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Aspen Technology Reports Solid Engineering Business Performance, Lower Expenses in First Quarter Fiscal 2003

CAMBRIDGE, Mass., Oct 24, 2002 /PRNewswire-FirstCall via COMTEX/ --

Company Expects Breakeven Operations in Current Period, Profit in March Quarter

Aspen Technology, Inc. (Nasdaq: AZPN) today reported financial results for its first quarter ending September 30, 2002.

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Total revenues for the first quarter were $77.3 million, with license revenues totaling $29.7 million and services revenues totaling $47.6 million. The company reported a net loss of $10.7 million, or $0.28 per share. The company's first quarter net loss applicable to common stockholders was $13.0 million, or $0.34 per share, after accounting for the accretion of the preferred stock discount and dividend.

"Our new organization, which is focused around our two major product lines, has helped to streamline our operations and will set the foundation for improved efficiency in the coming quarters," said David McQuillin, President and CEO of AspenTech. "We achieved our expense reduction targets across the company, cutting spending to $88 million in the first quarter. Our Engineering business hit our revenue targets and was profitable in the quarter. However, our Manufacturing/Supply Chain business fell short and did not meet our expectations. While we saw solid results from our foundation products, demand for our integrated, enterprise products continued to be weak.

"As a result, we are realigning our expenses within the Manufacturing/Supply Chain business to focus on near-term opportunities. These actions are intended to restore the Manufacturing/Supply Chain business, and AspenTech as a whole, to profitability in the third quarter of fiscal 2003. Since we will only achieve a partial quarter of benefits in the current quarter, our target is to break even for the three months ending December 31, 2002."

For the second quarter, AspenTech expects expenses, including cost of revenues, will total approximately $80-82 million, approximately 19% below fourth quarter fiscal 2002 levels if Hyprotech were included for a full quarter. Based on its recently implemented reductions, the company expects its number of employees will total approximately 1,750 at December 31, 2002, down from approximately 2,150 at September 30, 2002.

"We are looking forward to AspenWorld, our global process industry conference that kicks off next week, as this gathering of customers and prospects has traditionally been an important catalyst for our software sales. I am excited about the solutions we will be showcasing and the opportunities to enhance key customer relationships," added McQuillin.

During the first quarter of fiscal 2003, AspenTech signed nine license transactions of approximately $1 million or more, up from three in the first quarter of fiscal 2002. The company signed substantial license agreements in the quarter with Aventis, Conoco, Jacobs Engineering, Praxair and SINOPEC.

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, October 24, 2002. Interested parties may listen to a live Webcast of the call by logging on to AspenTech's website: 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 October 24, 2002, by dialing 719-457- 0820 and entering in confirmation code 643085.

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, incorporating 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, to production in the plant, to the delivery of 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 and Unilever. For more information, visit

The headline and the fourth and fifth 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 and the Aspen logo are trademarks of Aspen Technology, Inc., Cambridge, Mass.

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

    For Media:
     Carin Warner
     Warner Communications
     (978) 526-1960

    For Investors:
     Joshua Young
     Aspen Technology, Inc.
     (617) 949-1274

                            ASPEN TECHNOLOGY, INC.
                            (Dollars in thousands)

                                                 September 30,       June 30,
                                                     2002             2002
    Current assets:
      Cash, cash equivalents and short-term
       investments                                  $47,894          $52,120
      Accounts receivable and unbilled
       services, net                                102,609          125,987
      Current portion of long-term
       installments receivable, net                  41,869           40,404
      Deferred tax asset                              2,929            2,929
      Prepaid expenses and other current
       assets                                        18,268           18,699

         Total current assets                       213,569          240,139

    Long-term installments receivable, net           68,496           68,318
    Equipment and leasehold improvements,
     net                                             49,244           50,803
    Computer software development costs,
     net                                             16,640           13,810
    Intangible assets, net                          122,869          125,363
    Purchased intellectual property, net             26,147           27,626
    Deferred tax asset                               15,576           15,576
    Other assets                                      7,380            6,708

      Total assets                                 $519,921         $548,343

    Current liabilities:
      Current portion of long-term debt              $4,983           $5,334
      Amount owed to Accenture                       10,150           11,100
      Accounts payable and accrued expenses          78,709           94,987
      Unearned revenue                               18,130           20,983
      Deferred revenue                               39,257           38,624
        Total current liabilities                   151,229          171,028

    Long-term debt, less current maturities          91,016           92,135
    Obligation subject to common stock
     settlement                                       3,278            1,810
    Deferred revenue, less current portion            7,332            9,548
    Deferred tax liability                           14,404           15,003
    Other liabilities                                 4,450            5,031

    Total stockholders' equity                      248,212          253,788
      Total liabilities and stockholders'
       equity                                      $519,921         $548,343

                            ASPEN TECHNOLOGY, INC.
                (Dollars in thousands, except per share data)

                                                       Three Months Ended
                                                September 30,    September 30,
                                                     2002               2001
       Software licenses                           $29,646            $19,231
       Services                                     47,604             46,960
         Total revenues                             77,250             66,191

       Cost of software licenses                     3,335              2,444
       Cost of services                             28,008             30,142
       Selling and marketing                        29,154             26,624
       Research and development                     17,745             17,999
       General and administrative                    9,821              7,422
       Restructuring charge                              -              2,642
         Total costs and expenses                   88,063             87,273

       Income (loss) from operations               (10,813)           (21,082)

       Other income (expense), net                    (501)              (184)
       Interest income, net                            581                753

       Income (loss) before provision for
       (benefit from) income taxes                 (10,733)           (20,513)

       Provision for (benefit from) income
        taxes                                            -             (6,154)

         Net income (loss)                         (10,733)           (14,359)

        Accretion of preferred stock
         discount and dividend                      (2,234)               -

       Net income (loss) applicable to
        common stockholders                       $(12,967)          $(14,359)

       Basic and diluted earnings (loss)
        per share:
          Net income (loss) per share               $(0.28)            $(0.45)
          Accretion of preferred stock
           discount and dividend                     (0.06)               -

       Net income (loss) per share
        applicable to common stockholders           $(0.34)            $(0.45)

       Weighted average shares outstanding
        - basic and diluted                         37,994             31,760

       Pro Forma before Restructuring
        Charge and Preferred Stock
        Discount and Dividend Accretion:
       Net income (loss)                          $(10,733)          $(12,510)

       Diluted earnings (loss) per share            $(0.28)            $(0.39)

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

                                                   Three Months Ended
                                             September 30,       September 30,
                                                  2002                2001

       Net income (loss)                        $(12,967)           $(14,359)
         Adjustments to net loss:
         Restructuring charge, net of
          tax effect                                   -               1,849
         Preferred stock discount and
          dividend accretion                       2,234                   -

       Pro forma net income (loss)              $(10,733)           $(12,510)

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SOURCE Aspen Technology, Inc.

Media: Peter Watt of Aspen Technology, Inc., +44 (0) 1223 819
752, or Carin Warner of Warner Communications, +1-978-526-1960,; or Investors: Joshua Young of Aspen Technology, Inc.,
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