing of our private equity financing, a substantial reduction of outstanding debt, and the generation of positive cash flow from operations, we have dramatically improved our balance sheet and put the company in a position to capitalize on improving IT demand in the process industries.

"We recently introduced a number of new products for the Enterprise Operations Management (EOM) market with some of our largest customers. We are encouraged by both the growth prospects for these solutions, as well as the demonstrable uptick in customer interest to deploy these types of applications. Given our improved operational execution and lower quarterly expenses, we are positioned to continue our progress and deliver on our objectives for this fiscal year."

    First Quarter Highlights

    AspenTech accomplished the following in the first quarter:

    --  Continued improvement in company execution, with first quarter
        operating results creating an operating profit in the
        seasonally weak September quarter for the first time in five
        years.

    --  Signed significant license transactions with ICI Paints, CITGO
        Petroleum, CIBA Specialty Chemicals, Rohm & Haas, Jacobs
        Engineering and Aventis. Additionally, the company signed two
        large transactions for its polymer production control
        solutions, one of AspenTech's strategic growth markets.

    --  Generated $13.8 million of positive cash flow from operations.

    --  Strengthened the balance sheet through a $100 million private
        equity transaction with Advent International.

    --  Purchased and retired approximately $12.6 million of the
        company's convertible bonds and made a final payment of
        approximately $8.2 million to Accenture, resulting in a $20.8
        million reduction in total debt.

    --  Retired $60 million of the company's Series B preferred stock
        in its entirety by paying down $30 million in cash and
        converting the final $30 million at a discount into $21
        million of Series D preferred stock.

    --  Established a strategic alliance with UOP to market Aspen
        RefSYS, a refinery-wide simulation and optimization solution
        for the petroleum industry.

    --  Held successful user group meetings with approximately 1,200
        participants in New Orleans, Louisiana and Paris, France to
        demonstrate new products and introduce updated product
        positioning.

"We improved on many of our key financial metrics in the first quarter," said Charles Kane, Senior Vice President & CFO of AspenTech. "This included reducing DSOs for billed receivables to 74 days from 85 days in the previous quarter, significantly decreasing the leverage on the balance sheet, reducing total expenses by 13 percent year-over-year, and substantially improving our year-over-year operating results."

The company will be holding a conference call and webcast to discuss its financial results, business outlook, and related corporate and financial matters at 5:00 p.m. eastern time on Wednesday, October 29,2003. Interested parties may 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 for the next twelve months and will also be available for forty-eight hours via telephone, beginning at 8:00 p.m. eastern time on October 29, 2003, by dialing (800) 642-1687 and entering in confirmation code: 3081208.

Pro Forma Results

AspenTech reports pro forma 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 pro forma to GAAP is included in the attached condensed consolidated financial statements.

About AspenTech

Aspen Technology, Inc. provides industry-leading software and implementation services that enable process companies to increase efficiency and profitability. AspenTech's engineering product line is used to design and improve plants and processes, maximizing returns throughout an asset's operating life. Its manufacturing/supply chain product line allows companies to increase margins in their plants and supply chains, by managing customer demand, optimizing production, and streamlining the delivery of finished products. These two offerings are combined to create solutions for enterprise operations management (EOM), integrated enterprise-wide systems that provide process manufacturers with the capability to dramatically improve their operating performance. Over 1,500 leading companies already rely on AspenTech's software, including Aventis, Bayer, BASF, BP, ChevronTexaco, Dow Chemical, DuPont, ExxonMobil, Fluor, Foster Wheeler, GlaxoSmithKline, Shell, and Total. For more information, visit www.aspentech.com.

The third and fourth paragraphs of this press release contains forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For this purpose, any statement using the term "will," "should," "could," "anticipates," "believes" or a comparable term is a forward-looking statement. Actual results may vary significantly from AspenTech's expectations based on a number of risks and uncertainties, including: AspenTech's lengthy sales cycle which makes it difficult to predict quarterly operating results; the FTC's investigation of AspenTech's acquisition of Hyprotech; fluctuations in AspenTech's quarterly operating results; AspenTech's dependence on customers in the cyclical chemicals, petrochemicals and petroleum industries; AspenTech's ability to raise additional capital as required; AspenTech's ability to integrate the operations of acquired companies; intense competition; AspenTech's need to develop and market products successfully; reliance on relationships with strategic partners; and other risk factors described from time to time in AspenTech's periodic reports and registration statements filed with the Securities and Exchange Commission. AspenTech cannot guarantee any future results, levels of activity, performance, or achievements. Moreover, neither AspenTech nor anyone else assumes responsibility for the accuracy and completeness of any forward-looking statements. AspenTech undertakes no obligation to update any of the forward-looking statements after the date of this press release.

AspenTech and the Aspen logo are trademarks of Aspen Technology, Inc., Cambridge, Mass.

                        ASPEN TECHNOLOGY, INC.
            CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 (in thousands, except per share data)

                                                Three Months Ended
                                           September 30, September 30,
                                                 2003          2002

REVENUES:
  Software licenses                            $35,063       $29,646
  Services                                      41,951        47,604
    Total revenues                              77,014        77,250

EXPENSES:
  Cost of software licenses                      3,617         3,335
  Cost of services                              24,632        28,008
  Selling and marketing                         23,874        29,154
  Research and development                      16,006        17,745
  General and administrative                     8,740         9,821
    Total costs and expenses                    76,869        88,063

  Income (loss) from operations                    145       (10,813)

  Other income (expense), net                     (228)         (501)
  Interest income, net                             722           581

  Income (loss) before provision for
   income taxes                                    639       (10,733)

  Provision for income taxes                       188             -

    Net income (loss)                              451       (10,733)

   Accretion of preferred stock discount
    and dividend (1)                             3,852        (2,234)

  Net income (loss) applicable to common
   stockholders                                 $4,303      $(12,967)


EARNINGS PER SHARE COMPUTATIONS:
  Net income (loss) applicable to common
   stockholders                                 $4,303      $(12,967)
    Plus: impact of assumed conversion of
     Series D preferred stock                    1,661             -
  Net income (loss) applicable to common
   stockholders, including assumed
   conversions                                  $5,964      $(12,967)

  Weighted average shares outstanding -
   Basic                                        39,772        37,994
    Common stock equivalents                     1,497             -
    Incremental shares from assumed
     conversion of Series D preferred stock     18,168             -
  Weighted average shares outstanding -
   Diluted                                      59,437        37,994

  Basic net income (loss) per share
   applicable to common stockholders             $0.11        $(0.34)

  Diluted net income (loss) per share
   applicable to common stockholders             $0.10        $(0.34)

PRO FORMA EARNINGS PER SHARE:
  Net income (loss) before Preferred stock
   discount and dividend accretion:               $451      $(10,733)

  Diluted earnings (loss) per share              $0.01        $(0.28)

  Weighted average shares outstanding -
   diluted                                      59,437        37,994

(1) Detail of this amount is provided on the reconciliation of net
    income (loss) to pro forma net income (loss)


Supplemental information - Reconciliation of net income (loss) to pro
forma net income (loss)

                                                 Three Months Ended
                                           September 30, September 30,
                                                  2003          2002

Net income (loss)                                $4,303      $(12,967)
  Adjustment to net income (loss):
     Preferred stock discount and dividend
      accretion                                   2,600         2,234
     Gain on conversion of Series B
      redeemable preferred stock                 (6,452)

Pro forma net income (loss)                        $451      $(10,733)


                        ASPEN TECHNOLOGY, INC.
                 CONSOLIDATED CONDENSED BALANCE SHEETS
                            (in thousands)

                                               September 30, June 30,
                                                   2003        2003

ASSETS
Current assets:
  Cash, cash equivalents and short-term
   investments                                   $101,591    $51,567
  Accounts receivable, net                         63,712     77,725
  Unbilled services                                15,883     15,279
  Current portion of long-term installments
   receivable, net                                 32,147     34,720
  Deferred tax asset                                2,929      2,929
  Prepaid expenses and other current assets        10,061     11,581

     Total current assets                         226,323    193,801

Long-term installments receivable, net             71,031     73,377
Equipment and leasehold improvements, net          27,879     31,158
Computer software development costs, net           18,137     17,728
Intangible assets, net                             39,847     41,279
Purchased intellectual property, net                1,719      1,861
Deferred tax asset                                 13,830     13,831
Other assets                                        7,254      5,445

  Total assets                                   $406,020   $378,480


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                $2,632     $3,849
  Amount owed to Accenture                              -      8,162
  Accounts payable and accrued expenses            73,428     82,094
  Unearned revenue                                 19,772     20,492
  Deferred revenue                                 35,553     37,266
    Total current liabilities                     131,385    151,863

Long-term debt, less current maturities            77,027     89,911
Deferred revenue, less current portion              8,390      9,815
Deferred tax liability                             13,402     13,258
Other liabilities                                  15,482     16,009

Redeemable preferred stock                        101,078     57,537

Total stockholders' equity                         59,256     40,087
  Total liabilities and stockholders' equity     $406,020   $378,480

SOURCE: Aspen Technology, Inc.

Aspen Technology, Inc.
For Investors:
Joshua Young, 617-949-1274
joshua.young@aspentech.com
or
For Media:
Peter Watt, +44 1223 819-752
peter.watt@aspentech.com
Customize your Business Wire news & multimedia to match your needs.
Get breaking news from companies and organizations worldwide.
Logon for FREE today at www.BusinessWire.com.