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Aspen Technology Reports Fourth Quarter and Fiscal Year 2002 Financial Results

08/15/02
CAMBRIDGE, Mass., Aug 15, 2002 /PRNewswire-FirstCall via COMTEX/ --

Company anticipates operating profit in quarter ending December 2002

Aspen Technology, Inc. (Nasdaq: AZPN) today reported financial results for its fourth quarter and fiscal year ended June 30, 2002.

(Photo: http://www.newscom.com/cgi-bin/prnh/20000811/ASPENLOGO )

Total revenues for the fourth quarter were $84.0 million, with license revenues totaling $37.4 million and services revenues totaling $46.6 million. For the quarter ending June 30, 2002, the company reported a pro forma net loss of $11.7 million, or $0.34 per share. The pro forma loss excludes restructuring charges, the charges for in-process R&D, the write-down of certain equity investments, the reduction in value of the deferred tax asset, and the dilutive impact from the accretion of the preferred stock discount and dividend. On a Generally Accepted Accounting Principles (GAAP) basis, the company reported a fourth quarter loss of $60.0 million, or $1.72 per share.

For the full fiscal year ending June 30, 2002, AspenTech recorded total revenues of $320.6 million, compared with $326.9 million reported in fiscal 2001. In fiscal 2002, the company recorded a pro forma net loss of $37.3 million, or $1.14 per share, excluding restructuring charges, the charges for in-process R&D, the write-down of certain equity investments, the reduction in value of the deferred tax asset, and the dilutive impact from the accretion of the preferred stock discount and dividend. On a Generally Accepted Accounting Principles (GAAP) basis, the company reported a loss of $83.5 million, or $2.56 per share for fiscal year 2002.

"We have taken aggressive actions intended to return us to operating profitability and positive cash flow by the end of this calendar year," said Larry Evans, Chairman and CEO. "In the near-term, we have cut expenses to breakeven at quarterly revenue of $88 million. We have also sharpened our focus on two core product lines: Engineering and Supply Chain Manufacturing. This streamlined approach will enable us to better match revenue and spending until the IT spending environment strengthens, while maintaining our key customer support and development activities.

"We have also made significant changes in our sales and product development leadership and improved our organizational efficiency. We believe this will add more predictability to our financial results, while allowing us to develop and market our solutions more rapidly and efficiently. AspenTech's reputation for technical excellence and process industry expertise has never been stronger, and in the year ahead we are committed to delivering financial results that reflect this valuable industry leadership."

For the first quarter of fiscal 2003, which ends September 30, 2002, AspenTech expects total expenses, including cost of revenues, will total approximately $88 million, compared with total revenues of approximately $84 million. This expense run rate represents a reduction of approximately 14 percent, or $14 million, from fourth quarter fiscal 2002 spending levels, adjusted to include a full quarter of Hyprotech expenses and excluding restructuring and other charges. These anticipated reductions will result from the mandatory furlough program, temporary salary cuts, hiring freeze, and discretionary spending controls recently implemented in July, as well as headcount reductions and other actions taken in the fourth quarter that will fully take effect in the September quarter. For the second fiscal quarter of fiscal 2003, AspenTech believes it will record total revenues of approximately $92 million, with total expenses of approximately $88 million. For fiscal year 2003, the company expects revenues to range between $380 and $385 million, with total expenses of approximately $361 million.

During the fourth quarter of fiscal 2002, AspenTech signed 11 license transactions of approximately $1 million or greater. The company signed substantial license agreements with BASF, Celanese, Degussa, Muller, PPG Industries and Philips Petroleum.

As previously announced, 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, August 15, 2002. 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 via telephone beginning at 8:00 p.m. EST on August 15, 2002, by dialing 719-457-0820 and entering in confirmation code 150110.

About AspenTech

Aspen Technology, Inc. is a leading supplier of enterprise software and services to the process industries, enabling its customers to increase their margins and optimize their business performance. AspenTech's engineering solutions, incorporating Hyprotech's technologies, help companies design and improve their plants and processes, maximizing returns throughout their operational life. AspenTech's supply chain manufacturing solutions allow companies to run their plants and supply chain more profitably, from customer demand through to the delivery of the finished product. 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 and Unilever. For more information, visit www.aspentech.com.

Paragraphs, 4, 5, 6 and 7 of this press release contain forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve factors that may cause AspenTech's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward- looking statements. Specifically, by way of example and without limitation, some of the statements in the third, fourth, fifth and sixth paragraphs are forward-looking statements and their achievement is subject to a number of factors 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 dependence on key 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 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 BALANCE SHEET
                            (Dollars in thousands)


                                                   June 30,         June 30,
                                                     2002             2001
    ASSETS
    Current assets:
      Cash, cash equivalents and short-term
       investments                                  $52,120          $67,638
      Accounts receivable and unbilled
       services, net                                125,987          116,389
      Current portion of long-term
       installments receivable, net                  40,404           31,094
      Deferred tax asset                              2,929            3,252
      Prepaid expenses and other current
       assets                                        18,699           17,591

         Total current assets                       240,139          235,964

    Long-term installments receivable, net           68,318           43,428
    Equipment and leasehold improvements,
     net                                             50,803           43,276
    Computer software development costs,
     net                                             13,810            8,539
    Intangible assets, net                          125,363           43,964
    Purchased intellectual property, net             27,626              -
    Deferred tax asset                               15,576           15,686
    Other assets                                      6,708           15,737

      Total assets                                 $548,343         $406,594


    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Current portion of long-term debt              $5,334           $2,539
      Obligation subject to common stock
       settlement                                    11,100              -
      Accounts payable and accrued expenses          94,987           62,959
      Unearned revenue                               20,983           18,711
      Deferred revenue                               38,624           24,341
        Total current liabilities                   171,028          108,550

    Long-term debt, less current maturities          92,135           88,149
    Obligation subject to common stock
     settlement                                       1,810              -
    Deferred revenue, less current portion            9,548            8,190
    Deferred tax liability                           15,003              -
    Other liabilities                                 5,031              635

    Total stockholders' equity                      253,788          201,070
      Total liabilities and stockholders'
       equity                                      $548,343         $406,594



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


                                      Three Months Ended  Twelve Months Ended
                                     June 30,   June 30,  June 30,   June 30,
                                       2002       2001      2002       2001
    REVENUES:
      Software licenses               $37,363    $40,012  $133,913   $147,448
      Services                         46,589     47,973   186,691    179,476
        Total revenues                 83,952     87,985   320,604    326,924

    EXPENSES:
      Cost of software licenses         3,167      3,151    11,830     11,856
      Cost of services                 29,600     30,695   119,972    114,595
      Selling and marketing            30,629     31,846   115,225    113,608
      Research and development         19,045     18,763    74,458     68,913
      General and administrative       10,638      8,189    34,258     30,643
      Restructuring charges            13,941      6,969    16,083      6,969
      Charges for in-process
       research and development        14,900      2,300    14,900      9,915
        Total costs and expenses      121,920    101,913   386,726    356,499

      Income (loss) from operations   (37,968)   (13,928)  (66,122)   (29,575)

      Other income (expense), net        (388)       650      (893)       669
      Write-off of investment          (8,923)       -      (8,923)    (5,000)
      Interest income, net                178        878     1,177      4,799

      Income (loss) before provision
       for (benefit from)
       income taxes                   (47,101)   (12,400)  (74,761)   (29,107)

      Provision for (benefit from)
      income taxes                     10,703     (3,720)    2,404     (8,732)

        Net income (loss)             (57,804)    (8,680)  (77,165)   (20,375)

       Accretion of preferred stock
        discount and dividend (1)      (2,161)       -      (6,301)       -

      Net income (loss) applicable
       to common stockholders        $(59,965)   $(8,680) $(83,466)  $(20,375)

      Basic and diluted earnings
       (loss) per share:
         Net income (loss) per share   $(1.66)    $(0.28)   $(2.37)    $(0.68)
         Accretion of preferred
          stock discount and
          dividend                      (0.06)       -       (0.19)       -

      Net income (loss) per share
       applicable to common
       stockholders (2)                $(1.72)    $(0.28)   $(2.56)    $(0.68)

      Weighted average shares
       outstanding - basic and
       diluted                         34,829     30,572    32,625     29,941

       Pro Forma before Charges for
        In Process R&D, Write-off of
        Investments, Amortization of
        Goodwill, Restructuring
        Charges, Preferred Stock
        Discount and Dividend Accretion,
        and Valuation on Deferred Tax
         Asset:

      Net income (loss)              $(11,741)    $1,232  $(37,259)    $3,633

      Diluted earnings (loss) per
       share                           $(0.34)     $0.04    $(1.14)     $0.12


    (1) The twelve months ending June 30, 2002 include a preferred stock
        dividend of $3.5 million that was incurred during the quarter ended
        March 31, 2002, primarily due to a beneficial conversion feature
        embedded in the Series B preferred stock.  This dividend was not
        included in our March 31, 2002 financial results.

    (2) The three months and twelve months ending June 30, 2001 include $0.6
        million and $2.1 million of amortization of goodwill respectively,
        while 2002 results do not include any amortization of goodwill to
        comply with FASB 142.


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

                                   Three Months Ended    Twelve Months Ended
                                  June 30,    June 30,  June 30,     June 30,
                                    2002        2001      2002         2001

       Net income (loss)          $(59,965)    $(8,680) $(83,466)    $(20,375)
         Adjustments to net loss:
         Write-off of acquired
          in-process research and
          development               14,900       2,300    14,900        9,915
         Write-off of investment     8,923           -     8,923        5,000
         Amortization of goodwill        -         643         -        2,124
         Restructuring charge       13,941       6,969    16,083        6,969
         Preferred stock discount
          and dividend accretion     2,161           -     6,301            -
         Valuation of deferred
          tax asset                  8,299           -         -            -

       Pro forma net income
        (loss)                    $(11,741)     $1,232  $(37,259)      $3,633


    Contacts:
    For Media:
     Peter Watt
     Aspen Technology, Inc.
     +44 (0) 1223 819 752

    For Media:
     Carin Warner
     Warner Communications
     (978) 526-1960
     carin@warnerpr.com

    For Investors:
     Joshua Young
     Aspen Technology, Inc.
     (617) 949-1274
     joshua.young@aspentech.com

SOURCE Aspen Technology, Inc.

CONTACT:
Media, Peter Watt of Aspen Technology, Inc., +44 (0) 1223 819
752, or Carin Warner of Warner Communications, +1-978-526-1960,
carin@warnerpr.com; or Investors, Joshua Young of Aspen Technology, Inc.,
+1-617-949-1274, joshua.young@aspentech.com
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URL: http://www.aspentech.com