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Aspen Technology Reports Fiscal Year 2003 Second Quarter Financial Results

01/30/03

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 30, 2003--

License revenues grow 24 percent sequentially; expenses decline

substantially

Aspen Technology, Inc. (NASDAQ: AZPN) today reported financial results for its fiscal 2003 second quarter and six months ending December 31, 2002.

Total revenues for the second quarter grew to $83.0 million, with license revenues of $36.8 million, up 24 percent from the previous quarter, and services revenue of $46.2 million. On a Generally Accepted Accounting Principles (GAAP) basis, the company reported a second quarter net loss of $136.9 million, or $3.59 per share, which, after adjustment for restructuring and other charges, and preferred stock dividend and discount accretion, resulted in net income of $0.6 million, or $0.02 per share in the second quarter. The restructuring and other charges, which totaled $135.2 million, were primarily related to the write-down of certain assets due to the declining market values of businesses AspenTech acquired or invested in. Also included, was the impact of previously announced headcount reductions and related facilities consolidations, which constituted a much smaller proportion of the restructuring and other charges.

"We met or exceeded all of our key operational objectives in the December quarter, which enabled us to restore the company to operating profitability, excluding charges, a quarter earlier than we anticipated," said David McQuillin, President and CEO of AspenTech. "Solid customer demand, particularly in the refining and oil & gas sectors, coupled with improved execution, led to sequential top-line growth. Expenses were down substantially from last quarter, as we realized the benefit of headcount reductions and cost control measures implemented earlier in the year.

"In addition, we ended the quarter with more cash than we had forecasted, due to an increase in the sale of installment receivables and improved collection activity. Our success in the second quarter was an important milestone for the company and gives us confidence that we can sustain this improved execution, as we move toward achieving our revenue and profitability targets for the rest of this fiscal year."

During the second fiscal quarter, AspenTech signed significant license transactions with bp, UOP, PetroCanada, ConocoPhillips, Ameriven, TotalFinaElf, Fluor Daniel and Bristol Myers Squibb. The company saw strong demand for its Engineering solutions, and Manufacturing/Supply Chain product line revenues were in line with expectations.

Also during the second quarter, over 2000 attendees from more than 600 companies and 48 countries attended AspenWorld, the pre-eminent global conference for the process industries. This forum brought together industry analysts and executives from a wide range of process manufacturing sectors to discuss business issues currently facing the industry. The event enabled AspenTech to showcase its newest offerings and communicate the company's vision and strategy for Enterprise Operations Management.

The company recently secured a new $25 million commercial line of credit with Silicon Valley Bank, which will replace its previous line of credit with Fleet Bank. The two-year, secured credit facility will carry an interest of the prime rate plus 0.5 percent.

The company will be holding a conference call to discuss its financial results, business outlook, and related corporate and financial matters at 4:45 p.m. EST on Thursday, January 30, 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 ten days and will also be available for forty-eight hours via telephone, beginning at 8:00 p.m. EST on January 30, 2003, by dialing 719-457-0820 and entering in confirmation code 463511.

About AspenTech

Aspen Technology, Inc. is a leading supplier of enterprise software to the process industries, enabling its customers to increase their margins and optimize their business performance. AspenTech's engineering solutions, including Hyprotech's technologies, help companies design and improve their plants and processes, maximizing returns throughout their operational life. AspenTech's manufacturing/supply chain solutions allow companies to run their plants and supply chains more profitably, from customer demand through to the delivery of the finished products. Over 1,200 leading companies rely on AspenTech's software every day to drive improvements across their most important engineering and operational processes. AspenTech's customers include: Air Liquide, AstraZeneca, Bayer, BASF, BP, ChevronTexaco, Dow Chemical, DuPont, ExxonMobil, GlaxoSmithKline, Lyondell Equistar, Merck, Mitsubishi Chemical, Shell, Southern Company, TXU Energy and Unilever. 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; fluctuations in AspenTech's quarterly operating results; AspenTech's dependence on customers in the cyclical chemicals, petrochemicals and petroleum industries; AspenTech's need to hire additional qualified personnel and its dependence on key current employees; intense competition; AspenTech's dependence on systems integrators and other 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, Aspen ProfitAdvantage, Plantelligence, 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        Six Months Ended
                       Dec. 31,     Dec. 31,    Dec. 31,     Dec. 31,
                         2002         2001        2002         2001
REVENUES:
Software licenses       $36,781      $39,939     $66,427      $59,170
Services                 46,192       47,057      93,796       94,017
  Total revenues         82,973       86,996     160,223      153,187

EXPENSES:
Cost of software
 licenses                 3,511        3,054       6,846        5,498
Cost of services         26,823       30,261      54,831       60,403
Selling and marketing    27,031       28,451      56,185       55,075
Research and development 15,997       17,829      33,742       35,828
General and
 administrative           8,923        7,520      18,744       14,942
Restructuring and
 other charges          135,244            -     134,501        2,642
  Total costs and
   expenses             217,529       87,115     304,849      174,388

Income (loss) from
 operations            (134,556)        (119)   (144,626)     (21,201)

Other income
 (expense), net            (313)        (171)       (814)        (355)
Interest income, net        268          144         849          897

Income (loss) before 
 provision for (benefit 
 from) income taxes     (134,601)        (146)  (144,591)     (20,659)

Provision for
 (benefit from)
 income taxes                 -          (44)         -        (6,198)

  Net income (loss)    (134,601)        (102)   (144,591)     (14,461)

 Accretion of preferred 
  stock discount and
  dividend               (2,287)           -      (4,521)           -

Net income (loss)
 applicable to common
 stockholders         $(136,888)       $(102)  $(149,112)    $(14,461)

Basic and diluted
 earnings (loss)
 per share:
   Net income
    (loss) per share     $(3.53)      $(0.00)     $(3.80)      $(0.46)
   Accretion of
    preferred
    stock discount
    and dividend          (0.06)           -       (0.12)           -

Net income (loss)
 per share applicable to
 common stockholders     $(3.59)      $(0.00)     $(3.91)      $(0.46)

Weighted average shares
 outstanding -
 basic and diluted       38,128       31,748      38,092       31,740

Pro Forma before 
 Restructuring and other
 charges, and Preferred 
 stock discount and
 dividend accretion:
Net income (loss)          $643        $(102)   $(10,090)    $(12,612)

Diluted earnings
 (loss) per share         $0.02       $(0.00)     $(0.26)      $(0.40)

Weighted average shares 
 outstanding - diluted   39,560       31,748      38,092       31,740




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

                              Three Months Ended     Six Months Ended
                              Dec. 31,   Dec. 31,  Dec. 31,   Dec. 31,
                                2002      2001       2002       2001

Net income (loss)            $(136,888)  $(102)  $(149,112)  $(14,461)
 Adjustments to net loss:
  Restructuring and other
   charges, net of tax effect  135,244      --     134,501      1,849
  Preferred stock discount
   and dividend accretion        2,287      --       4,521        --

Pro forma net income (loss)  $     643   $(102)  $ (10,090)  $(12,612)




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


                                                  Dec. 31,   June 30,
                                                    2002       2002
ASSETS
Current assets:
    Cash, cash equivalents and
     short-term investments                      $ 53,665   $ 52,120
    Accounts receivable and
     unbilled services, net                        98,345    125,987
    Current portion of long-term installments
     receivable, net                               36,418     40,404
    Deferred tax asset                              2,929      2,929
    Prepaid expenses and other current assets      20,676     18,699

       Total current assets                       212,033    240,139

Long-term installments receivable, net             69,296     68,318
Equipment and leasehold improvements, net          39,447     50,803
Computer software development costs, net           15,017     13,810
Intangible assets, net                             43,081    125,363
Purchased intellectual property, net                2,143     27,626
Deferred tax asset                                 15,576     15,576
Other assets                                        6,036      6,708

    Total assets                                 $402,629   $548,343


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long-term debt            $  4,807   $  5,334
    Amount owed to Accenture                        8,300     11,100
    Accounts payable and accrued expenses          93,258     94,987
    Unearned revenue                               17,730     20,983
    Deferred revenue                               35,612     38,624

      Total current liabilities                   159,707    171,028

Long-term debt, less current maturities            89,584     92,135
Obligation subject to common stock settlement       4,245      1,810
Deferred revenue, less current portion             15,797      9,548
Deferred tax liability                             14,964     15,003
Other liabilities                                   5,268      5,031

Total stockholders' equity                        113,064    253,788

    Total liabilities and stockholders' equity   $402,629   $548,343

--30--MB/bo*

CONTACT: For Media
Aspen Technology, Inc.
Peter Watt, +44 (0) 1223 819 752
or
For Investors
Aspen Technology, Inc.
Joshua Young, (617) 949-1274
joshua.young@aspentech.com