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Aspen Technology's GAAP Loss of $0.05 Narrows in Fiscal Third Quarter

    CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 29, 2003--

      Pro Forma earnings per share triples sequentially to $0.06,
                      excluding one-time charges

Aspen Technology, Inc. (NASDAQ: AZPN) today reported financial results for its fiscal 2003 third quarter and the nine months ending March 31, 2003.

Total revenues for the third quarter were $79.7 million, with license revenues totaling $34.9 million, and services revenue of $44.8 million. On a Generally Accepted Accounting Principles (GAAP) basis, AspenTech reported a net loss to common shareholders of $2.0 million, or $0.05 per share, significantly better than the loss of $136.9 million in the second quarter of fiscal 2003, which reflected a $135.2 million restructuring and other charge related to goodwill impairment, asset write-downs, headcount reductions, and related facilities consolidation.

On a pro forma basis, AspenTech posted net income of $2.4 million, or $0.06 per share, a substantial improvement over pro forma net income of $643,000, or $0.02 in the second quarter of fiscal 2003.

Pro forma results in both periods exclude $2.3 million of preferred stock dividend and discount accretion. In addition, pro forma net income excludes restructuring and other charges, which in the third quarter totaled $2.1 million for anticipated professional services fees related to the previously announced Federal Trade Commission investigation.

"I am pleased to have met our financial objectives again this quarter, particularly in a difficult macroeconomic environment," said David McQuillin, President and CEO of AspenTech. "We hit our license revenue target, further reduced our operating expenses, and significantly improved pro forma profitability. This sequential improvement is solid evidence that the actions we took last autumn to streamline both our organization and our product focus are having a positive effect on our execution, which is enabling us to operate profitably.

"In terms of the key operational highlights, the geographic composition of our license revenue was well-balanced and our Engineering product line exceeded its objectives. We continue to see steady demand for our Manufacturing/Supply Chain solutions, although primarily for individual Foundation technologies. From an end-user perspective, the petroleum refining and oil and gas sectors were again important contributors in the third quarter, as integrated refiners sought to optimize their asset productivity and upstream divisions launched large engineering projects. Major customers continue to express their confidence in our solutions for Enterprise Operations Management, which provide proven, rapid, and substantial returns on investment, enabling customers to consistently improve their profitability."

During the third fiscal quarter, AspenTech signed significant license transactions with Air Liquide, Air Products, Borealis, PetroCanada, Shell and Lurgi. The company closed nine transactions of approximately $1 million or more, up from five transactions in the previous quarter.

The company will be holding a conference call and webcast to discuss its financial results, business outlook, and related corporate and financial matters at 4:45 p.m. eastern time on Tuesday, April 29, 2003. 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 the next twelve months and will also be available for forty-eight hours via telephone, beginning at 8:00 p.m. eastern time on April 29, 2003, by dialing 719-457-0820 and entering in confirmation code: 146166.

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. 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

The fifth paragraph 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, Aspen ProfitAdvantage, Plantelligence, and the Aspen logo are trademarks of Aspen Technology, Inc., Cambridge, Mass.

                 (in thousands, except per share data)

                          Three Months Ended     Nine Months Ended
                          March 31,  March 31,  March 31,  March 31,
                             2003       2002       2003       2002
Software licenses          $34,883 $37,380 $101,310 $96,550
Services                    44,846     46,086    138,642    140,102

  Total revenues            79,729     83,466    239,952    236,652

Cost of software
 licenses                    2,891      3,165      9,737      8,663
Cost of services            25,745     29,969     80,576     90,372
Selling and marketing       24,455     29,521     80,640     84,597
Research and development    15,727     19,585     49,469     55,413
General and
 administrative              8,893      8,678     27,637     23,620
Restructuring and other
 charges                     2,100       (500)   137,344      2,142

  Total costs and expenses  79,811     90,418    385,403    264,807

Income (loss) from
 operations                    (82)    (6,952)  (145,451)   (28,155)

Other income (expense),
 net                            64       (152)      (750)      (505)
Interest income, net           349        103      1,198        999

Income (loss) before
 provision for (benefit
 from) income taxes            331     (7,001)  (145,003)   (27,661)

Provision for (benefit
 from) income taxes              -     (2,100)         -     (8,299)

  Net income (loss)            331     (4,901)  (145,003)   (19,362)

 Accretion of preferred
  stock discount and
  dividend                  (2,291)    (4,140)    (6,812)    (4,140)

Net income (loss)
 applicable to common
 stockholders              $(1,960)   $(9,041) $(151,815)  $(23,502)

Basic and diluted net
 income (loss) per share
 applicable to common
 stockholders               $(0.05)    $(0.28)    $(3.96)    $(0.74)

Weighted average shares
 outstanding - basic and
 diluted                    38,795     31,948     38,295     31,768

Pro Forma before Restructuring and other charges, and Preferred stock
 discount and dividend accretion:
Net income (loss)           $2,431    $(5,251)   $(7,659)  $(17,863)

Diluted earnings (loss)
 per share                   $0.06     $(0.16)    $(0.20)    $(0.56)

Weighted average shares
 outstanding - diluted      40,938     31,948     38,295     31,768

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

                          Three Months Ended       Nine Months Ended
                           March 31, March 31,     March 31, March 31,
                             2003     2002           2003      2002

 Net income (loss)         $(1,960) $(9,041)      $(151,815) $(23,502)
 Adjustments to net
 Restructuring and
  other charges, net
  of tax effect              2,100     (350)        137,344     1,499
 Preferred stock
  discount and
  dividend accretion         2,291    4,140           6,812     4,140

 Pro forma net
  income (loss)             $2,431  $(5,251)        $(7,659) $(17,863)

                        ASPEN TECHNOLOGY, INC.
                            (in thousands)

                                                   March 31,  June 30,
                                                     2003       2002
Current assets:
Cash, cash equivalents and short-term investments   $53,414 $52,120
Accounts receivable and unbilled services, net       96,535   125,987
Current portion of long-term installments
 receivable, net                                     29,114    40,404
Deferred tax asset                                    2,929     2,929
Prepaid expenses and other current assets            14,494    18,699

   Total current assets                             196,486   240,139

Long-term installments receivable, net               68,829    68,318
Equipment and leasehold improvements, net            35,522    50,803
Computer software development costs, net             15,885    13,810
Intangible assets, net                               43,481   125,363
Purchased intellectual property, net                  2,002    27,626
Deferred tax asset                                   15,576    15,576
Other assets                                          5,867     6,708

Total assets                                       $383,648 $548,343

Current liabilities:
Current portion of long-term debt                    $4,954 $5,334
Amount owed to Accenture                              5,333    11,100
Accounts payable and accrued expenses                75,619    94,987
Unearned revenue                                     18,429    20,983
Deferred revenue                                     38,887    38,624

  Total current liabilities                         143,222   171,028

Long-term debt, less current maturities              90,334    92,135
Obligation subject to common stock settlement         5,006     1,810
Deferred revenue, less current portion               12,426     9,548
Deferred tax liability                               14,496    15,003
Other liabilities                                     3,086     5,031

Total stockholders' equity                          115,078   253,788

Total liabilities and stockholders' equity         $383,648 $548,343 

    CONTACT: Aspen Technology, Inc. Joshua Young, 617/949-1274
             Aspen Technology, Inc. Peter Watt, +44 1223 819-752

    SOURCE: Aspen Technology, Inc.