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Aspen Technology Announces Financial Results for First-Quarter Fiscal Year 2007

11/07/06

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Nov. 7, 2006--Aspen Technology, Inc. (Nasdaq: AZPN), a leading provider of software and services to the process industries, today announced its financial results for its fiscal 2007 first quarter, ended September 30, 2006.

For the quarter ended September 30, 2006, AspenTech reported total revenue of $64.2 million, an increase of 7% from the first quarter of the prior year. Top line results were driven by license revenue of $28.1 million, an increase of 17% from the prior year period. Services revenue was $36.1 million, an increase of 1% from the prior year period.

Mark Fusco, President and CEO of AspenTech, stated, "In the September quarter, total revenue was slightly lower than we expected, offset by continued success in effectively managing our expenses. The first quarter is typically seasonally challenging, and as we have stated in the past, our quarterly results can be impacted by the timing of closing large deals." Fusco added, "We were pleased that we were able to file our 10-K and bring our stock option review and restatement to a timely completion. With this now behind us, the management team can focus on growing the business. We remain optimistic about our outlook for the second quarter and full fiscal year 2007 as a result of the strength of our end user markets, leading market share position, growing acceptance of aspenONE solutions, and large customer base that is predominantly on recurring, term-based contracts."

For the quarter ended September 30, 2006, AspenTech's loss from operations, determined in accordance with generally accepted accounting principles (GAAP), was $6.4 million. GAAP operating expenses in the first quarter of fiscal 2007 included $3.1 million of non-cash stock-based compensation, $1.2 million in professional fees associated with the completion of the stock option review, $1.5 million of non-cash amortization of intangibles associated with previous acquisitions, $5.8 million in a loss on sales of assets and $1.4 million in restructuring charges due to the company's continued office consolidations - the combination of which reduced the company's GAAP operating margin by approximately twenty percentage points.

For the quarter ended September 30, 2005, the company reported a GAAP loss from operations of $4.6 million. Operating expenses in the first quarter of fiscal 2006 included $1.6 million of non-cash stock-based compensation, $1.8 million of non-cash amortization of intangibles associated with previous acquisitions, $1.9 million of provisions for the settlement of litigation, and $2.3 million of restructuring charges and loss on sales and disposals of assets.

Loss applicable to common shareholders was $10.6 million in the first quarter of fiscal 2007, compared to a loss of $8.4 million in the same period last year. Loss applicable to common shareholders included the impact of $3.7 million of accretion of preferred stock dividend and discount in the first quarter of fiscal 2007, and $3.8 million in the prior year period.

Loss per share applicable to common shareholders was $0.20 for the quarter ended September 30, 2006, compared to a loss per share applicable to common shareholders of $0.19 in the same period last year. Of note, the above mentioned combination of stock-based compensation, professional fees associated with the completion of our stock option review, amortization of intangibles associated with previous acquisitions, provisions for the settlement of litigation, loss on sales of assets and restructuring charges, and accretion of preferred stock dividends and discount had a net, negative impact of $0.27 per share in the quarter ended September 30, 2006 and $0.22 per share in the year ago period.

AspenTech had cash and cash equivalents of $88.9 million at September 30, 2006, compared to $86.3 million at the end of the prior quarter, and remains essentially debt-free. The increase in cash was driven by positive cash flow from operations during the quarter.

Conference Call and Webcast

AspenTech will host a conference call and webcast today, November 7, 2006, at 4:45 pm (EST) to discuss the Company's financial results, business outlook, and related corporate and financial matters. The live dial-in number is 1-877-239-3024, conference ID code 9079537. Interested parties may also listen to a live webcast of the call by logging on to the Investor Relations section of AspenTech's website, http://www.aspentech.com/corporate/investor.cfm, and clicking on the "webcast" link. A replay of the call will be archived on AspenTech's website and will also be available via telephone at 1-800-642-1687 or 1-706-645-9291, conference ID code 9079537, through November 14, 2006.

About AspenTech

Aspen Technology, Inc. provides industry-leading software and professional services that help process companies improve efficiency and profitability by enabling them to model, manage and control their operations. The new generation of integrated aspenONE solutions is aligned with the key industry business processes, providing manufacturers the capabilities they need to optimize operational performance, make real-time decisions and synchronize the plant and supply chain. Over 1,500 leading companies already rely on AspenTech's software, including Bayer, BASF, BP, Chevron Corporation, DuPont, ExxonMobil, Fluor, GlaxoSmithKline, Sanofi-Aventis, Shell and Total. For more information, visit www.aspentech.com.

AspenTech, aspenONE and the aspen leaf logo are trademarks of Aspen Technology, Inc., Cambridge, Mass.

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

                                               Three Months Ended
                                           September 30, September 30,
                                               2006          2005
                                           ------------- -------------
                                                   (Unaudited)
REVENUES:
  Software licenses                            $ 28,076      $ 24,037
  Service and other                              36,128        35,736
                                           ------------- -------------
    Total revenues                               64,204        59,773
                                           ------------- -------------

COST OF REVENUES:
  Cost of software licenses                       3,149         3,875
  Cost of service and other                      17,679        17,299
  Amortization of technology related
   intangible assets                              1,472         1,782
                                           ------------- -------------
    Total cost of revenues                       22,300        22,956
                                           ------------- -------------

  Gross profit                                   41,904        36,817

OPERATING COSTS:
  Selling and marketing                          21,618        18,675
  Research and development                        8,673        10,148
  General and administrative                     10,711        10,321
  Restructuring charges                           1,446         2,199
  Loss on sales and disposals of assets           5,839            61
                                           ------------- -------------
    Total operating costs                        48,287        41,404
                                           ------------- -------------

  Income (loss) from operations                  (6,383)       (4,587)

  Other income (expense), net                      (415)         (204)
  Interest income, net                              947           816
                                           ------------- -------------

  Income (loss) before income tax
   provision                                     (5,851)       (3,975)

  Income tax provision                           (1,015)         (650)
                                           ------------- -------------

  Net income (loss)                              (6,866)       (4,625)

   Accretion of preferred stock discount
    and dividend                                 (3,736)       (3,778)
                                           ------------- -------------

  Income (loss) applicable to common
   shareholders                                $(10,602)     $ (8,403)
                                           ============= =============

EARNINGS PER SHARE:
  Income (loss) per share applicable to
   common shareholders - Basic and Diluted     $  (0.20)     $  (0.19)
                                           ============= =============

  Weighted average shares outstanding -
   Basic and Diluted                             52,801        43,237
                                           ============= =============
 Supplemental information -

                                               Three Months Ended
                                           September 30, September 30,
                                               2006          2005
                                           ------------- -------------
                                                   (Unaudited)

Stock-based compensation costs included in
 the Statements of Operations

  Cost of service and other                 $       508   $       285
  Selling and marketing                           1,029           448
  Research and development                          382           188
  General and administrative                      1,177           671
                                           ------------- -------------

  Total stock-based compensation            $     3,096   $     1,592
                                           ============= =============
                        ASPEN TECHNOLOGY, INC.
                CONSOLIDATED CONDENSED BALANCE SHEETS
                            (in thousands)

                                              September 30,  June 30,
                                                  2006        2006
                                              ------------- ----------
ASSETS                                              (Unaudited)
Current assets:
  Cash and cash equivalents                     $   88,866   $ 86,272
  Accounts receivable, net                          50,576     55,654
  Unbilled services                                  8,544      8,518
  Current portion of long-term installments
   receivable, net                                   5,699     12,123
  Prepaid expenses and other current assets          8,439      8,813
                                              ------------- ----------

    Total current assets                           162,124    171,380
                                              ------------- ----------

Long-term installments receivable, net              10,447     35,681
Retained interest in sold receivables               28,202     19,010
Equipment and leasehold improvements, net            8,093      8,351
Computer software development costs, net            16,242     15,456
Intangible assets, net                              18,559     20,048
Purchased intellectual property, net                    24        165
Deferred tax asset                                   1,595      1,595
Other assets                                         2,466      2,552
                                              ------------- ----------

    Total assets                                $  247,752   $274,238
                                              ============= ==========


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Current portion of long-term debt             $      249   $    247
  Accounts payable and accrued expenses             70,212     81,646
  Deferred revenue                                  52,824     64,238
                                              ------------- ----------
    Total current liabilities                      123,285    146,131
                                              ------------- ----------

Long-term debt, less current maturities                 97        149
Deferred revenue, less current portion               2,851      2,609
Deferred tax liability                               1,309      1,309
Other liabilities                                   19,080     20,446

Redeemable preferred stock                         129,211    125,475

Total stockholders' equity (deficit)               (28,081)   (21,881)
                                              ------------- ----------

    Total liabilities and stockholders'
     equity (deficit)                           $  247,752   $274,238
                                              ============= ==========

CONTACT: Media:
Aspen Technology, Inc.
Patrick Pecorelli, 617-949-1220
patrick.pecorelli@aspentech.com
or
Investors:
Integrated Corporate Relations
Kori Doherty, 617-956-6730
kdoherty@icrinc.com

SOURCE: Aspen Technology, Inc.