Aspen Technology Reports GAAP Profitability and Higher Second Quarter Software License Revenue
CAMBRIDGE, Mass., Jan 22, 2004 (BUSINESS WIRE) -- Aspen Technology, Inc. (NASDAQ: AZPN) today reported financial results for its fiscal 2004 second quarter and six months ended December 31, 2003.
Total revenues for the second quarter totaled $80.4 million, with software license revenues of $37.7 million and services revenues of $42.7 million. On a Generally Accepted Accounting Principles (GAAP) basis, the company reported second quarter net income of $560,000, or $0.01 per diluted share, compared to a net loss of $136.9 million or ($3.59) per diluted share in the same period last year. Excluding the preferred stock dividend and discount accretion, the company reported second quarter net income of $3.9 million, or $0.05 per diluted share compared to pro forma (non-GAAP) net income of $643,000, or $0.02 per diluted share, in the second quarter of fiscal 2003.
"During the second quarter, we continued to build upon the operational performance and financial foundation that we worked hard to establish at AspenTech over the previous four quarters," said David McQuillin, President and CEO of AspenTech. "With the significant structural changes behind us, we have now turned our full attention to focusing on the execution of our business strategy to deliver sustainable, profitable growth for our shareholders. With economic indicators steadily improving, we are beginning to see pockets of strength in our customer base and we are moving aggressively to capitalize on these opportunities.
"Our strategy to deliver business value with vertical software solutions to the emerging enterprise operations management (EOM) market is gaining momentum. We are encouraged by our customers' response to the benefits they are receiving from some of our newer products such as Aspen Operations Manager. We have also added new functionality to our supply chain planning solutions over the past year which has strengthened demand for this technology from the petroleum, chemicals and consumer goods markets."
Second Quarter Highlights
AspenTech accomplished the following in the second quarter:
- Significantly improved year-over-year GAAP net income.
- Pro forma (non-GAAP) net income increased six-fold from the year-ago quarter and more than eight-fold sequentially.
- Increased cash balance by more than $23 million to approximately $125 million.
- Closed 9 transactions of approximately $1 million or greater, compared to 5 transactions last year.
- Signed significant license transactions with Saudi Aramco, Anadarko Petroleum Corporation, Aker Kvaerner, Stone & Webster and Akzo Nobel.
- Reduced total expenses by approximately seven percent year-over-year and delivered a sequential decline for the third straight quarter. Fiscal 2004 second quarter total expenses include a $2 million accrual for legal fees related to the FTC proceeding.
- Lowered DSOs for billed receivables by 11 days to 72 days compared to 83 days in the second quarter of fiscal 2003.
- Delivered on new product development commitments with commercial availability of Aspen RefSYS 1.0, HYSYS Upstream Oil & Gas Option 1.0, and new functionality for Aspen Operations Manager.
- Purchased $7.0 million of the company's 5.25% subordinated debentures at a discount to par in January 2004.
Charles Kane, Senior Vice President & CFO, commented, "We have made measurable improvement in almost every aspect of our financial performance, both sequentially and on a year-over-year basis. Our reduction in operating expenses and a more favorable revenue mix drove an improvement in operating margins this quarter."
Total revenues for the six months ended December 31, 2003 were $157.4 million, with software license revenues growing by approximately ten percent year-over-year to $72.8 million and services revenue totaling $84.6 million. On a GAAP basis, the company reported net income of $4.9 million, or $0.10 per diluted share compared to a net loss of $149.9 million or ($3.93) per diluted share for the same period last year. Fiscal 2004 GAAP earnings include a one-time gain of $6.5 million relating to the retirement of the Series B preferred stock. On a pro forma (non-GAAP) basis, excluding this one-time gain as well as the preferred stock dividend and discount accretion, the company reported net income of $4.4 million, or $0.06 per diluted share compared to a pro forma (non-GAAP) loss of $10.1 million or ($0.26) per diluted share in the prior year.
The company will hold 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 Thursday, January 22, 2004. 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 January 22, 2004, by dialing (800) 642-1687 and entering in confirmation code: 4734628.
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 Six Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
-------- ---------- -------- ----------
REVENUES:
Software licenses $37,759 $36,781 $72,822 $66,427
Services 42,661 46,192 84,612 93,796
-------- ---------- -------- ----------
Total revenues 80,420 82,973 157,434 160,223
-------- ---------- -------- ----------
EXPENSES:
Cost of software
licenses 4,315 3,511 7,932 6,846
Cost of services 24,246 26,823 48,878 54,831
Selling and
marketing 23,589 27,031 47,463 56,185
Research and
development 14,294 15,997 30,300 33,742
General and
administrative 8,167 8,923 16,907 18,744
Restructuring &
Other One Time
Charges 2,000 135,244 2,000 135,244
-------- ---------- -------- ----------
Total costs
and expenses 76,611 217,529 153,480 305,592
-------- ---------- -------- ----------
Income (loss)
from operations 3,809 (134,556) 3,954 (145,369)
Other income
(expense), net 523 (313) 295 (814)
Interest income,
net 895 268 1,617 849
-------- ---------- -------- ----------
Income (loss)
before provision
for income taxes 5,227 (134,601) 5,866 (145,334)
Provision for
income taxes 1,315 - 1,503 -
-------- ---------- -------- ----------
Net income
(loss) 3,912 (134,601) 4,363 (145,334)
Accretion of
preferred
stock discount
and dividend(1) (3,352) (2,287) 500 (4,521)
-------- ---------- -------- ----------
Net income
(loss)
applicable to
common
stockholders $560 $(136,888) $4,863 $(149,855)
======== ========== ======== ==========
EARNINGS PER SHARE:
Basic net
income (loss)
per common
share $0.01 $(3.59) $0.12 $(3.93)
======== ========== ======== ==========
Diluted net
income (loss)
per common
share $0.01 $(3.59) $0.10 $(3.93)
======== ========== ======== ==========
Weighted
average shares
outstanding -
Basic 40,175 38,128 39,967 38,092
======== ========== ======== ==========
Weighted
average shares
outstanding -
Diluted 50,315 38,128 46,337 38,092
======== ========== ======== ==========
PRO FORMA EARNINGS PER SHARE:
Pro forma net income (loss) excludes Accretion of preferred stock
discount and dividend for all periods and Restructuring and other
charges for the periods ended December 31, 2002 , and pro forma
weighted average shares outstanding assumes the conversion of the
Series D preferred stock to common stock.
Net income (loss) $3,912 $643 $4,363 $(10,090)
======== ========== ======== ==========
Diluted earnings
(loss) per share $0.05 $0.02 $0.06 $(0.26)
======== ========== ======== ==========
Weighted
average shares
outstanding -
diluted 86,651 39,560 73,589 38,092
======== ========== ======== ==========
(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 Six Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
-------- ---------- -------- ----------
Net income (loss) $560 $(136,888) $4,863 $(149,855)
Adjustments to net
income (loss):
Restructuring and
other charges - 135,244 - 135,244
Preferred stock
discount and
dividend accretion 3,352 2,287 5,952 4,521
Gain on conversion
of Series B
redeemable
preferred stock - - (6,452) -
-------- ---------- -------- ----------
Pro forma net
income (loss) $3,912 $643 $4,363 $(10,090)
======== ========== ======== ==========
Pro forma net income (loss) excludes Restructuring and other
charges and Accretion of preferred stock discount and dividend, and
pro forma weighted average shares outstanding assumes the conversion
of the Series D preferred stock to common stock.
ASPEN TECHNOLOGY, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
Dec. 31, June 30,
2003 2003
--------- ---------
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $124,941 $51,567
Accounts receivable, net 64,574 77,725
Unbilled services 16,389 15,279
Current portion of long-term installments
receivable, net 15,201 34,720
Deferred tax asset 2,929 2,929
Prepaid expenses and other current assets 8,930 11,581
--------- ---------
Total current assets 232,964 193,801
--------- ---------
Long-term installments receivable, net 69,347 73,377
Equipment and leasehold improvements, net 25,840 31,158
Computer software development costs, net 18,411 17,728
Intangible assets, net 37,958 41,279
Purchased intellectual property, net 1,578 1,861
Deferred tax asset 13,829 13,831
Other assets 4,235 5,445
--------- ---------
Total assets $404,162 $378,480
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $2,427 $3,849
Amount owed to Accenture - 8,162
Accounts payable and accrued expenses 67,957 82,094
Unearned revenue 21,577 20,492
Deferred revenue 35,287 37,266
--------- ---------
Total current liabilities 127,248 151,863
--------- ---------
Long-term debt, less current maturities 76,450 89,911
Deferred revenue, less current portion 7,741 9,815
Deferred tax liability 13,391 13,258
Other liabilities 11,032 16,009
--------- ---------
Redeemable preferred stock 99,903 57,537
Total stockholders' equity 68,397 40,087
--------- ---------
Total liabilities and stockholders' equity $404,162 $378,480
========= =========
Aspen Technology, Inc.
Joshua Young, 617-949-1274
joshua.young@aspentech.com